FUNDAMENTAL PRINCIPLES AND POLICIES

LEGEND Labor law

BFOQ - Bona Fide Occupational Qualification
The law that defines State policies on labor and
BLR - Bureau of Labor Relations
employment and governs the rights and duties of the
CB - Collective Bargaining
employer (Er) and employees (Ee) with respect to:
CBA - Collective Bargaining Agreement 1. The terms and conditions of employment, and
CE - Certification Election 2. Labor disputes arising from collective bargaining
DOLE - Department of Labor and Employment or other concerted activity respecting such terms
Ee - Employee and conditions.
Er - Employer
Sources of labor laws
LA - Labor Arbiter
LC - Labor Code 1. Labor Code (LC) and other related special
LLO - Legitimate Labor Organization legislation [including their respective
LOA - Leave of Absence Implementing Rules and Regulations (IRR)]
NCMB - National Conciliation and Mediation 2. Contracts
Board 3. Collective Bargaining Agreement (CBA)
NLRC - National Labor Relations Commission 4. Company practice
5. Company policies
NSD - Night Shift Differential
OFW - Overseas Filipino Worker Aim of labor law
OT - Overtime
PCE - Petition for Certification Election The aim of labor law is social justice.
POEA - Philippine Overseas Employment
Administration Social justice
RAB - Regional Arbitration Branch
Social justice is neither communism, nor despotism,
RD - Regional Director
nor atomism, nor anarchy, but the humanization of
RH - Regular Holiday laws and the equalization of social and economic force
RTWPB Regional Tripartite Wages and by the State so that justice in its rational and
- Productivity Boards objectively secular conception may at least be
RW - Regular Wage approximated. Social Justice means the promotion of
RWD - Regular Working Days the welfare of all the people, the adoption by the
government of measures calculated to insure
SIL - Service Incentive Leave
economic stability of all the competent elements of
SLE - Secretary of Labor and Employment society, through the maintenance of a proper
ULP - Unfair Labor Practice economic and social equilibrium in the interrelations
UT - Undertime of the members of the community, constitutionally,
VA - Voluntary Arbitrator through the adoption of measures legally justifiable, or
VR - Voluntary Recognition extra-constitutionally, through the exercise of powers
WD - Wage Distortion underlying the existence of all governments on the
time-honored principle of salus populi est suprema lex
WRD - Weekly Rest Day
(Calalang v. Williams, G.R. No. 47800, December 2,
1940).

Limitations in invoking the principle of social justice

LABOR LAW
1. Not to undermine property rights resulting in
Labor confiscation (Guido v.Rural Progress Adm, L-2089,
October 31, 1949).
It is the exertion by human beings of physical or mental 2. May only protect the laborers who come to court
efforts, or both, towards the production of goods and with clean hands (Phil.Long Distance Telephone
services. Co. v. NLRC, G.R. 80609, August 23, 1988).

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1 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
3. Never result to an injustice or oppression of the Er
(Phil.Geothermal Inc. v. NLRC, G.R. No. 106370,
September 8, 1994).
4. If it is used to shield wrongdoings.
Q: May social justice as a guiding principle in labor
law be so used by the courts in sympathy with the
working man if it collides with the Equal protection
clause of the Constitution? (2003 Bar Question)
A: Yes. The State is bound under the Constitution to
afford full protection to Labor and when conflicting
interests collide and they are to be weighed on the
scales of social justice, the law should accord more
sympathy and compassion to the less privileged
workingman (Fuentes v. NLRC, 266 SCRA 24, January 2,
1997).
However it should be borne in mind that social justice
ceases to be an effective instrument for the
equalization of the social and economic forces by the
State when it is used to shield wrongdoing (Corazon
Jamer v. NLRC, 278 SCRA 632).
Matters that may properly fall under the term labor
law
The term labor law covers the following:
1. Statutes passed by the State to promote the
welfare of the workers and Ees and regulate their
relations with their Ers.
2. Judicial decisions applying and interpreting the
aforesaid statutes.
3. Rules and regulations issued by administrative
agencies, within their legal competence, to
implement labor statutes.
Classification of labor laws
1. Labor Standards That which sets out the
minimum terms, conditions and benefits of
employment that Ers must provide or comply with
and to which Ees are entitled as a matter of legal
right.
e.g. 13th month pay
2. Labor Relations Defines and regulates the status,
rights and duties, and the institutional
mechanisms, that govern the individual and
collective interactions of Ers, Ees or their
representatives. It is concerned with the
stabilization of relations of Ers and Ees and seeks
to forestall and adjust the differences between
them by the encouragement of CB and the
settlement of labor disputes through conciliation,
mediation and arbitration.
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2014 GOLDEN NOTES
e.g. Collective Bargaining Negotiations
3. Social Legislation All laws passed by the State to
promote public welfare. It includes statutes
intended to enhance the welfare of the people
even where there is no Er-Ee relationship.
e.g. GSIS Law, SSS Law, Philhealth benefits,
Agrarian Laws
NOTE: The purpose of labor legislation is to afford protection
to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed and regulate
the relations between workers and Ers. The State shall
assure the rights of workers to self-organization, collective
bargaining (CB), security of tenure and just and humane
conditions of work. (2006 Bar Question)
Q: How do the provisions of the law on labor relations
interrelate, if at all, with the provisions pertaining to
labor standards? (2003 Bar Question)
A: The law on Labor Relations provides for rights and
procedures by which workers may obtain from their Er
benefits which are over and above the minimum terms
and conditions of employment set by labor standards
law. Labor Standards law alone does not guarantee
lasting industrial peace. It is assured through Labor
Relations law which enables workers to obtain better
benefits guaranteed by labor standards laws and by
providing for a mechanism to settle disputes between
the Er and his Ees.
Labor legislation v. Social legislation
Labor Legislation is sometimes distinguished from
social legislation by the former referring to labor
statutes, like Labor Relations Law and Labor Standards,
and the latter to Social Security Laws. Labor legislation
focuses on the rights of the worker in the workplace.
Social Legislation are those laws that provide
particular kinds of protection or benefits to society or
segments thereof in furtherance of social justice.
NOTE: All Labor laws are social legislations, but not all social
legislations are labor laws.
Contract of labor
It is a consensual, nominate, principal, and
commutative contract whereby one person, called the
Er, compensates another, called the laborer, worker or
Ee, for the latters service. It is relationship impressed
with public interest in keeping with our constitutional
policy of social justice.
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 FUNDAMENTAL PRINCIPLES AND POLICIES
Essential characteristics of a contract of labor
1. Er freely enters into a contract with the Ee;
2. Er can select who his Ee will be;
3. Er can dismiss the Ee; the Ee in turn can quit his
job;
4. Er must give remuneration; and
5. Er can control and supervise the conduct of the
Ee.
The CBA operating as a source of law
The CBA is the norm of conduct between Er and Ees
and compliance therewith is mandated by the express
policy of the law (DOLE Philippines, Inc., v. Pawis ng
Makabayang Obrero (PAMAO-NFL), G.R. No. 146650,
January 13, 2003 in citing E. Razon, Inc. v. Secretary of
Labor and Employment, G.R. No. 85867, May 13,
1993).
Requisites before past practices would be considered
as a source of labor law
There must be:
1. Voluntarily institution by Er without any legal
compulsion
2. A passage of time- should have been done over a
long period of time, and must be shown to have
been consistent and deliberate (American Wire
and Cable Daily Rated Employees Union v.
American Wire and Cable Co., Inc., G.R. No.
155059, April 29, 2005).
NOTE: No passage of time is required for a company policy
to become a source of labor law.
FUNDAMENTAL PRINCIPLES AND POLICIES
CONSTITUTIONAL PROVISIONS
Constitutional mandates on labor law
1. Sec. 3, Art. XIII The State shall afford full
protection to labor, local and overseas, organized
and unorganized, and promote 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.
3 FACULTY OF CIVIL 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.
2. Sec. 9, Art. II The State shall promote a just and
dynamic social order that will ensure the
prosperity and independence of the nation and
free the people from poverty through policies that
provide adequate social services, promote full
employment, a rising standard of living, and an
improved quality of life for all.
3. Sec. 10, Art II - The State shall promote social
justice in all phases of national development.
4. Sec. 11, Art II - The State values the dignity of
every human person and guarantees full respect
for human rights.
5. Sec. 13, Art. II - The State recognizes the vital role
of the youth in nation-building and shall promote
and protect their physical, moral, spiritual,
intellectual, and social well-being. It shall
inculcate in the youth patriotism and nationalism,
and encourage their involvement in public and
civic affairs.
6. Sec. 14, Art. II - The State recognizes the role of
women in nation-building, and shall ensure the
fundamental equality before the law of women
and men.
7. Sec. 18, Art. IIThe State affirms labor as a primary
social economic force. It shall protect the rights of
workers and promote their welfare.
8. Sec. 20, Art. II The State recognizes the
indispensable role of the private sector,
encourages private enterprise and provide
incentives to needed investments.
9. Sec. 1, Art. III - No person shall be deprived of life,
liberty, or property without due process of law,
nor shall any person be denied the equal
protection of the laws.
10. Sec. 4, Art. III - No law shall be passed abridging
the 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.
11. Sec. 8, Art. III The right of the people, including
those employed in the public and private sectors,
to form unions, associations, or societies for
UNIVERSITY OF SANTO TOMAS
 Labor Law and Social Legislation
purposes not contrary to law shall not be
abridged.
12. Sec. 10, Art. III No law impairing the obligation
of contracts shall be passed.
13. Sec. 16, Art. III All persons shall have the right to
a speedy disposition of their cases before all
judicial, quasi-judicial or administrative bodies.
14. Sec. 18 (2), Art. III No involuntary servitude in
any form shall exist except as a punishment for a
crime whereof the party shall have been duly
convicted.
15. Sec. 1, Art. XIII - The Congress shall give highest
priority to the enactment of measures that
protect and enhance the right of all the people to
human dignity, reduce social, economic, and
political inequalities, and remove cultural
inequities by equitably diffusing wealth and
political power for the common good.
To this end, the State shall regulate the
acquisition, ownership, use, and disposition of
property and its increments.
16. Sec. 2, Art. XIII - The promotion of social justice
shall include the commitment to create economic
opportunities based on freedom of initiative and
self-reliance.
17. Sec. 13, Art. XIII The State shall establish a
special agency for disabled persons for their
rehabilitation, self-development and self-reliance
and their integration into the mainstream of
society.
18. Sec. 14, Art. XIII The State shall protect working
women by providing safe and healthful working
conditions, taking into account their maternal
functions, and such facilities and opportunities
that will enhance their welfare and enable them
to realize their full potential in the service of the
nation.
State policy on labor as found in the constitution
1. Afford full protection to labor
2. Promote full employment
3. Ensure equal work opportunities regardless of
sex, race, or creed
4. Assure the rights of workers to self-organization,
security of tenure, just and humane conditions of
work, participate in policy and decision-making
processes affecting their right and benefits
5. Regulate the relations between Ers and workers
(Sec. 3, Art. XIII)
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Basic rights of workers guaranteed by the
constitution
1. Security of tenure
2. Living wage
3. Humane working conditions
4. Share in the fruits of production
5. Self-organization
6. Collective bargaining and negotiation
7. Engage in peaceful concerted activities, including
the right to strike
8. Participate in policy and decision making
processes (Sec. 3, Art. XIII)
Principle of Non-oppression
The principle mandates capital and labor not to act
oppressively against each other or impair the interest
and convenience of the public. The protection to labor
clause in the Constitution is not designed to oppress or
destroy capital (Capili v. NLRC, G.R. No. 117378, March
26, 1997).
The law in protecting the rights of the Ees authorizes
neither oppression nor self-destruction of the Er
(Pacific Mills Inc. v. Alonzo, G.R. No. 78090, July 26,
1991). It should be made clear that when the law tilts
the scale of justice in favor of labor, it is but a
recognition of the inherent economic inequality
between labor and management. The intent is to
balance the scale of justice; to put the two parties on
relatively equal positions. There may be cases where
the circumstances warrant favoring labor over the
interests of management but never should the scale
be so tilted if the result is an injustice to the
employer. Justitia nemini neganda est (Justice is to be
denied to none) (Philippine Geothermal, Inc. v. NLRC
and Edilberto M. Alvarez, G.R. No. 106370, September
8, 1994).
NEW CIVIL CODE AND OTHER LAWS
1. New Civil Code (NCC)
a. Art. 19 Every person must, in the exercise
of his rights and in the performance of his
duties, act with justice, give everyone his
due, and observe honesty and good faith.
b. 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.
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 FUNDAMENTAL PRINCIPLES AND POLICIES
c. Art. 1701 - Neither capital nor labor shall act
oppressively against the other, or impair the
interest or convenience of the public.
d. Art. 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.
e. Art. 1703 - No contract which practically
amounts to involuntary servitude, under
any guise whatsoever, shall be valid.
f. Art. 1704 - In collective bargaining, the labor
union or members of the board or
committee signing the contract shall be
liable for non-fulfillment thereof.
g. Art. 1705 - The laborer's wages shall be paid
in legal currency.
h. Art. 1706 - Withholding of the wages,
except for a debt due, shall not be made
by the employer.
i. Art. 1707 - The laborer's wages shall be a
lien on the goods manufactured or the
work done.
j. Art. 1708 - The laborer's wages shall not
be subject to execution or attachment,
except for debts incurred for food,
shelter, clothing and medical
attendance.
k. Art. 1709 - The employer shall neither
seize nor retain any tool or other articles
belonging to the laborer.
l. Art. 1710 - Dismissal of laborers shall be
subject to the supervision of the
Government, under special laws.
2. Revised Penal Code (RPC)
Art. 289 Formation, maintenance and
prohibition of combination of capital or labor
through violence or threats. Any person
who, for the purpose of organizing,
maintaining or preventing coalitions or
capital or labor, strike of laborers or lock-out
of employees, shall employ violence or
threats in such a degree as to compel or force
the laborers or employers in the free and
legal exercise of their industry or work, if the
act shall not constitute a more serious
offense in accordance with the provisions of
the RPC.
3. Special Laws
a. E.O. 180- Providing guidelines for the
exercise of the Right to Organize of
Government Employees, creating a
Public Sector Labor-Management
Council, and for other purposes
b. R.A. 8291 - Government Service
Insurance Act of 1997
5 FACULTY OF CIVIL LAW
c. 13th Month Pay Law
d. Retirement Pay Law
e. SSS Law
f. Paternity Leave Act
g. Anti Child Labor Act
h. Anti Sexual Harassment Act
i. Magna Carta for Public Health Workers
j. Solo Parents Welfare Act of 2000
k. National Health Insurance Act as
amended by R.A. 9241
l. Migrant Workers and Overseas Filipinos
Act of 1995 as amended by RA 10022
m. PERA Act of 2008
n. Home Development Mutual Fund Law of
2009
o. The Magna Carta of Women
p. Comprehensive Agrarian Reform Law as
amended by R.A. 9700
q. Batas Kasambahay
LABOR CODE
Labor code
Presidential Decree No. 442 otherwise known as the
Labor Code of the Philippines is a decree instituting a
labor Code, thereby revising and consolidating labor
and social laws to afford protection to labor, promote
employment and human resources development and
ensure industrial peace based on social justice.
Effectivity date
Presidential Decree No. 442 was signed into law on
May 1, 1974. Article 2 states that the Code was to
take effect six months after its promulgation.
Therefore, the law took effect on November 1, 1974.
Applicability of the labor code
GR: All rights and benefits granted to workers under
the LC shall apply alike to all workers, whether
agricultural or non-agricultural.
XPNs:
1. Government Ees
2. Ees of government corporations created by
special or original charter
3. Foreign governments
4. International agencies
5. Corporate officers/ intra-corporate disputes
which fall under P.D. 902-A and now fall under the
jurisdiction of the regular courts pursuant to the
Securities Regulation Code.
6. Local water district except where NLRCs
jurisdiction is invoked.
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 Labor Law and Social Legislation
7. As may otherwise be provided by the LC.
Test in determining whether a GOCC is subject to the
provisions of the LC
It is determined by the manner of their creation.
Government corporations incorporated under the
Corporation Code are covered by the LC while those
created by special (original) charter from Congress are
subject to Civil Service rules.
Agency that exercises the rule-making power
granted in the labor code
The Department of Labor and Employment (DOLE)
thru the Secretary of Labor and Employment (SLE) and
other Government agencies charged with the
administration and enforcement of the LC or any of its
parts shall promulgate the necessary IRRs.
Limitations to the rule-making power granted to
the SLE and other government agencies
1. It must be issued under the authority of law
2. It must not be contrary to law and the
Constitution
Effectivity of rules and regulations
Such rules and regulations shall become effective 15
days after announcement of their adoption in
newspapers of general circulation.
Art. 3, Declaration of Basic Policy
It is the policy of the State to:
1. Afford full protection to labor
2. Promote full employment
3. Ensure equal work opportunities regardless of
sex, race, or creed
4. Assure the rights of workers to self-organization,
security of tenure, just and humane conditions of
work, participate in policy and decision-making
processes affecting their right and benefits
5. Regulate the relations between Ers and workers.
Art. 4, Construction in favor of Labor
Concept of liberal approach in interpreting the labor
code and its IRR
The LC and its IRR, being remedial in character must be
accorded the broadest scope and most beneficial
interpretation. It is only in this way that their purpose,
which is to remedy evils of exploitation, manipulation
and oppression, may be achieved. Strict adherence to
the letter of labor law is not allowed; the spirit thereof
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
prevails and must be given effect. Under Art. 4 of the
LC, all doubts in the implementation and
interpretation of the provisions thereof, including its
IRR, are to be resolved in favor of labor.
Compassionate justice
The social justice policy mandates a compassionate
attitude toward the working class in its relation to
management. In calling for protection to labor, the
Constitution does not condone wrong doing by the Ee.
However, it urges a moderation of the sanctions that
maybe applied to him in the light of the many
disadvantages that weigh heavily on him like an
albatross on his neck.
It is disregarding rigid rules and giving due weight to all
equities of the case (Gandara Mill Supply and Milagros
Sy v. NLRC and Silvestre Germano, G.R. 126703,
December 29, 1998).
e.g. An Ee who was validly dismissed may still be given
severance pay.
Recognition of management prerogative
The law also recognizes that management has rights
which are also entitled to respect and enforcement in
the interest of fair play (St. Lukes Medical Center Ees
Assn v. NLRC, G.R. No. 162053, March 7, 2007).
Art. 166, Policy
Policy of the state in relation to Ees compensation
and state insurance fund
The State shall promote and develop a tax-exempt Ees
compensation program whereby Ees and their
dependents, in the event of work-connected disability
or death, may promptly secure adequate income
benefits and medical related benefits (Art. 166, LC).
Purpose of Workmens Compensation Act
The primary purpose of a Workmens Compensation
Act is to provide compensation for disability or death
resulting from occupational injuries or diseases, or
accidental injury to, or death of Ees.
Art. 211, Declaration of Policy
The state aims to promote:
1. Free CB and negotiations, including voluntary
arbitration, mediation and conciliation as modes
of settling labor or industrial disputes;
2. Free trade unionism;
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 FUNDAMENTAL PRINCIPLES AND POLICIES
3. Free and voluntary organization of a strong and
united labor movement;
4. Enlightenment of workers concerning their rights
and obligations as union members and as Ees;
5. Adequate administrative machinery for the
expeditious settlement of labor or industrial
disputes;
6. Stable but dynamic and just industrial peace;
7. Participation of workers in the decision-making
processes affecting their rights, duties and
welfare;
8. Truly democratic method of regulating the
relations between the Ers and Ees by means of
agreements freely entered into through CB, no
court or administrative agency or official shall
have the power to set or fix wages, rates of pay,
hours of work or other terms and conditions of
employment, except as otherwise provided under
the LC.
Art. 212, Definitions
Employer
Any person acting in the interest of an Er, directly or
indirectly. The term does not include a labor
organization or any of its officers and agents, except
when acting as an Er [Art. 212(e), LC].
An Er is defined as any person or entity that employs
the services of others; one for whom work is doneand
who pays their wages of salaries; any person acting in
the interest of an Er; refers to the enterprise where the
labor organization operates or seeks to operate
[Sec.1(s), Rule I, Book V, IRR].
NOTE: The term employer is not restricted to business
owners alone because it includes any person as long as he
acts in the interest of the Er.
Instance when a labor organization is deemed an
employer
When it is acting as such in relation to persons
rendering services under hire, particularly in
connection with its activities for profit or gain.
NOTE: The mere fact that respondent is a labor union does
not mean that it cannot be considered an Er for persons who
work for it. Much less should it be exempted from labor laws
(Bautista v. Inciong, G.R. No. L-52824, March 16, 1988).
Employee
The term employee covers:
1. Any person in the employ of the Er
7 FACULTY OF CIVIL LAW
2. Any individual whose work has ceased as a result
of or in connection with any current labor dispute
or because of any unfair labor practice if he has
not obtained any other substantially equivalent
and regular employment
3. One who has been dismissed from work but the
legality of dismissal is being contested in a forum
of appropriate jurisdiction (D.O. No. 40-03).
NOTE: The term shall not be limited to the Ees of a particular
Er unless the LC explicitly states.
Any Ee, whether employed for a definite period or not, shall,
beginning on the first day of service, be considered an Ee for
purposes of membership in any labor union [Art. 277(c), LC].
Managerial employee
The person who is vested with the powers or
prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline Ees.
Supervisory employee
The person who effectively recommends such
managerial actions if the exercise of such authority is
not merely routinary or clerical in nature but requires
the use of independent judgment.
Rank-and-file employees
Those persons who are neither managerial nor
supervisory Ees are considered rank-and-file.
Labor dispute
A labor dispute includes any controversy or matter
concerning:
1. Terms and conditions of employment, or
2. The association or representation of persons in
negotiating, fixing, maintaining, changing or
arranging the terms and conditions of
employment
3. Regardless of whether the disputants stand in the
proximate relation of Er and Ee. [Art.212(l), LC]
Tests on whether a controversy is a labor dispute
1. As to nature It depends on whether the dispute
arises from Er-Ee relationship, although
disputants need not be proximately Er or Ee of
another.
2. As to subject matter The test depends on
whether it concerns terms or conditions of
employment or association or representation of
persons in negotiating, fixing, maintaining or
changing terms or conditions of employment.
UNIVERSITY OF SANTO TOMAS
 Labor Law and Social Legislation
Kinds of labor disputes
1. Labor standard disputes
a. Compensation E.g. Underpayment of
minimum wage; stringent output quota; illegal
pay deductions
b. Benefits E.g. Non-payment of holiday pay, OT
pay or other benefits
c. Working Conditions E.g. Unrectified work
hazards
2. Labor relations disputes
a. Organizational right disputes/ Unfair Labor
Practice (ULP) E.g. Coercion, restraint or
interference in unionization efforts; reprisal or
discrimination due to union activities; company
unionism; ULP, strike or lockout; union
members complaint against union officers
b. Representation disputes E.g. Uncertainty as to
which is the majority union; determination of
appropriate CB unit; contests for recognition by
different sets of officers in the same union
c. Bargaining disputes E.g. Refusal to bargain;
bargaining in bad faith; bargaining deadlock;
economic strike or lockout
d. Contract administration or personnel policy
disputes E.g. Non-compliance with CBA
provision (ULP if gross non-compliance with
economic provisions); disregard of grievance
machinery; non observance of unwarranted use
of union security clause; illegal or unreasonable
personnel management policies; violation of
no-strike/no-lockout agreement
e. Employment tenure disputes E.g. Non-
regularization of Ees; non-absorption of labor-
only contracting staff; illegal termination; non-
issuance of employment contract
Parties to a labor dispute
1. Primary parties are the Er, Ees and the union.
2. Secondary parties are the voluntary arbitrator,
agencies of DOLE, NLRC, SLE and the Office of the
President.
Inter-union dispute
Any conflict between and among legitimate labor
unions involving representation questions for the
purposes of CB or to any other conflict or dispute
between legitimate labor unions.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Intra-union dispute
Any conflict between and among union members,
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 from chartering
or affiliation of union.
Rights disputes
They are claims for violations of a specific right arising
from a contract, i.e. CBA or company policies.
Interest disputes
They involve questions on what should be included in
the CBA. Strictly speaking, the parties may choose a
voluntary arbitrator to decide on the terms and
conditions of employment, but this is impracticable
because it will be a value judgment of the arbitrators
and not of the parties.
Contractnegotiation disputes
These are disputes as to the terms of the CBA.
Contractinterpretation disputes
These are disputes arising under an existing CBA,
involving such matters as the interpretation and
application of the contract, or alleged violation of its
provisions.
Art. 255, Exclusive Bargaining Representation and
Workers Participation in Policy and Decision-
Making
Bargaining representative of the Ees for purposes of
collective bargaining
The labor organization designated or selected by the
majority of the Ees in an appropriate collective
bargaining unit shall be the exclusive representative of
the Ees in such unit for the purpose of CB. However,
an individual Ee or group of Ees shall have the right at
any time to present grievances to their Er (Art. 255, LC,
as amended by Sec. 22 of R.A. No. 6715, 1989).
Rule on solicitation of questions, suggestions and
complaints by the Er from the Ees who are
represented by a union
GR: The Er may not solicit questions, suggestions and
complaints from Ees who are represented by a union.
8
 FUNDAMENTAL PRINCIPLES AND POLICIES
XPN: Where the following requisites are met:
1. The CB representative executes an agreement
waiving the right to be present on any occasion when
Ee grievances are being adjusted by the Er; and
2. Er acts strictly within the terms of his waiver
agreement.
Q: The hotel union filed a Notice of Strike with the
National Conciliation and Mediation Board (NCMB)
due to an unfair labor practice against the Diamond
Hotel who refused to bargain with it. The hotel
advised the union that since it was not certified by
the DOLE as the exclusive bargaining agent, it could
not be recognized as such. The union sought to
bargain for members only. May the Union bargain
collectively?
A: No. Art. 255 of the LC declares that only the labor
organization designated or selected by the majority of
the Ees in an appropriate CB unit is the exclusive
representative of the Ees in such unit for the purpose
of CB. The union is admittedly not the exclusive
representative of the majority of the Ees of the hotel,
hence, it could not demand from the hotel the right to
bargain collectively in their behalf (Manila Diamond
Hotel v. Manila Diamond Hotel Ees Union, G.R. No.
158075, June 30, 2006).
Principle of Codetermination (2007 Bar Question)
It refers to the right of workers to participate in policy
and decision-making process affecting their rights and
benefits (PAL v. NLRC, G.R. No. 85985, August 13,
1993; Sec. 3, Art. XIII, 1987 Constitution).
Extent of the workers right to participate in policy
and decision-making processes in a company
Such right refers not only to formulation of corporate
programs and policies but also to participation in
grievance procedures and voluntary modes of settling
disputes.
Q: Does the workers right to participate in policy and
decision-making process as provided under Art. XIII,
Sec. 13 of the 1987 Constitution include membership
in the Board of Directors of a corporation? (2008 Bar
Question)
A: No, such is not included. The SC recognized the right
of the union to participate in policy formulation and
decision-making process on matters affecting the
union members rights, duties and welfare. However,
such participation of the union in committees of the Er
is not in the nature of a co-management control of the
business. Impliedly, therefore, workers participatory
9 FACULTY OF CIVIL LAW
right in policy and decision-making processes does not
include the right to put a union member in
acorporations Board of Directors (Manila Electric
Company v. Quisumbing, G.R. No. 127598, January 27,
1999).
Q: May the management be compelled to share with
the union or its employees its prerogative of
formulating a Code of Discipline?
A: Yes, the management may be compelled to do so.
The Code of Discipline involves security of tenure and
loss of employment a property right. It is time that
management realizes that to attain effectiveness in its
conduct rules, there should be candidness and
openness by Management and participation by the
union, representing its members. In fact, our
Constitution has recognized the principle of shared
responsibility between Ers and workers and has
likewise recognized the right of workers to participate
in policy and decision-making process affecting their
rights (PAL v. NLRC, G.R. No. 85985, August 13. 1993).
Art. 277, Miscellaneous Provisions
Right to security of tenure
It connotes that no worker shall be dismissed upon
employment without cause and without due process.
Burden of proving the existence of a valid or
authorized cause of termination
The Er has the burden of proof in proving that the
termination was for a valid or authorized cause. The
existence of a just or authorized cause for dismissal
cannot be presumed. A contrary rule would
contravene the constitutional policy of affording
protection to the worker (Art. 277, LC).
Workers right to notice and hearing prior to
dismissal
Art. 277 (b) of the LC provides that:
1. The Er shall furnish the Ee whose employment is
sought to be terminated a written notice
containing a statement of the causes for
termination; and
2. Afford the Ee ample opportunity to be heard and
to defend himself
NOTE: In connection with dismissals for authorized causes,
the Er must serve a written notice upon the worker and the
DOLE at least 1 month before the intended date of
termination (Art. 283, LC).
UNIVERSITY OF SANTO TOMAS
 Labor Law and Social Legislation

Purpose of notice and hearing Rule with regard to establishments where no

legitimate labor organizations exists to preserve
The twin requirement of notice and hearing industrial peace
constitutes essential elements of due process in cases
of Ee dismissal. The requirement of notice is intended Labor management committees may be formed
voluntarily by workers and Ers for the purpose of
to inform the Ee concerned of the Ers intent to dismiss
promoting industrial peace [Art. 277(h), LC, as ameded
and the reason for the proposed dismissal, upon the by Sec. 33, R.A. 6715].
other hand, the requirement of hearing affords the Ee
opportunity to answer his Ers charges against him and
accordingly to defend himself therefrom before
dismissal is effected. Neither of these two
requirements can be dispensed with without running
a foul of the due p process requirement of the 1987
process requirement of the 1987 Constitution (Century
Textile Mills, Inc., et al. v. NLRC, et al. G.R. No. 77859,
May 25, 1988).

Q: May the Er be allowed to dismiss an Ee and let him

explain later?

A: No, the Er may not do so. While the procedure laid

down by the law for the dismissal of an Ee need not be
observed to the letter of the law, at least it must be
done in the natural sequence of notice, hearing and
judgment. Dismissing the Ee and let him explain later
is not in accord with the requirement of due process
(Batangas Laguna Tayabas Bus Co. v. NLRC, et al. G.R.
No. 94429, May 29, 1992).

Circumstances where the termination of Ees may be

suspended by the SLE

The SLE may suspend the effects of the termination in

the event of a prima facie finding by the appropriate
official of the DOLE before whom such dispute is
pending that the termination may cause a serious
labor dispute or is in implementation of a mass lay-off
[Art. 277(b), as amended by Sec. 33, R.A 6715].

Labor organizations responsibility with regard the

preservation of industrial peace

The Ministry shall help promote and gradually

develop, with the agreement of labor organizations
and Ers, labor-management cooperation programs at
appropriate levels of the enterprise based on the
shared responsibility and mutual respect in order to
ensure industrial peace and improvement in
productivity, working conditions and the quality of
working life [Art. 277(g), LC, incorporated by B.P Blg.
130].

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 10
 FUNDAMENTAL PRINCIPLES AND POLICIES

RECRUITMENT AND PLACEMENT XPNs:

1. Construction contractors if authorized by the
RECRUITMENT OF LOCAL AND MIGRANT WORKERS DOLE and Construction Industry Authority
2. Other persons or entities as may be
Worker authorized by the SLE
3. Members of the diplomatic corps (but hiring
Any member of the labor force, whether employed or must go through POEA)
unemployed [Art. 13 (a), LC]. 4. Public employment offices
5. Private recruitment offices
Recruitment and placement 6. Private employment agencies
7. POEA
1. Any act of canvassing, enlisting, contracting, 8. Shipping or manning agents or
transporting, utilizing, hiring or procuring representatives
workers; and 9. Name hires [Sec. 1(i) of Rule II, Omnibus Rules
2. Includes referrals, contact services, promising or and Regulations implementing the Migrant
advertising for employment, locally or abroad, Workers and Overseas Filipinos Act of 1995 as
whether for profit or not [Art. 13 (b), LC]. amended by R.A. 10022]

Essential elements in determining whether one is
engaged in recruitment and placement
It must be shown that:
1. The accused gave the complainant the distinct
impression that he had the power or ability to
send the complainant for work,
2. Such that the latter was convinced to part with his
money in order to be so employed (People v.
Goce, G.R. No. 113161, August 29, 1995).
NOTE: Name hires - They are individual
workers who are able to secure contracts for
overseas employment opportunities with Ers
without the assistance or participation of any
agency (Rule II, Omnibus Rules and
Regulations implementing the Migrant
Workers and Overseas Filipinos Act of 1995 as
amended by R.A. 10022).
Private employment agency

Persons deemed engaged in recruitment and
placement
Any person or entity which, in any manner, offers or
promises for a fee employment to 2 or more persons
(Art. 13[b], LC).
Any person or entity engaged in the recruitment and
placement of workers for a fee which is charged,
directly or indirectly, from the workers or Ers or both
(Art. 13, LC).
Private recruitment agency

Constitution of recruitment and placement It is any person or association engaged in the

Regardless of the number of persons dealt with,
recruitment and placement is still constituted. The
proviso merely lays down a rule of evidence that
where a fee is collected in consideration of a promise
or offer of employment to 2 or more prospective
workers, the individual or entity dealing with them
shall be deemed to be engaged in the act of
recruitment and placement. The words "shall be
deemed" create that presumption (People v. Panis,
G.R. L-58674-77 July 11, 1986).
Persons or entities that may engage in recruitment
and placement
GR: No person or entity other than the public
employment offices, shall engage in the recruitment
and placement of workers.
recruitment and placement of workers without
charging any fee, directly or indirectly, from the
workers or Ers.
Overseas employment
It is the employment of a worker outside the
Philippines.
Overseas Filipino Worker (OFW)
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. [Sec.
(jj), Rule II, Omnibus Rules and Regulations

UNIVERSITY OF SANTO TOMAS

11 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Implementing Migrant Workers Act as amended by
R.A. 10022 (2010)]
NOTE: The term OFW is to be used interchangeably with
migrant worker as provided in R.A. 10022.
Seafarer
Refers to any person who is employed or engaged in
overseas employment in any capacity on board a ship
other than a government ship used for military or non-
commercial purposes. The definition shall include
fishermen, cruise ship personnel and those serving on
mobile offshore and drilling units in the high seas [Sec.
1(ss), Rule II, Omnibus Rules and Regulations
Implementing Migrant Workers Act as amended by
R.A. 10022 (2010)].
Emigrant
Any person, worker or otherwise, who emigrates to a
foreign country by virtue of an immigrant visa or
resident permit or its equivalent in the country of
destination (Art. 13, LC).
EMPLOYMENT OF NON-RESIDENT ALIENS
Employment of non-resident aliens
Non-residents alien may be hired if an employment
permit is issued to a non-resident alien or to the
applicant employer after a:
1. Determination of the non-availability of a person
in the Philippines who is competent,
2. Able and willing at the time of application to
perform the services for which the alien is desired.
Requirements in employment of non-resident aliens
Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign Er
who desires to engage an alien for employment in the
Philippines:
1. Shall obtain an employment permit from the
DOLE
2. The permit may be issued to a non-resident alien
or to the applicant Er after a determination of the
non-availability of a person in the Philippines who
is competent, able and willing at the time of
application to perform the services for which the
alien is desired
3. For an enterprise registered in preferred areas of
investments, said permit may be issued upon
recommendation of the Government agency
charged with the supervision of said registered
enterprise
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Q: The DOLE issued an alien employment permit for
Earl Cone, a U.S. citizen, as sports consultant and
assistant coach for GMC. Later, the Board of Special
Inquiry of the Commission on Immigration and
Deportation approved Cones application for a
change of admission status from temporary visitor to
pre-arranged employee. A month later, GMC
requested that it be allowed to employ Cone as full-
fledged coach. The DOLE Regional Director granted
the request. The Basketball Association of the Phils.
appealed the issuance of said permit to the SLE who
cancelled Cones employment permit because GMC
failed to show that there is no person in the
Philippines who is competent and willing to do the
services nor that the hiring of Cone would redound to
the national interest. Is the act of the SLE valid?
A: Yes. GMCs claim that hiring of a foreign coach is an
Ers prerogative has no legal basis. Under Art. 40 of the
LC, an Er seeking employment of an alien must first
obtain an employment permit from the DOLE. GMCs
right to choose who to employ is limited by the
statutory requirement of an employment permit (GMC
v. Torres, G.R. No. 93666, April 22, 1991).
PROHIBITION AGAINST TRANSFER OF EMPLOYMENT
Requirement for immigrants and resident aliens
It is required for immigrants and resident aliens to
secure an Alien Employment Registration Certificate.
Duration of the employment permit
GR: Minimum of 1 year
XPN: If the employment contract, consultancy
services, or other modes of engagement provides
otherwise, which in no case shall exceed 5 years [DOLE
D.O. 97-09, Revised Rules for the Issuance of
Employment Permits to Foreign Nationals (2009)].
Persons required to obtain employment permit
GR: Only non-resident aliens;
XPNs:
1. Diplomatic services and foreign government
officials;
2. Officers and staff of international organizations
and their legitimate spouses;
3. Members of governing board who has voting
rights only;
4. Those exempted by special laws;
12
 RECRUITMENT AND PLACEMENT
5. Owners and representatives of foreign principals
who interview Filipino applicants for employment
abroad;
6. Aliens whose purpose is to teach, present and/or
conduct research studies;
7. Resident aliens (D.O. 75-06).
Employment of aliens in entities engaged in
nationalized activities
GR: Aliens may not be employed in entities engaged in
nationalized activities
XPNs:
1. Secretary of Justice specifically authorizes the
employment of technical personnel;
2. Aliens are elected members of the board of
directors or governing body of corporations or
associations engaging in partially nationalized
activities shall be allowed in proportion to their
allowable participation or share in the capital of
such entities [Section 2-A of Anti-Dummy Law, as
amended by P.D. 715]; or
3. Enterprises registered under the Omnibus
Investment Code in case of technical, supervisory
or advisory positions, but for a limited period.
Transfer/change of employment of a non-
resident alien after the issuance of the
employment permit
After the issuance of an employment permit, the alien
shall not transfer to another job or change his Er
without prior approval of the SLE.
PRIVATE SECTOR PARTICIPATION IN THE
RECRUITMENT AND PLACEMENT OF WORKERS
Entities in the private sectors that can participate in
recruitment and placement of workers
1. Shipping or manning agents or representatives
2. Private recruitment offices
3. Public employment offices
4. Construction contractors if authorized by the
DOLE and Construction Industry Authority.
5. Persons that may be authorized by the SLE
6. Private employment agencies (Sec. 1, Rule VII,
Book I, IRR of the LC).
Requirements for participation in recruitment and
placement of workers
1. Filipino citizens, or partnerships or corporations
with at least 75% of the authorized capital stock is
13
owned and controlled by Filipino citizens; (Art. 27,
LC)
2. Capitalization
a. Single proprietorship or partnership
-A minimum capitalization of P2 million
b. Corporation
-A minimum paid-up capital of P2 million
Provided,that those with existing licenses shall,
within 4 yrs. from the effectivity hereof, increase
their capitalization or paid up capital, as the case
may be, to P2 million at the rate of Php 250,000.00
every year (Art. 28, LC).
3. Not otherwise disqualified by law or other
government regulations to engage in the
recruitment and placement of workers for
overseas employment (Rule I, Part II, POEA Rules).
4. Payment of registration fees
5. Posting of surety/cash bonds
Regulation of the private sectors participation in the
recruitment and overseas placement of workers
The government regulates the participation of the
private sector in recruitment and overseas placement
of workers by setting up a licensing and registration
system (Sec. 14, R.A. 10022).
Q: Is a corporation, 70% of the authorized and voting
capital of which is owned and controlled by Filipino
citizens, allowed to engage in the recruitment and
placement of workers, locally or overseas? Explain
briefly. (2002 Bar Question)
A: No. It is because Art. 27 of the LC requires at least
75%.
Persons and entities disqualified to engage in the
business of recruitment and placement of workers
1. Travel agencies and sales agencies of airline
companies; (Art. 26, LC)
2. Officers or members of the board of any
corporation or members in a partnership engaged
in the business of a travel agency;
3. 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;
4. Persons, partnerships or corporations which have
derogatory records, such as but not limited to
those:
a. Certified to have derogatory record or
information by the NBI or by the Anti-Illegal
Recruitment Branch of the POEA;
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

b. Against whom probable cause or prima facie FEES TO BE PAID BY WORKERS

finding of guilt for illegal recruitment or other
related cases exists; Instances when a worker may be charged
c. Convicted for illegal recruitment or other
related cases and/or crimes involving moral Only when:
turpitude; and 1. He has obtained work through recruiters efforts,
d. Agencies whose licenses have been and
previously revoked or cancelled by the POEA 2. The worker has actually commenced working.
for violation of R.A. 8042, P.D. 442 as
amended and their IRRs. NOTE: A land-based agency may charge and collect from its
hired workers a placement fee in an amount equivalent to 1
5. Any official or Ee of the DOLE, POEA, OWWA, DFA month salary, exclusive of documentation costs (Sec. 3, Rule
V, POEA Rules and Regulations).
and other government agencies directly involved
in the implementation of R.A. 8042 and/or any of
his/her relatives within the 4th civil degree of Authorized payments that may be collected from a
consanguinity or affinity; and hired worker
6. Persons or partners, officers and directors of
corporations whose licenses have been previously 1. Placement fee in an amount equivalent to one
cancelled or revoked for violation of recruitment months salary of the worker, and
laws (Sec. 2, Rule I, 2002 Rules and Regulations on 2. Documentation costs (Sec. 3, Rule V, POEA Rules
the Recruitment and Employment of Land-Based and Regulations)
Workers).
ILLEGAL RECRUITMENT, ART. 38 (LOCAL), SEC. 6,
TRAVEL AGENCIES PROHIBITED FROM MIGRANT WORKERS ACT, R.A. 8042
RECRUITMENT AND PLACEMENT
Prohibited practices in recruitment or placement
Prohibition on travel agencies and sales agencies of
airline companies to recruit 1. Furnishing or publishing any falsie
notice/information/document related to
They are prohibited from engaging in the business of recruitment/employment
recruitment and placement of workers for overseas 2. Failure to file reports required by SLE
employment whether for profit or not. 3. Inducing or attempting to induce a worker
already employed to quit his employment in
Q: WTTA is a well-known travel agency and an order to offer him another unless the transfer is
authorized sales agent of the PAL. Since majority of designed to liberate a worker from oppressive
its passengers are overseas workers, WTTA applied terms and conditions
for a license for recruitment and placement activities. 4. Recruitment/placement of workers in jobs
It stated in its application that its purpose is not for harmful to public health or morality or to the
profit but to help Filipinos find employment abroad. dignity of the country
Should the application be approved? (2006 Bar 5. Engaging directly or indirectly in the
Question) management of a travel agency
6. Substituting or altering employment contracts
A: No. The application should be disapproved, as it is without approval of DOLE
prohibited by Art. 26 of the LC, to wit: "Art. 26. Travel 7. Charging or accepting any amount greater than
agencies and sales agencies of airline companies are that specified by DOLE or make a worker pay any
prohibited from engaging in the business of amount greater than actually received by him
recruitment and placement of workers for overseas 8. Committing any act of misrepresentation to
employment whether for profit or not." Rule I, Part II secure a license or authority
POEA Rules and Regulations Governing the 9. Influencing or attempting to influence a
Recruitment and Employment of Land-Based Workers person/entity not to employ any worker who has
(2002) disqualifies any entity having common director not applied employment through his agency
or owner of travel agencies and sales agencies of 10. Obstructing or attempting to obstruct inspection
airlines, including any business entity from the by SLE or by his representatives
recruitment and placement of Filipino workers 11. Withholding or denying travel documents from
overseas, whether they derive profit or not. applicant workers before departure for
monetary considerations other than authorized
by law

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 14
 RECRUITMENT AND PLACEMENT

12. Granting a loan to an overseas Filipino worker 1. Failure to actually

with interest exceeding eight percent (8%) per deploy without
annum, which will be used for payment of legal valid reason;
and allowable placement fees and make the 2. Failure to reimburse
migrant worker issue, either personally or expenses incurred
through a guarantor or accommodation party, by the worker in
postdated checks in relation to the said loan connection with
13. Refusing to condone or renegotiate a loan his/her
incurred by an OFW after his employment documentation and
contract has been prematurely terminated processing for
through no fault of his or her own purposes of
14. For a suspended recruitment/manning agency to deployment;
engage in any kind of recruitment activity To allow a non-Filipino
including the processing of pending workers citizen to head or
applications; and manage a licensed
15. For recruitment/manning agency or a foreign recruitment/ manning
principal/Er to pass on the OFW or deduct from agency.
his or her salary the payment of the cause of
fees, premium or other insurance related Persons prohibited from engaging in the business of
charges, as provided under the compulsory recruiting migrant workers
workers insurance coverage
16. Imposing a compulsory and exclusive 1. It is unlawful for any official or Ee of the following
arrangement whereby an OFW is required to: agencies to engage in recruiting migrant workers:
a. Avail a loan only from specifically designated a. DOLE
institutions, or entities or persons b. POEA
b. To undergo health examinations only from c. Overseas Workers Welfare Administration
specifically designated medical, entities or (OWWA)
persons, except seafarers whose medical d. DFA
examination cost is shouldered by the ship e. Other Government agencies involved in the
owner implementation of R.A. 8042
c. To undergo training of any kind only from
designated institutions, entities or persons, 2. The relatives within the 4th civil degree of
except for recommendatory trainings consanguinity or affinity of such official or Ee are
mandated by principals/shipowners (Sec. 6, also prohibited from engaging directly or
R.A. 8042, Migrant Workers and Overseas indirectly in the business of recruiting migrant
Filipino Act, as amended by R.A. 10022). workers (Sec. 8, R.A. 8042).

Difference between the prohibited acts under LC and LICENSE v. AUTHORITY

R.A. 8042 or the Overseas Filipinos and Overseas
Migrant Workers Act, as amended by R.A. 10022 License requirement

LC R.A. 8042, as amended The business of recruitment and replacement is

by RA 10022 regulated by law by requiring them to obtain license
1. Illegal recruitment Illegal recruitment and authority.
Art.38 under Sec. 6 means any
2. Prohibited acts recruitment activity License
under Art.34 of LC committed by non-
licensees/ non-holders A document issued by DOLE authorizing a person or
of authority or entity to operate a private employment agency.
prohibited acts (same as
Art. 34, LC) Authority

Added to the following A document issued by the DOLE authorizing a person

in the list of prohibited or association to engage in recruitment and placement
acts: activities as a private recruitment entity.

UNIVERSITY OF SANTO TOMAS

15 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Persons who may be issued license and authority
1. Natural persons Must be a Filipino
2. Artificial persons 75% of the capital and voting
stock of which is owned and controlled by Filipino.
Non-licensee / non-holder of authority
Any person, corporation or entity:
1. Which has not been issued a valid license or
authority to engage in recruitment and placement
by the SLE, or
2. Whose license or authority has been suspended,
revoked or cancelled by the POEA or the SLE
Non-transferability of license or authority
License or authority are non-transferable (Art. 29, LC).
License or authority is granted on the basis of personal
qualifications of the grantee. Thus, it is beyond the
commerce of man.
Q: A recruitment and placement agency declared
voluntary bankruptcy. Among its assets is its license
to engage in business. Is the license of the bankrupt
agency an asset which can be sold in public auction
by the liquidator? (1998 Bar Question)
A: No, because of the non-transferability of the license
to engage in recruitment and placement. The LC (Art.
29) provides that no license to engage in recruitment
and placement shall be used directly or indirectly by
any person other than the one in whose favor it was
issued nor may such license be transferred, conveyed
or assigned to any other person or entity. It may be
noted that the grant of a license is a governmental act
by the DOLE based on personal qualifications, and
citizenship and capitalization requirements (Arts.27-
28, LC).
NOTE: Change of ownership or relationship of a single
proprietorship licensed to engage in overseas employment
shall cause the automatic revocation of the license.
ESSENTIAL ELEMENTS OF ILLEGAL RECRUITMENT
Illegal recruitment
Illegal recruitmen is defined by law as any recruitment
activities undertaken by non-licenses or non-holders
of authority (People v. Senoron, G.N. No. 119160,
January 30, 1997).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Elements of illegal recruitment
1. Offender is a non-licensee or non-holder of
authority to lawfully engage in the
recruitment/placement of workers.
2. Offender undertakes:
a. Any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring
workers and includes referring, contract
services, promising or advertising for
employment abroad, whether for profit or
not [Art. 13(f), as amended by R.A. 10022] ; or
b. Any of prohibited practices under Art. 34 of
the LC.
3. For complex illegal recruitment, an additional
element that the offender commits the act against
three or more persons, individually, or as a group
(People v. Baytic, G.R. No. 150530, February 20,
2003) or there are three or more offenders.
Kinds of illegal recruitment
1. Simple Illegal Recruitment
2. Complex Illegal Recruitment
Persons liable for illegal recruitment
Any person (whether non-licensee, non-holder of
authority, licensee or holder of authority) who
commits any of the prohibited acts, shall be liable for
Illegal recruitment (R.A. 8042, as amended by R.A.
10022).
Way to prove illegal recruitment
It must be shown that the accused gave the distinct
impression that he had the power or ability to send
complainants abroad for work such that the latter
were convinced to part with their money in order to
be deployed (People v. Fortuna, 395 SCRA 353).
Q: Larry Domingo was accused of the crime of illegal
recruitment. He argued that he issued no receipt or
document in which he acknowledged as having
received any money for the promised jobs. Hence, he
should be free from liability. Was Larry engaged in
recruitment activities?
A: Yes. Even if at the time Larry was promising
employment no cash was given to him, he is still
considered as having been engaged in recruitment
activities, since Art. 13(b) of the LC states that the act
of recruitment may be for profit or not. It suffices that
Larry promised or offered employment for a fee to the
complaining witnesses to warrant his conviction for
16
 RECRUITMENT AND PLACEMENT

illegal recruitment (People v. Domingo, G.R. No. interested to pursue the case against her. Resolve the
181475, April 7, 2009). case with reasons. (2005 Bar Question)

SIMPLE ILLEGAL RECRUITMENT A: Maryrose is guilty of large scale illegal recruitment.

It is large scale illegal recruitment when the offense is
Simple illegal recruitment committed against 3 or more persons, individually or
as a group [Art. 38(b), LC]. In view of the above, her
It is the violation of Arts. 13(b) and 34 of the LC defense of good faith and the Affidavit of Desistance
involving less than three recruiters or victims. as well as the refund given will not save her because
R.A. 8042 is a special law, and illegal recruitment is
Complex illegal recruitment malum prohibitum (People v. Saulo, G.R. No. 125903,
November 15, 2000).
It is the violation ofArts. 13(b) and 34 of the LC
involving at least three recruiters or victims. It may ILLEGAL RECRUITMENT AS ECONOMIC SABOTAGE
either be:
1. Committed by a syndicate; or Illegal recruitment as economic sabotage
2. In large Scale
Article 38 (b) of LC, as amended by Pd 2018
ILLEGAL RECRUITMENT IN LARGE SCALE
(SEC. 6, R.A. 10022) It is economic sabotage when complex illegal
recruitment is committed, such that it is syndicated or
Illegal recruitment in large scale done in a large scale.

Illegal recruitment in large scale is committed against Illegal recruitment v. Estafa

three or more persons individually or as a group.
ILLEGAL RECRUITMENT ESTAFA
Illegal recruitment committed by a syndicate Malum in se, thus:
Malum prohibitum, thus:
1.Criminal intent is
1. Criminal intent is not
Illegal recruitment is committed by a syndicate if it was necessary
necessary
carried out by a group of three or more persons 2. It is a crime which
2. It is a crime which
conspiring or confederating with one another. involves moral
involves moral turpitude
turpitude
NOTE: Illegal recruitment in large scale pertains to the It is not required that it be Accused defrauded
number of victims while syndicated illegal recruitment shown that the recruiter another by abuse of
pertains to the number of recruiters.
wrongfully represented confidence, or by
himself as a licensed means of deceit
Q: While her application for renewal of her license to
recruiter
recruit workers for overseas employment was still NOTE: It is essential
pending, Maryrose Ganda recruited Alma and her 3 NOTE: It is enough that the that the false
sisters, Ana, Joan, and Mavic, for employment as victims were deceived as they statement or
housemates in Saudi Arabia. Maryrose represented relied on the fraudulent
to the sisters that she had a license to recruit workers misrepresentation and representation
for overseas employment and demanded and scheme that caused them to constitutes the very
received P30,000.00 from each of them for her entrust their money in cause or the only
services. Her application for the renewal of her exchange of what they later motive which induces
discovered was a vain hope of the complainant to part
license, however, was denied, and consequently
obtaining employment with the thing of value.
failed to employ the four sisters in Saudi Arabia. The
abroad.
sisters charged Maryrose with large scale illegal
Illegal recruitment and estafa cases may be filed
recruitment. Testifying in her defense, she declared
simultaneously or separately. The filing of charges
that she acted in good faith because she believed that
for illegal recruitment does not bar the filing of
her application for the renewal of her license would
estafa, and vice versa.
be approved. She adduced in evidence the Affidavits
Double jeopardy will not set in.
of Desistance which the four private complainants
had executed after the prosecution rested its case. In
Q: Bugo, by means of false pretenses and fraudulent
the said affidavits, they acknowledge receipt of the
representation, convinced Dado to give the amount
refund by Maryrose of the total amount of Php
of Php 120,000.00 for processing the latters papers
120,000.00 and indicated that they were no longer

UNIVERSITY OF SANTO TOMAS

17 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
so that he can be deployed to Japan. Dado later on
found out that Bugo had misappropriated,
misapplied and converted the money to her own
personal use and benefit. Can Dado file the cases of
illegal recruitment and estafa simultaneously?
A: Yes. Illegal recruitment and estafa cases may be
filed simultaneously or separately. The filing of charges
for illegal recruitment does not bar the filing of estafa,
and vice versa. Bugos acquittal in the illegal
recruitment case does not prove that she is not guilty
of estafa. Illegal recruitment and estafa are entirely
different offenses and neither one necessarily includes
or is necessarily included in the other. A person who is
convicted of illegal recruitment may, in addition, be
convicted of estafa under Art. 315, par. 2(a) of the RPC.
In the same manner, a person acquitted of illegal
recruitment may be held liable for estafa. Double
jeopardy will not set in because illegal recruitment is
malum prohibitum, in which there is no necessity to
prove criminal intent, whereas estafa is malum in se,
in the prosecution of which, proof of criminal intent is
necessary (Sy v. People, G.R. No. 183879, April 14,
2010).
LIABILITIES
LOCAL RECRUITMENT AGENCY
Liability of the local recruitment agency
A Local Recruitment Angency shall be jointly and
solidarily liable with its principal or foreign-based Er
for any violation of the recruitment agreement and
violation of contracts of employment [Sec. 10(a)(2)
Rule V, Book I, IRR].
Liability of corporate officers, directors or partners if
the recruitment/ placement agency is a juridical
being
If the recruitment/placement agency is a juridical
being, the corporate officers, directors or partners as
the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for
the claims and damages (Becmen Service Exporter and
Promotion v. Cuaresma, G.R. Nos. 182978-79, April 7,
2009).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Remedies under the Migrant Workers Act and how
may they be enforced
CRIMINAL ACTIONS
RTC
Province or city:
1. Where the offense was committed or
2. Where the offended party actually resides at the
same time of the commission of the offense
MONEY CLAIMS
NLRC
Original and exclusive jurisdiction to hear and
decide claims arising out of an Er-Ee 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 liability of the principal/ Er and the
recruitment/ placement agency for any and all
claims shall be joint and several.
The performance bond to be filed by the
recruitment/ placement agency shall be
answerable for all money claims or damages that
may be awarded to the workers.
If the recruitment/placement agency is a juridical
being, the corporate officers and directors and
partners as the case may be, shall themselves be
jointly and solidarily liable with the corporation or
partnership for the claims and damages.
ADMINISTRATIVE ACTIONS
POEA
Original and exclusive jurisdiction to hear and
decide:
1. All cases which are administrative in character,
involving or arising out of violations of rules and
regulations relating to licensing and registration
of recruitment and employment agencies or
entities and
2. Disciplinary action cases and other special cases
which are administrative in character, involving
Ers, principals, contracting partners and Filipino
migrant workers.
a. It may be filed with the POEA Adjudication
Office or the DOLE/POEA regional office of the
place where the complaint applied or was
recruited at the option of the complainant.
The office with which the complaint was first
filed shall take cognizance of the case.
b. DA cases and other special cases, as
mentioned in the preceding Section, shall be
filed with POEA Adjudication Office.
18
 RECRUITMENT AND PLACEMENT
Compromise agreement on money claims
A compromise agreement on money claim is allowed.
This is consistent with the policy encouraging amicable
settlement of labor disputes. Sec. 10 of R.A. 8042
allows resolution by compromise of cases filed with
the NLRC.
Period as to when such compromise agreements shall
be made
Any compromise/amicable settlement or voluntary
agreement on money claims inclusive of damages shall
be paid within four months from the approval of the
settlement by the appropriate authority.
Overtime and leave pay are not included in the
computation of the monetary award
The word salaries in Sec. 10(5) of the LC does not
include OT and leave pay. For seafarers, DO No. 33,
series of 1996, provides a Standard Employment
Contract of Seafarers, in which salary is understood as
the basic wage, exclusive of OT, leave pay and other
bonuses; whereas OT pay is compensation for all work
performed in excess of the regular 8 hours, and
holiday pay is compensation for any work performed
on designated rest days and holidays (Serrano
v.Gallant Maritime Services & Marlow Navigation Co.,
Inc., G.R. No.167614, March 24, 2009).
FOREIGN EMPLOYER
THEORY OF IMPUTED KNOWLEDGE
A rule in insurance law 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 so far as the transaction is
concerned, even though in fact the knowledge is not
communicated to the principal at all (Leonor v.
Filipinas Compania, 48 OG 243).
Q: Sunace International Management Services
(Sunace), deployed to Taiwan Montehermozo as a
domestic helper under a 12-month contract effective
Feb. 1, 1997. The deployment was with the
assistance of a Taiwanese broker, Edmund Wang,
President of Jet Crown International Co., Ltd. After
her 12-month contract expired on Feb. 1, 1998,
Montehermozo continued working for her Taiwanese
employer for two more years, after which she
returned to the Philippines on Feb. 4, 2000. Shortly
after her return she file before the NLRC against
Sunace, one Perez, the Taiwanese broker, and the
19
employer-foreign principal alleging that she was
jailed for three months and that she was underpaid.
Should Sunace be held liable for the underpayment
for the additional two years that she worked for her
Taiwanese employer under the theory of imputed
knowledge?
A: No, the theory of imputed knowledge ascribes the
knowledge of the agent, Sunace, to the principal
Taiwanese Er, not the other way around. The
knowledge of the principal-foreign Er cannot,
therefore, be imputed to its agent Sunace.
There being no substantial proof that Sunace knew of
and consented to be bound under the 2-year
employment contract extension, it cannot be said to
be privy thereto. As such, it and its owner cannot be
held solidarily liable for and of Montehermozos claims
arising from the 2-year employment extension
(Sunace v. NLRC, G.R. No. 161757, January 25, 2006).
SOLIDARY LIABILITY
Liability of the private employment agency and the
principal or foreign-based employer
They are jointly and solidarily liable for any violation of
the recruitment agreement and the contracts of
employment.
NOTE: This joint and solidary liability imposed by law against
recruitment agencies and foreign Ers is meant to assure the
aggrieved worker of immediate and sufficient payment of
what is due him (Becmen Service Exporter and Promotion v.
Cuaresma, G.R. Nos. 182978-79, April 7, 2009).
Absence of employment contract, special power of
attorney and affidavit of responsibility, as required
by the POEA rules and regulations to the private
employment agency and the principal
Non-compliance with POEA Rules and Regulations
cannot be utilized to relieve the agency and its
principal from liabitliy. In fact, such non-compliance is
a ground for the cancellation or suspension of their
license (Hornales v. NLRC, et al., G.R. No. 118934,
September 10, 2001).
PRETERMINATION OF CONTRACT OF
MIGRANT WORKER
Employees compensation in case of premature
termination of contract
A worker dismissed from overseas employment
without just, valid or authorized cause as defined by
law or contract is entitled to full reimbursement of his
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
placement fee with interest at 12% per annum, plus his
salary for the unexpired portion of his employment
contract or for three months for every year of the
unexpired term, whichever is less (Sec. 7, R.A. 10020,
2010).
Basis in computing an employees compensation in
case of premature termination of contract
The Migrant Workers Act provides that salaries for the
unexpired portion of the employent contract or three
months for every year of the unexpired term,
whichever is less, shall be awarded to the overseas
Filipino worker, in cases of illegal dismissal. In Serrano
v. Gallant Maritime Services (G.R. No. 167614, March
24, 2009) however, the clause or for three months for
every year of the unexpired term, whichever is less is
declared unconstitutional and awarded the entire
unexpired portion of the employment contract to the
overseas Filipino worker.
Nonetheless, Sec. 7 of R.A. 10022 amended Sec. 10 of
the Migrant Workers Act, and once again reiterated
the provision of awarding the unexpired portion of the
employent contract or three months for every year of
the unexpired term, whichever is less (Skippers United
Pacific, Inc. v. Doza, et. al, G.R. No. 175558, February
8, 2012).
The declaration in March 2009 of the
unconstitutionality of the clause or for three months
for every year of the unexpired term, whichever is
less in RA 8042 shall be given retroactive effect to the
termination that occurred in January 1999 because an
unconstitutional clause in the law confers no rights,
imposes no duties and affords no protection. The
unconstitutional provision is inoperative, as if it was
not passed into law at all (Yap v. Thenamaris Ships
Management and Intermare Maritime Agencies, Inc.,
G.R. No. 179532, May 30, 2011).
Q: Serrano, a seafarer, was hired by Gallant Maritime
and Marlow Navigation Co. for 12 months as Chief
Officer. On the date of his departure, he was
constrained to accept a downgraded employment
contract for the position of Second Officer, upon the
assurance that he would be made Chief Officer after
a month. It was not done; hence, he refused to stay
on as Second Officer and was repatriated to the Phils.
He had served only 2 months & 7 days of his contract,
leaving an unexpired portion of 9 months & 23 days.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Serrano filed with the LA a Complaint against Gallant
Maritime and Marlow for constructive dismissal and
for payment of his money claims. The LA rendered a
favorable decision to Serrano awarding him
$8,770.00, representing his salary for 3 months of
the unexpired portion of his contract of
employment applying R.A. 8042, Sec 10, par. 5:
Money Claims. - In case of termination of
overseas employment without just, valid
or authorized cause as defined by law or
contract, the workers shall be entitled to
the full reimbursement of his placement
fee with interest of 12% per annum, plus
his salaries for the unexpired portion of his
employment contract or for 3 months for
every year of the unexpired term,
whichever is less.
Is the subject clause constitutional?
A: No. The subject clause contains a suspect
classification in that, in the computation of the
monetary benefits of fixed-term Ees who are illegally
discharged, it imposes a 3-month cap on the claim of
OFWs with an unexpired portion of one year or more
in their contracts, but none on the claims of other
OFWs or local workers with fixed-term employment.
The subject clause singles out one classification of
OFWs and burdens it with a peculiar disadvantage.
The clause is a violation of the right of Serrano and
other OFWs to equal protection and right to
substantive due process, for it deprives him of
property, consisting of monetary benefits, without any
existing valid governmental purpose.
Furthermore, prior to R.A. 8042, all OFWs, regardless
of contract periods or the unexpired portions thereof,
were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their
claims were subjected to a uniform rule of
computation: their basic salaries multiplied by the
entire unexpired portion of their employment
contracts. The same applies local workers with fixed-
term employment.
Thus, Serrano is entitled to his salaries for the entire
unexpired period of nine months and 23 days of his
employment contract, pursuant to law and
jurisprudence prior to the enactment of RA 8042
(Serrano v. Gallant Maritime Services & Marlow
Navigation Co., Inc., G.R. No.167614, March 24, 2009).
20
 RECRUITMENT AND PLACEMENT

PENALTIES FOR ILLEGAL RECRUITMENT Prosecution officer

Information shall be filed
within 48 hours from
in court within 24 hours
Consequence of conviction for illegal recruitment the date of receipt of
from the termination of
the records of the
the investigation
PENALTIES (Under R.A. 10022) case. (Sec. 11)
Offender / Offense Penalty Prescriptive Period for Illegal Recruitment Cases
Illegal recruitment as Simple Illegal
Life imprisonment + Economic Sabotage
economic sabotage Recruitment
fine of P2M-P5M
Within 20 yrs. from
Provided: Within 5 yrs. from the the time illegal
1. If person illegally time illegal recruitment recruitment has
recruited is below has happened happened. (Sec.
18 years of age or 12,R.A. 8042)
Maximum penalty
2. Illegal recruitment is
shall be imposed
committed by a DIRECT HIRING
non-licensee/non-
holder Direct hiring
Any person found 12 yrs. and 1 day - 20 yrs.
guilty of illegal imprisonment; or It is when an Er hires a Filipino worker for overseas
recruitment Fine: P1M-P2M employment without going through the POEA or
Any person found 6 yrs. and 1 day - 12 yrs. entities authorized by the SLE.
guilty of the imprisonment; or
prohibited acts Fine of P500K - P1M Ban on direct hiring
Licensee/holder of 2-5 yrs. imprisonment; or
authority violates Fine: P10K - P50K; GR: An Er may only hire Filipino worker for overseas
provisions or both employment through POEA or entities authorized by
Non-licensee/non- 4-8 yrs. imprisonment; or DOLE.
holder of authority Fine: P20K - P100K
violates provisions or both XPNs: Direct hiring by:
Corporation, Penalty imposed upon 1. International organizations
partnership, officer/s responsible for 2. Name hires
association, or entity violation 3. Members of the diplomatic organizations
Penalties prescribed 4. Other Ers as may be allowed by DOLE
under RA 10022,
Alien + Purposes of the prohibition on direct hiring
Deportation without
further proceedings 1. To ensure the best possible terms and conditions of
Automatic revocation of employment for the worker.
license or authority and 2. To assure the foreign Er that he hires only qualified
all permits and privileges Filipino workers.
In every case 3. To ensure full regulation of employment in order to
of the recruitment or
manning agency, lending avoid exploitation.
institutions, training
school or medical clinic REGULATION AND ENFORCEMENT
PERIODS
SUSPENSION OR CANCELLATION OF LICENSE OR
Mandatory Period for Resolution of Illegal AUTHORITY
Recruitment Cases
The preliminary investigations of cases under R.A. Person who can suspend or cancel license or
10022 shall be terminated within a period of 30 authority
calendar days from the date of their filing.
If the PI is conducted by If the PI is conducted The Secretary of Labor and Employment is vested with
a prosecution officer by a judge and a power to suspend or cancel any license or authority to
and a prima facie case is prima facie case is recruit employees for overseas employment.
established found to exist

UNIVERSITY OF SANTO TOMAS

21 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Grounds for revocation of license
1. Incurring an accumulated 3 counts of suspension
by an agency based on final and executory orders
within the period of validity of its license
2. Violations of the conditions of license
3. Engaging in acts of misrepresentation for the
purpose of securing a license or renewal
4. Engaging in the recruitment or placement of
workers to jobs harmful to the public health or
morality or to the dignity of the country (Sec. 3,
Rule I, Book VI, Rules and Regulations Governing
Overseas Employment).
Grounds for suspension or cancellation of license
1. Commission of prohibited acts under Art. 34 of LC
2. Publishing job announcements w/o POEAs
approval
3. Charging a fee which may be in excess of the
authorized amount before a worker is employed
4. Deploying workers w/o processing through POEA
5. Recruitment in places outside its authorized area
(Sec. 4, Rule II, Book IV, POEA Rules).
6. If the employment agency fails to provide the
ticket or PTA within 48 hours from receipt of the
notice [R.A. 10022]
Degree of proof required for the suspension of
license or authority
Administrative determinations require only
substantial proof and not clear and convincing
evidence. In proceedings for cancellation or
suspension of license or authority, no rule requires
that testimonies or complaints be corroborated by
documentary evidence, if the charge of unlawful
exaction is substantially proven.
Q: Concerned Filipino contract workers in the Middle
East reported to the DFA that XYZ, a private
recruitment and placement agency, is covertly
transporting extremists to terrorist training camps
abroad. Intelligence agencies of the Government
allegedly confirmed the report. Upon being alerted
by the DFA, the DOLE issued orders cancelling the
licenses of XYZ, and imposing an immediate travel
ban on its recruits for the Middle East. XYZ appealed
to the Office of the President to reverse and set aside
the DOLE orders, citing damages from loss of
employment of its recruits, and violations of due
process including lack of notice and hearing by the
DOLE. The DOLE in its answer claimed the existence
of an emergency in the Middle East which required
prompt measures to protect the life and limb of
OFWs from a clear and present danger posed by the
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
ongoing war against terrorism. Should the DOLE
orders be upheld or set aside? (2004 Bar Question)
A:
1. The DOLE order cancelling the licenses of XYZ is
void because a report that an agency is covertly
transporting extremists is not a valid ground for
cancellation of a Certificate of Registration (Art.
239, LC) and there is failure of due process as no
hearing was conducted prior to the cancellation
(Art. 238, LC).
2. The DOLE order imposing the travel ban is valid
because it is a valid exercise of police power to
protect the national interest (Sec. 3, Art. XIII,
Constitution on full protection to labor safety of
workers) and on the rule making authority of the
SLE [Art. 5, LC; Phil. Assn. of Service Exporters v.
Drilon, G.R. No. 81958, June 30, 1988].
REGULATORY AND VISITORIAL POWERS OF THE
DOLE SECRETARY
Regulatory powers of the SLE
1. Restrict and regulate the recruitment and
placement activities of all agencies
2. Issue orders and promulgate rules and regulations
Visitorial power
1. Access to Ers records and premises at any time of
the day or night, whenever work is being
undertaken
2. To copy from said records
3. Question any Ee and investigate any fact,
condition or matter which may be necessary to
determine violations or which may aid in the
enforcement of the LC and of any labor law, wage
order, or rules and regulation issued pursuant
thereto.
Instances when the visitorial power of the SLE may be
exercised under the LC
1. Inspect books of accounts and records of any
person or entity engaged in recruitment and
placement; require it to submit reports regularly
on prescribed forms and act in violations of any
provisions of the LC on recruitment and
placement (Art. 37, LC).
2. Have access to Ers records and premises to
determine violations of any provisions of the LC
on recruitment and placement (Art. 128, LC).
3. Conduct industrial safety inspections of
establishments (Art. 165, LC).
22
 RECRUITMENT AND PLACEMENT
4. Inquire into the financial activities of legitimate
labor organizations (LLO) and examine their books
of accounts upon the filing of the complaint under
oath and duly supported by the written consent of
at least 20% of the total membership of the labor
organization concerned.
SLE cannot issue search warrants or warrants of
arrest, unconstitutionality of Art. 38(c) of the LC
Under the 1987 Constitution, only a judge may issue
search warrants or warrants of arrest. Hence, Art.
38(c) of the LC is unconstitutional inasmuch as it gives
the SLE the power to issue search warrants and
warrants of arrest. The labor authorities must go
through the judicial process (Salazar v. Achacoso, G.R.
No. 81510, March 14, 1990).
REMITTANCE OF FOREIGN EXCHANGE EARNINGS
Remittance of foreign exchange earnings
GR: It shall be mandatory for all OFWs to remit a
portion of their foreign exchange earnings to their
families, dependents, and/or beneficiaries ranging
from 50% - 80% depending on the workers kind of job
(Rule VIII, Book III, POEA Rules).
XPNs:
1. The workers immediate family members,
beneficiaries and dependents are residing with
him abroad
2. Immigrants and Filipino professionals and Ees
working with the UN agencies or specialized
bodies
3. Filipino servicemen working in U.S. military
installations (Resolution No. 1-83, Inter-Agency
Committee for Implementation of E.O. 857).
Effect of failure to remit
1. Workers Shall be suspended or removed from
the list of eligible workers for overseas
employment.
2. Employers Will be excluded from the overseas
employment program. Private employment
agencies shall face cancellation or revocation of
their licenses or authority to recruit (Sec. 9, E.O.
857).
PROHIBITED ACTIVITIES
Prohibited practices in recruitment/ placement:
1. Furnishing or publishing any false
notice/information/document related to
recruitment/employment
23
2. Failure to file reports required by SLE
3. Inducing or attempting 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
4. Recruitment/placement of workers in jobs
harmful to public health or morality or to the
dignity of the country
5. Engaging directly or indirectly in the management
of a travel agency
6. Substituting or altering employment contracts
without approval of DOLE
7. Charging or accepting any amount greater than
that specified by DOLE or make a worker pay any
amount greater than actually received by him
8. Committing any act of misrepresentation to
secure a license or authority
9. Influencing or attempting to influence any
person/entity not to employ any worker who has
not applied of employment through his agency
10. Obstructing or attempting to obstruct inspection
by SLE or by his representatives
11. Withholding or denying travel documents from
applicant workers before departure for monetary
considerations other than authorized by law
12. Granting a loan to an OFW which will be used for
payment of legal and allowable placement fees
13. Refusing to condone or renegotiate a loan
incurred by an OFW after his employment
contract has been prematurely terminated
through no fault of his or her own
14. For a suspended recruitment/manning agency to
engage in any kind of recruitment activity
including the processing of pending workers'
applications; and
15. For a recruitment/manning agency or a foreign
principal/ Er to pass on the OFW 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
16. Imposing a compulsory and exclusive
arrangement whereby an OFW is required to:
a. Avail a loan only from specifically designated
institutions, entities or persons
b. To undergo health examinations only from
specifically designated medical, entities or
persons, except seafarers whose medical
examination cost is shouldered by the
shipowner
c. To undergo training of any kind only from
designated institutions, entities or persons,
except for recommendatory trainings
mandated by principals/shipowners (Sec. 6,
R.A. 10022).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION (POEA)
Principal functions of the POEA
1. Protection of the right of Filipino workers to fair
and equitable employment practices
2. Regulation of private sector participation in the
recruitment and overseas placement of workers
by setting up a licensing and registration system
3. Deployment of Filipino workers through
Government to Government hiring
4. Formulation, implementation, and monitoring of
overseas employment of Filipino workers taking
into consideration their welfare and domestic
manpower requirements
5. Shall inform migrant workers not only of their
rights as workers but also of their rights as
human beings, instruct and guide the workers
how to assert their rights and provide the
available mechanism to redress violation of their
rights (Sec. 14, R.A. 10022).
6. Implementation, in partnership with other law-
enforcement agencies, of an intensified program
against illegal recruitment activities (Sec. 14, R.A.
10022).
Power of the POEAs to terminate or impose a ban on
employment of migrant workers
The POEA may at any time terminate or impose a ban
on employment of migrant workers, to do so, in
consultation with the DFA based on the ff. grounds:
1. In pursuit of the national interest; or
2. When public welfare so requires (Sec. 4 R.A.
10022)
Minimum conditions/ provisions of overseas
employment contracts
1. Guaranteed wages for regular hours and OT, not
lower than the minimum wage prescribed in all of
the following:
a. The host country
b. Bilateral agreements or international
conventions ratified by the host country and
the Philippines
c. The Philippines
2. Free transportation to and from the worksite or
offsetting benefit
3. Free food and accommodation or offsetting
benefit
4. Just/authorized causes of termination of the
contract or services of the worker
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
NOTE: An agreement that diminishes the Ees pay and
benefits as contained in a POEA-approved contract is void,
unless such subsequent agreement is approved by the POEA.
Deployment of OFWs
The State shall allow the deployment of OFWs
1. Only in countries where the rights of Filipino
migrant workers are protected.
2. To vessels navigating the foreign seas or to
installations located offshore or on high seas
whose owners/Ers are compliant with
international laws and standards that protect the
rights of migrant workers.
3. To companies and contractors with international
operations: Provided, That they are compliant
with standards, conditions and requirements, as
embodied in the employment contracts
prescribed by the POEA and in accordance with
internationally-accepted standards (Sec. 3, R.A.
10022 amending R.A. 8042).
Guarantees of the receiving country for the
protection of the rights of OFWs
1. It has existing labor and social laws protecting the
rights of workers, including migrant workers;
2. It is a signatory to and/or a ratifier of multilateral
conventions, declarations or resolutions relating
to the protection of workers, including migrant
workers; and
3. It has concluded a bilateral agreement or
arrangement with the government on the
protection of the rights of OFWs (Sec. 3, R.A.
10022 amending R.A. 8042).
Provided, that the receiving country is taking positive,
concrete measures to protect the rights of migrant
workers in furtherance of any of the guarantees.
NOTE: In the absence of a clear showing that any of the
guarantees exists in the country of destination of the
migrant workers, no permit for deployment shall be issued
by the POEA.
Repatriation of a worker
GR: The repatriation of the:
1. Worker and the transport of his personal
belongings - shall be the primary responsibility of
the agency which recruited or deployed the
worker overseas.
2. Remains and transport of the personal belongings
of a deceased worker and all costs attendant
thereto - shall be borne by the principal and/or
the local agency.
24
 RECRUITMENT AND PLACEMENT

XPNs: 6. Embezzlement of funds of the company or fellow

1. If the termination of employment is due solely worker entrusted for delivery to relatives in the
to the fault of the worker, the principal/ Er or Phils.
agency shall not be responsible for the 7. Creating trouble at the worksite or in the vessel
repatriation of the former and/or his 8. Gambling
belongings. 9. Initiating or joining a strike or work stoppage
2. In cases of war, epidemic, disaster or where the laws of the host country prohibits
calamities, natural or man-made, and other strikes or similar actions
similar event, and where the principal or 10. Commission of felony punishable by Philippine
recruitment agency cannot be identified, the laws or by the host country
Overseas Workers Welfare Administration, in 11. Theft or robbery
coordination with appropriate international 12. Drunkenness
agencies, shall take charge of the repatriation 13. Drug addiction or possession or trafficking of
(Sec.15, R.A. 8042). prohibited drugs
14. Desertion or abandonment
Mandatory repatriation of underage migrant workers
Jurisdiction of the LA v. POEA
Upon discovery or being informed of the presence of
migrant workers whose ages fall below the minimum JURISDICTION
age requirement for overseas deployment, the Labor Arbiter POEA
responsible officers in the foreign service shall without Original and exclusive
delay repatriate said workers and advise the DFA Original and
jurisdiction over:
through the fastest means of communication available exclusive
of such discovery and other relevant information. The jurisdiction over all
1. All cases which are
license of a recruitment/manning agency which claims arising out of
administrative in character
recruited or deployed an underage migrant worker Er-Ee relationship or
relating to licensing and
shall be automatically revoked and shall be imposed a by virtue of any law
registration of recruitment
fine of not less than P500,000 but not more than or contract involving
and employment agencies
P1,000,000 (Sec. 9, R.A. 10022). OFWs including
claims for:
2. Disciplinary Action cases
Regulatory and adjudicatory functions of the POEA and other special cases,
1. Actual
which are administrative in
1. Regulatory It regulates the private sector 2. Moral
character, involving Ees,
participation in the recruitment and overseas 3. Exemplary
principals, contracting
placement of workers through its licensing and 4. Other forms of
partners and Filipino
registration system. damages (Sec. 10,
migrant workers (Rule VII,
2. Adjudicatory R.A. 8042).
Book VII, POEA Rules).
a. Administrative cases involving violations of
licensing rules and regulations and Q: A seafarer was prevented from leaving the port
registration of recruitment and employment of Manila and refused deployment without valid
agencies or entities reason. His POEA-approved employment contract
b. Disciplinary action cases and other special provides that the employer-employee relationship
cases which are administrative in character shall commence only upon the seafarers actual
involving employers, principals, contracting departure from the port in the point of hire. Is the
partners and Filipino migrants. seafarer entitled to relief under the Migrant Workers
Act, in the absence of an employer-employee
Grounds for disciplinary action of OFWs relationship?

Under R.A. 8042, these are:
1. Prostitution
2. Unjust refusal to depart for the worksite
3. Gunrunning or possession of deadly weapons
4. Vandalism or destroying company property
5. Violation of the laws and sacred practices of the
host country and unjustified breach of
employment contract
A:Yes. Despite the absence of an Er-Ee relationship,
the NLRC has jurisdiction over the seafarers
complaint. The jurisdiction of LAs is not limited to
claims arising from Er-Ee relationships. Sec. 10 of the
Migrant Workers Act provides that the LAs shall have
jurisdiction over claims arising out of an Er-Ee
relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment

UNIVERSITY OF SANTO TOMAS

25 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

including claims for actual, moral, exemplary and

other forms of damages. Since the present case
involves the employment contract entered into by
petitioner for overseas employment, his claims are
cognizable by the LAs of the NLRC (Santiago v. CF
Sharp Crew Management,G.R. No. 162419, July 10,
2007).

Matters that fall outside the jurisdiction of the POEA

1. Foreign judgments such claim must be brought

before regular courts. POEA is not a court; it is an
administrative agency, exercising adjudicatory or
quasi-judicial functions.
2. Torts falls under the provisions of the Civil
Code.

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 26
 LABOR STANDARDS

LABOR STANDARDS Managerial Ees

HOURS OF WORK Those whose primary duty consists of the

management of the establishment in which they are
COVERAGE/ EXCLUSIONS employed or a department or subdivision thereof, and
other officers or members of the managerial staff [Art.
Groups of Ees under the LC 82(2), LC].

1. Managerial Ee - One who is vested with the They must meet all of the ff. conditions, namely:
powers or prerogatives to lay down and execute 1. Primary duty: management of the
management policies and/or to hire, transfer, establishment in which they are employed or
suspend, lay-off, recall, discharge, assign or of a department or sub-division thereof;
discipline Ees. 2. Customarily or regularly direct the work of 2
2. Supervisory Ee - those who in the interest of the or more Ees
Er, effectively recommend such managerial 3. Has the authority to hire or fire other Ees of
actions if the exercise of such authority is not lower rank; or their suggestions and
merely routinary or clerical in nature but requires recommendations as to the hiring and firing
the use of independent judgment. and as to the promotion or any change of
3. Rank-and-file Ee - all Ees not falling within any of status of other Ees are given particular
the above definitions (Art. 212[m], LC). weight.
4. Execute under general supervision work
Ees covered by the conditions of employment under along specialized or technical lines requiring
the LC special training, experience, or knowledge
5. Execute under general supervision special
GR: Ees in all establishments and undertakings assignment and tasks; and
whether for profit or not. 6. Do not devote more than 20% of their hours
worked to activities which are not directly
XPNs: and closely related to the performance of the
1. Government Ees work described.
2. Managerial Ees
3. Field personnel Reason why managerial employees are not covered
4. Ersfamily members who depend on him for by the conditions of employment under the LC
support
5. Domestic helpers and persons in the personal They are employed by reason of their special training,
service of another, expertise or knowledge and for positions requiring the
6. Workers who are paid by results as exercise of discretion and independent judgment.
determined under DOLE regulations (Art. 82. Value of work cannot be measured in terms of hours.
LC).
Field personnel
NOTE: The conditions of employment under the the Lc
will apply only if an er-Ee relationship exists. They are:
1. Non-agricultural Ees
Government Ees 2. Who regularly perform their duties
3. Away from the principal place of business or
They are Ees of the: branch office of the Er; and
1. National Government 4. Whose actual hours of work in the field cannot be
2. Any of its political subdivisions determined with reasonable certainty.
3. Including those employed in GOCCs with original
charters Domestic helpers and persons in the personal service
of another
Law applicable to government Ees
Those who:
It is the Civil Service Law, Rules and Regulations 1. Perform services in the Ers home which are
usually necessary or desirable for the
maintenance or enjoyment thereof; or

UNIVERSITY OF SANTO TOMAS

27 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
2. Minister to the personal comfort, convenience or
safety of the Er as well as the members of his Ers
household.
Q: A house personnel was hired by a ranking
company official to maintain a staff house provided
for the official. The personnel is being paid by the
company itself. Is the house personnel a domestic
servant of the company official?
A: No. The personnel is not a domestic helper but a
regular Ee of the company (Apex Mining v. NLRC, G.R.
No. 9366, April 22, 1991; Remington Industrial Sales
Corporation v. Castaneda, G.R. Nos. 169295-96,
November 20, 2006).
Person who determines working conditions
Generally, they are determined by the Er, as he is
usually free to regulate, according to his discretion, all
aspects of employment.
Limitation on the Ers power to regulate working
conditions
It must be done in good faith and not for the purpose
of defeating or circumventing the rights of the Ees.
Such are not always absolute and must be exercised
with due regard to the rights of labor.
NOTE: Ones employment, profession, trade or calling is a
property right and the wrongful interference therewith is an
actionable wrong.
NORMAL HOURS OF WORK
Normal hours of work of an Ee
GR: The normal hours of work of any Ee shall not
exceed 8 hours a day (Art. 83, LC).
XPNs:
1. Health personnel
2. Compressed workweek
NOTE: Normal hours of work may be shortened or
compressed. Neither does it follow that a person who does
not observe normal hours of work cannot be deemed an
employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat,
the employer similarly denied the existence of an Er-Ee
relationship, as the claimant according to it, was a
"supervisor on commission basis" who did not observe
normal hours of work. This Court declared that there was an
Er-Ee relationship, noting that "[the] supervisor, although
compensated on a commission basis, [is] exempt from the
observance of normal hours of work for his compensation is
measured by the number of sales he makes" (Lazaro v. SSS,
435 SCRA 472).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Rationale behind the law on eight-hour labor
It is enacted not only to safeguard the health and
welfare of the Ee or laborer, but also in a way to
minimize unemployment by forcing Ers, in cases where
more than 8-hour operation is necessary, to utilize
different shifts of laborers or Ees working only for 8
hours each.
Coverage of hours of work
1. All time during which an Ee is required to be:
a. On duty, or
b. At the Ers premises, or
c. At a prescribed workplace
2. All time during which an Ee is suffered or
permitted to work (Sec. 3, Rule I, Book III, IRR).
Principles in determining hours worked
1. All hours which the Ee is required to give to his Er
regardless of whether or not such hours are spent
in productive labor or involve physical or mental
exertion.
2. Rest period is excluded from hours worked, even
if Ee does not leave his workplace, it being enough
that:
a. He stops working
b. May rest completely
c. May leave his workplace, to go elsewhere,
whether within or outside the premises of the
workplace
3. All time spent for work is considered hours worked
if:
a. The work performed was necessary
b. If it benefited the Er
c. Or the Ee could not abandon his work at the
end of his normal working hours because he
had no replacement
d. Provided, the work was with the knowledge
of his Er or immediate supervisor
4. The time during which an Ee is inactive by reason of
interruptions in his work beyond his control shall be
considered working time:
a. If the imminence of the resumption of the work
requires the Ees presence at the place of work;
or
b. If the interval is too brief to be utilized
effectively and gainfully in the Ees own interest
(Sec. 4, Rule I, Book III, IRR).
Instances when hours of worked are compensable
1. Ee is required to be on duty
2. Ee is suffered or permitted to work
28
 LABOR STANDARDS

3. Rest periods of short duration during working
hours
4. Travel time, when beneficial to theEr (Rada v.
NLRC, 205 SCRA 69):
a. Travel from home to work
GR: Normal travel from home to work is not
working time.
XPNs:
i. Emergency call outside his regular
working hours where he is required to
travel to his regular place of business or
some other work site.
ii. Done through a conveyance provided by
the Er.
iii. Done under the supervision and control
of the Er.
iv. Done under vexing and dangerous
circumstance.
b. Travel that is all in a days work time spent
in travel as part of the Ees principal activity
E.g. travel from job site to job site during the
work day, must be counted as working hours.
c. Travel away from home
GR:
a. Travel that requires an overnight stay on
the part of the Ee when it cuts across the
Ees workday is clearly working time.
b. The time is not only hours worked on
regular workdays but also during
corresponding working hours on non-
working days. Outside of these regular
working hours, travel away from home is
not considered working time.
XPN: During meal period or when Ee is
permitted to sleep in adequate facilities
furnished by the Er.
Instances when hours of work not counted as
compensable
pursuits (Arica v.NLRC G.R. No. 78210 February
28, 1989).
6. Meal time (60 min.), unless predominantly spent
for the Ers benefit
NOTE: Activities before work and after work are deemed
performed during work hours, where such activities are
controlled or required by the Er and are pursued necessarily
and primarily for the Ers benefit.
Hours of work of health personnel
GR: 8 hours for 5 days (40-hour workweek), exclusive
of time for meals.
XPN: Where the exigencies of the service require that
such personnel work for 6 days or 48 hours, they shall
be entitled to an additional compensation of at least
30% of their regular wage for work on the 6th day (Art.
83, LC).
Health personnel covered by the 40-hour workweek
1. Those in cities and municipalities with a
population of at least 1 million; or
2. Those in hospitals and clinics with a bed capacity
of at least 100
NOTE: Art. 83(2) of the LC does not require hospitals to pay
the Ees a full weekly salary with paid 2 days off (San Juan de
Dios Ees Assoc.-AFW et al. v. NLRC, G.R. No. 126383,
November 28, 1997).
Rules on requiring resident physicians to be on duty
beyond the 40-hour workweek limitation
GR: The customary practice of requiring resident
physicians beyond the 40 hours of work per week is
not permissible and violates the limitation under Art.
83.
XPN: If there is a training agreement between the
resident physician and the hospital and the training
program is duly accredited or approved by appropriate
government agency.

1. Ee ceases to work COMPRESSED WORKWEEK

2. Ee may rest completely
3. Ee may leave at his will the spot where he actually
stays while working to go somewhere else (Luzon
Stevedoring v. Luzon Marine G.R. No. L-9265 April
29, 1957).
4. When work is broken/not continuous (NDC v.CIR
G.R. No. L-53961 June 30, 1987).
5. Assembly time, routinary practice of employees,
proceedings not infected with complexities so as
to deprive Ees time to attend to their personal
Compressed workweek
The normal workweek is reduced to less than 6 days
but the total number of work-hours of 48 hours per
week shall remain. The normal workday is increased to
more than 8 hours but not to exceed 12 hours, without
corresponding overtime premium. The concept can be
adjusted accordingly depending on the normal

UNIVERSITY OF SANTO TOMAS

29 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

workweek of the company (Department Advisory 5. No strenuous physical exertion or that they are
Order No. 2, Series of 2009). given adequate rest periods.
6. It must be for a temporary duration as determined
Requisites for the adoption of compressed workweek by the DOLE.

1. The Er shall notify the DOLE through the Regional MEAL BREAK
Office which has jurisdiction over the workplace,
of the adoption of compressed workweek. Duration of the meal period
2. The notice shall be in Report Form attached to the
advisory. Every Er shall give his Ees not less than 60 minutes or
The Regional Office shall conduct an ocular visit to 1 hour time-off for regular meals.
validate whether the adoption of the flexible work
arrangements is in accordance with this issuance Non-compensability of the meal period
(Department Advisory Order No. 2, Series of 2009).
Meal period during time-off is not compensable.
Instance when the implementation of a compressed Ee must be completely relieved from duty.
workweek is considered valid
Instance when the meal period is considered
The validity of the reduction of working hours can be compensable
upheld when the arrangement is:
1. Temporary It is compensable where the lunch period or meal
2. It is a more humane solution instead of a time:
retrenchment of personnel 1. Is predominantly spent for the Ers benefit; or
3. There is notice and consultations with the workers 2. Where it is less than 20 min.
and supervisors
4. A consensus is reached on how to deal with NOTE: Where during a meal period, the laborers are
deteriorating economic conditions; and required to stand by for emergency work, or where the meal
5. It is sufficiently proven that the company was hour is not one of complete rest, such is considered OT (Pan
suffering from losses. Am v. Pan Am Ees Association, G.R. No. L-16275, (1961). Rest
periods or coffee breaks running from 5 to 20 min.shall be
considered as compensable working time (Sec. 7, Rule I, Book
NOTE: Under the Bureau of Working Conditions bulletin, a
III, IRR).
reduction of the number of regular working days (RWD) is
valid where the arrangement is resorted to by the Er to
prevent serious losses due to causes beyond his control, such Compensability of meal periods provided during
as when there is a substantial slump in the demand for his overtime work
goods or services or when there is alack of raw materials.
There is one main consideration in determining the validity Meal periods provided during overtime work are
of reduction of working hours that the company was compensable, since the 1 hour meal period (non-
suffering from losses. A year of financial losses would not compensable) is not given during OT work because the
justify a reduced workweek (Linton Commercial v. Hellera,
latter is usually for a short period and to deduct from
G.R. No. 163147, October 10, 2007).
the same would reduce to nothing the Ees OT work.
Thus, the 1 hour break for meals during OT should be
Conditions where a "compressed workweek"
treated as compensable.
schedule may be legally authorized as an exception
to the "8-hour a day" requirement under the LC (2005
Compensability of meal periods that are shortened
Bar Question)
1. Compensable At the instance of Er, when:
1. The Ee voluntarily agrees to it
a. Work is non-manual in nature or does not
2. There is no diminution in their weekly or monthly
involve strenuous physical exertion;
take home pay or fringe benefits
b. Establishment regularly operates less than 16
3. The benefits are more than or at least
hours a day;
commensurate or equal to what is due to the Ees
c. Work is necessary to prevent serious loss of
without the compressed work week
perishable goods.
4. OT pay will be due and demandable when they are
d. Actual or impending emergency or there is
required to work on those days which should have
urgent work to be performed on machineries
ceased to be working days because of the
and equipment to avoid serious loss which
compressed work week schedule.

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 30
 LABOR STANDARDS

the Er would otherwise suffer (Sec. 7, Rule I, Waiting time not considered as working time
Book III, IRR).
e. Establishment regularly operates less than 16 It is not considered working time when the Ee is
hours a day; waiting to be engaged: idle time is not working time; it
f. Work is necessary to prevent serious loss of is not compensable.
perishable goods.
g. Actual or impending emergency or there is NOTE: Under the law, the idle time that an Ee may spend for
urgent work to be performed on machineries resting and during which he may leave the spot or place of
and equipment to avoid serious loss which work though not the premises of his Er, is not counted as
working time only where the work is broken or is not
the Er would otherwise suffer (Sec. 7, Rule I,
continuous (National Development Co. v. CIR, 6 SCRA 763).
Book III, IRR).
Idle time considered as working time
2. Not Compensable Ee requested for the shorter
meal time so that he can leave work earlier than
It is when the Ee is idle or inactive by reason of
the previously established schedule. Requisites:
interruptions beyond his control.
a. Ees voluntarily agree in writing and are willing
to waive OT pay for the shortened meal
Conditions in order for lectures, meetings and
period;
training programs to be not considered as working
b. No diminution in the salary and other fringe
time
benefits of the Ees which are existing before
the effectivity of the shortened meal period;
All of the following conditions must be present:
c. Work of the Ees does not involve strenuous
1. Attendance is outside of the Ers regular working
physical exertion and they are provided with
hours
adequate coffee breaks in the morning and
2. Attendance is in fact voluntary and
afternoon;
3. The Ee does not perform any productive work
d. Value of the benefits derived by the Ees from
during such attendance.
the proposed work arrangements is equal to
or commensurate with the compensation
Ee considered as working while on call
due them for the shortened meal period as
well as the OT pay for 30 min. as determined
When Ee is required to remain on call in the Ers
by the Ees concerned;
premises or so close thereto that he cannot use the
e. OT pay will become due and demandable
time effectively and gainfully for his own purpose.
after the new time schedule
f. Arrangement is of temporary duration.
OVERTIME WORK, OVERTIME PAY
NOTE: The implementing rules allow the meal time to be less
than 60 minutes, under specified cases and in no case Work day
shorter than 20 minutes (Sec. 7, Rule 1, Book III).
Work day is the 24-hour period which commences
If the so called meal time is less than 20 minutes, it from the time the Ee regularly starts to work
becomes only a rest period and under the same section 7, is
considered working time. Illustration:

WAITING TIME If the worker starts to work 8 am today, the

workday is from 8 am today up to 8 am tomorrow.
Waiting time considered as working time
NOTE: Minimum normal working hours fixed by law need
1. It is considered working time if waiting is an not be continuous to constitute the legal working day.
integral part of his work, or
2. The Ee is required or engaged by the Er to wait Overtime work
(engaged to wait)
It is overtime work if performed beyond 8 hours within
NOTE: The controlling factor is whether waiting time spent the workers 24-hour workday.
in idleness is so spent predominantly for the Ers benefit or
for the Ee. NOTE: Express instruction from the Er to the Ee to render OT
work is not required for the Ee to be entitled to OT pay; it is
sufficient that the Ee is permitted or suffered to work.
However, written authority after office hours during rest

UNIVERSITY OF SANTO TOMAS

31 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
days and holidays are required for entitlement to Q: In lieu of overtime pay, the employee was given
compensation. permission to go on leave on some other day, is that
valid?
Overtime pay v. Premium pay
A: No. Permission given to the Ee to go on leave on
OVERTIME PAY PREMIUM PAY some other day of the week shall not exempt the Er
Additional compensation for from paying the additional compensation required
Additional
work performed within 8 hours because it would prejudice the Ee, for he will be
compensation
on days when normally he deprived of the additional pay for the OT work he has
for work
should not be working (on non- rendered and which is utilized to offset the undertime
performed
working days, such as rest days he may have incurred. Undertime could be charged
beyond 8 hours
and special days.) against the Ees accrued leave.
on ordinary days
But additional compensation
(within the
for work rendered in excess of 8 Q: Socorro is a clerk-typist in Hospicio de San Jose, a
workers 24-
hours during these days is also charitable institution dependent for its existence on
hour workday)
considered OT pay. contributions and donations from well wishers. She
renders work 11 hours a day but has not been given
Rationale behind the overtime pay OT pay since her place of work is a charitable
institution. Is Socorro entitled to overtime pay?
Ee is made to work longer than what is commensurate Explain briefly. (2002 Bar Question)
with his agreed compensation for the statutory fixed
or voluntarily agreed hours of labor he is supposed to A: Yes. Socorro is entitled to OT pay. She does not fall
do (PNB v. PEMA and CIR, G.R. No. L-30279, July 30, under any of the exceptions to the coverage of Art. 82,
1982). It discourages the Er from requiring such work under the provisions of hours of work. The LC is equally
thus protecting the health and well-being of the applicable to non-profit institutions. A covered Ee who
worker, and also tend to remedy unemployment by works beyond 8 hours is entitled to OT compensation.
encouraging Ers to employ others workers to do what
cannot be accomplished during the normal hours of Q: Danilo Flores applied for the position of driver in
work. the motor-pool of Gold Company, a multinational
corporation. Danilo was informed that he would
Overtime pay rates frequently be working overtime as he would have to
drive for the company's executives even beyond the
PAY RATES ordinary 8-hour work day. He was provided with a
OT during a regular working day contract of employment wherein he would be paid a
Additional compensation of 25% of the regular monthly rate equivalent to 35 times his daily wage,
wage regular sick and vacation leaves, 5 day-leave with pay
every month and time off with pay when the
OT during a holiday or rest day
company's executives using the cars do not need
Rate of the first 8 hours worked on
Danilo's service for more than eight hours a day, in
plus at least 30% of the regular wage (RW):
lieu of overtime. Are the above provisions of the
contract of employment in conformity with, or
If done on a special holiday OR rest day:
violative of, the law?
30% of 130% of RW
A: Except for the provision that Danilo shall have time
If done on a special holiday AND rest day:
off with pay when the company's executives using the
30% of 150% of RW
cars do not need Danilo's service for more than 8 hours
a day, in lieu of OT, the provisions of the contract of
If done on a regular holiday:
employment of Danilo are not violative of any labor
30% of 200% of RW
law because they instead improve upon the present
provisions of pertinent labor laws.
Basis of computing the overtime pay and additional
remuneration
Working overtime is generally voluntary on the part
of the Ee
Regular wage which includes the cash wage only,
without deduction on account of the facilities provided GR: An Ee may not be compelled to render OT work;
by the Er. (Art. 90, LC) OT work is voluntary.

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 32
 LABOR STANDARDS
XPNs: Compulsory OT work in any of the following
situations:
1. Urgent work to be performed on machines
and installations in order to avoid serious loss
or damage to the Er or some other cause of
similar nature
2. Work is necessary to prevent loss or damage
to perishable goods
3. In case of imminent danger to the public
safety due to an actual or impending
emergency in the locality caused by serious
accidents, fire, flood, typhoon, earthquake,
epidemic or other disaster or calamity
4. Country is at war
5. Completion or continuation of the work
started before the 8th hour is necessary to
prevent serious obstruction or prejudice to
the business operations of the Er
6. Any other national or local emergency has
been declared
7. Necessary to prevent loss of life or property.
NOTE: There should be payment of additional
compensation. Ees refusal to obey the order of the Er
constitutes insubordination for which he may be subjected
to disciplinary action.
Q: The employment contract requires work for more
than 8 hours a day with a fixed wage inclusive of OT
pay. Is that valid?
A: It depends.
1. When the contract of employment requires
work for more than 8 hours at specific wages
per day, without providing for a fixed hourly
rate or that the daily wages include OT pay,
said wages cannot be considered as including
OT compensation (Manila Terminal Co. v. CIR,
et al., 91 Phil., 625).
2. However, the employment contract may
provide for a built-in OT pay. Because of
this, non-payment of OT pay by the employer
is valid (Engineering Equipment v. Minister of
Labor, G.R. No. L-64967, September 23,
1985).
Undertime (UT) cannot offset overtime (OT)
Where a worker incurs undertime hours during his
regular daily work, said undertime hours should not be
offset against the overtime hours on the same day or
on any other day. It is both prohibited by the statute
and by jurisprudence.
33
Right to OT pay cannot be waived
GR: The right to OT pay cannot be waived as it is
governed by law and not merely by the agreement of
the parties.
XPNs:
1. If the waiver is made in exchange for certain
valuable benefits and privileges, which may even
exceed the OT Pay.
2. Compressed workweek
OT rate may be subject to stipulation of the Er and Ee
GR: The premium for work performed on the Ees rest
days or on special days or regular holidays are included
as part of the regular rate of the Ee in the computation
of OT pay for any OT work rendered on said days
especially if the Er pays only the minimum OT rates
prescribed by law.
XPN: Ees and Er may stipulate in their collective
agreement the payment of OT rates higher than those
provided by law and exclude the premium rates in the
computation of OT pay. Such agreement may be
considered valid only if the stipulated OT pay rates will
yield to the Ees not less than the minimum prescribed
by law.
OT pay in a compressed workweek scheme
Any work performed beyond 12 hours a day or 48
hours a week shall be subject to OT premium
(Department Advisory No. 02, s. of 2004).
NIGHT WORK (R.A. 10151),
NIGHT SHIFT DIFFERENTIAL
Night work
Any and all work rendered between 6 pm and 6 am
(National Rice & Corn Corp. v. NARIC, 105 Phil 891).
Night worker
Any employed person whose work requires
performance of a substantial number of hours of night
work which exceeds a specified limit. This limit shall be
fixed by the SLE after consulting the workers
representatives/labor organizations and Ers. (Art. 154,
Chapter V, LC, as amended by R.A. 10151)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Persons covered by the provisions on night work
under R.A. 10151
GR: All persons who shall be employed or permitted or
suffered to work at night.
XPN: Those employed in agriculture, stock raising,
fishing, maritime transport and inland navigation,
during a period of not less than 7 consecutive hours,
including the interval from midnight to 5 in the
morning, to be determined by the SLE after consulting
the workers representatives/labor organizations and
Ers.
Right of the workers to undergo health assessment to
avoid health problems associated with night work
At their request, workers shall have the right to
undergo health assessment without charge and to
receive advice on how to reduce or avoid health
problems associated with their work:
1. Before taking up an assignment as a night worker;
2. At regular intervals during such an assignment;
and
3. If they experience health problems during such an
assignment which are not caused by factors other
than the performance of night work.
NOTE: Night workers who are certified as unfit for night
work, due to health reasons, shall be transferred, whenever
practicable, to a similar job for which they are fit to work.If
such transfer to a similar job is not practicable, these
workers shall be granted the same benefits as other workers
who are unable to work, or to secure employment during
such period.
Employability of women for night work
R.A. 10151 repealed Arts. 130 and 131 of the LC on
Night Work prohibition with regard to women
workers. However, measures shall be taken to ensure
that an alternative to night work is available to women
workers who would otherwise be called upon to
perform such work:
1. Before and after childbirth, for a period of at least
16 weeks, which shall be divided between the
time before and after childbirth;
2. For additional periods, in respect of which a
medical certificate is produced stating that said
additional periods are necessary for the health of
the mother or child:
a. During pregnancy;
b. During a specified time beyond the period,
after childbirth is fixed pursuant to number 1,
the length of which shall be determined by
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
the DOLE after consulting the labor
organizations and Ers.
NOTE: During the periods referred in art. 158 in RA10151:
1. A woman worker shall not be dismissed or given notice of
dismissal, except for just or authorized causes provided
for in the Code that are not connected with pregnancy,
childbirth and childcare responsibilities.
2. A woman worker shall not lose the benefits regarding her
status, seniority, and access to promotion which may
attach to her regular night work position.
Condition for pregnant women and nursing mothers
to be allowed to work at night
They are allowed if a competent physician, other than
the company physician, shall certify their fitness to
render night work, and specify, in the case of pregnant
Ees, the period of the pregnancy that they can safely
work.
Facilities required from Ers under R.A. 10151
1. Suitable first-aid facilities, including arrangements
where such workers, where necessary, can be
taken immediately to a place for appropriate
treatment.
2. Safe and healthful working conditions and
adequate or reasonable facilities, i.e. sleeping or
resting quarters in the establishment, and
transportation from the work premises to the
nearest point of their residence subject to
exceptions and guidelines to be provided by the
DOLE.
Night Shift Differential (NSD)
It is additional compensation of not less than 10% of
an Ees regular wage for every hour worked between
10 pm to 6 am, whether or not such period is part of
the workers regular shift.
Non-waivability of NSD
GR: Waiver of NSD is against public policy (Mercury
Drug Co., Inc. v. Dayao, et al., G.R. No. L-30452,
September 30, 1982).
XPN: Waiver is allowed if this will result to higher or
better benefits to Ees.
PART-TIME WORK
Non-prohibition of part-time work
Part-time work is not prohibited. The LC merely
provides for the maximum number of hours and not
34
 LABOR STANDARDS

the minimum. Under Art. 124, as amended by R.A. Duties of a contractor who furnishes both work and
6727, wage proportionate to part-time work is the material
recognized.
This is equivalent to sale; therefore, these are the
NOTE: The wage and benefits of a part-time worker are in duties:
proportion to the number of hours worked. For example, if 1. To deliver
an Ee earns P300.00 for an 8-hour work, he shall then get 2. To transfer ownership
P150.00 for work done in 4 hours.
3. To warrant against eviction and hidden defects

CONTRACT FOR A PIECE OF WORK Remedies of the ER in case of defects

Contract for a piece of work 1. Ask the contractor to remove the defect or to
execute another work.
It is a contract whereby the contractor binds himself to 2. If the contractor fails or refuses, the Er can ask
execute a piece of work for the Er, in price or another at the contractors expense. If a building
consideration of a certain compensation. The is involved, expenses for correction and
contractor may employ his labor, skill or also furnish completion may be recovered.
the material.
Rules on agreements waiving or limiting the
NOTE: All workers paid on piece-work shall be entitled to
contractors liability
receive not less than the prescribed daily minimum wage or
a proportion thereof for working less than 8 hours.
1. In the absence of fraud, the agreement would
Contract for piece of work v. Lease of services ordinarily be valid.
2. In the absence of prohibitory statute, the validity
of a limitation is generally upheld, with a view of
CONTRACT FOR PIECE
LEASE OF SERVICES obtaining compensation commensurate to the
OF WORK
risk assumed.
The object is the work
done or the result of the The object is services.
Q: A asked B to make a radio cabinet. B bound himself
said work.
to furnish the material. Before the radio cabinet
The risk is generally
could be delivered, it was destroyed by a fortuitous
borne by the Er, not by
The risk is borne by the event.
the worker unless the
worker before delivery.
latter is guilty of fault or
a. Who suffers the loss?
negligence.
b. Is the contract extinguished?
Contractor
A:
a) B suffers the loss of both the materials and
The worker is also called a contractor. He in turn may
the work, unless there was moraaccipiendi. If
obtain the services of others, who will work under him.
there was moraaccipiendi, it is evident that A
suffers the loss.
Test to determine if one is an Ee or an independent
b) No, therefore B may be required to do the
contractor
work all over again, unless there had been a
prior stipulation to the contrary or unless a
The right of control test is used. If the person for
re-making is possible (Art. 1717, NCC).
whom services are to be performed controls only the
end to be achieved, the worker is a contractor; if the NOTE: The law merely refers to the burden of the loss, and
former controls not only the end but also the manner not to the extinguishment of the contract.
and means to be used, the latter is an Ee.
Effects when the Er accepts the work
Things that the contractor can furnish
1. The contractor is generally relieved of liability.
1. Both material and labor, or 2. If the acceptance is made without objection, the
2. Only labor Er may still sue for hidden defects.

UNIVERSITY OF SANTO TOMAS

35 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Place of payment 4. Workers in any duly registered cooperatives when

so recommended by the Bureau of Cooperative
1. Where stipulated Development and upon approval of the SLE.
2. If no stipulation, then at the time and place of 5. Workers of a barangay micro business enterprise
delivery. (R.A. 9178)

Mechanics lien WAGE v. SALARY

One who executed a work on a movable property has WAGE SALARY

a right to retain it by way of pledge until he is paid. (Gaa v.CA, G.R. No. 44169, Dec. 3, 1985)
Compensation for Paid to white collared
WAGES manual labor (skilled or workers and denotes a
unskilled) also known as higher degree of
Wage blue collared workers, employment or a
paid at stated times and superior grade of
It is the remuneration or earnings, however measured by the day, services and implies a
designated, capable of being expressed in terms of week, month or season. position in the office.
money, whether fixed or ascertained on a time, task, Considerable pay for a Suggestive of a larger
piece, or commission basis, or other method of lower and less and more permanent or
calculating the same, payable by an Er to an Ee under responsible character of fixed compensation for
a written or unwritten contract of employment: employment. more important service.
1. For work done or to be done, or for services GR:Not subject to
rendered or to be rendered; and includes execution
2. Fair and reasonable value of board, lodging,
or other facilities customarily furnished by the Er to XPN: Debts incurred for Subject to execution.
the Ee as determined by SLE. food, shelter, clothing
and medical
NOTE: Fair and reasonable value means it shall not include attendance.
any profit to the Er or to any person affiliated with the Er.
MINIMUM WAGE DEFINED,
No Work, No Pay Principle (Fair days wage for a
MINIMUM WAGE SETTING
fair days labor)
Minimum wage
GR: If there is no work performed by the Ee, without
the fault of the Er, there can be no wage or pay.
Statutory minimum wage is the lowest wage rate fixed
by law that an Er can pay his workers.
XPNs: The laborer was able, willing and ready to work
but was:
Rationale for fixing a minimum wage
1. Prevented by management;
2. Illegally locked out;
The legislature was entitled to adopt measures to
3. Illegally suspended;
reduce the evils of the sweating system, the
4. Illegally dismissed
exploiting of workers at wages so low as to be
5. Illegally prevented from working (Aklan Electric
insufficient to meet the bare cost of living, thus making
Coop. v. NLRC, G.R. No. 129246, January 10, 2000).
their very helplessness the occasion of a most injurious
competition. The legislature had the right to consider
Applicability of the term wages
that its minimum wage requirements would be an
important aid in carrying out its policy of protection.
GR: It applies to all Ees.
There is also an additional and compelling
XPNs:
consideration which recent economic experience has
1. Farm tenancy or leasehold;
brought into a strong light. The exploitation of a class
2. Household or domestic helpers, including family
of workers who are in an unequal position with respect
drivers and persons working in the personal
to bargaining power and are thus relatively
service of another;
defenceless against the denial of a living wage is not
3. Home workers engaged in needlework or in any
only detrimental to their health and well-being but
cottage industry duly registered in accordance
casts a direct burden of their support upon the
with law;

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 36
 LABOR STANDARDS
community. What these workers lose in wages the
taxpayers are called upon to pay. The bare cost of
living must be met [West Coast Hotel v. Parrish, 300 US
79].
Standards or criteria for minimum wage setting
In the determination of such regional minimum wages,
the Regional Board shall, among other relevant factors
consider the following:
1. The demand for living wages
2. Wage adjustment vis-a-vis the consumer price
index
3. The cost of living and changes or increases therein
4. The needs of workers and their families
5. The need to induce industries to invest in the
countryside
6. Improvements in standards of living
7. The prevailing wage levels
8. Fair return on the capital invested and capacity to
pay by Ers
9. Effects on employment generation and family
income
10. The equitable distribution of income and wealth
along the imperatives of economic and social
development
Exemptions from the mimimum wage
The following persons are exempted from the
coverage of fixing a minimum wage:
1. Household or domestic helpers, including family
drivers and persons in the personal service of
another;
2. Homeworkers engaged in needle-work;
3. Workers employed in any establishment duly
registered with the National Cottage Industries
and Development Authority, provided that such
workers perform the work in their respective
homes;
4. Workers in a duly registered cooperative when so
recommended by the Bureau of Cooperative
Development and upon approval of the SLE (Sec.
2, Rule VII, Book III, IRR of LC).
Salary Ceiling Method
A method of minimum wage adjustment whereby the
wage adjustment is applied to Ees receiving a certain
denominated salary ceiling. In other words, workers
already being paid more than the existing minimum
wage are also to be given a wage increase (ECOP v.
NWCP, G.R. No. 96169, September 24, 1991).
37
Floor Wage Method
It involves the fixing of a determinate amount to be
added to the prevailing statutory minimum wage
rates.
Q: The Regional Wage Board of Region II issued a
Wage Order granting all Ees in the private sector
throughout the region an across-the-board increase
of P15.00 daily. Is this Wage Order valid?
A: It depends. The Wage Order is valid insofar as the
mandated increase applies to Ees earning the
prevailing minimum wage rate at the time of the
passage of the Wage Order and void with respect to its
application to Ees receiving more than the prevailing
minimum wage rate at the time of the passage of the
Wage Order. The Regional Wage granted an across-
the-board wage increase of P15.00 to all Ees in the
region. It did not set a wage level nor a range to which
a wage adjustment or increase shall be added. In doing
so, the Regional Wage Board exceeded its authority by
extending the coverage of the Wage Order to wage
earners receiving more than the prevailing minimum
wage rate, without a denominated salary ceiling. The
Wage Order granted additional benefits not
contemplated by R.A. No. 6727 (MBTC v. NWPC
Commission, G.R. No. 144322, February 06, 2007).
Q: Since the Wage Order was declared void with
respect to its application to employees receiving
more than the prevailing minimum wage rate at the
time of the passage of the Wage Order, should these
Ees refund the wage increase received by them?
A: No. The Es should not refund the wage increase
since they received it in good faith, in the honest belief
that they are entitled to such wage increase and
without any knowledge that there was no legal basis
for the same (MBTC v. NWPC Commission, G.R.
NO.144322, February 06, 2007).
MINIMUM WAGE OF WORKERS PAID BY RESULTS
Workers paid by results
They are:
1. Paid based on the work completed; and
2. Not on the time spent in working
3. Including those who are paid on piecework,
takay, pakiaw, or task basis if their output
rates are in accordance with the standards
prescribed.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
WORKERS PAID BY RESULTS
Application of wage orders to workers paid by results
All workers paid by result, including those who are
paid on piece work, takay or task basis, shall be
entitled to receive not less than the prescribed daily
minimum wage or a proportion thereof for working
less than 8 hours.
Minimum wage of workers paid by results
1. Those who are paid piece rates which are
prescribed in Piece Rate Orders issued by DOLE
Wages or earnings are determined by simply
multiplying the number of pieces produced by the
rate per piece.
2. Those who are paid output rates which are
prescribed by the Er and are not yet approved by
the DOLE The number of pieces produced is
multiplied by the rate per piece as determined by
the Er.
a. If resulting amount is equivalent to or more
than the applicable statutory minimum rate
in relation to the number of hours worked
Worker will receive such amount
b. If the amount is less than the applicable legal
rate Er is required by law to pay the
difference between the resulting amount and
the applicable legal minimum rate.
APPRENTICES/LEARNERS/PERSONS WITH DISABILITY
Minimum wage rate for apprentices/learners and
persons with disability
The wage or salary rate shall not be less than 75% of
the applicable minimum wage.
COMMISSION
Commission
A fee paid based on a percentage of the sale made by
an Ee or agent, as distinguished from regular payments
of wages or salary.
Instances when commissions be included in the
computation of basic salary or not
1. If the commission is comprised of a pre-
determined percentage of the selling price of the
goods Included in the basic salary
2. If the commission were paid as productivity
bonuses or closely resemble profit-sharing, or
when it has no clear, direct or necessary relation
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
to the amount of work actually done by each
individual employee Excluded from basic salary
DEDUCTIONS FROM WAGES
Wage deduction
GR: No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of
his employees (Art. 113, LC).
XPNs:
1. Deductions under Art. 113 of the LC for insurance
premiums.
2. Union dues in cases where the right of the worker
or his union to check off has been recognized by the
Er or authorized in writing by the individual worker
concerned (Art. 113, LC).
NOTE: Art. 241(o) of the LC provides that special
assessments may be validly checked-off provided that
there is an individual written authorization duly signed
by every Ee.
3. Deductions for SSS, PhilHealth and Pag-ibig
premiums
4. Taxes withheld pursuant to the Tax Code
5. Deductions under Art. 114 of the LC for loss or
damage to tools, materials or equipment
6. Deductions made with the written authorization of
the Ee for payment to a third person (Sec 13, Rule
VIII, Book III of the IRR).
7. Deductions as disciplinary measures for habitual
tardiness (Opinion dated March 10, 1975 of the
Labor Secretary).
8. Agency fees under Art. 248(e)of the LC
9. Deductions for value of meals and facilities freely
agreed upon
10. In case where the Ee is indebted to the Er where
such indebtedness has become due and
demandable (Art. 1706, NCC).
11. In court awards, wages may be subject of execution
or attachment, but only for debts incurred for food,
shelter, clothing, and medical attendance (Art.
1703, NCC).
12. Salary deduction of a member of a legally
established cooperative (R.A. 6938, Art. 59, LC).
Deductions for absences are allowed
Deductions for unpaid absences are allowed. If the Ee
is monthly paid, the equivalent daily rate should be
determined first before making the deduction.
38
 LABOR STANDARDS

NON-DIMINUTION OF BENEFITS Cost of facilities furnished by the Er may be charged

Non-diminution of benefits
GR: Benefits being given to Ees cannot be taken back
or reduced unilaterally by the Er because the benefit
has become part of the employment contract,
whether written or unwritten.
XPN: When diminution of benefits is done to correct
an error.
NOTE: If the error is not corrected in a reasonable time, it
ripens into a company policy and Ees can demand it as a
matter of right.
against an Ee
In order that the cost be charged against the Ee,
his/her acceptance of such facilities must be voluntary.
Requirements for deducting values for facilities
1. Proof must be shown that such facilities are
customarily furnished by the trade
2. The provision of deductible Facilities must be
voluntarily accepted in writing
3. The Facilities must be charged at fair and
reasonable value (Mabeza v. NLRC, G.R. No.
118506, April 18, 1997).

Instances when non-diminution of benefits is Status of food and lodging, or the electricity and
applicable water consumed by a hotel worker

It is applicable if it is shown that the grant of benefit: These are supplements. Considering, therefore, that
1. Is based on an express policy of the law; or hotel workers are required to work different shifts and
2. Has ripened into practice over a long period of are expected to be available at various odd hours, their
time and the practice is consistent and deliberate ready availability is a necessary matter in the
and is not due to an error in the construction/ operations of a small hotel. Furthermore, granting that
application of a doubtful or difficult question of meals and lodging were provided and indeed
law. constituted facilities, such facilities could not be
deducted without the Er complying first with certain
FACILITIES v. SUPPLEMENTS legal requirements (Mabeza v. NLRC, G.R. No. 118506,
April 18, 1997).
Facilities v. Supplement
WAGE DISTORTION/RECTIFICATION
FACILITIES SUPPLEMENT
Items of expenses Extra remuneration or Wage Distortion (WD)
necessary for the special privileges or
laborers and his familys benefits given to or A situation where an increase in wage results in the
existence and received by the elimination or severe contraction of intentional
subsistence laborers over and quantitative differences in wage or salary rates
above their ordinary between and among the Ee-groups in an
NOTE: Does not include earnings or wages establishment as to effectively obliterate the
tools of trade or articles / [Atok Big Wedge distinctions embodied in such wage structure based
services primarily for the Mining Co. v. Atok Big on skills, length of service or other logical bases of
benefit of the Er or Wedge Mutual Benefit differentiation.
necessary to the conduct of Assoc., G.R. No. L-7349,
the Ers business. July 19, 1955). Elements of WD
Forms part of the wage Independent of wage
Deductible from wage Not wage deductible 1. An existing hierarchy of positions with
For the benefit of the Granted for the corresponding salary rates.
worker and his family. convenience of the Er. 2. A significant change or increase in the salary rate
of a lower pay class without a corresponding
Criterion in determining whether an item is a increase in the salary rate of a higher one;
supplement or facility 3. The elimination of the distinction between the 2
groups or classes; and
The criterion is not so much with the kind of the 4. The WD exists in the same region of the country
benefit or item (food, lodging, bonus or sick leave) (Alliance Trade Unions v. NLRC, G.R. No. 140689,
given, but its purpose (State Marine v. Cebu Seamens February 17, 2004).
Assn., G.R. No. L-12444, February 28, 1963).

UNIVERSITY OF SANTO TOMAS

39 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Basic principles in WD Non-strikeablity of WD

1. The concept of WD assumes an existing group or WD is non-strikeable (Ilaw at Buklod ng Manggagawa

classification of Ees which establishes distinctions v. NLRC, G.R. No. 91980, June 27, 1991). WD is neither
among such Ees on some relevant or legitimate a deadlock in collective bargaining nor ULP.
basis. This classification is reflected in a differing
wage rate for each of the classes of Ees. DIVISOR TO DETERMINE DAILY RATE
2. Often results from Government decreed increases
Ways for the computation of the Estimated
in minimum wages.
Equivalent Monthly Rate (EEMR) of daily-paid Ees
3. Should a WD exist, there is no legal requirement
that, in the rectification of that distortion by a re-
1. For those who are required to work every day
adjustment of the wage rates of the differing
including Sundays or rest days, special days and
classes of Ees, the gap which had previously or
regular holidays.
historically existed be restored in precisely the
same amount. In other words, correction of a WD
EEMR = (Applicable daily rate x 393.50
may be done by re-establishing a substantial or
days)/12
significant gap (as distinguished from the
historical gap) between the wage rates of the Where 393.50:
differing classes of Ees.
= 298 ordinary working days
4. The re-establishment of a significant difference in
wage rates may be the result of the resort to = 24 for 12 regular holidays x 200%
grievance procedures or CB negotiations (Metro
= 67.60 for 52 rest days x 130%; and
Transit Org., Inc. v. NLRC, G.R. No. 116008, july 20,
1995). = 3.90 for 3 special days x 130%
2. For those who do not work and are not considered
Duty of the Er and the union/worker if there is WD
paid on Sundays or rest days.
The Er and the union shall negotiate to correct the
distortions. If there is no union, the Er and the workers EEMR = (Applicable daily rate x 313 days)/12
shall endeavor to correct such distinctions.
Where 313:
Process for correction of wage distortion of organized = 298 ordinary working days
establishments v. unorganized establishments
= 12 regular holidays; and

Organized Unorganized = 3 special holidays

Establishment Establishment 3. For those who do not work and are not considered
(with union) (without union) paid on Saturdays and Sundays or rest days
The Er and the union The Er and the workers
shall negotiate to shall endeavor to EEMR = (Applicable daily rate x 261 days)/12
correct distortion. correct the distortion.
Any dispute shall be Where 261:
Any dispute shall be
resolved through a = 246 ordinary working days
settled through the
grievance procedure
NCMB. = 12 regular holidays; and
under the CBA.
If it remains = 3 special holidays
If it remains unresolved
unresolved, it shall be
within 10 days it shall be REST PERIODS
dealt with through
referred to the NLRC.
voluntary arbitration.
The NLRC shall conduct WEEKLY REST DAY
The dispute will be
continuous hearings and
resolved within 10 days Right to weekly rest day (WRD)
decide the dispute
from the time the
within 20 days from the
dispute was referred to Every Er shall give his Ees a rest period of not less than
time the same was
voluntary arbitration. 24 consecutive hours after every 6 consecutive normal
referred.
work days (Sec. 3, Rule III, Book III, IRR).

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 40
 LABOR STANDARDS

Scope of WRD 6. Analogous or similar circumstances as determined

by the SLE;
It shall apply to all Ers whether operating for profit or 7. Work is necessary to avail of favorable weather or
not, including public utilities operated by private environmental conditions where performance or
persons (Sec. 1, Rule III, Book III, IRR). quality of work is dependent thereon.

Person who determines the WRD
GR: Er shall determine and schedule the WRD of his Ee.
XPNs:
1. CBA
2. Rules and regulations as the SLE provides
3. Preference of Ee based on religious grounds Ee
shall make known his preference in writing at least
7 days before the desired effectivity of the initial rest
day so preferred [Sec. 4(1), Rule III, Book III, IRR].
Ee volunteers to work on his rest day under other
circumstances
He shall express it in writing subject to additional
compensation [Sec. 6(2), Rule III, Book III, IRR]
Premium pay
It is the additional compensation for work rendered by
the Ee on days when normally he should not be
working such as special holidays and WRDs.

XPNs to XPN no. 3: Er may schedule the WRD of his Er and Ee can agree on the rate of premium pay other
choice for at least 2 days in a month if the preference than that provided by law
of the Ee will inevitably result in:
a. serious prejudice to the operations of the Nothing shall prevent the Er and his Ee or their
undertaking and representatives from entering into any agreement
b. the Er cannot normally be expected to resort with terms more favorable to the Ees; Provided, it shall
to other remedial measures [Sec. 4(2) , Rule not be used to diminish any benefit granted to the Ees
III, Book III, IRR]. under existing laws, agreements and voluntary Er
practices (Sec. 9, Rule III, Book III, IRR).
Right of the Ee to know the schedule of their WRDs
Rates of compensation for rest day, Sunday or
Er shall make known rest period by means of holiday work
1. Written notice
2. Posted conspicuously in the workplace RATES OF ADDITIONAL
3. At least 1 week before it becomes effective (Sec. INSTANCES
COMPENSATION
5, Rule III, Book III, IRR). Work on a scheduled
+ 30% premium pay of
rest day
EMERGENCY REST DAY WORK 100% RW (Sec. 7, Rule III,
Book III, IRR)
Ee to work on his rest day
Work performed on
GR: The Ee cannot be compelled by the Er to work on Sundays and Holidays + 30% premium pay of
his rest day. by an Ee who has no 100% RW (Sec. 7, Rule III,
regular workdays and Book III, IRR)
XPNs:
1. Urgent work to be performed on the machinery, rest days
equipment or installation, to avoid serious loss Work on a Sunday + 30% premium pay of
which the Er would otherwise suffer; (If Ees scheduled rest 100% RW (Sec. 7, Rule III,
2. Nature of work requires continuous operations day) Book III, IRR)
for 7 days in a week or more and stoppage of the 1st 8 hrs: + 30% PP of
work may result in irreparable injury or loss to the
100% RW
Er;
3. Abnormal pressure of work due to special Work performed on
circumstances, where the Er cannot be ordinarily Excess of 8 hrs: + 30% of
any Special Holiday
expected to resort to other measures; hourly rate on said date
4. Actual or impending emergencies (serious (M.C. No. 10, Series of
accident, fire, flood, typhoon, earthquake, etc.) 2004).
5. Prevent loss or damage to perishable goods;

UNIVERSITY OF SANTO TOMAS

41 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

1st 8 hrs: + 50% PP of XPN: Otherwise declared by the President

100% RW
Work performed on a 2. Local Special Public Holiday Regular working day
Special Holiday and
Excess of 8 hrs:+ 30% of
same day is the NATIONAL SPECIAL
hourly rate on said date DATE
scheduled rest day DAYS
(M.C. No. 10, Series of
All Saints Day November 1
2004).
Last Day of the Year December 31
Ninoy Aquino Day August 21
Ee is only entitled to his
basic rate. No PP is According to its
required. Chinese New Year respective date in the
Work performed on a calendar
Special Working Reason: Work performed Other days declared by
Holiday is considered work on law
ordinary working days 1. Special Non-working November 2
(Sec. 7, Rule III, Book III, days
IRR). 2. Special Public
Holidays
NOTE: Holiday work provided under Art. 93 pertains to 3. Special National
special holidays or special days. Holiday
4. Special Holiday ( for
Q: Jose applied with Mercury Drug Company for the all schools)
position of Sales Clerk. Mercury Drug Company
a. Edsa Revolution February 25
maintains a chain of drug stores that are open every
day till late at night. Jose was informed that he had Anniversary
to work on Sundays and holidays at night as part of LOCAL SPECIAL DAYS
the regular course of employment. He was presented Those declared by:
with a contract of employment setting forth his e.g. Manila day (in
1. Law, or
compensation on an annual basis with an express Manila only)
2. Ordinance
waiver of extra compensation for work on Sundays
(Proclamation 295, s. of 2011 of President Benigno
and holidays, which Jose signed. Is such a waiver
Aquino III)
binding on Jose? Explain. (1996 Bar Question)
NATIONAL SPECIAL
A: No. The waiver is not binding on Jose. Rights may be DATE
waived, unless the waiver is contrary to law, public DAYS
order, public policy, morals and customs. The waiver All Saints Day November 1
in this case is void. Last Day of the Year December 31
Ninoy Aquino Day August 21
HOLIDAY PAY/PREMIUM PAY
Other days declared by
Holiday pay law
1. Special Non-working November 2
It is a premium given to Ees pursuant to the law even days December 24
if he has not been suffered to work on a regular 2. Special Public Holidays
holiday. It is limited to the 12 regular holidays, also 3. Special National
called legal holidays listed by law. The Ee should not
Holiday
have been absent without pay on the working day
preceeding the regular holiday. 4. Special Holiday ( for all
schools)
Classes of special days a. Edsa Revolution February 25
Anniversary
1. National Special Public Holiday LOCAL SPECIAL DAYS
GR: Non-working days

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 42
 LABOR STANDARDS

Those declared by: Determination of eidl fitr and/or eidl adha

e.g. Manila day (in
1. Law, or
Manila only) The proclamation declaring a national holiday for the
2. Ordinance
observance of Eidl Fitr and/or Eidl Adha shall be
(R.A. 9849, 2009)
issued:
1. After the approximate date of the Islamic holiday
Regular holidays (RH)
has been determined in accordance with the:
a. Islamic Calendar (Hijra) or
They are compensable whether worked or unworked
b. Lunar Calendar or
subject to certain conditions. They are also called legal
c. Upon astronomical calculations
holidays. The following are considered regular
d. Whichever is possible or convenient
holidays:
2. The Office of Muslim Affairs shall inform the Office
of the President on which day the holiday shall fall
NOTE: RH falling within temporary or periodic shutdown and
temporary cessation of work are compensable. However, if (Proclamation 295, s. of 2011 of President Benigno
the temporary or periodic shutdown and cessation of work Aquino III).
is due to business reverses, the Er may not pay the Ees during
such period. A Christian Ee working within the Muslim area cannot
be compelled to work during Muslim holiday
REGULAR HOLIDAYS DATE
New Years Day January 1 All workers, Muslims and Christians, working within
the Muslim area are entitled to holiday pay on Muslim
Maundy Thursday According to their
holidays (SMC v. CA, G.R. 146775, January 30, 2002).
respective dates in
Good Friday the calendar Muslim Ee working outside the Muslim area cannot
After the be compelled to work during the observance of the
determination of MH
Eidl Fitr
approximate dates
of the Islamic GR: Muslim Ees shall be excused from work during MH
without diminution of salary or wages.
holidays in
accordance with the XPN: Those who are permitted or suffered to work on
Islamic calendar MH are entitled to at least 100% basic pay + 100% as
Eidl Adha (Hijra) or the lunar premium of their basic pay (SMC v. CA, G.R. 146775,
calendar, or upon January 30, 2002).
Islamic astronomical
Regular holiday (RH) v. Special holiday
calculations
Araw ng Kagitingan April 9 REGULAR HOLIDAY SPECIAL HOLIDAY
Labor Day May 1 If Unworked
Independence Day June 12 Regular pay
Last Monday of (subject to certain
National Heroes Day No Pay
August conditions for daily paid
Ees)
Bonifacio Day November 30
If worked
Christmas Day December 25
+ 30% premium pay of
Rizal Day December 30 2x regular pay (200%)
100% RW

Muslim holidays (MH) Work on RH

Muslim holidays are those observed in specified An Er may require an Ee to work on RH but Ee shall be
Muslim areas. All private corporations, offices, compensated twice his regular rate.
agencies and entities or establishments operating
within the designated Muslim provinces and cities are
required to observe Muslim holidays.

UNIVERSITY OF SANTO TOMAS

43 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Rates of compensation for RH on Ees regular to its monthly paid Ee (Wellington v.Trajano, G.R.
workday and rest day 114698, July 03, 1995).

FORMULAS TO COMPUTE WAGES ON Concept of absences

REGULAR HOLIDAYS
(M.C.No.10, Series of 2004) ABSENCES
RH on Ees regular LOA with pay on the LOA without pay on the
RH on Ees rest day day immediately day immediately
workday
If unworked preceding RH. preceding a RH.
100% 100% GR: An Ee may not be
paid the required HP
e.g. Php 300 RW e.g. Php 300 RW if he has not worked
If worked (1st 8 hrs) on such RH.
200% 200% + 30% of 200%
XPNs: Where the day
GR: All covered Ees are
immediately
e.g. 300(RW) e.g 600 (200% of RW) entitled to HP.
preceding the
+ 300 X 0.3
holiday is a:
600 = Total Wage (TW) 180
1. Non-working day in
the establishment or
600 + 180 = 780 (TW)
2. The scheduled rest
If worked (OT)(excess of 8 hrs)
day of the Ee.
230%
230% + 30% of hourly Effect in case there is a temporary or periodic
200% + 30% of hourly rate rate on said date shutdown and temporary cessation of work
on said date
TEMPORARY OR PERIODIC SHUTDOWN and
Important condition that should be met in order to TEMPORARY CESSATION OF WORK
avail/receive the single holiday pay (Sec. 7, Rule IV, Book III, IRR)
Instances Rule:
The Ee should not have been absent without pay on
the working day preceding the RH. 1. Yearly inventory, or
RH falling within the
2. When the repair or
period shall be
Monthly paid v. Daily paid Ees cleaning of machineries
compensated.
is undertaken
Monthly Paid Ees Daily Paid Ees Due to business reverses
One whose wage or salary is RH may not be paid
One whose wage or (cessation as authorized by
being paid everyday of the by the Er
salary is being paid the SLE)
month, including rest days,
only on those days
Sundays, regular or special
he actually worked, COVERAGE, EXCLUSIONS
days, although he does not
except in cases of
regularly work on these
regular or special Persons entitled to holiday pay
days.
days, although he
does not regularly GR: All Ees are entitled (Sec.1, Rule IV, Book III, IRR).
Not excluded from benefit
work on these days.
of holiday pay.
XPNs:
Effect if a legal holiday falls on a Sunday 1. Government Ees and any of its political
subdivisions, including GOCCs (with original
A legal holiday falling on a Sunday creates no legal charter)
obligation for the Er to pay extra to the Ee who does 2. Retail and service establishments regularly
not work on that day, aside from the usual holiday pay employing less than 10 workers
3. Domestic helpers and persons in the personal
service of another

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 44
 LABOR STANDARDS

4. Ee engaged on task or contract basis or purely members as "no class days" certainly the latter do
commission basis not expect payment for said unworked days, and
5. Members of the Family of the Er who are this was clearly in their minds when they entered
dependent on him for support into the teaching contracts (Jose Rizal College v.
6. Managerial Ee and other members of the NLRC, G.R. No. 65482, December 01, 1987).
managerial staff 2. If during special public holidays Yes. The law and
7. Field personnel and other Ee whose time and the IRR governing holiday pay are silent as to
performance are unsupervised by the Er payment on Special Public Holidays. It is readily
8. Ee paid fixed amount for performing work apparent that the declared purpose of the holiday
irrespective of the time consumed in the pay which is the prevention of diminution of the
performance thereof (Sec. 1, Rule IV, Book III, IRR). monthly income of the Ees on account of work
interruptions is defeated when a regular class day
TEACHERS, PIECE WORKERS, TAKAY, SEAFARERS, is cancelled on account of a special public holiday
SEASONAL WORKERS and class hours are held on another working day to
make up for time lost in the school calendar.
Holiday pays of certain Ees Otherwise stated, the faculty member, although
forced to take a rest, does not earn what he should
EMPLOYEES RULE earn for that day. Be it noted that when a special
1. RH during semestral public holiday is declared, the faculty member paid
Private school vacations by the hour is deprived of expected income, and it
does not matter that the school calendar is
teachers (Faculty - Not entitled to holiday
extended in view of the days or hours lost, for their
members of pay income that could be earned from other sources is
colleges and 2. RH during Christmas lost during the extended days. Similarly, when
universities) vacation classes are called off or shortened on account of
- Entitled to holiday pay typhoons, floods, rallies, and the like, these faculty
Holiday pay shall not be less members must likewise be paid, whether or not
extensions are ordered (Jose Rizal College v. NLRC,
Ee paid by: than his average daily earnings
G.R. No. 65482, December 01, 1987).
1. results or for the last 7 actual work days
2. output preceding the Regular holiday. Double holiday pay
(Piece work Provided: Holiday pay shall not
payment) be less than the statutory There are 2 RHs falling on the same day.
minimum wage rate.
May not be paid the required MAUNDY
WED THURSDAY & ARAW RATE
Seasonal Workers Holiday pay during off-season
NG KAGITINGAN
where they are not at work. Present Unworked 200%
Workers having LOA w/pay Unworked 200%
no regular work Shall be entitled to holiday pay 300%
LOA w/ pay Worked
days (at least)
Seafarers Shall be entitled to holiday pay Authorized 300%
Worked
absence (at least)
Q: Are the school faculty who according to their 390%
contracts are paid per lecture hour entitled to Authorized Worked and day is (+30% of
unworked holiday pay? absence Rest Day each 3
100%)
A:
1. If during RH No. Art. 94 of the LC is silent with Concept of successive regular holidays
respect to faculty members paid by the hour who
because of their teaching contracts are obliged to ENTITLED
MAUNDY GOOD
work and consent to be paid only for work actually WED TO HOLIDAY
THURS FRIDAY
done (except when an emergency or a fortuitous PAY
event or a national need calls for the declaration of Worked RH RH Yes. Both
special holidays). Regular holiday specified as such
by law are known to both school and faculty

UNIVERSITY OF SANTO TOMAS

45 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

LOA 4. Those already enjoying vacation leave with pay of

RH RH Yes. Both at least 5 days
w/pay
LOA w/o 5. Managerial Ees
RH RH No. Both 6. Field personnel and other Ees whose performance
pay
is unsupervised by the Er
Yes. Only to 7. Employed in establishments regularly employing
LOA w/o
Worked RH holiday pay less than 10 workers
pay
on Friday 8. Exempt establishments
9. Engaged with atask or contract basis, purely
Conditions so that an Ee may be entitled to 2 commission basis, or those who are paid in a fixed
successive holiday pays amount of performing work irrespective of the
time consumed in the performance thereof [Art.
On the day immediately preceding the 1st RH, he must 95(b), LC].
be:
1. Present (worked), or Teachers of private schools on contract basis are
2. On LOA with pay (Sec. 10, Rule IV, Book III, IRR). entitled to service incentive leave

If the above stated conditions are not met
He must work on the 1st RH to be entitled to holiday
pay on the 2nd RH (Sec. 10, Rule IV, Book III, IRR).
LEAVES
SERVICE INCENTIVE LEAVE
Service incentive leave (SIL)
It is 5-days leave with pay for every Ee who has
rendered at least 1 year of service. It is commutable to
its money equivalent if not used or exhausted at the
end of the year.
At least 1 year of service
Service for not less than 12 months, whether
continuous or broken reckoned from the date the Ee
started working, including authorized absences and
paid regular holidays unless the working days in the
establishment as a matter of practice or policy, or that
provided in the employment contract is less than 12
months, in which case said period shall be considered
as one year (Sec. 3, Rule V, Book III, IRR).
The phrase "those who are engaged on task or
contract basis" should, however, be related to "field
personnel" applying the rule on ejusdem generis that
those general and unlimited terms are restrained and
limited by the particular terms that they follow.
Clearly, Cebu Institute of Technology teaching
personnel cannot be deemed as field personnel which
refers "to non-agricultural Ees who regularly perform
their duties away from the principal place of business
or branch office of the Er and whose actual hours of
work in the field cannot be determined with
reasonable certainty (Par. 3, Art. 82, LC); (CIT v. Ople,
G.R. No. 70203, December 18, 1987).
Part-time workers are entitled to the full benefit of
the yearly 5-day service incentive leave
A part-time worker is entitled to service incentive
leave whether the service within 12 months is
continuous or broken or where the working days in the
employment contract as a matter of practice or plicy is
less than 12 months. The availment and commutation
of the same can be proportionate to the daily work
rendered and the regular daily salary. (DOLEs
explanatory Bulletin on Part-time Employment,
January 2, 1996).

Persons entitled to SIL Entitlement of piece-rate workers to SIL

GR: Applies to every Ee who has rendered at least 1
year of service (Art. 95[a]).
XPNs:
1. Government Ees and any of its political
subdivisions including GOCCs
2. Those already enjoying the benefit
3. Domestic helpers and persons in the personal
services of another
Piece-rate workers are entitled to the full benefit of
the yearly 5-day service incentive leave. Under P.D.
851 or 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. Ees engaged on
task or contract basis or paid on
purely commission basis are not automatically
exempted from the grant of SIL, unless, they fall under
the classification of field personnel (Serrano v.
Severino Santos, G.R. No. 187698, August 09, 2010).

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 46
 LABOR STANDARDS
NOTE: Field personnel shall refer to non-agricultural Ees
who regularly perform their duties away from the principal
place of business or branch office of the employer and
whose actual hours of work in the field cannot be
determined with reasonable certainty (Ibid.)
Entitlement of Ees with salaries above minimum
wage to SIL
Ees with salaries above minimum wage are entitled to
service incentive leave. The difference between the
minimum wage and the actual salary received by the
Ees cannot be deemed as their 13th month pay and SIL
pay as such difference is not equivalent to or of the
same import as the said benefits contemplated by law
(JPL Marketing Promotions v. CA, G.R. No. 151966, July
08,2005).
Entitlement of terminated Ees to SIL
1. Illegally dismissed Ees - entitled to SIL until actual
reinstatement (Integrated Contractor and
Plumbing Works, Inc. v. NLRC, G.R. No. August 09,
2005).
2. Legally dismissed Ees the Ee who had not been
paid of SIL from the outset of employment is
entitled only of such pay after a year from
commencement of service until termination of
employment or contract (JPL Marketing
Promotions v. CA, G.R. No. 151966, July 08, 2005).
Commutability of SIL to monetary equivalent
It is commutable if not used at the end of the year. It
is aimed primarily at encouraging workers to work
continuously and with dedication to the company.
Basis for cash conversion
The basis shall be the salary rate at the date of
commutation. The availment and commutation of the
SIL may be on a pro-rata basis (No. VI(c), DOLE
Handbook on Workers Statutory Monetary Benefit).
Establishments exempt from the application of the
SIL Law
Establishments employing less than 10 Ees are
exempted by the LC and the Implementing Rules from
paying SIL. The clear policy of the LC is to include all
establishments, except a few classes, under the
coverage of the provision granting SIL to
workers (Murillo v. Sun Valley Realty, Inc., G.R. No. L-
67272 June 30, 1988).
47
MATERNITY LEAVE
Maternity leave benefit
A covered female Ee is entitled to a daily maternity
benefit equivalent to 100% of her present basic salary,
allowances and other benefits or the cash equivalent
of such benefits for 60 days or 78 days in case of
caesarean delivery.
Conditions for availment of maternity leave benefit
1. The Ee shall have notified her Er of her pregnancy
and the probable date of her childbirth which
notice shall be transmitted to the SSS;
2. The payment shall be advanced by the Er in 2
equal installments within 30 days from the filing
of the maternity leave application;
3. In case of caesarean delivery, the Ee shall be paid
the daily maternity benefit for 78 days;
4. Payment of daily maternity benefits shall be a bar
to the recovery of sickness benefits for the same
compensable period of 60 days for the same
childbirth, abortion, or miscarriage;
5. The maternity benefits provided under Sec. 14-A
shall be paid only for the first four deliveries;
6. The SSS shall immediately reimburse the Er of
100% of the amount of maternity benefits
advanced to the Ee by the Er upon receipt of
satisfactory proof of such payment and legality
thereof; and
7. If an Ee should give birth or suffer abortion or
miscarriage without the required contributions
having been remitted for her by her Er to the SSS,
or without the latter having been previously
notified by the Er of the time of the pregnancy, the
Er shall pay to the SSS damages equivalent to the
benefits which said Ee would otherwise have been
entitled to, and the SSS shall in turn pay such
amount to the Ee concerned.
Requirements in order that maternity benefits may
be claimed
1. There is childbirth, abortion or miscarriage.
2. She has paid at least three monthly
contributions.
PATERNITY LEAVE
Paternity leave
It refers to the benefits granted to a married male Ee
allowing him not to report for work for 7 days but
continues to earn the compensation therefore, on
the condition that his spouse has delivered a child or
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
suffered a miscarriage for purposes of enabling him to
effectively lend support to his wife in her period of
recovery and/or in the nursing of the newly-born child.
Concept of paternity leave benefits
Every married male Ee in the private and public sectors
shall be entitled to a paternity leave of 7 days with full
pay for the first 4 deliveries of the legitimate spouse
with whom he is cohabiting.
Conditions for entitlement to paternity leave
The male Ee is:
1. Legally married to, and is cohabiting with the
woman who delivers the baby;
2. Ee of private or public sector;
3. Maybe availed of only for the first 4 deliveries of
the legitimate spouse with whom he is cohabiting;
and
4. Notify his Er of the pregnancy of his legitimate
spouse and the expected date of such delivery
NOTE: Delivery shall include childbirth or any miscarriage.
Q: Ron is a bank employee of BPI. He is cohabiting
with Michelle for five straight years with whom he
has four children. In the fifth year of their
cohabitation, Michelle had her miscarriage. Ron is
availing himself of his paternity leave. Is he entitled
to paternity leave?
A: No. Ron is not entitled to paternity leave because
the facts of the case only show that he is only
cohabiting with Michelle. The law expressly provides
that the male must be legally married to the woman
with whom he is cohabiting as a condition for
entitlement of paternity leave. Even assuming that
Ron is legally married to Michelle, he cannot avail also
of the paternity leave because the law limits the
deliveries only to four which include childbirth or
miscarriage. Based on the facts, it is already the 5th
delivery of the woman.
PARENTAL LEAVE
Parental leave
Leave benefits granted to a solo parent to enable
him/her to perform parental duties and
responsibilities - where physical presence is required.
In addition to leave privileges under existing laws,
parental leave of not more than 7 working days every
year shall be granted to any solo parent Ee who has
rendered service of at least 1 year (Sec. 8).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Conditions for entitlement of parental leave
1. He or she must fall among those referred to as a
solo parent.
2. Must have the actual and physical custody of the
child or children.
3. Must have at least rendered service of one year to
his or her employer.
4. He or she must remain a solo parent.
Persons considered a solo parent entitled to parental
leave
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:
a. Death of spouse;
b. Detention or service of sentence of spouse
for a criminal conviction for at least 1 yr;
c. Physical and/or mental incapacity of
spouse
d. Legal separation or de facto separation
from spouse for at least 1 year as long as
he/she is entrusted with the custody of
the children;
e. 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;
f. Abandonment of spouse for at least 1 yr;
3. Unmarried mother/father who has preferred to
keep and rear his or her child/children instead of:
a. having others care for them or
b. give them up to a welfare institution;
4. Any other person who solely provides:
a. parental care and
b. support to a child or children;
5. Any family member who assumes the responsibility
of head of family as a result of the:
a. death,
b. abandonment,
c. disappearance or
d. prolonged absence of the parents or solo
parent.
NOTE: 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. (Sec.3)
48
 LABOR STANDARDS
LEAVES FOR VICTIMS OF VIOLENCE AGAINST
WOMEN and their CHILDREN (R.A. 9262)
A female Ee who is a victim of violence (physical,
sexual, or psychological) is entitled to a paid leave of
10 days in addition to other paid leaves (R.A. 9262,
Anti- VAWC Act). This is known as the battered woman
leave.
SPECIAL LEAVE BENEFIT FOR WOMEN
A woman Ee having rendered continuous aggregate
employment service of at least 6 months for the last
12 months shall be entitled to a special leave benefit
of 2 months with full pay based on her gross monthly
compensation following surgery caused by
gynaecological disorders (Sec. 18, R.A. 9710, Magna
Carta of Women).
SERVICE CHARGES
Service charges
These are charges collected by hotels, restaurants and
similar establishments at the rate of 85% for covered
Ees equally distributed among them, and 15% for the
management to answer for losses and breakages.
Covered employees
GR: All Ees are covered, regardless of their position,
designation, and employment status, irrespective of
the method by which their wages are paid.
NOTE: Applies only to hotels, restaurants and similar
establishment collecting service charges.
XPN: Managerial Ees (Sec. 2, Rule VI, Book III, IRR)
Period to distribute the share of Ee
The period is not less than once every 2 weeks or twice
a month at intervals not exceeding 16 days.
Service charge v. Tips
Service charges are collected by the management
from the customers. Tips are voluntary payments
made by the customers to the Ees for excellent service.
Applicable rule when service charge is abolished
If it is ablolished, the share of the covered Ees shall be
considered integrated in their wages on the basis of
the average monthly share of each Ees for the past 12
months immediately preceding the abolition.
49
NOTE: Service charges form part of the award in illegal
dismissal cases.
13th MONTH PAY
13th month pay or its equivalent
Additional income based on wage required by P.D. 851
requiring all Ers to pay their Ees a 13th month pay
which is equivalent to 1/12 of the total basic salary
earned by an Ee within a calendar year.
NOTE: The absence of an express provision in the CBA
obligating the Er to pay the members of a union 13th month
pay is immaterial. Notwithstanding therefore the absence of
any contractual agreement, the payment of a 13th month pay
being a statutory grant, compliance with the same is
mandatory and is deemed incorporated in the CBA.
Persons covered by P.D. 851
All rank-and-file Ees are covered by P.D. 851 regardless
of the amount of basic salary that they receive in a
month, if their Ers are not otherwise exempted from
paying the 13th month pay. Such Ees are entitled to the
13th month pay regardless of said designation of
employment status, and irrespective of the method by
which their wages are paid.
Provided, that they have worked for at least 1 month,
during a calendar year (Revised Guidelines on the
Implementation of the 13th Month Pay Law).
Persons not covered by P.D. 851
1. Government Ees
2. Household helpers
NOTE: Covered by R.A. 10361 or the Batas
Kasamabahay
3. Ees paid purely on commission basis
4. Ees already receiving 13th month pay
Q: What would be your advice to your client, a
manufacturing company, who asks for your legal
opinion on whether or not the 13th Month Pay Law
covers a casual Ee who is paid a daily wage? (1998 Bar
Question)
A: I will advise the manufacturing company to pay the
casual Ee 13th Month Pay if such casual Ee has worked
for at least 1 month during a calendar year. The law on
the 13th Month Pay provides that Ees are entitled to
the benefit of said law regardless of their designation
or employment status.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
The SC ruled in (Jackson Building-Condominium Corp.
v. NLRC, G.R. No. 112546, March 14, 1996),
interpreting P.D.851, as follows: Ees are entitled to the
13th month pay benefits regardless of their designation
and irrespective of the method by which their wages
are paid.
NOTE: An Er may give to his Ees of the required 13th Month
pay before the opening of the regular school year and the
other half on or before Dec. 24.
Form of the 13th month pay
1. Christmas Bonus
2. Midyear Bonus
3. Profit Sharing Scheme
4. Other Cash bonuses amounting to not less than
1/12 of its basic salary
NOTE: It must always be in the form of a legal tender. The
following cannot be considered as substitute for 13th month
pay:
1. Free rice
2. Electricity
3. Cash and stock dividends
4. Cost-of-living Allowance (Sec. 3)
Q: Concepcion Textile Co. included the OT pay, night-
shift differential pay, and the like in the computation
of its Ees 13th month pay. Subsequently, with the
promulgation of the decision of the SC in the case of
SMC v. Inciong (103 SCRA 139) holding that these
other monetary claims should not be included in the
computation of the 13th Month Pay, Concepcion
Textile Co. sought to recover under the principle of
solutio indebiti the overpayment of the Ees 13th
month pay, by debiting against future 13th month
payments whatever excess amounts it had previously
made.
a. Is the Company's action tenable?
b. With respect to the payment of the 13th
month pay after the SMC ruling, what
arrangement, if any, must the Company
make in order to exclude from the 13th
month pay all earnings and remunerations
other than the basic pay? (1994 Bar
Question)
A:
a. The Company's action is not tenable. The
principle of solutio indebiti which is a civil law
concept is not applicable in labor law (Davao
Fruits Corp. v. NLRC, et al., G.R. No. 85073,
August 24, 1993). After the 1981 SMC ruling,
the High Court decided the case of (Philippine
Duplicators Inc. v. NLRC, GR 110068,
November 11, 1993). Accordingly,
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
management may undertake to exclude sick
leave, vacation leave, maternity leave,
premium pay for regular holiday, night
differential pay and cost of living allowance.
b. The company shall include sales commissions
based on the settled rule. (Songco v. NLRC,
G.R. No. L-50999, March 23, 1990).
Ers covered by 13th month pay under P.D. 851
GR: Payment of 13th month pay applies to all Ers.
XPNs:
1. Distressed Ers:
a. Currently incurring substantial losses or
b. In the case of non-profit institutions and
organizations, where their income,
whether from donations, contributions,
grants and other earnings from any source,
has consistently declined by more than
40% of their normal income for the last 2
years, subject to the provision of Sec. 7 of
P.D. 851;
2. The Government and any of its political
subdivisions, including GOCCs, except those
corporations operating essentially as private
subsidiaries of the Government;
3. Ers already paying their Ees 13th month pay or
more in a calendar year of its equivalent at the
time of this issuance:
Its equivalent shall include:
a. Christmas bonus
b. Mid-year bonus
c. Profit-sharing payments and
d. Other cash bonuses amounting to not
less than 1/12th of the basic salary
It shall not include:
a. Cash and stock dividends,
b. COLA
c. All other allowances regularly enjoyed
by the Ee, as well as non-monetary
benefits.
4. Ers of household helpers and persons in the
personal service of another in relation to such
workers; and
NOTE: Covered by R.A. 10361 or the Batas
Kasamabahay
5. Ers of those who are paid on apurely
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
50
 LABOR STANDARDS
where the workers are paid on a piece-rate
basis in which case the Er shall be covered by
this issuance insofar as such workers are
concerned (Sec 3, P.D. 851).
Options of covered Ers
1. Pay 1/2 of the 13th month pay required before the
opening of the regular school year and the other
half on or before the 24th day of December of
every year.
2. In any establishment where a union has been
recognized or certified as the CB agent of the Ee,
the periodicity or frequency of payment of the
13th month pay may be the subject of agreement.
Adjudicated claims
Non-payment of the 13th month pay provided by P.D.
851 and the rules of NLRC shall be treated as money
claims cases.
The following Ees may or may not be entitled to 13th
month pay
1. Ee paid by results Entitled to 13th month pay.
NOTE: Ees paid a fixed or guaranteed wage plus
commission are also entitled to the mandated
13thmonth pay, based on their total earnings during the
calendar year, i.e. on both their fixed or guaranteed
wage and commission.
2. Those with Multiple Ers Government Ees working
part time in a private enterprise, including private
educational institutions, as well as Ees working in
2 or more private firms, whether full or part time
basis, are entitled to the required 13th month pay
from all their private Ers regardless of their total
earnings from each or all their Ers.
3. Private School Teachers, including faculty
members of universities and colleges Entitled
regardless of the number of months they teach or
are paid within a year, if they have rendered
service for at least 1 month within a year.
4. Resigned or Separated Ees - If resigned or
separated from work before the time of payment
of 13th month pay, entitled to monetary benefits
in proportion to the length of time he started
working during the calendar year up to the time of
resignation or termination of service. (Pro-rated
13th month pay)
Application of pro-ration of 13th month pay
GR: Pro-ration of 13th month pay applies only in cases
of resignation or separation from work; computation
51
should be based on length of service and not on the
actual wage earned by the worker (Honda Phils. v.
Samahan ng Manggagawasa Honda, G.R. No. 145561,
June 15, 2005).
XPN: Ees who are paid a guaranteed minimum wage
or commissions earned are entitled to 13th Month Pay
based on total earnings (Philippine Agricultural
Commercial and Industrial Workers Union v. NLRC,
G.R. No. 107994, August 14, 1995).
14th month pay not legally demandable
The granting of 14th month pay is a management
prerogative and is not legally demandable. It is
basically a bonus and is gratuitous in nature (Kamaya
Point Hotel v. NLRC, G.R. No. 75289, August 31, 1989).
Commission in relation to 13th month pay
1. The salesmans commissions, comprising a pre-
determined percent of the selling price of the
goods sold by each salesman, were properly
included in the term basic salary for purposes of
computing their 13th month pay.
2. The so-called commission paid to or received by
medical representatives of BoieTakeda Chemicals
or by the rank-and-file Ees of Phil. Fuji Xerox were
excluded from the term basic salary because
these were paid as productivity bonuses. Such
bonuses closely resemble profit sharing,
payments and have no clear, direct, necessary
relation to the amount of work actually done by
each individual Ee.
SEPARATION PAY
Separation pay
Separation pay refers to the amount due to the Ee who
has been terminated from service for causes
authorized by law such as the installation of labor-
saving losses or the closing or cessation of operation
of the establishment or undertaking.
Purpose for providing separation pay
Separation pay is intended to provide the Ee with the
wherewithal during the period he is looking for
another employment (Gabuay v. Oversea Paper
Supply, G.R. No. 148837, August 13, 2004).
Instances when Ee is entitled to separation pay
1. When the termination of employment is due to
causes authorized by law (Art. 284, LC).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
2. When the severance of employment is caused by
a disease, particularly when the Ee is found to be
suffering from any disease and whose continued
employment is prohibited by law or is prejudicial
to his health and of his co-Ees (Art. 284, LC).
3. When the termination from service has been
declared illegal, but his reinstatement to his
former position is no longer feasible for some
valid reason (Gabuay v. Oversea Paper Supply,
G.R. No. 148837, August 13, 2004).
4. In case of pre-termination of employment
contract in job-contracting arrangement (D.O 18-
02, Rules Implementing Art. 106 109, LC).
5. Where separation pay is awarded as a measure of
social or compassionate justice (PLDT v. NLRC,
G.R. No. L-80609, August 23, 1988).
RETIREMENT PAY
Retirement
It is the result of a bilateral act of the parties, a
voluntary agreement between the Er and the Ee
whereby the latter after reaching a certain age agrees
and/or consents to sever his employment with the
former (Soberano v. Secretary of Labor, G.R. No. L-
43753-56 and G.R. No.L-50991, August 29, 1980;
Ariola v. Philex Mining Corp, 446 SCRA 152).
Persons covered by retirement benefit
All Ees in the private sector:
1. Regardless of their position, designation or status;
and
2. Irrespective of the method by which their wages
are paid (Sec.1, Rule II, Book VI, IRR).
Persons not covered by retirement benefits
1. Ees of the National Government and its political
subdivisions, including GOCCs (if they are covered
by the Civil Service Law)
2. Domestic helpers and persons in the personal
service of another
3. Ees of retail, service, and agricultural
establishments or operations employing not more
than 10 Ees (Sec.2, Rule II, Book VI, IRR).
Kinds of retirement schemes
1. Compulsory and contributory in nature;
2. One set up by the agreement between the Er and
Ees in the CBA or other agreements between
them (other applicable employment contract);
3. One that is voluntarily given by the Er, expressly
as announced company policy or impliedly as in
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
the failure to contest the Ees claim for retirement
benefits (Marilyn Odchimar Gertach v. Reuters
Limited Phils., G.R. No. 14854, January 17, 2005).
Retroactive application of Art. 287 of the LC (on
retirement) as amended by R.A. 7641
Art. 287 of the LC as amended by R.A. 7641 can be
applied retroactively, provided that;
1. The claimant for retirement benefits was still the
Ee of the Er at the time the statute took effect;
and
2. The claimant was in compliance with the
requirements for eligibility under the statute for
such retirement benefits (PSVSIA v. NLRC, G.R. No.
115019, April 14, 1997).
Provisions of the retirement plan binding as part of
the employment contract
The retirement plan forms part of the employment
contract since it is made known to the Ees and
accepted by them, and such plan has an express
provision that the company has the choice to retire an
Ee regardless of age, with 20 years of service, said
policy is within the bounds contemplated by the LC.
Moreover, the manner of computation of retirement
benefits depends on the stipulation provided in the
company retirement plan (Progressive Devt
Corporation v. NLRC, G.R. No. 138826, October 30,
2000).
NOTE: Although retirement plan forms part of the
employment contract, before a right to retirement benefits
or pension vests in an Ee, he must have met the stated
conditions of eligibility with respect to the nature of
employment, age, and length of service. This is a condition
precedent to his acquisition of rights thereunder. SC ruled
that the conditions of eligibility for retirement must be met
at the time of retirement at which juncture the right to
retirement benefits or pension, if the Ee is eligible, vests in
him.
Again, it has been held that pension and retirement plans
create a contractual obligation in which the promise to pay
benefits is made in consideration of the continued faithful
service of the Ee for the requisite period (Brion v. South Phil.
Union Mission of the Seventh Day Adventist Church, 307
SCRA 497).
Q: The instant labor dispute between petitioners
(PAL) stemmed from petitioners act of unilaterally
retiring airline pilot Captain Albino Collantes under
PAL-ALPAP Retirement Plan. The SLE assailed the
order of PALs action of unilaterally retiring
Captain Collantes andfurther ordered that the basis
of the computation of Captain Collantes'
retirement benefitsshould be Art. 287 of the LC the
52
 LABOR STANDARDS
PAL-ALPAP Retirement Plan. But PAL contends that
the retirement plan should prevail as it is the
agreement between the parties. What should be the
basis of the computation of Captain Collantes
retirement benefits?
A: The basis of computation of Collantes retirement
benefits should be Art. 287 of the LC. The given
retirement benefits under the retirement plan is low
compared to the retirement benefits provided under
Art. 287 of the LC. Applying the second paragraph of
Art. 287 ofthe LC, an Ees retirement benefits under
any collective bargaining and other agreement shall
not be less than those provided in the LC. Hence, Art.
287 of the LC and not the PAL-ALPAP Retirement Plan,
should govern the computation of the benefits to be
awarded to Captain Collantes. Moreover, a pilot who
retires after twenty years of service or after flying
20,000 hours would still be in the prime of his life and
at the peak of his career, compared to one who retires
at the age of 60 years old. Based on this peculiar
circumstance that PAL pilots are in, the parties
provided for a special scheme of retirement different
from that contemplated in the LC. Conversely, the
provisions of Art. 287 of the LC could not have
contemplated the situation of PALs pilots. Rather, it
was intended for those who have no more plans of
employment after retirement, and are thus in need of
financial assistance and reward for the years that they
have rendered service. (Philippine Airlines, Inc. v.
Airline PilotsAssociation of the Philippines, G.R. No.
143686, January 15, 2002).
ELIGIBILITY
Retirement age
It is the age of retirement that is specified in the
1. CBA;
2. Employment contract;
3. Retirement plan [Sec. 3, Rule II, Book VI, IRR]; OR
4. Optional retirement age for underground mining
Ees
Retirement age in the absence of a retirement plan or
other applicable agreement
1. Optional Upon reaching 60 years old provided
that Ee has rendered 5 years of service.
NOTE: The option to retire upon reaching the age of 60
years or more but not beyond 65 is the exclusive
prerogative of the Ee if there is no provision on
retirement in a CBA or any other agreement or if the Er
has no retirement plan (R.A. 7641; Capili v. NLRC, G.R.
No. 117378, March 26, 1997).
53
2. Compulsory 65 years old, regardless of years of
service (Sec. 4, Rule II, Book VI, IRR).
NOTE: Retirement benefits, where not mandated by
law, may be granted by agreement of the Ees and their
Er or as a voluntary act on the part of the Er. Retirement
benefits are intended to help the Ee enjoy the
remaining years of his life, lessening the burden of
worrying for his financial support, and are a form of
reward for his loyalty and service to the Er (Aquino v.
NLRC, G.R. No. 87653, February 11, 1992).
Compulsory retirement age below 60 is allowed
Art. 287 permits Er and Ee to fix the applicable
retirement age at below 60. The same is legal and
enforceable so long as the parties agree to be
governed by such CBA (Pantranco North Express v.
NLRC, G.R. No. 95940, July 24, 1996).
Rule for extension of service of retiree upon reaching
the compulsory retirement age
Upon the compulsory retirement of an Ee or official in
the public or private service, his employment is
deemed terminated. The matter of extension of
service of such Ee or official is addressed to the sound
discretion of the Er (UST Faculty Union v. NLRC, G.R.
No. 89885, August 6, 1990).
AMOUNT
Computation of retirement benefits in the absence of
an applicable agreement or retirement plan
A retiree is entitled to a retirement pay equivalent to
at least month salary for every year of service, a
fraction of at least 6 months being considered as 1
whole year (R.A. 7641).
Composition of month salary or retirement pay
Unless parties provide for broader inclusions,
retirement pay is comprised of:
1. 15 days salary based on latest salary rate;
2. Cash equivalent of not more than 5 days of service
incentive leaves (22.5/year of service)
3. 1/12 of the 13th month pay
4. All other benefits as may be agreed upon by the
Er and Ee (Sec.5.2, Rule II, Book VI, IRR).
NOTE: Under Sec. 26 of R.A. 4670, otherwise known as
Magna Carta for Public School Teachers, public school
teachers having fulfilled the age and service requirements of
the applicable retirement laws shall be given one range
salary raise upon the retirement, which shall be the basis of
the computation of the lump sum of the retirement pay and
monthly benefit thereafter.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Q: In 1955, Hilaria was hired as a grade school teacher RETIREMENT PAY UNDER RA 7641 VIS--VIS
at the Sta. Catalina College. In 1970, she applied for RETIREMENT BENEFITS UNDER SSS AND GSIS LAWS
and was granted a 1 year leave of absence (LOA)
without pay due to the illness of her mother. After REVISED
the expiration in 1971 of her LOA, she had not been GOVERNMENT EMPLOYEES
SOCIAL
heard from by Sta. Catalina. In the meantime, she SERVICE COMPENSATI
SECURITY LAW
was employed as a teacher at the San Pedro Parochial INSURANCE ON ACT
School during SY 80-81 and at the Liceo de San ACT
Pedro, during SY 1981-1982. In 1982, she applied Compulsory Compulsory for Compulsory
anew at Sta. Catalina which hired her. On Mar 22, upon all E e s all permanent upon all Ers
1997, during the 51st Commencement Exercises of not over 60 Ees below 60 and their Ees
Sta. Catalina, Hilaria was awarded a Plaque of years of age and years of age not over
Appreciation for 30 yrs. of service and Php 12,000 as their Ers. upon 60years of
gratuity pay. On May 31, 1997, Hilaria reached the appointment of age; Provided,
compulsory retirement age of 65. Sta. Catalina 1. Filipinos permanent that an Ee
pegged her retirement benefits at Php recruited in the status, and for who is over 60
59,038.35. However, amount of Php 12,000 Philippines by all elective years of age
representing the gratuity pay, which was given to foreign-based officials for the and paying
her, was deducted from her retirement benefits. Ers for duration of contributions
employment their tenure. to qualify for
Should the gratuity pay be deducted from the abroad may be the retirement
retirement benefits? covered by the NOTE: Any or life
SSS on a person, whether insurance
A: Yes. Gratuity pay is separate and distinct from voluntary basis. elected or benefit
retirement benefits. It is paid purely out of generosity. appointed, in the
administered
service of an Er is
2. Compulsory by the System
a covered Ee if
Gratuity pay v. Retirement benefits upon all self- he receives shall be
employed compensation for subject to
GRATUITY PAY RETIREMENT BENEFITS persons earning such service. compulsory
It is paid to the Php 1, 800 or coverage.
beneficiary for the past Are intended to help the more per
annum.
services or favor Ee enjoy the remaining
(1997 Bar Exam Question)
rendered purely out of years of his life,
the generosity of the releasing him from the RETIREMENT BENEFITS OF WORKERS PAID BY
giver or grantor. It is not burden of worrying for RESULTS/ RETIREMENT BENEFITS OF PART-TIME
intended to pay a his financial support, WORKERS
worker for actual and are a form of Determination of the amount of retirement benefits
services rendered or for reward for his loyalty to of workers paid by results and part-time workers
actual performance. It is the Er (Sta. Catalina
The 15-day salary of workers paid by results and part-
a money benefit or College and Sr. Loreta time workers shall be determined from their average
bounty given to the Oranza, v. NLRC and daily salary which is the average daily salary for the last
worker, the purpose of Hilaria Tercera, G.R. No. 12 months reckoned from the date of their retirement,
which is to reward Ees 144483, November 19, divided by the number of actual working days in that
who have rendered 2003). particular period (Sec. 5.2 and 5.3 of the Rules
satisfactory service to Implementing the New Retirement Law).
the company.
TAXABILITY

Non-taxability of retirement benefits under R.A. 7641

Retirement benefits under R.A 7641 are tax exempt

provided that such benefits provided by the
retirement plan be equal or less than the minimum
requirement provided by law.

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 54
 LABOR STANDARDS
Requirements for tax exemption under R.A. 7641
1. That there be no CBA or other applicable
employment contract providing for retirement
benefits for an Ee; or
2. Even if there is a CBA or other applicable
employment contract providing for retirement
benefits for an Ee, that the same is below the
requirements set forth by law.
WOMEN WORKERS
PROVISIONS AGAINST DISCRIMINATION
State policy on non-discrimination against women
The State condemns discrimination against women in
all its forms and pursues by all appropriate means and
without delay the policy of eliminating discrimination
against women in keeping with the Convention on the
Elimination of All Forms of Discrimination Against
Women (CEDAW) and other international instruments
consistent with Philippine law. The State shall accord
women the rights, protection, and opportunities
available to every member of society (Sec. 2, R.A. 9710
or the Magna Carta of Women).
The State shall take steps to review and, when
necessary, amend and/or repeal existing laws that are
discriminatory to women within 3 years from the
effectivity of this Act (Sec. 12, R.A. 9710).
Discriminatory acts against women Ee
1. Discrimination with respect to the terms and
conditions of employment solely on account of sex
a. Payment of lesser compensation to a female
Ee as against a male Ee for work of equal
value
b. Favoring a male Ee with respect to
promotion, training opportunities, study and
scholarship grants on account of gender (Art.
135, LC).
c. Favoring a male applicant with respect to
hiring where the particular job can equally be
handled by a woman
d. Favoring a male Ee over a female Ee with
respect to the dismissal of personnel.
2. Stipulating, whether as a condition for
employment or continuation of employment:
a. That a woman Ee shall not get married, or
b. That upon marriage, such woman Ee shall be
deemed resigned or separated (Art. 136, LC).
55
Q: May a woman worker be dismissed on the ground
of dishonesty for having written single on the space
for civil status on the application sheet, contrary to
the fact that she was married?
A: Art. 136 of the LC, explicitly prohibits discrimination
merely by reason of marriage of a female Ee. The
policy of not accepting or disqualifying from work any
woman worker who contracts marriage is afoul of the
right against discrimination provided to all women
workers by our labor laws and by our Constitution
(PT&T Co. v. NLRC, G.R. No. 118978, May 23, 1997).
3. Dismissing, discriminating or otherwise prejudice
a woman Ee by reason of her being married (Art.
136, LC).
4. Art. 137 of the LC
NOTE: Discrimination in any form from pre-
employment to post employment, including hiring,
promotion or assignment, based on the actual,
perceived or suspected HIV status of an individual is
unlawful (Philippine AIDS Prevention and Control Act of
1998, R.A. 8504).
Q: Can an individual, the sole proprietor of a business
enterprise, be said to have violated the Anti-Sexual
Harassment Act of 1995 if he clearly discriminates
against women in the adoption of policy standards
for employment and promotions in the enterprise?
Explain. (2003 Bar Question)
A: When an Er discriminates against women in the
adoption of policy standards for employment and
promotion in his enterprise, he is not guilty of Sexual
Harassment. Instead, the Er is guilty of discrimination
against women Ees which is declared to be unlawful by
the LC.
For an Er to commit Sexual Harassment, he as a
person of authority, influence or moral ascendancy
should have demanded, requested or otherwise
required a sexual favor from his Ee whether the
demand, request or requirement for submission is
accepted by the object of said act.
STIPULATION AGAINST MARRIAGE
(ART. 136, LC)
No-spouse employment policy
It is a policy banning spouses from working in the same
company.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Validity of no-spouse employment policy
GR: It may not facially violate Art. 136 of the LC but it
creates a disproportionate effect and the only way it
could pass judicial scrutiny is by showing that it is
reasonable despite the discriminatory and
disproportionate effect.
XPN: Bona fide occupational qualification rule
(BFOQR)
Bona fide occupational qualification rule
There must be a finding of any BFOQ to justify an Ers
no spouse employment rule. There must be a
compelling business necessity for which no alternative
exists other than the discriminating practice. To justify
a BFOQ, the Er must prove two factors:
1. That the employment qualification is reasonably
related to the essential operation of the job
involved; and
2. That there is a factual basis for believing that all or
substantially all persons meeting the qualification
would be unable to properly perform the duties of
the job (Star Paper v. Simbol, G.R. No. 164774,
April 12, 2006).
Importance of the BFOQR
1. To ensure that the Ee can effectively perform his
work.
2. So that the no-spouse employment rule will not
impose any danger to business.
Q: Glaxo, a company which has a policy against
employees having relationships with the employees
of its competitors, employed Tecson as a medical
representative. Tecson married Bettsy, a Branch
coordinator in one of Glaxos competitors. Tecson
was then transferred to another area but he did not
accept such transfer.
Is the policy of Glaxo valid and reasonable so as to
constitute the act of Tecson as willful disobedience?
A: Yes. The prohibition against personal or marital
relationships with Ees of competitor companies upon
Glaxos Ees is reasonable under the circumstances
because relationships of that nature might
compromise the interest of the company. Glaxo does
not impose an absolute prohibition against
relationships between its Ees and those of competitor
companies. Its Ees are free to cultivate relationships
with and marry persons of their own choosing. What
the company merely seeks to avoid is a conflict of
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
interest between the Ee and the company that may
arise out of such relationships. Furthermore, the
prohibition forms part of the employment contract
and Tecson was aware of such restrictions when he
entered into a relationship with Bettsy (Duncan Assoc.
of Detailman-PTGWO v. GlaxoWellcome Phil. Inc., G.R.
No. 162994, September 17, 2004).
PROHIBITED ACTS (ART. 137, Labor Code)
Prohibited acts under Art.137 of the LC
It shall be unlawful for any Er to:
1. Deny any woman Ee benefits provided by law.
2. Discharge any woman for the purpose of
preventing her from enjoying any of the benefits
provided by law.
3. Discharge such woman on account of her
pregnancy, or while on leave or in confinement
due to her pregnancy.
4. Discharge or refuse the admission of such woman
upon returning to her work for fear that she may
again be pregnant.
Q: At any given time, approximately 90% of the
production workforce of a semiconductor company
are females. 75% of the female workers are married
and of child-bearing years. It is imperative that the
Company must operate with a minimum number of
absences to meet strict delivery schedules. In view of
the very high number of lost working hours due to
absences for family reasons and maternity leaves, the
company adopted a policy that it will employ married
women as production workers only if they are at least
35 years old. Is the policy in violation of any law?
(1998 Bar Question)
A: Yes, it violates Art. 140 of the LC which provides that
no Er shall discriminate against any person in respect
to the terms and conditions of employment on
account of his age.
Persons covered under the classification of certain
women workers
Any women who is permitted or suffered to work:
1. With or without compensation
2. In any night club, cocktail lounge, massage clinic,
bar or similar establishment
3. Under the effective control or supervision of the
Er for a substantial period of time
4. Shall be considered as an Ee of such establishment
for purposes of labor and social legislation.
56
 LABOR STANDARDS
ANTI-SEXUAL HARASSMENT ACT
(R.A. 7877)
State policy in enacting the Anti-Sexual Harassment
Law
The State shall:
1. Value the dignity of every individual
2. Enhance the development of its human resources
3. Guarantee full respect for human rights, and
4. Uphold the dignity of workers, Ees, applicants for
employment, students or those undergoing
training, instruction or education (Sec. 2, R.A.
7877).
Persons who may be held liable for sexual
harassment
In a work, education or training-related environment
Sexual Harassment may be committed by an:
1. Er
2. Manager
3. Supervisor
4. Agent of the Er
5. Teacher, instructor, professor
6. Coach, trainer, or
7. Any other person who, having authority, influence
or moral ascendancy over another in a work or
training or education environment:
a. Demands
b. Requests or
c. Requires
-any sexual favor from the other,
regardless of whether the demand,
request or requirement for submission is
accepted by the object of R.A. 7877 (Sec.
3, R.A. 7877).
Acts of sexual harassment
Generally, sexual harassment is committed when a
person demands, requests, or otherwise requires any
sexual favor from another, regardless of whether the
demand, request or requirement for submission is
accepted by the latter.
The definition of sexual harassment does not require
a categorical demand or request for sexual favor
While the provision states that there must be a
demand, request or requirement of a sexual favor. It
is not necessary that the demand, request or
requirement of a sexual favor be articulated in a
categorical manner. It may be discerned, with equal
certitude, from the acts of the offender.
57
Likewise, it is not essential that the demand, request
or requirement be made as a condition for continued
employment or for promotion to a higher position. It
is enough that the respondents acts result in creating
an intimidating, hostile or offensive environment for
the employee (Domingo v.Rayala, G.R. No. 155831,
February 18, 2008).
Places where sexual harassment are committed
Specifically:
1. In a work-related or employment environment:
a. The sexual favor is made as 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 Ee which in a
way would discriminate, deprive or diminish
employment opportunities or otherwise
adversely affect said Ee;
b. The above acts would impair the Ees rights or
privileges under existing labor laws; or
c. The above acts would result in an
intimidating, hostile, or offensive
environment for the Ee.
2. In an education or training environment sexual
harassment is employed:
a. Against one who is under the care, custody or
supervision of the offender;
b. Against one whose education, training,
apprenticeship or tutorship is entrusted to
the offender;
c. When sexual favor is made a condition to the
giving of a passing grade, or the granting of
honors and scholarships, or the payment of a
stipend, allowance or other benefits,
privileges, or considerations; or
d. When sexual advances result in an
intimidating, hostile or offensive
environment for the student, trainee or
apprentice.
Duties of the Er or head of office in a work-related,
education or training environment
1. Prevent or deter the commission of acts of Sexual
Harassment, and
2. Provide the procedures for the resolution,
settlement or prosecution of acts of Sexual
Harassment.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Towards this end, the Er or head of office shall
1. Promulgate appropriate rules and
regulations in consultation with and
jointly approved by the Ees or students
or trainees, through their duly
designated representatives, prescribing
the procedure for the investigation or
Sexual Harassment cases and the
administrative sanctions therefore (Sec.
4, R.A. 7877).
NOTE: Administrative sanctions shall not be
a bar to prosecution in the proper courts for
unlawful acts of Sexual Harassment.
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.
3. The Er or head of office, education or
training institution shall disseminate or
post a copy of this R.A. 7877 for the
information of all concerned.
Liability of the Er, head of office, educational or
training institution
Er shall be solidarily liable for damages arising from the
acts of Sexual Harassment committed in the
employment, education or training environment
provided:
1. The Er or head of office, educational or training
institution is informed of such acts by the
offended party; and
2. No immediate action is taken thereon (Sec. 5,
R.A. 7877).
An independent action for damages may be filed
Nothing under R.A. 7877 shall preclude the victim of
work, education or training-related Sexual Harassment
from instituting a separate and independent action for
damages and other affirmative relief (Sec. 6).
Three-fold liability rule in sexual harassment cases
An act of Sexual Harassment may give rise to civil,
criminal and administrative liability on the part of the
offender, each proceeding independently of the
others.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Prescription of action
The civil, criminal and administrative action shall
prescribe in 3 years.
Q: A Personnel Manager, while interviewing an
attractive female applicant for employment, stared
directly at her for prolonged periods, albeit in a
friendly manner. After the interview, the manager
accompanied the applicant to the door, shook her
hand and patted her on the shoulder. He also asked
the applicant if he could invite her for dinner and
dancing at some future time. Did the Personnel
Manager, by the above acts, commit Sexual
Harassment? Reason. (2000 Bar Question)
A: Yes, because the Personnel Manager, is in a position
to grant or not to grant a favor (a job) to the applicant.
Under the circumstances, inviting the applicant for
dinner or dancing creates a situation hostile or
unfriendly to the applicant's chances for a job if she
turns down the invitation [Sec. 3 (a) (3), R.A. No. 7877,
Anti-Sexual Harassment Act].
Q: In the course of an interview, another female
applicant inquired from the same Personnel Manager
if she had the physical attributes required for the
position she applied for. The Personnel Manager
replied: "You will be more attractive if you will wear
micro-mini dresses without the undergarments that
ladies normally wear." Did the Personnel Manager,
by the above reply, commit an act of sexual
harassment? Reason.
A: Yes. The remarks would result in an offensive or
hostile environment for the Ee. Moreover, the remarks
did not give due regard to the applicants feelings and
it is a chauvinistic disdain of her honor, justifying the
finding of Sexual Harassment (Villarama v. NLRC, G.R.
No. 106341, September 02, 1994).
Q: Pedrito Masculado, a college graduate from the
province, tried his luck in the city and landed a job as
a utility/maintenance man at the warehouse of a big
shopping mall. After working as a casual employee
for 6 months, he signed a contract for probationary
employment for 6 months. Being well-built and
physically attractive, his supervisor, Mr. Hercules
Barak, took special interest to befriend him. When his
probationary period was about to expire, he was
surprised when one afternoon after working hours,
Mr. Barak followed him to the mens comfort room.
After seeing that no one else was around, Mr. Barak
placed his arm over Pedritos shoulder and softly
said: You have great potential to become a regular
Ee and I think I can give you a favorable
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 LABOR STANDARDS
recommendation. Can you come over to my condo
unit on Saturday evening so we can have a little
drink? Im alone, and Im sure you want to stay longer
with the company.
Is Mr. Barak liable for Sexual Harassment committed
in a work-related or employment environment?
(2000 Bar Question)
A: Yes, the elements of Sexual Harassment are all
present. The act of Mr. Barak was committed in a
workplace. Mr. Barak, as supervisor of Pedrito
Masculado, has authority, influence and moral
ascendancy over Masculado.
Given the specific circumstances mentioned in the
question like Mr. Barak following Masculado to the
comfort room, etc. Mr. Barak was requesting a sexual
favor from Masculado for a favorable
recommendation regarding the latter's employment.
It is not impossible for a male, who is a homosexual, to
ask for a sexual favor from another male.
EMPLOYMENT OF MINOR WORKERS
Rules on employment of minor workers
GR:
1. No person under 18 years of age will be allowed
to be employed in an undertaking which is
hazardous or deleterious in nature.
2. No Er shall discriminate against any person in
respect to terms and conditions of employment
on account of his age.
XPN:
A. Below 15 yrs. Old
1. The child works directly under the sole
responsibility of his parents or legal guardian
and where only members of the family are
employed, subject to the following
conditions:
a. Employment does not endanger the
childs safety, health and morals
b. Employment does not impair the childs
normal development
c. Er-parent or legal guardian provides the
child with the primary and/or secondary
education prescribed by the Department
of Education
2. The childs employment or participation in
public entertainment or information through
cinema, theater, radio or television is
essential provided:
59
a. Employment contract is concluded by
the childs parents or legal guardian,
b. With the express agreement of the child
concerned, if possible, and
c. The approval of DOLE, the following must
be complied with:
i. The employment does not involve
advertisement or commercials
promoting alcoholic beverages,
intoxicating drinks, tobacco and its by-
products or exhibiting violence
ii. There is a written contract approved
by DOLE
iii. The conditions provided in the first
instance are met
B. Above 15 but below 18 May be employed in
any non-hazardous work
C. Above 18 No prohibition
Requirement before engaging a minor into
employment
The Er shall first secure a work permit from the DOLE
which shall ensure observance of the requirements
(Sec. 12, R.A. 7160).
Rule in the issuance of work certificates/ permits to
children at least 15 but below 18 years of age
The issuance of a DOLE Certificate to youth aged 15 to
below 18 years of age is not required by law. No Er
shall deny opportunity to any such youth applying for
employment merely on the basis of lack of work
permit or certificate of eligibility for employment. Any
young person aged 15 to below 18 years of age may
present copy of this DOLE advisory to any Er, job
provider, government authority, or his/her
representative when seeking employment or anytime
during employment (DOLE Department Advisory No.
01-08).
Non-hazardous work
It is any work or activity in which the Ee is not exposed
to any risk which constitutes an imminent danger to
his safety and health.
Hazardous workplaces
1. Nature of work exposes the workers to dangerous
environmental elements, contaminants or work
conditions
2. Workers are engaged in construction work,
logging, fire-fighting, mining, quarrying, blasting,
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
stevedoring, dock work, deep-sea fishing, and
mechanized farming
3. Workers are engaged in the manufacture or
handling of explosives and other pyrotechnic
products
4. Workers use or are exposed to heavy or power-
driven tools
Q: You were asked by a paint manufacturing
company regarding the possible employment as a
mixer of a person aged 17, who shall be directly under
the care of the section supervisor. What advice would
you give? Explain briefly. (2002 Bar Question)
A: The paint manufacturing company cannot hire a
person who is aged 17. Art. 139(c) of the LC provides
that a person below 18 years of age shall not be
allowed to work in an undertaking which is hazardous
or deleterious in nature as determined by the SLE.
Paint manufacturing has been classified by the SLE as
a hazardous work.
Prohibitions on the employment of children in certain
advertisements
Employment of child models in all commercial
advertisements promoting the following shall be
prohibited:
1. Alcoholic beverage
2. Intoxicating drinks
3. Tobacco and its by products
4. Gambling
5. Violence
6. Pornography
Q: A spinster school teacher took pity on one of her
pupils, a robust and precocious 12-year old boy
whose poor family could barely afford the cost of his
schooling. She lives alone at her house near the
school after her housemaid left. In the afternoon, she
lets the boy do various chores as cleaning, fetching
water and all kinds of errands after school hours. She
gives him rice and Php 30.00 before the boy goes
home at 7 every night. The school principal learned
about it and charged her with violating the law which
prohibits the employment of children below 15 years
of age. In her defense, the teacher stated that the
work performed by her pupil is not hazardous, and
she invoked the exception provided in the
Department Order of DOLE for the engagement of
persons in domestic and household service. Is her
defense tenable? (2004 Bar Question)
A: No, her defense is not tenable. Under Art. 139 of
the LC on minimum employable age, no child below
15 years of age shall be employed except when he
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
works directly under the sole responsibility of his
parents or guardian, the provisions of the alleged
department order of DOLE to the contrary
notwithstanding. A mere department order cannot
prevail over the express prohibitory provisions of the
LC.
Q: Determine whether the following minors should
be prohibited from being hired and from performing
their respective duties indicated hereunder: (2006
Bar Question)
a. A 17-year old boy working as miner at the
Walwadi Mining Corporation.
b. An 11-year old boy who is an accomplished
singer and performer in different parts of the
country.
c. A 15-year old girl working as a library assistant in
a girls' high school.
d. A 16-year old girl working as model promoting
alcoholic beverages.
e. A 17-year old boy working as a dealer in a casino.
(2006 Bar Question)
A:
a. Yes, he should be prohibited from being hired and
from performing the duties of a miner because
such constitutes hazardous work under D.O. No.
04 Series of 1999. Art. 139(c) of LC expressly
prohibits the employment of persons below 18
years of age in an undertaking which is hazardous
or deleterious in nature as determined by the SLE.
b. No, he should not be prohibited from being hired
and from performing as a singer. Under Art. VIII
Sec. 12(2) of R.A. 7619 as amended by R.A. 7658,
this constitutes an exception to the general
prohibition against the employment of children
below 15 years of age, provided that the following
requirements are strictly complied with:
1. The Er shall ensure the protection, health
safety and morals of the child
2. The Er shall institute measures to prevent the
childs exploitation or discrimination taking
into account the system and level of
remuneration, and the duration and
arrangement of working time; and
3. The Er shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing program
for training and skill acquisition of the child.
Moreover, the child must be directly under
the sole responsibility of his parents or
guardian and his employment should not in
any way interfere with his schooling.
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 LABOR STANDARDS
c. No, she should not be prohibited from working as
a library assistant because the prohibition in the
LC against employment of persons below 18 years
of age merely pertains to employment in an
undertaking which is hazardous or deleterious in
nature as identified in the guidelines issued by the
SLE. Working as a library assistant is not one of
undertakings identified to be hazardous under
D.O. No 04 Series of 1999.
d. Yes, she should be prohibited from working as a
model promoting alcoholic beverages. R.A. 7610
categorically prohibits the employment of child
models in all commercials or advertisements
promoting alcoholic beverages and intoxicating
drinks, among other things.
e. Yes, he should be prohibited from working as a
dealer in casino, because Art. 140 of the LC
prohibits the employment of persons below 18
years of age in an undertaking which is hazardous
or deleterious in nature identified in the
guidelines issued by the SLE. Working as a dealer
in a casino is classified as hazardous under D.O.
No. 04 Series of 1999 as it exposes children to
physical, psychological or sexual abuses.
ACT AGAINST CHILD LABOR (R.A. 9231) AND
CHILD ABUSE LAW (R.A. 7610)
Child labor
Any work or economic activity performed by a child
that subjects him or her to any form of exploitation or
is harmful to his or her health and safety or physical,
mental or psychosocial development.
Working child
Any child engaged as follows:
1. When the child is below 18 years of age in a work
or economic activity that is not child labor; or
2. When the child is below 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
Limitation on the hours of work of a working child
If the child is:
1. Below 15 years of age Not more than 20 hours a
week and not more than 4 hours a day
61
- Not allowed to work between 8:00 pm 6:00
am
2. At least 15 years of age but below 18 years of age
Will not exceed 8 hours a day or 40 hours a week
- Not allowed to work between 10:00 pm
6:00 am
Worst forms of labor
1. All forms of slavery (Anti-Trafficking of Persons Act
of 2003) or practices similar to slavery such as sale
and trafficking of children, debt bondage and
serfdom and forced or compulsory labor,
including recruitment of children for use in armed
conflict;
2. The use, procuring, offering of a child for
prostitution, for the production of pornography or
for pornographic performances;
3. The use, procuring, offering or exposing of a child
for illegal or illicit activities, including the
production and trafficking of dangerous drugs and
volatile substances prohibited under existing
laws;
4. Employing child models in all commercials or
advertisements promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts
and violence; and
5. Work which, by its nature or circumstances in
which it is carried out, is hazardous or likely to be
harmful to the health, safety or morals of children.
Persons who can file a complaint for unlawful acts
committed against children
1. Offended party
2. Parents or guardians
3. Ascendants or collateral relatives within the
3rd degree of consanguinity
4. Officer, social worker or representative of a
licensed child-caring institution
5. Officer or social worker of DSWD
6. Barangay chairman of the place where the
violation occurred, where the child is residing
or employed
7. At least 3 concerned, responsible citizens
where the violation occurred
Instances when the state can intervene in behalf of
the child
1. When the parent, guardian, teacher or person
having care or custody of the child fails or is
unable to protect the child against abuse,
exploitation and discrimination; or
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
2. When such acts are committed against the child
by the said parent, guardian, teacher or person
having care and custody over the child.
Jurisdiction over offenses punishable under R.A. 9231
The Family Courts shall have original jurisdiction over
all cases involving offenses punishable under this Act.
EMPLOYMENT OF HOUSEHELPERS
Persons covered by R.A. 10361 otherwise known as
Batas kasambahay
All kasambahay engaged in domestic work, whether
on a live-in or live-out arrangement, such as, but not
limited to, the following:
1. General househelp
2. Nursemaid or Yaya
3. Cook
4. Gardener
5. Laundry person
6. Working children or domestic workers 15 years
and above but below 18 years of age; or
7. Any person who regularly performs domestic
work in one household on an occupational basis
(live-out arrangement) [Sec. 3(d), R.A. 10361].
Persons not covered by the batas kasambahay
The following are not covered:
1. Service providers
2. Family drivers
3. Children under foster family arrangement; and
4. Any other person who performs work occasionally
or sporadically and not on an occupational and
regular basis.
Children under foster family arrangement
Children under foster family arrangement are those
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;
provided, that the foster family and foster care
arrangements are in compliance with the procedures
and requirements as prescribed by R.A. 10165 or
Foster Care Act of 2012.
Examples of persons performing work occasionally or
sporadically and not on an occupational basis
1. A janitress doing irregular laundry work for a
household during rest day;
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
2. A construction worker doing casual gardening job
for a household; or
3. A hospital nurse or a student doing baby-sitting
job.
Employable age for a kasambahay
The employable age for a kasambahay is 15 years old
and above.
NOTE: The employment of children 15 but below 18 years of
age may be made under the following conditions:
1. They shall not be allowed to work for more than 8
hours a day, and in no case beyond 40 hours a week;
2. They shall not be allowed to work between 10 p.m. to
6 a.m. of the following day;
3. They shall not be allowed to do hazardous work; and
4. They shall not be denied access to education and
training.
The consent of the parent/guardian of working children is
required in the employment contract.
Er of a kasambahay
An Er is any person who engages and controls the
services of a kasambahay and is party to the
employment contract.
Ers household
Household refers to the immediate family members or
other occupants of the house who are directly and
regularly provided services by the kasambahay.
Modes of hiring a kasambahay
An Er can hire directly or through private employment
agencies registered with the DOLE regional offices. The
Er, whether the kasambahay is hired directly or
through POEA, shall shoulder the expenses for hiring.
The kasambahay shall not be charged of any cost of
the recruitment, placement, or finders fee.
NOTE: The Er shall pay the expenses that are directly used
for the transfer of the kasambahay from place of origin to the
place of work. An Er can be reimbursed of the deployment
expenses when the kasambahay unreasonably leaves the Er
within 6 months from the time he/she started work.
If a kasambahay is hired thru a Private Employment Agency,
the agency is allowed to collect Service Fee from the Er.
Pre-employment requirements
Before entering into an employment contract, the Er
has the option to require the following from a
kasambahay:
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 LABOR STANDARDS
1. Medical certificate or health certificate issued by
a local government health officer;
2. Barangay and police clearance;
3. NBI clearance; and
4. Duly authenticated birth certificate or, if not
available, voters identification card, baptismal
record, or passport showing the kasambahays
age.
NOTE: Requirements are mandatory when the employment
of the kasambahay is facilitated through a private
employment agency.
It is not a requirement for a kasambahay to be trained and
certified by TESDA prior to employment. However, the
kasambahay is encouraged to undergo competency
assessment and be certified by TESDA. Training is not a
requirement for competency assessment.
Contract between the Er and kasambahay
The Er and the kasambahay shall enter into a contract
of employment written in a language or dialect
understood by them.
NOTE: The contract need not be notarized. The Punong
Barangay or his/her designated officer may attest to the
contract and serve as witness to its execution.
Contents of the employment contract
1. Duties and responsibilities of the kasambahay;
2. Period of employment;
3. Compensation;
4. Authorized deductions;
5. Hours of work and proportionate additional
payment;
6. Rest days and allowable leaves;
7. Board, lodging and medical attention;
8. Agreements on deployment expenses, if any;
9. Loan agreement;
10. Termination of employment; and
11. Any other lawful condition agreed upon by both
parties.
Registration of the kasambahay
The Er is required to register the kasambahay in the
Registry of Domestic Workers in the barangay where
the Er resides. For this purpose, the DILG, in
coordination with the DOLE, shall formulate a
registration system.
NOTE: The registration of the kasambahay is free of charge.
Mandatory benefits of a kasambahay
1. Monthly minimum wage;
63
2. Daily rest period of 8 (total) hours;
3. Weekly rest period of 24 (uninterrupted) hours
4. 5 days annual service incentive leave with pay;
5. 13th month pay;
6. SSS benefit;
7. PhilHealth benefit; and
8. Pag-IBIG benefit
Other rights and privileges of a kasambahay
1. Freedom from Ers interference in wage disposal;
2. Standard of treatment;
3. Board, lodging, and medical attendance;
4. Right to privacy;
5. Access to outside communication;
6. Access to education and training;
7. Right to be provided a copy of the employment
contract;
8. Right to Certificate of Employment;
9. Right to form, join, or assist labor organization;
10. Right to terminate employment based on just
cause; and
11. Right to exercise religious beliefs and cultural
practices.
Basic necessities of a kasambahay
1. At least 3 adequate meals a day, taking into
consideration the kasambahays religious beliefs
and cultural practices;
2. Humane sleeping condition; and
3. Appropriate rest and basic medical assistance.
NOTE: Though not part of the basic necessities required
to be provided by the Er to the kasambahay, shampoo,
soap, toothpaste etc. may be provided gratuitously.
Monthly minimum wage of a kasambahay
For those employed in:
1. National Capital Region Php 2,500.00
2. Cities and 1st class municipalities Php 2,000.00
3. Other municipalities Php 1,500.00 (Sec. 24, R.A.
10361).
NOTE: The law provides a mechanism for increasing the
minimum wage of the kasambahay. Initially, one year from 4
June 2013, the Regional Tripartite Wages and Productivity
Boards (RTWPB) may review, and if proper, determine and
adjust the minimum wage (Sec. 24, R.A. 10361).The RTWPB
shall coordinate with TESDA on the wage review and
adjustment based on the kasambahays competency level, in
line with the thrust to professionalize the domestic service
sector.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Payment of Wage
Wage shall be in cash and at least be paid once a
month.
NOTE: The Er shall at all times provide the kasambahay with
a copy of the pay slip every pay day containing the amount
paid and all deductions made, if any. The copies of the pay
slip shall be kept by the Er for a period of 3 years (Sec. 26,
R.A. 10361).
Payment of wages by means of promissory, voucher,
coupon, token, ticket, chit, or anything other than the cash
wage is prohibited.
Daily rest period
The kasambahay is entitled to a total daily rest period
of at least 8 hours.
Prohibition of work beyond 16 hours
The Er cannot require the kasambahay to work
beyond 16 hours at any given workday in return for
an equivalent hourly rate. The eight-hour rest period
must be observed.
NOTE: Kasambahays are also entitled to at least 24
consecutive hours of rest in a week. The Er and the
kasambahay may determine the schedule of the weekly
rest period. The Er shall respect the preferred weekly rest
day of the kasambahay on religious grounds (Sec. 21, R.A.
10361).
Five-day annual service incentive leave
The kasambahay can avail the five day annual service
incentive leave after 1 year of service.
NOTE: If the kasambahay fails to avail of any of his/her
annual SIL, it shall be forfeited and cannot be converted to
cash.
Other agreement that the Er and the kasambahay can
enter into relative to the kasambahays weekly rest
day and service incentive leave
1. Offsetting a day of absence with a particular rest
day;
2. Waiving a particular rest day in return for an
equivalent daily rate of pay;
3. Accumulating rest days not exceeding 5 days;
4. Adding the accumulated rest days (maximum of 5
days) to the five-day SIL; and
5. Waiving a particular SIL in return for an equivalent
daily rate of pay.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
13th month pay
The kasambahay is entitled to 13th month pay after 1
month of service.
Computation of the 13thmonth pay
In computing the 13thmonth pay, the total basic wage
received in a given calendar year shall be divided by 12.
The amount derived shall be paid not later than
December 24.
SSS, PHILHEALTH, and PAG-IBIG
The kasambahay is covered by SSS, PhilHealth and Pag-
IBIG after 1 month of service.
Ers obligation to register the kasambahay in SSS,
PHILHEALTH, and PAG-IBIG
Under the SSS, PhilHealth, and PAG-IBIG laws, the Er
has the obligation to register the kasambahay and
deduct and remit the required premiums and
contributions. The Er shall incur certain liabilities,
including criminal prosecution, if he fails or refuses to
comply with his/her obligations.
Employers liability in case the kasambahay refuses
to be a member of SSS, PHILHEALTH, and PAG-IBIG
The employer is still liable under the SSS, PHILHEALTH,
and PAG-IBIG laws in case the kasambahay refuses
membership with those agencies, because it is
mandatory and non-negotiable.
Person liable to pay the SSS premium, PHILHEALTH
and PAG-IBIG contributions of the kasambahay
GR: The Er shall pay the SSS premium, and PHILHEALTH
and PAG-IBIG contributions of the kasambahay
XPN: If the wage of the kasambahay is Php 5,000.00 or
more, the kasambahay will pay his/her share in the
premiums/contributions.
Provisions protecting Ers of a kasambahay
1. Prohibition against privileged information;
2. Er may require certain pre-employment
documents prior to engagement;
3. Ers are assured of quality services through DOLE-
TESDA training, assessment, and certification of
kasambahay;
64
 LABOR STANDARDS
4. Forfeiture of 15-day unpaid salary should the
kasambahay leave the residence of the Er without
any justifiable reason; and
5. Right to terminate the employment on justifiable
grounds.
Grounds for termination of contract by the
kasambahay
1. Verbal or emotional abuse of the kasambahay by
the Er or any member of the household;
2. In human treatment including physical abuse of
the kasambahay by the Er or any member of the
household;
3. Commission of a crime or offense against the
kasambahay by the Er or any member of the
household;
4. Violation by the Er of the terms and conditions of
the employment contract and other standards set
forth under the law;
5. Any disease prejudicial to the health of the
kasambahay, the Er, or member/s of the
household; and
6. Other causes analogous to the foregoing (Sec. 33,
R.A. 10361).
Grounds for termination of contract by the Er
1. Misconduct or willful disobedience by the
kasambahay of the lawful order of the Er in
connection with the formers 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
Er on the kasambahay;
4. Commission of a crime or offense by the
kasambahay against the person of the Er or any
immediate member of the Ers 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 Er, or member/s of the
household; and
7. Other causes analogous to the foregoing (Sec. 34,
R.A. 10361).
NOTE: Neither the domestic worker nor the Er may
terminate the contract before the expiration of the term
except for grounds provided for in Secs. 33 and 34 of the
Batas Kasambahay.
The domestic worker and the Er may mutually agree upon
written notice to pre-terminate the contract of
employment to end the employment relationship (Sec. 32,
R.A. 10361).
65
Termination of contract if the duration of service is
not determined in the contract
The kasambahay or the Er may terminate the
contract anytime if the duration of service is not
determined in the contract. Either the Er or the
kasambahay may give notice to end the working
relationship 5 days before the intended date of the
termination of service.
Effect of unjust dismissal by the Er
The kasambahay shall receive the following if he\she
is unjustly dismissed by the Er:
1. Outright payment of earned wage; and
2. Indemnity benefit in the form of wage equivalent
to 15 days work.
Liabilities of a kasambahay who leaves his/her Er
without justifiable reason
1. Forfeiture of wage equivalent to 15 days work;
and
2. Reimbursement of the deployment expenses, if
the employment contract is terminated within 6
months from employment.
Right against inspection of his belongings
The Er cannot inspect the belongings of the
kasambahay. However, the Er and the kasambahay
can agree in their employment contract that an
inspection can be made before he/she leaves the
household.
Kasambahay desk officer
In case of non-payment or underpayment of wage
and other labor-related concerns, the kasambahay
can seek assistance to the Kasambahay Desk Officer
situated in their respective barangays or the nearest
DOLE field/provincial/regional office.
Replacement of a kasambahay from a private
employment
The Er can demand from a private employment
agency the replacement of a kasambahay within 1
month from the day the kasambahay reported for
work on the following cases:
1. The kasambahay is found to be suffering from an
incurable or contagious disease, or mental illness
as certified by a competent or government
physician;
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
2. The kasambahay abandons the job without
justifiable cause, voluntarily resigns, commits
theft or any other analogous acts prejudicial to
the Er or his/her family; or
3. The kasambahay is physically or mentally
incapable of discharging the minimum
requirements of the job, as specified in the
employment contract.
Effect of failure of the private employment agency
to provide a qualified replacement
After one month from receipt of the Ers request and
the private employment agency failed to provide a
qualified replacement, the Er shall be entitled to a
refund of 75% of the fees paid to the private
employment agency.
Responsibilities of the private employment agency
under the law
1. Ensure that the kasambahay is qualified as
required by the Er;
2. Secure the best terms and conditions of
employment for the kasambahay;
3. Ensure that the employment agreement
between the kasambahay and the employer
stipulates the terms and conditions of
employment and all the benefits in accordance
with the IRR;
4. Provide a pre-employment orientation briefing
to the kasambahay and the Er about their rights
and responsibilities in accordance with this IRR;
5. Ensure that the kasambahay is not changed or
required to pay any recruitment or placement
fees;
6. Keep copies of employment contracts and
agreements pertaining to recruited kasambahay
which shall be made availabe during inspections
or whenever required by the DOLE or local
government officials;
7. Assist the kasambahay in filing his/her
complaints or grievances against the Ers;
8. Cooperate with government agencies in rescue
operations involving abused or exploited
kasambahay; and
9. Assume joint and solidary liability with the Er for
payment of wages, wage-related and other
benefits, including monthly contribution for SSS,
PhilHealth, and Pag-IBIG membership.
Unlawful acts under the Batas Kasambahay
1. Employment of children below 15 years of age;
2. Withholding of the kasambahays wages;
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
3. Interference in the disposal of the kasambahays
wages;
4. Requiring kasambahay to make deposits for loss
or damage;
5. Placing the kasambahay under debt bondage; and
6. Charging another household for temporarily
performed tasks.
NOTE: Unlawful acts are punishable with an administrative
fine ranging from Php 10,000 to Php 40,000 to be imposed
by the DOLE Regional Offices.
Remedies for unlawful acts
The aggrieved party may file the appropriate civil or
criminal action before the regular courts.
Remedy for abused or exploited kasambahay
The law mandates the conduct of immediate rescue of
abused or exploited kasambahay by the municipal or
city social welfare officer or a social welfare officer
from DSWD, in coordination with the concerned
barangay officials. The law sets out that crimes or
offenses committed under the Penal Code and other
criminal laws shall be filed with the regular courts.
Q: Erlinda worked as a cook, preparing the lunch and
merienda of the Ees of Remington Industrial Sales
Corp. She worked at the premises of the company.
When Erlinda filed an illegal dismissal case, Mr. Tan,
the managing director of Remington Corp., claimed
that Erlinda was a domestic helper and not a regular
Ee of the corporation. Mr. Tan argued that it is only
when the househelper or domestic servant is
assigned to certain aspects of the business of the Er
that such househelper or domestic servant may be
considered as such an Ee. Is Erlinda a domestic or
househelper?
A: No. Erlinda is clearly not a househelper. A
househelper or domestic servant under the IRR of
the LC is one who is employed in the Ers home to
minister exclusively to the personal comfort and
enjoyment of the Ers family. A househelper, domestic
servant or laundrywoman in a home or in a company
staffhouse is different in the sense that in a
corporation or a single proprietorship engaged in
business or industry or any agricultural or similar
pursuit, service is being rendered in the staffhouses or
within the premises of the business of the Er. In such
instance, they are Ees of the company or Er in the
business concerned, entitled to the privileges of a
regular Ee. The mere fact that the househelper or
domestic servant is working within the premises of the
business of the employer and in relation to or in
connection with its business, as in its staffhouses for
66
 LABOR STANDARDS
its guest or even for its officers and Ees, warrants the
conclusion that such househelper or domestic servant
is and should be considered a regular Ee and not a
househelper (Remington Industrial v. Castaneda, G.R.
Nos. 169295-96, Nov. 20, 2006).
Q: Albert, a 40-year old Er, asked his domestic helper,
Inday, to give him a private massage. When Inday
refused, Albert showed her Art. 141 of the Labor
Code, which says that one of the duties of a domestic
helper is to minister to the Ers personal comfort and
convenience. Is Indays refusal tenable? (2009 Bar
Question)
A: Yes. Indays refusal to give her Er a private
massage is in accordance with law because the nature
of the work of a domestic worker must be in
connection with household chores. Massaging is not a
domestic work.
Q: NBC has a rest house and recreational facility in
the highlands of Tagaytay City for the use of its top
executives and corporate clients. The rest house staff
includes a caretaker, two cooks and a laundrywoman.
All of them are reported to the SSS as domestic or
household Ees of the resthouse and recreational
facility and not of NBC. Can NBC legally consider the
caretaker, cooks and laundrywoman as domestic Ees
of the rest house and not of NBC? (2000 Bar Question)
A: No, they are not domestic Ees. They are the Ees of
NBC because the rest house and recreational facility
are business facilities which are for use of NBCs top
executives and clients (Traders Royal Bank v. NLRC,
G.R. No. 127864, December 22, 1999).
EMPLOYMENT OF HOMEWORKERS
Homeworkers
They are those who perform in or about his own home
any processing or fabrication of goods or materials, in
whole or in part, which have been furnished directly or
indirectly, by an Er and sold thereafter to the latter.
Househelpers v. Homeworkers
HOUSEHELPERS HOMEWORKERS
Performs in or about his
own home any
Minister to the personal
processing or fabrication
needs and comfort of
of goods or materials, in
his Er in the latters
whole or in part, which
home
have been furnished
directly or indirectly, by
67
an Er and sold thereafter
to the latter.
Er of a homeworker
Includes any person, natural or artificial who, for his
account or benefit, or on behalf of any person residing
outside the country, directly or indirectly, or through
an Ee, 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 directions.
2. Sells any goods, articles or materials to be
processed or fabricated in or abut a home and
then rebuys them after such processing or
fabrication, either by himself or through some
other person.
Duty of the Er in case he contracts with another in the
performance of his work
It shall be the duty of the Er to provide in such contract
that the Ees or homeworkers of the contractor and the
latters subcontractor shall be paid in accordance with
the LC.
Liability of the Er if the contractor or subcontractor
fails to pay the wages or earnings of his Ees
Er shall be jointly and severally liable with the
contractor or sub-contractor to the workers of the
latter to the extent that such work is performed under
such contract, in the same manner as if the Ees or
homeworkers were directly engaged by the Er.
Right of industrial homeworkers to form labor
organizations
DO No. 5, replacing Rule XIV of the IRR Book 3 of the
LC, authorizes the formation and registration of labor
organization of industrial homeworkers. It also makes
explicit the Ers duty to pay and remit SSS, PHILHEALTH
and ECC premiums.
Prohibitions against homework
The following shall be prohibited as homework:
1. Explosives, fireworks and similar articles;
2. Drugs and poisons; and
3. Other articles, the processing of which
requires exposure to toxic substances (Sec.
13, Rule XIV, Book III, IRR).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Prohibition of any deduction from the homeworkers
earnings due to loss or damage
GR: The Er, contractor or subcontractor shall not make
any deduction from the homeworkers earnings for
the value of materials which have been lost,
destroyed, soiled or otherwise damage.
XPNs: Unless the ff. conditions are met:
1. The homeworker is clearly shown to be
responsible for the loss or damage;
2. The Ee is given reasonable opportunity to
show cause why deductions should not be
made;
3. The amount of such deduction is fair and
reasonable and shall not exceed the actual
loss or damages; and
4. The deduction is made at such rate that the
amount deducted does not exceed 20% of the
homeworkers earnings in a week.
Q: Josie is the confidential secretary of the Chairman
of the Board of the bank. She is presently on
maternity leave. In an arrangement where the
Chairman of the Board can still have access to her
services, the bank allows her to work in her residence
during her leave. For this purpose, the bank installed
a fax machine in her residence, and gave her a
cellphone and a beeper. Is Josie a homeworker under
the law? Explain. (2000 Bar Question)
A: No, she is actually an office worker. She is not an
industrial homeworker who accepts work to be
fabricated or processed at home for a contractor,
which work, when finished, will be returned to or
repurchased by said contractor (Art. 155, LC).
APPRENTICES AND LEARNERS
Apprenticeship
It is practical training on the job supplemented by
related theoretical instruction involving a contract
between an apprentice and an Er on an approved
apprenticeable occupation.
Apprentice
Any worker who is covered by a written
apprenticeship agreement with an individual Er or any
of the entities recognized under the LC.
NOTE: GR: Apprenticeship programs shall be primarily
voluntary
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
XPNs: Compulsory Apprenticeship:
1. National security or economic development so
demand, the President may require compulsory
training
2. Services of foreign technicians are utilized by
private companies in apprenticeable trades.
Qualifications of an apprentice
1. At least 15 years of age
NOTE: Those below 18 years of age shall not work in
hazardous occupations
2. Physically fit for the occupation
3. Possess vocational aptitude and capacity
4. Possess:
a. The ability to comprehend, and
b. Follow oral and written instructions
5. The company must have an apprenticeship
program duly approved by the DOLE.
NOTE: Trade and industry associations may recommend to
the SLE appropriate educational requirements for different
occupations.
Apprenticeable occupation
Any trade, form of employment or occupation which
requires more than three (3) months of practical
training with theoretical instruction officially endorsed
by the tripartite body and approved for apprenticeship
by the TESDA.
On the job training (OJT)
It is practical work experience through actual
participation in productive activities given to or
acquired by an apprentice.
Highly technical industries
Highly technical industries are those which are
engaged in the application of advanced technology.
NOTE: Prior approval by TESDA (formerly DOLE) of the
proposed apprenticeship program is a condition sine qua
non. Otherwise, an apprentice becomes a regular Ee (Nitto
Enterprises v. NLRC, 248 SCRA 654).
When occupation deemed hazardous
1. Nature of work exposes worker to dangerous
environmental elemental contaminants or work
conditions
2. Workers are engaged in construction work,
logging, fire fighting, mining, quarrying, blasting,
68
 LABOR STANDARDS
stevedoring, deep-sea fishing, and mechanized
farming
3. Workers are engaged in the manufacture or
handling of explosives and other pyrotechnic
products
4. Workers use, or are exposed to heavy or power-
driven machinery or equipment.
Ers of apprentices
1. Only Ers in highly technical industries and
2. Only in apprenticeable occupations approved by
SLE.
Employment status of apprentices
They are contractual workers whose length of service
depends on the term provided for in the
apprenticeship agreement. Thus, the Er is not obliged
to employ the apprentice after the completion of his
training.
Conditions for employment of an apprentice
1. Should be an apprenticeable trade as determined
by TESDA
2. Prior approval by the DOLE of the proposed
apprenticeship program is a condition sine qua non
before an apprenticeship agreement can be validly
entered into (Nitto Enterprises v. NLRC, 248 SCRA
654).
NOTE: One of the objectives of Title II (Training and
Employment of Special Workers) of the LC is to establish
apprenticeship standards for the protection of apprentices.
An apprenticeship program should first be approved by the
DOLE before an apprentice may be hired, otherwise a person
hired will be considered a regular Ee.
(Century Canning Corp. v. CA, 530 SCRA 501)
Period of apprenticeship
Apprenticeship must not exceed 6 months.
NOTE:
1. 2 months/400 hours: Trades or occupations which
normally require 1 year or more for proficiency
2. 1 month/200 hours: Occupations and jobs which require
more than 3 months but less than 1 year for proficiency
(Sec. 19, Rule VI, Book II, IRR).
Status of an apprentice after the lapse of the period of
apprenticeship
He is deemed a regular Ee. He cannot be hired as a
probationary Ee since the apprenticeship is deemed the
probationary period.
69
Compensation of an apprentice
GR: It starts at not less than 75% of the statutory
minimum wage for the 1st 6 months (except OJT);
thereafter, shall be paid in full minimum wage,
including the full COLA.
XPN: Art. 72 of the LC provides that the SLE may
authorize the hiring of apprentices without
compensation whose training on the job is required:
1. By the school or;
2. By a training program curriculum or;
3. As requisite for graduation or
4. As requisite for board examination.
Rules regarding apprenticeship agreements
Apprenticeship agreements, including the wage rates
of apprentices, shall:
1. Conform to the rules issued by SLE.
2. The period of Apprenticeship shall not exceed
6 months.
3. Apprenticeship agreements providing for
wage rates below the legal minimum wage,
which in no case shall start below 75% of the
applicable minimum wage, may be entered
into only in accordance with Apprenticeship
programs duly approved by the SLE.
4. The DOLE shall develop standard model
programs of Apprenticeship (Sec. 18, Rule VI,
Book II, IRR).
Every apprenticeship agreement shall be signed by
1. The Er or his agent, or
2. An authorized representative of any of the
recognized organizations, associations or groups,
and
3. The apprentice.
Apprenticeship agreement with a minor
An apprenticeship agreement with a minor shall be
signed in his behalf by:
1. His parent or guardian, or if the latter is not
available,
2. An authorized representative of the DOLE.
Rules on working scholars
There is no Er-Ee relationship between students on
one hand, and schools, where there is written
agreement between them under which the former
agree to work for the latter in exchange for the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
privilege to study free of charge. The student is not
considered an Ee (Sec. 14, Rule IX, Book III, IRR).
Q: Padilla entered into a written agreement with
Gomburza College to work for the latter in exchange
for the privilege of studying in said institution. His
work was confined to keeping clean the lavatory
facilities of the school. One school day, he got into a
fist fight with a classmate, Monteverde, as a result of
which the latter sustained a fractured arm.
Monteverdefiled a civil case for damages against him,
impleading Gomburza College due to the latter's
alleged liability as his Er. Under the circumstances,
could Gomburza College be held liable by
Monteverde as Padillas employer? (1997 Bar
Question)
A: No. Gomburza College is not liable for the acts of
Padilla because there is no Er-Ee relationship between
them. As provided in the IRR of the LC, "there is no Er-
Ee relationship between students on one hand, and
schools, colleges, or universities on the other, where
students work with the latter in exchange for the
privilege to study free of charge, provided the students
are given real opportunity, including such facilities as
may be reasonable and necessary to finish their
chosen courses under such arrangement."
Procedure for the termination of apprenticeship
The party terminating shall:
1. Serve a written notice on the other at least 5 days
before actual termination,
2. Stating the reason for such decision; and
3. A copy of said notice shall be furnished to the
Apprenticeship Division concerned.
Party who can terminate an apprenticeship
agreement
1. Either party may terminate an agreement after
the apprenticeship period but only for a valid
cause.
2. It may be initiated by either party upon filing a
complaint or upon DOLEs own initiative.
Party who may appeal the decision of the authorized
agency of the DOLE
It may be appealed by any aggrieved person to the SLE
within 5 days from receipt of the decision.
NOTE: The decision of the SLE shall be final and executory.
Principle of Exhaustion of Administrative Remedies
applied in case of breach of apprenticeship
agreement
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Exhaustion of Administrative Remedies is a condition
precedent to the institution of an action for enforcing
application of agreement.
Duty of the plant apprenticeship committee
The plant apprenticeship committee shall have the
initial responsibility for settling differences arising out
of Apprenticeship agreement (Sec. 32b, Rule VI, Book
II, IRR).
Learners
1. They are persons hired as trainees in semi-skilled
and other industrial occupations
2. Which are non-apprenticeable and
3. Which may be learned through practical training
on the job in a relatively short period of time
4. Which shall not exceed 3 months
5. Whether or not such practical training is
supplemented by theoretical instructions (Sec. 1a,
Rule VII, Book II, IRR).
Employment of learners
Learners may be employed when:
1. No experienced worker is available
2. It is necessary to prevent curtailment of
employment opportunities; and
3. Employment does not create unfair competition
in terms of labor costs or impair or lower working
standards.
Contents of a learnership agreement
Any Er desiring to employ learners shall enter into a
learnership agreement with them, which agreement
shall include:
1. The names and addresses of the learners;
2. The duration of the learnership period, which
shall not exceed 3 months;
3. The wages or salary rates of the learners
which shall begin at not less than 75% of the
applicable minimum wage; and
4. A commitment to employ the learners if they
so desire, as regular Ees upon completion of
the Learnership.
Employment of minors as learners
A learner must be at least 15 years of age.
NOTE: Those below 18 years of age shall not work in
hazardous occupations.
70
 LABOR STANDARDS

Persons who may employ learners PERSONS WITH DISABILITY (R.A. 7277 as amended
by R.A. 9442)
Only Ers in semi-skilled and other industrial
occupations which are non-apprenticeable may DEFINITION
employ learners.
Persons with disability (PWD)
Status of learners who have been allowed or suffered
work during the first 2 months Those whose earning capacity is impaired by:
1. Physical deficiency
If training is terminated by the Er before the end of the 2. Age
stipulated period through no fault of the Learner, they 3. Injury
shall deemed regular Ees (Sec. 4, Rule VII, Book II, IRR). 4. Disease
5. Mental deficiency
Learnership v. Apprenticeship 6. Illness

Learnership Apprenticeship Employment of PWD

Nature
Training on the job in Training in trades 1. When their employment is necessary to prevent
semi-skilled and other which are curtailment of employment opportunities; and
industrial occupation or apprenticeable, that 2. When it will not create unfair competition in labor
trades which are non- is, practical training costs or lower working standards (Art. 79, LC).
apprenticeable and which on the job
may be learned thru supplemented by Employment period of PWD
practical training on the related theoretical
job in a relatively short instruction for more There is no minimum or maximum duration. It
period of time. than 3 months. depends on the agreement but it is necessary that
Duration of training there is a specific duration stated.
Min: 3 months
Max: 3 months PWD as apprentices or learners
Max: 6 months
Commitment to employ
With commitment to PWD may be hired as apprentices or learners if their
employ the learner as a disability is not such as to effectively impede the
No commitment to performance of job operations in the particular
regular Ee if he desires
hire occupations for which they are hired (Art. 81, LC).
upon completion of
learnership
Persons with disability can be a regular Ee
In case of pre-termination of contract
Considered a regular Ee if
Persons with disability can be a regular Ee if work is
pre-termination occurs
Worker not usually or necessarily desirable to the business
after 2 months of training
considered as regular (Bernardo v. NLRC, G.R No. 122917, July 12, 1999).
and the dismissal is
Ee.
without fault of the
Persons who may employ persons with disability
Learner.
Coverage
Ers in all industries: Provided, the disability is not such
Highly technical
Semi-skilled/Industrial as to effectively impede the performance of job
industries and only in
occupations operations in the particular occupations for which they
industrial occupation
are hired.
There is a list of learnable
No list
trades by TESDA Not all workers with a disability are considered
Written agreement disabled workers
Requires
Requires learnership
apprenticeship The mere fact that a worker has a disability does not
agreement
agreement make him a disabled worker because his disability may
not impair his efficiency or the quality of his work. If
despite his disability he can still efficiently perform his
work, he would be considered a qualified disabled

UNIVERSITY OF SANTO TOMAS

71 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

worker entitled to the same treatment as qualified able- Persons with Disability v. Differently Abled
bodied workers (Bernardo v. NLRC, G.R. No. 122917, July
12, 1999). Persons with
Differently Abled
Disability
RIGHTS OF PERSONS WITH DISABILITY Refers to all suffering from
restriction of different
1. Equal opportunity for employment Earning capacity is abilities as a result of
2. Sheltered employment (the Government shall impaired by age, or mental, physical or sensory
endeavour to provide them work if suitable physical or mental impairment to perform an
employment for disabled persons cannot be found deficiency or injury. activity in the manner or
through open employment) within range considered
3. Apprenticeship normal for a human being.
4. Vocational rehabilitation (means to develop the Covers all activities or
skills and potentials of disabled workers and enable Covers only workers.
endeavors.
them to compete in the labor market) Basis: Basis: range of activity
5. Vocational guidance and counselling loss/impairment of which is normal for a
earning capacity. human being.
PROHIBITIONS ON DISCRIMINATION AGAINST Restriction due to
PERSONS WITH DISABILITY Loss due to injury or
impairment of
physical or mental
mental/physical/ sensory
No disabled person shall be denied access to defect or age.
defect.
opportunities for suitable employment. A qualified If hired, entitled to
disabled employee shall be subject to the same terms 75% of minimum
and conditions of employment and the same If qualified, entitled to all
wage.
compensation, privileges, benefits, fringe benefits, terms and conditions as
incentives or allowances as a qualified able-bodied qualified able-bodied
Subject to definite
person. person.
periods of
employment.
NOTE: 5% of all casual emergency and contractual positions Employable only No restrictions on
in the Departments of Social Welfare and Development; when necessary to employment.
Health; Education, Culture and Sports; and other
prevent curtailment
government agencies, offices or corporations engaged in
social development shall be reserved for disabled persons of employment Must get equal opportunity
(R.A. 7277). opportunity. and no unfair competition.

INCENTIVES FOR EMPLOYERS

Incentives of Er who are employing disabled workers

1. Entitled to an additional deduction, from their gross

income, equivalent to 25% of the total amount paid as
salaries and wages to disabled persons: Provided,
however, That such entities present proof as certified
by the DOLE that disabled persons are under their
employ: Provided further, That the disabled Ee is
accredited with the DOLE and the Department of
Health as to his disability, skills and qualifications.
2. Private entities that improve or modify their
physical facilities in order to provide reasonable
accommodation for disabled persons shall also be
entitled to an additional deduction from their net
taxable income, equivalent to 50% of the direct costs
of the improvements or modifications (Sec. 8, R.A.
7277).

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 72
 TERMINATION OF EMPLOYMENT

TERMINATION OF EMPLOYMENT security guards filled up Baron application form and

submitted the executed forms directly to the Security
EMPLOYER-EMPLOYEE RELATIONSHIP Department of Baron. The pay slips of the security
guards bore Baron's logo and showed that Baron
Existence of an employment relationship deducted the amounts for SSS premiums, medicare
contributions and withholding taxes from the wages
Employment relationship is determined by law and not of the secutiry guards. The assignments of security
by contract (Insular Life Assurance Co. Ltd. v. NLRC, guards, who should be on duty or on call, promotions,
G.R. No. 119930, March 12, 1998). suspensions, dismissals and award citations for
meritorious services were all done upon approval by
NOTE: Taxi or jeepney drivers under the boundary system Baron's chief security officer. After the expiration of
are Ees of the taxi or jeepney owners/operators; so also the the contract with ASIA, Baron did not renew the same
passenger bus drivers and conductors (Jardin v. NLRC and
and instead executed another contract for security
Goodman Taxi, G.R. No. 119268, February 23, 2000).
services with another agency. ASIA placed the
affected security guards on "floating status" on "no
Er-Ee relation is a question of law
work no pay" basis. Having been displaced from
work, the ASIA security guards filed a case against
An employment contract which stipulates that there is
Baron for illegal dismissal, OT pay, minimum wage
no Er-Ee relationship between the parties is invalid.
differentials, vacation leave and sick leave benefits,
The existence of an Er-Ee relation is a question of law
and 13thmonth pay. Baron denied liability alleging
and being such, it cannot be made the subject of
that ASIA is the Er of the security guards and
agreement (Tabas v. California Manufacturing Co.,
therefore, their complaint for illegal dismissal and
G.R. No. L-80680, January 26, 1989).
payment of money claims should be directed against
ASIA. Nevertheless, Baron filed a Third Party
Q: Banco de Manila and the Ang Husay Janitorial and
Complaint against ASIA.
Pest Control Agency entered into an Independent
Contractor Agreement with the usual stipulations
Is there an Er-Ee relationship between the Baron, on
specifically, the absence of Er- Ee relationship, and
one hand, and the ASIA security guards, on the other
the relief from liability clauses. Can the bank, as a
hand? Explain briefly.(1999 Bar Question)
client, and the agency, as an independent contractor,
stipulate that no Er-Ee relationship exists between
A: As a general rule, the security guards of a private
the bank and the employees of the Agency who may
security guard agency are the Ees of the latter and not
be assigned to work in the Bank? Reason.
of the establishment that has entered into a contract
with the private security guard agency for security
A: Yes, they can stipulate provided that the
services. But under the facts in the question, Baron
relationship is job contracting. However the
Hotel appear to have hired the security guards, to have
stipulation cannot prevail over the facts and the laws.
paid their wages, to have the power to promote,
The existence of Er-Ee relationship is determined by
suspend or dismiss the security guards and the power
facts and law and not by stipulation of the parties.
of control over them, namely, the security guards were
under orders of Baron Hotel as regard their
It is axiomatic that the existence of an Er-Ee
employment. Because of the above-mentioned
relationship cannot be negated by expressly
circumstances, Baron Hotel is the Er of the security
repudiating it in the management contract and
guards.
providing therein that the Ee is an independent
contractor when the terms of the agreement clearly
Q: Assuming that ASIA is the Er, is the act of ASIA in
show otherwise. For the employment status of a
placing the security guards on "floating status"
person is defined and prescribed by law and not by
lawful? Why?
what the parties say it should be. In determining the
status of the management contract, the "four-fold
A: It is lawful for a private security guard agency to
test" on employment has to be applied (Insular Life
place its security guard on a "floating status" if it has
Assurance Co.. Ltd. v. NLRC, G.R. No. 119930, March
no assignment to give to said security guards. But if the
12, 1998).
security guards are placed on a "floating status" for
more than 6 months, the security guards may consider
Q: ASIA executed a 1-year contract with the Baron
themselves as having been dismissed.
Hotel for the former to provide the latter with 20
security guards to safeguard the persons and
belongings of hotel guests, among others. The

UNIVERSITY OF SANTO TOMAS

73 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q: Lacson was one of more than 100 Ees who were
terminated from employment due to the closure of
LBM Construction Corporation. LBM was a sister
company of Lastimoso Construction, Inc. and RL
Realty & Devt Corp. All three entities formed what
came to be known as the Lastimoso Group of
Companies. The three corporations were owned and
controlled by members of the Lastimoso family; their
incorporators and directors all belonged to the
Lastimoso family. The three corporations were
engaged in the same line of business, under one
management, and used the same equipment
including manpower services. Lacson and his co-Ees
filed a complaint with the Labor Arbiter against LBM,
RL Realty and Lastimoso Construction to hold them
jointly and severally liable for back wages and
separation pay. Lastimoso Construction, Inc. RL
Realty & Development Corporation interposed a
Motion to Dismiss contending that they are juridical
entitles with distinct and separate personalities from
LBM Construction Corporation and therefore, they
cannot be held jointly and severally liable for the
money claims of workers who are not their
employees. Rule on the motion to dismiss. Should it
be granted or denied? Why? (1999 Bar Question)
A: It is very clear that even if LBM Construction
company, Lastimoso Construction Company, Inc. and
RL Realty & Devt Corp. all belong to the Lastimoso
family and are engaged in the same line of business
under one management and used the same
equipment including manpower services, these
corporations were separate juridical entities. Thus,
only the LBM Construction Corporation is the Er of
Teofilo Lacson. The other corporation do not have any
Er-Ee relations with Lacson. The case in question does
not include any fact that would justify piercing the veil
of corporate fiction of the other corporations in order
to protect the rights of workers. In a case (Concept
Builders, Inc. v. NLRC, G.R. No. 108734, May 29,1996)
the SC ruled that it is a fundamental principle of
corporation law that a corporation is an entity
separate and distinct from its stockholders and from
other corporations to which it may be connected. But
this separate and distinct personality of a corporation
is merely a fiction created by law for convenience and
to promote justice. So, when the notion of separate
juridical personality is used to defeat public
convenience, justify wrong, protect fraud or defend
crime, or is used as a device to defeat the labor laws,
this separate personality of the corporation maybe
disregarded or the veil of corporate fiction pierced.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
FOUR- FOLD TEST
Factors determining the existence of an employer-
employee relationship
The fourfold test:
1. Selection and engagement of the employee;
2. Payment of wages;
3. Power of dismissal; and
4. Power of control (Azucena, Vol. I).
Control test
Under the control test, there is an Er-Ee relationship
when the person for whom the services are performed
reserves the right to control not only the end achieved
but also the manner and means used to achieve that
end (Television and Production Exponents Inc. v.
Servana,542 SCRA 578).
Kinds of control exercised by an Er
Not all forms of control are indicative of Er-Ee
relationship. Where the degree of control is both the
result and the means, there is an employer-employee
relationship. Where the control is merely to results,
there is only an independent contractor relationship.
If there is a degree of control for compliance with a
government regulation that is not the control
referred to (Insular life v. NLRC, G.R. No.119930,
March 12, 1998).
NOTE: However, in certain cases the control test is not
sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a
relationship where several positions have been held by the
worker. The better approach is to adopt the two-tiered test
(Francisco v. NLRC, G.R. No. 170087, August 31, 2006).
This two-tiered test would provide us with a framework of
analysis, which would take into consideration the totality of
circumstances surrounding the true nature of the
relationship between the parties. This is especially
appropriate in this case where there is no written agreement
or terms of reference to base the relationship on and due to
the complexity of the relationship based on the various
positions and responsibilities given to the worker over the
period of the latters employment (Francisco v. NLRC, G.R.
No. 170087, August 31, 2006).
Q: The Pizza Corporation (PizCorp) and Ready Supply
Cooperative (RSC) entered into a "service
agreement" where RSC in consideration of service
fees to be paid by PizCorp's will exclusively supply
PizCorp with a group of RSC motorcycle-owning
cooperative members who will henceforth perform
PizCorp's pizza delivery service. RSC assumes under
the agreement --- full obligation for the payment of
74
 TERMINATION OF EMPLOYMENT
the salaries and other statutory monetary benefits of
its members deployed to PizCorp. The parties also
stipulated that there shall be no Er-Ee relationship
between PizCorp and the RSC members. However, if
PizCorp is materially prejudiced by any act of the
delivery crew that violates PizCorps directives and
orders, PizCorp can directly impose disciplinary
actions on, including the power to dismiss, the erring
RSC member/s. (2008 Bar Question)
a. Is the contractual stipulation that there is no
Er-Ee relationship binding on labor officials?
b. Based on the test/s for Er-Ee relationship,
determine the issue of who is the Er of the
RSC members.
A:
A a.) No. The contractual stipulation that there is no
Er-Ee relationship between PizCorp and the RSC
members is not binding on labor officials because what
determines the existence or non-existence of
employer-employee relationship is the actual factual
situation between PizCorp and RSC members and not
what is stipulated in the contract.
Alternative Answer : The agreement between PizCorp
and RSC, that there is, or will not be, an Er-Ee
relationship between the RSC motorcycle-owning
cooperative members performing delivery services is
not binding on labor officials because the test of
employer-employee relationship is law and not
agreement between the parties. (Insular Life, etc. v.
NLRC, 287 SCRA 476).
b.) Using the control test, the Er of the RSC members
is PizCorp. According to the facts, the RSC members
are supposed to make their deliveries in accordance
with PizCorp directives and orders. In addition, the
PizCorp can directly impose disciplinary sanction,
including the power to dismiss the RSC members.
Q: Genesis entered into a Careers Agent Agreement
with EmoLife Insurance Company, a domestic
corporation engaged in insurance business. In the
Agreement, it provides that the agent is an
independent contractor and nothing therein shall be
construed or interpreted as creating an Er-Ee
relationship. It further provides that the agent must
comply with three requirements: (1) compliance with
the regulations and requirements of the company; (2)
maintenance of a level of knowledge of the
company's products that is satisfactory to the
company; and (3) compliance with a quota of new
businesses. However, EmoLife insurance company
terminated Genesis services. Genesis filed an illegal
dismissal complaint alleging therein that an Er-Ee
relationship exists and that he was illegally
75
dismissed. Is he an employee of the Insurance
Company?
A: No. Genesis is not an Ee of EmoLife Insurance
Company. Generally, the determinative element is the
control exercised over the one rendering the service.
The concept of control in LC has to be compared and
distinguished with control that must necessarily
exist in a principal-agent relationship. The Er controls
the Ee both in the results and in the means and
manner of achieving this result. The principal in an
agency relationship, e.g. insurance agent, on the other
hand, also has the prerogative to exercise control over
the agent in undertaking the assigned task based on
the parameters outlined in the pertinent laws. In the
present case, the Agreement fully serves as grant of
authority to Genesis as EmoLifes insurance agent. This
agreement is supplemented by the companys agency
practices and usages, duly accepted by the agent in
carrying out the agency. Foremost among these are
the directives that the principal may impose on the
agent to achieve the assigned tasks, to the extent that
they do not involve the means and manner of
undertaking these tasks. The law likewise obligates the
agent to render an account; in this sense, the principal
may impose on the agent specific instructions on how
an account shall be made, particularly on the matter
of expenses and reimbursements. To these extents,
control can be imposed through rules and regulations
without intruding into the labor law concept of control
for purposes of employment (Gregorio Tongko v.
ManuLife Insurance Company, G.R. No. 167622, June
29, 2010).
Two-tiered test
1. The putative Ers power to control the Ee with
respect to the means and methods by which the
work is to be accomplished; and
2. The underlying economic realities of the activity
or relationship.
Proper standard for economic dependence
The proper standard is whether the worker is
dependent on the alleged Er for his continued
employment in that line of business.
The determination of the relationship between Er and
Ee depends upon the circumstances of the whole
economic activity, such as:
1. The extent to which the services performed
are an integral part of the Ers business
2. The extent of the workers investment in
equipment and facilities;
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
3. The nature and degree of control exercised by
the Er;
4. The workers opportunity for profit and loss;
5. The amount of initiative, skill, judgment, or
foresight required for the success of the
claimed independent enterprise;
6. The permanency and duration of the
relationship between the worker and Er; and
7. The degree of dependency of the worker
upon the Er for his continued employment in
that line of business (Francisco v. NLRC, G.R.
No. 170087, August 31, 2006).
Application of the four-fold test and the two-tiered
test
Present Philippine law recognizes a two-tiered test.
The first tier of the test is the four-fold test. The second
tier is the economics of the relationship test. But the
latter test is used if and only if there is going to be
harshness in the results because of the strict
application of the four-fold test (Francisco v. NLRC,
G.R. No. 170087, August 31, 2006).
KINDS OF EMPLOYMENT
PROBATIONARY EMPLOYMENT
Probationary employment
Employment where the Ee, upon his engagement:
1. Is made to undergo a trial period
2. During which the Er determines his fitness to
qualify for regular employment,
3. Based on reasonable standards made known
to the Ee at the time of engagement (Sec 6,
Rule I, Book VI, IRR).
Characteristics of probationary employment
1. It is an employment for a trial period;
2. It is a temporary employment status prior to
regular employment;
3. It arises through a contract with the following
elements:
a. The Ee must learn and work at a particular
type of work
b. Such work calls for certain qualifications
c. The probation is fixed
d. The Er reserves the power to terminate
during or at the end of the trial period
e. And if the Ee has learned the job to the
satisfaction of the Er, he becomes a regular
Ee.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Rules on probationary employment
1. Er shall make known to the Ee at the time he is
hired, the standards by which he will qualify as a
regular Ee;
2. An Ee allowed to continue work after the
probationary period shall be considered a regular
Ee;
3. During the probationary period, the Ee enjoys
security of tenure; his services can only be
terminated for just or authorized causes.
Period of probationary employment
GR: It shall not exceed 6 months.
XPNs:
1. Covered by an Apprenticeship or Learnership
agreement stipulating a different period
2. Voluntary agreement of parties (especially
when the nature of work requires a longer
period)
3. The Er gives the Ee a second chance to pass
the standards set (Mariwasa Manufacturing,
Inc. v. Leogardo, Jr., G.R. No. 74246, January
26, 1989).
4. When the same is required by the nature of
the work, e.g. the probationary period set for
professors, instructors and teachers is 3
consecutive years of satisfactory service
pursuant to DOLE Manual of Regulations for
Private Schools.
5. When the same is established by company
policy.
NOTE: Period of probation shall be reckoned from the date
the Ee actually started working [Sec.6 (b), Rule I, Book VI,
IRR]. Probationary Ees may be dismissed for cause before
end of the probationary period.
After the lapse of the probationary period (6 months), Ee
becomes regular.
Purpose of the probation period
The purpose of the probation period is to afford the Er
an opportunity to observe the fitness of a
probationary Ee at work.
Extension of the probationary period beyond six
months
The Er and Ee may validly agree to extend the
probationary period beyond six months. Such an
extension may be lawfully agreed upon, despite the
restrictive language of Art. 281. A voluntary
agreement extending the original probationary period
to give the Ee a second chance to pass the probation
76
 TERMINATION OF EMPLOYMENT
standards constitutes a lawful exception to the
statutory limit (Mariwasa Manufacturing, Inc. v.
Leogardo, Jr., G.R. No. 74246, January 26, 1989).
NOTE: By voluntarily agreeing to such an extension, the Ee
waived any benefit attaching to the completion of the period
if he still failed to make the grade during the period of
extension [Mariwasa Mfg. Inc. v. Hon. Leogardo, G.R. No.
74246, January 26, 1989).
Instances when extension of probationary period is
allowed
Extension is allowed only when:
1. Nature of the job requires a longer period, or
2. If it is a company policy that the period of
probationary employment should be an
extended period
NOTE: The extension of period should always be reasonable;
Such that, the nature of the work so requires and that it is
the amount of time required for an ordinary worker to learn
the job.
Essence of the prohibition on double or successive
probation
The evil sought to be prevented is to discourage
scheming Ers from using the system of double or
successive probation to circumvent the mandate of
the law on regularization and make it easier for them
to dismiss their Ees (Holiday Inn Manila v. NLRC, G.R.
No. 109114, September 14, 2003).
Q: Michelle Miclat was employed on a probationary
basis as marketing assistant by Clarion Printing House
but during her employment she was not informed of
the standards that would qualify her as a regular Ee.
30 days after, Clarion informed Miclat that her
employment contract had been terminated without
any reason. Miclat was informed that her
termination was part of Clarions cost-cutting
measures. Is Miclat considered as a regular Ee and
hence entitled to its benefits?
A: Yes. In all cases of probationary employment, the Er
shall make known to the Ee the standards under which
he will qualify as a regular Ee at the time of his
engagement. Where no standards are made known to
the Ee at that time, he shall be deemed a regular Ee. In
the case at bar, she was deemed to have been hired
from day one as a regular Ee (Clarion Printing House
Inc., v. NLRC, G.R. No. 148372, June 27, 2005).
77
Obligation of the Er to his probationary Ees
There is obligation on the part of Er to inform
standards for regularization at the time of
engagement. The failure to inform has the effect that
upon the expiry of the probationary employment, with
or without the period provided for in the contract, the
worker is deemed to be regular.
Q: Middleby Phils. Corp. hired Alcira as engineering
support services supervisor on a probationary basis
for six months. Apparently unhappy with Alciras
performance, Middleby terminated his services.
Alcira contends that he was already a regular Ee
when his employment was terminated. According to
Alciras computation, since Art. 13 of the NCC
provides that 1 month is composed of 30 days, 6
months totaling 180 days, then his 180th day would
fall on Nov. 16, 1996 making him a regular Ee before
his termination. Is the contention of the petitioner in
the computation of six months correct?
A: No, the computation of the 6-month probationary
period is reckoned from the date of appointment up to
the same calendar date of the 6th month following. In
short, since the number of days in each particular
month was irrelevant, Alcira was still a probationary Ee
when Middleby opted not to regularize him on Nov.
20, 1996 (Alcira v. NLRC, G.R. No. 149859, June 9,
2004).
NOTE: In Mitsubishi Motors v. Chrysler Phils. Labor Union,
G.R. No. 148738, June 29, 2004, the SC ruled in this wise:
Applying Art. 13 of the NCC, the probationary
period of 6-months consists of 180 days. This is in
conformity with Art. 13(1) of the NCC. The number
of months in the probationary period, 6, should then
be multiplied by the number of days within a month,
30; hence, the period of 180 days. As clearly
provided for the in last par. of Art. 13, in computing
a period, the first day shall be excluded and the last
day included. Thus, the 180 days commenced on
May 27, 1996, and ended on Nov. 23, 1996. The
termination letter dated Nov. 25, 1996 was served
on Paras only on Nov. 26, 1996. He was, by then
already a regular Ee of the company under Art. 281
of the LC.
How to resolve the conflict between the Alcira and
Mitsubishi Motors case
1. Statutory Construction The latter case prevails
(Mitsubishi Motors); or
2. Rule more favorable to the Ee Use the
computation which would amount to granting the
subject Ee regular employment status (based on
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Constitutional and statutory provisions for the
liberal interpretation of labor laws)
Instances when a probationary Ee is deemed to be a
regular Ee
1. If he is allowed to work after a probationary
period (Art. 281, LC).
2. If no standards, under which he will qualify as a
regular Ee, are made known to him at the time of
his engagement [Sec. 6 (d), Rule I, Book VI, IRR].
Grounds for terminating a probationary employment
1. Just/authorized causes
2. When he fails to qualify as a regular Ee in
accordance with reasonable standards made
known by the Er to the Ee at the time of his
engagement (ICMC v. NLRC, G.R. No. 72222,
January 30, 1989) (see Art. 281, LC).
NOTE: If pre-termination of probationary contract is due to
the valid causes, the Er is not liable to pay the monetary
value of the unexpired portion of the employment.
While probationary Ees do not enjoy permanent status, they
are afforded the security of tenure protection of the
Constitution. Consequently, they cannot be removed from
their positions unless for cause. Such constitutional
protection, however, ends upon the expiration of the period
stated in their probationary contract of employment.
Thereafter, the parties are free to renew the contract or not
(CSA v. NLRC, G.R. No. 87333, September 6, 1991).
Limitations on the Ers power to terminate a
probationary employment contract
1. The power must be exercised in accordance with
the specific requirements of the contract;
2. If a particular time is prescribed, the termination
must be within such time and if formal notice is
required, then that form must be used;
3. The Ers dissatisfaction must be real and in good
faith, not feigned so as to circumvent the contract
or the law; and
4. There must be no unlawful discrimination in the
dismissal.
NOTE: The probationary Ee is entitled to procedural due
process prior to dismissal from service.
Q: Ron Cruz was employed as gardener by Manila
Hotel on probation status effective Sept. 22, 1976.
The appointment signed by Cruz provided for a 6
month probationary period. On Mar. 20, 1977, or a
day before the expiration of the probationary period,
Cruz was promoted to lead gardener position. On the
same day, Cruz position was abolished by Manila
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Hotel allegedly due to economic reverses or business
recession, and to salvage the enterprise from
imminent danger of collapse. Was Cruz illegally
dismissed?
A: Yes, there is no dispute that as a probationary Ee,
Cruz had but limited tenure. Although on probationary
basis, however, Cruz still enjoys the constitutional
protection on security of tenure. During his tenure of
employment, therefore, or before his contract expires,
Cruz cannot be removed except for cause as provided
for by law.
What makes Cruz dismissal highly suspicious is that it
took place at a time when he needs only but a day to
be eligible as a regular Ee. That he is competent finds
support in his being promoted to a lead gardener in so
short span of less than 6 months. By terminating his
employment or abolishing his position with but only
one day remaining in his probationary appointment,
the hotel deprived Cruz of qualifying as a regular Ee
with its concomitant rights and privileges (Manila
Hotel Corp. v. NLRC, G.R. No. L-53453, January 22,
1986).
Period of probationary employment of private school
teachers
The probationary employment of academic teaching
personnel shall not be more than a period of 6
consecutive semesters or 9 consecutive trimesters of
satisfactory service, as the case may be (Sec. 117 of the
Manual of Regulations for Private Higher Education).
NOTE: An academic teaching personnel, who does not
possess the minimum academic qualifications under Section
35 and 36 of the Manual of Regulations for Private Higher
Education shall be considered as a part-time Ee, and
therefore can not avail of the status and privileges of a
probationary employment. A part-time Ee can not acquire a
regular permanent status, and hence, may be terminanted
when a qualified teacher becomes available. (Manual of
Regulations for Provate Higher Education)
Q: Colegio de San Agustin (CSA) hired Gela Jose as a
grade school classroom teacher on a probationary
basis for SY 84 85. Her contract was renewed for
SYs 85-86 and 86-87. On Mar. 24, 87, the CSA
wrote the Gela that "it would be in the best interest
of the students and their families that she seek
employment in another school or business concern
for next school year." Notwithstanding the said
notice, the CSA still paid Gela her salary for April 15
to May 15, 1987. On April 6, 87, Gela wrote the CSA
and sought reconsideration but she received no
reply. Thereafter, she filed a complaint for illegal
dismissal. Was Gela illegally dismissed?
78
 TERMINATION OF EMPLOYMENT
A: No. The Faculty Manual of CSA underscores the
completion of three years of continuous service at CSA
before a probationary teacher acquires tenure.
Hence, Gela cannot claim any vested right to a
permanent appointment since she had not yet
achieved the prerequisite 3-year period under the
Manual of Regulation for Private Schools and the
Faculty Manual of CSA.
In the instant case where the CSA did not wish to
renew the contract of employment for the next school
year, Gela has no ground to protest. She was not
illegally dismissed. Her contract merely expired (CSA v.
NLRC, G.R No. 87333, September 6, 1991).
Q: During their probationary employment, eight
employees were berated and insulted by their
supervisor. In protest, they walked out. The
supervisor shouted at them to go home and never to
report back to work. Later, the personnel manager
required them to explain why they should not be
dismissed from employment for abandonment and
failure to qualify for the positions applied for. They
filed a complaint for illegal dismissal against their Er.
As the Labor Arbiter, how will you resolve the case?
(2006 Bar Question)
A: As the LA, I will resolve the case in favor of the 8
probationary Ees due to the following:
1. Probationary Ees also enjoy security of
tenure ( Biboso v. Victoria Milling, G.R.No. L-
44360, March 31, 1977).
2. In all cases involving Ees on probationary
status, the Er shall make known to the Ee at
the time he is hired, the standards by which
he will qualify for the positions applied for.
3. The filing of the complaint for illegal
dismissal effectively negates the Ers theory
of abandonment (Rizada v. NLRC, G.R. No.
96982, September 21, 1999).
4. The order to go home and not to return to
work constitutes dismissal from
employment.
5. The 8 probationary Ees employment were
terminated without just cause and without
due process.
In view of the foregoing, I will order reinstatement to
their former positions without loss of seniority rights
with full back wages, plus damages and attorneys
fees.
79
REGULAR EMPLOYMENT
Regular employment
1. An employment shall be deemed to be regular
where the Ee has been engaged to perform
activities which are usually necessary or desirable
in the usual business or trade of the Er, the
provisions of written agreements to the contrary
notwithstanding and regardless of the oral
agreements of the parties [Sec. 5 (a), Rule I, Book
VI, IRR].
2. Any Ee who has rendered at least one year of
service, whether such service is continuous or
broken, shall be considered a regular Ee with
respect to the activity in which he is employed and
his employment shall continue while such activity
exists [Sec. 5 (b), Rule I, Book VI, IRR].
NOTE: Regularization is not a management prerogative;
rather, it is the nature of employment that determines it. It
is a mandate of the law (PAL v. Pascua, G.R. No. 143258,
August 15, 2003).
Regular employment does not mean permanent
employment. A probationary Ee becomes a regular Ee after
6 months. The service of a regular Ee may only be terminated
for just/authorized causes.
The practice of entering into employment contracts which
would prevent the workers from becoming regular should be
struck down as contrary to public policy and morals
(Universal Robina Corp. v. Catapang, G.R. No. 164736,
October 14, 2005).
Tests to determine regular employment
1. The primary standard of determining regular
employment is the reasonable connection
between the particular activity performed by the
Ee to the usual trade or business of the Er. The test
is whether the former is usually necessary or
desirable in the usual business or trade of the Er
(De Leon v. NLRC, G.R. No. 70705, August 21,
1989).
NOTE: The connection can be determined by
considering the nature of the work performed and its
relation to the scheme of the particular business or
trade in its entirety (Highway Copra Traders v. NLRC,
G.R. No. 108889, July 30, 1998).
2. Also, the performance of a job for at least a year
is sufficient evidence of the jobs necessity if not
indispensability to the business. This is the rule
even if its performance is not continuous and
merely intermittent. The employment is
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

considered regular, but only with respect to such maintenance section of the companys engineering
activity and while such activity exists (Universal department (De Leon v. NLRC, August 21, G.R. No.
Robina Corp. v. Catapang, G.R. No. 164736, 70705, 1989).
October 14, 2005).
Q: Honorio Dagui was hired by Doa Aurora Suntay
NOTE: The status of regular employment attaches to the Tanjangco in 1953 to take charge of the maintenance
casual Ee on the day immediately after the end of his first and repair of the Tanjangco apartments and
year of service. The law does not provide the qualification residential bldgs. He was to perform carpentry,
that the Ee must first be issued a regular appointment or
plumbing, electrical and masonry work. Upon the
must first be formally declared as such before he can acquire
death of Doa Aurora Tanjangco in 1982, her
a regular status (Aurora Land Projects Corp. v. NLRC, G.R. No.
114733, January 2, 1997). daughter, Teresita Tanjangco Quazon, took over the
administration of all the Tanjangco properties, and
Mode of compensation is not determinative of dismissed Dagui. Is Honorio Dagui a regular Ee?
regular employment
A: Yes. The jobs assigned to Dagui as maintenance
While the Ees mode of compensation was on a per man, carpenter, plumber, electrician and mason were
piece basis the status and nature of their directly related to the business of the Tanjangcos as
employment was that of regular Ees (Labor Congress lessors of residential and apartment bldgs. Moreover,
of the Phils v. NLRC, G.R. No. 123938, May 21, 1998). such a continuing need for his services by the
Tanjangcos is sufficient evidence of the necessity and
NOTE: Seafarers cannot be considered as regular Ees. Their indispensability of his services to their business or
employment is governed by the contracts they sign every trade.
time they are hired and their employment terminated when
the contract expires. Their employment is fixed for a certain Dagui should likewise be considered a regular Ee by
period of time (Ravago v. Esso Eastern Maritime Ltd., G.R. the mere fact that he rendered service for the
No. 158324, March 15, 2005). Tanjangcos for more than one year, that is, beginning
1953 until 1982, under Doa Aurora; and then from
In case of OFWs, Art280 of the LC does not apply.
1982 up to June 8, 1991 under the daughter, for a total
of 29 and 9 years respectively. Owing to Dagui's length
Q: Moises was employed by La Tondea at the
of service, he became a regular Ee, by operation of law,
maintenance section of its Engineering Department
one year after he was employed in 1953 and
paid on a daily basis through petty cash vouchers. His
subsequently in 1982 (Aurora Land Projects Corp. v.
work consisted mainly of painting company building
NLRC, G.R. No. 114733, January 2, 1997).
and equipment and other odd jobs relating to
maintenance. After a service of more than 1 year,
Q: A total of 43 Ees who are deaf-mutes were hired
Moises requested that he be included in the payroll
and re-hired on various periods by Far East Bank and
of regular workers, instead of being paid through
Trust Co. as money sorters and counters through a
petty cash vouchers. Instead, La Tondea dismissed
uniformly worded agreement called Employment
Moises and claimed that Moises was contracted on a
Contract for Handicapped Workers. The company
casual basis specifically to paint certain company
disclaimed that these Ees were regular Ees and
buildings and that its completion terminated Moises
maintained among others that they are a special class
employment. Can Moises be considered as a regular
of workers, who were hired temporarily under a
Ee?
special employment arrangement which was a result
of overtures made by some civic and political
A: Yes, the law demands that the nature and entirety
personalities to the Bank. Should the deaf-mute Ees
of the activities performed by the Ee be considered.
be considered as regular Ees?
Here, the painting and maintenance work given to
Moises manifests a treatment consistent with a
A: Yes. The renewal of the contracts of the
maintenance man and not just a painter, for if his job
handicapped workers and the hiring of others leads to
was only to paint a building there would be no basis
the conclusion that their tasks were beneficial and
for giving him other work assignments in-between
necessary to the bank. It also shows that they were
painting activities.
qualified to perform the responsibilities of their
positions; their disability did not render them
It is not tenable to argue that the painting and
unqualified or unfit for the tasks assigned to them.
maintenance work of Moises are not necessary in La
Tondeas business of manufacturing liquors;
otherwise, there would be no need for the regular

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 80
 TERMINATION OF EMPLOYMENT
The Magna Carta for Disabled Persons mandates that
a qualified disabled Ee should be given the same terms
and conditions of employment as a qualified able-
bodied person. The fact that the Ees were qualified
disabled persons necessarily removes the
employment contracts from the ambit of Art. 80. Since
the Magna Carta accords them the rights of qualified
able-bodied persons, they are thus covered by Art. 280
of the LC (Bernardo v. NLRC, G.R. No. 122917, July 12,
1999).
Q: Coca-Cola Bottlers Phils, Inc., (CCBPI) engaged the
services of the workers as sales route helpers for a
period of 5 months. After 5 months, the workers
were employed by the company on a day-to-day
basis. According to the company, the workers were
hired to substitute for regular route helpers
whenever the latter would be unavailable or when
there would be an unexpected shortage of
manpower in any of its work places or an unusually
high volume of work. The practice was for the
workers to wait every morning outside the gates of
the sales office of the company, if thus hired, the
workers would then be paid their wages at the end of
the day. Should the workers be considered as regular
Ees of CCBPI?
A: Yes, the repeated rehiring of the workers and the
continuing need for their services clearly attest to the
necessity or desirability of their services in the regular
conduct of the business or trade of the company. The
fact that the workers have agreed to be employed on
such basis and to forego the protection given to them
on their security of tenure, demonstrate nothing more
than the serious problem of impoverishment of so
many of our people and the resulting unevenness
between labor and capital (Magsalin & Coca-Cola v.
N.O.W.M., G.R. No. 148492, May 9, 2003).
Q: Metromedia Times Corp. entered, for the fifth
time, into an agreement with Efren Paguio,
appointing him to be an account executive of the
firm. He was to solicit advertisements for The
Manila Times. The written contract between the
parties provided that, You are not an employee of
the Metromedia Times Corp. nor does the company
have neither any obligations towards anyone you
may employ, nor any responsibility for your
operating expenses or for any liability you may incur.
The only rights and obligations between us are those
set forth in this agreement. This agreement cannot be
amended or modified in any way except with the duly
authorized consent in writing of both parties. Is
Efren Paguio a regular Ee of Metromedia Times
Corporation?
81
A: Yes, he performed activities which were necessary
and desirable to the business of the Er, and that the
same went on for more than a year. He was an
account executive in soliciting advertisements, clearly
necessary and desirable, for the survival and
continued operation of the business of the corp.
The corporation cannot seek refuge under the terms
of the agreement it has entered into with Efren Paguio.
The law, in defining their contractual relationship,
does so, not necessarily or exclusively upon the terms
of their written or oral contract, but also on the basis
of the nature of the work of Efren has been called upon
to perform. A stipulation in an agreement can be
ignored as and when it is utilized to deprive the Ee of
his security of tenure (Paguio v. NLRC, G.R. No.
147816, May 9, 2003).
Q: Super Comfort Hotel employed a regular pool of
extra waiters who are asked to report for duty
when the Hotels volume of business is beyond the
capacity of the regularly employed waiters to
undertake. Pedro has been an extra waiter for
more than 10 years. He is also called upon to work on
weekends, on holidays and when there are big affairs
at the hotel. What is Pedros status as an Ee under the
LC? (2008 Bar Question)
A: Pedro has acquired the status of a regular Ee. Pedro
was engaged to perform activities which are necessary
or desirable in the usual business or trade of the Er.
Moreover, Pedro has been extra waiter for more
than 10 years. Under the law, any Ee who has rendered
service for at least one year, whether such service is
continuous or broken, shall be considered a regular Ee
with respect to the activity in which he is employed
and his employment shall continue while such activity
exists (Art. 280, Labor Code).
Alternative Answer: Pedro is a regular, but seasonal
worker. He is regular because as waiter, he was
engaged to perform activities which are usually
necessary or desirable in the usual business or trade of
employer Super Comfort Hotel. However, his security
of tenure is coterminous with the seasonal need for
which he was hired (Art. 280, 1st par., LC).
PROJECT EMPLOYMENT
Project
A "project" has reference to a particular job or
undertaking that may or may not be within the regular
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
or usual business of the Er. In either case, the project
must be distinct, separate and identifiable from the
main business of the Er, and its duration must be
determined or determinable (PAL v. NLRC, G.R. No.
125792, November 9, 1998).
Project employment
Project employment is employment that has been
fixed for a specific project or undertaking the
completion for which has been determined at the time
of engagement of the Ee (Sec. 5[a], Rule I, Book VI,
IRR). The period is not the determining factor, so that
even if the period is more than 1 year, the Ee does not
necessarily become regular.
NOTE: Where the employment of a project Ee is extended
long after the supposed project has been finished, the Ees
are removed from the scope of project Ees and considered
as regular Ees.
Repeated hiring on a project-to-project basis is considered
necessary and desirable to the business of the Er. The Ee is
regular (Maraguinot v. NLRC, G.R. No. 120969, July 22, 1998).
Indicators of project employment
Either one or more of the following circumstances,
among others, may be considered as indicators that an
Ee is a project Ee (Hanjin v. Ibaez, G.R. No. 170181,
June 26, 2008).
a. The duration of the specific/identified
undertaking for which the worker is engaged is
reasonably determinable;
b. Such duration, as well as the specific work/service
to be performed, is defined in an employment
agreement and is made clear to the Ee at the time
of hiring;
NOTE: Absent any other proof that the project Ees were
informed of their status as such, it will be presumed
that they are regular Ees.
c. The work/service performed by the Ee is in
connection with the particular project/
undertaking for which he is engaged;
d. The Ee, while not employed and awaiting
engagement, is free to offer his services to any
other Er;
e. The termination of his employment in the
particular project/undertaking is reported to the
DOLE Regional Office having jurisdiction over the
workplace within 30 days following the date of his
separation from work, using the prescribed form
on Ees termination, dismissal or suspensions;
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
f. An undertaking in the employment contract by
the Er to pay completion bonus to the project Ee
as practiced by most construction companies
Requisites in determining whether an Ee is a project
Ee
1. The project Ee was assigned to carry out a specific
project or undertaking, and
2. The duration and scope of which were specified at
the time the Ee was engaged for that project
(Imbuido v. NLRC, G.R. No. 114734, May 31, 2000).
3. The Ee must have been dismissed every after
completion of his project or phase
4. Report to the DOLE of Ees dismissal on account of
completion of contract (Policy Inst. No. 20; D.O. 19
1997).
Q: Diosdado, a carpenter, was hired by Building
Industries Corporation (BIC), and assigned to build a
small house in Alabang. His contract of employment
specifically referred to him as a "project employee,"
although it did not provide any particular date of
completion of the project. Is the completion of the
house a valid cause for the termination of Diosdados
employment? (2009 Bar Question)
A: Yes. The completion of the house should be a valid
cause for termination of Diosdados employment.
Although the employment contract may not state a
particular date, but if it did not specify that the
termination of the parties employment relationship
was to be on a day certain the day when the phase
of work would be completed the Ee cannot be
considered ot have been a regular Ee (Filipinas Pre-
Fabricated Building Systems, v. Puente, 453 SRA 820).
To satisfy due process requirements, under DOLE
Department Order No. 19, Series of 1993, the
employer is required to report to the relevant DOLE
Regional Office the fact of termination of project Ees
as a result of the completion of the project or any
phase thereof in which one is employed.
Alternative answer:
No. The completion of the house is not a valid cause
for termination of employment of Diosdado, because
of the failure of the BIC to state the specific project or
undertaking the completion or termination of which
has been determined at the time of the engagement
of the Ee (Art. 280, LC). There being no valid
termination of employment, there is no need to
comply with requirements of procedural due process.
Q: The Er hires the Ees whereby their employment
would automatically expire upon the completion of a
82
 TERMINATION OF EMPLOYMENT
project. When the employer Er proceeded to serve
notices of termination of employment when the
project was about to be completed, the Ees filed a
notice of strike for mass termination. Is the action of
the Ees correct?
A: No. The litmus test to determine whether an
individual is a project Ee lies in setting a fixed period of
employment involving a specific undertaking which
completion or termination has been determined at the
time of the particular Ees engagement. In this case, as
previously adverted to, the officers and the members
of the Union were specifically hired as project Ees for
Leyte Geothermal Power Project. Consequently, upon
the completion of the project or substantial phase
thereof, the officers and the members of the Union
could be validly terminated (Leyte Geothermal Power
Progressive Employees Union v. Philippine National Oil
Company, G.R. No. 170351, March 30, 2011).
Requisites to acquire regular Ee status of project Ee
or a member of work pool
The following must concur to acquire a status of a
regular Ee status:
1. There is a continuous rehiring of project Ees even
after cessation of a project; and
2. The tasks performed by the alleged project Ee
are vital, necessary and indispensable to the usual
business or trade of the Er (D.M. Consunji, Inc. v.
JAMIN, G.R. No. 192514, April 18, 2012).
NOTE: The length of time during which the Ee was
continuously re-hired is not controlling, but merely serves as
a badge of regular employment. Enero and Maraguinot have
been employed for a period of not less than 2 years and have
been involved in at least 18 projects. These facts are the
basis in considering them as regular Ees of the company.
A work pool may exist although the workers in the pool do
not receive salaries and are free to seek other employment
during temporary breaks in the business, provided that the
worker shall be available when called to report for a
project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project
workers insofar as the effect of temporary cessation of work
is concerned. This is beneficial to both the Er and Ee for it
prevents the unjust situation of coddling labor at the
expense of capital and at the same time enables the
workers to attain the status of regular Ees (Maraguinot v.
NLRC, G.R. No. 120969, January 22, 1998).
Day certain rule
It states that a project employment that ends on a
certain date does not end on an exact date but upon
the completion of the project.
83
Entitlement to separation pay
GR: Project Ees are not entitled to separation pay if
their services are terminated as a result of the
completion of project.
XPN: If the projects they are working on have not yet
been completed when their services are terminated;
project Ees also enjoy security of tenure during the
limited time of their employment (De Ocampo v. NLRC,
G.R. No. 81077, June 6, 1990).
Q: Roger Puente was hired by Filsystems, Inc., initially
as an installer and eventually promoted to mobile
crane operator, and was stationed at the companys
premises. Puente claimed in his complaint for illegal
dismissal, that his work was continuous and without
interruption for 10 years, and that he was dismissed
from his employment without any cause. Filsystems
on its part averred that Puente was a project Ee in the
companys various projects, and that after the
completion of each project, his employment was
terminated, and such was reported to the DOLE. Is
Roger Puente a regular Ee?
A: No, Puente is a project Ee. The contracts of
employment of Puente attest to the fact that he was
hired for specific projects. His employment was
coterminous with the completion of the projects for
which he had been hired. Those contracts expressly
provided that his tenure of employment depended on
the duration of any phase of the project or on the
completion of the construction projects. Furthermore,
the company regularly submitted to the labor dept
reports of the termination of services of project
workers. Such compliance with the reportorial
requirement confirms that Puente was a project Ee.
The mere rehiring of Puente on a project-to-project
basis did not confer upon him regular employment
status. The practice was dictated by the practical
consideration that experienced construction workers
are more preferred. It did not change his status as a
project Ee (Filipinas Pre-Fabricated Building Systems
(FILSYSTEMS), Inc. v. Puente, G.R. No. 153832, March
18, 2005).
SEASONAL EMPLOYMENT
Seasonal employment
Employment where the job, work or service to be
performed is seasonal in nature and the employment
is for the duration of the season [Sec.5 (a), Rule I, Book
VI, IRR].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
An employment arrangement where an Ee is engaged
to work during a particular season on an activity that
is usually necessary or desirable in the usual business
or trade of the Er.
NOTE: For Seasonal Ees, their employment legally ends upon
completion of the project or the season. The termination of
their employment cannot and should not constitute an
illegal dismissal (Mercado v. NLRC, G.R. No. 79869,
September 5, 1991).
One year duration on the job is pertinent in deciding
whether a casual Ee has become regular or not, but it is not
pertinent to a Seasonal or Project Ee. Passage of time does
not make a seasonal worker regular or permanent (Mercado
v. NLRC, G.R. No. 78969, September 5, 1991).
During off-season, the relationship of Er-Ee is not severed;
the Seasonal Ee is merely considered on LOA without pay.
Seasonal workers who are repeatedly engaged from season
to season performing the same tasks are deemed to have
acquired regular employment (Hacienda Fatima v. National
Federation of Sugarcane Workers-Food and General Trade,
G.R. No. 149440, January 28, 2003).
Entitlement to separation pay
When the business establishment is sold which
effectively terminates the employment of the seasonal
Ees, the latter would be entitled to separation pay.
Seasonal Ees as regular Ees
Seasonal Ees can be considered regular Ees. The fact
that Seasonal Ees do not work continuously for one
whole year but only for the duration of the season
does not detract from considering them in regular
employment. Seasonal workers who are called to work
from time to time and are temporarily laid off during
off-season are not separated from service in that
period, but merely considered on leave until re-
employed.
If the Ee has been performing the job for at least a
year, even if the performance is not continuous and
merely intermittent, the law deems repeated and
continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is
considered regular, but only with respect to such
activity and while such activity exists (Benares v.
Pancho, G.R. No. 151827, April 29, 2005).
But one year duration on the job is pertinent in
deciding whether a casual Ee has become regular or
not, but it is not pertinent to a Seasonal or Project Ee.
Passage of time does not make a seasonal worker
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
regular or permanent (Mercado v. NLRC, G.R. No.
78969, September 5, 1991).
Q: Carlito Codilan and Maximo Docena had been
working for the rice mill for 25 years, while Eugenio
Go, Teofilo Trangria and Reynaldo Tulin have been
working for 22, 15, and 6 years respectively. The
operations of the rice mill continue to operate and do
business throughout the year even if there are only
two or three harvest seasons within the year. This
seasonal harvesting is the reason why the company
considers the workers as seasonal employees. Is the
company correct in considering the Ees as seasonal
Ees?
A: No. The fact is that big rice mills such as the one
owned by the company continue to operate and do
business throughout the year even if there are only
two or three harvest seasons within the year. It is a
common practice among farmers and rice dealers to
store their palay and to have the same milled as the
need arises. Thus, the milling operations are not
seasonal. Finally, considering the number of years that
they have worked, the lowest being 6 years, the
workers have long attained the status of regular Ees as
defined under Art. 280 (Tacloban Sagkahan Rice Mill v.
NLRC, G.R. No. 73806, March 21, 1990).
CASUAL EMPLOYMENT
Casual employment
1. It is an employment where the Ee is engaged in an
activity which is not usually necessary or desirable in
the usual business or trade of the Er, Provided: such
employment is neither Project nor Seasonal (Art. 281,
LC).
NOTE: But despite the distinction between regular and
casual employment, every Ee shall be entitled to the same
rights and privileges, and shall be subject to the same duties
as may be granted by law to regular Ees during the period of
their actual employment.
2. An Ee is engaged to perform a job, work or service
which is merely incidental to the business of the Er,
and such job, work or service is for a definite period
made known to the Ee at the time of engagement [Sec.
5 (b), Rule I, Book VI, IRR]
Casual Ee becoming a regular Ee
If he has rendered at least 1 year of service, whether
such service is continuous or broken, he is considered
as regular Ee with respect to the activity in which he is
employed and his employment shall continue while
such activity exists.
84
 TERMINATION OF EMPLOYMENT

Job is coterminous with No termination report

A casual Ee is only casual for 1 year, and it is the a specific project or required.
passage of time that gives him a regular status phase thereof. It is
(KASAMMA-CCO v. CA, G.R. No. 159828, April 19, required that a
2006). termination report be
submitted at the
The purpose is to give meaning to the constitutional nearest employment
guarantee of security of tenure and right to self- office upon completion
organization (Mercado v. NLRC, G.R. No. 79868, of the project or phase.
September 5, 1991).
FIXED TERM EMPLOYMENT
Q: Yakult Phils. is engaged in the manufacture of
cultured milk. The workers were hired to cut cogon Term employment
grass and weeds at the back of the factory building
used by Yakult. They were not required to work on A contract of employment for a definite period
fixed schedule and they worked on any day of the terminates by its own terms at the end of such period
week on their own discretion and convenience. The (Brent School v. Zamora, G.R. No. L-48494, February 5,
services of the workers were terminated by Yakult 1990).
before the expiration of the 1 year period. May casual
or temporary Ees be dismissed by the Er before the NOTE: Term employment is not a circumvention of the law
expiration of the 1-year period of employment? on security of tenure if it follows the requisites laid down by
the Brent ruling (Romares v. NLRC, G.R. No. 122327, August
A: Yes. The usual business or trade of Yakult Phils. is 19, 1998).
the manufacture of cultured milk. The cutting of the
cogon grasses in the premises of its factory is hardly Decisive determinant in term employment
necessary or desirable in the usual business of the
Yakult. It is the day certain agreed upon by the parties for the
commencement and the termination of their
The workers are casual Ees. Nevertheless, they may be employment relation.
considered regular Ees if they have rendered services
for at least 1 year. When, as in this case, they were Fixed term employment
dismissed from their employment before the
expiration of the 1-year period they cannot lawfully It is an employment where a fixed period of
claim that their dismissal was illegal (Capule, et al. v. employment was agreed upon:
NLRC, G.R. No. 90653, November 12, 1990).
1. Knowingly and voluntarily by the parties,
Project Ee v. Casual Ee 2. Without any force, duress or improper pressure
being brought to bear upon the Ee and usiness of
PROJECT EE CASUAL EE Er (Philips Semiconductor v. Fadriquela, G.R. No.
141717, April 14, 2004).
Employed for a specific Engaged to perform a
project or undertaking job, work or service
Q: Darrell was hired as an athletic director in Amorita
the completion or which is incidental to
School for a period of five years. As such, he oversees
termination of which is the business of the Er
the work of coaches and related staff involved in
determined at the time and the definite period
intercollegiate or interscholastic athletic programs.
of his engagement. of his employment is
However, he was not rehired upon the expiration of
made known to him at
said period. Darrell questions his termination alleging
the time of his
that he was a regular Ee and could not be dismissed
engagement.
without valid cause.
His work need not be His continued
incidental to the employment after the
a. Is he a regular Ee?
business of the Er and lapse one year makes
b. Will Rene automatically become a regular Ee
his employment may him a regular Ee.
if he is rehired by the school for another
exceed one year
definite period of employment?
without necessarily
making him a regular Ee.

UNIVERSITY OF SANTO TOMAS

85 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A:
a. No. Darrell was not a regular Ee but an Ee under
a fixed- term contract. While it can be said that
the services he rendered were usually necessary
and desirable to the business of the school, it
cannot also be denied that his employment was
for a fixed term of five years. The decisive
determinant in fixed- term employment should
not be the activities that the employee is called
upon to perform, but the day certain agreed
upon by the parties for the commencement and
termination of their employment relation (Brent
School Inc. v. Zamora, G.R. No. 48494, February
5, 1990).
b. No. The decisive determinant in term
employment is the day certain agreed upon by
the parties for the commencement and
termination of their employment relationship, a
day certain being understood to be that which
must necessarily come, although it may not be
known when and not whether the work is usually
necessary and desirable to the business of the Er.
Q: Does the Reasonable Connection Rule apply in
fixed term employment for a fixed-term Ee to be
eventually classified as a regular Ee?
A: No. It should be apparent that this settled and
familiar notion of a period, in the context of a contract
of employment, takes no account at all of the nature
of the duties of the Ee; it has absolutely no relevance
to the character of his duties as being usually
necessary and desirable to the usual business of the Er,
or not.
Q: Dean Jose and other Ees are holding
administrative positions as dean, dept heads and
institute secretaries. In the implementation of the
Reorganization, Retrenchment and Restructuring
program effective Jan. 1, 1984, Dean Jose and other
Ees were retired but subsequently rehired. Their
appointment to their administrative positions as
dean, dept heads and institute secretaries had been
extended by the company from time to time until the
expiration of their last appointment on May 31, 1988.
Were Dean Jose and other Ees illegally dismissed?
A: No. Petitioners were dismissed by reason of the
expiration of their contracts of employment.
Petitioners' appointments as dean, dept heads and
institute secretaries were for fixed terms of definite
periods as shown by their respective contracts of
employment, which all expired on the same date, May
31, 1988. The validity of employment for a fixed
period has been acknowledged and affirmed by the SC
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
(Blancaflor v. NLRC, G.R. No. 101013, February 2,
1993).
JOB CONTRACTING
ARTS. 106 109, LABOR CODE
Job contracting (independent contracting/
subcontracting)
"Contracting" or "subcontracting" is an arrangement
whereby a principal agrees to put out or farm out with
a contractor the performance or completion of a
specific job, work or service within a definite or
predetermined period, regardless of whether such job,
work or service is to be performed or completed
within or outside the premises of the principal (DO 18-
A).
Conditions in order to be considered as legitimate job
contracting or subcontracting
1. The contractor must be registered in accordance
with these Rules and carries a distinct and
independent business and undertakes to perform
the job, work or service on its own responsibility,
according to its own manner and method, and
free from control and direction of the principal in
all matters connected with the performance of
the work except as to the results thereof;
2. The contractor has substantial capital and/or
investment; and
3. The Service Agreement ensures compliance with
all the rights and benefits under Labor Laws (Sec.
4, DO 18-A).
Labor-only contracting
There is labor-only contracting when:
1. The contractor does not have substantial capital
or investments in the form of tools, equipment,
machineries, work premises, among others, and
the Ees 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
2. The contractor does not exercise the right to
control over the performance of the work of the
Ee (Sec. 6, DO 18-A).
86
 TERMINATION OF EMPLOYMENT

Factors to consider in determining whether building, machineries and all other working tools
contractor is carrying on an independent business utilized by private respondents in carrying out their
tasks were owned and provided by SMC. In addition,
1. Nature and extent of work the shrimp processing company was found to have
2. Skill required control of the manner and method on how the work
3. Term and duration of the relationship was done. Thus, the complainants were deemed Ees
4. Right to assign the performance of specified not of the cooperative but of the shrimp processing
pieces of work company. Since respondents who were engaged in
5. Control and supervision of worker shrimp processing performed tasks usually necessary
6. Power of Er to hire, fire and pay wages or desirable in the aquaculture business of SMC, they
7. Control of the premises should be deemed regular Ees of the latter and as such
8. Duty to supply premises, tools, appliances, are entitled to all the benefits and rights appurtenant
materials and labor to regular employment (SMC v. Prospero Aballa, et al.,
9. Mode, manner and terms of payment (Vinoya v. G.R. No. 149011, June 28, 2005).
NLRC, G.R. No. 126586, February 03, 2000).
Conditions of permissible job contracting
NOTE: Individuals with special skills, expertise or talent enjoy
the freedom to offer their services as independent 1. The labor contractor must be duly licensed by the
contractors. An individual like an artist or talent has a right appropriate Regional Office of the DOLE
to render his services without any one controlling the means 2. There should be a written contract between the
and methods by which he performs his art or craft (Sonza v. labor contractor and his client-Er that will assure
ABS-CBN, G.R. No. 138051, June 10, 2004). the Ees at least the minimum labor standards and
benefits provided by existing laws.

Q: SMC and Sunflower Cooperative entered into a 1- NOTE: The Ees of the contractor or subcontractor shall be
yr Contract of Services, to be renewed on a month to paid in accordance with the provisions of the LC (Art. 106,
month basis until terminated by either party. LC).
Pursuant to the contract, Sunflower engaged private
Q: The Pizza Corporation (PizCorp) and Ready Supply
respondents to render services at SMCs Bacolod
Cooperative (RSC) entered into a "service
Shrimp Processing Plant. The contract was deemed
agreement" where RSC in consideration of service
renewed by the parties every month after its
fees to be paid by PizCorp's will exclusively supply
expiration on Jan. 1, 94 and respondents continued
PizCorp with a group of RSC motorcycle-owning
to perform their tasks until Sep. 11, 95. In July 95,
cooperative members who will henceforth perform
private respondents filed a complaint before the
PizCorp's pizza delivery service. RSC assumes under
NLRC, praying to be declared as regular Ees of SMC,
the agreement full obligation for the payment of the
with claims for recovery of all benefits and privileges
salaries and other statutory monetary benefits of its
enjoyed by SMC rank and file Ees. Respondents
members deployed to PizCorp. The parties also
subsequently filed an Amended Complaint to include
stipulated that there shall be no Er-Ee relationship
illegal dismissal as additional cause of action
between PizCorp and the RSC members. However, if
following SMCs closure of its Bacolod Shrimp
PizCorp is materially prejudiced by any act of the
Processing Plant on which resulted in the termination
delivery it can impose disciplinary sanctions on,
of their services. SMC filed a Motion for Leave to File
including the power to dismiss, the erring RSC
Attached Third Party Complaint to implead
member/s. Assume that RSC has a paid-up
Sunflower as 3rd-Party Defendant. SMC argues that
capitalization of P1, 000.000.00. Is RSC engaged in
Sunflower could not have been issued a certificate of
"labor only" contracting, permissible job
registration as a cooperative if it had no substantial
contracting or simply, recruitment? (2008 Bar
capital. Are private respondents Ees of the
Question)
independent cooperative contractor (Sunflower) or
of the SMC?
A:
A1) Even if the RSC has a paid up capitalization of P1,
A: The contention of SMC holds no basis. Using the
000,000.00 it is not engaged in labor-only contracting,
substantial capital doctrine and the right of control
or permissible job contracting. It is engaged simply in
test, the Court found that the Sunflower had no
recruiting. RSC merely provides PizCorp the formers
substantial capital in the form of tools, equipment,
motorcycle-owning members to deliver the product of
machineries, work premises and other materials to
PizCorp in accordance with PizCorps directives and
qualify itself as an independent contractor. The lot,
orders.

UNIVERSITY OF SANTO TOMAS

87 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Alternative Answer
RSC is engaged in labor only contracting. It is not
enough to show substantial capitalization or
investment in the form of tools, equipment, machinery
and word premises. In addition, the following factors
have to be considered: (a) whether the contractor is
carrying on an independent business; (b) the nature
and extent of the work; (c) the skill required; (d) the
term and duration of the relationship; (e) the right to
assign the performance of specified pieces of work; (f)
the control and supervision of the workers; (g) the
power of Er with respect to the hiring, firing, and
payment of workers of the contractor; (h) the control
and supervision of the workers; (i) the control of the
premises; (j) the mode, manner and terms of payment
(Alexander Vinoya v. NLRC, Regent Food Corporation
and/or Ricky See, 324 SCRA 469 2000); Osias Corporal
Sr., et al v. NLRC, Lao Enteng Company, Inc. and/or
Trinidad Lao Ong, 341, SCRA 658).
Parties in contracting and subcontracting
1. Contractor/subcontractor Any person or entity,
including a cooperative, engaged in a legitimate
contracting or subcontracting arrangement.
2. Contractual Ee One who is employed by a
contractor or subcontractor to perform or
complete a job, work, or service pursuant to a
service agreement with a principal (D.O. 18-A).
3. Principa l Any Er who puts out or farms out a job,
service, or work to a contractor or subcontractor.
Relationship arising from contractual arrangements
There is a trilateral relationship between the principal,
contractor and Ee. There exists a contractual
relationship between the principal and the contractor
or subcontractor to its Ees.
DEPARTMENT ORDER NO. 18-A
Rights of a contractual Ee
They shall be entitled to all the rights and privileges as
provided for in the LC, as amended, to include the
following:
1. Safe and healthful working conditions;
2. SIL, rest days, OT pay, holiday pay, 13th month pay
and separation pay;
3. Retirement benefits under SSS or retirement
plans of the contractor;
4. Social security and welfare benefits;
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
5. Self-organization, CBA and peaceful concerted
actions; and
6. Security of tenure (Sec. 8, DO 18-A)
Effects of termination of Contractual Ee to separation
pay and other benefits
1. If caused by the pre-termination of the Service
Agreement not due to authorized causes under
Art. 283 of LC The right of Ee to unpaid wages
and other unpaid benefits including unremitted
legal mandatory contributions shall be borne by
the party at fault, without prejudice to the
solidary liability of the parties to the Service
Agreement.
2. If the termination results from the expiration of
the service agreement or completion of the phase
of the job The Ee may opt for payment of
separation benefits as may be provided by law or
the Service Agreement, without prejudice to
his/her entitlement to the completion bonuses or
other emoluments, including retirement benefits
whenever applicable.
Principal as the Er of the contractual Ee
When:
1. There is labor-only contracting
2. The contracting arrangement falls within the
prohibited acts
Furnishing a bond for wages due to the Ees in case the
contractor or subcontractor fails to pay the same
The Er or indirect Er may require the contractor or
subcontractor to furnish a bond equal to the cost of
labor under contract to answer for the wages due to
Ees in case the contractor or subcontractor fails to pay
the same
Liability of the principal
The principal shall be solidarily liable with the
contractor in the event of any violation of any
provision of the LC, including the failure to pay wages.
This will not prevent the principal from claiming
reimbursement from the contractor.
Essence of the prohibition on labor-only contracting
It gives rise to confusion as to who is the real Er of the
workers and who is liable to their claims. It also
deprives workers of the opportunity to become
regular Ees.
88
 TERMINATION OF EMPLOYMENT

Bases of the state in prohibiting labor-only A:

contracting
1. No. In the problem given, Arnold did not have
1. The Constitution, which provides that the State sufficient capital or investment for one. For
shall protect labor and promote its welfare, and another, Arnold was not free from the control and
shall guarantee basic labor rights including just direction of SMPC because all work activities and
and humane terms and conditions of employment schedules were fixed by the company. Therefore,
and the right to self-organization. Arnold is not a job contractor. He is engaged in
2. Art. 106 of the LC, which allows the SLE to labor-only contracting.
distinguish between labor-only contracting and 2. SMPC is liable for the claims of the workers hired
job contracting to prevent any violation or by Arnold. A finding that Arnold is a labor-only
circumvention of the LC. contractor is equivalent to declaring that there
exist an Er-Ee relationship between SMPC and
Labor-only contracting v. Job contracting workers hired by Arnold. This is so because Arnold
is considered a mere agent of SMPC (Lim v. NLRC,
LABOR-ONLY G.R. No. 124630, February 19, 1999).
JOB CONTRACTING
CONTRACTING
No Er-Ee relationship Grounds for cancellation of registration of
exist between the Er contractors or subcontractors
and the contractor's Ees
Er is treated as direct Er
except when the 1. Misrepresentation of facts in the application;
of the person recruited in
contractor or 2. Submission of a falsified or tampered application
all instances
subcontractor fails to or supporting documents to the application for
pay the wages of the registration;
Ees 3. Non-submission of Service Agreement between
Liability is limited (shall the principal and the contractor when required to
be solidarily liable with Er do so;
only when the Er fails to 4. Non-submission of the required semi-annual
Liability extends to all report;
comply with
those provided under 5. Findings through arbitration that the contractor
requirements as to
the Labor Standards law has engaged in labor-only contracting and/or the
unpaid wages and other
labor standards prohibited activities;
violations) 6. Non-compliance with labor standards and
Permissible, subject working conditions;
Prohibited by Law only to certain 7. Findings of violation of Sec. 8 (Rights of
conditions Contractor's Employees) or Sec. 9 (Required
The contractor has Contracts of DO 18-A)
Has no substantial capital 8. Non-compliance with SSS, the HDMF, Pag-ibig,
substantial capital or
or investment Philhealth, and ECC laws; and
investment
9. Collecting any fees not authorized by law and
Q: SMPC entered into a contract with Arnold for the other applicable rules and regulations (Sec. 23, DO
milling of lumber as well as the hauling of waste 18-A).
wood products. The company provided the
equipment and tools because Arnold had neither DEPARTMENT CIRCULAR NO. 01-12
tools and equipment nor capital for the job. Arnold, (Clarifying the Applicability of D.O. 18-A)
on the other hand, hired his friends, relatives and
neighbors for the job. Their wages were paid by SMPC Q: Are the rules provided under D.O. No. 18-A (Rules
to Arnold, based on their production or the number Implementing Art. 106 to 109 of the LC as amended)
of workers and the time used in certain areas of work. applicable to companies or firms in:
All work activities and schedules were fixed by the 1. Business Process Outsourcing (BPO) or
company. Knowledge Process Outsourcing (KPO); and
2. Construction Industries
1. Is Arnold a job contractor? Explain briefly.
2. Who is liable for the claims of the workers hired by A:
Arnold? Explain briefly. (2002 Bar Question) 1. No. D.O. 18-A contemplates generic or focused
singular activity in one contract between the

UNIVERSITY OF SANTO TOMAS

89 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

principal and the contractor and does not contracting. This considers the nature of the business,
contemplate information-technology enabled substantial capital and the control exercised.
services involving entire business processes.
These companies engaged in business processes FACTOR TEST Independent Labor-only
may hire Ees in accordance with the applicable Contractor contractor
laws and maintain these employees based on
businesses requirements, which may or may not No separate
be for different clients of the BPOs at different business
periods of the Ees employment [3.2, Department
The business of independent
Circular No. 01-12].
2. No. Licensing and the exercise of the regulatory an independent and distinct
powers over the construction industry is lodged contractor is from the
with the Philippine Contractors Accreditation Nature of entirely principal. May
Board (PCAB) under the Construction Industry business separate and be a cabo or
Authority of the Philippines (CIAP) pursuant to distinct from an in-house
P.D. 1746 and not with the DOLE or any of its the business of agency
regional offices [4.1, Department Circular No. 01-
the principal prohibited
12].
under DO 18-
EFFECTS OF LABOR-ONLY CONTRACTING 02

Effects of finding that there is labor-only contracting The only

Substantial Has substantial investment is
A finding that a contractor is a labor-only contractor capital OR capital or bringing
is equivalent to declaring that there is an Er-Ee investment investment. individuals to
relationship between the principal and the Ees of the
work
labor-only contractor (Assoc. Anglo-American
Tobacco Corp. v. Clave, G.R. No. 50915, August 30,
Control as to
1990). Control as to
only RESULTS
Control BOTH results
NOTE: The principal is considered the direct Er of the but not the
and means
contractual Ees for purposes of enforcing the provisions of means
the LC and other social legislations.
Effect VALID VOID
The contractor/subcontractor is deemed only to be the
agent of the principal.

The principal is solidarily liable with the
contractor/subcontractor in the event of any violation of any
provision of the LC, including failure to pay wages.
TRILATERAL RELATIONSHIP IN JOB CONTRACTING
Trilateral relationship (in legitimate contracting or
subcontracting arrangement) is when:
1. Er-Ee relationship between the contractor
and the Ees it engaged to perform the specific
job, work or service being contracted; and
2. Contractual relationship between the
principal and the contractor (Sec. 5, DO 18-A).
Factor Test
It is used to determine the relationship of the parties
if it is independent contracting or labor-only
NOTE: DO 18-A prohibits job contracting of functions
performed by regular Ees.
Substantial capital or investment
It refers to paid-up capital stocks/shares of at least
Three Million Pesos (Php 3,000,000.00) in the case of
corporations, partnerships and cooperatives; in the
case of single proprietorship, a net worth of at least
Three Million Pesos (Php 3,000,000.00) (D.O. 18-A).
NOTE: The law does not require both substantial capital and
investment in the form of tools, equipment, machineries,
etc. This is clear from the use of conjunction or. If the
contention was to require the contractor to prove that he
has both capital and requisite investment, then the
conjunction and should have been used (Virginia Neri v.
NLRC, G.R. No. 97008, July 23, 1993).

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 90
 TERMINATION OF EMPLOYMENT
Right to control
It refers to the right reserved to the person for whom
the services of the contractual workers are performed,
to determine not only the end to be achieved, but also
the manner and means to be used in reaching that end
(D.O. 18-A).
DISMISSAL FROM EMPLOYMENT
In cases of regular employment, Substantive due
process (Security of Tenure) is when the Er shall not
terminate the services of an Ee except for a just cause
or when authorized by the LC on Termination of
Employment (Art. 279, LC).
No worker shall be dismissed except for a just or
authorized cause provided by law and after due
process.
JUST CAUSES
Just causes for termination (Art. 282, LC)
1. Serious misconduct or willful disobedience by the
Ee of the lawful orders of his Er or representative
in connection with his work;
2. Gross and habitual neglect by the Ee of his duties;
3. Fraud or willful breach by the Ee of the trust
reposed in him by his Er or duly organized
representative;
4. Commission of a crime or offense by the Ee against
the person of his Er or any immediate member of
his family or his duly authorized representative;
5. Other causes analogous to the foregoing.
NOTE: The burden of proving that the termination was for a
valid or authorized cause shall rest on the Er [Art. 277(b), LC].
Serious misconduct
It is an improper or wrong conduct; the transgression
of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in
judgment. To be serious within the meaning and
intendment of the law, the misconduct must be of
such grave and aggravated character and not merely
trivial or unimportant (Villamor Golf Club v. Pehid, G.R.
No. 166152, October 4, 2005).
Elements of serious misconduct
1. It must be serious or of such a grave and
aggravated character;
2. Must relate to the performance of the Ees duties;
91
3. Ee has become unfit to continue working for the
Er (Philippine Aeolus Automotive United Corp. v.
NLRC, G.R. No. 124617, April 28, 2000).
Examples of serious misconduct:
1. Sexual Harassment
2. Fighting within the company premises
3. Uttering obscene, insulting or offensive words
against a superior
4. Falsification of time records
5. Gross immorality
Q: Escando, upset at his transfer to the washer
section, repeatedly uttered gago ka and
threatened bodily harm to his superior Mr. Andres. Is
the utterance of the obscene words and threats of
bodily harm gross and willful misconduct?
A: Yes. The repeated utterances by Escando of
obscene, insulting or offensive words against a
superior were not only destructive of the morals of his
co-Ees and a violation of the company rules and
regulations, but also constitute gross misconduct
which is one of the grounds provided by law to
terminate the services of an Ee (Autobus Workers
Union v. NLRC, G.R. No. 117453, June 26, 1998).
Q: Samson made insulting and obscene utterances
towards the General Manager saying Si EDT bullshit
yan, sabihin mo kay EDT yan among others during
the Christmas party. Are the utterances towards the
General Manager gross misconduct?
A: The alleged misconduct of Samson when viewed in
its context is not of such serious and grave character
as to warrant his dismissal. Samson made the
utterances and obscene gestures at an informal
Christmas gathering and it is to be expected during this
kind of gatherings, where tongues are more often than
not loosened by liquor of other alcoholic beverages,
that Ees freely express their grievances and gripes
against their Ers. Ees should be allowed wider latitude
to freely express their grievances and gripes against
their Er. Ees should be allowed wider latitude to freely
express their sentiments during these kinds of
occasions which are beyond the disciplinary authority
of the Er (Samson v. NLRC, G.R. No. 121035, April 12,
2000).
Requisites that must concur in order that willful
disobedience of the Ers lawful orders are considred
just cause for termination:
1. The Ees assailed conduct must have been willful
or intentional, the willfulness being
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
characterized by a wrongful and perverse
attitude.
2. The disobeyed orders, regulations or
instructions of the Er must be:
a. Reasonable and lawful
b. Sufficiently known to the Ee
c. In connection with the duties which the
Ee has been engaged to discharge (Cosep
v. NLRC, G.R. No. 124966, June 16, 1998).
Q. Is refusal to a promotion by an Ee an act of
insubordination or willful disobedience?
A. No. There is no law that compels an Ee to accept a
promotion for the reason that a promotion is in the
nature of a gift or reward, which a person has the right
to refuse. The exercise of the Ee of the right to refuse
a promotion cannot be considered in law as
insubordination or willful disobedience (PT&T Corp. v.
CA, G.R. No. 152057, September, 29, 2003).
Q: A company vehicle was brought twice out of the
company premises without authorization. In the first
instance the company opted not to implement any
action against Homer and instead issued a
memorandum reminding Homer as well as the
security guards of the proper procedure. However, in
the second instance the vehicle met an accident. Is
Homer guilty of willful disobedience even though he
was not the one who personally brought the
company vehicle out of the company premises and
was merely a passenger in the second incident?
A: Yes. A rule prohibiting Ees from using company
vehicles for private purpose without authority from
management is a reasonable one. When Homer rode
the company vehicle, he was undoubtedly aware of
the possible consequences of his act and taking into
consideration his moral ascendancy over the security
guards it was incumbent upon him not only to
admonish them but also to refrain from using the
company car himself. Homer is responsible for the
unauthorized release of the vehicle of the company
which is a violation of the rules and regulations of the
company. Homer was already reminded of the proper
procedure of the company (Family Planning Org. of the
Phil. v. NLRC, G.R. No. 75907, May, 23, 1992).
Q: Escobins group were security guards based in
Basilan. They were placed in floating status and were
asked to report for reassignment in Metro Manila by
PISI. Upon failure to report or respond to such
directives they were ordered dismissed from
employment by PISI for willful disobedience. Did the
failure to report to Manila amount to willful
disobedience?
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
A: No. The reasonableness of the rule pertains to the
kind of character of directives and commands and to
the manner in which they are made. In this case, the
order to report to the Manila office fails to meet this
standard. The order to report to Manila was
inconvenient, unreasonable, and prejudicial to
Escobins group since they are heads of families
residing in Basilan and they were not given
transportation money or assurance of availability of
work in Manila (Escobin v. NLRC, G.R. No. 118159, April
15, 1998).
Gross negligence
It implies a want or absence of or failure to exercise
slight care of diligence of the entire absence of care it
evinces thoughtless disregard of consequences
without exerting any effort to avoid them. However,
such neglect must not only be gross but habitual in
character (Judy Phils. v. NLRC, G.R. No. 111934, April
29, 1998).
Degree of negligence as a just cause for termination
Gross and habitual negligence.
Habitual neglect of duties
Imply repeated failure to perform ones duties over a
period of time, depending upon the circumstance (JGB
and Associates v. NLRC, GR No. 10939, March, 7,
1996).
Q: Antiola, as assorter of baby infant dress for Judy
Phils., erroneously assorted and packaged 2,680
dozens of infant wear. Antiola was dismissed from
employment for this infraction. Does the single act of
misassortment constitute gross negligence?
A: No. Such neglect must not only be gross but also
habitual in character. Hence, the penalty of dismissal
is quite severe considering that Antiola committed the
infraction for the first time (Judy Phils. v. NLRC, G.R.
No. 111934, April 29, 1998).
Q: Does the failure in performance evaluations
amount to gross and habitual neglect of duties?
A: As a general concept poor performance is
equivalent to inefficiency and incompetence in the
performance of official duties. The fact that an Ees
performance is found to be poor or unsatisfactory
does not necessarily mean that the Ee is grossly and
habitually negligent of his duties. Gross negligence
implies a want or absence of or failure to exercise
slight care of diligence or the entire absence or care.
92
 TERMINATION OF EMPLOYMENT
He evinces a thoughtless disregard of consequences
without exerting any effort to avoid them (Eastern
Overseas Employment Center Inc. v. Bea, G.R. 143023,
November 29, 2005).
Q: Is inefficiency a just cause for dismissal?
A: Yes, failure to observe prescribed standards of work
or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal.
Such inefficiency is understood to mean failure to
attain work goals or work quotas, either by failing to
complete the same within the allotted reasonable
period, or by producing unsatisfactory results (Buiser
v. Leogardo, G.R. No. L-63316, 1984). This ground is
considered analogous to those enumerated under Art.
282. (Skippers United Pacific v. Magud, G.R. No.
166363, August 15, 2006).
Q: Gamido was a quality control inspector of VH
Manufacturing. Gamido was allegedly caught by the
company Pres. Dy Juanco of sleeping and was
dismissed from employment. Did Gamidos act of
sleeping on the job constitute a valid cause of
dismissal?
A: No. Sleeping on the job as a valid ground for
dismissal only applies to security guards whose duty
necessitates that they be awake and watchful at all
times. Gamidos single act of sleeping further shows
that the alleged negligence or neglect of duty was
neither gross nor habitual (VH Manufacturing v. NLRC,
G.R. No. 130957, January, 19, 2000).
Some forms of neglect of duty
1. Habitual tardiness and absenteeism
2. Abandonment:
a. Failure to report for work or absence without
justifiable reason
b. Clear intention to sever Er-Ee relationship
manifested by some overt acts (Labor et. al v.
NLRC, GR No. 110388, September 14, 1995).
Loss of trust and confidence a just cause for
termination when
1. It applies only to cases involving:
a. Ees occupying positions of trust and
confidence (confidential and managerial Ees)
To this class belong managerial Ees, i.e.,
those vested with the powers or prerogatives
to lay down management policies and/or to
hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline Ees or
93
effectively recommend such managerial
actions
NOTE: The mere existence of a basis for the loss of
trust and confidence justifies the dismissal of the
managerial Ee because when an Ee accepts a
promotion to a managerial position or to an office
requiring full trust and confidence, such Ee gives
up some of the rigid guaranties available to
ordinary workers (Cecilia T. Manese v. Jollibee
Foods Corporation, G.R. No. 170454, October 11,
2012).
b. Ees routinely charged with the care and custody
of the Ers money or property To this class
belong cashiers, auditors, property custodians,
etc., or those who, in the normal and routine
exercise of their functions, regularly handle
significant amounts of money or property
(Mabeza v. NLRC, G.R. No. 118506, April 18,
1997).
2. The loss of trust and confidence must be based on
willful breach.
NOTE: A breach is willful if it is done intentionally,
knowingly, and purposely without justifiable excuse, as
distinguished from an act done carelessly,
thoughtlessly, heedlessly, or inadvertently (De la Cruz v.
NLRC, G.R. No. 119536, February 17, 1997).
3. The act constituting the breach must be work-
related such as would show the Ee concerned to
be unfit to continue working for the Er (Gonzales
v. NLRC, G.R. No. 131653, March 26, 2001).
4. It must be substantial and founded on clearly
established facts sufficient to warrant the Ees
separation from employment (Sulpicio Lines Inc. v.
Gulde, G.R. No. 149930, February 22, 2002).
5. Fraud must be committed against the Er or his
representatives, e.g.:
a. Falsification of time cards
b. Theft of company property
c. Unauthorized use of company vehicle
NOTE: The treatment of rank and file personnel and
managerial Ees in so far as the application of the doctrine of
loss of trust and confidence is concerned is different. As
regards managerial Ees, such as Caoile, mere existence of a
basis for believing that such Ee has breached the trust of his
Er would suffice for his dismissal (Caoile v. NLRC, G.R. No.
115491, November 24, 1998).
Guidelines for the Doctrine of Loss of Confidence to
apply
1. Loss of confidence should not be simulated
(reasonable basis for loss of trust and confidence);
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
2. Not used for subterfuge for causes which are
improper and/or illegal and unjustified;
3. Not arbitrarily asserted in the face of
overwhelming evidence to the contrary;
4. Must be genuine, not a mere afterthought to
justify earlier action taken in bad faith; and
5. The Ee involved holds a position of trust and
confidence.
NOTE: The breach of trust must rest on substantial grounds
and not on the Ers arbitrariness, whims, caprices, or
suspicion; otherwise, the Ee would eternally remain at the
mercy of the Er. It should be genuine and not simulated, nor
should it appear as a mere afterthought to justify earlier
action taken in bad faith of a subterfuge for causes which are
improper, illegal, or unjustified. It has never been intended
to afford and occasion for abuse because of its subjective
nature. There must, therefore, be an actual breach of duty
committed by the Ee which must be established by
substantial evidence (Dela Cruz v. NLRC, G.R. No. 119536,
February 17, 1997).
Q: Mabeza, a chambermaid at Hotel Supreme was
terminated from employment because of her refusal
to sign an affidavit attesting to their Ers compliance
with minimum wage and other labor standards.
Mabeza filed a complaint for illegal dismissal against
Hotel Supreme. As a defense, Hotel Supreme claimed
that she abandoned her work and belatedly claimed
loss of confidence as the ground for the dismissal of
Mabeza because she stole some of the properties of
her Er. Is loss of confidence a valid ground for
dismissal of a hotel chambermaid?
A: No. Loss of confidence as a just cause for dismissal
was never intended to provide Ers with a blank check
for terminating their Ees. Evidently, an ordinary
chambermaid who has to sign out for linen and other
hotel property from the property custodian each day
and who has to account for each and every towel or
bed sheet utilized by the hotel's guests at the end of
her shift would not fall under any of these two classes
of Ees for which loss of confidence, if ably supported
by evidence, would normally apply (Mabeza v. NLRC,
G.R. No. 118506, April 18, 1997).
Q: Abelardo Abel was first hired by Philex Mining
Corp. in January 1988. He was later assigned to the
companys Legal Department as a Contract Claims
Asst., and held the position for 5 yrs. prior to his
transfer to the Mine Engineering and Draw Control
Department wherein he was appointed Unit Head. In
2002, he was implicated in an irregularity occurring in
the subsidence area of the companys mine site at
Benguet. His co-worker Lupega, executed an affidavit
known as the Subsidence Area Anomaly. The
incidents in Lupegas affidavit supposedly took place
when Abel was still a Contract Claims Asst. at the
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
companys legal dept. An investigation was promptly
launched by the companys officers. Abel attended
the meetings but claimed that he was neither asked
if he needed the assistance of counsel nor allowed to
properly present his side. By memo, the company
found Abel guilty of (1) fraud resulting in loss of trust
and confidence and (2) gross neglect of duty, and was
meted out the penalty of dismissal from
employment. Was Abel validly dismissed for any of
the causes provided for in Art.282 of the LC?
A: No. The 1st requisite for dismissal on the ground of
loss of trust and confidence is that the Ee concerned
must be holding a position of trust and confidence.
Abel was a contract claims assistant at the time he
allegedly committed the acts which led to its loss of
trust and confidence. It is not the job title but the
actual work that the Ee performs. It was part of Abels
responsibilities to monitor the performance of the
companys contractors in relation to the scope of work
contracted out to them.
The 2ndrequisite is that there must be an act that
would justify the loss of trust and confidence. Loss of
trust and confidence, to be a valid cause for dismissal,
must be based on a willful breach of trust and founded
on clearly established facts. The basis for the dismissal
must be clearly and convincingly established but proof
beyond reasonable doubt is not necessary. The
companys evidence against Abel fails to meet this
standard. Its lone witness, Lupega, did not support his
affidavit and testimony during the company
investigation with any piece of evidence at all. It could
hardly be considered substantial evidence (Abel v.
Philex Mining Corp., G.R. No. 178976, July 31, 2009).
Q: Is failure to reach the monthly sales quota a valid
ground for dismissal based on loss of trust and
confidence?
A: No. It is stated in Art. 282 of the LC that loss of trust
and confidence is a ground for termination of an
employee. However, it requires that such breach of
trust be willful whether it be done intentionally,
knowingly, and purposely, without justifiable excuse.
The court finds that failure to reach the monthly sales
quota is not valid ground for loss of trust and
confidence as this is not what has been contemplated
in Art. 282(c) of the LC.
Several factors can be attributed to the low sales
performance, which may not be compelled by the
respondent. It being involuntary on his part the factors
cannot be taken as a valid ground as they are not to be
considered willful breach of trust, for they were not
done intentionally, knowingly and purposely, without
94
 TERMINATION OF EMPLOYMENT
justifiable excuse (Norkis Distributors, Inc and Alex D.
Buat v. Delfin S. Descallar, G.R. No. 185255, March 14,
2012).
Abandonment as a just cause for termination
It means deliberate and unjustified refusal of an
employee to resume his employment.
Requirements for a valid finding of abandonment
Two (2) factors must be present:
1. The failure to report for work, or absence without
valid or justifiable reason; and
2. A clear intention to sever Er-Ee relationship, with
the 2nd element as the more determinative
factor, being manifested by some overt acts (Sta.
Catalina College v. NLRC, G.R. No. 144483,
November 19, 2003).
How to prove abandonment
Abandonment is proven when the Er must show that
the Ee deliberately and unjustifiably refused to resume
his employment without any intention of returning.
There must be a concurrence of the intention to
abandon and some overt acts from which an Ee may
be deduced as having no more intention to work. The
law, however, does not enumerate what specific overt
acts can be considered as strong evidence of the
intention to sever the Ee-Er relationship (Sta. Catalina
College v. NLRC, G.R. No. 144483, November 19, 2003).
Q: Mejila, a barber at Windfield Barber Shop, had an
altercation with a fellow barber which resulted in his
subsequent turning over the duplicate keys of the
shop to the cashier and took away all his belongings
there from and worked at different barbershop.
Mejila then filed an illegal dismissal case but did not
seek reinstatement as a relief. Did Mejila commit
abandonment?
A: Yes. Mejilas acts such as surrendering the shops
keys, not reporting to the shop anymore without any
justifiable reason, his employment in another barber
shop, and the filing of a complaint for illegal dismissal
without praying for reinstatement clearly show that
there was a concurrence of the intention to abandon
and some overt acts from which it may be inferred that
the Ee concerned has no more interest in working (Jo
v. NLRC, G.R. No. 121605, February 2, 2000).
Q: The Ees averred that they were underpaid and
filed a complaint for money claims against the Er
before the LA. As a result of their complaint, they
95
were relieved from their posts and were not given
new assignments despite the lapse of six months. On
the other hand, the Er maintains that the Ees were
not dismissed but were merely transferred to a new
post and voluntarily abandoned their jobs when they
failed to report for duty in the new location. Upon
termination, the Ee moved to file a joint complaint
for illegal dismissal. Is there a valid indication of
abandonment from work?
A. No. For abandonment of work to fall under Art. 282
of the LC, as amended, as gross and habitual neglect of
duties there must be the occurrence of two elements:
first, there should be a failure of the Ee to report for
works without a valid or justifiable reason and second,
there should be a showing that the Ee intended to
sever the Er-Ee relationship, the second element being
the more determinative factor as manifested by overt
acts.
The Er cannot simply conclude knowledge that an Ee is
ipso facto notified of a transfer when there is no
evidence to indicate that the Ee had knowledge of the
transfer order. Hence, the failure of an Ee to report for
work at the new location cannot be taken against him
as an element of abandonment.
In addition to these tests for valid transfer, there
should be proper and effective notice to the Ee
concerned. It is the Ers burden to show that the Ee
was duly notified of the transfer. Verily, an Er cannot
reasonably expect an Ee to report for work in a new
location without first informing said Ee of the transfer.
Alert securitys insistence on the sufficiency of mere
issuance of the transfer order is indicative of bad faith
on their part (Alert Security and Investigation Agency,
Inc. et al v. Saidali Pasawilan, et al., G.R. No. 182397,
September 14, 2011).
Guidelines to determine the validity of termination:
Validity of termination per se is determined by
compliance with two-notice rule, hearing, just or
authorized cause. This is more or propriety of dismissal
as penalty as oppose to reprimand, suspension, etc.
"Commission of a crime or offense" as just cause for
termination of an Es service
When an offense committed by the Ee against the
person of his Er or any immediate member of his
family or his duly authorized representative and thus,
conviction of a crime involving moral turpitude is not
analogous thereto as the element of relation to his
work or to his Er is lacking.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
NOTE: A criminal case need not be actually filed. Commission
of acts constituting a crime itself is sufficient.
For an act to be included in analogous cases of just
causes of termination
It must be due to the voluntary and/or willful act or
omission of the Ee (Nadura v. Benguet Consolidated,
G.R. No. L-17780, August 24, 1962).
e.g.:
1. Violation of company rules and regulations
2. Drunkenness
3. Gross inefficiency
4. Illegally diverting Ers products
5. Failure to heed an order not to join an illegal
picket
6. Violation of safety rules and code of discipline
NOTE: To fall within the ambit of analogous cases the act
or omission must have an element similar to those found in
the specific Just cause enumerated under Art. 282.
(International Rice Research Institute v. NLRC, G.R. No.
97239, May 12, 1993).
Past offenses
(Stellar Industrial Service Inc. v. NLRC) Previous offenses
may be so used as a valid justification for dismissal from
work ONLY if the infractions are related to the
subsequent offense upon which the basis the
termination of employment is decreed.
(Chua-Qua v. Clave) The school failed to show that Chua
took advantage of her position to court her student
Chua. If the two eventually fell in love, despite the
disparity in their ages and academic levels, this only lends
substance to the truism that the heart has reasons of its
own which reason does not know. But, yielding to this
gentle and universal emotion is not to be so casually
equated with immorality. The deviation of the
circumstances of their marriage from the usual social
pattern cannot be considered as a defiance of
contemporary social mores.
Doctrine of Incompatibility
Where the Ee has done something that is contrary or
incompatible with the faithful performance of his
duties, his Er has a just cause for terminating his
employment (Manila Chauffeurs League v. Bachrach
Motor Co., G.R. No. L-47071, June 29, 1940).
AUTHORIZED CAUSES
Authorized causes of termination by the Er:
1. Installation of labor-saving devices
(automation/robotics)
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
2. Redundancy (superfluity in the performance of a
particular work) Exists where the services of an
Ee are in excess of what is reasonably demanded
by the actual requirements of the enterprise
(Wiltshire File Co., Inc. v. NLRC, G.R. No. 82249,
February 7, 1991).
NOTE: The redundancy should not have been created
by the Er.
3. Reorganization
NOTE: An Er is not precluded from adopting a new
policy conducive to a more economical and effective
management, and the law does not require that the Er
should be suffering financial losses before he can
terminate the services of the Ee on the ground of
redundancy (DOLE Phil., Inc. v. NLRC, G.R. No. L-55413,
July 25, 1983).
4. Retrenchment Cutting of expenses and includes
the reduction of personnel; It is a management
prerogative, a means to protect and preserve the
Ers viability and ensure his survival. To be an
authorized cause it must be effected in good faith
and for the retrenchment, which is after all a
drastic recourse with serious consequences for
the livelihood of the Ees or otherwise laid-off.
NOTE: The phrase to prevent losses means that
retrenchment or termination from the service of some
Ees is authorized to be undertaken by the Er sometime
before the anticipated losses are actually sustained or
realized. Evidently, actual losses need not set in prior to
retrenchment (Cajucom VII v. TP Phils Cement Corp., et
al, G.R. No. 149090, February 11, 2005).
5. Closing or cessation of operation of the
establishment or undertaking Must be done in
good faith and not for the purpose of
circumventing pertinent labor laws.
6. Disease Must be incurable within 6 months and
the continued employment is prohibited by law or
prejudicial to his health as well as to the health of
his co-Ees with a certification from the public
health officer that the disease is incurable within
6 months despite due to medication and
treatment
Other authorized causes
1. Total and permanent disability of Ee
2. Valid application of union security clause
3. Expiration of period in term of employment
4. Completion of project in project employment
5. Failure in probation
6. Relocation of business to a distant place
96
 TERMINATION OF EMPLOYMENT
7. Defiance of return-to work-order
8. Commission of Illegal acts in strike
9. Violation of contractual agreement
10. Retirement
Steps required in termination of an Ees employment
for authorized causes:
1. Written Notice to DOLE 30 days prior to the
intended day of termination.
Purpose: To enable it to ascertain the veracity of
the cause of termination.
2. Written notice to Ee concerned 30 days prior the
intended date of termination.
3. Payment of separation pay - Serious business
losses do not excuse the Er from complying with
the clearance or report required in Art. 283 of the
LC and its IRR before terminating the employment
of its workers. In the absence of justifying
circumstances, the failure of the Er to observe the
procedural requirements under Art. 284 of the LC
taints their actuations with bad faith if the lay-off
was temporary but then serious business losses
prevented the reinstatement of respondents, the
Ers should have complied with the requirements
of written notice.
Requisites of a valid redundancy:
1. Written notice served on both the Ees and the
DOLE at least 1 month prior to separation from
work
2. Payment of separation pay equivalent to at least
1 month pay or at least 1 month pay for every year
of service, whichever is higher
3. Good faith in abolishing redundant position
4. Fair and reasonable criteria in ascertaining what
positions are to be declared redundant:
a. Less preferred status, e.g. temporary Ee
b. Efficiency and
c. Seniority
Q: Ong, a Sales Manager of Wiltshire File Co., Inc.,
was informed of the termination of his employment
due to redundancy upon returning from a trip
abroad. Ong maintains that there can be no
redundancy since he was the only person occupying
his position in the company.
Is there redundancy even though Ong was the only
one occupying his position?
A: Yes. Redundancy in an Ers personnel does not
necessarily or even ordinarily refer to duplication of
work. The characterization of Ongs services as no
longer necessary or sustainable and therefore
97
properly terminable, was an exercise of business
judgment on the part of Wiltshire. Furthermore, a
position is redundant where it is superfluous, and
superfluity of a position or positions may be the
outcome of a number of factors, such as over hiring of
workers, decreased volume of business, or dropping of
a particular product line or service activity previously
manufactured or undertaken by the enterprise. The Er
has no legal obligation to keep in its payroll more Ees
that are necessary for the operation of its business
(Wiltshire File Co., Inc. v. NLRC, G.R. No. 82249,
February 7, 1991).
NOTE: The losses which the company may suffer or is
suffering may be proved by financial statements audited by
independent auditors (Asian Alcohol Corporation v. NLRC,
G.R. No. 131108, March 25, 1999).
Retrenchment is a means of last resort because in the
normal course of business losses are expected. Er must have
taken all measures necessary to prevent losses and it is the
last measure when you touch the work force.
Requisites of a valid retrenchment:
1. Written notice served on both the Ee and the
DOLE at least 1 month prior to the intended date
of retrenchment
2. Payment of separation pay equivalent to at least
one month pay or at least 1/2 month pay for every
year of service, whichever is higher
3. Good faith
4. Proof of expected or actual losses
5. The Er used fair and reasonable criteria in
ascertaining who would be retained among the
Ees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship of certain
workers (FASAP v. PAL, G.R. No. 178083, October
2, 2009).
Criteria in selecting Ees to be retrenched:
There must be fair and reasonable criteria to be used
in selecting Ees to be dismissed such as:
1. Less preferred status;
2. Efficiency rating;
3. Seniority (Phil. Tuberculosis Society, Inc. v.
National Labor Union, G.R. No. 115414,
August 25, 1998).
Last In First Out (LIFO) Rule
It applies in the termination of employment in the line
of work. What is contemplated in the LIFO rule is that
when there are two or more Ees occupying the same
position in the company affected by the retrenchment
program, the last one employed will necessarily be the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
first one to go (Maya Farms Ees Organization v. NLRC,
G.R. No. 106256, December 28, 1994).
Q: Is the seniority rule or "last in first out" policy to
be strictly followed in effecting a retrenchment or
redundancy program? (2001 Bar Question)
A: No. In Asian Alcohol Corp., the SC stated that with
regard the policy of "first in, last out" in choosing
which positions to declare as redundant or whom to
retrench to prevent further business losses, there is
no law that mandates such a policy. The reason is
simple enough. A host of relevant factors come into
play in determining cost efficient measures and in
choosing the Ees who will be retained or separated to
save the company from closing shop. In determining
these issues, management plays a pre-eminent role.
The characterization of positions as redundant is an
exercise of business judgment on the part of the Er. It
will be upheld as long as it passes the test of
arbitrariness.
Q: Philippine Tuberculosis Society, Inc. retrenched
116 Ees after incurring deficits amounting to 9.1
million pesos. Aside from retrenching its Ees, the
company also implemented cost cutting measures to
prevent such losses for increasing and minimizing it.
The NLRC ruled that the retrenchment was not valid
on the ground that the Society did not take the
seniority rule into account in the selection of the
retrenchment. Was the retrenchment done by the
Society not valid for its failure to follow the criteria
laid down by law?
A: No. The Society terminated the employment of
several workers who have worked with the Society for
great number of years without consideration for the
number of years of service and their seniority indicates
that they had been retained for such a long time
because of loyal and efficient service. The burden of
proving the contrary rests on the Society (Phil.
Tuberculosis Society, Inc. v. National Labor Union, G.R.
No. 115414, August 25, 1998).
Q: Due to mounting losses the former owners of
Asian Alcohol Corporation sold its stake in the
company to Prior Holdings. Upon taking control of
the company and to prevent losses, Prior Holdings
implemented a reorganization plan and other cost-
saving measures including the retrenchment of 117
Ees some of which are members of the union and the
majority held by non-union members. Some
retrenched workers filed a complaint for illegal
dismissal alleging that the retrenchment was a
subterfuge for union busting activities.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Was the retrenchment made by Asian Alcohol valid
and justified?
A: Yes. Even though the bulk of the losses were
suffered under the old management and continued
only under the new management, ultimately the new
management of Prior Holdings will absorb such losses.
The law gives the new management every right to
undertake measures to save the company from
bankruptcy (Asian Alcohol Corp. v. NLRC, G.R. No.
131108, March 25, 1999).
Redundancy v. Retrenchment
Redundancy does not involve losses or the closing or
cessation of operations of the establishment.
On the other hand, retrenchment involves losses,
closures or cessation of operations of establishment or
undertaking due to serious business losses or financial
reverses.
Requisites of a valid closure
1. Written notice served on both the Ees and the
DOLE at least 1 month prior to the intended date
of closure
2. Payment of separation pay equivalent to at least
one month pay or at least 1/2 month pay for every
year of service, whichever is higher, except when
closure is due to serious business losses
3. Good faith
4. No circumvention of the law
5. No other option available to the Er
Test for the validity of closure or cessation of
establishment or undertaking
The ultimate test of the validity of closure or cessation
of establishment or undertaking is that it must be bona
fide in character. And the burden of proving such falls
upon the Er (Capitol Medical Center, Inc. v. Dr. Meris,
G.R. No. 155098, September 16, 2005).
Payment of separation pay in case of closure
Payment of separation pay is required only where
closure is neither due to serious business losses nor
due to an act of Government (North Davao Mining
Corp v. NLRC, G.R. No. 112546, Mar. 13, 1996;NFL v.
NLRC, G.R. No. 127718, March 2, 2000).
NOTE: Closure contemplated is a unilateral and voluntary act
on the part of the Er to close the business establishment.
When the closure of the business is due to serious
business loss- there is no obligation to pay separation
pay.
98
 TERMINATION OF EMPLOYMENT

Where closure of business is by compulsion of law (e.g.: brought about by the enormous rejection of their
the land where the building is situated was declared products for export to the United States.
covered by the Comprehensive Agrarian Reform Law) -
closure of business is not attributed to Ers will thus, no Was the closure warranted by the alleged business
obligation to pay.
reverses?
Q: Galaxie Steel Corp. decided to close down because
A: No. The closure of a business establishment is a
of serious business loses. It filed a written notice with
ground for the termination of the services of any Ee
the DOLE informing its intended closure and the
unless the closing is for the purpose of circumventing
termination of employment. It posted the notice of
the provisions of the law. But, while business reverses
closure on the corporate bulletin board.
can be a just cause for terminating Ees, they must be
sufficiently proved. In this case, the audited financial
1. Does the written notice posted by Galaxie on
statement of SIMEX clearly indicates that they actually
the bulletin board sufficiently comply with
derived earnings. Although the rejections may have
the notice requirement under Art. 283 of the
reduced their earnings they were not suffering losses.
LC?
There is no question that an Er may reduce its work
2. Are Galaxie Ees entitled to separation pay?
force to prevent losses but it must be serious, actual
and real otherwise this ground for termination would
A:
be susceptible to abuse by scheming Ers who might be
1. No. In order to meet the purpose, service of
merely feigning business losses or reverses in their
the written notice must be made individually
business ventures to ease out Ees (Union of Filipino
upon each and every Ee of the company.
Workers v. NLRC, G.R. No. 90519, March 23, 1992).
However, the Court held that where the
dismissal is for an authorized cause, non-
Q: Carmelcraft Corporation closed its business
compliance with statutory due process
operations allegedly due to losses of Php 1, 603.88
should not nullify the dismissal, or render it
after the Carmelcraft Employees Union filed a
illegal, or ineffectual. Still, the Er should
petition for certification election. Carmelcraft Union
indemnify the Ee, in the form of nominal
filed a complaint for illegal lockout and ULP with
damages, for the violation of his right to
damages and claim for employment benefits. Were
statutory due process (Galaxie Steel Workers
the losses incurred by the company enough to justify
Union v. NLRC, G.R. No. 165757, October 17,
closure of its operations?
2006).
A: No. The determination to cease operations is a
2. No. Galaxie had been experiencing serious
prerogative of management that is usually not
financial losses at the time it closed business
interfered with by the State as no business can be
operations. Art. 283 of the LC governs the
required to continue operating at a loss simply to
grant of separation benefits "in case of
maintain the workers in employment. That would be a
closures or cessation of operation" of
taking of property without due process of law which
business establishments "not due to serious
the Er has a right to resist. But where it is manifest that
business losses or financial reverses." Where,
the closure is motivated not by a desire to avoid
the closure then is due to serious business
further losses but to discourage the workers from
losses, the LC does not impose any obligation
organizing themselves into a union for more effective
upon the Er to pay separation benefits
negotiations with management, the State is bound to
(Galaxie Steel Workers Union v. NLRC, G.R.
intervene. The losses of less than Php 2,000 for a
No. 165757, October 17, 2006).
corporation capitalized at Php 3 million cannot be
considered serious enough to call for the closure of the
Q: Rank-and-file workers of SIMEX filed a petition for
company (Carmelcraft Corp. v. NLRC, G.R. No. 90634-
direct certification and affiliated with Union of
35, June 6, 1990).
Filipino Workers (UFW). Subsequently, 36 workers of
the companys lumpia department and 16 other
Q: Is the transferee of the closed corporation
workers from other departments were effectively
required to absorb the Ees of the old corporation?
locked out when their working areas were cleaned
out. The workers through UFW filed a complaint for
A:
unfair labor practices against the company. SIMEX
GR: There is no law requiring a bona fide purchaser of
then filed a notice of permanent shutdown/total
assets of an on-going concern to absorb in its employ
closure of all units of operation in the establishment
the Ees of the latter except when the transaction
with the DOLE allegedly due to business reverses

UNIVERSITY OF SANTO TOMAS

99 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

between the parties is colored or clothed with bad entire establishment department due to
faith (Sundowner Devt Corp. v. Drilon, G.R. No. 82341, or to close or abolish a serious business losses
December 6, 1989). department or section to be regarded as an
thereof for economic authorized cause for
XPNs: reasons, such as to terminating Ees, it must
1. Where the transferee was found to be merely minimize expenses be proven that the losses
an alter ego of the different merging firms and reduce incurred are substantial
(Filipinas Port Services, Inc. v. NLRC, G.R. No. capitalization. and actual or reasonably
97237, August 16, 1991). imminent; that the same
2. Where the transferee voluntarily agrees to do increased through a
so (Marina Port Services, Inc. v. Iniego, G.R. period of time; and that
No. 77853, January 22, 1990). the condition of the
company is not likely to
Q: Marikina Dairy Industries, Inc. decided to sell its improve in the near
assets and close operations on the ground of heavy future.
losses. The unions alleged that the financial losses LC provides for the
Does not obligate the
were imaginary and the dissolution was a scheme payment of separation
Er for the payment of
maliciously designed to evade its legal and social package in case of
separation package if
obligations to its Ees. The unions want the buyers of retrenchment to prevent
there is closure of
the corporations assets restrained to operate unless losses.
business due to
the members of the unions are hired to operate the
serious losses.
plant under the terms and conditions specified in the
collective bargaining agreements.
Disease as a ground for dismissal
Is the buyer of a companys assets required to absorb
the Ees of the seller? When the Ee suffers from a disease, and:
1. His continued employment is prohibited by law or
A: No. There is no law requiring that the purchaser of prejudicial to his health or to the health of his co-
a companys assets should absorb its Ees and the most Ees (Sec.8, Rule I, Book VI, IRR).
that can be done for reasons of public policy and social 2. With a certification by competent public health
justice was to direct that buyers of such assets to give authority that the disease is incurable within 6
preference to the qualified separated Ees in the filling months despite due medication and treatment
up of vacancies in the facilities of the buyer (MDII (Solis v. NLRC, GR No. 116175, October 28, 1996).
Supervisors & Confidential Ees Assn (FFW) v.
residential Assistant on Legal Affairs, G.R. Nos. L- NOTE: The requirement for a medical certification cannot be
45421-23, September 9, 1977). dispensed with; otherwise, it would sanction the unilateral
and arbitrary determination by the Er of the gravity or extent
Closure v. Retrenchment of the Ees illness and thus defeat the public policy on the
protection of labor (Manly Express v. Payong, G.R. No.
167462, October 25, 2005).
CLOSURE RETRENCHMENT
It is the reversal of Is the reduction of
Procedure in terminating an Ees employment on the
fortune of the Er personnel for the
ground of disease
whereby there is a purpose of cutting down
complete cessation of on costs of operations in
1. The Er shall not terminate his employment unless:
business operations to terms of salaries and
a. There is a certification by a competent public
prevent further wages resorted to by an
health authority
financial drain upon an Er because of losses in
b. That the disease is of such nature or at such a
Er who cannot pay operation of a business
stage that it cannot be cured within a period
anymore his Ees since occasioned by lack of
of 6 months even with proper medical
business has already work and considerable
treatment.
stopped. reduction in the volume
of business.
2. If the disease or ailment can be cured within the
One of the In the case of period, the Er shall not terminate the Ees
prerogatives of retrenchment, however, employment but shall ask the Ee to take a leave.
management is the for the closure of a The Er shall reinstate such Ee to his former
decision to close the business or a

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 100
 TERMINATION OF EMPLOYMENT

position immediately upon the restoration of his Rules on separation pay with regard to each cause of
normal health (Sec. 8, Rule I, Book VI, IRR). termination:

Entitlement to reinstatement CAUSE OF

SEPARATION PAY
TERMINATION
An Ee suffering from a disease is entitled to a Equivalent to at least 1
reinstatement. Provided he presents a certification by month pay or at least 1
a competent public health authority that he is fit to Automation
month pay for every year of
return to work (Cebu Royal Plant v. Deputy Minister, service, whichever is higher
G.R. No. L-58639, August 12, 1987). Equivalent to at least 1
month pay or at least 1
Medical Certificate as mandatory requirement Redundancy
month pay for every year of
service, whichever is higher
The requirements of a medical certificate is Equivalent to 1 month pay or
mandatory. Only where there is a prior certification Retrenchment at least month pay for
from a competent public authority that the disease every year or service
afflicting the Ee sought to be dismissed is of such Closures or
nature or at such stage that it cannot be cured within Equivalent to at least 1
cessation of
6 months even with proper medical treatment that the month pay or at least 1
operation not due
latter could be validly terminated from his job (Tan v. month pay for every year of
to serious
NLRC, G. R. No. 116807, April 14, 1997). service (if due to severe
business
financial losses, no
losses/financial
NOTE: Termination from work on the sole basis of actual separation pay
reverses
perceived or suspected HIV status is deemed unlawful (Sec.
35, R.A. 8504 HIV/AIDS Law). Equivalent to at least 1
month pay or at least
Disease
Q: Anna Ferrer has been working as a bookkeeper at month pay for every year of
Great Foods, Inc., which operates a chain of high-end service, whichever is higher
restaurants throughout the country, since 1970
when it was still a small eatery at Binondo. In the NOTE: A fraction of at least 6 months shall be considered 1
early part of the year 2003, Anna, who was already whole year.
50 years old, reported for work after a week-long
There is no separation pay when the closure is due to an act
vacation in her province. It was the height of the of the Government.
SARS scare, and management learned that the first
confirmed SARS death case in the Phils, a Purpose of the two notices served to the Ee and the
balikbayan nurse from Canada, is a townmate of DOLE 1 month prior to termination
Anna. Immediately, a memorandum was issued by
management terminating the services of Anna on 1. To give the Ees some time to prepare for the
the ground that she is a probable carrier of SARS eventual loss of their jobs and their corresponding
virus and that her continued employment is income, look for other employment and ease the
prejudicial to the health of her co-Ees. Is the action impact of the loss of their jobs.
taken by the Er justified? (2004 Bar Question) 2. To give the DOLE the opportunity to ascertain the
veracity of the alleged cause of termination (Phil.
A: The Ers act of terminating the employment of Anna Telegraph & Telephone Corp. v. NLRC, G.R. No.
is not justified. There is no showing that said Ee is sick 147002, August 15, 2005).
with SARS, or that she associated or had contact with
the deceased nurse. They are merely town mates. NOTE: Notice to both the Ees concerned and the DOLE are
Furthermore, there is no certification by a competent mandatory and must be written and given at least 1 month
public health authority that the disease is of such a before the intended date of retrenchment and the fact that
nature or such a stage that it cannot be cured within a the Ees were already on temporary lay-off at the time notice
period of 6 months even with proper medical should have been given to them is not an excuse to forego
treatment (Implementing Rules, Book VI, Rule 1, Sec. 8, the 1-month written notice (Sebuguero v. NLRC, G.R.
LC). No.115394, September 27, 1995).

Q: DAP Corp. ceased its operation due to the

termination of its distribution agreement with Intl
Distributors Corp. which resulted in its need to cease

UNIVERSITY OF SANTO TOMAS

101 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
its business operations and to terminate the
employment of its Ees. Marcial et al. filed a complaint
for illegal dismissal and for failure to give the Ees
written notices regarding the termination of their
employment. On the other hand, DAP claims that
their Ees actually knew of the termination therefore
the written notices were no longer required. Are
written notices dispensed with when the Ees have
actual knowledge of the redundancy?
A: The Ees actual knowledge of the termination of a
companys distributorship agreement with another
company is not sufficient to replace the formal and
written notice required by law. In the written notice,
the Ees are informed of the specific date of the
termination, at least a month prior to the date of
effectivity, to give them sufficient time to make
necessary arrangements. In this case, notwithstanding
the Ees knowledge of the cancellation of the
distributorship agreement, they remained uncertain
about the status of their employment when DAP failed
to formally inform them about the redundancy (DAP
Corp. v. CA, G.R. No. 165811, December 14, 2005).
DUE PROCESS
TWIN NOTICE REQUIREMENT
Two-fold requirements of a valid dismissal for a just
cause
1. Substantive It must be for a just cause.
2. Procedural There must be notice and hearing.
Twin requirements of procedural due process [Art.
277(b), LC]
1. Notice Twin-notice rule
a. First notice Necessity of first notice to inform
the worker of the violation and preparation for
the defense
b. Last notice To give the worker a notice of the
Ers final decision
2. Hearing Two fundamental rules:
a. Hearing means ample opportunity to be heard
b. What the law prohibits is total absence of
opportunity to be heard
If ample opportunity to be heard is given,
there is no violation.
Position paper A position paper is a valid
alternative because not all cases are of
litigation concerns. It should suffice in
matters that only involve a question of law.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
NOTE: When termination is based on just cause, notice
should be givento the Ee applying the twin notice
rule
If the termination is based on all of the authorized
causes, notices should be given to all Ees affected and
the DOLE at least one month before the intended date
of termination.
Purpose of notice and hearing
The requirement of notice is intended to inform the Ee
concerned of the Ers intent to dismiss him and the
reason for the proposed dismissal.
1. On the other hand the requirement of Hearing
affords the Ee the opportunity to answer his Ers
charges against him and accordingly to defend
himself there from before dismissal is effected
(Salaw v. NLRC, G.R. No. 90786, September 27,
1991).
NOTE: Failure to comply with the requirement of the 2
notices makes the dismissal illegal. The procedure is
mandatory (Loadstar Shipping Co. Inc. v. Mesano, G.R.
No. 138956, August 7, 2003). And for non-compliance
with the due process requirements in the termination
of a persons employment, a company is sanctioned to
pay a certain amount as damages (King of Kings
v. Mamac, G.R. No. 166208, June 29, 2007).
Q: Should there exist a valid and just cause, may the
Er depart from giving theEe the right to be heard?
A: No. Art. 277(b) of the LC mandates that an Er who
seeks to dismiss an Ee must afford the latter ample
opportunity to be heard and to defend himself with
the assistance of his representative if he so desires.
Expounding on this provision, the SC held that ample
opportunity connotes every kind of assistance that
management must accord the Ee to enable him to
prepare adequately for his defense including legal
representation (U-BIX Corp. v. Bravo, G.R. No. 177647,
October 31, 2008).
Procedure to be observed by the Er for the
termination of employment based on any of the just
causes for termination
1. A written notice should be served to the Ee
specifying the ground/s for termination and giving
the said Ee reasonable opportunity to explain.
NOTE: This first written notice must apprise the Ee
that his termination is being considered due to the
acts stated in the notice (Phil. Pizza Inc. v.
Bungabong, G.R. No. 154315, May 9, 2005).
102
 TERMINATION OF EMPLOYMENT
2. A hearingor conference should be held during which
the Ee concerned, with the assistance of counsel, if
the Ee so desires, is given the opportunity to
respond to the charge, providefor his evidence and
present the evidence offered against him.
3. A written notice of termination If termination is
the decision of the Er, it should be served on the Ee
indicating that upon due consideration of all the
circumstance, grounds have been established to
justify his termination.
NOTE: Single notice of termination does not comply with the
requirements of the law (Aldeguer & Co., Inc. v. Honeyline
Tomboc, G.R. No. 147633, July 28, 2008).
Q: Caong, Tresquio and Daluyon were employed by
Regualos under a boundary agreement, as drivers of
his jeepneys. Later on, the three were barred by
Regualos from driving the vehicles due to deficiencies
in their boundary payments.Is the policy of
suspending jeepney drivers pending payment of
arrears in their boundary obligations reasonable?
A: Yes. The policy of suspending drivers who fail to
remit the full amount of the boundary was fair and
reasonable under the circumstances. Notice was given
to the drivers who were getting lax in remitting their
boundary payments. In fact, Regualos incurred a
considerable amount of arrears. He had to put a stop
to it as he also relied on these boundary payments to
raise the full amount of his monthly amortizations on
the jeepneys.
Caong, Tresquio and Daluyon were not denied due
process. Due process is not a matter of strict, rigid or
formulaic process. The essence of due process is
simply the opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain
ones side or an opportunity to seek a reconsideration
of the action or ruling complained of. A formal or trial-
type hearing is not at all times and in all instances
essential, as the due process requirements are
satisfied where the parties are afforded fair and
reasonable opportunity to explain their side of the
controversy at hand (Caong v. Regualos, G.R. No.
179428, January 26, 2011).
HEARING; MEANING OF OPPORTUNITY TO BE
HEARD
Coverage of opportunity to be heard
The first written notice to be served on the Ees should
contain the specific causes or grounds for termination
against them, and a directive that the Ees are given the
opportunity to submit their written explanation within
a reasonable period. Under the Omnibus Rules,
103
reasonable opportunity means every kind of
assistance that management must accord to the Ees to
enable them to prepare adequately for their defense.
This should be construed as a period of at least five (5)
calendar days from receipt of the notice to give the Ees
an opportunity to study the accusation against them,
consult a union official or lawyer, gather data and
evidence, and decide on the defenses they will raise
against the complaint. To enable the Ees to
intelligently prepare their explanation and defenses,
the notice should contain a detailed narration of the
facts and circumstances that will serve as basis for the
charge against the Ees. A general description of the
charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are
violated and/or which among the grounds under Art.
282 is being charged against the Ees.
After serving the first notice, the Ers should schedule
and conduct a hearing or conference wherein the Ees
will be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present
evidence in support of their defenses; and (3) rebut
the evidence presented against them by the
management. During the hearing or conference, the
Ees are given the chance to defend themselves
personally, with the assistance of a representative or
counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity
to come to an amicable settlement (King of Kings v.
Mamac, G.R. No. 166208, June 29, 2007).
Q: The illegal dismissal case was referred to the LA. Is
a formal hearing or trial required to satisfy the
requirement of due process?
A: No. Trial-type hearings are not required in labor
cases and these may be decided on verified position
papers, with supporting documents and their
affidavits.
The holding of a formal hearing or trial is discretionary
with the labor arbiter and is something that the parties
cannot demand as a matter of right. It is entirely within
his authority to decide a labor case before him, based
on the position papers and supporting documents of
the parties, without a trial or formal hearing. The
requirements of due process are satisfied when the
parties are given the opportunity to submit position
papers wherein they are supposed to attach all the
documents that would prove their claim in case it be
decided that no hearing should be conducted or was
necessary (Shoppes Manila v. NLRC, 419 SCRA 354).
NOTE: It is not necessary for the affiants to appear and
testify and be cross-examined by the counsel for the adverse
party. It is sufficient that the documents submitted by the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
parties have a bearing on the issue at hand and support the
positions taken by them (C.F. Sharp & Co. v. Zialcita, 495
SCRA 387).
The essence of due process is simply an opportunity to be
heard, or as applied to administrative proceedings, an
opportunity to explain ones side or an opportunity to seek
a reconsideration of the action or ruling complained of (PLDT
v. Bolso, 530 SCRA 550).
The burden of proof in termination cases
The burden of proof rest upon the Er to show that the
dismissal of the Ee is for a just cause, and failure to do
so would necessarily mean that the dismissal is not
justified, consonant with the constitutional guarantee
of security of tenure.
NOTE: Due process refers to the process to be followed;
burden of proof refers to the amount of proof to be adduced.
In money claims, the burden of proof as to the amount to be
paid the Ees rests upon the Er since he is in custody of
documents that would be able to prove the amount due,
such as the payroll.
Degree of proof required
In administrative or quasi-judicial proceedings,
substantial evidence is considered sufficient in
determining the legality of an Ers dismissal of an Ee
(Pangasinan III Electric Cooperative, Inc. v. NLRC, G.R.
No. 8987, November 13, 1992).
Q: Perez and Doria were employed by PT&T. After
investigation, Perez and Doria were placed on
preventive suspension for 30 days for their alleged
involvement in anomalous transactions in the
shipping section. PT&T dismissed Perez and Doria
from service for falsifying documents. They filed a
complaint for illegal suspension and illegal dismissal.
The LA found that the suspension and the subsequent
dismissal were both illegal. The NLRC reversed the
LAs decision, it ruled that Perez and Doria were
dismissed for just cause, that they were accorded due
process and that they were illegally suspended for
only 15 days (without stating the reason for the
reduction of the period of petitioners illegal
suspension). On appeal, thev CA held that they were
dismissed without due process. Were petitioners
illegally dismissed?
A: Yes. The Er must establish that the dismissal is for
cause in view of the security of tenure that Ees enjoy
under the Constitution and the LC. PT&T failed to
discharge this burden. PT&Ts illegal act of dismissing
Perez and Doria was aggravated by their failure to
observe due process. To meet the requirements of due
process in the dismissal of an Ee, an Er must furnish
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
the worker with 2 written notices: (1) a written notice
specifying the grounds for termination and giving to
said Ee a reasonable opportunity to explain his side
and (2) another written notice indicating that, upon
due consideration of all circumstances, grounds have
been established to justify the Er's decision to dismiss
the Ee (Perez. v. Phil. Telegraph and Telephone
Company, G.R. No. 152048, April 29, 2009).
Guidelines in determining whether the penalty
imposed on Ee is proper
1. Gravity of the offense
2. Position occupied by the Ee
3. Degree of damage to the Er
4. Previous infractions of the same offense
5. Length of service (ALU-TUCP v. NLRC, G.R. No.
120450, February 10, 1999); PAL v. PALEA, G.R.
No.L-24626, June 28, 1974)
Q: Felizardo was dismissed from Republic Flour Mills-
Selecta Ice Cream Corporation for dishonesty and
theft of company property for bringing out a pair of
boots, 1 piece aluminum container and 15 pieces of
hamburger patties. Is the penalty of dismissal
commensurate with the offense committed?
A: There is no question that the Er has the inherent
right to discipline its Ees which includes the right to
dismiss. However this right is subject to the police
power of the State. As such, the Court finds that the
penalty imposed upon Felizardo was not
commensurate with the offense committed
considering the value of the articles he pilfered and the
fact that he had no previous derogatory record during
his 2 years of employment in the company. Moreover,
Felizardo was not a managerial or confidential Ee in
whom greater trust is reposed by management and
from whom greater fidelity to duty is correspondingly
expected (ALU-TUCP v. NLRC, G.R. No. 120450,
February 10, 1999).
Hearing is not an indispensable part of due process
Art. 277(b) of the LC provides that, in cases of
termination for a just cause, an Ee must be given
ample opportunity to be heard and to defend
himself. Thus, the opportunity to be heard afforded
by law to the Ee is qualified by the word ample which
ordinarily means considerably more than adequate or
sufficient.In this regard, the phrase ample
opportunity to be heard can be reasonably
interpreted as extensive enough to cover actual
hearing or conference. To this extent, Sec. 2(d), Rule I
of the IRR of Book VI of the LC requiring a hearing and
conference during which the Ee concerned is given the
104
 TERMINATION OF EMPLOYMENT

opportunity to respond to the charge is in conformity constituting a process is

with Art. 277(b). cause for found in LC
termination of (Art. 283) not
Significantly, Sec. 2(d), Rule I of the IRR of Book VI of his in Constitution
the LC itself provides that the so-called standards of employment. according to
due process outlined therein shall be observed Agabon.
substantially, not strictly. This is a recognition that
while a formal hearing or conference is ideal, it is not NOTE: in Art.
an absolute, mandatory or exclusive avenue of due 277 (b) in
process (Perez v. PT&T, G.R. No. 152048, April 29, relation
2009). to Art. 283, if
the closure of
Q: If the dismissal is for just or authorized cause but business will
the requirement of notice and hearing were not result in a mass
layoff and
complied with, should the dismissal be held illegal?
serious labor
dispute, the SLE
A: No, in (Agabon v. NLRC, G.R. No. 158693, November can
17, 2004), it was held that when dismissal is for just or enjoin the Er as
authorized cause but due process was not observed, regards
the dismissal should be upheld. mass
termination
The Er, however, should be held liable for non-
compliance with the procedural requirements of due
process in the form of damages. Possible
Effect Liability of ER
Situations
Procedural Due Process under Art. 282-284 of the a.) With Just NO Liability
LC as applied in the Agabon Case or
Art. 282 Art. 283 Art. 284 Authorized Termination NOTE: Separation
The Er must The Er must Er may Cause VALID Pay if for
b.) With Due Authorized Cause
give the Ee a give the Ee terminate the
notice and the DOLE services of his Process
specifying the written Ee. a.) Without Reinstatement +
grounds for notices 30 Just or Full
which dismissal days prior to Authorized Termination Backwages
is sought a the effectivity Cause INVALID
hearing or an of his NOTE: If
b.) With Due
opportunity to separation. Reinstatement not
Process
be heard and possible
Separation Pay
after hearing or
a.) Without Reinstatement +
opportunity to
Just or Full
be heard, a
Authorized Termination Backwages
notice of the
decision to Cause INVALID
NOTE: If
dismiss. b.) Without
Reinstatement not
The Worker is an There is no Due Process
possible
requirement inactive party hearing Separation Pay
under Art. 277 in the cause requirement in Liable for
a.) With Just
(b) of notice for diseases but noncompliance
or
and hearing termination. there is notice With procedural
Authorized Termination
applies only in Only notice requirement requirements
Cause VALID
Art. 282 with dole and to worker, but
b.) Without
because the Er notice to no NOTE: Separation
Due Process
is accusing the worker is notice to Pay if for
worker that the required. No DOLE. Authorized Cause
latter need for a
committed an hearing
act or omission because due

UNIVERSITY OF SANTO TOMAS

105 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
NOTE: The Agabon ruling was modified by (JAKA Food
Processing v. Pacot G.R. No. 151378, March 28, 2005) where
it was held that:
1. If based on just cause (Art. 282, LC) but the Er failed to
comply with the notice requirement, the sanction to be
imposed upon him should be tempered because the
dismissal process was, in effect, initiated by an act
imputable to the Ee; and
2. If based on authorized causes (Art. 283, LC) but the Er
failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal process
was initiated by Ers exercise of his management
prerogative.
RELIEFS FOR ILLEGAL DISMISSAL
Remedies of Ee in case of illegal dismissal
In case where the worker is illegally terminated, his
remedies are:
1. Reinstatement without loss of seniority
rights
2. Full backwages
NOTE: Full backwages means no deduction
3. Separation pay in lieu of reinstatement
4. Damages, including Attorneys fees
Q: Does the offer to reinstate the illegally dismissed
Ee affect the liability of the erring Er?
protest or reservation. As a result of this, their
seniority rights were lost.
Are the pilots entitled to the restoration of their
seniority rights?
A: No. An Ee has no inherent right to seniority. He has
only such rights as may be based on a contract,
statute, or an administrative regulation relative
thereto. Seniority rights which are acquired by an Ee
through long-time employment are contractual and
not constitutional. The discharge of an Ee thereby
terminating such rights would not violate the
Constitution. When the pilots tendered their
respective retirement or resignation and PAL
immediately accepted them, both parties mutually
terminated the contractual employment relationship
between them thereby curtailing whatever seniority
rights and privileges the pilots had earned through the
years.
Full backwages
The LC as amended by R.A. 6715 points to "full
backwages" as meaning exactly that, i.e., without
deducting from backwages the earnings derived
elsewhere by the concerned Ee during the period of
his illegal dismissal (Buenviaje v. CA, G.R. 147806,
November 12, 2002).
Separation pay in lieu of reinstatement when

A: No. At any rate, sincere or not, the offer of 1. Doctrine of Strained Relations (applies to
reinstatement could not correct the earlier illegal confidential and managerial Ees only)
dismissal of the Ee. The Er incurred liability under the 2. In case the position has been abolished (applies to
LC from the moment an Ee was illegally dismissed, and both managerial and rank and file Ees)
the liability did not abate as a result of the Er's
NOTE: Moral and exemplary damages may also be awarded.
repentance (Ranara v.NLRC, 212 SCRA 631).
Prescriptive period for filing an action for illegal
Q: PAL dismissed strike leader Capt. Gaston as a
dismissal
result of which the Union resolved to undertake the
grounding of all PAL planes and the filing of
An action for reinstatement by reason of illegal
applications for protest retirement of members
dismissal is one based on an injury which may be
who had completed 5 years of continuous service,
brought within 4 years from the time of dismissal
and protest resignation for those who had
pursuant to Art. 1146 of the NCC (Azcor Manufacturing
rendered less than 5 years of service in the company.
v. NLRC, 303 SCRA 26).
PAL acknowledged receipt of said letters and among
the pilots whose protest resignation or retirement
REINSTATEMENT
was accepted by PAL were Enriquez and Ecarma.
PENDING APPEAL (ART. 223, LC)
Before their readmission, PAL required Enriquez and
Reinstatement
Ecarma to accept 2 conditions, namely: that they sign
conformity to PALs letter of acceptance of their
It is the restoration of the Ee to the state from which
retirement and or resignation and that they submit
he has been unjustly removed or separated without
an application for employment as new Ees without
loss of seniority rights and other privileges.

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2014 GOLDEN NOTES 106
 TERMINATION OF EMPLOYMENT
Forms of reinstatement
1. Actual or physical Tthe Ee is admitted back to
work
2. Payroll The Ee is merely reinstated in the payroll
NOTE: An order of reinstatement by the LA is not the same
as actual reinstatement of a dismissed or separated Ee,
however it is immediately executory even pending appeal.
Thus, until the Er continuously fails to actually implement
the reinstatement aspect of the decision of the LA, their
obligation to the illegally dismissed Ee, insofar as accrued
backwages and other benefits are concerned, continues to
accumulate. It is only when the illegally dismissed Ee
receives the separation pay (in case of strained relations)
that it could be claimed with certainty that the Er-Ee
relationship has formally ceased thereby precluding the
possibility of reinstatement (Triad Security & Allied Services,
Inc. et al v.Ortega, G.R. No. 160871, February 6, 2006).
Q: Is an illegally dismissed Ee entitled to
reinstatement as a matter of right?
A: GR: Yes.
XPNs:
Proceeds from an illegal dismissal wherein
reinstatement is ordered but cannot be carried out
as in the following cases:
1. Reinstatement cannot be effected in view of
the long passage of time or because of the
realities of the situation.
2. It would be inimical to the Ers interest.
3. When reinstatement is no longer feasible.
4. When it will not serve the best interest of
the parties involved.
5. Company will be prejudiced by
reinstatement.
6. When it will not serve a prudent purpose.
7. When there is resultant strained relation
(applies to both confidential and managerial
Ees only).
8. When the position has been abolished
(applies to managerial, supervisory and
rank-and-file Ees).
NOTE: In such cases, it would be more prudent to order
payment of separation pay instead of reinstatement
(Quijano v. Mercury Drug Corporation, G.R. No. 126561, July
8, 1998).
Order of reinstatement
It means restoration to a state or condition from which
one had been removed or separated. The person
reinstated assumes the position he had occupied prior
to his dismissal. Reinstatement presupposes that the
previous position from which one had been removed
107
still exists, or that there is an unfilled position which is
substantially equivalent or of similar nature as the one
previously occupied by the Ee.
An order for reinstatement entitles an Ee to receive his
accrued backwages 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 (Pfizer v. Velasco,
G.R. 177467, March 9, 2011).
Arts. 223 v. 279 of the LC
Art. 223 Art. 279
May be availed of as Presupposes that the
soon as the LA renders a judgment has already
judgment declaring that become final and
the dismissal of the Ee is executory.
illegal and ordering said Consequently, there is
reinstatement. It may be nothing left to be done
availed of even pending except the execution
appeal thereof.
NOTE: An award or order for reinstatement is self-executory.
It does not require the issuance of a writ of execution
(Pioneer Texturizing Corp. v. NLRC, G.R. No. 118651, October
6, 1997).
Rule on wages during reinstatement pending appeal
Dismissed Ee whose case was favorably decided by the
LA is entitled to receive wages pending appeal upon
reinstatement, which is immediately executory.
Unless there is a restraining order, it is ministerial
upon the LA to implement the order of reinstatement
and it is mandatory on the Er to comply therewith.
After the LAs decision is reversed by a higher tribunal,
the Ee 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 Er.
The test is two-fold: (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 Ers unjustified act or
omission. If the delay is due to the Ers unjustified
refusal, the Er may still be required to pay the salaries
notwithstanding the reversal of the LAs decision
(Garcia v. PAL, G.R. No. 164856, August 29, 2009).
Q: PAL dismissed Garcia, for violating PALs Code of
Discipline for allegedly sniffing shabu in PALs
Technical Center Tool Room Section. Garcia then filed
for illegal dismissal and damages where the LA
ordered PAL to immediately reinstate Garcia. On
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
appeal, the NLRC reversed the decision and dismissed
Garcias complaint for lack of merit. Garcias motion
for reconsideration was denied by the NLRC. It
affirmed the validity of the writ and the notice issued
by the LA but suspended and referred the action to
the Rehabilitation Receiver for appropriate action.
May Garcia collect wages during the period between
the LAs order of reinstatement pending appeal and
the NLRC decision overturning that of the LA?
A: Art. 223(3) of the LC provides that the decision of
the LA reinstating a dismissed or separated Ee, insofar
as the reinstatement aspect is concerned, shall
immediately be executory, pending appeal.
Even if the order of reinstatement of the LA is reversed
on appeal, it is obligatory on the part of the Er to
reinstate and pay the wages of the dismissed Ee during
the period of appeal until reversal by the higher court.
On the other hand, if the Ee has been reinstated during
the appeal period and such reinstatement order is
reversed with finality, the Ee is not required to
reimburse whatever salary he received for he is
entitled to such, more so if he actually rendered
services during the period.
Q: May the Court order the reinstatement of a
dismissed employee even if the prayer of the
complaint did not include such relief?
A: Yes. So long as there is a finding that the Ee was
illegally dismissed, the court can order the
reinstatement of an Ee even if the complaint does not
include a prayer for reinstatement, unless, of course
the Ee has waived his right to reinstatement. By law,
an Ee who is unjustly dismissed is entitled to
reinstatement among others. The mere fact that the
complaint did not pray for reinstatement will not
prejudice the Ee, because technicalities of law and
procedure are frowned upon in labor proceedings
(Pheschem Industrial Corp. v. Moldez, G.R. No. 116158,
May 9, 2005).
In any case, Sec.2(c), Rule 7 of the Rules of Court
provides that a pleading shall specify the relief sought,
but may add a general prayer for such further or other
reliefs as may be deemed just and equitable. Under
this rule, a court can grant the relief warranted by the
allegation and the proof even if it is not specifically
sought by the injured party; the inclusion of a general
prayer may justify the grant of a remedy different from
or together with the specific remedy sought, if the
facts alleged in the complaint and the evidence
introduced so warrant. The prayer in the complaint for
other reliefs equitable and just in the premises justifies
the grant of a relief not otherwise specifically prayed
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
for (Prince Transport, Inc. v. Garcia et.al, G.R. No.
167291, January 12, 2011).
Q: A complaining Ee obtained a favourable decision
in an illegal dismissal case. The LA ordered her
immediate reinstatement. The Er opted payroll
reinstatement pending appeal. The NLRC reversed
the decision of the LA ruled that the dismissal was
valid. The Er stopped the payroll reinstatement. The
Ee elevated the case to the CA, and eventually to the
SC. The SC upheld the dismissal. Is the Ee entitled to
continued payroll reinstatement after the NLRC
decision?
A: No. The Ee is not entitled to continued payroll
reinstatement. The decision of the NLRC on appeals
from decisions of the LA shall become final and
executory after 10 calendar days from receipt thereof
by the parties. That the CA may take cognizance of and
resolve a petition for certiorari for the nullification of
the decisions of the NLRC on jurisdictional and due
process considerations does not affect the statutory
finality of the NLRC decision. Since the NLRC decision
which upheld the dismissal became final, the Er was
correct in stopping the payroll reinstatement of the Ee
(Bago v. NLRC, G.R. No. 170001, April 4, 2007).
Q: Can the Er demand that the Ee reimburse the
amount that had been paid under the period of
payroll reinstatement?
A: No. Even if the order of reinstatement of the LA is
reversed on appeal, it is obligatory on the part of the
Er to reinstate and pay the wages of the dismissed Ee
during the period of appeal until reversal by the higher
court.
If the Ee has been reinstated during the appeal period
and such reinstatement order is reversed with finality,
the Ee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he
actually rendered services during the period (Garcia v.
PAL, G.R. No. 164856, June 20, 2009).
Q: What happens if there is an Order of
Reinstatement but the position is no longer
available?
A: The Ee should be given a substantially equivalent
position. If no substantially equivalent position is
available, reinstatement should not be ordered
because that would in effect compel the Er to do the
impossible. In such a situation, the Ee should merely
be given a separation pay consisting of 1-month salary
for every year of service (Grolier Intl Inc. v. ELA, G.R.
No. 83523, August 31, 1989).
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 TERMINATION OF EMPLOYMENT
Q: Can the order of reinstatement be immediately
enforced in the absence of a motion for the issuance
of a writ of execution? (2009 Bar question)
A: Yes, in Pioneer Texturizing Corp. v. NLRC, the Court
held that an award or order of reinstatement is self-
executory and does not require a writ of execution to
implement and enforce it. To require the application
for and issuance of a writ of execution as a prerequisite
for the execution of a reinstatement award would
certainly betray and run counter to the very objective
and intent of Art. 223 of the Labor Code (on the
immediate execution of a reinstatement order).
Alternative Answer:
The decision to reinstate pending appeal is not self-
executory. A motion for a writ of execution is
mandatory before an order of reinstatement can be
enforced because an Ee needs, the assistance of the
NLRC Sheriff to enforce the order.
Strained relations rule
It is when the Er can no longer trust the Ee and vice
versa or there were imputations of bad faith to each
other, reinstatement could not effectively serve as a
remedy. This rule applies only to positions which
require trust and confidence (Globe Mackay v. NLRC,
G.R. No. 82511, March 3, 1992).
NOTE: Under the circumstances where the employment
relationship has become so strained to preclude a
harmonious working relationship and that all hopes at
reconciliation are naught after reinstatement, it would be
more beneficial to accord the Ee backwages and separation
pay.
The following must be proven before the strained
relations rule can be applied to a particular case
1. The Ee concerned occupies a position where he
enjoys the trust and confidence of his Er; and
2. That it is likely if the Ee is reinstated, an
atmosphere of antipathy and antagonism may be
generated as to adversely affect the efficiency
and productivity of the Ee concerned (Globe
Mackay Cable & Wire Corp. v. NLRC G.R. No.
82511, March 3, 1992).
Q: Does the strained relations rule always bar
reinstatement in all cases?
A: No. The rule should be applied on a case to case
basis, based on each cases peculiar conditions and not
109
universally. Otherwise, reinstatement can never be
possible simply because some hostility is invariably
engendered between the parties as a result of
litigation. That is human nature (Anscor Transport v.
NLRC, G.R. No. 85894, September 28, 1990).
Besides, no strained relations should arise from a valid
and legal act of asserting one's right; otherwise an Ee
who shall assert his right could be easily separated
from the service, by merely paying his separation pay
on the pretext that his relationship with his Er had
already become strained (Globe Mackay Cable & Wire
Corp. v. NLRC, G.R. No. 82511, March 3, 1992).
SEPARATION PAY IN LIEU OF REINSTATEMENT
Separation pay can be viewed
Under present laws and jurisprudence, separation pay
may be viewed in 4 ways:
1. In lieu of reinstatement in illegal dismissal
cases, where Ee is ordered reinstated but
reinstatement is not feasible.
2. As Ers statutory obligation in cases of legal
termination due to authorized causes under
Arts. 283 and 284 of the LC.
3. As financial assistance, as an act of social
justice and even in case of legal dismissal
under Art. 282 of the LC.
4. As employment benefit granted in CBA or
company policy. (Poquiz, 2005)
Q: Respondents are licensed drivers of public utility
jeepneys owned by Moises Capili. When Capili
assumed ownership and operation of the jeepneys,
the drivers were required to sign individual contracts
of lease of the jeepneys. The drivers gathered the
impression that signing the contract was a condition
precedent before they could continue driving. The
drivers stopped plying their assigned routes and a
week later filed with the LA a complaint for illegal
dismissal praying not for reinstatement but for
separation pay. Are the respondents entitled to
separation pay?
A: No. When the drivers voluntarily chose not to
return to work anymore, they must be considered as
having resigned from their employment. The common
denominator of those instances where payment of
separation pay is warranted is that the employee was
dismissed by the Er (Capili v. NLRC, G.R. 117378, March
26, 1997).
Q: Romeo has been an Ee of AAA Company from 1993
to 1999 but was unable to report to work due to some
illness. Romeo claimed that he was offered by AAA of
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Php 15,000 separation pay, on the contrary AAA
claimed Romeo was never terminated and even told
the latter that Romeo could go back to work anytime
but Romeo clearly manifested that he was no longer
interested in returning to work and instead asked for
separation pay. Is Romeo terminated or considered
resigned? Is Romeo entitled to separation pay?
A: Romeo is considered resigned. Romeos various
pleadings support his intention of not returning to
work on the ground that his health is failing.
Moreover, Romeo did not ask for reinstatement and
rejected AAA Companys offer for him to return to
work. This is tantamount to resignation. Resignation is
defined as the voluntary act of an Ee who finds himself
in a situation where he believes that personal reasons
cannot be sacrificed in favor of the exigency of the
service and he has no other choice but to disassociate
himself from his employment.
Romeo is not entitled to separation pay. There is no
provision in the LC which grants separation pay to
voluntarily resigning Ees. In fact, the rule is that an Ee
who voluntarily resigns from employment is not
entitled to separation pay, except when it is stipulated
in the employment contract or CBA, or it is sanctioned
by established Er practice or policy. Hence, Romeo is
not entitled to separation pay in the absence of a
Labor provision and a stipulation in his employment
contract or CBA (Romeo Villaruel v. Yeo Han Guan, G.R.
No. 169191, June 1, 2011).
Q: Two groups of seasonal workers claimed
separation benefits after the closure of Phil. Tobacco
processing plant in Balintawak and the transfer of its
tobacco operations to Candon, Ilocos Sur. Phil.
Tobacco refused to grant separation pay to the
workers belonging to the first batch, because they
had not been given work during the preceding year
and, hence, were no longer in its employ at the time
it closed its Balintawak plant. Likewise, it claims
exemption from awarding separation pay to the
second batch, because the closure of its plant was
due to "serious business losses," as defined in Art.
283 of the LC. Both labor agencies held that the two
groups were entitled to separation pay equivalent to
1/2 month salary for every year of service, provided
that the employee worked at least 1 month in a given
year. Is the separation pay granted to an illegally
dismissed Ee the same as that provided under Art.283
of the LC in case of retrenchment to prevent losses?
A: No. The separation pay awarded to Ees due to illegal
dismissal is different from the amount of separation
pay provided for in Art. 283 of the LC. Prescinding from
the above, Phil. Tobacco is liable for illegal dismissal
and should be responsible for the reinstatement of the
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
first group and the payment of their backwages.
However, since reinstatement is no longer possible as
Phil. Tobacco have already closed its Balintawak plant,
members of the said group should instead be awarded
normal separation pay (in lieu of reinstatement)
equivalent to at least one month pay, or one month
pay for every year of service, whichever is higher. It
must be stressed that the separation pay being
awarded to the first group is due to illegal dismissal;
hence, it is different from the amount of separation
pay provided for in Art. 283 in case of retrenchment to
prevent losses or in case of closure or cessation of the
Ers business, in either of which the separation pay is
equivalent to at least one (1) month or one-half (1/2)
month pay for every year of service, whichever is
higher (Phil. Tobacco Flue-Curing & Redrying Corp. v.
NLRC, G.R. No. 127395, December 10, 1998).
Q: Does separation pay apply in cases of legal
dismissal?
A: It depends. As Ers statutory obligation in cases of
legal termination due to authorized causes under Arts.
283 284 of the LC. As financial assistance, as an act of
social justice and even in case of legal dismissal under
Art. 282 of the LC. Art. 223 of the LC concerns itself
with an interim relief, granted to a dismissed or
separated Ee while the case for illegal dismissal is
pending appeal. It does not apply where there is no
finding of illegal dismissal. On the other hand, an Ee
who is unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation
was withheld from him up to the time of his actual
reinstatement (Lansangan v. Amkor Technology
Philippines, Inc., G.R. No. 177026, (2009).
BACKWAGES
Backwages
It refers to the relief given to an Ee to compensate him
for the lost earnings during the period of his dismissal.
It presupposes illegal termination.
NOTE: Entitlement to backwages of the illegally dismissed Ee
flows from law. Even if he does not ask for it, it may be given.
The failure to claim backwages in the complaint for illegal
dismissal is a mere procedural lapse which cannot defeat a
right granted under substantive law (St. Michaels Institute
v.Santos, G.R. No. 145280, December 4, 2001).
Q: What is the basis of awarding backwages to an
illegally dismissed employee?
110
 TERMINATION OF EMPLOYMENT
A: The payment of backwages is generally granted on
the ground of equity. It is a form of relief that restores
the income that was lost by reason of the unlawful
dismissal; the grant thereof is intended to restore the
earnings that would have accrued to the dismissed Ee
during the period of dismissal until it is determined
that the termination of employment is for a just cause.
It is not private compensation or damages but is
awarded in furtherance and effectuation of the public
objective of the LC. Nor is it a redress of a private right
but rather in the nature of a command to the Er to
make public reparation for dismissing an Ee either due
to the formers unlawful act or bad faith (Tomas
Claudio Memorial College Inc., v. CA, G.R. No.
152568, February 16, 2004).
Q: What is the period covered by the payment of
backwages?
A: The backwages shall, from the time that wages are
unlawfully withheld until the time of actual
reinstatement or, if reinstatement is no longer
feasible, until the finality of judgment awarding
backwages, cover the period from the date of
dismissal of the Ee up to the date of:
1. Actual reinstatement, or if reinstatement is no
longer feasible
2. Finality of judgment awarding backwages (Buhain
v. CA, G.R. 143709, July 2, 2002)
NOTE: The backwages to be awarded should not be
diminished or reduced by earnings elsewhere during the
period of his illegal dismissal. The reason is that the Ee while
litigating the illegality of his dismissal must earn a living to
support himself and his family (Bustamante v. NLRC, G.R. No.
111651, Mar. 15, 1996; Buenviaje v. CA, G.R. No. 147806,
November 12, 2002).
Q: Baldo was dismissed from employment for having
been absent without leave (AWOL) for eight (8)
months. It turned out that the reason for his absence
was his incarceration after he was mistaken as his
neighbors killer. Eventually acquitted and released
from jail, Baldo returned to his Er and demanded
reinstatement and full backwages. Is Baldo entitled
to reinstatement and backwages? Explain your
answer. (2009 BAR QUESTION)
A: Yes, Baldo is entitled to reinstatement. Although he
shall not be entitled to backwages during the period of
his detention, but only from the time the company
refused to reinstate him. (Magtoto v. NLRC, 140 SCRA
58).
111
Alternative Answer
No, Baldo is not entitled to reinstatement and
backwages. The dismissal was for cause, i.e. AWOL.
Baldo failed to timely inform the employer of the
cause of his failure to report for work; hence,
prolonged absence is a valid ground to terminate
employment.
COMPUTATION
The following are included in the computation of
backwages
1. Transportation and emergency allowances
2. Vacation or SIL and sick leave
3. 13th month pay
NOTE: Facilities such as uniforms, shoes, helmets and
ponchos should not be included in the computation of
backwages because said items are given for free, to be use
only during official tour of duty not for private or personal
use.
The award of backwages is computed on the basis of 30-day
month (JAM Trans Co. v. Flores, G.R. No. 82829, March 19,
1993).
Q: How are the backwages of a probationary Ee who
fails to qualify as a regular Ee computed?
A: The backwages that should be awarded to
respondent shall be reckoned from the time of her
constructive dismissal until the date of the termination
of her employment. The computation should not cover
the entire period from the time her compensation was
withheld up to the time of her actual reinstatement.
This is because as a probationary Ee, the lapse of
probationary employment without appointment as a
regular Ee of effectively severed the Er-Ee relationship
between the parties (Robinsons Galleria v. Ranchez,
G.R. No. 177937, January 9, 2011).
Q: Is an Ee entitled to backwages even after the
closure of the business?
A: No. The closure of the business rendered the
reinstatement of complainant to an Ees previous
position impossible but she is still entitled to the
payment of backwages up to the date of dissolution or
closure. An Er found guilty of ULP in dismissing his Ee
may not be ordered to pay backwages beyond the date
of closure of business where such closure was due to
legitimate business reasons and not merely an
attempt to defeat the order of reinstatement (Pizza
Inn v. NLRC, G.R. No. 74531, June 28, 1988).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Circumstances that prevent award of backwages
1. Dismissal for cause
2. Death, physical or mental incapacity of the
employee
3. Business reverses
4. Detention in prison
LIMITED BACKWAGES
Rule on backwages for dismissed employees
GR: In the case of Osmalik Bustamante, et al. v. NLRC
and Evergreen Farms, Inc., the SC held that the passing
of R.A. 6715, particularly Sec. 34, which took effect on
March 21, 1989, amended Art. 279 of the LC, which
now states in part:
ART. 279. Security of Tenure. - An Ee who is
unjustly dismissed from work shall be
entitled to reinstatement without loss of
seniority rights and other privileges and to
his full backwages, inclusive of allowances,
and to his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up to
the time of his actual reinstatement.
Verily, the evident legislative intent as expressed in
R.A. 6715, is that the backwages to be awarded to an
illegally dismissed Ee, should not, as a general rule, be
diminished or reduced by the earnings derived by him
elsewhere during the period of his illegal dismissal.
The underlying reason for this ruling is that the Ee,
while litigating the legality (illegality) of his dismissal,
must still earn a living to support himself and his
family. Corollary thereto, full backwages have to be
paid by the Er as part of the price or penalty he has to
pay for illegally dismissing his Ee. Thus, the provision
calling for full backwages to illegally dismissed Ees is
clear, plain and free from ambiguity and, therefore,
must be applied without attempted or strained
interpretation.
XPN: Award of backwages to a separated Ee may be
limited for a certain number of years considering good
faith on the part of the Er in terminating the Ee, which
period shall depend on the attending circumstances of
the case (Victory Liner, Inc. v. Race, G.R. No. 164820
March 28, 2007).
NOTE: The rule providing for the entitlement of an illegally
dismissed Ee to only three years backwages without
deduction or qualification to obviate the need for further
proceedings in the course of execution, otherwise known as
the Mercury Drug Rule, has long been abandoned since
March 21, 1989 (BPI Employees Union & Uy v. BPI, et al., G.R.
No. 137863, March 31, 2005).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
PREVENTIVE SUSPENSION
Preventive suspension
It means that during the pendency of the investigation,
the Er may place the Ee under preventive suspension
leading to termination when there is an imminent
threat or a reasonable possibility of a threat to the
lives and properties of the Er, his family and
representatives as well as the offenders co-workers
by the continued service of the Ee.
Duration of preventive suspension
It should not last for more than 30 days. The Ee should
be made to resume his work after 30 days. It can be
extended provided the Ees wages are paid after the
30-day period.
This period is intended only for the purpose of
investigating the offense to determine whether he is
to be dismissed or not. It is not a penalty.
NOTE: The Er may continue the period of preventive
suspension provided that he pays the salary of the Ee. If
more than 1 month, the Ee must actually be reinstated or
reinstated in the payroll. Officers are liable only for the
offense committed if done with malice.
Q: Cantor and Pepito were preventively suspended
pending application for their dismissal by Manila
Doctors Hospital after being implicated by one
Macatubal when they refused to help him when he
was caught stealing x-ray films from the hospital.
Was the preventive suspension of Cantor and Pepito
proper?
A: No. Where the continued employment of an Ee
poses a serious and imminent threat to the life and
property of the Er or on his co-Ees, the Ees preventive
suspension is proper. In this case, no such threat to the
life and property of the Er or of their co-Ees is present
and they were merely implicated by the Macatubal
(Manila Doctors Hospital v. NLRC, G.R. No L-64897,
February 28, 1985).
CONSTRUCTIVE DISMISSAL
Constructive dismissal
It occurs when there is cessation of work because
continued employment is rendered impossible,
unreasonable, or unlikely as when there is a demotion
in rank or diminution in pay or when a clear
discrimination, insensibility, or disdain by an Er
becomes unbearable to the Ee leaving the latter with
no other option but to quit (The University of
112
 TERMINATION OF EMPLOYMENT
Immaculate Conception v. NLRC, G.R. No. 181146,
January 26, 2011).
Relief entitled to illegally or constructively dismissed
Ees
An an illegally or constructively dismissed Ee is entitled
to: (1) either reinstatement, if viable, or separation
pay, if reinstatement is no longer viable; and (2)
backwages. These two reliefs are separate and distinct
from each other and are awarded conjunctively
(Robinsons Galleria v. Ranchez, G.R. No. 177937,
January 9, 2011).
Q: Reynaldo was hired by Geminilou Trucking Service
(GTS) as a truck driver to haul and deliver products of
San Miguel Pure Foods Company, Inc. He was paid
Php 400 per trip and made 4 trips a day. He claimed
that he was requested by GTS to sign a contract
entitled Kasunduan Sa Pag-upa ng Serbisyo which
he refused as he found it to alter his status as a
regular Ee to merely contractual. He averred that on
account of his refusal to sign the Kasunduan, his
services were terminated prompting him to file a
complaint before the NLRC for constructive dismissal
against the GTS. Would Reynaldos refusal to sign the
Kasunduan adequately support his allegation of
constructive dismissal?
A: No. The test of constructive dismissal is whether a
reasonable person in the Ees position would have felt
compelled to give up his job under the circumstances.
In the present case, the records show that the lone
piece of evidence submitted by Reynaldo to
substantiate his claim of constructive dismissal is an
unsigned copy of the Kasunduan. This falls way short
of the required quantum of proof which is substantial
evidence, or such relevant evidence as a reasonable
mind might accept as adequate to support a
conclusion. Reynaldo was not dismissed, but that he
simply failed to report for work after an altercation
with a fellow driver (Madrigalejos v. Geminilou
Trucking Service, G.R. No. 179174, December 24,
2008).
Q: Flores, a conductor of JAM Transportation Co.,
Inc., had an accident where he had to be hospitalized
for a number of days. Upon reporting back to the
company he was told to wait. For several days this
continued and he was promised a route assignment
which did not materialize. Upon speaking to
Personnel Manager Medrano, he was told that he will
be accepted back to work but as a new Ee. Flores
rejected the offer because it would mean forfeiture
of his 18 years of service to the company. Is the offer
for reinstatement as a new Ee a constructive
dismissal?
113
A: Yes. Flores re-employment as a new Ee would be
very prejudicial to him as it would mean a demotion in
rank and privileges and the retirement benefits for his
previous 18 years of service with the company would
simply be considered as non-existent. It amounts to
constructive dismissal (JAM Transportation Co., Inc. v.
Flores, G.R. No. 82829, March 19, 1993).
Q: Quinanola was transferred from the position of
Executive Secretary to the Executive Vice President
and General Manager to the Production Dept as
Production Secretary. Quinanola rejected the
assignment and filed a complaint for illegal dismissal
due to constructive dismissal. Did the transfer of
Quinanola amount to constructive dismissal?
A: No. Quinanolas transfer was not unreasonable
since it did not involve a demotion in rank or a change
in her place of work nor a diminution in pay, benefits
and privileges. It did not constitute constructive
dismissal. Furthermore, an Ees security of tenure does
not give him a vested right in his position as would
deprive the company of its prerogative to change his
assignment or transfer him where he will be most
useful (Philippine Japan Active Carbon Corp. v. NLRC,
G.R. No. 83239, March 8, 1989).
Q: Sangil was a utility man/assistant steward of the
passenger cruise vessel Crown odyssey under a one-
year contract. Sangil suffered head injuries after an
altercation with a Greek member of the crew. He
informed the captain that he no longer intends to
return aboard the vessel for fear that further trouble
may erupt between him and the other Greek
crewmembers of the ship. Was Sangil constructively
dismissed?
A: Yes. There is constructive dismissal where the act of
a seaman in leaving ship was not voluntary but was
impelled by a legitimate desire for self-preservation or
because of fear for his life. Constructive dismissal does
not always involve diminution in pay or rank but may
be inferred from an act of clear discrimination,
insensibility or disdain by an Er may become
unbearable on the part of the Ee that it could foreclose
any choice by him except to forego his continued
employment. (Sunga Ship Management Phil., Inc. v.
NLRC, G.R. No. 119080, April 14, 1998)
Q: Does the validity of suspending operation excuse
the Er from paying separation pay?
A: No. The validity of its act of suspending its
operations does not excuse it from paying separation
pay. Art. 283 of the LC is emphatic that an Ee, who was
dismissed due to cessation of business operation, is
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

entitled to the separation pay equivalent to one

month pay or at least 1/2 month pay for every year of
service, whichever is higher. And it is jurisprudential
that separation pay should also be paid to Ees even if
the closure or cessation of operations is not due to
losses (Manila Minings Corp. Employees Assn. v.
Manila Mining Corp., G.R. Nos. 178222-23, September
29, 2010).

Circumstances where financial assistance are proper

The general rule is that financial assistance is allowed

only in instances where the Ee is validly dismissed for
causes other than serious misconduct or those
reflecting on his moral character. Nonetheless,
financial assistance may be allowed as a measure of
social justice and exceptional circumstances, and as an
equitable concession for balancing the interests of the
Er with those of the worker.Where there is neither a
dismissal nor abandonment, it has been previously
held that separation pay may be awarded under
appropriate circumstances. Also, in cases where there
is no dismissal, the status quo between the Ee and Er
should be maintained; and in lieu of reinstatement
thegrant of separation pay to Ee is proper (Luna v.
Allado Construction Co., Inc., G.R. No. 175251, May 30,
2011).

Q: What is a floating status? When is an Ee in a

floating status considered to be constructively
dismissed?

A: Pursuant to Art. 286 of the LC, the bona fide

suspension of the operation of a business undertaking
for a period not exceeding 6 months, or the fulfillment
by the Ee of a civic duty shall not terminate
employment. In all such cases the Er shall reinstate the
Ee to his former position without loss of seniority
rights if he indicates his desire to resume his work not
later than one month from the resumption of
operations of his Er or from his relief from the military
or civic duty.Only when such a "floating status" lasts
for more than 6 months that the Ee may be considered
to have been constructively dismissed (Nippon
Housing Phil. Inc., v. Leynes, G.R. No. 177816, August
3, 2011).

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2014 GOLDEN NOTES 114
 MANAGEMENT PREROGATIVE

MANAGEMENT PREROGATIVE law or contract to grant it, it just the same granted the
benefit.
Management prerogative
Limitations on management prerogative
GR: It is the right of an Er to regulate, according to his
own discretion and judgment, all aspects of It is circumscribed by limitations found in:
employment, including:
1. Law,
1. Hiring 2. CBA, or
2. Work assignments 3. General principles of fair play and justice
3. Working methods
4. Time, place and manner of work Furthermore, a line must be drawn between
5. Tools to be used management prerogatives regarding business
6. Processes to be followed operations per se and those which affect the rights of
7. Supervision of workers Ees. In treating the latter, management should see to
8. Working regulations it that its Ees are at least properly informed of its
9. Transfer of Ees decisions and modes of actions. Such management
10. Work supervision prerogative may be availed of without fear of any
11. Lay-off of workers liability so long as it is exercised in good faith for the
12. Discipline advancement of the Ers interest and not for the
13. Dismissal purpose of defeating or circumventing the rights of Ees
14. Recall of workers under special laws or valid agreement and are not
exercised in a malicious, harsh, oppressive, vindictive
XPNs: Otherwise limited by law, contract, and or wanton manner or out of malice or spite (PAL v.
principles of fair play and justice. NLRC, G.R. No. 85985, August 13, 1993; San Miguel
Brewery Sales v. Ople, G.R. No. 53515, February 8,
NOTE: So long as a companys prerogatives are exercised in 1989); Punzal v. ETSI Technologies Inc, 518 SCRA 66).
good faith for the advancement of the Ers interest and not
for the purpose of defeating or circumventing the rights of NOTE: It must be established that the prerogative being
the Ees under special laws or under valid agreements, the invoked is clearly a managerial one.
Supreme Court will uphold them.
Q: Is withholding an Ees salary a valid exercise of
Q: Little Hands Garment Company, an unorganized management prerogative?
manufacturer of children's apparel with around 1,000
workers, suffered losses for the 1st first time in A: No. Any withholding of an Ees wages by an Er may
history when its US and European customers shifted only be allowed in the form of wage deductions under
their huge orders to China and Bangladesh. The the circumstances provided in Art. 113 of the LC: 1) the
management informed its Ees that it could no longer worker is insured; 2) for union dues; 3) in cases
afford to provide transportation shuttle services. authorized by law or regulation issued by the SLE. In
Consequently, it announced that a normal fare would the absence of the following circumstances,
be charged depending on the distance traveled by the withholding thereof is thus unlawful (SHS Perforated
workers availing of the service. Materials, Inc. v. Diaz, G.R. 185814, October 13, 2010).

Was the Little Hands Garments Company within its
rights to withdraw this benefit which it had
unilaterally been providing its Ees? (2005 Bar
Question)
A: Yes, because this is a management prerogative
which is not due any legal or contractual obligation.
The facts of the case do not state the circumstances
through which the shuttle service may be considered
as a benefit that ripened into a demandable right.
There is no showing that the benefit has been
deliberately and consistently granted, i.e. with the Ers
full consciousness that despite its not being bound by
Q: May a MERALCO Ee invoke the remedy of writ of
habeas data available where his Er decides to transfer
her workplace on the basis of copies of an
anonymous letter posted therein, imputing to her
disloyalty to the company and calling for her to leave,
which imputation it investigated but fails to inform
her of the details thereof?
A: No. The writs of amparo and habeas data will not
issue to protect purely property or commercial
concerns nor when the grounds invoked in support of
the petitions therefore are vague or doubtful.
Employment constitutes a property right under the
context of the due process clause of the Constitution.

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115 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

The writ of habeas data directs the issuance of the writ of Ers to control and manage their enterprises
only against public officials or Ees, or private effectively.
individuals or entities engaged in the gathering,
collecting or storing of data or information regarding NOTE: The right of Ees to security of tenure does not give
an aggrieved partys person, family or home; and that them vested rights to their positions to the extent of
MERALCO (or its officers) is clearly not engaged in such depriving management of its prerogative to change their
assignments or to transfer them (Endico v. Quantum Foods
activities (MERALCO v. Lim, G.R. No. 184769, October
Distribution Center, G.R. No. 161615, January 30, 2009).
5, 2010).
Q: May the Er exercise his right to transfer an Ee and
DISCIPLINE
compel the latter to accept the same if said transfer
is coupled with or is in the nature of promotion?
Er's right to discipline his Ees
A: No. There is no law that compels an Ee to accept
The Er has the prerogative to instill discipline in his Ees
promotion. Promotion is in the nature of a gift or a
and to impose reasonable penalties, including
reward which a person has a right to refuse. When an
dismissal, on erring Ees pursuant to company rules and
Ee refused to accept his promotion, he was exercising
regulations (San Miguel Corporation v. NLRC, G.R. No.
his right and cannot be punished for it. While it may be
87277, May 12, 1989).
true that the right to transfer or reassign an Ee is an
Ers exclusive right and the prerogative of
An Er has the prerogative to prescribe reasonable rules
management, such right is not absolute (Dosch v. NLRC
and regulations necessary for the proper conduct of its
and Northwest Airlines, G.R. No. 51182, July 5, 1983).
business, to provide certain disciplinary measures in
order to implement said rules and to assure that the
Burden of proving that the transfer was reasonable
same would be complied with. An Er enjoys a wide
latitude of discretion in the promulgation of policies,
The Er must be able to show that the transfer is not
rules and regulations on work-related activities of the
unreasonable, inconvenient or prejudicial to the Ee;
Ees. This is inherent in its right to control and manage
nor does it involve a demotion in rank or a diminution
its business effectively (San Miguel Corp. v. NLRC, 551
of his salaries, privileges and other benefits. Should
SCRA 410).
the Er fail to overcome this burden of proof, the Ees
transfer shall be tantamount to constructive dismissal
Limitation on the Ers power to discipline
(Blue Dairy Corporation v. NLRC, 314 SCRA 401).
While management has the prerogative to discipline
Limitations on management prerogatives
its Ees and to impose appropriate penalties on erring
workers, pursuant to company rules and regulations,
1. Such that the Er must be motivated by good faith
however, such management prerogative must be
2. The contracting out should not be resorted to
exercised in good faith for the advancement of the Ers
circumvent the law or must not have been the
interest and not for the purpose of defeating or
result of malicious or arbitrary actions (MERALCO
circumventing the rights of the Ees under special laws
v. Quisumbing, G.R. no. 127598. February 22,
and valid agreements. (PLDT v. Teves, G.R. No. 143511,
2000).
November 15, 2010).
PRODUCTIVITY STANDARD
TRANSFER OF EMPLOYEES
Q: May an Er impose productivity standards for its
Employers right to transfer and reassign Ees workers?

In the pursuit of its legitimate business interests,
especially during adverse business conditions,
management has the prerogative to transfer or assign
Ees from one office or area of operation to another
provided there is no demotion in rank or diminution of
salary, benefits and other privileges and the action is
not motivated by discrimination, bad faith, or effected
as a form of punishment or demotion without
sufficient cause. This privilege is inherent in the right
A: Yes. An Er is entitled to impose productivity
standards for its workers. In fact, non-compliance may
be visited with a penalty even more severe than
demotion. The practice of a company in laying off
workers because they failed to make the work quota
has been recognized in this jurisdiction. Failure to
meet the sales quota assigned to each of them
constitute a just cause of their dismissal, regardless of
the permanent or probationary status of their
employment. Likewise, failure to observe prescribed

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 116
 MANAGEMENT PREROGATIVE
standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just
cause for dismissal. Such inefficiency is understood to
mean failure to attain work goals or work quotas,
either by failing to complete the same within the
allotted reasonable period, or by producing
unsatisfactory results. This management prerogative
of requiring standards may be availed of so long as
they are exercised in good faith for the advancement
of the Ers interest (Leonardo v. NLRC, G.R. No. 125303,
2000).
GRANT OF BONUS
Bonus
It is an amount granted and paid to an Ee for his
industry and loyalty which contributed to the success
of the Ers business and made possible the realization
of profits.
Q: Can bonus be demanded?
A:
GR: No. Bonus is not demandable as a matter of right.
It is a management prerogative given in addition to
what is ordinarily received by or strictly due to
recipient (Producers Bank of the Phil. v. NLRC, G.R. No.
100701, March 28, 2001).
XPNs: Given for a long period of time, provided that:
1. Consistent and deliberate Er continued g
2. iving benefit without any condition imposed
for its payment;
3. Er knew he was not required to give benefit;
4. Nature of benefit is not dependent on profit;
5. Made part of the wage or compensation
agreed and stated in the employment
contract.
Q: The projected bonus for the Ees of Suerte Co. was
50% of their monthly compensation. Unfortunately,
due to the slump in the business, the president
reduced the bonus to 5% of their compensation. Can
the company unilaterally reduce the amount of
bonus? (2002 Bar Question)
A: Yes. The granting of a bonus is a management
prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient. An
Er cannot be forced to distribute bonuses when it can
no longer afford to pay. To hold otherwise would be to
penalize the Er for his past generosity (Producers Bank
of the Phil. v. NLRC, G.R. No. 100701, March 28, 2001).
117
CHANGE OF WORKING HOURS
Ers right to change working hours
Well-settled is the rule that management retains the
prerogative, whenever exigencies of the service so
require, to change the working hours of its Ees.
Q: May the normal hours fixed in Art. 83 of the LC be
reduced by the Er? Explain.
A: It depends. Art. 83 provides that the normal hours
of work of an Ee shall not exceed 8 hours a day. This
implies that the Er, in the exercise of its management
prerogatives, may schedule a work shift consisting of
less than 8 hours. And following the principle of a fair
days wage for a fair days labor, the Er is not obliged
to pay an Ee, working for less than 8 hours a day, the
wages due for 8 hours. Nonetheless, if by voluntary
practice or policy, the Ee for a considerable period of
time has been paying his Ees wages due for 8 hours
work although the work shift less than 8 hours (e.g.
seven) it cannot later on increase the working hours
without an increase in the pay of the Ees affected. An
Er is not allowed to withdraw a benefit which he has
voluntarily given.
RULE ON MARRIAGE BETWEEN EMPLOYEES OF
COMPETITOR-EMPLOYEES
Q: Is the stipulation in the employment contract
prohibiting an Ee from marrying another Ee of a
competitor company a valid exercise of management
prerogative?
A: Yes. The policy is not aimed at restricting a personal
prerogative that belongs only to the individual.
However, an Ees personal decision does not detract
the Er from exercising management prerogatives to
ensure maximum profit and business success. It does
not impose an absolute prohibition against
relationships between its Ees and those of competitor
companies. Its Ees are free to cultivate relationships
with and marry persons of their own choosing. What
the company merely seeks to avoid is a conflict of
interest between the employee and the company that
may arise out of such relationships. It is also not
violative of the equal protection clause because it is a
settled principle that the commands of the equal
protection clause are addressed only to the State or
those acting under color of its authority. Corollarily, it
has been held in a long array of U.S. Supreme Court
decisions that the equal protection clause erects no
shield against merely private conduct, however,
discriminatory or wrongful. The only exception occurs
when the State in any of its manifestations or actions
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

has been found to have become entwined or involved

in the wrongful private conduct (Duncan Association of
Detailman-PTGWO and Pedro A. Tecson v. Glaxo
Wellcome Philippines, Inc., G.R. No. 162994,
September 17, 2004).

POST-EMPLOYMENT BAN

Q: Genesis Fulgencio had been working for Solidbank

Corporation since 1977. He later on applied for
retirement. Solidbank required Genesis to sign an
undated Undertaking where he promised that "[he]
will not seek employment with a competitor bank or
financial institution within one (1) year from
February 28, 1995, and that any breach of the
Undertaking or the provisions of the Release, Waiver
and Quitclaim would entitle Solidbank to a cause of
action against him before the appropriate courts of
law. Equitable Banking Corporation (Equitable)
employed Genesis. Is the post-retirement
employment ban incorporated in the Undertaking
which Genesis executed upon his retirement
unreasonable, oppressive, hence, contrary to public
policy?

A: No. There is a distinction between restrictive

covenants barring an Ee to accept a post-employment
competitive employment or restraint on trade in
employment contracts and restraints on post-
retirement competitive employment in pension and
retirement plans either incorporated in employment
contracts or in CBAs between the Er and the union of
Ees, or separate from said contracts or CBAs which
provide that an Ee who accepts post retirement
competitive employment will forfeit retirement and
other benefits or will be obliged to reinstitute the
same to the Er. The strong weight of authority is that
forfeitures for engaging in subsequent competitive
employment included in pension and retirement plans
are valid even though unrestricted in time or
geography. A post-retirement competitive
employment restriction is designed to protect the Er
against competition by former Ee who may retire and
obtain retirement or pension benefits and, at the same
time, engage in competitive employment (Rivera v.
Solidbank, G.R. No. 163269, April 19, 200

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2014 GOLDEN NOTES 118
 SOCIAL WELFARE LEGISLATION (PD 626)
SOCIAL AND WELFARE LEGISLATION (P.D. 626)
Social Legislation
It consists of statutes, regulations and jurisprudence
that afford protection to labor, especially to working
women and minors, and is in full accord with the
constitutional provisions on the promotion of social
justice to insure the well-being and economic security
of all the people.
SOCIAL SECURITY SYSTEM LAW (R.A. 8282)
Policy objective in the enactment of the Social
Security Law
To establish, develop, promote and perfect a sound
and viable tax-exempt social security service suitable
to the needs of the people throughout the Philippines,
which shall promote social justice and provide
meaningful protection to members and their
beneficiaries against the hazards of disability, sickness,
maternity, old age, death, and other contingencies
resulting in loss of income or financial burden (Sec. 2,
R.A. 8282).
NOTE: The enactment of SSS law is a legitimate exercise of
the police power. It affords protection to labor and is in full
accord with the constitutional mandate on the promotion of
social justice [Roman Catholic Archbishop of Manila vs. SSS,
G.R. No. 15045, (1961)].
Definitions
1. Employer - Any person, natural or juridical, domestic
or foreign, who carries into the Phils. any trade,
business, industry, undertaking or activity of any kind
and uses the services of another person who is under
his orders as regards the employment, except the
Government and any of its political subdivisions,
branches or instrumentalities, including corporations
owned or controlled by the Government: Provided,
That a self-employed person shall be both Ee and Er at
the same time. (Sec 8[c], R.A. 8282)
2. Employee - Any person who performs services for an
Er in which either or both mental and physical efforts
are used and who receives compensation for such
services, where there is an Er-Ee relationship:
Provided, That a self-employed person shall be both Ee
and Er at the same time. (Sec. 8[d], R.A. 8282)
3. Employment -
GR: Any service performed by an Ee for his Er.
119
XPNs:
1. Employment purely casual and not for the
purpose of occupation or business of the Er;
2. Service performed on or in connection with an
alien vessel by an Ee if he is employed when
such vessel is outside the Phils;
3. Service performed in the employ of the Phil.
Government or instrumentality or agency
thereof;
4. Service performed in the employ of a foreign
government or international organization, or
their wholly-owned instrumentality:
5. Such other services performed by temporary
and other Ees which may be excluded by
regulation of the SSC. Ees of bona fide
independent contractors shall not be deemed
Ees of the Er engaging the services of said
contractors. (Sec. 8[j], R.A. 8282)
4. Contingency - The retirement, death, disability,
injury or sickness and maternity of the member.
5. Monthly pension
a. The monthly pension shall be the highest of the
following amounts:
I. The sum of the following:
i. Php 300.00; plus
ii. 20% of the average monthly salary credit;
plus
iii. 2% of the average monthly salary credit
for each credited year of service in excess
of 10 years; or
II. 40% of the average monthly salary credit; or
III. Php 1,000.00, provided that the Monthly
Pension shall in no case be paid for an
aggregate amount of less than sixty (60)
months (Sec. 12 [a], R.A. 8282)
b. Minimum Pension
I. Php 1,200.00 - members with at least 10
credited years of service
II. Php 2, 400.00 for those with 20 credited years
of service. (Sec. [b], R.A. 8282)
NOTE: Monthly pension dependents
pension shall be suspended:
1. Upon the reemployment or resumption
of self-employment;
2. Recovery of the disabled member from
his permanent total disability
3. Failure to present himself for
examination at least once a year upon notice
by the SSS. [Sec. 13-A (b), RA 8282]
6. Average monthly credit - An average monthly credit
is the result obtained by:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
a. Dividing the sum of the last 60 monthly salary
credits immediately preceding the semester of
contingency by 60; or
b. Dividing the sum of all the monthly salary credits
paid prior to the semester of contingency by the
number of monthly contributions paid in the same
period, whichever is greater.
Provided, that the injury or sickness which caused the
disability shall be deemed as the permanent disability
for the purpose of computing the average monthly
salary credit.
7. Average daily salary credit - An average salary credit
is the result obtained by dividing the sum of the 6
highest monthly salary credits in the 12-month period
immediately preceding the semester of contingency
by 180.
SSS premiums are not taxes
The funds contributed to the System belong to the
members who will receive benefits, as a matter of
right, whenever the hazards provided by the law occur
[CMS Estate, Inc., vs. SSS, G.R. No. 26298, (1984)].
Benefits received under SSS law are not part of the
estate of a member
Benefits receivable under the SSS Law are in the nature
of a special privilege or an arrangement secured by the
law pursuant to the policy of the State to provide social
security to the workingman. The benefits are
specifically declared not transferable and exempt from
tax, legal processes and liens [SSS vs. Davac, et. al.,
G.R. No.21642, (1966)].
COVERAGE
A. Compulsory Coverage
a. All Ees not over 60 years of age and their
Ers;
b. Domestic helpers whose income is not
less than P 1000/month and not over 60
years of age and their Ers;
Limitations:
i. Any benefit earned by the Ees
under private benefit plans existing
at the time of the approval of the
Act shall not be discontinued,
reduced or otherwise impaired;
ii. Existing private plans shall be
integrated with the SSS but if the Er
under such plan is contributing
more than what is required by this
Act, he shall pay to the SSS the
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
amount required to him, and he
shall continue with his
contributions less the amount paid
to SSS;
iii. Any changes, adjustments,
modifications, eliminations or
improvements in the benefits of
the remaining private plan after the
integration shall be subject to
agreements between the Ers and
the Ees concerned; and
iv. The private benefit plan which the
Er shall continue for his Ees shall
remain under the Ers management
and control unless there is an
existing agreement to the contrary
c. All self-employed considered both an
Er and Ee
NOTE: A self-employed person is one whose
income is not derived from employment as well as
those mentioned in Sec. 9-A of the law, including:
1. All self-employed professionals;
2. Partners and single proprietors of business;
3. Actors and actresses, directors, scriptwriters
and news correspondents who do not fall
within the definition of the term Ee in Sec. 8
of this Act;
4. Professional athletes, coaches, trainers and
jockeys; and
5. Individual farmers and fishermen. [Sec. 9(a),
RA 8282]
B. Voluntary
a. Spouses who devote full time to managing the
household and family affairs, unless they are
also engaged in other vocation or
employment which is subject to mandatory
coverage; (Sec. 9[b], R.A. 8282)
b. Filipinos recruited by foreign-based Ers for
employment abroad may be covered by the
SSS on a voluntary basis; (Sec. 9[c], R.A. 8282)
c. Ee separated from employment to maintain
his right to full benefits
d. Self-employed who realizes no income for a
certain month
C. By agreement
Any foreign government, international
organization, or their wholly-owned
instrumentality employing workers in the
Philippines, may enter into an agreement with the
Philippine government for the inclusion of such
Ees in the SSS except those already covered by
their respective civil service retirement systems.
120
 SOCIAL WELFARE LEGISLATION (PD 626)
Seafarers also covered by the SSS Law
The result of the Memorandum of Agreement entered
by SSS and DOLE approved by the Social Security
Commission per the Commission's Resolution No. 437,
dated July 14, 1988 was that the Standard Contract of
Employment to be entered into between foreign
shipowners and Filipino seafarers is the instrument by
which the former express their assent to the inclusion
of the latter in the coverage of the Social Security Act.
In other words, the extension of the coverage of the
SSS to Filipino seafarers arises by virtue of the assent
given in the contract of employment signed by Er and
seafarer [Ben Sta. Rita v. Court of Appeals, G.R. No.
119891, (1995)]. By extending the benefits of the
Social Security Act to Filipino seafarers on board
foreign vessels, the individual employment
agreements entered into with the stipulation for such
coverage contemplated in the DOLE-SSS
Memorandum of Agreement, merely gives effect to
the constitutional mandate to the State to afford
protection to labor whether "local or overseas." (Ibid.)
Effectivity of compulsory coverage
The compulsory coverage is deemed effective:
1. As to the Employer - On the first day of
operation
2. As to the Employee - On the first day of
his employment
3. As to the Self- - Upon his
Employed registration with the
SSS
Effect of separation of an employee from his
employment under compulsory coverage
1. His Ers obligation to contribute arising from that
employment shall cease at the end of the month
of separation,
2. But said Ee shall be credited with all contributions
paid on his behalf and entitled to benefits
according to the provisions of R.A. 9282.
3. He may, however, continue to pay the total
contributions to maintain his right to full benefit
(Sec. 11, R.A. 8282).
Note: The above provision recognizes the once a member,
always a member rule.
Effect of the interruption of business or professional
income
If the self-employed member realizes no income in any
given month:
121
1. He shall not be required to pay contributions for
that month.
2. He may, however, be allowed to continue paying
contributions under the same rules and regulations
applicable to a separated Ee member:
3. Provided, that no retroactive payment of
contributions shall be allowed other than as
prescribed under Sec.22-A (Sec. 11-A, R.A. 8282).
Determination of the contributions of the self-
employed
The contribution shall be determined in accordance
with Sec. 18 of the SSS Law, provided that:
1. The monthly earnings declared as the time of
registration shall be considered as his monthly
compensation and he shall pay for both Er and Ee
contributions
2. The monthly earnings declared at the time of
registration shall remain the basis of his monthly
salary credit, unless another declaration of his
monthly earnings was made, the latter becomes
the new basis of his monthly salary credits. [Sec.
19-A, R.A. No. 8282]
Reportorial requirements of the ER and self-
employed
1. Er - Report immediately to SSS the names, ages,
civil status, occupations, salaries and dependents
of all his covered Ees
2. Self-employed - Report to SSS within 30 days from
the first day of his operation, his name, age, civil
status, occupation, average monthly net income
and his dependents
EXCLUSIONS FROM COVERAGE
Employment which are excluded from compulsory
coverage under the SSS Law
1. Employment purely casual and not for the purpose
of occupation or business of the Er;
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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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 Ees in the SSS
except those already covered by their respective civil
service retirement systems: Provided, further, That the
terms of such agreement shall conform with the
provisions of this Act 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 Ees which may be excluded by regulation of the
Commission. Ees of bona fide independent contractors
shall not be deemed Ees of the Er engaging the service
of said contractors (Section 8(j) of R.A. 1161, as
amended).
Q: A textile company hires 10 carpenters to repair the
roof of its factory which was destroyed by typhoon
Bening. Are the carpenters subject to compulsory
coverage under the SSS Law? Why?
A: No. the employment is purely casual and not for the
purpose of the occupation or business of the Er. Their
engagement is occasioned by the passage of the
typhoon; they are not hired on a regular basis.
BENEFITS
Benefits under the SSS Law
1. Sickness Benefits
2. Permanent Disability Benefits
3. Maternity Leave Benefit
4. Retirement Benefit
5. Death and funeral Benefits
Non-transferability of the benefits provided for in the
SSS law
Benefits provided for in the SSS Law are not
transferable and no power of attorney or other
document executed by those entitled thereto in favor
of any agent, attorney or any other person for the
collection thereof on their behalf shall be recognized,
except when they are physically unable to collect
personally such benefits (Sec.15, R.A. 1161, as
amended).
Q: On her way home from work, Mikaela, a machine
operator in a sash factory, decided to watch a movie
in a movie house. However, she is stabbed by an
unknown assailant. When she filed a claim for
benefits under the SSS Law, it was denied on the
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
ground that her injury is not work-connected. Is the
denial legal? Why?
A: No. It is not necessary, for the enjoyment of
benefits under the SSS Law that the injury is work-
connected. What is important is membership in the
SSS and not the causal connection of the work of the
Ee to his injury or sickness.
Note: Claims based on work-connected injuries or
occupational diseases are covered by the State Insurance
Fund.
SICKNESS BENEFITS
Sickness benefit
It is a daily allowance paid to a covered Ee who
becomes sick and is confined in a hospital for more
than 3 days or elsewhere with the Commissions
approval.
Entitlement to sickness benefit
Under Sec. 14 of the Social Security Law, the following
are the requisites for the enjoyment by a covered
individual of the sickness benefits:
1. Payment of at least 3 monthly contributions in the
12-month period immediately preceding the
semester of sickness;
2. Sickness or injury and confinement for more than
3 days in a hospital or elsewhere with the
Commissions approval;
3. Notice of the fact of sickness by the Ee to the Er
(or to the SSS in case the member is unemployed)
within 5 calendar days after the start of his
confinement; and
4. Exhaustion of sick leaves of absence with full pay
to the credit of the Ee.
NOTE: The requirement of notification is not necessary
when:
1. Confinement is in a hospital; or
2. The employee became sick or was injured while
working or within the premises of the employer.
Requisites that must be complied with in order to
avail of sickness benefits
1. In no case shall the daily sickness benefit be paid
longer than 120 days in 1 calendar year, nor shall any
unused portion of the 120 days of sickness benefit
granted be carried forward and added to the total
number of compensable days allowable in the
subsequent year;
122
 SOCIAL WELFARE LEGISLATION (PD 626)
2. No employee shall be paid any sickness benefit for
more than two hundred forty days on account of the
same confinement;
3. Ee member shall notify his Er of the fact of his
sickness or injury within 5 calendar days after the start
of his confinement unless such confinement:
a. Is in a hospital
b. The Ee became sick or was injured while
working or within the premises of the Er
(notification to the Er not necessary);
NOTE: If the member is unemployed or self-employed, he
shall directly notify the SSS of his confinement within 5
calendar days after the start thereof unless such
confinement is in a hospital in which case notification is
also not necessary. Where notification is necessary,
confinement shall be deemed to have started not earlier
than the 5th day immediately preceding the date of
notification (Sec.14 [b], R.A. 8282).
Compensable confinement
1. It begins on the 1st day of sickness
2. Payment of such allowances shall be promptly
made by the Er:
a. Every regular payday or on the 15th and
last day of each month,
b. In case of direct payment by the SSS - as
long as such allowances are due and
payable (Sec. 14[b], R.A. 8282).
Payment of sickness benefit
1. The Er shall pay the Ee for each compensable
confinement or fraction thereof
2. The SSS shall pay the member who is unemployed,
self-employed or voluntary members with a daily
sickness benefit equivalent to 90% of his average daily
salary credit.
Requirements in order that Er may claim
reimbursement of the sickness benefit
1. 100% of daily benefits shall be reimbursed by SSS
if the following requirements are satisfied:
a. Receipt of SSS of satisfactory proof of
such payment and legality thereof;
b. The Er has notified the SSS of the
confinement within 5 calendar days after
receipt of the notification from the Ee
member.
2. Er shall be reimbursed only for each day of
confinement starting from the 10th calendar day
immediately preceding the date of notification to
the SSS if the notification to the SSS is made
beyond 5 calendar days after receipt of the
123
notification from the Ee member (Sec. 14 [c], R.A.
8282).
Reimbursement by SSS
GR: SSS shall reimburse the Er or pay the unemployed
member only for confinement within 1 year
immediately preceding the date the claim for benefit
or reimbursement is received by the SSS.
XPN: Confinement in a hospital in which case the claim
for benefit or reimbursement must be filed within 1
year from the last day of confinement (Sec. 14[c], R.A.
8282).
Instances when the employer or the unemployed
member is not entitled to reimbursement
1. Where the Er failed to notify the SSS of the
confinement;
2. In the case of the unemployed; where he failed to
send the notice directly to the SSS except when
the confinement is in a hospital; and
3. Where the claim for reimbursement is made after
1 year from the date of confinement.
PERMANENT DISABILITY BENEFITS
Permanent disability benefit
It is a cash benefit paid to a member who becomes
permanently disabled, either partially or totally.
Permanent total disability
Under Sec. 13-A (d) of the SSS Law, the following
disabilities are deemed permanent total:
1. Complete loss of sight of both eyes;
2. Loss of two limbs at or above the ankle or
wrists;
3. Permanent complete paralysis of two limbs;
4. Brain injury resulting to incurable imbecility or
insanity; and
5. Such cases as determined and approved by the
SSS.
Dependents
The dependents shall be the following:
1. The legal spouse entitled by law to receive
support from the member;
2. The legitimate, legitimated or legally adopted
and illegitimate child who is:
a. Unmarried
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

b. Not gainfully employed and has not Effect of retirement or death of a pensioner with a
reached the age of 21 years of age; partial disability
or
c. If over 21 years of age, he is If the pensioner with partial disability retires or dies,
congenitally or while still a minor has the disability pension shall cease upon his retirement
been permanently incapacitated or death (Sec 13-A [j], R.A. 8282).
and incapable of self-support,
physically or mentally; and Compensability under the LC v. Compensability under
3. The parent who is receiving regular support the SSS Law
from the member. [Sec. 8 (e), RA 8282]
BASIS LABOR LAW SOCIAL
Death benefits v. Permanent total disability benefits SECURITY
LAW
BASIS DEATH PERMANENT Purpose Governs Benefits are
BENEFITS TOTAL compensabilit intended to
DISABILITY y of : provide
BENEFITS 1. Work- insurance or
Requisite At least 36 At least 36 related protection
monthly monthly disabilities against the
contributions contributions 2. When there hazards or
Benefits Primary Member is loss of risks of
payable to Beneficiaries income due to disability,
whom work- sickness, old
Failure to Benefits shall Benefits shall connected or age or death,
make 36 be in lump be in lump work- inter alia,
monthly sum sum aggravated irrespective of
payments equivalent to equivalent to injury or whether they
the monthly the monthly illness. arose from or
pension pension in the course
times the times the of the
number of number of employment.
monthly monthly Nature A disability is Disability may
contributions contributions total and be permanent
paid to SSS or paid to SSS or permanent if total or
12 times the 12 times the as a result of permanent
monthly monthly the injury or partial.
pension, pension, sickness the Ee
whichever is whichever is is unable to
higher. higher. perform any
gainful
Effect of the death of a pensioner with permanent occupation for
total disability a continuous
period
1. Primary beneficiaries are entitled to receive monthly exceeding 120
pension as of the date of disability. days
2. If there are no primary beneficiaries and the regardless of
pensioner dies within 60 months from the start of his whether he
monthly pension - Secondary beneficiaries shall be loses the use
entitled to a lump sum benefit equivalent to the of any of his
total monthly pensions corresponding to the body parts.
balance of the 5-year guaranteed period excluding
the dependents pension (Sec. 13-A [c], R.A. 8282).

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 124
 SOCIAL WELFARE LEGISLATION (PD 626)
MATERNITY LEAVE BENEFIT
Maternity benefit
The maternity benefit is a daily cash allowance granted
to a female member who was unable to work due to
childbirth or miscarriage.
Qualifications for entitlement to maternity benefit
1. She has paid at least three monthly contributions
within the 12-month period immediately
preceding the semester of her childbirth or
miscarriage.
2. She has given the required notification of her
pregnancy through her Er if employed, or to the
SSS if separated, voluntary or self-employed
member.
NOTE: A voluntary or a self-employed member is entitled to
the maternity benefit provided that she meets the qualifying
conditions as mentioned in the preceding.
RETIREMENT BENEFIT
Retirement benefit
It is a cash benefit paid to a member who can no longer
work due to old age.
Types of retirement benefit
1. Monthly Pension - Lifetime cash benefit paid to a
retiree who has paid at least 120 monthly
contributions to the SSS prior to the semester of
retirement.
2. Lump Sum Amount - Granted to a retiree who has
not paid the required 120 monthly contributions.
Members entitled to retirement benefits
1. A member who
a. Is at least 60 years old
b. Has paid at least 120 monthly
contributions prior to the semester of
retirement; and
c. Already separated from employment or
has ceased to be self-employed,
2. A member who is at least 65 years old, shall
be entitled for as long as he lives to the
monthly pension; (Sec 12-B [a], R.A. 8282)
3. A member
a. At least 60 years old at retirement; and
b. Does not qualify for pension benefits
under paragraph (a) above - entitled to a
lump sum benefit equal to the total
125
contributions paid by him and on his
behalf;
c. Must be separated from employment
and is not continuing payment of
contributions to the SSS on his own (Sec.
12-B [b], R.A. 8282).
Consequence of the re-employment or resumption to
work of a retired pensioner
The monthly pension of a retirement pensioner who
resumes employment and is less than 65 years old will
be suspended. He and his Er will again be subject to
compulsory coverage (Sec. 12-B [c], R.A. 8282).
Entitlement of the children of a retiree member to
dependents pension
Only 5 minor children, beginning from the youngest,
are entitled to the dependents pension. No
substitution is allowed. Where there are more than 5
legitimate and illegitimate children, the legitimate
ones will be preferred.
NOTE: The dependent child will receive the pension until the
child reaches 21 years of age, gets married, gets employed
and earns Php 300 a month or more, or dies.
However, the dependent's pension is granted for life to
children who are over 21 years old, provided they are
incapacitated and incapable of self-support due to physical
or mental defect which is congenital or acquired during
minority.
DEATH AND FUNERAL BENEFITS
Entitlement to death benefits
1. Upon death of a member, if he has paid at
least 36 monthly contributions prior to the
semester of death:
a. primary beneficiaries shall be entitled to
the monthly pension; or
b. If there are no primary beneficiaries,
secondary beneficiaries shall be entitled
to a lump sum benefit equivalent to 36
times the monthly pension.
2. Upon death of a member If he has not paid
the required 36 monthly contributions prior
to the semester of death:
a. Primary or secondary beneficiaries shall
be entitled to a lump sum benefit
equivalent to the monthly pension
multiplied by the number of monthly
contributions paid to the SSS: or
b. 12 times the monthly pension, whichever
is higher (Sec. 13, R.A. 8282).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Primary beneficiaries
1. The dependent spouse until he or she remarries
2. The dependent legitimate, legitimated or legally
adopted, and illegitimate children: Provided, that the
dependent illegitimate children shall be entitled to
50% of the share of the legitimate, legitimated or
legally adopted children.
Secondary beneficiaries
1. Dependent parents
2. In the absence of the foregoing, any other person
designated by the covered employee as secondary
beneficiary [Sec. 8(k), R.A. 8282].
Dependents
1. The legal spouse entitled by law to receive support
from the member;
2. The legitimate, legitimated, or legally adopted, and
illegitimate child who:
a. Is unmarried,
b. Not gainfully employed, and
c. Has not reached 21 years of age, or if over 21
years of age, he is congenitally or while still a
minor has been permanently incapacitated
and incapable of self-support, physically or
mentally.
d. The parent who is receiving regular support
from the member.
Length of time the primary beneficiaries shall be
entitled to the death benefits
The primary beneficiary shall be entitled to death
benefits consisting of monthly pension and
dependents pension until:
1. Dependent spouse entitled until he/she
remarries
2. Dependent children entitled until:
a. They get married;
b. Find gainful employment;
c. Reach the age of 21 years; or
d. Recover from mental or physical incapacity and
can now support themselves.
Funeral benefit
A funeral grant equivalent to Php 12, 000.00 shall be
paid, in cash or in kind, to help defray the cost of
expenses upon the death of a member or retiree (Sec.
13-B, R.A. 8282).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
BENEFICIARIES
Dependent for support
The entitlement to benefits as a primary beneficiary
requires not only legitimacy but also dependence
upon the member Ee [Gil v. SSC CA- GR SP. 37150,
(1996)].
NOTE: If a wife is already separated de facto from her
husband, she cannot be said to be "dependent for support"
upon the husband, absent any showing to the contrary.
Conversely, if it is proved that the husband and wife were
still living together at the time of his death, it would be safe
to presume that she was dependent on the husband for
support, unless it is shown that she is capable of providing
for herself [SSS vs. Aguas, G.R. No. 165546, (2006)].
Q: A, an SSS member was survived by his legal wife,
who is not dependent upon him. He was also survived
by two common-law wives with whom he had
illegitimate minor children. Who among them is
entitled to the benefits?
A: The illegitimate minor children shall be entitled to
the death benefits as primary beneficiaries because
the legal wife is not dependent upon the member. The
SSS Law is clear that for a minor child to qualify as a
dependent the only requirements are that he/she
must be below 21 yrs. of age, not married nor gainfully
employed [Signey vs. SSS, G.R. No. 173582, (2008)].
Compensation
All actual remuneration for employment, including the
mandated cost of living allowance, as well as the cash
value of any remuneration paid in any medium other
than cash except that part of the remuneration
received during the month in excess of the maximum
salary.
Q: The owners of FALCON Factory, a company
engaged in the assembling of automotive
components, decided to have their building
renovated. Fifty (50) persons, composed of
engineers, architects and other construction
workers, were hired by the company for this
purpose. The work was estimated to be completed
in 3 years. The workers contended that since the
work would be completed after more than 1 year,
they should be subject to compulsory coverage
under the Social Security Law. Do you agree with
their contention? Explain your answer fully. (2000
Bar Question)
A: No. Under Sec. 8 (j) of R.A. 1161, as amended,
employment of purely casual and not for the purpose
126
 SOCIAL WELFARE LEGISLATION (PD 626)
of the occupation or business of the Er is excepted from
compulsory coverage. An employment is purely casual
if it is not for the purpose of occupation or business of
the Er. In the problem given, Falcon Factory is a
company engaged in the assembly of automotive
components. The 50 persons (engineers, architects and
construction workers) were hired by Falcon Factory to
renovate its building. The work to be performed by
these 50 people is not in connection with the purpose
of the business of the factory. Hence, the employment
of these 50 persons is purely casual. They are,
therefore, excepted from the compulsory coverage of
the SSS law.
Settlement of disputes
DISPUTE SETTLEMENT
Disputes involving:
1. Coverage
2. Benefits
3. Contributions
4. Penalties
Social 5. Any other matter related
Security thereto.
Commissi
on NOTE: Disputes within the mandatory
(SSC) period of 20 days after the submission
of evidence. (Sec. 5a, R.A. 8282)
Decision, in the absence of appeal,
shall be final and executory 15 days
after date of notification. (Sec. 5b, R.A.
8282)
Decisions of SSC shall be
appealable to:
1. CA questions of law and fact
CA / SC
(Sec. 5c, R.A. 8282)
2. SC questions of law. (Sec.
5c, R.A. 8282)
SSC may, motu proprio or on
motion of any interested party,
Execution
issue a writ of execution to enforce
of
any of its decisions or awards, after
decision
it has become final and executory.
(Sec. 5d R.A. 8282)
Q: Can the SSC validly re-evaluate the findings of the
RTC, and on its own, declare the latters decision to
be bereft of any basis?
A: No. It cannot review, much less reverse, decisions
rendered by courts of law as it did in the case at bar
when it declared that the CFI Order was obtained
through fraud and subsequently disregarded the
same, making its own findings with respect to the
validity of Bailon and Alices marriage on the one hand
and the invalidity of Bailon and Teresitas marriage on
127
the other. In interfering with and passing upon the CFI
Order, the SSC virtually acted as an appellate court.
The law does not give the SSC unfettered discretion to
trifle with orders of regular courts in the exercise of its
authority to determine the beneficiaries of the SSS
[SSS vs. Teresita Jarque Vda. De Bailon, G.R. No.
165545, (2006)].
Q: Due to the delinquency incurred by ABC Co. on its
premium and loan amortizations, SSS suggested
settling its obligation either through installment or
through dacion en pago. ABC chose dacion en pago
and offered its property situated in Baguio City. It was
approved by the SSS. However, SSS refused to accept
the payment unless the interest and charges will be
paid. ABC then filed a suit in court. SSS moved for
dismissal contending that the SSC, and not regular
courts, has the jurisdiction to entertain controversy
arising from the non-implementation of a dacion en
pago agreed upon by the parties as a means of
settlement of ABCs liabilities. Resolve.
A: The law clearly vests upon the Commission
jurisdiction over disputes arising under this Act with
respect to coverage, benefits, contributions and
penalties thereon or any matter related
thereto... Dispute is defined as a conflict or
controversy. From the allegations of the complaint, it
readily appears that there is no longer any dispute
with respect to ABCs accountability to the SSS. It had,
in fact, admitted their delinquency and offered to
settle them by way of dacion en pago subsequently
approved by the SSS in Resolution No. 270-s. 2001. The
controversy, instead, lies in the non-implementation
of the approved and agreed dacion en pago on the
part of the SSS. As such, ABC filed a suit to obtain its
enforcement which is, doubtless, a suit for specific
performance and one incapable of pecuniary
estimation beyond the competence of the
Commission [SSS vs. Atlantic Gulf and Pacific Company
of Manila, Inc. and Semirara Coal Corp., G.R. No.
175952, (2008)].
Prescriptive period to claim the benefits
GR: 4 years from the date of contingency
XPNs: Life insurance and retirement (Sec. 28, R.A.
8291)
GSIS LAW (R.A. 8291)
Purpose for the enactment of the GSIS law
To provide and administer the following social security
benefits for government Ees:
1. Compulsory life insurance
2. Optional life insurance
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
3. Retirement benefits
4. Disability benefits to work-related contingencies;
and
5. Death benefits
Definitions
1. Employer
a. National Government
b. Its political subdivisions, branches, agencies,
instrumentalities
c. GOCCs, and financial institutions with original
charters
d. Constitutional Commissions and the Judiciary
(Sec. 2[c], R.A. 8291)
2. Employee or member - Any person, receiving
compensation while in the service of an Er, whether by
election or appointment, irrespective of status of
appointment, including barangay and sanggunian
officials (Sec. 2[d], R.A. 8291).
3. Compensation - The basic pay or salary received by
an Ee, pursuant to his or her election or appointment,
excluding per diems, bonuses, OT pay, honoraria,
allowances and any other emoluments received in
addition to the basic pay which are not integrated into
the basic pay under existing laws (Sec. 2[i], R.A. 8291).
Q: Baradero is a member of the Sangguniang Bayan
of the Municipality of La Castellana, Negros Occ. and
is paid on a per diem basis. On the other hand, Belo a
Vice-Governor of Capiz is in a hold over capacity and
is paid on a per diem basis. Are the services rendered
by Baradero and Belo on a per diem basis creditable
in computing the length of service for retirement
purposes?
A: Yes. The traditional meaning of per diem is a
reimbursement for extra expenses incurred by the
public official in the performance of his duties. Under
this definition, the per diem is intended to cover the
cost of lodging and subsistence of officers and
employees when the latter are on a duty outside of
their permanent station. On the other hand, a per
diem could rightfully be considered a compensation or
remuneration attached to an office.
The per diems paid to Baradero and Belo were in the
nature of compensation or remuneration for their
services as Sangguniang Bayan and Vice-Governor,
respectively, rather than a reimbursement for
incidental expenses incurred while away from their
home base.
If the remuneration received by a public official in the
performance of his duties does not constitute a mere
allowance for expenses but appears to be his actual
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
base pay, then no amount of categorizing the salary as
a per diem would take the allowances received from
the term service with compensation for the purpose of
computing the number of years of service in
government [GSIS v. CSC, G. R. Nos. 98395 and 102449,
(1995)].
Reportorial requirements of the Er
Er must report to GSIS the names, employment status,
positions, salaries of the employee and such other
matter as determined by the GSIS.
Penalty in case of delayed remittance or non-
remittance of contributions
The unremitted contributions shall be charged
interests as prescribed by the GSIS Board of Trustees
but shall not be less than 2% simple interest per month
from due date to the date of payment by the
employers concerned (Sec. 7, R.A. 8291).
Q: May a member enjoy the benefits provided for in
the Revised GSIS Act simultaneous with similar
benefits provided under other laws for the same
contingency?
A: Whenever other laws provide similar benefits for
the same contingencies covered by this Act, the
member who qualifies to the benefits shall have the
option to choose which benefits will be paid to him.
However, if the benefits provided by the law chosen
are less than the benefits provided under this Act, the
GSIS shall pay only the difference (Sec. 55, R.A. 8291).
Similarities between the SSS law and the GSIS law
Basis Social Government
Security Act Service Insurance
of 1997 (RA Act of 1997
8282)
(RA 8291)
Dependents 1. Legal spouse entitled for
support;
2. Child, whether legitimate,
legitimated, legally adopted or
illegitimate;
3. Parents dependent for support
Funding 1. ERs contribution
2. Ees / members contribution
Exemption Property, assets, revenues of SSS
from tax, and GSIS are all exempt from
128
 SOCIAL WELFARE LEGISLATION (PD 626)

legal taxes, and all benefits paid by SSS services,

processes, or GSIS shall likewise be exempt where there is
lien from taxes, assessments, fees, an employer-
charges and duties of all kinds. employee
relationship

SSS law v. GSIS law 3. Self-

employed -
Basis Social Security Government considered
Act of 1997 Service Insurance both employer
(RA 8282) Act of 1997 and employee
(RA 8291)
Conditions 1. Unmarried; 1. Unmarried;
for child to
Who are 1. Employer - 1. Employer - the be 2. Not 2. Not gainfully
covered Any person, national considered gainfully employed;
natural or government, its dependent employed;
judicial, political 3. Not over the
domestic or subdivisions, 3. Has not age of majority;
foreign who branches, reached 21 OR
carries on in agencies or years of age;
the Philippines instrumentalities, OR 4. Incapable of
any trade, including GOCCs, supporting himself
business, and financial 4. Incapable of either physically
industry, institutions with supporting or mentally prior
undertaking or original charters, himself either to 21 years of age
activity of any the constitutional physically or or age of majority
kind and uses commissions and mentally prior as the case may be
the services of the judiciary to 21 years of
another age or age of
person who is 2. Employee - any majority as the
under his person receiving case may be
orders as compensation
regards while in service of Beneficiaries 1. Primary 1. Primary
employment an employer as
defined herein, a. Dependent a. legal,
Exempt whether by Spouse until Dependent
employer - election or remarriage Spouse until
Government appointment, AND remarriage AND
and any of its regardless of the
b. Dependent b. Dependent
political status of
Legitimate or Children
subdivisions, employment,
Legitimated or
branches and including 2. Secondary
Legally
instrumentalit Barangay and
Adopted and
y, including Sanggunian a. Dependent
Illegitimate
GOCCs, i.e. Members parents AND
Children
those under
GSIS 2. Secondary b. Legitimate
descendants
2. Employee - a. Dependent subject to
any person Parents restrictions on
who performs dependent
services for an b. Absent any children,
employer who primary and legitimate
receives secondary descendants
compensation beneficiaries,
for such any other

UNIVERSITY OF SANTO TOMAS

129 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

person Coverage 1. Compulsory Compulsory for all

designated by employees
member as a. All Ees not receiving
secondary over sixty (60) compensation
beneficiary years of age who have not
and their Ers; reached
Benefits 1. Sickness 1. Separation compulsory compulsory
Benefits Benefits coverage of retirement age,
the Ers shall irrespective of
2. Permanent 2. Retirement take effect on employment
Disability Benefits the first day of status
Benefits his operation
3. Pemanent and that of the
3. Maternity Disability Benefits Ee on the day
Benefits of his
4. Temporary
employment
4. Retirement Disability Benefits
Benefits b. Self-
5. Survivorship
employed
5. Permanent Benefits
persons as
Disability
6. Funeral may be
6. Death Benefits determined by
Benefits the
7. Life Insurance Commission,
7. Funeral Benefits including but
Benefits not limited to:
XPN: The all self-
8. Loan Grant members of the employed
Judiciary and professionals;
Constitutional partners and
Commissions shall single-
have life insurance proprietors of
only. business;
actors and
actresses,
directors,
scriptwriters
and news
correspondent
s not
employees;
professional
athletes,
coaches,
trainers and
jockeys, and
individual
farmers and
fishermen,
upon their
registration
with the SSS.

c. Domestic
helpers sixty
years of age
and below

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 130
 SOCIAL WELFARE LEGISLATION (PD 626)

with a monthly Exceptions 1. Employmen 1. Members of the

income of not from t purely casual AFP
less than coverage and not for
P1000 on the purpose, 2. Members of the
date of their occupation, or PNP
employment. business of the
Er. 3. Contractual
d. Individual Ees, who have no
farmers and 2. Services Er-Ee relationship
fishermen performed on with the agency
under SSS or in they serve
rules and connection
regulation. with alien 4. Members if
vessel, if Judiciary and
2. Voluntary employed Constitutional
when such Commissions
a. Filipinos vessel is covered by life
recruited by outside of the insurance only
foreign-based Philippines.
Ers for
employment 3. Ees of
abroad Philippine
Government
b. Ees or
separated instrumentalit
from y or agency
employment thereof.
to maintain his
right to full 4. Service
benefits performed in
the employ of
c. Self- a foreign
employed who government,
realizes no or
income for a international
certain month organizations,
or wholly
d. Spouses
owned
who devote
instrumentalit
full time to
y employing
managing
workers in the
household and
Philippines or
family affairs
employing
unless
Filipinos
specifically
outside of the
mandatorily
Philippines.
covered
5. Services
performed by
temporary
employees
and other
employees
excluded by
SSS regulation;
Ees of bona
fide

UNIVERSITY OF SANTO TOMAS

131 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

independent COVERAGE
contractors
shall not be Compulsory coverage of the GSIS (2009 Bar question)
deemed Ees of
the Er The following are compulsorily covered by the GSIS
engaging the pursuant to Sec. 3 of RA 8291:
services of an 1. All Ees receiving compensation who have not
independent reached the compulsory retirement age,
contractor irrespective of employment status.
2. Members of the Judiciary and Constitutional
Commissions for life insurance policy.
Compensatio All actual The basic pay or
n renumeration salary received by Government Ees subject to coverage under the GSIS
for an Ee, pursuant to law
employment, his
including the election/appoint GR: All Ees receiving compensation who have not
mandated ment, EXCLUDING reached the compulsory retirement age, irrespective
COLA, as well per diems, of employment status.
as the cash bonuses, overtime
value of any pay, honoraria, XPNs:
renumeration allowances and 1. Uniformed members of the:
paid in any any other a. AFP; and
medium other emoluments b. PNP
than cash received in 2. Contractuals who have no Er and Ee
EXCEPT that addition to the relationship with the agencies they serve.
part of the basic pay
renumeration Coverage of life insurance, retirement and other
in excess of social security protection
the maximum
salary credit GR: All members of the GSIS shall have life insurance,
retirement, and all other social security protections
Effects of 1. ERs A member such as disability, survivorship, separation, and
separation contribution separated from unemployment benefits (Sec. 3, R.A. 8291).
from on his account the service shall
employment ceases; continue to be a
XPNs: The members of the following shall have life
member, and shall insurance only:
2. Ees be entitled to 1. The Judiciary; and
obligation to whatever benefits
2. Constitutional Commissions
contribute also he has qualified to
ceases at the in the event of any Compulsory coverage of life insurance
end of the contingency
month of compensable
GR: All Ees receiving compensation who have not
separation; under the GSIS reached the compulsory retirement age, irrespective
Act. of employment status
3. Ee shall be
credited with XPN: All members of the Armed Forces of the
all Philippines and the Philippine National Police (PNP)
contributions
paid on his Classification of members for the purpose of benefit
behalf and entitlement
entitled to
benefits 1. Active members
according to a. Still in the service and are paying integrated
the provisions premiums;
of the SSS Act. b. Covered for the entire package benefits and
privileges being extended by GSIS.
2. Policyholders

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 132
 SOCIAL WELFARE LEGISLATION (PD 626)

a. Covered for life insurance only
b. Can avail of policy loan privilege only
c. May also apply for housing loans
d. Judiciary and Constitutional Commissions
3. Retired Members
a. Former active members who have retired from
the service and are already enjoying the
corresponding retirement benefits applied
for;
b. Not entitled to any loan privilege, except stock
purchase loan (Sec. 2.2, Rules II, IRR, R.A. 8291).
b. Payable upon reaching 60 years of age or
upon separation, whichever comes later.
2. A member with less than 15 years of service and less
than 60 years of age at the time of resignation or
separation:
a. Cash payment equivalent to 18 times the
basic monthly pension (BMP), payable at
the time of resignation or separation
b. An old-age pension benefit equal to the
basic monthly pension, payable monthly
for life upon reaching the age of 60.

EXCLUSIONS FROM COVERAGE Effects of separation from service with regard to

membership
Persons excluded from the coverage of the GSIS law
A member separated from the service shall continue
1. Ees who have separate retirement schemes to be a member and shall be entitled to whatever
(members of the Judiciary, Constitutional benefits he has qualified to.
Commissions and others similarly situated)
2. Contractual Ees who have no Er-Ee with the Note: A member separated for a valid cause shall
agencies they serve automatically forfeit his benefits, unless the terms of
3. Uniformed members of the AFP, BJMP, whose resignation or separation provide otherwise. In the case of
forfeiture, the separated employee shall be entitled to
coverage by the GSIS has ceased effective June 24,
receive only of the cash surrender value of his insurance.
1997
4. Uniformed members of the PNP whose coverage
UNEMPLOYMENT BENEFITS
by the GSIS has ceased effective February 1, 1996
(Sec. 2.4, Rule II, IRR, R.A. 8291).
Unemployment benefits
BENEFITS
It will consists of cash payment equivalent to 50% of
the average monthly compensation.
Benefits under the GSIS Act
NOTE: A member who has rendered at least 15 years of
1. Separation service will be entitled to separation benefits instead of
2. Unemployment or involuntary separation unemployment benefits.
3. Retirement
4. Permanent disability Conditions for entitlement to unemployment
5. Temporary disability benefits
6. Survivorship
7. Funeral 1. The recipient must be a permanent Ee at the time
8. Life Insurance of separation;
9. Such other benefits and protection as may be 2. His separation was involuntary due to the abolition
extended to them by the GSIS such as loans. of his office or position resulting from reorganization;
and
SEPARATION BENEFITS 3. He has been paying the contribution for at least 1
year prior to separation.
Entitlement of a member to separation benefits
RETIREMENT BENEFITS
A member who has rendered a minimum of 3 years
creditable service shall be entitled to separation Reason for compulsory retirement
benefit upon resignation or separation under the
following terms: The compulsory retirement of government officials
1. A member with at least 3 years but less than 15 years and Ees upon reaching the age of 65 years is founded
- Cash payment equivalent to 100% of the AMC for on public policy which aims by it to maintain efficiency
every year of service the member has paid in the government service and at the same time give
contributions: the retiring public servants the opportunity to enjoy
a. Not less than Php 12,000.00 during the remainder of their lives the recompense,

UNIVERSITY OF SANTO TOMAS

133 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
for their long service and devotion to the government
, in the form of a comparatively easier life, freed from
the rigors of civil service discipline and the exacting
demands that the nature of their work and their
relations with their superiors as well as the public
would impose upon them [Beronilla vs. GSIS, G.R. No.
21723, (1970)].
Conditions in order to be entitled to retirement
benefits
1. A member has rendered at least 15 years of
service;
2. He is at least 60 years of age at the time of
retirement; and
3. He is not receiving a monthly pension benefit from
permanent total disability (Sec. 13-A, R.A. 8291).
Options of the retiree with regard to his or her
retirement benefits
The retiree may get either of the following:
1. Lump sum equivalent to 6 months of the basic
monthly pension (BMP) payable at the time of
retirement and an old-age pension benefit equal to
BMP payable for life, starting upon the expiration of
the 5 years covered by the lump sum; or
2. Cash payment equivalent to 18 times his BMP and
monthly pension for life payable immediately (Sec.
13[a], R.A. 8291).
Rule in case of extension of service in order to be
entitled for retirement benefits
In Rabor v. CSC (G.R. No. 111812, May 1995), the
Supreme Court held that the head of the government
agency concerned is vested with discretionary
authority to allow or disallow extension of the service
of an official or Ee who has reached 65 years old
without completing the 15 years of government
service. However, this discretion is to be exercise
conformably with the provisions of Civil Service
Memorandum Circular No. 27, series of 1990 which
provides that the extension shall not exceed 1 year.
PERMANENT DISABILITY BENEFITS
Disability
Any loss or impairment of the normal functions of the
physical and/or mental faculty of a member, which
reduces or eliminates his/her capacity to continue
with his/her current gainful occupation or engage in
any other gainful occupation.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Total disability
Complete incapacity to continue with present
employment or engage in any gainful occupation due
to the loss or impairment of the normal functions of
the physical and/or mental faculties of the member.
Types of permanent disability
1. Permanent Total Disability (PTD) - Accrues or
arises when recovery from any loss or impairment
of the normal functions of the physical and/or
mental faculty of a member which reduces or
eliminates his capacity to continue with his
current gainful occupation or engage in any other
gainful occupation is medically remote [Section 2
(q) and (s) R.A. 8291].
2. Permanent Partial Disability (PPD) - Accrues or
arises upon the irrevocable loss or impairment of
certain portion/s of the physical faculties, despite
which the member is able to pursue a gainful
occupation (Sec. 2[u], R.A. 8291).
Benefits for permanent total disability
1. A member is entitled to the monthly income benefit
for life equivalent to the BMP when:
a. He is in the service at the time of the disability
or
b. If separated from service
c. He has paid at least 36 monthly contributions
within 5 years immediately preceding his
disability
d. He has paid a total of at least 180 monthly
contribution prior his disability
e. He is not receiving old-age retirement pension
benefits
2. If the member does not satisfy the conditions above
but has rendered at least 3- years-service, he shall be
advanced the cash payment equivalent to 100% of his
average monthly compensation for each year of
service he has pad contributions but not less than Php
12,000.00 which should have been his separation
benefit (he shall no longer receive separation
benefits).
Benefits for permanent partial disability
A member is entitled to cash payment in accordance
with the schedule of disabilities to be prescribed by
GSIS, if he satisfies the given conditions of either (1) or
(2) of Sec. 16(a).
Suspension of payment of benefits
1. In case a member is re-employed; or
134
 SOCIAL WELFARE LEGISLATION (PD 626)
2. Member recovers from disability as determined
by the GSIS; or
3. Fails to present himself for medical examination
when required by the GSIS (Sec. 16 [c], R.A. 8291).
Instances when recovery is precluded
If the permanent disability was due to the following
acts of the subject Ee, recovery from the GSIS is
precluded:
1. Grave misconduct
2. Notorious negligence
3. Habitual intoxication
4. Willful intention to kill himself or another
TEMPORARY DISABILITY BENEFITS a.
b.
Temporary total disability
It accrues or arises when the impaired physical and/or
mental faculties can be rehabilitated and/or restored
to their normal functions (Sec 2[t], R.A. 8291).
NOTE: A member cannot enjoy the temporary total disability
benefit and sick leave pay simultaneously.
Benefits for temporary disability
1. Member is entitled to 75% of his current daily
compensation for each day or fraction thereof of total
disability benefit, to start at the 4th day but not
exceeding 120 days in one calendar year when:
a. He has exhausted all sick leaves
b. CBA sick leave benefits
Provided, that:
i. He was in the service at time of disability; or
ii. If separated, he has rendered at least 3
years of service and has paid at least 6
monthly contributions in the year
preceding his disability
2. The temporary total disability benefits shall in no
case be less than P70 a day.
NOTE: An application for disability must be filed with the
GSIS within 4 years from the date of the occurrence of the
contingency.
SURVIVORSHIP BENEFITS
Persons entitled to survivorship benefits
Upon the death of a member or pensioner, his
beneficiaries shall be entitled to survivorship benefits.
Such benefit shall consist of:
1. The basic survivorship pension which is 50% of the
basic monthly pension; and
135
2. The dependent childrens pension not exceeding
50% of the basic monthly pension
Note: The dependent children shall be entitled to the
survivorship pension as long as there are dependent children
and, thereafter, the surviving spouse shall receive the basic
survivorship pension for life or until he or she remarries.
Conditions for the entitlement of the primary
beneficiaries to basic monthly pension
Upon the death of a member, the primary
beneficiaries shall be entitled to:
1. Survivorship pension - Provided, that the
deceased:
Was in the service at the time of his death; or
If separated from the service, has rendered at
least 3 years of service at the time of his death
and has paid 36 monthly contributions within
the five-year period immediately preceding
his death; or has paid a total of at least 180
monthly contributions prior to his death; or
2. The survivorship pension plus a cash payment
equivalent to 100% of his average monthly
compensation for every year of service - Provided,
that the deceased was in the service at the time of
his death with at least 3 years of service; or
3. A cash payment equivalent to 100% of his average
monthly compensation for each year of service he
paid contributions, but not less than Php
12,000.00 - Provided, that the deceased has
rendered at least 3 years of service prior to his
death but does not qualify for the benefits under
item (1) or (2) of this paragraph [Sec. 21 (a), R.A.
8291].
Secondary beneficiaries
In the absence of primary beneficiaries, the secondary
beneficiaries shall be entitled to:
1. The cash payment equivalent to 100% of his
average monthly compensation for each year of
service he paid contributions, but not less than
Php 12,000.00 - Provided, That the member is in
the service at the time of his death and has at least
3 years of service; or
2. In the absence of secondary beneficiaries, the
benefits under this paragraph shall be paid to his
legal heirs (Sec. 21[c], R.A. 8291).
Payment of survivorship pension
After the end of the guaranteed 30 months, the
beneficiaries are still entitled to survivorship benefits.
The survivorship pension shall be paid as follows:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
1. When the dependent spouse is the only survivor,
he/she shall receive the basic survivorship
pension for life or until he or she remarries;
2. When only dependent children are the survivors,
they shall be entitled to the basic survivorship
pension for as long as they are qualified, plus the
dependent childrens pension equivalent to 10%
of the basic monthly pension for every dependent
child not exceeding 5, counted from the youngest
and without substitution;
3. When the survivors are the dependent spouse
and the dependent children, the dependent
spouse shall receive the basic survivorship
pension for life or until he/she remarries, and the
dependent children shall receive the dependent
childrens pension (Sec. 21[b], R.A. 8291).
Benefits that the beneficiaries are entitled to upon
the death of the pensioner
1. Upon the death of an old-age pensioner or a
member receiving the monthly income benefit for
permanent disability, the qualified beneficiaries
shall be entitled to the survivorship pension.
2. When the pensioner dies within the period
covered by the lump sum, the survivorship
pension shall be paid only after the expiration of
such period.
Q: Gary Leseng was employed as a public school
teacher at the Marinduque High. On April 27, 1997, a
memorandum was issued by the school principal
designating Gary to prepare the model dam project,
which will be the official entry of the school in the
search for Outstanding Improvised Secondary Science
Equipment for Teachers. Gary complied with his
superior's instruction and took home the project to
enable him to finish before the deadline. While
working on the model dam project, he came to
contact with a live wire and was electrocuted. The
death certificate showed that he died of cardiac arrest
due to accidental electrocution.
Bella (Garys common-law wife) and Jobo (his only
son) filed a claim for death benefits with the GSIS
which was denied on the ground that Garys death
did not arise out of and in the course of employment
and therefore not compensable because the
accident occurred in his house and not in the school
premises. Is Bella entitled to file a claim for death
benefits with the GSIS? Why? (1991 Bar Question)
A: No. Not being a beneficiary, Bella is not entitled to
receive survivorship benefits. She is not a beneficiary
because she is a common-law wife and not a legal
dependent spouse. The beneficiaries of a member of
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
the GSIS are entitled to the benefits arising from
the death of said member. Death benefits are called
survivorship benefits under the GSIS Law.
Q: Is the cause of death of Gary (cardiac arrest due
to accidental electrocution in his house)
compensable? Why?
A: Yes. To be compensable under the GSIS Law, the
death need not be work connected.
Q: Abraham, a policeman, was on leave for a month.
While resting in their house, he heard two of his
neighbors fighting with each other. Abraham
rushed to the scene intending to pacify the
protagonists. However, he was shot to death by one
of the protagonists. Eva Joy, a housemaid, was
Abraham's surviving spouse whom he had
abandoned for another woman years back. When
she learned of Abraham's death, Eva Joy filed a claim
with the GSIS for death benefits. However, her claim
was denied because: (a) when Abraham was killed,
he was on leave; and (b) she was not the dependent
spouse of Abraham when he died. Resolve with
reasons whether GSIS is correct in denying the claim.
(2005 Bar Question)
A: Yes, because under the law, a dependent is one who
is a legitimate spouse living with the Ee (Art. 167 [i], LC).
In the problem given, Eva Joy had been abandoned by
Abraham who was then living already with another
woman at the time of his death.
Moreover, Abraham was on leave when he was killed.
The 24-hour duty rule does not apply when the
policeman is on vacation leave [ECC v. CA, G.R. No.
121545, (1996)]. Taking together jurisprudence and the
pertinent guidelines of the ECC with respect to claims
for death benefits, namely:
1. That the Ee must be at the place where his work
requires him to be;
2. That the Ee must have been performing his official
functions; and
3. That if the injury is sustained elsewhere, the Ee
must have been executing an order for the Er, it is
not difficult to understand then why Eva Joy's claim
was denied by the GSIS [Tancinco v. GSIS, G.R. No.
132916, (2001)].
In the present case, Abraham was resting at his house
when the incident happened; thus, he was not at the
place where his work required him to be. Although at
the time of his death Abraham was performing a
police function, it cannot be said that his death
occurred elsewhere other than the place where he
was supposed to be because he was executing an
order for his Er.
136
 SOCIAL WELFARE LEGISLATION (PD 626)

FUNERAL BENEFITS 3. For those without any life insurance as of the

effectivity of this Act, their insurance shall take
Funeral benefits effect following said effectivity.

The funeral benefit is in the amount Php 20,000. It is Optional life insurance coverage
intended to defray the expenses incident to the burial
and funeral of the deceased member, pensioner, or 1. A member may at any time apply for himself
retiree under R.A. 660, R.A. 1616, P.D. 1146, and R.A. and/or his dependents an insurance and/or pre-
8291. It is payable to the members of the family of the need coverage embracing:
deceased, in the order which they appear: a. Life
1. Legitimate spouse b. Memorial plans
2. Legitimate child who spent for the funeral c. Health
services, or d. Education
3. any other person who can show e. Hospitalization
unquestionable proof of his having borne the f. Other plans as maybe designed by GSIS
funeral expenses of the deceased. 2. Any Er may apply for group insurance coverage for
its Ees.
Payment of funeral benefits
BENEFICIARIES
Funeral benefits will be paid upon the death of:
1. An active member Beneficiaries
2. A member who has been separated from the service 1. Primary beneficiaries
but is entitled to future separation or retirement a. The legal dependent spouse until he/she
benefits remarries, and
3. A member who is a pensioner (excluding b. The dependent children (Sec. 2[g] , R.A. 8291)
survivorship pensioners) 2. Secondary beneficiaries
4. A retiree who is at the time of his retirement was of a. The dependent parents, and
pensionable age, at least 60 years old, who opted to b. Subject to the restrictions on dependent
retire under RA 1616 (An act further amending Sec.12, children, the legitimate descendants (Sec. 2[h] , R.A.
C.A. 186, as amended, by prescribing two other modes 8291)
of retirement and for other purposes).
Dependents
LIFE INSURANCE
1. Legitimate spouse dependent for support upon the
Classes of life insurance coverage under the GSIS law member or pensioner;
2. Legitimate, legitimated, legally adopted child,
1. Compulsory Life Insurance including the illegitimate child,
2. Optional Life Insurance a. Who is unmarried,
b. Not gainfully employed,
Note: The plans may be endowment or ordinary life. c. Not over the age of majority, or if over the age
of majority, incapacitated and incapable of self-
Compulsory life insurance coverage support due to a mental or physical defect acquired
prior to age of majority; and
All Ees including the members of the Judiciary and the d. Parents dependent upon the member for
Constitutional Commissioners except for Members of support (Sec. 2[f]).
the AFP, the PNP, BFP and BJMP, shall, under such
terms and conditions as may be promulgated by the LIMITED PORTABILITY LAW (R.A. 7699)
GSIS, be compulsorily covered with life insurance,
which shall automatically take effect as follows: Limited portability rule
1. Those employed after the effectivity of this Act,
their insurance shall take effect on the date of A covered worker who transfers employment from
their employment; one sector to another or is employed on both sectors,
2. For those whose insurance will mature after the shall have creditable services or contributions on both
effectivity of this Act, their insurance shall be Systems credited to his service or contribution record
deemed renewed on the day following the in each of the Systems and shall be totalized for
maturity or expiry date of their insurance;

UNIVERSITY OF SANTO TOMAS

137 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
purposes of old-age, disability, survivorship, and other
benefits in either or both Systems (Sec. 3, R.A. 7699).
All contributions paid by such member personally, and
those that were paid by his employers to both Systems
shall be considered in the processing of benefits which
he can claim from either or both Systems (Sec. 4, R.A.
7699).
This is advantageous to the SSS and GSIS members for
purposes of death, disability or retirement benefits. In
the event the Ees transfer from the private sector to
the public sector, or vice-versa, their creditable
employment services and contributions are carried
over and transferred as well.
EMPLOYEES COMPENSATION
Employees compensation program
It is the program provided for in Arts. 166 to 208 of the
LC whereby a fund known as the State Insurance Fund
is established through premium payments exacted
from Ers and from which the Ees and their dependents
in the event of work-connected disability or death,
may promptly secure adequate income benefit, and
medical or related benefits.
NOTE: The claimant under the Employees Compensation
Program is required to present proof of casual relation or
aggravation, if the cause or origin of the disease is still
unknown. Compassion for the victims of diseases not
covered by law ignores the need to show a greater concern
for the trust fund to which the tens of millions of workers
and their families look for compensation whenever
accidents, disease, and deaths occur. The law, however,
does not require a direct casual relation. It is enough that the
hypothesis on which the workmans claim is based is
PROBABLE.
Contributions to the State Insurance Fund
Contributions under this Title shall be paid in their
entirety by the Er and any contract or device for the
deduction of any portion thereof from the wages or
salaries of the Ees shall be null and void (Art.183(c),
LC).
Definitions
1. Injury - Any harmful change in the human organism
from any accident arising out of and in the course of
employment.
2. Sickness - Any illness definitely accepted as an
occupational disease.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
3. Occupational Disease - One which results from the
nature of the employment, and by nature is meant
conditions which all Ees of a class are subject and
which produce the disease as a natural incident of a
particular occupation, and attach to that occupation a
hazard which distinguishes it from the usual run of
occupations and is in excess of the hazard attending
the employment in general.
To be occupational, the disease must be one wholly
due to causes and conditions which are normal and
constantly present and characteristic of the particular
occupation.
NOTE: Although the cause of cancer is not yet known, it has
already been included as a qualified occupational disease in
certain cases.
4. Compensable Sickness - It means any illness
definitely accepted as an occupational disease listed
by the Commission or any illness caused by
employment, subject to proof that the risk of
contracting the same is increased by working
conditions (Art. 167(l), LC).
Accrual of the right to compensation or benefit under
the Employees Compensation Program
The right to compensation or benefit for loss or
impairment of an employees earning capacity due to
work-related illness or injury arises or accrues upon,
and not before, the happening of the contingency.
Hence, an Ee acquires no vested right to a program of
compensation benefits simply because it was
operative at the time he became employed [San
Miguel Corporation vs. NLRC, G.R. No. 57473, (1988)].
Benefits under the State Insurance Fund
1. Medical Benefits
2. Disability Benefits
3. Death Benefits
4. Funeral Benefits
Persons entitled to benefits under the Employees
Compensation Program
The covered Ee, his dependents, and in case of his
death, his beneficiaries.
Dependents of the employee
1. Legitimate, legitimated, legally adopted or
acknowledged natural child who is unmarried, not
gainfully employed, and not over 21 years of age or
over 21 years of age provided he is incapacitated
and incapable of self-support due to a physical or
138
 SOCIAL WELFARE LEGISLATION (PD 626)
mental defect which is congenital or acquired
during minority;
2. Legitimate spouse living with the Ee;
3. Parents of said Ee wholly dependent upon him for
regular support (Art.167(i), LC, as amended by P.D.
1921);
Beneficiaries
It includes the dependent spouse until he remarries
and dependent children, who are the primary
beneficiaries. In their absence, the dependent parents
and subject to the restrictions imposed on dependent
children, the illegitimate children and legitimate
descendants who are the secondary
beneficiaries: Provided, that the dependent
acknowledged natural child shall be considered as a
primary beneficiary when there are no other
dependent children who are qualified and eligible for
monthly income benefit (Art. 167, LC, as amended by
Sec. I, P.D. 1921).
Recovery from the State Insurance Fund does not bar
a claim for benefits under the SSS Law
As expressly provided for in Art. 173 of the LC,
payment of compensation under the State Insurance
Fund shall not bar the recovery of benefits under the
SSS Law. Benefits under the State Insurance Fund
accrue to the Ees concerned due to hazards involved
and are made a burden on the employment itself. On
the other hand, social security benefits are paid to SSS
members by reason of their membership therein for
which they contribute their money to a general fund
[Ma-ao Sugar Central Co., Inc. vs. CA, G.R. No. 83491,
(1990)].
COVERAGE
Coverage
Ers and their Ees not over 60 years of age are subject
to compulsory coverage under this program.
The Er may belong to either the:
1. Public sector covered by the GSIS, comprising the
National Government, including GOCCs,
Philippine Tuberculosis Society, the Philippine
National Red Cross, and the Philippine Veterans
Bank; and
2. Private sector covered by the SSS, comprising all
Ers other than those defined in the immediately
preceding paragraph.
The Ee may belong to either the:
1. Public sector comprising the employed workers
who are covered by the GSIS, including the
139
members of the AFP, elective officials who are
receiving regular salary and any person employed
as casual emergency, temporary, substitute or
contractual;
2. Private sector comprising the employed workers
who are covered by the SSS.
Effectivity of the compulsory coverage
1. Employer On the first day of operation
2. Employee On the day of his employment
Theory of increased risk
The term sickness as defined in Art. 167(l) of the LC
is a recognition of the theory of increased risk. To
establish compensability under the same, the claimant
must show substantial proof of work-connection, but
what is required is merely a reasonable work-
connection and not a direct causal relation. Proof of
actual cause of the ailment is not necessary. The test
of evidence of relation of the disease with the
employment is probability and not certainty [Jimenez
v. Employees Compensation Commission, G.R. No. L-
58176, (1984); Panotes vs. ECC, G.R. No. L-64802,
(1984)].
NOTE: An illness not listed by the Employees Compensation
Commission as an occupational disease is compensable
provided that it is established that the risk of contracting the
same is increased by working conditions.
Going and coming rule
GR: In the absence of special circumstances, an Ee
injured while going to or coming from his place of work
is excluded from the benefits of Workmens
Compensation Act.
XPNs:
1. Where the Ee is proceeding to or from his work on
the premises of the Er;
2. Proximity Rulewhere the Ee is about to enter or
about to leave the premises of his Er by way of
exclusive or customary means of ingress and egress;
3. Ee is charged, while on his way to or from his place
of employment or at his home, or during this
employment with some duty or special errand
connected with his employment; and
4. Where the Er as an incident of the employment
provides the means of transportation to and from
the place of employment.
Personal comfort doctrine
Acts performed by an Ee within the time and space
limits of his employment, to minister personal
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
comfort, such as satisfaction of his thirst, hunger, or
other physical demands, or to protect him from
excessive cold, shall be deemed incidental to his
employment and injuries suffered in the performance
of such act shall be considered compensable and
arising out of and in the course of employment.
Defenses that may be interposed by the state
insurance fund against a claim for compensation
made by a covered Ee or his dependents
The following defenses may be set up:
1. Injury is not work-connected or the sickness is not
occupational
2. Disability or death was occasioned by the Ees
intoxication, willful intention to injure or kill himself or
another, or his notorious negligence (Art. 172, LC)
3. No notice of sickness, injury or death was given to
the Er (Art. 206, LC)
4. Claim was filed beyond 3 years from the time the
cause of action accrued (Art. 201, LC, as amended by
P.D. 1921)
Note: Notorious negligence is equivalent to gross
negligence; it is something more than mere carelessness or
lack of foresight.
Q: Abraham Dino works as a delivery man in a
construction supply establishment owned by
Abraham Julius. One day, while Dino was making
reports on his delivery, he had an altercation with
Julius; irked by the disrespectful attitude of Dino,
Julius pulled out his gun and shot Dino, hitting him in
the spinal column and paralyzing him completely.
Julius was prosecuted for the act.
1. Is the disability suffered by Abraham Dino
compensable?
2. If Abraham Dino recovers compensation from
the SIF, can he still recover from Abraham Julius
damages in the criminal case? Why?
A:
1. Yes. The injury was sustained by Abraham Dino in
his place of work and while in the performance of
his official functions.
2. No. Under Art. 173 of the LC, as amended by P.D.
1921, the liability of the State Insurance Fund
under the Employees Compensation Program
shall be exclusive and in place of all other liabilities
of the Er to the Ee or his dependents or anyone
otherwise entitled to recover damages on behalf
of the Ee or his dependents.
Q: Wilfredo, a truck driver employed by a local
construction company, was injured in an accident
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
while on assignment in one of his employers project
in Iraq. Considering that his injury was sustained in a
foreign country, is Wilfredo entitled to benefits under
the Employees Compensation Program?
A: Yes. Filipinos working abroad in the service of an Er,
domestic or foreign, who carries on in the Philippines
any trade, business, industry, undertaking or activity of
any kind, are covered by the ECP (Rule 1, Section 5, ECC
Rules; Art.169, LC).
MEDICAL BENEFIT (MEDICAL SERVICES)
Conditions for the entitlement to medical services
For an Ee to be entitled to medical services, the
following conditions must be satisfied:
1. He has been duly reported to the System (SSS or
GSIS);
2. He sustains a permanent disability as a result of an
injury or sickness; and
3. The System has been notified of the injury or
sickness which caused his disability.
DISABILITY BENEFIT
Disability benefits
They are income benefits in case of temporary total
disability, permanent total disability and permanent
partial disability
Permanent and total disabilities
The following disabilities shall be deemed permanent
and total:
1. Temporary total disability lasting continuously for
more than one hundred twenty days, except as
otherwise provided for in the Rules;
2. Complete loss of sight of both eyes;
3. Loss of two limbs at or above the ankle or wrist;
4. Permanent complete paralysis of two limbs;
5. Brain injury resulting in incurable imbecility or
insanity; and
6. Such cases as determined by the Medical Director
of the System and approved by the Commission
(Art.192(c), LC).
NOTE: Permanent total disability may arise although the
employees does not lose the use of any part of his body.
Where the Ee is unable, by reason of the injury or sickness,
to perform his customary job for more than 120 days,
permanent total disability arises [Ijares vs. CA, G.R. No.
105854, (1999)].
140
 SOCIAL WELFARE LEGISLATION (PD 626)

Conversion of a permanent partial disability to FUNERAL BENEFIT

permanent total disability
Funeral benefit
A permanent partial disability be converted to
permanent total disability after the employees A funeral benefit of Php 10, 000.00 shall be paid upon
retirement. This is in line with the social justice the death of a covered Ee or permanently totally
provision in the Constitution. A persons disability may disabled pensioner.
not manifest itself fully at one precise moment in time
but rather over a period of time. Disability should not
be understood more on its medical significance but on
the loss of earning capacity.

DEATH BENEFITS

Conditions for entitlement to death benefits

The beneficiaries of a deceased Ee shall be entitled to

an income benefit if all of the following conditions are
satisfied:

1. The Ee has been duly reported to the System;

NOTE: If an employee suffers disability or dies before

he is duly reported for coverage to the System (SSS or
GSIS), the Er shall be liable for the benefits (Sec.1, Rule
X; Sec.1, Rule XI; Sec. 1, Rule XII; Sec. 1, Rule XIII; ECC
Rules).

2. He died as a result of an injury or sickness; and

3. The System has been duly notified of his death, as
well as the injury or sickness which caused his
death.

Length of time the primary beneficiaries are entitled

to death benefits

1. Dependent Spouseuntil he or she remarries.

2. Dependent Childrenuntil they get married, or
find gainful employment, or reach 21 years of age.
3. Dependent Child suffering from physical or mental
defectuntil such defect disappears.

Ers liability in case of death or injury of the Ee

1. If the cause of the death or personal injury arose out

of and in the course of employment, the Er is liable.
2. If the cause was due to the Ees own notorious
negligence, or voluntary act or drunkenness, the Er
shall not be liable.
3. If the cause was partly due to the Ees lack of due
care, the compensation shall be inequitably reduced.
4. If the cause was due to the negligence of a fellow
Ee, the Er and the guilty Ee shall be liable solidarily.
5. If the cause was due to the intentional or malicious
act of fellow Ee, the fellow Ee and Er are liable unless
the Er exercised due diligence in selecting and
supervising his Ees.

UNIVERSITY OF SANTO TOMAS

141 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
LABOR RELATIONS LAW
RIGHT TO SELF ORGANIZATION
Right to Self-Organization
It is the right of workers and Ees to form, join or assist
unions, organizations or associations for purposes of
CB and negotiation and for mutual aid and protection.
It also refers to the right to engage in peaceful
concerted activities or to participate in policy and
decision-making processes affecting their rights and
benefits.
NOTE: The LC incorporated the policy laid down in the
International Labor Organization Convention No. 87:
Freedom of Association and Protection of the Right to
Organization which provides that workers and Ers, without
distinction whatsoever, shall have the right to establish and,
subject only to the rules of the organization concerned, to
join organizations of their own choosing without previous
authorization.
Also, under the International Covenant on Civil and Political
Rights, - Everyone shall have the right to freedom of
association with others, including the right to form and join
trade unions for the protection of his interests.
Constitutional provisions that protect the right to
self-organization
1. Sec. 18, Art. IIThe State affirms labor as a
primary social economic force. It shall protect the
rights of the workers and promote their welfare.
2. Sec. 3, Art. XIIIThe State is required to
guarantee the rights of all workers to self-
organization, CB and negotiations, and peaceful
concerted activities, including the right to strike in
accordance with law.
3. Sec. 8, Art. IIIThe right of the people, including
those employed in the public and private sectors,
to form unions, associations, or societies for
purposes not contrary to law, shall not be
abridged.
Extent of the Right to Self-Organization
It includes the right
1. To form, join and assist labor organizations for the
purpose of CB through representatives of their own
choosing; and
2. To engage in lawful and concerted activities for the
purpose of CB or for their mutual aid and protection
(Art. 246, LC).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
EES ELIGIBLE TO UNIONIZE FOR PURPOSES OF CBA
1. All persons employed in commercial, industrial
and agricultural enterprises
2. Workers in religious, charitable, medical, or
educational institutions, whether operating for
profit or not
3. Supervisors
4. Security Guards
5. Workers of Cooperatives
Right of supervisory Ees to self-organization
Supervisory Ees shall not be eligible for membership in
a labor organization of the rank-and-file Ees but may
join, assist or form separate labor organizations of
their own. The rank and file union and the supervisors
union operating within the same establishment may
join the same federation or national union.
Ees eligible to join a labor organization for mutual aid
and protection
The following enjoy the right to self-organization for
mutual aid and protection:
1. Ambulant workers
2. Intermittent workers
3. Itinerant workers
4. Self-employed people
5. Rural workers
6. Those without definite Ers (Art. 243, LC)
NOTE: The reason for this rule is that the abovementioned
workers have no Ers to collectively bargain with.
Time Ee is eligible to join a labor organization
Any Ee, whether employed for a definite period or not,
shall, beginning on his first day of service, be
considered as an Ee for purposes of membership in
any labor union [Art. 277 (c), LC as amended by Sec. 33,
R.A. No. 6715].
NOTE: Organizations of workers and Ers shall have the right
to establish and join federations and confederations, and
any such organization, federation or confederation shall
have the right to affiliate with international organizations of
workers and Ers (Art.5, ILO Convention No. 87)
PERSONS DISQUALIFIED TO FORM, JOIN, AND ASSIST
LABOR ORGANIZATIONS
Persons disqualified to form, join, and assist labor
organizations
1. High level or Managerial Government Ees (Sec. 3,
E.O. 180)
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 LABOR RELATIONS LAW
2. Ees of international organizations with
immunities
3. Managerial Ees [Art. 212 (m), LC] - 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 Ees.
NOTE: The mere fact that an Ee is designated as
manager does not ipso facto make him one. Job
description determines the nature of his employment
4. Members of the AFP including the police
officers, policemen, firemen, and jail guards
(Sec. 4, E.O. 180).
5. Confidential Ees
6. Ees of cooperatives who are its members.
However they may form workers association.
7. Non-Ees
8. Government Ees, including GOCCs with
original charters
NOTE: Government Ees are governed by the Civil
Service Commission.
9. Aliens without a valid working permit or
aliens with working permits but are nationals
of a country which do not allow Filipinos to
exercise their right of self-organization and to
join or assist labor organizations [Art. 269 of
LC; Sec.2, Rule II, D.O. No. 9 (1997)].
Confidential Ees
Confidential Ees are defined as those who
1. Assist or act in a confidential capacity,
2. Formulate, determine, and effectuate
management policies in the field of labor
relations.
The two (2) criteria are cumulative, and both must be
met if an Ee is to be considered a confidential Ee that
is, the confidential relationship must exist between
the Ee and his supervisor, and the supervisor must
handle the prescribed responsibilities relating to labor
relations (Tunay na Pagkakaisa ng Manggawa sa Asia
Brewery vs. Asia Brewer, Inc., G.R. No. 162025, August
3, 2010).
NOTE: An important element of the confidential Ee rule is
the Ees access to confidential labor relations information.
An Ee may not be excluded from the appropriate bargaining
unit merely because he has access to confidential
information concerning the Ers internal business which is
not related to the field of labor relations and has no
relevance to negotiations and settlement of grievances
wherein the interests of a union and the management are
143
invariably adversarial (San Miguel Corp. Supervisors v.
Laguesma, G.R. 110399, August 15, 1997).
Examples of Confidential Ees who could not unionize
1. Bank cashiers
2. Accounting personnel,
3. Radio and telegraph operators who, having
access to confidential information
4. Personnel staff (Standard Chartered Bank
Employees Union v. Standard Chartered Bank,
G.R. No. 161933, April 22, 2008)
Rationale behind the exclusion of confidential Ees
from the rank-and-file bargaining unit
The rationale for their separate category and
disqualification to join any labor organization is similar
to the inhibition for managerial Ees, because if allowed
to be affiliated with a union, the latter might not be
assured of their loyalty in view of evident conflict of
interests and the union can also become company-
dominated with the presence of managerial Ees in the
union membership. Having access to confidential
information, confidential Ees may also become the
source of undue advantage. Said Ees may act as a spy
or spies of either party to a CBA (San Miguel Foods Inc.,
vs. San Miguel Corporation Supervisors and Exempt
Union, G.R. No. 146206, August 1, 2011).
Human Resource Assistant and Personnel Assistant
are considered confidential Ees
As Human Resource Assistant, the scope of ones work
necessarily involves labor relations, recruitment and
selection of Ees, access to Ees' personal files and
compensation package, and human resource
management. As regards a Personnel Assistant, one's
work includes the recording of minutes for
management during CB negotiations, assistance to
management during grievance meetings and
administrative investigations, and securing legal
advice for labor issues from the petitioners team of
lawyers, and implementation of company programs.
Therefore, in the discharge of their functions, both
gain access to vital labor relations information which
outrightly disqualifies them from union membership
(San Miguel Foods Inc. v. San Miguel Corporation
Supervisors and Exempt Union, G.R. No. 146206,
August 1, 2011).
Exercise of right to self-organization by aliens
GR: All aliens, natural or juridical, as well as foreign
organizations are strictly prohibited from engaging
directly or indirectly in all forms of trade union
activities without prejudice to normal contacts
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
between Philippine labor unions and recognized
international labor centers.
XPN: Alien Ees with valid working permits issued by
the DOLE may exercise the right to self-organization
and join or assist labor organizations for purposes of
CB, if they are nationals of a country which grants the
same or similar rights to Filipino workers, as certified
by the DFA.
Q: A, an Ee of XYZ Cooperative, owns 500 shares in
the cooperative. He has been asked to join the XYZ
Cooperative Employees Association. He seeks your
advice on whether he can join the association. What
advice will you give him? (2010 Bar Question)
A: A cannot join XYZ Cooperative Employees
Association because owning shares makes him a co-
owner thereof. An Ee-member of a cooperative cannot
join a union and bargain collectively with his
cooperative for an owner cannot bargain with himself
and his co-owners (Cooperative Rural Bank of Davao
City, Inc. v. Calleja, 165 SCRA 725).
BARGAINING UNIT
It is a group of Ees of a given Er, comprised of all or less
than all of the entire body of the Ees which the
collective interest of all the Ees consistent with equity
to the Er, indicate to be best suited to serve the
reciprocal rights and duties of the parties under the
collective bargaining provisions of the law.
TEST TO DETERMINE THE CONSTITUENCY OF AN
APPROPRIATE BARGAINING UNIT
Factors considered in determining the
appropriateness of a bargaining unit
1. Will of the Ees (Globe Doctrine)
2. Prior Collective Bargaining history (CB History
Doctrine)
3. Similarity of employment status (Employment
Status Doctrine)
4. Affinity and unity of the Ees interest, such as
substantial similarity of work and duties, or similarity
of compensation and working conditions (Substantial
Mutual Interest Doctrine / Community of Interest
Rule)
Globe Doctrine
In defining the appropriate bargaining unit, the
determining factor is the desire of the workers
themselves.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
CB History Doctrine
In determining the appropriate bargaining unit, prior
CB history and affinity of the Ees may be resorted to.
NOTE: While the existence of a bargaining history is a factor
that may be reckoned with in determining the appropriate
bargaining unit, the same is not decisive or conclusive. Other
factors must be considered. The test of grouping is
community or mutuality of interests. This is so because the
basic test of an asserted bargaining units acceptability is
whether or not it is fundamentally the combination which
will best assure to all Ees the exercise of their CB rights
(Democratic Labor Association v. Cebu Stevedoring
Company, Inc., G.R. No. L-10321, February 28, 1958).
Employment Status Doctrine
The determination of the appropriate bargaining unit
is based on the employment status of the Ees.
Substantial Mutual Interest Doctrine
The Ees sought to be represented by the CB agent
must have substantial mutual interest in terms of
employment and working condition as evinced by the
type of work they perform (San Miguel Corp.
Employees Union-PTGWO v. Confesor, 262 SCRA 81).
Factors to be considered in determining the
Substantial Mutual Interest Doctrine
1. Similarity in the scale and manner of
determining earnings
2. Similarity in employment benefits, hours of work,
and other terms and conditions of employment
3. Similarity in the kinds of work performed
4. Similarity in the qualifications, skills and training
of Ees
5. Frequency of contract or interchange among the
Ees
6. Geographical proximity
7. Continuity and integration of production
processes
8. Common supervision and determination of labor-
relations policy
9. History of CB
10. Desires of the affected Ees or
11. Extent of union organization
Q: A registered labor union in UP, ONAPUP, filed a
petition for certification election among the non-
academic Ees. The university did not oppose,
however, another labor union, the All UP Workers
Union assents that it represents both academic and
non-academic personnel and seeks to unite all
workers in one union. Do Ees performing academic
144
 LABOR RELATIONS LAW
functions need to comprise a bargaining unit distinct
from that of the non-academic Ees?
A: Yes. The mutuality of interest test should be taken
into consideration. There are two classes of rank and
file Ees in the university, those who perform academic
functions such as the professors and instructors, and
those whose function are non-academic who are the
janitors, messengers, clerks etc. Thus, not much
reflection is needed to perceive that the mutuality of
interest which justifies the formation of a single
bargaining unit is lacking between the two classes of
Ees (U.P. v. Ferrer-Calleja, G.R. No.96189, July 14,
1992).
One-company, One-union Policy
GR: All the rank-and-file Ees with substantially the
same interests and who invoke the right to self-
organization are part of a single unit so that they can
deal with their Er with just one and potent voice. The
Ees bargaining power is strengthened thereby
(General Rubber and Footwear Corporation v. Bureau
of Labor Relations, et al., G.R. No. 74262, October 29,
1987).
XPNs:
1. Supervisory Ees who are allowed to form their
own unions apart from the rank-and-file Ees and
2. Craft Unit
3. Plant Unit
NOTE: The policy should yield to the right of Ees to form
union for purposes not contrary to law, self-organization and
to enter into CB negotiations.
NOTE: Two companies cannot be treated into a single
bargaining unit even if their businesses are related.
Subsidiaries or corporations formed out of former divisions
of a mother company following a re-organization may
constitute a separate bargaining unit.
Q: Union filed a petition for certification election
among the rank and file Ees of 3 security agencies
including the Veterans Security. The latter opposed
alleging that the 3 security agencies have separate
and distinct corporate personalities. May a single
petition for certification election be filed by a labor
union in the three corporations instead of filing three
separate petitions?
A: Yes. The following are indications that the three
agencies do not exist and operate separately and
distinctly from each other with different corporate
direction and goals: 1) Veterans Security failed to
rebut the fact that they are managed through the
Utilities Management Corporation with all their Ees
145
drawing their salaries and wages from the said entity;
2) that the agencies have common and interlocking
incorporators and officers; 3) that they have a single
mutual benefit system and followed a single system of
compulsory retirement; 4) they could easily transfer
security guards of one agency to another and back
again by simply filling-up a common pro-forma slip; 5)
they always hold joint yearly ceremonies such as the
PGA Annual Awards Ceremony; and 6) they continue
to be represented by one counsel.
Hence, the veil of corporate fiction of the three
agencies should be lifted for the purpose of allowing
the Ees of the three agencies to form single union. As
a single bargaining unit, the Ees need not file three
separate PCE (Philippine Scout Veterans Security and
Investigation Agency v. SLE, G.R. No. 92357, July 21,
1993).
Q: Company XYZ has two recognized labor unions,
one for its rank-and-file Ees and the other for its
supervisory Ees. Of late, the company instituted a
restructuring program by virtue of which A, a rank-
and-file Ee and officer of rank-and-file Ees labor
union, was promoted to a supervisory position along
with four other colleagues, also active union
members and/or officers. Labor Union KMJ, a rival
labor union seeking recognition as the rank-and-file
bargaining agent, filed a petition for the cancellation
of the registration of rank-and-file Ees labor union on
the ground that A and her colleagues have remained
to be members of rank-and-file Ees labor union. Is the
petition meritorious? Explain. (2010 Bar Question)
A: No. The inclusion as union members of Ees outside
the bargaining unit shall not be a ground for the
cancellation of the registration of the union. Said Ees
are automatically deemed removed from the list of
membership of said union.
Methods in determining the bargaining
representative
1. Voluntary recognition (VR)
2. Certification election
3. Consent election
VOLUNTARY RECOGNITION
Voluntary recognition
The process by which a legitimate labor union is
recognized by the Er as the exclusive bargaining
representative or agent in a bargaining unit, reported
with the Regional Office of the DOLE [Sec. 1 (bbb), Rule
I, Book V, IRR].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Voluntary recognition when proper
VR is proper only in cases where there is only one
legitimate labor organization existing and operating in
a bargaining unit.
Requirements for voluntary recognition
The notice of VR shall be accompanied by the original
copy and two duplicate copies of the following
requirements:
1. Joint statement under oath of the VR
2. Certificate of posting of joint statement for 15
consecutive days in at least two conspicuous
places in the establishment of the bargaining
unit
3. Certificate of posting
4. Approximate number of Ees in the bargaining
unit and the names of those who supported
the recognition
5. Statement that the labor union is the only
legitimate labor organization operating
within the bargaining unit
NOTE: Where the notice of VR is sufficient in form, number
and substance and where there is no registered labor union
operating within the bargaining unit concerned, the Regional
Office, through the Labor Relations Division shall, within 10
days from receipt of the notice, record the fact of VR in its
roster of legitimate labor unions and notify the labor union
concerned.
Conditions to voluntary recognition
1. VR is possible only in an unorganized
establishment.
2. Only one union must ask for recognition. If there
are two or more unions asking to be recognized,
the Er cannot recognize any of them; the rivalry
must be resolved through an election.
3. The union voluntarily recognized should be the
majority union as indicated by the fact that
members of the bargaining unit did not object to
the projected recognition. If no objection is raised,
the recognition will proceed and the DOLE shall be
informed. If objection is raised, the recognition is
barred and a CE or consent election will have to
take place.
NOTE: In an organized establishment, VR is not possible. A
petition to hold a CE has to be filed within the freedom
period which means the last 60 days of the 5th year of the
expiring CBA. The petition may be filed by any LLO, but the
petition must have written support of at least 25% of the Ees
in the bargaining unit.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Where and when to file the petition for voluntary
recognition
Within 30 days from such recognition, Er shall submit
a notice of VR with the Regional Office which issued
the recognized labor unions certificate of registration
or certificate of creation of a chartered local.
Effects of recording of fact of voluntary recognition
1. The recognized labor union shall enjoy the rights,
privileges and obligations of an existing bargaining
agent of all the Ees in the bargaining unit.
2. It shall also bar the filing of a PCE by any labor
organization for a period of one year from the
date of entry of VR.
Er cannot voluntarily recognize a union in case there
are other legitimate LLOs in a bargaining unit
An Er cannot ignore the existence of an LLO at the time
of its VR of another union. The Er and the voluntarily
recognized union cannot, by themselves, decide
whether the other union represented an appropriate
bargaining unit (Sta. Lucia East Commercial
Corporation v. Hon. Secretary of Labor, G.R. 162355,
August 14, 2009).
CERTIFICATION ELECTION
Certification election
It is the process of determining through secret ballot
the sole and exclusive representative of the Ees in an
appropriate bargaining unit, for purposes of CB or
negotiation [Sec. 1 (h), Rule I, Book V, IRR].
NOTE: The process is called CE because it serves as the
official, reliable and democratic basis for the BLR to
determine and certify the union that shall be the exclusive
bargaining representative of the Ees for the purpose of
bargaining with the Er.
Nature of certification election
A CE is not a litigation but merely an investigation of a
non-adversarial fact-finding character in which BLR
plays a part of a disinterested investigator seeking
merely to ascertain the desire of the Ees as to the
matter of their representation (Airline Pilots
Association of the Philippines v. CIR, G.R. No. L-33705,
April 15, 1977).
Purpose of a certification election
It is a means of determining the workers choice of
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 LABOR RELATIONS LAW
1. Whether they want a union to represent
them for CB or if they want no union to
represent them at all.
2. And if they choose to have a union to
represent them, they will choose which
among the contending unions will be the sole
and exclusive bargaining representative of
the Ees in the appropriate bargaining unit.
Filing a petition for certification election (PCE)
The following may file a PCE:
1. Any LLO
2. A national union or federation which has already
issued a charter certificate to its local chapter
participating in the CE
3. A local chapter which has been issued a charter
certificate
4. An Er only when requested to bargain collectively
in a bargaining unit where no registered CBA
exists (Sec. 1, Rule VIII, Book V, IRR as amended by
D.O. 40-F-03).
NOTE: A national union or federation filing a petition in
behalf of its local/chapter shall not be required to disclose
the names of the local/chapters officers and members, but
shall attach to the petition the charter certificate it issued to
its local/chapter (Sec. 1, Rule VIII, Book V, IRR as amended by
D.O. 40-F-03).
In registration of federation or national union, the
20% membership requirement is not required
The registration requirement of submitting the names
of all its members comprising at least 20% of all the Ees
in the bargaining unit where it seeks to operate is
applicable only to registration of independent union.
LC merely requires for proof of affiliation of at least 10
local chapters and the names and addresses of the
companies where they operate. No 20% membership
requirement is required for registration of a federation
or national union.
NOTE: Under the LC and the rules, the power granted to
labor organizations to directly create a chapter or local
through chartering is given to a federation or national union
only, not to a trade union center (SMCEU v. San Miguel
Packaging Products Employees Union, G.R. No. 171153,
September 12, 2007).
Er may file a PCE
Er may file a PCE when requested to bargain
collectively. But thereafter it should not be allowed to
have an active role in the CE; it shall merely act as a
bystander.
147
CE proceeding is not a litigation, but a mere summary
and non-litigious proceeding. The only purpose is to
ascertain the will of the parties in determining who will
be the bargaining agent.
Winning Union - Majority of the valid votes cast,
assuming that there is a valid election
Valid election - Majority of eligible voters cast their
votes
Er as a Bystander Doctrine
In all cases, whether the PCE is filed by an Er or a LLO,
the Er shall not be considered a party thereto with a
concomitant right to oppose a PCE. The Ers
participation in such proceedings shall be limited to:
(1) being notified or informed of petitions of such
nature; and (2) submitting the list of Ees during the
pre-election conference should the Mediator-Arbiter
act favorably on the petition.
Except when it is requested to bargain collectively, an
Er is a mere bystander to any PCE; such proceeding is
non-adversarial and merely investigative, for the
purpose thereof is to determine which organization
will represent the Ees in their CB with the Er. The
choice of their representative is the exclusive concern
of the Ees; the Er cannot have any partisan interest
therein; it cannot interfere with, much less oppose,
the process by filing a motion to dismiss or an appeal
from it; not even a mere allegation that some Ees
participating in a PCE are actually managerial Ees will
lend an Er legal personality to block the CE. The Ers
only right in the proceeding is to be notified or
informed thereof (Republic v. Kawashima Textile, G.R.
No. 160352, July 23, 2008).
Q: May an organization which carries a mixture of
rank-and-file and supervisory Ees possess any of the
rights of a LLO, including the right to file a PCE for the
purpose of collective bargaining?
A: Yes. While there is a prohibition against the
mingling of supervisory and rank-and-file Ees in one
labor organization, the LC does not provide for the
effects thereof. Thus, the Court held that after a labor
organization has been registered, it may exercise all
the rights and privileges of a LLO. Any mingling
between supervisory and rank-and-file Ees in
membership cannot affect its legitimacy for that is not
among the grounds for cancellation of its registration,
unless such mingling was brought about by
misrepresentation, false statement or fraud under Art.
239 of the LC (Republic vs. Kawashima Textile, G.R. No.
160352, July 23, 2008).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Issues directly involved in a certification proceeding
1. Proper composition and constituency of the
bargaining unit; and
2. The veracity of majority membership claims of the
competing unions so as to identity the one union
that will serve as the bargaining representative of
the entire bargaining unit.
NOTE: Some of the Ees may not want to have a union; hence,
no union is one of the choices named in the ballot. If no
union wins, the company or the bargaining unit remains un-
unionized for at least 12 months, the period is known as 12-
month bar. After that period, a PCE may be filed again.
Non-extendability of the five-year representation
status of a bargaining agent
While the parties may agree to extend the CBAs
original five-year term together with all other CBA
provisions, any such amendment or term in excess of
five years will not carry with it a change in the unions
exclusive CB status. Under Art. 253-A, LC, the exclusive
bargaining status cannot go beyond five years and the
representation status is a legal matter not for the
workplace parties to agree upon. In other words,
despite an agreement for a CBA with a life of more
than five years, either as an original provision or by
amendment, the bargaining unions exclusive
bargaining status is effective only for five years and can
be challenged within 60 days prior to the expiration of
the CBAs first five years (FVC Labor Union-Philippine
Transport and General Workers Organization v. Sama-
samang Nagkakaisang Manggagawa sa FVC-Solidarity
of Independent and General Labor Organizations, G.R.
No. 176249, November 27, 2009).
GROUND FOR DENIAL OF PCE
Ground for denial of PCE
1. Non-appearance Non appearance of the
petitioner for two consecutive scheduled
conferences before the Mediator-Arbiter despite
notice
2. Unregistered Union The petitioning union or
national union/federation is not listed in the
Departments registry of legitimate labor unions
or that its registration certificate has been
cancelled with finality
3. No Charter Failure of a local/chapter or
national union/federation to submit duly issued
charter certificate upon filling of the petition for
certification eletction
4. Absence of Employment Relationship Absence
of Er-Ee relationship between all members of the
petitioning union and the establishment where
the proposed bargaining unit is sought to be
represented
5. The 12 month Bar Filing of a petition within one
(1) year from the date of the recording of the
voluntary recognition, or within the same period
from a valid certification, consent or run-off
election where no appeal on the results of the
certification, consent or run-off election is
pending.
6. Negotiation or Deadlock
7. Existing CBA
8. Lack of Support In an organized establishment,
the failure to submit the twenty five percent
(25%) signature requirement to support the
filling of the petition for the certification
election.
Ee may intervene in the petition for certification
election
An Ee may intervene in the petition for certification
election for the purpose of protecting his individual
right (Sec. 1, Rule VIII, Book V, IRR as amended by D.O.
40-F-03, s. 2008).
Where petition for certification election is filed
The petition for certification election shall be filed with
the Regional Office of the DOLE (Implementing Rules,
as amended by D.O. 40-F-03, s. 2008).
Authority to hear and resolve the PCE
The authority to hear and resolve the petition for
certification election rests with the Mediator-Arbiter.
Period to file PCE
The proper time to file the PCE depends on whether
the certified bargaining unit has a CBA or not:
1. If it has no CBA, the petition may be filed anytime
outside the 12-month bar (certification year).
2. If it has CBA, it can be filed only within the last 60
days of the 5th year of the CBA.
NOTE: At the expiration of the freedom period, the Er shall
continue to recognize the majority status of the incumbent
bargaining agent where no PCE is filed.
Union Election v. Certification Election
CERTIFICATION
UNION ELECTION
ELECTION
Held pursuant to the
The process is ordered
unions constitution and
and supervised by DOLE
by-laws

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2014 GOLDEN NOTES 148
 LABOR RELATIONS LAW

All Ees whether union or current CBA if such CBA is a new CBA that has been
non-union members who prematurely entered into, meaning, it was entered
Right to vote is enjoyed
belong to the into before the expiry date of the old CBA. The filing of
only by union members
appropriate bargaining the PCE shall be within the freedom period of the old
unit can vote CBA which is outside the freedom period of the new
The winner in a CE is an CBA that had been prematurely entered into.
entity, a union, which
Winners of union becomes the Q: Are probationary Ees entitled to vote in a
election become officers representative of the certification election? Why? (1999 Bar Question)
and representatives of whole bargaining unit
the union only that includes even the A: Yes. In a CE, all rank-and-file Ees in the appropriate
members of the defeated bargaining unit are entitled to vote. This principle is
unions. clearly stated in Art. 255, LC which states that the
"labor organization designated or selected by the
NOTE: Both in CE and union election, the prescribed majority of the Ees in such unit shall be the exclusive
procedures should be followed. representative of the Ees in such unit for the purpose
of CB" (Airtime Specialists ,Inc. v. Ferrer-Calleja, G.R.
Q: Can a "No-union" win in a certification election? No. 80612-16, December 29, 1989).
(2006 Bar Question)
Any Ee, whether employed for a definite period or not,
A: Yes. The objective in a CE is to ascertain the majority shall beginning on the first day of his service, be
representation of the bargaining representative, if the eligible for membership in any labor organization. In a
Ees desire to be represented at all by anyone. Hence, CE for the bargaining unit of rank and file Ees, all rank
no union is one of the choices in a CE. and file Ees, whether probationary or permanent are
entitled to vote. As long as probationary Ees belong to
Alternative Answer: the defined bargaining unit, they are eligible to
support the PCE (NUWHRAIN-Manila Pavilion Hotel
No. A no union cannot win in a CE. The purpose of a Chapter v. Secretary, G.R. No. 181531, July 31, 2009).
CE is to select an exclusive bargaining agent and a no
union vote would precisely mean that the voter is not Direct certification
choosing any of the contending unions. If the no-union
votes constitute a majority of the valid votes cast, this It is the process whereby the Mediator-Arbiter directly
fact will all the more mean that no union won in CE. A certifies a labor organization of an appropriate
one-year bar will consequently stop the holding of bargaining unit of a company after a showing that such
another CE to allow the Er to enjoy industrial peace for petition is supported by at least a majority of the Ees
at least one year. in the bargaining unit.

Q: In what instance may a petition for certification
election be filed outside the freedom period of a
current collective bargaining agreement? (1997 Bar
Question)
A: As a general rule in an establishment where there is
a CBA in force and effect, a PCE may be filed only
during the freedom period of such CBA. But to have
that effect, the CBA should have been filed and
registered with the DOLE (Art. 231, 253-A and 256, LC).
Thus, a CBA that has not been filed and registered
with the DOLE cannot be a bar to a CE and such
election can be held outside the freedom period of
such CBA.
Alternative Answer
A PCE may be filed outside the freedom period of a
NOTE: Even in a case where a union has filed a PCE, the mere
fact that there was no opposition does not warrant a direct
certification. More so in a case when the required proof is
not presented in an appropriate proceeding and the basis of
the direct certification is the unions self-serving assertion
that it enjoys the support of the majority of the Ees, without
subjecting such assertion to the test of competing claims
(Samahang Manggagawa sa Permex v. Secretary, G.R. No.
107792, March 2, 1998).
Failure of an independent union to prove its
affiliation with a federation does not affect its right
to file a PCE as an independent union
As a LLO, it has the right to file a PCE on its own. Its
failure to prove its affiliation with a federation cannot
affect its right to file said PCE as an independent union.
At the most, its failure will result in an ineffective
affiliation with the federation. Despite affiliation, the
local union remains the basic unit free to serve the

UNIVERSITY OF SANTO TOMAS

149 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
common interest of all its members and pursue its own
interests independently of the federation (Samahan
ng mga Manggagawa sa Filsystems v. SLE, G.R. No.
128067, June 5, 1998).
Illegally dismissed Ees of the company may
participate in the certification election
It is now well-settled that Ees who have been
improperly laid off but who have at present an
unabandoned right to or expectation of re-
employment, are eligible to vote in CEs. Thus, and to
repeat, if the dismissal is under question, as in the case
now at bar whereby a case of illegal dismissal and/or
ULP was filed, the Ees concerned could still qualify to
vote in the elections (Phiippine Fruits & Vegetables
Industries v. Torres, G.R. No. 92391, July 3, 1992).
NOTE: Ees whose services were terminated are still entitled
to vote during the certification election provided that there
is a pending illegal dismissal case filed by them. While the
case is still pending, the Er-Ee relationship is not yet severed.
How protest should be made during certification
elections
Protest must be raised and contained in the minutes
of the proceedings otherwise it is deemed waived
(National Association of Trade Free Unions v. Mainit
Lumber Development Co. Workers Union, G.R. No.
79526, December 21, 1990). Protests should be
formalized before the Med-Arbiter within 5 days from
the close of the proceedings otherwise it is deemed
abandoned (Timbungco v. Castro, G.R. No. 76111,
March 14, 1990).
IN AN UNORGANIZED ESTABLISHMENT
Unorganized establishment
An unorganized establishment is a bargaining unit with
no recognized or certified bargaining agent. It does not
necessarily refer to an entire company.
NOTE: It may happen that the rank-and-file unit has a
bargaining agent while the supervisory unit still does not
have such agent; thus, the former is already an organized
establishment while the latter remains, in the same
company, an unorganized establishment.
Requirement for certification election in unorganized
establishments
The certification election shall be automatically
conducted upon the filing of a PCE by a LLO.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
IN AN ORGANIZED ESTABLISHMENT
Requisites for certification election in an organized
establishment
The Mediator-Arbiter is required to automatically
order the conduct of a CE by secret ballot in an
organized establishment as soon as the following
requisites are met:
1. A petition questioning the majority status of
the incumbent bargaining agent is filed
before the DOLE within the 60-day freedom
period;
2. Such petition is verified;
3. The petition is supported by the written
consent of at least 25% of all the Ees in the
bargaining unit [Art. 256, (LC), (TUPAS-WFTU
v. Laguesma, G.R. No. 102350, June 30, 1994).
Filing of 25% consent signature in the petition for
certification election
Ideally, the signature should be filed together with the
petition. However, it may be filed after the petition
within a reasonable period of time.
Effect if the PCE was not accompanied by the
requisite 25% consent signatures
Under the Implementing Rules, absence or failure to
submit the written consent of at least 25% of all the
Ees in the bargaining unit to support the petition is a
ground for denying the said petition. The SC said that
the Med-Arbiter may still have the discretion to grant
or deny the petition. Even if there is no 25% consent
signature submitted together with the petition, it is
within the discretion of the Med-Arbiter whether to
grant or deny the petition (Port Workers Union v.
Bienvenido Laguesma, G.R. Nos. 94929-30, March 18,
1992). If the petition, however, is accompanied by the
25% consent signatures, then the holding of the CE
becomes mandatory (California Manufacturing Corp.
v. Laguesma, G.R. No. 97020, June 8, 1992).
Consent signatures of at least 25% of the Ees in the
bargaining unit may not be submitted simultaneously
with the filing of the PCE
The administrative rule requiring the simultaneous
submission of the 25% consent signatures upon the
filing of PCE should not be strictly applied to frustrate
the determination of the legitimate representative of
the workers. Accordingly, the Court held that the mere
filing of a PCE within the freedom period is sufficient
basis for the issuance of an order for the holding of a
CE, subject to the submission of the consent signatures
150
 LABOR RELATIONS LAW

within a reasonable period from such filing (Port 3. The total number of votes for all the contending
Workers Union of the Phils. v. Laguesma, G.R. Nos. unions is at least 50% of the number of votes cast.
94929-30, March 18, 1992). (Sec. 1, Rule X, Book V, IRR)
4. None of the choices obtained the majority of the
Effect of Ees withdrawal of his signature in the PCE valid votes cast (50%+ 1 second majority);
5. The two choices which garnered the highest votes
If the withdrawal was made before the filing of the will be voted and the one which garners the highest
petition, then the withdrawal is presumed to be number of votes will be declared the winner
voluntary unless there is convincing proof to the provided they get the majority votes of the total
contrary. If the withdrawal was made after the filing of votes cast.
the petition, the withdrawals are deemed involuntary.
Thus, withdrawals made after the filing of the petition Requirements for a run-off election
will not affect the PCE.
1. An election was conducted with three or more
Requisites for a PCE between organized and choices
unorganized establishments 2. None of the contending union obtained the required
majority vote of 50% + 1 of the valid votes cast
Art.256. Art.257. 3. There are no objections or challenges that can alter
BASIS
ORGANIZED UNORGANIZED the results materially
Bargaining 4. The number of votes received by all contending
Present None
agent unions when added together amounts to at least 50%
Petition Has to be a No need to be of the total votes cast
filed verified petition verified
No PCE except Choices in a run-off election
within 60 days Not applicable. No
Freedom before the freedom period. The unions receiving the highest and 2nd highest
Period expiration of the Petition can be number of the votes cast (Sec.2, Rule X, Book V, IRR).
CBA. (See Art. filed anytime.
253 & 253-A) NOTE: No Union is not a choice in the Run-off Election.
Must be duly
supported by No substantial Posting of notice for run-off election
25% of all the support rule.
members of the The notice should be posted by the Election Officer at
Substantial appropriate It is the intention least five days before the actual date (Sec. 1, Rule X,
support bargaining unit. of law to bring in Book V, IRR).
rule the union, to
Percentage base: implement the RE-RUN ELECTION
all members of policy behind Art.
an appropriate 211(a). It is an election that takes place when:
bargaining unit. 1. One choice receives a plurality of the vote and the
remaining choices results in a tie; or
NOTE: The approval of the PCE in an unorganized bargaining 2. All choices received the same number of votes.
unit is never appealable, the reason being that the law favors
unionized than not unionized. NOTE: In both instances, the no union is also a choice.

RUN-OFF ELECTION CONSENT ELECTION

Run-off election Consent election

It is an election conducted when It is an election voluntarily agreed upon by the parties,

1. A CE which provides for three or more choices
results in none of the contending unions receiving
a majority of the valid votes cast, and
2. There are no objections or challenges which if
sustained can materially alter the results, provided
with or without the intervention by the DOLE [Sec.1
(h), Rule I, Book V, IRR].
NOTE: To afford an individual Ee-voter an informed choice
where a local/chapter is the petitioning union, the
local/chapter shall secure its certificate of creation at least

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151 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
five working days before the date of the consent election numbers of
(Sec.1, Rule VIII, Book V, IRR as amended by DO 40-F-03). votes in a CE
with three or
Certification election v. consent election v. run-off more choices,
election v. re-run election where not one
of the unions
PARTICIPATION obtained the
OF majority of the
PURPOSE
MEDIATOR- valid votes cast,
ARBITER provided the
Requires PCE total union
filed by a union votes is at least
or Er. A Med- 50% of the
Arbiter grants votes cast.
the petition and Takes place in
To determine an election two instances:
the sole and officer is 1. If one choice
exclusive designated by receives a
bargaining regional plurality of
Certification agent of all the director to the vote and
Election Ees in an supervise the the remaining
appropriate election. choices
bargaining unit
Re-run results in a
for the purpose NOTE: Med-
Election tie; or
of CB. Arbiter may
2. If all choices
determine if
received the
there is an Er-Ee
relationship and if same number
the voters are of votes.
eligible.
To determine NOTE: In both
the issue of instances, the no
union is also a
majority
choice.
representation
of all the
NOTE: Petition for cancellation of registration is not a bar to
workers in the a PCE. No prejudicial question shall be entertained in a PCE
appropriate CB (D.O. 40-03).
unit mainly for
Held by
the purpose of AFFILIATION AND DISAFFILIATION OF THE LOCAL
agreement of
determining the UNION FROM THE MOTHER UNION
the unions with
Consent administrator of
or without the
Election the CBA when Affiliate
participation of
the contracting
the Med-
union suffered It refers to:
Arbiter.
massive 1. An independent union affiliated with a federation,
disaffiliation national union; or
and not for the 2. A local chapter which was subsequently granted
purpose of independent registration but did not disaffiliate from
determining the its federation.
bargaining
agent for Purpose of affiliation
purpose of CB.
Takes place The purpose of affiliation is to foster the free and
between the voluntary organization of a string and united labor
Run-Off
unions who movement [Art. 211 (c), LC].
Election
received the
two highest

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2014 GOLDEN NOTES 152
 LABOR RELATIONS LAW
Effect of affiliation
The labor union that affiliates with a federation is
subject to the laws of the parent body under whose
authority the local union functions. The Constitution,
by-laws and rules of the mother federation, together
with the charter it issues to the local union, constitutes
an enforceable contract between them and between
the members of the subordinate union inter se. Thus,
pursuant to the Constitution and by-laws, the
federation has the right to investigate and expel
members of the local union (Villar v. Inciong, G.R. No.
L-50283-84, April 20, 1983).
Creation of local chapter
A duly registered federation or national union may
directly create a local/chapter by issuing a charter
certificate indicating the establishment of a
local/chapter.
1. The chapter shall acquire legal personality only for
purposes of filing a PCE from the date it was issued
a charter certificate
2. The chapter shall be entitled to all other rights and
privileges of a LLO only upon the submission of the
following documents in addition to its charter
certificate:
a. Names of the chapters officers, their
addresses, and the principal office of the
chapter
b. Chapters constitution and by-laws
c. Where the chapters constitution and by-laws
are the same as that of the federation or the
national union, this fact shall be indicated
accordingly
3. The genuineness and due execution of the
supporting requirements shall be
a. Certified under oath by the secretary or
treasurer of the local/chapter, and
b. Attested to by its president [Sec.2(e), Rule III,
Book V, IRR, as amended by D.O. 40-F-03]
Reportorial requirements in affiliation
The report of affiliation of independently registered
labor unions with a federation or national union shall
be accompanied by the following documents
1. Resolution of the labor union's board of directors
approving the affiliation;
2. Minutes of the general membership meeting
approving the affiliation;
3. The total number of members comprising the
labor union and the names of members who
approved the affiliation;
153
4. The certificate of affiliation issued by the
federation in favor of the independently
registered labor union; and
5. Written notice to the Er concerned if the affiliating
union is the incumbent bargaining agent [D.O. 40-
03, Rule, III, Sec. 7, (2003)].
Disaffiliation of local union from the federation
GR: A labor union may disaffiliate from the mother
union to form an independent union only during the
60-day freedom period immediately preceding the
expiration of the CBA.
XPN: Even before the onset of the freedom period,
disaffiliation may still be carried out, but such
disaffiliation must be effected by the majority of the
union members in the bargaining unit.
NOTE: This happens when there is a substantial shift in
allegiance on the part of the majority of the members of the
union. In such a case, however, the CBA continues to bind
the members of the new or disaffiliated and independent
union to determine the union which shall administer the CBA
may be conducted (ANGLO-KMU v. Samahan ng
Manggagawang Nagkakaisa sa Manila Bay Spinning Mills at
J.P. Coats, G.R. No.118562, July 5, 1996).
Limitation to disaffiliation
Disaffiliation should be in accordance with the rules
and procedures stated in the Constitution and by-laws
of the federation. A local union may disaffiliate with its
mother federation provided that there is no
enforceable provision in the federations constitution
preventing disaffiliation of a local union (Tropical Hut
Employees Union v. Tropical Hut, G.R. Nos. L-43495-99,
January 20, 1990).
NOTE: A prohibition to disaffiliate in the Federations
constitution and by-laws is valid because it is intended for its
own protection.
Locals or chapters which retained status as LLO shall be
allowed to register as independent unions. If they fail to
register, they shall lose their legitimate status upon the
expiration of the CBA.
Q: PSEA is a local union in Skylander Company which
is affiliated with PAFLU. PSEA won the certification
election among the rank-and-file Ees of the Skylander
Company but its rival union PSEA-WATU protested
the results. Pending the resolution of such
controversy, PSEA disaffiliated with PAFLU and hence
affiliated with NCW which was supported by its
members. May a local union disaffiliate with its
mother federation pending the settlement of the
status as the sole and exclusive bargaining agent?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

A: Yes. The pendency of an election protest does not dues after entitled to the collected as
bar the valid disaffiliation of the local union which was Disaffiliation union dues and there would no
supported by the majority of its members. not the federation longer be any
from which the labor union that
The right of a local union to disaffiliate with the labor organization is allowed to
federation in the absence of any stipulation in the disaffiliated. collect such
Constitution and by-laws of the federation prohibiting union dues from
disaffiliation is well settled. Local unions remain as the the Ees.
basic unit of association, free to serve their own
interest subject to the restraints imposed by the SUBSTITUTIONARY DOCTRINE
Constitution and by-laws of national federation and
are free to renounce such affiliation upon the terms Under this doctrine, where there occurs a shift in the
and conditions laid down in the agreement which Ees union allegiance after the execution of a CB
brought such affiliation to existence. In the case at bar, contract with the Er, the Ees can change their agent
no prohibition existed under the Constitution and by- (labor union) but the CB contract which is still
laws of the federation. Hence, the union may freely subsisting continues to bind the Ees up to its expiration
disaffiliate with the federation (Philippine Skylanders date. They may however, bargain for the shortening of
v. NLRC, G.R. No. 127374, January 31, 2002). said expiration date.

Independently Registered v. Unregistered Chartered NOTE: The Ees cannot revoke the validly executed CB
Local Union contract with their Er by the simple expedient of changing
their bargaining agent. The new agent must respect the
CHARTERED LOCAL UNION contract (Benguet Consolidated Inc. v. BCI Employees and
Workers Union-PAFLU, G.R. No. L-24711, April 30, 1968).
Independently
Unregistered
Registered It cannot be invoked to support the contention that a newly
By application certified CB agent automatically assumes all the personal
with the undertakings of the former agent-like the no strike clause
federation for in the CBA executed by the latter.
By signing the issuance of a
How to
contract of charter UNION DUES AND SPECIAL ASSESSMENTS
affiliate?
affiliation certificate to be
submitted to the Dues and assessments which the union may collect
Bureau of Labor
Relations LLOs are authorized to collect reasonable amount of
Would cease to the following:
be an LLO and 1. Membership fees
Would not affect would no longer 2. Union dues
its being an LLO have the legal 3. Assessments
and therefore it personality and 4. Fines
Effect of
would continue to the rights and 5. Contribution for labor education and
Disaffiliation
have legal privileges research, mutual death and hospitalization
to the union
personality and to granted by law to benefits, welfare fun, strike fund and credit
(local)
possess all rights LLO, unless the and cooperative undertakings[Art. 277 (a),
and privileges of local chapter is LC]
LLO. covered by its 6. Agency fees [Art. 248 (e), LC]
duly registered
CBA. Union dues
An existing CBA
would continue to These are regular monthly contributions paid by the
The CBA would members to the union in exchange for the benefits
Effect of be valid as the
continue to be given to them by the CBA and to finance the activities
Disaffiliation labor organization
valid up to its of the union in representing the union.
to the CBA can continue
expiration date.
administering the
CBA.
Entitlement Labor Union dues may
to union organization no longer be

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2014 GOLDEN NOTES 154
 LABOR RELATIONS LAW

Check-off 2. Secretarys record of the minutes of the meeting,

which must include the
It is a method of deducting from an Ees pay at a a. List of members present
prescribed period, the amounts due the union for fees, b. Votes cast
fines and assessments. c. Purpose of the special assessments
d. Recipient of such assessments;
NOTE: Deductions for union service fees are authorized by
law and do not require individual check-off authorizations. 3. Individual written authorization to check-off duly
signed by the Ee concerned to levy such
Nature and purpose of check-off assessments.

Union dues are the lifeblood of the union. All unions
are authorized to collect reasonable membership fees,
union dues, assessments, fines and other
contributions for labor education and research,
mutual death and hospitalization benefits, welfare
fund, strike fund and credit and cooperative
undertakings [Art. 277(a), LC].
Special assessments or extraordinary fees
Effect of failure to strictly comply with the
requirements set by law
It shall invalidate the questioned special assessments.
Substantial compliance with the requirements is not
enough in view of the fact that the special assessment
will diminish the compensation of union members
(Palacol v. Ferrer-Calleja,G.R. No. 85333, February 26,
1990).

These are assessments for any purpose or object other Jurisdiction over check-off disputes
than those expressly provided by the labor
organizations Constitution and by-laws. Being an intra-union dispute, the RD of the DOLE has
jurisdiction over check off disputes.
REQUIREMENTS FOR VALIDITY
Check-off v. Special assessments
Requisites of a valid check-off
Check-off Special Assessment
GR: No special assessments, attorneys fees, How approved
negotiation fees or any other extraordinary fees may (Union Dues)
be checked off from any amount due to an Ee without By obtaining the individual
individual written authorization duly signed by the Ee. By written resolution
written authorization duly
approved by majority of
signed by the Ee which
The authorization should specify the all the members at the
must specify
1. Amount meeting called for that
1. Amount
2. Purpose & purpose.
2. Purpose
3. Beneficiary of the deduction. 3. Beneficiary
Exception to such requirement
XPNs: (Agency fees)
1. For mandatory activities under the LC Not necessary when
2. For Agency Fees
1. For mandatory activities
3. When non-members of the union avail of the under the LC
benefits of the CBA: 2. For Agency Fees
a. Non-members may be assessed union 3. When non-members of
dues equivalent to that paid by union the union avail of the
members; benefits of the CBA No exception; written
b. Only by board resolution approved by a. Said non-members resolution is mandatory
majority of the members in general
may be assessed in all instances.
meeting called for the purpose. union dues equivalent
to that paid by union
Requisites for a valid levy of special assessment or members;
extraordinary fees
b. Only by Board
resolution approved
1. Authorization by a written resolution of the by majority of the
majority of all members at the general members in general
membership meeting duly called for that purpose;

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155 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

meeting called for the apply to non-members of the recognized CB agent with
purpose regard to assessment of agency fees.

Union Dues v. Agency Fees

AGENCY FEES Union Dues Agency Fee

Is deducted from non-
Agency fee Is deducted from members of the
members for the bargaining agent (union)
It is an amount equivalent to union dues, which a non- payment of union dues for the enjoyment of the
union member pays to the union because he benefits benefits under the CBA.
from the CBA negotiated by the union. May not be deducted
May be deducted from
from the salaries of the
the salary of the Ees
NOTE: Payment by non-union members of agency fees does union members without
without their written
not amount to unjust enrichment because the purpose of the written consent of
consent.
such dues is to avoid discrimination between union and non- the workers affected.
union members.
RIGHT TO COLLECTIVE BARGAINING
Q: A is employed by XYZ Company where XYZ
Employees Union (XYZ-EU) is the recognized Collective bargaining
exclusive bargaining agent. Although A is a member
of rival union XYR-MU, he receives the benefits under 1. It is the process of negotiation by an organization
the CBA that XYZ-EU had negotiated with the or group of workmen, in behalf of its members,
company. XYZ-EU assessed A, a fee equivalent to the with the Er, concerning wages, hours of work, and
dues and other fees paid by its members but A insists other terms and conditions of employment, and
that he has no obligation to pay said dues and fees 2. The settlement of disputes by negotiation
because he is not a member of XYZEU and he has not between an Er and the representative of his Ees.
issued an authorization to allow the collection.
Explain whether his claim is meritorious. (2010 Bar NOTE:
Question) GR: No court or administrative agency or official shall have
the power to set or fix wages, rates of pay, hours of work, or
A: The fee exacted from A takes the form of an agency other terms and conditions of employment
fee which is sanctioned by Art. 248 (e), LC. The
collection of agency fees in an amount equivalent to XPNs: As otherwise provided under the LC:
1. National Wages and Productivity Commission and
union dues and fees from Ees who are not union
RTWPB as to wage fixing. (Art. 99 and 122, LC)
members is recognized under the LC. The union may 2. NCMB and NLRC as to wage distortion. (Art. 124,
collect such fees even without any written LC)
authorization from the non-union member Ees, if said 3. SLE and President of the Philippines as to
Ees accept the benefits resulting from the CBA. The certification and assumption of powers over labor
legal basis of agency fees is quasi-contractual (Del Pilar disputes [Art. 236(g), LC].
Academy v. Del Pilar Academy Employees Union, G.R.
No. 170112, April 30, 2008). Purpose behind CB

REQUISITES FOR ASSESSMENT It is to encourage a truly democratic method of

regulating the relations between the Ers and Ees by
Requisites for assessment of agency fees means of agreements freely entered into through CB.

1. The Ee is part of the bargaining unit Parties to a CB

2. He is not a member of the union
3. He partook of the benefits of the CBA 1. Er
2. Ees, represented by the exclusive bargaining
NOTE: Other than for mandatory activities under the LC, no agent
special assessments, attorneys fees, negotiation fees or any
other extraordinary fees may be checked off from any Jurisdictional preconditions in CB (Kiok Loy Doctrine)
amount due to an Ee without his authorization. The
individual authorization required under this article shall not The mechanics of CB, which is defined as negotiations
towards a collective agreement, is set in motion only

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2014 GOLDEN NOTES 156
 LABOR RELATIONS LAW
when the following jurisdictional preconditions are
present, namely:
1. Possession of the status of majority
representation of Ees representative in
accordance with any of the means of selection or
designation provided for by the LC;
2. Proof of majority representation;
3. A demand to bargain under Art. 250 (a), LC (Kiok
Loy v. NLRC, G.R. No. L-54334, January 22, 1986).
Commencement of CB
Bargaining commences within 12 months after the
determination and certification of the Ees exclusive
bargaining representative (certification year).
Procedure in CB
When a party desires to negotiate an agreement:
1. It shall serve a written notice upon the other party
with a statement of proposals
2. Reply by the other party shall be made within 10
days with counter proposals
3. In case of differences, either party may request for
a conference which must be held within 10
calendar days from receipt of request
4. If not settled, NCMB may intervene and
encourage the parties to submit the dispute to a
VA
5. If not resolved, the parties may resort to any other
lawful means (either to settle the dispute or
submit it to a VA).
NOTE: During the conciliation proceeding in the NCMB, the
parties are prohibited from doing any act which may disrupt
or impede the early settlement of disputes [Art. 250 (d), LC].
Stages in CB
1. Preliminary process: Sending a written notice for
negotiation which must be clear and unequivocal
2. Negotiation process
3. Execution process: The signing of the agreement
4. Publication for at least 5 days before ratification
5. Ratification by the majority of all the workers in
the bargaining unit represented in the
negotiation (not necessary in case of arbitral
award)
6. Registration process.
7. Administration process: The CBA shall be jointly
administered by the management and the
bargaining agent for a period of 5 years.
8. Interpretation and Application process.
157
DUTY TO BARGAIN COLLECTIVELY
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(Art.
252, LC).
When there is a CBA, the duty to bargain collectively
shall also 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 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 (Art. 253, LC).
Commencement of duty of the Er to bargain
collectively
Only after the union requests the Er to bargain. If there
is no demand, the Er cannot be in default.
NOTE: Where a majority representative has been
designated, it is a ULP for the Er, as a refusal to collectively
bargain, to deal and negotiate with the minority
representative to the exclusion of the majority
representative.
Where there is a legitimate representation issue, there is no
duty to bargain collectively on the part of the Er (Lakas ng
mga Manggagawang Makabayan v. Marcelo Enterprises,
G.R. No. L-38258, November 19, 1982).
Restrictions to the duty to bargain collectively
1. Such duty does not compel any party to agree to
a proposal or to make any concession.
2. Parties cannot stipulate terms and conditions of
employment which are below the minimum
requirements prescribed by law.
Q: Does a petition for cancellation of a unions
certificate of registration involve a prejudicial
question that should first be settled before parties
could be required to collectively bargain?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: No. A pending cancellation proceeding is not a bar
to set mechanics for CB. If a certification election may
still be held even if a petition for cancellation of a
unions registration is pending, more so that the CB
process may proceed. The majority status of the union
is not affected by the cancellation proceedings (Capitol
Medical Center v. Trajano,G.R. No. 155690, June 30,
2005).
Impasse in bargaining
1. Where the subject of a dispute is a mandatory
bargaining subject, either party may bargain to an
impasse as long as he bargains in good faith.
2. Where the subject is non-mandatory, a party may
not insist in bargaining to the point of impasse. His
instance may be construed as evasion of duty to
bargain.
Test of bargaining in good faith
There is no perfect test of good faith in bargaining. The
good faith or bad faith is an inference to be drawn
from the facts and is largely a matter for the NLRCs
expertise. The charge of bad faith should be raised
while the bargaining is in progress.
NOTE: With the execution of the CBA, bad faith can no longer
be imputed upon any of the parties thereto. All provisions in
the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. This is not a case where
private respondent exhibited an indifferent attitude towards
CB because the negotiations were not the unilateral activity
of petitioner union. The CBA is good enough that private
respondent exerted reasonable effort of good faith
bargaining (Samahang Manggagawa sa Top Form
Manufacturing-United Workers of the Phiippinels v. NLRC,
G.R. No. 113856, September 7, 1998).
Economic exigencies
Economic exigencies cannot justify refusal to bargain.
An Er is not guilty of refusal to bargain by persistently
rejecting the unions economic demands where he is
operating at a loss, on a low profit margin, or in a
depressed industry, as long as he continues to
negotiate. But financial hardship constitutes no excuse
for refusing to bargain collectively.
Q: Does an Ers steadfast insistence to exclude a
particular substantive provision in the negotiations
for a CBA constitute refusal to bargain or bargaining
in bad faith?
A: No. This is no different from a bargaining
representatives perseverance to include one that they
deem of absolute necessity. Indeed, an adamant
insistence on a bargaining position to the point where
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
the negotiations reach an impasse does not establish
bad faith. Obviously, the purpose of CB is the reaching
of an agreement resulting in a contract binding on the
parties; but the failure to reach an agreement after
negotiations have continued for a reasonable period
does not establish a lack of good faith. The statutes
invite and contemplate a CB contract, but they do not
compel one. The duty to bargain does not include the
obligation to reach an agreement. While the law
makes it an obligation for the Er and the Ees to bargain
collectively with each other, such compulsion does not
include the commitment to precipitately accept or
agree to the proposals of the other. All it
contemplates is that both parties should approach the
negotiation with an open mind and make reasonable
effort to reach a common ground of agreement (Union
of Filipro Employees v. Nestle Philippines, G.R. Nos.
158930-31, March 3, 2008).
Deadlock
Deadlock is synonymous with impasse or a standstill
which presupposes reasonable effort at good faith
bargaining but despite noble intentions does not
conclude an agreement between the parties.
Remedies in case of deadlock in the renegotiation of
the CBA
The parties may:
1. Call upon the NCMB to intervene for the purpose
of conducting conciliation or preventive
mediation;
2. Refer the matter for VA or compulsory
arbitration;
3. Declare a strike or lockout upon compliance with
the legal requirements (This remedy is a remedy
of last resort)
WHEN THERE IS NO CBA
Duty to bargain collectively when there is no CBA
In the absence of an agreement or other voluntary
arrangement providing for a more expeditious manner
of CB, it shall be the duty of Er and the representatives
of the Ees to bargain collectively in accordance with
the provisions of the LC (Art. 251, LC).
WHEN THERE IS A CBA
Duty to bargain collectively when there is a CBA
When there is a CBA, the duty to bargain collectively,
in addition to Art. 252, shall mean that:
158
 LABOR RELATIONS LAW
1. Neither party shall terminate nor modify such
agreement during its lifetime.
2. However, either party can serve a written notice
to terminate or modify the agreement at least 60
days prior the expiration of its 5th year.
3. 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 (Art.
253, LC).
NOTE: CBA is a contract of indefinite period under Art. 253.
A CBA is entered into in order to foster stability and mutual
cooperation between labor and capital. An Er should not be
allowed to rescind unilaterally its CBA with the duly certified
bargaining agent it had previously contracted with, and
decide to bargain anew with a different group if there is no
legitimate reason for doing so and without first following the
proper procedure. If such behavior would be tolerated,
bargaining and negotiations between the Er and the union
will never be truthful and meaningful, and no CBA forged
after arduous negotiations will ever be honored or be relied
upon (Employees Union of Bayer Phils., FFW v. Bayer
Philippines, Inc., 636 SCRA 472).
Single Enterprise Bargaining
It involves negotiation between one certified labor
union and one Er. Any voluntarily recognized or
certified labor union may demand negotiations with its
Er for terms and conditions of work covering Ees in the
bargaining unit concerned (Sec. 3, Rule XVI, Book V,
Rules to Implement the LC, as amended by Department
Order No. 40-03, Series of 2003).
Multi-employer Bargaining Scheme
It involves negotiation between and among several
certified labor unions and Ers.
Any legitimate labor union and Er may agree in writing
to come together for the purpose of CB provided that
1. Only legitimate labor unions which are incumbent
exclusive bargaining agents may participate and
negotiate;
2. Only Ers with counterpart legitimate labor unions
which are incumbent bargaining agents may
participate and negotiate; and
3. Only those legitimate labor unions which pertain
to Er units which consent to multi-Er bargaining
may participate (Sec. 5, Rule XVI, Book V, Rules to
Implement the LC, as amended by Department
Order No. 40-03, Series of 2003).
159
COLLECTIVE BARGAINING AGREEMENT
Collective Bargaining Agreement
It is a contract executed upon request of either the Er
or the exclusive bargaining representative of the Ees
incorporating the agreement reached after
negotiations with respect to wages, hours of work,
terms and conditions of employment, including
proposals for adjusting any grievance or questions
under the agreement.
NOTE: The certification of the CBA by the BLR is not required
to make such contract valid. Once it is duly entered into and
signed by the parties, a CBA becomes effective as between
the parties whether or not it has been certified by the BLR
(Liberty Flour Mills Employees Association v. Liberty Flour
Mills, G.R. Nos. 58768-70, December 29, 1989).
Nature of a CBA
The CBA is the law between the contracting parties
the CB representative and the Er-company.
Compliance with a CBA is mandated by the expressed
policy to give protection to labor (Vicente Almario v.
Philippine Airlines, Inc., 532 SCRA 614).
Purpose of a CBA
The goal of CB is the making of agreements that will
stabilize business conditions and fix fair standards of
working conditions (P.I. Manufacturing, Incorporated
v. P.I. Manufacturing Supervisors and Foremen
Association, 543 SCRA 614).
Filing for registration of CBA
Within 30 days from execution of CBA, the parties
thereto shall submit the agreement to the Regional
Office which issued the certificate of registration/
certificate of creation of chartered local of the labor
union-party to the agreement.
Requirements for registration
The application for CBA registration shall be
accompanied by the original and two duplicate copies
of the following requirements
1. CBA
2. A statement that the CBA was posted in at
least two conspicuous places in the
establishment concerned for at least five days
before its ratification
3. Statement that the CBA was ratified by the
majority of the Ees in the bargaining unit.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
NOTE: The following documents must be certified under
oath by the representative of the Er and the labor union. No
other document shall be required in the registration of the
CBA.
NOTE: In addition, the BLR requires that the CBA should
include a clear statement of the term of the CBA. Ers duty to
bargain is limited to mandatory bargaining subjects; as to
other matters, he is free to bargain or not.

Zipper clause GRIEVANCE PROCEDURE

It is a stipulation in a CBA indicating that issues that Grievance

could have been negotiated upon but not contained in
the CBA cannot be raised for negotiation when the There is grievance when a dispute or controversy
CBA is already in effect. arises over the interpretation or implementation of
any provision of the CBA or interpretation or
A CBA is not an ordinary contract but one impressed enforcement of company personnel policies [Sec.1 (u),
with public interest, only provisions embodied in the Rule I, Book V, IRR].
CBA should be so interpreted and complied with.
Where a proposal raised by a contracting party does Grievance machinery
not find print in the CBA, it is not a part thereof and
the proponent has no claim whatsoever to its It refers to the mechanism for the adjustment and
implementation (SMTFM-UWP v. NLRC, G.R. No. resolution of grievances arising from the
113856, September 7, 1998). interpretation or enforcement of company personnel
policies. It is part of the continuing process of CB.
60-day freedom period
NOTE: It is a mandatory provision in any CBA. No collective
During the 60-day freedom period agreement can be registered in the absence of such
1. A labor union may disaffiliate from the mother procedure.
union to form a local or independent union only
during the 60-day freedom period immediately Establishment of grievance machinery
preceding the expiration of the CBA.
2. Either party can serve a written notice to Grievance machinery should be established by
terminate or modify agreement at least 60 days agreement of the parties. A grievance committee
prior to its expiration period. should be composed of at least two representatives
3. A PCE may be filed. each from the members of the bargaining unit and the
Er, unless otherwise agreed upon by the parties. It
MANDATORY PROVISIONS OF THE CBA shall be created within 10 days from the signing of
CBA.
Mandatory provisions of the CBA
NOTE: Although Art. 260, LC mentions parties to a CBA, it
does not mean that grievance machinery cannot be set up in
1. Grievance machinery
a CBA-less enterprise. In any workplace where grievance can
2. Voluntary Arbitration arise, grievance machinery can be established.
3. Wages
4. Hours of work Grievance procedure
5. Family planning
6. Rates of pay It refers to the internal rules of procedure established
7. Mutual observance clause by the parties in their CBA which usually consists of
8. No Strike-No Lockout Clause successive steps starting at the level of the
9. Labor-Management Council complainant and his immediate supervisor and ending,
when necessary, at the level of the top union and
NOTE: In short, the parties must include:
company officials and with VA as the terminal step.
1. Provisions that will ensure the mutual observance
of its terms and conditions.
2. A machinery for adjustment and resolution of Q: What will happen to grievances submitted to the
grievances arising from the: grievance machinery which are not settled within
a. Interpretation/implementation of the CBA seven calendar days from the date of their
and submission?
b. Interpretation/ enforcement of company
personnel policies. A: They shall automatically be referred to VA
prescribed in the CBA [Art. 260 (2), LC].

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2014 GOLDEN NOTES 160
 LABOR RELATIONS LAW
Either party may serve notice upon the other of its
decision to submit the issue to VA. If the party upon
whom such notice is served fails/refuses to respond
within seven days from receipt, VA/panel designated
in the CBA shall commence arbitration proceedings. If
the CBA does not designate or if the parties failed to
name the VA/panel, the regional branch of NCMB
appoints VA/panel.
Q: How are cases arising from the interpretation or
implementation of CBAs handled and disposed?
(1995 Bar Question)
A: They are disposed through the grievance machinery
and if not resolved by the grievance machinery,
through VA.
VOLUNTARY ARBITRATION
Voluntary arbitration
It refers to the mode of settling labor management
disputes by which the parties select a competent,
trained and impartial third person who shall decide on
the merits of the case and whose decision is final and
executory [Sec.1 (d), Rule II, NCMB Revised Procedural
Guidelines in the Conduct of Voluntary Arbitration
Proceedings, (2004)].
Basis for VA
The State shall promote the principle of shared
responsibility between workers and Ers and the
preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial
peace (Sec. 3, Art. XIII, 1987 Constitution).
Voluntary arbitrator
Any person who has been accredited by the NCMB as
such, or any person named or designated in the CBA
by the parties as their voluntary arbitrator, or one
chosen by the parties with or without the assistance of
the NCMB, pursuant to a selection procedure agreed
upon in the CBA or one appointed by the NCMB in case
either of the parties to the CBA refuses to submit to
VA.
NOTE: A voluntary arbitrator is not an Ee, functionary or part
of the government or of the DOLE, but he is authorized to
render arbitration services provided under labor laws (Ludo
& Luym Corporation v. Saornido, G.R. No. 140960, January
20, 2003).
161
Compulsory arbitration v. Voluntary arbitration
Compulsory arbitration is a system whereby the
parties to a dispute are compelled by the government
to forego their right to strike and are compelled to
accept the resolution of their dispute through
arbitration by a 3rd party. The essence of arbitration
remains since a dispute is resolved by a disinterested
3rdparty whose decision is final and binding on the
parties. The 3rdparty is normally appointed by the
government.
Under VA, referral of a dispute by the parties is made,
pursuant to a VA clause in their CBA, to an impartial
3rdperson for a final and binding resolution. Ideally,
arbitration awards are to be complied with by both
parties without delay, such that once an award has
been rendered by an arbitrator, nothing is left to be
done by both parties but to comply with the same
(Luzon Development Bank v. Association of Luzon
Development Bank Employees, G.R. No. 120319,
October 6, 1995).
Enforcement of decision of a voluntary arbitrator
Upon motion of any interested party, the voluntary
arbitrator or panel of voluntary arbitrators or the LA in
the region where the movant resides, in case of the
absence or incapacity of the voluntary arbitrator or
panel of voluntary arbitrators, for any reason, may
issue a writ of execution requiring either the sheriff of
the NLRC or regular courts or any public official whom
the parties may designate in the submission
agreement to execute the final decision, order or
award.
NO STRIKE-NO LOCKOUT CLAUSE
No strike-no Lockout clause
It is a clause in the CBA which is an expression of the
firm commitment of the parties 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 Er, that it will not
stage a lockout during the lifetime thereof.
Application of no strike-no lockout clause in the CBA
The no strike-no lockout clause in the CBA applies
only to economic strikes. It does not apply to ULP
strikes. Hence, if the strike is founded on a ULP of the
Er, a strike declared by the union cannot be considered
a violation of the no strike clause (Master Iron Labor
Union v. NLRC, G.R. No. 92009, February 17, 1993).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Effects of acts of violence committed in the course of Grievance Machinery v. Labor Management Council
strike
LABOR MANAGEMENT
1. If pervasive, widespread and regularly committed, GRIEVANCE MACHINERY
COUNCIL
it is illegal, union is responsible.
Resolves disputes in the Resolves disputes not
2. If isolated, sporadic or remote, it is still legal but
interpretation and within the provisions of
the person who committed is responsible.
implementation of the the CBA (PHIMCO
meaning of the Industries v. PHIMCO
LABOR MANAGEMENT COUNCIL
provisions of the CBA and Industries Labor
of the company Association, G.R. No.
Formation of Labor Management Council
personnel policies. 170830, August 11, 2010)
Labor-Management Councils or Committees may be
DURATION
formed voluntarily by workers and Ers in the event no
LLO exists for the purpose of promoting industrial
Duration of a CBA
peace.
1. Representation aspect (refers to the identity and
NOTE: One thing it cannot and must not do is to replace a
union. It can deal with the Er on matters affecting the Ees majority status of the union that negotiated the
rights, benefits and welfare (Azucena, 2010). CBA as the exclusive bargaining representative) -
five years.
Role of the DOLE in the creation of Labor 2. All other provisions (refers to the rest of the CBA,
Management Councils economic as well as non-economic provisions
except representation) - three years after the
The DOLE shall promote the formation of labor- execution of the CBA
management councils in organized and unorganized
establishments to enable the workers to participate in NOTE: Neither party shall terminate nor modify the CBA
during its lifetime. However, either party can serve a written
policy and decision-making processes in the
notice to terminate or modify the agreement at least 60 days
establishment, insofar as said processes will directly prior to its expiration date. It shall be the duty of both parties
affect their rights, benefits and welfare, except those to keep the status quo and to continue in full force and effect
which are covered by CB agreements or are traditional the terms and conditions of the existing agreement during
areas of bargaining. the 60-day period and/or until a new agreement is reached
by the parties (Art. 253, LC).
The DOLE shall promote other labor-management
cooperation schemes and, upon its own initiative or No petition questioning the majority status of the incumbent
upon the request of both parties, may assist in the bargaining agent shall be entertained by the DOLE and no CE
formulation and development of programs and shall be conducted outside of the 60-day freedom period.
projects on productivity, occupational safety and
health, improvement of quality of work life, product Q: What is the automatic renewal clause of CBAs
quality improvement, and other similar schemes (Sec. (2008 Bar Question)
1, Rule XXI, Book V, IRR).
A: The automatic renewal clause means that although
Selection of representative in the Management the CBA has expired, it continues to have legal effects
Council as between the parties until a new CBA has been
entered into (Pier & Arrastre Stevedoring Services, Inc.
In organized establishments, the workers v. Confessor, G.R. No. 110854, February 13, 1995). The
representative to the council shall be nominated by rationale of such clause is to make it the duty of the
the exclusive bargaining representative. In parties to keep the status quo and to continue in full
establishments where no LLO exists, the workers effect the terms and conditions of the existing
representative shall be elected directly by the Ees at agreement until a new agreement is reached by the
large (Sec. 2, Rule XXI, Book V, IRR). parties (Art. 253,LC).

Hold-over Principle

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

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2014 GOLDEN NOTES 162
 LABOR RELATIONS LAW
60-day period and/or until a new agreement is
reached by the parties. Despite the lapse of the formal
effectivity of the CBA the law still considers the same
as continuing in force and effect until a new CBA shall
have been validly executed.
Q: Does the hold-over principle apply to imposed CBA
/ arbitral award?
A: Yes. The hold-over principle, i.e., the duty of the
parties to keep the status quo and to continue in full
force and effect the terms and conditions of the
existing CBA until a new agreement is reached by the
parties apply to an imposed CBA. The law does not
provide for any exception nor qualification on which
economic provisions of the existing agreement are to
retain its force and effect. Likewise, the law does not
distinguish between a CBA duly agreed upon by the
parties and an imposed CBA (General Milling
Corporation ILU v. General Milling Corp., G.R. No.
193723, July 20, 2011).
FOR ECONOMIC PROVISIONS
Economic provisions are provisions granting economic
benefits to the Ees such as increases, vacation and sick
leaves, hospitalization and retirement.
FOR NON-ECONOMIC PROVISIONS
Non-economic provisions of a CBA
1. Coverage of the bargaining unit
2. Union security clauses
3. Management prerogatives and/or rights/
responsibilities of Ees
4. Grievance machinery and VA
5. No strike no lock out provision
Effectivity and retroactivity date of economic and
non-economic provisions of the CBA
1. If the CBA is the very first for the bargaining unit,
the parties have to decide the CBAs effectivity
date.
2. Those made within six months after date of expiry
of the CBA are subject to automatic retroaction to
the day immediately following the date of expiry.
3. Those not made within six months, the parties
may agree to the date of retroaction.
NOTE: This rule applies only if there is an existing agreement.
If there is no existing agreement, there is no retroactive
effect because the date agreed upon shall be the start of the
period of agreement.
163
Retroactivity does not apply if the provisions were imposed
by the SLE by virtue of arbitration. It applies only if the
agreement was voluntarily made by the parties.
Q: May the economic provisions of an existing CBA be
extended beyond the 3 year period as prescribed by
law in the absence of a new agreement?
A: Yes. Under the principle of hold over, until a new
CBA has been executed by and between the parties,
they are duty bound to keep the status quo and must
continue in full force and effect the terms and
conditions of the existing agreement. The law does
not provide for any exception or qualification as to
which of the economic provisions of the existing
agreement are to retain force and effect. Therefore, it
must be encompassing all the terms and condition in
the said agreement (New Pacific Timber v. NLRC, G.R.
No. 124224, March 17, 2000).
Q: Mindanao Terminal Company and respondent
union has an existing CBA which was about to expire.
Negotiations were held regarding certain provisions
of the CBA which resulted in a deadlock. The union
thereafter filed a notice of strike. During the
conference called by the NCMB, the company and the
union were able to agree on all of the provisions of
the CBA except for one. The unresolved provision was
subsequently settled, however no CBA was signed.
Thus, in the records of the Mediation Arbiter, all
issues were settled before the lapse of the six month
period after the expiration of the old CBA. Does the
signing of the CBA by the parties determine the date
it was entered into?
A: No. The signing of the CBA does not determine the
date it was entered into. In the present case, there was
already a meeting of the minds between the company
and the union prior to the end of the six month period
after the expiration of the old CBA. Hence, such
meeting of the minds is sufficient to conclude that an
agreement has been reached within the six month
period as provided under Art. 253-A, LC (Mindanao
Terminal and Brokerage Services Inc., v. Confessor,
G.R. No. 111809, May 5, 1997).
Q: When is the effectivity of an arbitral award
concluded beyond six months from the expiration of
the old CBA?
A: The CBA arbitral award granted six months from the
expiration of the last CBA shall retroact to such time
agreed upon by both the Er and the union. Absent
such agreement as to retroactivity, the award shall
retroact to the 1st day after the six month period
following the expiration of the last day of the CBA
should there be one. In the absence of a CBA, the SLEs
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
determination of the date of retroactivity as part of his
discretionary powers over arbitral award shall control
(Manila Electric Company v. Quisumbing, G.R. No.
127598, Feb. 22, 2000).
Q: PAL was suffering from a worsened financial
condition resulting to a retrenchment which
downsized its labor force by more than 1/3 thereby
affecting numerous union members. Hence, the
union went on strike. The PAL offered that shares of
stock be transferred to its Ees but the union refused.
Thus, PAL claimed it has no alternative left but to
close. PALEA then proposed that the CBA be
suspended for 10 years provided they remain the
certified bargaining agent. PAL agreed and resumed
operations. Is the agreement to suspend the CBA for
10 years abdicated the workers right to bargain?
A: No. The primary purpose of a CBA is to stabilize
labor-management relations in order to create a
climate of a sound and stable industrial peace. The
assailed agreement was the result of the voluntary CB
negotiations undertaken in the light of severe financial
situation faced by PAL (Rivera v. Espiritu, G.R. No.
135547, January 23, 2002).
Q: Is the above cited agreement in conflict with Art.
253-A, LC?
A: No. There is no conflict between the agreement and
Art. 253-A, LC for the latter has a two-fold purpose
namely: a) to promote industrial stability and
predictability and b) to assign specific time tables
wherein negotiations become a matter of right and
requirement. In so far as the first purpose, the
agreement satisfies the first purpose. As regard the
second purpose, nothing in Art. 253-A prohibits the
parties from waiving or suspending the mandatory
timetables and agreeing on the remedies to enforce
the same (Rivera v. Espiritu, G.R. No. 135547, January
23, 2002).
Q: Does the agreement violate the five year
representation limit as provided under Art. 253-A,
LC?
A: No. Under the said article, the representation limit
of the exclusive bargaining agent applies only when
there is an existing CBA in full force and effect. In this
case, the parties agreed to suspend the CBA and put in
abeyance the limit on representation (Rivera v.
Espiritu, G.R. No. 135547, January 23, 2002).
Q: What is the effect of an amended or extended
term of the CBA on the exclusive representation
status of the collective bargaining agent and the right
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
of another union to ask for certification as exclusive
bargaining agent?
A: While the parties may agree to extend the CBAs
original five-year term together with all other CBA
provisions, any such amendment or term in excess of
five years will not carry with it a change in the unions
exclusive bargaining status. By express provision of
Art. 253-A of the LC, the exclusive bargaining status
cannot go beyond the five years and the
representation status is a legal matter not for the
workplace parties to agree upon. Despite an
agreement for a CBA with a life of more than five years,
either as an original provision or by amendment, the
bargaining unions exclusive bargaining status is
effective only for five years and can be challenged
within 60 days prior to the expiration of the CBAs first
five years (FVC Labor Union-Philippine Transport and
General Workers Organization v. Sama-samang
Nagkakaisang Manggagawa sa FVC-Solidarity of
Independent and General Labor Organizations, G.R.
176249, November 27, 2009).
Q: ABC Company and U labor union have been
negotiating for a new CBA but failed to agree on
certain economic provisions of the existing
agreement. In the meantime, the existing CBA
expired. The company thereafter refused to pay the
Ees their midyear bonus, saying that the CBA which
provided for the grant of midyear bonus to all
company Ees had already expired. Are the Ees
entitled to be paid their midyear bonus? Explain your
answer. (2010 Bar Question)
A: Yes. The parties are duty-bound to maintain the
status quo and to continue in full force and effect the
terms and conditions of the existing CBA until a new
agreement is reached by the parties (Art. 253, LC).
Furthermore, Art. 253-A provides for an automatic
renewal clause of a CBA. Although a CBA has expired,
it continues to have legal effects as between the
parties until a new CBA has been entered into.
UNION SECURITY
UNION SECURITY CLAUSES; CLOSED SHOP, UNION
SHOP, MAINTENANCE OF MEMBERSHIP SHOP, ETC.
Union security
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 Ees the obligation to
acquire or retain union membership as a condition
affecting employment.
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 LABOR RELATIONS LAW

Union security clause
A stipulation in CBA whereby the management
recognizes that the memberships of Ees in the union
which negotiated said agreement should be
maintained and continued as a condition for
employment or retention of employment. The obvious
purpose is to safeguard and ensure the continued
existence of the union.
2. The union is requesting for the enforcement of the
union security provision in the CBA; and
3. There is sufficient evidence to support the decision
of the union to expel the Ee from the union.
These requisites constitute just cause for terminating
an Ee based on the union security provision of the CBA
(Gen. Milling Corporation v. Casio, G.R. No. 149552
March 10, 2010).

Closed shop CHECK-OFF; UNION DUES, AGENCY FEES

A closed shop may be defined as an enterprise in Union dues v. Agency fees

which, by agreement between the Er and his Ees or
their representatives, no person may be employed in BASIS UNION DUES AGENCY FEES
any or certain agreed departments of the enterprise Collected from Collected by the
unless he or she is, becomes, and, for the duration of union members union from non-
the agreement, remains a member in good standing of members
a union entirely comprised of or of which the Ees in From whom belonging to the
interest are a part. collected same bargaining
unit who receive
Union shop the benefits
under the CBA
There is union shop when all new regular Ees are There must be an Can be assessed
required to join the union within a certain period as a individual even without the
condition for their continued employment. Need for
written written
Written
authorization by authorization of
Closed shop v. Union shop Authorization
individual the employee
members. concerned.
CLOSED SHOP UNION SHOP
Er cannot hire any Ee Er can hire even those ULP IN COLLECTIVE BARGAINING
unless they are members who are not members of
of the union. the union but it requires Forms of ULP in bargaining
that after a certain
period they must 1. Failure to meet and convene
become members of the 2. Evading the mandatory subjects of bargaining
union. 3. Bad faith in bargaining, including failure to
execute the CBA if requested
Maintenance of membership shop 4. Gross violation of the CBA
5. Surface Bargaining
There is maintenance of membership shop when Ees, 6. Blue sky bargaining
who are union members as of the effective date of the
agreement, or who thereafter become members, must NOTE: Violations of CBA, except those which are gross in
maintain union membership as a condition for character, shall no longer be treated as ULP but a grievance
continued employment until they are promoted or under CBA (Silva v. NLRC, G.R. No. 110226, June 19, 1997).
transferred out of the bargaining unit or the
agreement is terminated. BARGAINING IN BAD FAITH

Requisites for termination on account of Boulwarism

enforcement of a union security clause in a CBA
In terminating the employment of an Ee by enforcing
the union security clause, the Er needs only to
determine and prove that:
1. The union security clause is applicable;
Boulwarism is known as bad faith in bargaining. It
includes the failure to execute the CBA.
Occurrence of boulwarism
It occurs when Er directly bargains with the Ee
disregarding the union; the aim was to deal with the

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165 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
labor union through Ees rather than with the Ees thru
the union. Er submits its proposals and adopts a take-
it-or-leave-it stand.
REFUSAL TO BARGAIN
Occurrence of refusal to bargain
This occurs when the Er refuses or fails to meet and
convene with the majority of his Ees. To bargain in
good faith, an Er must not only meet and confer with
the union which represents his Ees, but must also
recognize the union for the purpose of CB (Azucena,
2010).
Effect of refusal of management to give counter-
proposals to the unions demands
The failure of the Er to submit its counter-proposals to
the demands of the bargaining union does not, by
itself, constitute refusal to bargain (Philippine Marine
Radio Officers Association v. CIR, 102 Phil 373).
However, when the Er refuses to submit an answer or
reply to the written bargaining proposals of the
certified bargaining union, ULP is committed.
NOTE: While the law does not compel the parties to reach
an agreement, it contemplates that both parties will
approach the negotiation with an open mind and make a
reasonable effort to reach a common ground of agreement
(Kiok Loy v. NLRC, G.R. No. 54334, January 22, 1986).
INDIVIDUAL BARGAINING
Individual bargaining as ULP
It is ULP when the Er attempts to negotiate with
individual workers rather than with the certified
bargaining agent (Insular Life Assurance Co.,Ltd.,
Employees Assoc.-NATU v. Insular Life Assurance Co.,
Ltd., G.R. No. L-25291, January 30, 1971).
BLUE SKY BARGAINING
Blue-sky bargaining
It is defined as making exaggerated or unreasonable
proposals.
NOTE: Whether or not the union is engaged in blue-sky
bargaining is determined by the evidence presented by the
union as to its economic demands. Thus, if the union
requires exaggerated or unreasonable economic demands,
then it is guilty of ULP (Standard Chartered Bank v.
Confessor, G.R. No. 114974, June 16, 2004).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
SURFACE BARGAINING
Surface bargaining
It is the act of going through the motions of
negotiating without any legal intent to reach an
agreement (Standard Chartered Bank v. Confessor,
G.R. No. 114974, June 16, 2004).
NOTE: Surface bargaining is a question of intent of the party
concerned and usually such intent can only be inferred from
the totality of the challenged partys conduct both at and
away from the bargaining table.
Featherbedding/make work activities
It refers to the practice of the union or its agents in
causing or attempting to cause an Er to pay or deliver
or agree to pay or deliver money or other things of
value, in the nature of an exaction, for services which
are not performed or not to be performed, as when a
union demands that the Er maintain personnel in
excess of the latters requirements, including the
demand for fee for union negotiations [Art. 249 (d),
LC].
NOTE: It is not featherbedding if the work is performed no
matter how unnecessary or useless it may be.
Sweetheart Doctrine
It is when a labor organization asks for or accepts
negotiations or attorneys fees from Ers as part of the
settlement of any issue in CB or any other dispute.
NOTE: The resulting CBA is considered as a sweetheart
contract a CBA that does not substantially improve the
Ees wages and benefits and whose benefits are far below
than those provided by law.
UNFAIR LABOR PRACTICE (ULP)
NATURE OF ULP
Unfair labor practices violate the constitutional right of
workers and employees to self-organization, are
inimical to the legitimate interests of both labor and
management, including their right to bargain
collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt
industrial peace and hinder the promotion of healthy
and stable labor-management relations.
Consequently, unfair labor practices are not only
violations of the civil rights of both labor and
management but are also criminal offenses against the
State which shall be subject to prosecution and
punishment as herein provided (Art. 247, LC).
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 LABOR RELATIONS LAW

Acts considered as ULP Assurance-NATU v. The Insular Life Co. Ltd, G.R.
No.L-25291, January 30, 1971).
The act complained of must have a proximate and
causal connection with the: NOTE: An expression which might be permissibly uttered by
1. Exercise of the Right to Self-organization one Er, might, in the mouth of a more hostile Er, be deemed
2. Exercise of the Right to CB improper and consequently actionable as a ULP.
NOTE: Not all illegal acts are ULP. Only those enumerated in
the LC are ULP. Q: Phil. Marine Officers Guild (PMOG) is a union
representing some of Philsteams officers and Cebu
ULP OF EMPLOYERS Seamens Association (CSA) is another union
representing some of Philsteams officers. PMOG
ULP committed by Ers sent a letter to Philsteam requesting for CB but the
company asked the former to first prove that it
1. Interference represents the majority. Simultaneously, Philsteam
2. Yellow dog condition interrogated its captains, deck officers and engineers
3. Contracting out while CSA likewise sent its demands to Philsteam.
4. Company unionism The company recognized CSA as representing the
5. Discrimination for or against union membership majority and entered into a CBA. Hence, PMOG
6. Discrimination because of testimony declared a strike. PMOG was subjected to villification
7. Violation of duty to bargain and Philsteams pier superintendent participated in
8. Paid negotiation the solicitation of membership for CSA. Is the
9. Gross violation of CBA company guilty of ULP?

Interference A: Yes. Although the company is free to make

It is the act of Er to interfere with, restrain or coerce
Ees in the exercise of their right to self-organization.
Test of interference
Whether the Er has engaged in conduct which, it may
reasonably be said, tends to interfere with the free
exercise of the Ees right to self-organization.
NOTE: Direct evidence that an Ee was in fact intended or
coerced by the statements of threats of the Er is not
necessary if there is a reasonable interference that the anti-
union conduct of the Er does have an adverse effect on self-
organization and CB (The Insular Life Assurance-NATU v. The
Insular Life Co. Ltd, G.R. No.L-25291, January 30, 1971).
Totality of Conduct Doctrine
It states that the culpability of Ers remarks is to be
evaluated not only on the basis of their implications,
but against the background of and in conjunction with
collateral circumstances.
interrogations as to its Ees union, the same should be
for a legitimate purpose and must not interfere with
the exercise of self-organization otherwise it is
considered as ULP. Moreover, Philsteams supervisory
Ees statement that PMOG is a money-making union,
which is made to appear to be said in behalf of the
union and the participation of the companys pier
superintendent in soliciting membership for the
competing union, is ULP for interfering with the
exercise of the right to self-organization (Philsteam
and Navigation v. Philippine Marine Officers Guild, G.R.
Nos. L-20667 and L-20669, October 29, 1965).
Other examples of acts of interference
1. Outright and unconcealed intimidation
2. Intimidating expressions of opinion by Er
3. An Er who interfered with the right to self-
organization before a union is registered can be
held guilty of ULP (Samahan ng mga
Manggagawa sa Bandolino-LMLC v. NLRC, G.R.
No. 125195, July 17, 1997).

NOTE: It is the prerogative of the company to promote,

Under this doctrine, expressions of opinion by an Er,
though innocent in themselves, frequently were held
to be ULP because of:
1. The circumstances under which they were uttered
2. The history of the particular Ers labor relations or
anti-union bias
3. Their connection with an established collateral
plan of coercion or interference (The Insular Life
transfer or even demote its Ees to other positions when the
interests of the company reasonably demand it. Unless there
are circumstances which directly point to interference by the
company with the Ees right to self-organization, the transfer
of an Ee should be considered as within the bounds allowed
by law (Rubberworld Phils. v. NLRC, G.R. No. 75704, July 19,
1989).
In order that interrogation would not be deemed coercive

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 Labor Law and Social Legislation
a. The Er must communicate to the Ee the purpose of
questioning
b. Assure him that no reprisal would take place
c. Obtain Ee participation voluntarily
d. Must be free from Er hostility to union organization
e. Must not be coercive in nature
Yellow dog condition
It is to require as a condition of employment that a
person or an Ee shall not join a labor organization or
shall withdraw from one to which he belongs.
Yellow dog contract
It is a promise exacted from workers as condition of
employment that they are not to belong to or
attempts to foster a union during their period of
employment.
Prohibition on yellow dog contract
Yellow dog contracts are null and void because:
1. It is contrary to public policy for it is tantamount
to involuntary servitude.
2. It is entered into without consideration for Ees in
waiving their right to self-organization.
3. Ees are coerced to sign contracts disadvantageous
to their family.
NOTE: This is one of the cases of ULP that may be committed
in the absence of an Er-Ee relationship.
Three usual provisions under a yellow dog contract
1. A representation by the Ee that he is not a
member of a labor union.
2. A promise by the Ee not to join a labor union.
3. A promise by the Ee that upon joining a labor
union, he will quit his employment.
Contracting out
It is to contract out services or functions being
performed by union members when such will interfere
with, restrain or coerce Ees in the exercise of their
rights to self-organization.
Contracting out services
GR: Contracting out services by the ER is not ULP per
se.
XPNs: The following are prohibited for being contrary
to law or public policy:
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
A. 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 Ees and reduction of work hours or
reduction or splitting of the bargaining unit.
(2) Contracting out of work with a Cabo.
(3) Taking undue advantage of the economic
situation or lack of bargaining strength of the
contractors Ees, 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
Ees 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 Ees in the exercise
of their rights to self-organization as provided in
Art. 248 (c) of the LC, as amended.
(7) Repeated hiring of Ees 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 Ees 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 and this is made known to the Ee at
the time of engagement.
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 LABOR RELATIONS LAW

Company union
(9) Refusal to provide a copy of the Service
Agreement and the employment contracts Labor organization in which, in whole or in part is Er-
between the contractor and the Ees deployed to controlled or Er-dominated.
work in the bargaining unit of the principals
certified bargaining agent to the sole and exclusive
bargaining agent (SEBA).
(10) Engaging or maintaining by the principal of Forms of company unionism
subcontracted Ees in excess of those provided for
in the applicable CBA or as set by the Industry 1. Initiation of the company union idea by:
Tripartite Council (ITC). a. Outright formation by Er or his
representatives
B. Contracting out of jobs, works or services b. Ee formation on outright demand or
analogous to the above when not done in good influence by Er and
faith and not justified by the exigencies of the c. Managerially motivated formation by
business (Sec. 7, D.O. 18-A). Ees

NOTE: Consistent with the authority of the SLE to restrict or
prohibit the contracting out of labor to protect the rights of
workers, it shall be mandatory for all persons or entities,
including cooperatives, acting as contractors, to register
with the Regional Office of DOLE where it principally
operates. Failure to register shall give rise to the
presumption that the contractor is engaged in labor-only
contracting (Sec. 14, D.O. 18-A).
Q: Company "A" contracts out its clerical and
janitorial services. In the negotiations of its CBA, the
union insisted that the company may no longer
engage in contracting out these types of services,
which services the union claims to be necessary in
the company's business, without prior consultation.
Is the union's stand valid or not? For what reasons?
(2001 Bar Question)
A: No. The union's stand is not valid. It is part of
management prerogative to contract out any work,
task, job or project except that it is an ULP to contract
out services or functions performed by union
members when such will interfere with, restrain or
coerce Ees in the exercise of their rights to self-
organization [Art. 248(c) of the LC].
Run-away shop
It is an industrial plant moved by its owners from one
location to another to escape labor regulations or
State laws or to discriminate against Ees at the old
plant because of their union activities. It may also be
the place where the Er transferred his business in case
of strike.
NOTE: Where a plant removal is for business reasons but the
relocation is hastened by anti-union motivation, the early
removal is ULP. It is immaterial that the relocation is
accompanied by a transfer of title to a new Er who is an alter
ego of the original Er.
2. Financial support to the union by:
a. Er defrays union expenses
b. Pays attorney's fees to the attorney who
drafted the Constitution or by-laws of
the union.
3. Er encouragement assistance - Immediately
granting of exclusive recognition as bargaining
agent without determining whether the union
represents the majority of the Ees
4. Supervisory assistance- Soliciting membership,
permitting union activities during work time or
coercing Ees to join the union by threats of
dismissal or demotion
Act of company-domination of union
This is to initiate, dominate, assist or otherwise
interfere with the formation or administration of any
labor organization including giving of financial or other
support to it or its organizers or supporters.
Reason why company unionism/captive unionism is
a form of ULP
It is considered ULP because the officers will be
beholden to the Ers and they will not look after the
interest of whom they represent.
Discrimination
It 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.

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Discriminatory discharge of an Ee
The underlying reason for the discharge must be
established in order to determine whether such an act
is discriminatory or not.
The fact that a lawful cause for discharge is available is
not a defense where the Ee is actually discharged
because of his union activities. If the discharge is
actually motivated by lawful reason, the fact that the
Ee is engaged in union activities at the time will lie
against the Er and prevent him from the exercise of
business judgment to discharge an Ee for cause (Phil.
Metal Foundries Inc. v. CIR, G.R. Nos. L-34948-49, May
15, 1979).
Q: Jobo has 3 hotels, the Taal Vista Lodge, Manila
Hotel and the Pines Hotel. Among the 3, Pines Hotel
had more Ees and the only one with a labor
organization. When the bonus was distributed
among the 3 hotels, Pines Hotel Ees received the least
amount compared to the Ees of Manila Hotel and Taal
Vista Lodge.Did the company commit ULP?
A: Yes. In this case, Pines Hotel Ees who were the most
numerous "would receive, a lesser bonus than the Ees
of the Manila Hotel and Taal Vista Lodge where neither
is there any existing labor organization nor the
complainant union has any member." The fact that
management granted Christmas bonus to its Ees, the
same should have been distributed pro rata among all
its Ees regardless of their place of work (Manila Hotel
Co. v. Pines Hotel Employees Association, G.R. No.L-
30139, September 28, 1972).
Q: Can an Er discriminate against an Ee without
committing ULP?
A: Yes. The Er is not guilty of ULP if it merely complies
in good faith with the request of the certified union for
the dismissal of Ees expelled from the union pursuant
to the union security clause in the CBA (Soriano v.
Atienza, G.R. No. L-68619, March 16, 1989).
Q: A profit sharing scheme was introduced by the
company for its managers and supervisors, who are
not members of the union, hence do not enjoy the
benefits of the CBA. The respondent union wanted to
participate with the scheme but was denied by the
company due to the CBA. Subsequently the company
distributed the profit sharing to the manager,
supervisors and other non-union member Ees. As a
result the union filed a notice of strike alleging ULP.Is
the non-extension of the profit sharing scheme to
union members discriminatory and an ULP?
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
A: No. There can be no discrimination when the Ees
are not similarly situated. The situation of union
members is different and distinct from non-union
members because only union members enjoy the
benefit under the CBA. The profit sharing scheme was
extended to those who do not enjoy the benefits of
the CBA. Hence, there is no discrimination and ULP is
not committed (Wise and Co., Inc. v. NLRC, G.R. No. L-
87672, October 13, 1989).
Q: Is dismissal of an Ee pursuant to a union security
clause a form of ULP?
A: No. Union security clauses in the CBA, if freely and
voluntarily entered into, are valid and binding. Thus,
the dismissal of an Ee by the company pursuant to a
labor unions demand in accordance with a union
security agreement does not constitute ULP
(Malayang Samahan ng mga Manggagawa sa M.
Greenfield v. Ramos,G.R. No. 113907, February 28,
2000).
A union member who is employed under an
agreement between the union and his Er is bound by
the provisions thereof since it is a joint and several
contract of the members of the union entered into by
the union as their agent (Manalang v. Artex Devt.,
G.R. No. L-20432, October 30, 1967).
Notice and hearing as a requisite in dismissal of Ee
pursuant to a union security clause
Although a union security clause in a CBA may be
validly enforced and dismissal pursuant thereto may
likewise be valid, this does not erode the fundamental
requirement of due process. The reason behind the
enforcement of union security clauses which is the
sanctity and inviolability of contracts cannot erode
ones right to due process.
Notwithstanding the fact that the dismissal was at the
instance of the federation and that it undertook to
hold the company free from any liability resulting from
such dismissal, the company may still be held liable if
it was remiss in its duty to accord the would-be
dismissed Ees their right to be heard on the matter.
Q: Mabeza and her co-Ees were asked by the
company to sign an affidavit attesting to the latters
compliance with pertinent labor laws. Mabeza signed
the affidavit but refused to swear to its veracity
before the City prosecutor. Mabeza then filed a LOA
which was denied by management. After sometime,
she attempted to return to work but the company
informed her not to report for work and continue
170
 LABOR RELATIONS LAW
with her unofficial leave. Did the company commit
ULP?
A: Yes. The act of compelling an Ee to sign an
instrument indicating the Ers compliance with Labor
laws which the company might have violated together
with the act of terminating or coercing those Ees to
cooperate is an act of ULP. This is analogous with Art.
248(f) of the LC which provides to dismiss, discharge
or otherwise prejudice or discriminate against an Ee
for having given or being about to give testimony
under this Code. For in not giving a positive testimony
in favor of the Er, Mabeza reserved not only her right
to dispute the claim but also to work for better terms
and condition (Mabeza v. NLRC, G.R No. 118506, April
18, 1997).
ULP in bargaining
When the act constitutes violation of the duty to
bargain collectively as prescribed in the LC it is
considered ULP in bargaining.
NOTE: A companys refusal to make counter-proposal, if
considered in relation to the entire bargaining process, may
indicate bad faith and this is especially true where the
unions request for a counter proposal is left unanswered
(Kiok Loy v. NLRC, G.R. No. L-54334, January 22, 1986).
Examples of ULP in bargaining
1. Delaying negotiations by discussing unrelated
matters
2. Refusal to accept request to bargain
3. Rejecting a unions offer to prove its majority
claim
4. Shutdown to avoid bargaining
5. Engaging in surface bargaining
Q: Balmar Farms Employees Association (BFEA) is
affiliated with Associated Labor Union (ALU). ALU
won in the certification election held in the company.
Thus, ALU sent its proposal for a CBA, but the
company refused to act on it alleging that BFEA is the
sole and exclusive bargaining representative and that
BFEA through its president had sent a letter informing
the company of its disaffiliation with ALU. Is the
company guilty of ULP for refusing to bargain
collectively?
A: Yes. ALU is the certified exclusive bargaining
representative after winning the certification election.
The company merely relied on the letter of
disaffiliation by BFEAs president without proof and
consequently refusing to bargain collectively
constitutes ULP. Such refusal by the company to
bargain collectively with the certified exclusive
171
bargaining representative is a violation of its duty to
collectively bargain which constitutes ULP (Balmar
Farms v. NLRC, G.R. No.73504, October 15, 1991).
Q: The Kilusang Kabisig, a newly-formed labor union
claiming to represent a majority of the workers in
the Microchip Corp., proceeded to present a list of
demands to the management for purposes of
Collective Bargaining. The Microchips Corp., a
multinational corp. engaged in the production of
computer chips for export, declined total with the
union leaders, alleging that they had not as yet
presented any proof of majority status. The Kilusang
Kabisig then charged Microchip Corp. with ULP, and
declared a "wildcat" strike wherein means of ingress
and egress were blocked and remote and isolated
acts of destruction and violence were committed.
Was the company guilty of an ULP when it refused to
negotiate with the Kilusang Kabisig? (1997 Bar
Question)
A: No. It is not ULP not to bargain with a union which
has not presented any proof of its majority status. Only
the labor organization designated or selected by the
majority of the Ees in an appropriate CB unit is
the exclusive representative of the Ees in such unit for
the purpose of collective bargaining. It is not a ULP for
an Er to ask a union requesting to bargain collectively
that such union first show proof of its being a majority
union [Philippine Diamond Hotel and Resort, Inc.
(Manila Diamond Hotel) v. Manila Diamond Hotel
Employees Union, G.R. No. 158075, June 30, 2006].
Paid negotiation
It is the act of the Er to pay negotiation or attorneys
fees to the union or its officers or agents as part of the
settlement of any issue in CB or any other dispute.
Violation of CBA considered as ULP
Only when the violation of the CBA is gross that the
same is considered as ULP. There must be a flagrant
and/or malicious refusal to comply with the economic
provision of the CBA.
NOTE: All the ULP acts must have a relation to the Ees
exercise of their right to self-organization. Anti-union or anti-
organization motive must be proved because it is a
definitional element of ULP.
If violation is not gross, it is not ULP but a grievance under
CBA. The grossly violate phrase is an amendment by R.A.
6715.
Q: A complaint for ULP was filed by a prosecutor of
the CIR against Alhambra company, upon the charges
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
of the union that 15 of its members employed as
drivers and helpers are discriminated for being
deprived of the benefits under the CBA with no
justifiable reason other than union membership. Is
the company guilty of ULP?
A: Yes. The refusal to extend the benefits and
privileges under the CBA to Ees constitutes ULP.
Failure on the part of the company to live up in good
faith to the terms of the CBA is a serious violation of
the duty to collectively bargain which again amounts
to ULP. The 15 drivers and helpers are found to be Ees
of the company, hence, the benefit and privileges
under the CBA should be extended to them (Alhambra
Industries v. CIR, G.R. No. L-25984, October 30, 1970).
Relief available in ULP cases
The following relief may be availed of:
1. Civil liability
NOTE: Recovery of civil liability in the administrative
proceedings shall bar recovery under the Civil Code (Art.
247, LC)
2. Criminal liability
NOTE: No criminal prosecution under this Title may be
instituted without a final judgment finding that a ULP
was committed. (Art. 247, LC)
3. Cease and desist order
4. Affirmative order
5. Court may order the Er to bargain
6. CBA may be imposed
7. Strike by union members
NOTE: ULP cases are not subject to compromise in view of
the public interest involve. The relation between capital and
labor is not merely contractual. They are impressed with
public interest that labor contracts must yield to common
good.
Q: Is the commission of an ULP by an Er subject to
criminal prosecution? (2005 Bar Question)
A: Yes. ULPs are not only violations of the civil rights of
both labor and management but are also criminal
offenses against the State which shall be subject to
prosecution and punishment (Art.247 LC; See also
B.P.Blg.386 as amended by R.A. 6715). However, the
criminal aspect can only be filed when the decision of
the labor tribunals, finding the existence of ULP, shall
have become final and executory.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Financial report furnished by the Er
Upon written request of an LLO, the Er should furnish
the Ee its annual audited financial statements,
including the balance sheet and the profit and loss
statement, within 30 calendar days from the date of
receipt of the request, after the union has been duly
recognized by the Er or certified as the sole and
exclusive bargaining representative of the Ees in the
bargaining unit, or within 60 calendar days before the
expiration of the existing CBA, or during the CB
negotiation.
Instance when Ers refusal to furnish financial
information is not an ULP
While the refusal to furnish the requested information
is in itself an ULP and also supports the interference of
surface bargaining, however, if the union failed to put
its request in writing, management cannot be held
liable for ULP (Standard Chartered Bank Employees
Union v. Confesor, G.R. No. 114974, June 16, 2004).
ULP OF LABOR ORGANIZATIONS
ULP of labor organizations
It shall be ULP for labor organizations, its officers,
agents or representatives:
1. To restrain or coerce Ees in the exercise of their
rights to self-organization. However, a labor
organization shall have the right to prescribe its
own rules with respect to the acquisition or
retention of membership
2. To cause or attempt to cause an Er to discriminate
against an Ee, including discrimination against an
Ee with respect to whom membership in such
organization has been denied or to terminate an
Ee on any ground other than the usual terms and
conditions under which membership or
continuation of membership is made available to
other members
3. To violate the duty, or refuse to bargain
collectively with the Er, provided it is the
representative of the Ees
4. To cause or attempt to cause an Er 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
5. To ask for or accept negotiations or attorney's
fees from Ers as part of the settlement of any issue
in Collective Bargaining or any other dispute or
6. To violate a CBA (Art. 248, LC).
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 LABOR RELATIONS LAW
Instance when interference by a labor organization is
not ULP
Interference by a labor organization in the exercise of
the right to organize is not considered ULP because it
is in itself a function of self-organizing.
Examples of interference which does not amount to
ULP
1. Union campaigns for membership even among
members of another union
2. Filing by a union of a petition to dislodge an
incumbent bargaining union
3. A bargaining union, through a union security
clause, requires an incoming Ee to join the union.
Union cannot coerce Ees to join a strike
A union violates the law when, to restrain or coerce
non-strikers from working during the strike, it
1. Assaults or threatens to assault them
2. Threatens them with the loss of their jobs
3. Blocks their ingress to or egress from the plant
4. Damages non-strikers automobiles or forces
them off the highway
5. Physically preventing them from working
6. Sabotages the Ers property in their presence,
thereby creating an atmosphere of fear or
violence
7. Demonstrates loudly in front of a non-strikers
residence with signs and shouts accusing the non-
striker of scabbing
8. Holding the non-striker up to ridicule
9. Seeking public condemnation of the non-striker
Union-induced discrimination
This pertains to the arbitrary use of union security
clause. A union member may not be expelled from the
union, and consequently from his job, for personal and
impetuous reasons or for causes foreign to the closed
shop agreement (Manila Mandarin Employees Union
v. NLRC, G.R. No. 76989, September 29, 1987).
Labor unions are not entitled to arbitrarily exclude
qualified applicants for membership and a closed-shop
applicants provision will not justify the Er in
discharging, or a union in insisting upon the discharge
of an Ee whom the union thus refuses to admit to
membership without any reasonable ground thereof
(Salunga v. CIR, G.R. No. L-22456, September 27,
1967).
Aspects of ULP
173
Under the LC, ULP has two aspects
1. Civil aspect
2. Criminal aspect.
NOTE: Civil aspect Filed in the LA together with claim for
damages arising from termination (ex: reinstatement)
Criminal aspect Filed in the regular courts. Commenced
only upon final decision by LA that party commits ULP.
No simultaneous filing is allowed. There must be a final
decision first by the LA.
Persons who may be criminally liable for ULP
1. On the part of the Er, only the officers and agents
of corporations, associations or partnerships who
have actually participated in, authorized or
ratified ULPs shall be held criminally liable.
2. On the part of the union, only officers, members
of governing boards, representatives or agents or
members of labor associations or organizations
who have actually participated in, authorized or
ratified the ULPs shall be held criminally liable.
Burden of proof in ULP cases
In ULP cases, it is the union which has the burden of
proof to present substantial evidence to support its
allegations of ULP committed by the Er. It is not
enough that the union believed that the Er committed
acts of ULP when the circumstances clearly negate
even a prima facie showing to warrant such a belief.
RIGHT TO PEACEFUL CONCERTED ACTIVITIES
Constitutional basis of strikes, lockouts and other
concerted activities
The State 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
(Sec. 3, Art. XIII, 1987 Constitution).
NOTE: The law does not look with favor upon strikes and
lockouts because of their disturbing and pernicious effects
upon the social order and the public interests; to prevent or
avert them and to implement Sec. 6, Art. XIV of the
Constitution, the law has created several agencies, namely:
the BLR, the DOLE, the Labor Management Advisory Board,
and the CIR (Luzon Marine Devt Union v. Roldan, G.R. No. L-
2660, May 30, 1950).
Concerted action
It is an activity undertaken by two or more Ees or by
one on behalf of others.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
NOTE: Not all concerted actions are strikes. They may only
be protest actions they do not necessarily cause work
stoppage by the protesters. A strike in contrast is always a
group action accompanied by work stoppage.
FORMS OF CONCERTED ACTIVITIES
A strike is a coercive measure resorted to by laborers
to enforce their demands. The idea behind a strike is
that a company engaged in a profitable business
cannot afford to have its production or activities
interrupted, much less, paralyzed (Phil. Can Co. v. CIR,
G.R. No. L-3021, July 13, 1950).

Forms of concerted activities Elements of strike

1. Strike 1. Existence of an Er-Ee relationship

2. Lockout 2. Existence of a labor dispute
3. Picketing 3. Employment relation is deemed to continue
4. Boycott although in a state of belligerent suspension
5. Other Concerted Activities 4. Temporary work stoppage
a. Collective Letter 5. Work stoppage is done through concerted action
b. Publicity 6. The striking group is a LLO; in case of a bargaining
c. Placards and Banners deadlock, it must be the Ees sole bargaining
d. Speeches Music and Broadcasts representative

Strike Different forms of strike

It means any temporary stoppage of work by the 1.
concerted action of Ees as a result of an industrial or
labor dispute [Sec.1 (uu), Rule I, Book V, IRR]. 2.
The term strike shall comprise not only concerted
work stoppages, but also slowdowns, mass leaves, sit- 3.
downs, attempts to damage, destroy or sabotage plant
equipment and facilities and similar activities. Thus,
the fact that the conventional term strike was not
used by the striking Ees to describe their common
course of action is inconsequential, since the 4.
substance of the situation and not its appearance, will
be deemed to be controlling.
The right to strike, while constitutionally recognized, is 5.
not without legal constrictions. Art. 264(a) of the LC,
as amended, provides that no strike or lockout shall be
declared after assumption of jurisdiction by the
President or the Secretary or after certification or 6.
submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving
the same grounds for the strike or lockout. The court
has consistently ruled that once the Secretary of Labor 7.
assumes jurisdiction over a labor dispute, such
jurisdiction should not be interfered with by the
application of the coercive processes of a strike or Economic strike v. ULP strike
lockout. A strike that is undertaken despite the
issuance by the Secretary of Labor of an assumption
order and/or certification is a prohibited activity and
thus illegal (Solidbank Corporation v. Ernesto U.
Gamier/ Solid Bank Union, G.R. No. 159460, November
15, 2010). As to
nature
Purpose of a strike
Legal Strike - One called for a valid purpose and
conducted through means allowed by law.
Illegal Strike - One staged for a purpose not
recognized by law, or if for a valid purpose,
conducted through means not sanctioned by law.
Economic Strike - One staged by workers to force
wage or other economic concessions from the Er
which he is not required by law to grant
(Consolidated Labor Association of the Phil. vs.
Marsman, G.R. No. L-17038, July 31, 1964).
ULP Strike - One called to protest against the Ers
acts of unfair practice enumerated in Art. 248
of the LC, as amended, including gross violation of
the CBA and union busting.
Slow Down Strike - One staged without the
workers quitting their work but by merely
slackening or by reducing their normal work
output.
Wild-Cat Strike - One declared and staged without
filing the required notice of strike and without the
majority approval of the recognized bargaining
agent.
Sit Down Strike - One where the workers stop
working but do not leave their place of work.
ECONOMIC
BASIS ULP STRIKE
STRIKE
Voluntary Involuntary strike; the
strike because LO is forced to go on
the Ee will strike because of the
declare a ULP committed against
strike to them by the Er. It is an
compel act of self-defense since

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2014 GOLDEN NOTES 174
 LABOR RELATIONS LAW

management the Ees are being Express statutory recognition of the workers right to
to grant its pushed to the wall and strike and the Ers right to lockout
demands their only remedy is to
stage a strike. The LC provides that workers shall have the right to
The CB agent engage in concerted activities for purposes of CB for
of the their mutual benefit and protection. The right of LLOs
appropriate to strike and picket and of Ers to lockout, consistent
Either the CB agent or
Who will bargaining with the national interest, shall continue to be
the LLO in behalf of its
initiate unit can recognized and respected. However, no labor union
members
declare an may strike and no Er may declare a lockout on grounds
economic involving inter-union and intra-union disputes.
strike
30 days from Right to strike or lockout not absolute
notice of strike
before the The exercise of these rights is subject to reasonable
As to the restrictions pursuant to the police power of the State.
intended date 15 days from the filing
cooling- It has been held that the right to strike, because of the
of actual strike of the notice of strike
off period more serious impact upon the public interest, is more
subject to the
7-day strike vulnerable to regulation than the right to organize and
ban select representatives for purposes of CB [National
The cooling-off period Federation of Sugar Workers (NFSW) v. Ovejera, et al.
may be dispensed with, G.R. No. L-59743, May 31, 1982].
and the union may take
immediate action in Picketing
case of dismissal from
No exception employment of their It is the act of marching to and fro the Ers premises
mandatory officers duly elected in which is usually accompanied by the display of placard
As to the and other signs, making known the facts involved in a
accordance with the
exception NOTE: Notice of labor dispute.
unions constitution
to the strike and strike
and by-laws, which may
cooling- vote may be NOTE: The right to picket as a means of communicating the
constitute union
off period dispensed with; facts of a labor dispute is a phase of the freedom of speech
they may strike busting where the
guaranteed by the Constitution. Picketing if peacefully
immediately existence of the union is
carried out, cannot be curtailed even in the absence of Er-Ee
threatened. It must still relationship (PAFLU v. Cloribel, G.R. No. L-25878, March 28,
observe the mandatory 1969).
7-day strike ban period
before it can stage a Constitional basis of the right to picket
valid strike
The right to picket is guaranteed under the freedom of
Lockout speech and of expression and to peacably assemble to
air grievances under Sec. 4, Art. III.
It means any temporary refusal of an Er to furnish work
as a result of an industrial or labor dispute [Art. 212 Right to picket not an absolute right
(p)].
While peaceful picketing is entitled to protection as an
Lockout amounting to ULP exercise of free speech, the courts are not without
power to confine or localize the sphere of
A lockout, actual or threatened, as a means of communication or the demonstration to the parties to
dissuading the Ees from exercising their rights is clearly the labor dispute, including those with related
an ULP. However, to hold an Er guilty, the evidence interests, and to insulate establishments or persons
must establish that the purpose was to interfere with with no industrial connection or having interest totally
the Ees exercise of their rights. foreign to the context of the dispute (Liwayway Pub.,
Inc. v. Permanent Concrete Workers Union, G.R. No. L-
25003, October 23, 1981).

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175 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

The right to peaceful picketing shall be exercised by A boycott may be said to include any activity on the
the workers with due respect for the rights of part of a labor organization whereby it is sought
others. No person engaged in picketing shall commit through concerted action, other than by reason of
any act of violence, coercion or lawful competition, to obtain withdrawal of public
intimidation. Stationary picket, the use of means like patronage from one in business (Burke v. Adams Dairy,
placing of objects to constitute permanent blockade Inc., 352 U.S. 969).
or to effectively close points of entry or exit in
company premises are prohibited by law. NOTE: Ees may lawfully exert economic pressure on their Er
by means of a boycott, provided they act peaceably and
Strike v. Picketing honestly. They have a right to persuade the public by any
lawful means to refuse to patronize the Er. Union members
are entitled to advise the public of the existence of their
STRIKE PICKETING controversy with the Er and may request their friends and
To withhold or to stop To march to and from the the public generally to assist them by not patronizing the Er.
work by concerted action Ers premises, usually In so doing, there is no element of threat or coercion or
of Ees as a result of an accompanied by the unlawful interference with anothers business (51A, C.J.S.
industrial or labor display of placards and Sec. 286).
dispute. The work other signs making
stoppage may be known the facts involved Slowdown
accompanied by in a labor dispute. It is a
picketing by the striking strike activity separate It is a method by which ones Ees, without seeking a
Ees outside of the and different from actual complete stoppage of work, retard production and
company compound. stoppage of work. distribution in an effort to compel compliance by the
Focuses on stoppage of Focuses on publicizing Er with the labor demands made upon him.
work the labor dispute and its
incidents to inform the Q: Does an overtime boycott or work slowdown
public of what Is by the Ees constitute a strike and hence a violation of
happening in the the CBAs No strike, no lockout clause?
company struck against.
A: Yes. The concept of a slowdown is a "strike on the
NOTE: A strike conducted by a union which acquired its legal installment plan." It is a willful reduction in the rate of
personality after the filing of its notice of strike and the work by concerted action of workers for the purpose
conduct of the strike vote is illegal. of restricting the output of the Er, in relation to a labor
dispute; as an activity by which workers, without a
Strike-breaker complete stoppage of work, retard production or their
performance of duties and functions to compel
Any person who obstructs, impedes, or interferes with management to grant their demands.
by force, violence, coercion, threats, or intimidation
any peaceful picketing affecting wages, hours or Such a slowdown is generally condemned as
conditions of work or in the exercise of the right of self- inherently illicit and unjustifiable, because while the
organization or CB [Art. 212 (r), LC]. Ees "continue to work and remain at their positions
and accept the wages paid to them," they at the same
Strike area time "select what part of their allotted tasks they care
to perform of their own volition or refuse openly or
It means the establishment, warehouses, depots, secretly, to the Er's damage, to do other work;" in
plants or offices, including the sites or premises used other words, they "work on their own terms" (Interphil
as runaway shops, of the Er struck against, as well as Laboratories Employees Union-FFW v. Interphil
the immediate vicinity actually used by picketing Laboratories, Inc., G.R. No. 142824, December 19,
strikers in moving to and fro before all points of 2001).
entrance to and exit from said establishment [Sec. 1
(vv), Rule I, Book V, IRR]. Q: The Ees wrote and published a letter to the bank
president, demanding his resignation on the grounds
Boycott of immorality, nepotism, favoritism and
discrimination in the appointment and promotion of
It is an attempt, by arousing a fear of loss, to coerce bank Ees. The bank dismissed the Ees for the alleged
others, against their will to withhold from one libelous letter. Were the Ees engaged in a concerted
denominated unfriendly to labor their beneficial activity?
business intercourse.

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 LABOR RELATIONS LAW
A: Yes. Assuming that they acted in their individual
capacities when they wrote the letter, they were
nonetheless protected, for they were engaged in a
concerted activity, in their right of self-organization
that includes concerted activity for mutual aid and
protection. Any interference made by the company
will constitute as ULP.
The joining in protests or demands, even by a small
group of Ees, if in furtherance of their interests as such
is a concerted activity protected by the Industrial
Peace Act. It is not necessary that union activity be
involved or that Collective Bargaining be
contemplated (Republic Savings Bank v. CIR, G.R. No.
L-20303, September 27, 1967).
Q: May the grievances of the Ees be published in
newspapers, placards, and banners?
A: Members of a labor union may, without
authorization by statute, make known the facts of a
labor dispute, for freedom of speech is guaranteed by
the Constitution. Striking Ees, too, have a right to
acquaint the public with the fact of the existence of the
strike setting forth their claims in a controversy over
terms and conditions of employment by sign, handbill
or newspaper, advertisement as a legitimate means of
economic coercion (31 Am. Jur., Sec. 274).
It is generally conceded that a striker having the right
to apprise the public of the fact of the strike and solicit
its support may inscribe his grievances upon placards
and banners to be seen at a distance and to be read by
many at the same time and that he may carry such
placards or banners upon a public street, provided the
inscription is not libellous or otherwise unlawful (31
Am. Jur., Sec. 278).
Q: Does a strike staged by resigned Ees fall under the
ambit of concerted actions protected by law?
A: No. Resigned Ees mass action is not a strike
because Ees who go on strike do not quit their
employment. Ordinarily, the relationship of Er and Ee
continues until one of the parties acts to sever the
relationship or they mutually act to accomplish that
purpose. As they did not assume the status of strikers,
their protest retirement/resignation was not a
concerted activity which was protected by law
(Enrique v. Zamora, G.R. No. L-51382, December 29,
1986).
Q: PHIMCO argues that the strike staged by its Ees
was illegal as they committed the prohibited acts
under Art. 264(e) of the LC such as blocking the
ingress and egress of the company premises. The Ees,
177
on the other hand, submit that the picket was
peaceful and no human barricade blocked the
company premises. May a peaceful picketing of Ees
be held illegal?
A: Yes. Despite the validity of the purpose of a strike
and compliance with the procedural requirements, a
strike may still be held illegal where the means
employed are illegal. The means become illegal when
they come within the prohibitions under Art. 264(e) of
the LC. Protected picketing does not extend to
blocking ingress to and egress from the company
premises, and, the fact 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 (PHIMCO Industries, Inc. v. PHIMCO
Industries Labor Association, G.R. No. 170830, August
11, 2010).
NOTE: Even if the purpose of a strike is valid, the strike may
still be held illegal where the means employed are illegal.
Thus, the employment of violence, intimidation, restraint or
coercion in carrying out concerted activities which are
injurious to the right to property renders a strike illegal. And
so is picketing or the obstruction to the free use of property
or the comfortable enjoyment of life or property, when
accompanied by intimidation, threats, violence, and
coercion as to constitute nuisance (Soriano Aviation v.
Employees Association of A. Soriano Aviation, G.R. No.
166879, August 14, 2009).
Q: 18 AER employees staged a walkout and
assembled illegally in the company premises without
any reason. AER management asked the employees
to go back to work but the employees refused. They
walked out of the company premises and proceeded
to the office of AER-PRSC on another street. They
tried to cart away AERs line boring machine and
threatened and forced the guards and personnel to
open the AER-PSC compound. They occupied the
AER-PSC premises for several hours,
thus, disrupting the work of the other employees and
AERs services to its clients. They left after the police
intervened and negotiated with them. AER
management required the 18 employees to explain
why they should not be dismissed. Although the
employees submitted their explanations, AER still
terminated the services of the 18 employees. Is AER
justified in dismissing the 18 employees for engaging
in a sitdown strike?
A: No. The penalty of dismissal against the striking
Ees, who only staged a one day walkout, is too severe.
It is not in accordance with settled and authoritative
doctrine and legal principles that a mere finding of the
illegality of a strike does not automatically warrant a
wholesale dismissal of the strikers from their
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
employment and that a premature or improvident
strike should not be visited with a consequence so
severe as dismissal where a penalty less punitive
would suffice (Automotive Engine Rebuilders, Inc. v.
Progresibong Unyon ng mga Manggagawa ng AER,
G.R. No. 160138, July 13, 2011).
WHO MAY DECLARE A STRIKE OR LOCKOUT
Declaration of a strike or lockout
The following may declare a strike or lockout:
1. Any certified or duly recognized bargaining
representative may declare a strike in cases
of bargaining deadlocks and ULP. The Er may
declare a lockout in the same cases.
2. In the absence of a certified or duly
recognized bargaining representative, any
LLO in the establishment may declare a strike
but only on grounds of ULP [Sec. 6, Rule XXII,
Book V, Implementing Rules, as amended by
D.O. 40-03].
NOTE: 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 Er and a minority union.
Grounds for declaration of strike or lockout
1. Collective Bargaining Deadlock Economic
2. ULP Political
NOTE: It is possible to change an economic strike into a ULP
strike (Consolidated Labor Assn of the Phils. v. Marsman and
Co., G.R. No. L-17038, July 31, 1964).
Conversion Doctrine
It is when a strike starts as economic and later, as it
progresses, it becomes a ULP, or vice versa.
Q: Because of financial problems, the company
decided to temporarily shutdown its operations at
the dyeing and finishing division. It notified the DOLE
of the shutdown. Raymund Tomaroy with 16
members of the union staged a picket in front of the
companys compound, carrying placards. He
demanded a resumption of work and 13th month pay.
The company filed a petition to declare the strike
illegal. The union argues that they did not stage a
strike, for considering that the dyeing and finishing
division of the company was shutdown, it could not
have caused a work stoppage. Was the action of the
union a strike?
A: Yes. The concerted efforts of the members of the
union and its supporters caused a temporary work
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
stoppage. The allegation that there can be no work
stoppage because the operation in the division had
been shut down is of no consequence. It bears
stressing that the other divisions were fully
operational (Bukluran ng Manggagawa sa Clothman
Knitting Corp. v. CA, G.R. No. 158158, January 17,
2005).
Strike cannot be converted into a lockout
A strike cannot be converted into a pure and simple
lockout by the mere expedient of filing before the trial
court a notice of offer to return to work during the
pendency of the labor dispute between the union and
the Er (Rizal Cement Workers Union v. CIR, G.R. No. L-
18442, November 30, 1962).
Instances where a strike or lockout cannot be
declared
1. Violations of CBAs, except flagrant and/or
malicious refusal to comply with economic
provisions.
2. Inter-union disputes
3. Intra-union disputes
4. Failure to file a notice of strike or lockout or
without necessary strike or lockout vote obtained
and reported to the NCMB.
5. After assumption of jurisdiction by the SLE has
been declared
6. After certification or submission of the dispute to
compulsory or voluntary arbitration
7. There is already a pending case involving the same
grounds for the strike or lockout.
8. Labor standards cases such as wage orders. (Sec.
5, Rule XXII, Book V, Implementing Rules, as
amended by D.O. 40-03)
Occurrence of deadlock in collective bargaining
A deadlock arises when there is an impasse which
presupposes reasonable effort at good faith in
bargaining which, despite noble intentions, does not
conclude in agreement between the parties.
Internal union dispute
It includes all disputes or grievances arising from any
violation of or disagreement over any provision of the
constitution and by-laws of a union, including any
violation of the rights and conditions of union
membership provided for in this LC.
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 LABOR RELATIONS LAW
Labor dispute
Any controversy or matter concerning terms or
conditions or representation of persons in negotiating,
fixing, maintaining, changing or arranging the terms
and conditions of employment, regardless of whether
or not the disputants stand in the proximate relation
of Ers and Ees (Gold City Integrated Port Services, Inc.
v. NLRC, G.R. No. 103560, July 6, 1995).
Instances when a person or entity is considered as
participating or interested in a labor dispute
1. If relief is sought against him or it, and
2. He or it is engaged in the same industry, trade,
craft, or occupation in which such dispute occurs,
or
3. Has a direct or indirect interest therein, or
4. Is a member, officer, or agent of any association
composed in whole or in part of Ees or Ers
engaged in such industry, trade, craft, or
occupation
REQUISITES FOR A VALID STRIKE AND VALID
LOCKOUT
Requisites of a lawful strike / lockout
The requirements for a valid strike or lockout are as
follows:
1. It must be based on a valid and factual ground;
2. A strike or lockout notice shall be filed with the
NCMB at least 15 days before the intended date
of the strike or lockout if the issues raised are
ULPs, or at least 30 days before the intended
date thereof if the issue involves bargaining
deadlock.
NOTE: The failure of the union to serve the company a
copy of the notice of strike is a clear violation of Section
3, Rule XXII, Book V of the Rules Implementing the LC.
The Constitutional precepts of due process mandate
that the other party be notified of the adverse action of
the opposing party (Filipino Pipe and Foundry Corp. v.
NLRC, G.R. No. 115180, November 16, 1999).
3. In cases of dismissal from employment of union
officers duly elected in accordance with the
union constitution and by-laws, which may
constitute union busting where the existence of
the union is threatened, the 15-day cooling-off
period shall not apply and the union may take
action immediately after the strike vote is
conducted and the result thereof submitted to
the DOLE.
179
4. Notice of conduct of strike vote 24 hours before
the intended strike is filed with the DOLE.
5. A strike must be approved by a majority vote of
the members of the union and a lockout must
be approved by a majority vote 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
that purpose.
6. A strike or lockout vote shall be reported to the
NCMB-DOLE Regional Branch at least 7 days
before the intended strike or lockout subject to
the cooling-off period.
7. In the event the result of the strike/lockout
ballot is filed within the cooling-off period, the
7-day requirement shall be counted from the
day following the expiration of the cooling-off
period (NSFW vs. Ovejera, G.R. No. 59743, May
31, 1982).
In case of dismissal from employment of union
officers which may constitute union busting, the
time requirement for the filing of the Notice of
Strike shall be dispensed with but the strike vote
requirement, being mandatory in character, shall
in every case be complied with.
NOTE: The purpose of the 7 day strike ban is to give
DOLE an opportunity to verify whether the projected
strike really carries the imprimatur of the majority of
the union members in addition to the cooling-off period
before the actual strike (Lapanday Workers Union,
et.al. v. NLRC, G.R. Nos. 95494-97, September 7, 1995).
8. The dispute must not be the subject of an
assumption of jurisdiction by the President or
the SLE, a certification for compulsory
arbitration, or submission to compulsory or
voluntary arbitration or a subject of a pending
case involving the same grounds for the strike
or lockout.
Effect of non-compliance with the requisites of a
strike
The strike may be declared illegal.
Cooling-off period
It is the period of time given by the NCMB to mediate
and conciliate the parties. It is the span of time allotted
by law for parties to settle their disputes in a peaceful
manner before staging a strike or lockout.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
NOTE: Cooling-off and waiting period may be done
simultaneously.
Q: Johnny is the duly elected President and principal
union organizer of the Nagkakaisang Manggagawa
ng Manila Restaurant (NMMR), a LLO. He was
unceremoniously dismissed by management for
spending virtually 95% of his working hours in union
activities. On the same day Johnny received the
notice of termination, the labor union went on strike.
Management filed an action to declare the strike
illegal, contending that
1. The Union did not observe the cooling-off
period mandated by the LC; and
2. The Union went on strike without complying
with the strike-vote requirement under the LC.
Rule on the foregoing contentions with reasons.
(2009 Bar Question)
A:
1. The conduct of a strike action without observing
the cooling-off period is a violation of one of the
requirements of law which must be observed. The
cooling-off periods required by Art. 263 (c) and (f)
of the LC are to enable the DOLE to exert efforts
to amicably settle the controversy and for the
parties to review and reconsider their respective
positions during the cooling-off periods. But the
LC also provides that if the dismissal constitutes
union busting, the union may strike immediately.
2. The conduct of the strike action without a strike
vote violates Art. 263 (f) In every case, the
union or the Er shall furnish the DOLE the results
of the voting at least 7 days before the intended
strike to enable the DOLE and the parties to exert
the last effort to settle the dispute without strike
action.
Q: NFSW, the bargaining agent of Central Azucarera
de la Carlota (CAC) rank-and-file Ees, filed a notice of
strike based on non-payment of the 13th month pay
and 6 days thereafter they held the strike. A day after
the commencement of the strike, a report of the
strike-vote was filed by NFSW with DOLE. CAC filed a
petition to declare the strike illegal due to non-
compliance with the 15-day cooling off period and
the strike was held before the lapse of 7 days from
the submission to the DOLE of the result of the strike
vote. Was the strike held by NFSW legal?
A: No. The cooling-off period in Art. 264(c), LC and the
7-day strike ban after the strike-vote report prescribed
in Art. 264(f) of the LC were meant to be mandatory.
The law provides that the labor union may strike
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
should the dispute remain unsettled until the lapse of
the requisite number of days from the filing of the
notice, this clearly implies that the union may not
strike before the lapse of the cooling-off period. The
cooling-off period is for the DOLE to exert all efforts at
mediation and conciliation to effect a voluntary
settlement.
The mandatory character of the 7-day strike ban is
manifest in the provision that in every case the union
shall furnish the DOLE with the results of the voting at
least 7 days before the intended strike. This period is
to give time to verify that a strike vote was actually
held (NFSW v. Ovejera, G.R. No. L-59743, May 31,
1982).
Purpose of giving notice of the conduct of a strike
vote to the NCMB at least 24 hours before the
meeting for the said notice
1. Inform the NCMB of the intent of the union to
conduct a strike vote;
2. Give the NCMB ample time to decide on whether
or not there is a need to supervise the conduct of
the strike vote to prevent any acts of violence and
or irregularities;
3. Ample time to prepare for the deployment of the
requisite personnel (Capitol Medical Center v.
NLRC, G.R. No. 147080, April 26, 2005).
Legality of no strike/lockout clause
A no strike/lockout clause is legal but it is applicable
only to economic strikes, not ULP strikes. As a
provision in the CBA, it is a valid stipulation although
the clause may be invoked by an Er only when the
strike is economic in nature or one which is conducted
to force wage or other concessions from the Er that
are not mandated to be granted by the law itself. It
would be inapplicable to prevent a strike which is
grounded on ULP (Panay Electric Co. v. NLRC, G.R. No.
102672, October 4, 1995); (Malayang Samahan ng
mga Manggagawa sa Greenfield v. Ramos, G.R. No.
113907, February 28, 2000).
Preventive mediation case
It involves labor disputes which are the subject of a
formal or informal request for conciliation and
mediation assistance sought by either or both parties
or upon the initiative of the NCMB [Sec. 1 (mm), Rule
I, Book V, IRR].
NOTE: The regional branch may treat the notice as
preventive mediation case upon agreement of the parties.
180
 LABOR RELATIONS LAW
Legal basis for the conversion of a notice of strike to
preventive mediation
It is in pursuance of the NCMBs duty under the Rules
Implementing the LC to exert all efforts at mediation
and conciliation to enable the parties to settle the
dispute amicably and in line with the state policy of
favoring voluntary modes of settling labor disputes.
And a strike mounted by the union after the NCMB
dropped the notice of strike from its docket of notice
of strikes and during the pendency of preventive
mediation proceedings would be illegal (San Miguel
Corporation v. NLRC et al., G.R. No. 119293, June 10
,2003).
Duty to declare that the notice of strike or lockout has
been converted into preventive mediation case
Upon the recommendation of the conciliator or
mediator handling the labor dispute, the Director of
the Regional Branch of the NCMB which has
jurisdiction over the labor dispute has the duty to
declare and inform the parties that the issues raised or
the actual issues involved are not proper subjects of a
Notice of Strike or Lockout has been converted into a
Preventive Mediation Case without prejudice to
further conciliation or upon the request of either or
both parties.
Contents of the notice of strike or lockout
1. Name and addresses of Er
2. Union involved
3. Nature of the industry to which the Er belongs
4. Number of union members
5. Workers in the bargaining unit
6. Other relevant date
7. In case of bargaining deadlocks: unresolved issues,
written proposals of the union, counter-proposals of
the Er and proof of request for conference to settle
differences
8. In case of ULP: The acts complained of, and the
efforts taken to resolve the dispute
NOTE: NCMB shall inform the concerned party in case notice
does not conform to the requirements.
Actions to be taken by the NCMB on the notice of
strike of strike or lockout
1. Upon receipt of notice, the regional branch of the
NCMB shall exert all efforts at mediation and
conciliation to enable the parties to settle the dispute
amicably. It shall also encourage the parties to submit
the dispute to voluntary arbitration.
181
2. The regional branch of the NCMB may, upon
agreement of the parties, treat a notice as a preventive
mediation case.
3. During the proceedings, the parties shall not do any
act which may disrupt or impede the early settlement
of the dispute. They are obliged, as part of their duty
to bargain collectively in good faith and to participate
fully and promptly in conciliation meetings called by
the regional branch of the NCMB.
4. A notice, upon agreement of the parties, may be
referred to alternative modes of dispute resolution,
including voluntary arbitration.
Q: Was the strike held by the union legal based on
the fact that the notice of strike only contained
general allegations of ULP?
A: No. In cases of ULP, the notice of strike shall as far
as practicable, state the acts complained of and the
efforts to resolve the dispute amicably (Tiu v. NLRC,
G.R. No. 123276, August 18, 1997).
Q: Fil Transit Employees Union filed a notice of strike
with the Bureau of Labor Relations because of alleged
ULP of the company. Because of failure to reach an
agreement the union went on strike. Several Ees
were dismissed because of the strike. The union filed
another notice of strike alleging ULP, massive
dismissal of officers and members, coercion of Ees
and violation of workers rights to self-organization.
The DOLE after assuming jurisdiction over the
dispute, ordered all striking Ees including those who
were dismissed to return to work. The company,
however, countered that no strike vote had been
obtained before the strike was called and the result
of the strike vote was not reported to DOLE. Was the
strike held by the union illegal for failure to hold a
strike vote?
A: Yes. There is no evidence to show that a strike vote
had in fact been taken before a strike was called. Even
if there was a strike vote held, the strike called by the
union was illegal because of non-observance by the
union of the mandatory 7-day strike ban counted from
the date the strike vote should have been reported to
the DOLE (First City Interlink Transportation Co., Inc. v.
Confessor, G.R. No. 106316, May 5, 1997).
Tests in determining the legality of strike
The following tests must be satisfied:
1. Purpose test The strike must be due to either
bargaining deadlock and/or the ULP
2. Compliance with the procedural and substantive
requirements of the law (See requisites of a valid
strike).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
3. Means employed test It states that a strike may be
legal at its inception but eventually be declared illegal
if the strike is accompanied by violence which is
widespread, pervasive and adopted as a matter of
policy and not mere violence which is sporadic which
normally occur in a strike area.
Examples of strike and their legality
1. Sit-down strike Characterized by a temporary
work stoppage of workers who seize or occupy
property of the Er or refuse to vacate the premises
of the Er.
Illegal Amounts to a criminal act because of the
Ees trespass on the premises of the Er
2. Wildcat strike A work stoppage that violates the
labor contract and is not authorized by the union.
Illegal Because it fails to comply with certain
requirements of the law, to wit: notice of strike,
vote and report on strike vote
3. Slowdown Strike on an installment plan; an
activity by which workers, without complete
stoppage of work, retard production or their
performance of duties and functions to compel
management to grant their demands
Illegal Ees work on their own terms; while the
Ees continue to work and remain in their positions
and accept wages paid to them, they at the same
time select what part on their allotted tasks they
care to perform on their own volition or refuse
openly or secretly
4. Sympathetic strike Work stoppages of workers
of one company to make common cause with
other strikers or other companies without
demands or grievances of their own against the Er
Illegal There is no labor dispute between the
workers who are joining the strikers and the
latters Er
5. Secondary strike Work stoppages of workers of
one company to exert pressure on their Er so that
the latter will in turn bring pressure upon the Er of
another company with whom another union has a
labor dispute
Illegal There is no labor dispute involved.
NOTE: A strike can validly take place only in the
presence of and in relation to a labor dispute between
Er and Ee.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
6. Welga ng bayan (Cause Oriented Strikes) A
political strike and therefore there is neither a
bargaining deadlock nor any ULP
Illegal It is a political rally
7. Quickie strikes - Brief and unannounced
temporary work stoppage
Illegal- Failure to comply with notice
requirements and etc.
Q: A is a member of the labor union duly recognized
as the sole bargaining representative of his company.
Due to a bargaining deadlock, 245 members of the
500-strong union voted on March 13, 2010 to stage a
strike. A notice of strike was submitted to the NCMB
on March 16, 2010. Seven days later the workers
staged a strike. In the course of which, A had to leave
to attend to his wife who just gave birth. The union
members later intimidated and barred other Ees from
entering the work premises, thus paralyzing the
business operations of the company. A was dismissed
from employment as a consequence of the strike.
1. Was the strike legal? Explain.
2. Was As dismissal valid? Why or why not?
(2010 Bar Question)
A:
1. No. First, the union failed to satisfy the
required majority vote of the union
membership approving the conduct of a
strike [Art. 263 (f), LC; Sec. 11, Rule XXII,
Department Order No. 40-03]. Second, the
strike was illegal due to the non-observance
of the 30-day cooling off period by the union
[Art. 263 (c), LC].
2. No. A, as an ordinary striking worker, may not
be declared to have lost his employment
status by mere participation in an illegal
strike, unless there is proof that he knowingly
participated in the commission of illegal acts
during the strike (Art. 264, LC; Arellano
University Employees and Workers Union v.
Court of Appeals, 502 SCRA 219).
Q: Two unions, joined a welga ng bayan. The unions,
led by their officers, staged a work stoppage which
lasted for several days, prompting FILFLEX and BIFLEX
Corporations to file a petition to declare the work
stoppage illegal for failure to comply with procedural
requirements. Did the the Ees commit an illegal work
stoppage?
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 LABOR RELATIONS LAW
A: Yes. Ees, who have no labor dispute with their Er
but who, on a day they are scheduled to work, refuse
to work and instead join a welga ng bayan commit an
illegal work stoppage. There being no showing that the
two unions notified the corporations of their intention,
or that they were allowed by the corporations, to join
the welga ng bayan, their work stoppage is beyond
legal protection [BIFLEX Phils. Inc. Labor Union
(NAFLU) vs. FILFLEX Industrial and Manufacturing
Corp., G.R. No. 155679, December 19, 2006].
Enjoinment of strike
GR: No strikes arising from a labor dispute may be
enjoined.
XPNs:
1. Art. 263(g) - Assumption order by SLE
2. Art. 218(e) - Enjoining or restraining any actual or
threatened commission of any unlawful act in any
labor dispute
REQUISITES FOR LAWFUL PICKETING
Requisites for lawful picketing
1. It should be peacefully carried out;
2. There should be no act of violence, coercion or
intimidation;
3. The ingress to (entrance) or egress from (exit)
the company premises should not be
obstructed;
4. Public thoroughfares should not be impeded.
Effect of the absence of Er-Ee relationship on
picketing
If peacefully carried out, picketing cannot be
prohibited even in the absence of Ee-Er relationship
(PAFLU v. CFl, G.R.L-49580, January 17, 1983).
ASSUMPTION OF JURISDICTION BY THE SECRETARY
OF LABOR OR CERTIFICATION OF THE LABOR
DISPUTE TO THE NLRC FOR COMPULSORY
ARBITRATION
Power of the SLE to assume jurisdiction over a labor
dispute or certify it to the NLRC for compulsory
arbitration
The SLE may assume jurisdiction over a labor dispute,
or certify it to the NLRC for compulsory arbitration, if,
in his opinion, it may cause or likely to cause a strike or
lockout in an industry indispensable to the national
interest. The President may also exercise the power to
assume jurisdiction over a labor dispute.
183
Industries considered as indispensable to the
national interest
1. Public utilities
2. Companies engaged in the generation or
distribution of energy
3. Banks
4. Schools
5. Hospitals; and
6. Export oriented industries
Issues that the SLE may resolve when he assumes
jurisdiction over a labor dispute
1. Issues submitted to the SLE for resolution and
such issues involved in the labor dispute itself (St.
Scholasticas College v. Torres, G.R. No. 100158,
June 2, 1992).
2. SLE may subsume pending labor cases before LAs
which are involved in the dispute and decide even
issues falling under the exclusive and original
jurisdiction of LAs such as the declaration of
legality or illegality of strike (Intl. Pharmaceuticals
v. SLE, G.R. Nos. 92981-83, January 9, 1992).
NOTE: Power of SLE is plenary and discretionary (St. Lukes
Medical Center v. Torres, G.R. No. 99395, June 29, 1993).
Effect of such assumption or certification of labor
dispute to the NLRC
The following are the effects:
1. On intended or impending strike or lockout
Automatically enjoined even if a Motion for
Reconsideration is filed;
2. On actual strike or lockout Strikers or locked out
Ees should immediately return to work and Er should
readmit them back; and
3. On cases filed or may be filed all shall be
subsumed/absorbed by the assumed or certified
case except when the order specified otherwise. The
parties to the case should inform the SLE of pendency
thereof.
Extent of the powers of the President or the SLE
during strikes/lockouts
1. May determine the industries, which are in his
opinion indispensable to national interest
2. May intervene at any time and assume jurisdiction
over any such labor dispute in order to settle or
terminate the same [Art. 263(g), LC].
NOTE: The decision of the President or the SLE is final and
executory after receipt thereof by the parties.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Extent of the power of the President or the SLE to
issue assumption and certification orders
The power to issue assumption and certification
orders is an extraordinary authority strictly limited to
national interest cases and granted to the President or
to the SLE, which can justifiably rest on his own
consideration of the exigency of the situation in
relation to the national interest.
Under the LC, as amended, the SLE is vested with the
discretionary power to decide not only the question of
whether to assume jurisdiction over a given labor
dispute or certify the same to the NLRC, but also the
determination of the industry indispensable to
national interest.
The President shall not be precluded from intervening
at any time and assuming jurisdiction over any labor
dispute involving industries indispensable to national
interest in order to settle or terminate the same.
Under the LC, as amended, the SLE 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 DOLE before whom such
dispute is pending that the termination may cause a
serious labor dispute or is in the implementation of a
mass lay-off.
Nature of a return-to-work order
A return-to-work order is a valid statutory part and
parcel of the assumption of jurisdiction and
certification orders given the predictable prejudice the
strike could cause not only to the parties but more
especially to the national interest. Stated otherwise,
the assumption of jurisdiction and the certification
to the NLRC has the effect of automatically enjoining
the strike or lockout, whether actual or intended, even
if the same has not been categorically stated or does
not appear in the assumption or certification
order. It is not a matter of option or voluntariness but
of obligation. It must be discharged as a duty even
against the workers will. The worker must return to
his job together with his co-workers so that the
operation of the company can be resumed and it can
continue serving the public and promoting its
interest. It is executory in character and shall be strictly
complied with by the parties even during the
pendency of any petition questioning their validity
precisely to maintain the status quo while the
determination is being made (Union of Filipro
Employees vs. Nestle Philippines, Inc., GR No. 88710-
13, December 19, 1990).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Return-to-work order automatically carried in an
assumption order
It is not necessary for the SLE to issue a return-to-work
order in an assumption order. The mere issuance of an
assumption order automatically carries with it a
return-to-work order although not expressly stated
therein (TSEU-FFW v. CA, G.R. Nos. 143013-14,
December 18, 2000).
A return to work order may be validly issued pending
determination of the legality of the strike
Where the return to work order is issued pending the
determination of the legality of the strike, it is not
correct to say that it may be enforced only if the strike
is legal and may be disregarded if illegal. Precisely, the
purpose of the return to work order is to maintain the
status quo while the determination is being made
(Sarmiento v. Tuico, G.R. Nos. 75271-73, June 27,
1988).
Return-to-work vis-a-vis constitutional provision
against involuntary servitude
A return-to-work order is not offensive to the
constitutional provision against involuntary servitude.
It must be discharged as a duty even against the
workers will. The worker must return to his job
together with his co-workers so that the operation of
the company can be resumed and it can continue
serving the public and promoting its interest. It is
executory in character and 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.
NATURE OF ASSUMPTION ORDER OR CERTIFICATION
ORDER
Nature of the power of the SLE in assuming
jurisdiction
The assumption of jurisdiction is in the nature of a
police power measure. This is done for the promotion
of the common good considering that a prolonged
strike or lockout can be inimical to the national
economy. The SLE acts to maintain industrial peace.
Thus, his certification for compulsory arbitration is not
intended to impede the workers right to strike but to
obtain a speedy settlement of the dispute (Philtread
Workers Union v. Confesor, G.R. No. 117169, March
12, 1997).
The provision under the LC does not interfere with the
workers right to strike but merely regulates it, when in
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 LABOR RELATIONS LAW
the exercise of such right national interest will be
affected. The LC vests upon the SLE the discretion to
determine what industries are indispensable to
national interest.
NOTE: The underlying principle embodied in Art. 264 (g), LC
on the settlement of labor disputes is that assumption and
certification orders are executory in character and are
strictly complied with by the parties even during the
pendency of any petition questioning their validity. This
extraordinary authority given to the Secretary of Labor is
aimed at arriving at a peaceful and speedy solution to labor
disputes, without jeopardizing national interests.
Q: A notice of strike was filed by the PSBA Employees
Union-FFW, alleging union busting, coercion of
Employees and harassment on the part of PSBA. The
conciliation being ineffective, the strike pushed
through. A complaint for ULP and for a declaration of
illegality of the strike with a prayer for preliminary
injunction was filed by PSBA against the union.
While the cases were pending, a complaint was filed
in the RTC of Manila by some PSBA students against
PSBA and the union, seeking to enjoin the union and
its members from picketing and from barricading
themselves in front of the schools main gate. A TRO
was then issued by the RTC, which the union opposed
on the ground that the case involves a labor dispute
over which the RTC had no jurisdiction. The Acting
SLE later on assumed jurisdiction over the labor
dispute and ordered the striking Ees to return to
work.
1. Was the SLE correct in ordering the striking
Ees to return to work?
2. Does the RTC have jurisdiction to decide on
the case filed by the PSBA students?
A:
1. Yes. In the opinion of the Acting SLE, the labor
dispute adversely affected the national interest,
affecting as it did 9,000 students. He is
authorized by law to assume jurisdiction over
the labor dispute, after finding that it adversely
affected the national interest. This power is
expressly granted by Art. 263 (g) of the LC, as
amended by B.P. Blg. 227.
2. No. The RTC was without jurisdiction over the
subject matter of the case filed by some PSBA
students. It is a labor dispute which the labor
agencies have exclusive jurisdiction. The regular
courts have no jurisdiction over labor disputes
and to issue injunctions against strikes is well-
settled (PSBA v. Noriel, G.R. No. 80648, August
15, 1988).
185
Q: Members of the union learned that a redundancy
program would be implemented by PLDT. They thus
filed a notice of strike on the ground of ULP.
However, the Secretary of Labor, recognizing that
PLDTs operations is impressed with public and
national interest as communication plays a vital role
in furtherance of trade, commerce, and industry
specially at this time of globalized economy where
information is vital to economic survival, enjoined
the strike and issued a qualified return to work
order where all striking Ees except those who were
terminated due to redundancy were ordered to
return to work. Was the qualified return to work
order valid?
A: No. When the SLE exercises the powers granted by
Art. 263(g) of the LC, he is, indeed, granted great
breadth of discretion. However, the application of this
power is not without limitation, lest the SLE would be
above the law. As Art. 263(g) is clear and unequivocal
in stating that all striking or locked out Ees shall
immediately return to work and the Er shall
immediately resume operations and readmit all
workers under the same terms and conditions
prevailing before the strike or lockout, then the
unmistakable mandate must be followed by the SLE
(PLDT v. Manggagawa ng Komunikasyon sa Pilipinas,
G.R. No. 162783, July 14, 2005).
EFFECT OF DEFIANCE OF ASSUMPTION OR
CERTIFICATION ORDER
Effect of defiance to the return to work order
It shall be considered an illegal act committed in the
course of the strike or lockout and shall authorize the
SLE or the NLRC, as the case may be, to enforce the
same under pain or loss of employment status or
entitlement to full employment benefits from the
locking-out Er or backwages, damages and/or other
positive and/or affirmative reliefs, even to criminal
prosecution against the liable parties (Sec. 6, Rule IX,
of the New Rules of Procedure of the NLRC; St.
Scholasticas College v. Torres, G.R. No. 100158, June
2, 1992).
Effect of a defiance of assumption or certification
orders of the SLE
The defiance by the union, its officers and members of
the SLEs assumption of jurisdiction or certification
order constitutes a valid ground for dismissal [Art.
263(g), LC].
NOTE: The SLE may cite the defiant party in contempt
pursuant to the power vested in him under the provisions of
the LC.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Justifications for the dismissal of a defiant Ee
1. A strike that is undertaken after the issuance by
the SLE of an assumption or certification order
becomes a prohibited activity and thus illegal. The
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 an Ee defies a return-to-work
order, he is deemed to have abandoned his job.
3. By staging a strike after the assumption or
certification for compulsory arbitration, the Ee
forfeit their right to be readmitted to work,
having, in effect, abandoned their employment
(Steel Corporation of the Philippnes v. SCP
Employees Union, G.R. Nos. 169829-30, August
16, 2008).
NOTE: Once the SLE 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 process of a strike or lockout.
The workers defying a return-to-work order issued in
connection with the asusmption or certification by the SLE
may, in fact, be subjected not only to immediate disciplinary
action such as dismissal or loss of employment status but to
criminal prosecution as well. Defiant strikers could be validly
replaced.
Q: Several Ees and members of Union A were
terminated by Western Phone Co. on the ground of
redundancy. After complying with the necessary
requirements, the Union staged a strike and picketed
the premises of the company. The management then
filed a petition for the SLE to assume jurisdiction over
the dispute. Without the benefit of a hearing, the SLE
issued an Order to assume jurisdiction and for the
parties to revert to the status quo ante litem.
1. Was the order to assume jurisdiction legal?
Explain.
2. Under the same set of facts the SLE instead
issued an Order directing all striking workers to
return to work within 24 hours, except those
who were terminated due to redundancy. Was
the order legal? Explain.
1. Yes. The SLE has plenary power to assume
jurisdiction under Art. 263[g],LC: When in his
opinion, there exists a labor dispute causing or
likely to cause a strike or lockout in an industry
indispensable to the national interest, the SLE
may assume jurisdiction over the dispute and
decide it or certify it to the NLRC for compulsory
arbitration. This extraordinary authority given
to the SLE is aimed at arriving at a peaceful and
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
speedy solution to labor disputes without
jeopardizing national interests (Steel
Corportaion v. SCP Employees Union, G.R. Nos.
169829-30, April 16, 2008). Such assumption
shall have the effect of automatically enjoining
an impending strike or lockout or an order
directing immediate return to work and resume
operations, if a strike already took place, and for
the Er to re-admit all Ees under the same terms
and conditions prevailing before the strike or
lockout [Art. 263(g), LC; Sec. 15, Rule XXII,
Department Order No. 40-G-03].
NOTE: Meaning of the phrase under the same terms
and conditions
GR: It contemplates only actual reinstatement. This is
in keeping with the rationale that any work stoppage
or slowdown in that particular industry can be inimical
to the national economy.
XPN: Payroll reinstatement in lieu of actual
reinstatement but there must be showing of special
circumstances rendering actual reinstatement
impracticable, or otherwise not conducive to attaining
the purpose of the law in providing for assumption of
jurisdiction by the SLE in a labor dispute that affects
the national interest (Manila Diamond Hotel Ees Union
v. SLE, G.R. No. 140518, December 16, 2004).
2. No. The order will be inconsistent with the
established State policy of enjoining the parties
from performing acts that undermines the
underlying principles emodied in Art. 263(g), LC.
In this case, exempting the Ees terminated due
to redundancy from those who are required to
return-to-work, the SLE comes short of his duty
under Art. 263(g), LC to maintain status quo or
the terms and conditions prevailing before the
strike.
ILLEGAL STRIKE
Illegal Strike
A strike is illegal where:
1. It is contrary to specific prohibition of law, such as
strike by Ees performing governmental functions;
2. Violates a specific requirement of law;
3. Declared for an unlawful purpose, such as
inducing the Er to commit ULP against non-union
Ees;
4. Employs unlawful means in the pursuit of its
objective, such as widespread terrorism of non-
strikers;
5. Declared in violation of an existing injunction;
6. Contrary to an existing agreement, such as a no
strike clause or conclusive arbitration clause
186
 LABOR RELATIONS LAW

Good Faith Strike Doctrine the period of the illegal strike under the principle of a
fair days wage for a fair days labor (Danilo Escario v.
A strike may be considered legal where the union NLRC, G.R. No. 160302, September 27, 2010).
believed that the company committed ULP and the
circumstances warranted such belief in good faith, Q: X was dismissed for joining an illegal strike but was
although subsequently such allegations of ULP are reinstated because he is only a member of the union
found out as not true (Bacus v. Ople, GR No. L-56856, who did not commit any illegal act. Is X entitled for
October 23, 1984); (Peoples Industrial and backwages for the period of strike?
Commercial Ees and Organization (FFW) v. Peoples
Industrial and Commercial Corp., G.R. No.37687, A: No. Conformably with the long honored principle of
March 15, 1982). a fair days wage for a fair days labor, Ees dismissed
for joining illegal strike are not entitled to backwages
Effect of the good faith of strikers on the legality of for the period of the strike even if they are reinstated
strike by virtue of their being merely members of the striking
union who did not commit any illegal act during the
GR: A strike grounded on ULP is illegal if no such acts strike (Escario v. NLRC, G.R. 124055, June 8, 2000).
actually exist.
LIABILITY OF UNION OFFICERS v. LIABILITY OF
XPN: Even if no ULP acts are committed by the Er, if ORDINARY WORKERS
the Ees believe in GF that ULP acts exist so as to
constitute a valid ground to strike, then the strike held Union Officer Ordinary worker
pursuant to such belief may be legal. Where the union May be Cannot be
believed that the Er committed ULP and the declared to terminated
circumstances warranted such belief in good faith, the have lost his
resulting strike may be considered legal although, employment NOTE: The LC
status protects ordinary,
subsequently, such allegations of ULP were found to
Knowingly rank-and-file union
be groundless (NUWHRAIN-Interim Junta v. NLRC, G.R. members who
No. 125561, March 6, 1998). participating
participated in
in an illegal
such a strike from
Strike may be declared illegal on the ground of non- strike losing their jobs
compliance with the strict and mandatory provided that they
requirements for a valid conduct of a strike did not commit
illegal acts during
The requirements of law and its implementing rules the strike.
are mandatory and failure of a union to comply
renders the strike illegal (Magdala Multipurpose & Knowingly May be May be
Livelihood Cooperative v. Kilusang Manggagawa ng participating terminated terminated
LGS, G.R. Nos. 191138-39, October 19, 2011). in the
commission of
Ees who staged an illegal strike are not entitled to illegal acts
backwages during strike
(Samahang Manggagawa Sa Sulpicio Lines, Inc.Naflu
Contemplating two causes for the dismissal of an Ee et al. v. Sulpicio Lines, Inc., G.R. No. 140992, March
(a) unlawful lockout, and (b) participation in an illegal 25, 2004)
strikethe third paragraph of Art. 264(a) authorizes
the award of full backwages only when the Rule on reinstatement of striking workers
termination of employment is a consequence of an
unlawful lockout. As a general rule, backwages are Striking Ees are entitled to reinstatement, regardless
granted to indemnify a dismissed Ee for his loss of of whether or not the strike was the consequence of
earnings during the whole period that he is out of his the Ers ULP because while out on strike, the strikers
job. Considering that an illegally dismissed Ee is not are not considered to have abandoned their
deemed to have left his employment, he is entitled to employment, but rather have only ceased from their
all the rights and privileges that accrue to him from the labor; the declaration of a strike is not a renunciation
employment. That backwages are not granted to Ees of employment relation.
participating in an illegal strike simply accords with the
reality that they do not render work for the Er during

UNIVERSITY OF SANTO TOMAS

187 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Persons not entitled to reinstatement
1. Union officers who knowingly participate in the
illegal strike
2. Any striker or union who knowingly participates in
the commission of illegal acts during the strike
NOTE: Those union members who have joined an illegal
strike but have not committed any illegal act shall be
reinstated but without backwages.
The responsibility for the illegal acts committed during the
strike must be on an individual and not on a collective basis
(First City Interlink Transportation Co., Inc. v. Confesor, G.R.
No. 106316, May 5, 1997).
Rule in strikes in hospitals
1. It shall be the duty of the striking Ees or locking-
out Er to provide and maintain an effective
skeletal workforce of medical and health
personnel for the duration of the strike or lockout.
2. SLE may immediately assume jurisdiction within
24 hours from knowledge of the occurrence of
such strike or lockout certify it to the NLRC for
compulsory arbitration.
Q: More or less 1400 Ees of the company staged a
mass walk-out, allegedly without anybody leading
them as it was a simultaneous, immediate and
unanimous group action and decision, to protest the
non-payment of their salaries and wages. The SLE
who found the strike to be illegal granted the
clearance to terminate the employment of those who
were instigators in the illegal strike. Was the decision
of the SLE in granting the clearance correct?
A: No. A mere finding of the illegality of a strike should
not be automatically followed by wholesale dismissal
of the strikers from their employment. While it is true
that administrative agencies exercising quasi-judicial
functions are free from the rigidities of procedure, it is
equally well-settled that avoidance of technicalities of
law or procedure in ascertaining objectively the facts
in each case should not, however, cause denial of due
process (Bacus v. Ople, G.R. No. L-56856, October 23,
1984).
Q: Two days after the union struck, the SLE ordered
the striking workers to return to work within 24
hours. But the striking union failed to return to work
and instead they continued their pickets. As a result,
violence erupted in the picket lines. The service bus
ferrying non-striking workers was stoned causing
injuries to its passengers. Threats, defamation, illegal
detention, and physical injuries also occurred. The
company was directed to accept back all striking
workers, except the union officers, shop stewards,
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
and those with pending criminal charges. Was the SLE
correct in not including the union officers, shop
stewards and those with pending criminal charges in
the return-to-work order?
A: No. To exclude union officers, shop stewards and
those with pending criminal charges in the directive to
the company to accept back the striking workers
without first determining whether they knowingly
committed illegal acts would be tantamount to
dismissal without due process of law (Telefunken
Semiconductors Ees Union-FFW v. SLE, G.R. No. 122743
& 127215, December 12, 1997).
Award of backwages to Ees who abandoned a legal
strike but were refused reinstatement
Backwages shall be awarded to employees who
abandoned a legal strike but were refused
reinstatement can be awarded backwages provided
that the following requisites are present:
1. The strike was legal
2. There was an unconditional offer to return to
work as when the strikers manifested their
willingness to abide by the Court of Industrial
Relations back-to-work order and even sought
the aid of competent authorities to effect their
return
3. The strikers were refused reinstatement such as
when they have not been re-admitted to their
former position (Philippine Marine Officers' Guild
v. Compaia Maritima et al., G.R. Nos. L-20662
and L-20662, March 27, 1971).
NOTE: No backwages will be awarded to union members as
a penalty for their participation in the illegal strike. As for the
union officers, for knowingly participating in an illegal strike,
the law mandates that a union officer may be terminated
from employment and they are not entitled to any relief
(Gold City Integrated Port Services, Inc. v. NLRC ,G.R. No.
86000, September 21, 1990).
LIABILITY OF EMPLOYER
Entitlement of strikers to their backwages or strike
duration pay
GR: Strikers are not entitled to their backwages or
strike duration pay even if such strike was legal.
XPNs:
1. Where the strikers voluntarily and unconditionally
offered to return to work, but the Er refused to accept
the offer Ers are entitled to backwages from the date
their offer was made
188
 LABOR RELATIONS LAW
2. When there is a return-to-work order and the Ees
are discriminated against other Ees-workers are
entitled to back wages from the date of discrimination
3. In case of a ULP strike, in the discretion of the
authority deciding the case
4. When the Ees were illegally locked out and thus
compel them to stage a strike.
Q: By reason of a deadlock in collective bargaining,
the union, after the lapse of the cooling-off period,
declares a strike. The strike is peaceful but fruitless;
the management is adamant. So after 60 days, the
strikers abandoned their strike and offer to return to
work. Is the company bound to readmit them? Why?
A: Yes. By going on strike, the Ees are not deemed to
have abandoned their work; they are merely utilizing
a weapon given to them by law to seek better terms
and conditions of employment and to protect their
rights. An Er who refuses to readmit the strikers,
excepting those who have forfeited their employment
status because of illegal acts committed in the course
of the strike would be discriminating against them for
having exercised their right to engage in a concerted
action; it commits a ULP (Cromwell Commercial
Employees and Laborers Union v. CIR, et al., G.R. No. L-
19778, September 30, 1964).
Mere participation of an Ee in a lawful strike shall not
constitute sufficient ground for termination of his
employment
If by reason of the prolonged strike, the company was
compelled to hire replacements this would not
constitute as sufficient reason for it not to readmit the
strikers. Under Art. 264 of the LC, mere participation
of an Ee in a lawful strike shall not constitute sufficient
ground for termination of his employment, even if a
replacement had been hired by the Er during such
lawful strike. A contrary rule would enable the Er to
dismiss an Ee by the simple expedient of hiring a
replacement.
The illegal acts of a readmitted striker is deemed to
have been condoned
If an Er knowingly readmits to work a striker who
committed illegal acts during a strike it cannot later on
seek the dismissal of the Ee by reason of such acts.
189
WAIVER OF ILLEGALITY OF STRIKE
Instance when there is a waiver of the illegality of a
strike by the Er
When an Er accedes to the peaceful settlement
brokered by the NLRC by agreeing to accept all Ees
who had not yet returned to work, it waives the issue
of the illegality of the strike (Reformist Union v. NLRC,
G.R. No. 120482, January 27, 1997).
Effect of compliance with the return-to-work order to
the legality of strike
GR: A return-to-work order does not have the effect of
rendering the issue of the legality of the strike as moot
and academic (Insurefco Paper Pulp and Project
Workers Union v. Insular Sugar Refining Corp., 95 Phil.
761).
XPN: Er may be considered to have waived its right to
proceed against the striking Es for alleged commission
of illegal acts during the strike when, during a
conference before the Chairman of the NLRC, it agreed
to reinstate them and comply with the return-to-work
order issued by the SLE (TASLI-ALU v. Court of Appeals,
G.R. No. 145428, July 7, 2004).
INJUNCTIONS
Injunction
It is an order or a writ that commands a person to do
or not to do a particular act. It may be a positive
(mandatory) or a negative (prohibitory) command.
Q: Company C, a toy manufacturer, decided to ban
the use of cell phones in the factory premises. In the
pertinent Memorandum, management explained
that too much texting and phone-calling by Ees
disrupted company operations. Two Ee-members of
Union X were terminated from employment due to
violation of the memorandum-policy. The union
countered with a prohibitory injunction case (with
prayer for the issuance of a TRO) filed with the RTC
challenging the validity and constitutionality of the
cell phone ban. The company filed a motion to
dismiss, arguing that the case should be referred to
the grievance machinery pursuant to an existing CBA
with Union X, and eventually to Voluntary
Arbitration. Is the company correct? Explain. (2010
Bar Question)
A: No. The RTC has jurisdiction to hear and decide the
prohibitory injunction case filed by Union X against
Company C to enjoin the latter from implementing the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
memorandum-policy against the use of cell phones in
the factory. The issue in this case is the validity and
constitutionality of the cell phone ban being
implemented by Company C. The issue, therefore,
does not involve the interpretation of the
memorandum-policy, but its intrinsic validity
(Haliguefla v. PAL 602 SCRA 297).
REQUISITES FOR LABOR INJUNCTIONS
Injunction in labor disputes
GR: No temporary or permanent injunction or
restraining order in any case involving or growing out
of labor disputes shall be issued by any court (Art. 254,
LC).
XPNs:
1. Injunction power of the NLRC (Art. 218, LC)
2. Prohibited activities during a strike or lockout (Art.
264, LC)
3. Assumption or certification power of the SLE in
national interest cases [Art. 263(g), LC]
Requisites in issuing an injunction in labor cases
1. There is an actual or threatened commission of
any or all prohibited or unlawful acts in any labor
dispute
2. There is a need to enjoin or restrain such acts or
to require the performance of a particular act
3. If not restrained or performed forthwith, may
cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such
party (Sec. 218, LC)
NOTE: "Labor dispute" includes any controversy or matters
concerning terms or conditions of employment or the
association or representation of persons in negotiating,
fixing, maintaining, changing or arranging the terms and
conditions of employment, regardless of whether the
disputants stand in the proximate relation of Er and Ee (Sec.
212, LC).
Injunction in picketing
GR: Injunction is not available in picketing because
picketing is part of the freedom of speech duly
protected by the Constitution.
XPNs:
1. Where picketing is carried out through the use of
illegal means
2. Where picketing involves the use of violence and
other illegal acts
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
3. Where picketing affects the rights of third parties
and injunction become necessary to protect such
rights.
INNOCENT BYSTANDER RULE
Innocent bystander
They are the third party in a picketing who has no
existing connection or interest with and the picketing
union (MSF Tire & Rubber v. CA, G.R. No. 128632,
August 5, 1999).
NOTE: While peaceful picketing is entitled to protection as
an exercise of free speech, the courts are not without power
to confine or localize the sphere of communication or the
demonstration to the parties to the labor dispute, including
those with related interest, and to insulate establishments
or persons with no industrial connection or having interest
totally foreign to the context of the dispute. (Ibid.)
Required proof to be established by an innocent
bystander before a court enjoins a labor strike
The innocent by stander must show:
1. Compliance with the grounds specified in Rule 58
of the Rules of Court, and
2. That it is entirely different from, without any
connection whatsoever to, either party to the
dispute and, therefore, its interests are totally
foreign to the context thereof (MSF Tire & Rubber
v. CA, G.R. No. 128632, August 5, 1999).
Q: May the RTC take cognizance of the complaint
which is incidental to a labor dispute?
A: No. The RTC has no jurisdiction to act on labor cases
or various incidents arising therefrom, including the
execution of decisions, awards or orders where the
subject matter of the 3rd party claim is only incidental
to a labor case.
A party, by filing its 3rd party claim with the deputy
sheriff, submitted itself to the jurisdiction of the NLRC
acting through the LA.
The broad powers granted to the LA and to the NLRC
by Arts. 217, 218 and 224 of the LC can only be
interpreted as vesting in them jurisdiction over
incidents arising from, in connection with or relating to
labor disputes, as the controversy under
consideration, to the exclusion of the regular courts.
The RTC, being a co-equal body of the NLRC, has no
jurisdiction to issue any restraining order or injunction
to enjoin the execution of any decision of the latter
(Deltaventures v. Cabato, G.R. No. 118216, March 9,
2000).
190
 LABOR RELATIONS LAW

Q: Liwayway Publication Inc. is a second sub lessee of

a part of the premises of the Permanent Concrete
Products, Inc. It has a bodega for its newsprint in the
sublet property which it uses for its printing and
publishing business. The daily supply of newsprint
needed to feed its printing plant is taken from its
warehouse. The Ees of the Permanent Concrete
Products Inc. declared a strike against their company.
The union members picketed, stopped and
prohibited Liwayways trucks from entering the
compound to load newsprint from its bodega.

Does the lower court have jurisdiction to issue a writ

of preliminary injunction considering that there was
a labor dispute between Permanent Concrete
Products, Inc. and the union?
A: Yes. Liwayway Publication Inc. is not in any way
related to the striking union except for the fact that it
is the sub- lessee of a bodega in the companys
compound.

The business of Liwayway is exclusively the publication

of magazines which has absolutely no relation or
connection whatsoever with the cause of the strike of
the union against their company, much less with the
terms, conditions or demands of the strikers.
Liwayway is merely a 3rd person or an innocent by-
stander (Liwayway Pub., Inc. v. Permanent Concrete
Workers Union, G.R. No. L-25003, October 23, 1981).

Q: The Er filed with the RTC a complaint for damages

with preliminary mandatory injunction against the
union, the main purpose of which is to dispense the
picketing of the members of the union. The union
filed a motion to dismiss on the ground of lack of
jurisdiction. The RTC denied the motion to dismiss
and enjoined the picketing, it said that mere
allegations of Er-Ee relationship does not
automatically deprive the court of its jurisdiction and
even the subsequent filing of charges of ULP, as an
afterthought, does not deprive it of its jurisdiction.
Was the issuance by the RTC of the injunction proper?

A: No. The concerted action taken by the members of

the union in picketing the premises of the department
store, no matter how illegal, cannot be regarded as
acts not arising from a labor dispute over which the
RTCs may exercise jurisdiction (Samahang
Manggagawa ng Liberty Commercial v. Pimentel, G.R.
No. L-78621, December 2, 1987).

UNIVERSITY OF SANTO TOMAS

191 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
PROCEDURE AND JURISDICTION
LABOR ARBITER
JURISDICTION
Jurisdiction of LA v. Jurisdiction of NLRC
1. The NLRC has exclusive appellate jurisdiction on
all cases decided by the LA.
2. The NLRC does not have original jurisdiction on
the cases over which the LA have original and
exclusive jurisdiction.
3. The NLRC cannot have appellate jurisdiction if a
claim does not fall within the exclusive original
jurisdiction of the LA.
Nature of jurisdiction of LAs
It is original and exclusive. LAs have no appellate
jurisdiction.
Cases falling under the jurisdiction of LAs
Exclusive and original jurisdiction to hear and decide
the following cases involving all workers:
1. ULP cases
2. Termination disputes
3. If accompanied with a claim for reinstatement,
those that workers file involving wages, rates of
pay, hours of work and other terms and
conditions of employment
4. Claims for actual, moral, exemplary and other
forms of damages arising from Er-Ee relations
5. Cases arising from any violation of Art. 264, LC
including questions involving the legality of strikes
and lockouts except claims for Employment
Compensation, Social Security, Philhealth and
maternity benefits, all other claims arising from
Er-Ee relations, including those of persons in
domestic or household service, involving an
amount exceeding P5000 regardless of whether
accompanied with a claim for reinstatement
6. Monetary claims of overseas contract workers
arising from Er-Ee relations under the Migrant
Workers Act of 1995 as amended by RA 10022
7. Wage distortion disputes in unorganized
establishments not voluntarily settled by the
parties pursuant to RA 6727
8. Enforcement of compromise agreements when
there is non-compliance by any of the parties
pursuant to Art. 227 of the LC, as amended; and
9. Other cases as may be provided by law
NOTE: Although the provision speaks of exclusive and
original jurisdiction of LAs, the cases enumerated may
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
instead be submitted to a voluntary arbitrator by agreement
of the parties under Art. 262 of the LC. The law prefers
voluntary over compulsory arbitration.
Nature of the cases which the LA may resolve
The cases that an LA can hear and decide are
employment related. Where no Er-Ee relationship
exists between the parties and no issue is involved
which may be resolved by reference to the LC, other
labor statutes, or any CBA, it is the RTC that has
jurisdiction (Lapanday Agricultural Devt. Corp v. CA,
G.R. No. 112139, January 31, 2000).
The LA has jurisdiction over controversies involving Ers
and Ees only if there is a reasonable causal
connection between the claim asserted and the Er-Ee
relations. Absent such link, the complaint is cognizable
by the regular court (Eviota v. CA,G.R. No. 152121, July
29, 2003).
Concurrent jurisdiction of LAs with the NLRC
Labor arbiters exercise concurrent jurisdiction with
the NLRC with respect to contempt cases.
Extent of the jurisdiction of the LA if there are
unresolved matters arising from the interpretation of
the CBA
GR: LAs have no jurisdiction over unresolved or
unsettled grievances arising from the interpretation or
implementation of the CBA and those arising from the
interpretation or enforcement of company personnel
policies.
XPN: Actual termination disputes
NOTE: Where the dispute is just in the interpretation,
implementation or enforcement stage of the termination, it
may be referred to the grievance machinery set up by the
CBA or by voluntary arbitration. Where there was already
actual termination, i.e., violation of rights, it is already
cognizable by the LA (Maneja v. NLRC, G.R. No. 124013, June
5, 1998).
Alternative submission of disputes or
misunderstandings before the LA in case the
provision of the CBA regarding grievance procedure
allows the same
The use of the word may in the provision of the CBA
regarding grievance procedure, for reference of
disputes or misunderstandings to a grievance
committee shows the intention of the parties to
reserve the right to submit the illegal termination
dispute to the jurisdiction of the LA, rather than to a
voluntary arbitrator. Petitioner validly exercised his
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 LABOR RELATIONS LAW

option to submit his case to a LA when he filed his Visitation and

complaint before the proper government agency. In Enforcement
other words, the CA is correct in holding that voluntary Power of Regional
Labor Arbiter
arbitration is mandatory in character if there is a Secretary of Director
specific agreement between the parties to that effect. Labor and
It must be stressed however that, in the case at bar, Employment
the use of the word may shows the intention of the LA exercises
parties to reserve the right of recourse to LAs (Vivero original and
v. CA, G.R. No. 138938, October 24, 2000). exclusive
jurisdiction on
Cases which do not fall under the jurisdiction of the cases involving :
LAs
a. ULP ;
LAs have no jurisdiction over the following: b. Termination
disputes ;
1. Foreign governments (JUSMAG-Phils. v. NLRC, c. Wages ;
G.R. No. 108813, December 15, 1994) a) Inspection of d. Rates of pay;
2. International agencies (Lasco v. NLRC, G.R. Nos. establishments; e. Hours of
109095-109107, February 23, 1995) and work ;
3. Intra-corporate disputes which fall under P.D. Adjudication f. Other terms of
902-A and now falls under the jurisdiction of the b) Issuance of of Ees claims employment,
regular courts pursuant to the new Securities orders to compel for wages and claims for
Regulation Code (Nacpil v. IBC,G.R. No. 144767, compliance with benefits damages arising
March 21, 2002) labor standards, from Er-Ee
4. Executing money claims against government wage orders and relationship,
(Dept. of Agriculture v. NLRC, G.R. No. 104269, other labor laws legality of strikes
November 11, 1993) and lockouts,
5. Cases involving GOCCs with original charters and
which are governed by civil service law, rules or g. All other
regulations (Art. IX-B, Sec.2, No.1, 1987 claims arising
Constitution) from Er-Ee
6. Local water district (Tanjay Water District v. relationship
Gabaton, G.R. No. L-63742, April 17, 1989) except involving an
where NLRC jurisdiction is invoked (Zamboanga amount
City Water District v. Buat, G.R. No. 104389, May exceeding Php
27, 1994) 5,000.00
7. The aggregate money claim does not exceed Enforcement of Limited to All other claims
P5000 and without claim for reinstatement (Rajah labor legislation monetary arising from Er-
Humabon Hotel, Inc. v. Trajano, G.R. Nos. 100222- in general claims Ee relations
23 September 14,1993) LA decides case
8. Claim of Ee for cash prize under the Innovation Initiated by
within 30
Program of the company, although arising from Proceeding is an sworn
calendar days
Er-Ee relationship, is one requiring application of offshoot of complaints
after submission
general civil law on contracts which is within the routine filed by any
of the case by
jurisdiction of the regular courts (SMC v. NLRC, inspections interested
the parties for
G.R. No. 80774, May 31, 1988). party
decision
9. Cause of action based on quasi-delict or tort which
Jurisdictional 1) All other
has no reasonable connection with any of the
requirements: claims arising
claims enumerated in Art.217, LC (Ocheda v. CA,
from Er-Ee
G.R. No. 85517, October 16, 1992).
1) Complaint relations
10. Complaint arising from violation of training
No jurisdictional arises from
agreement (Singapore Airlines v. Pano, G.R. No. L-
requirements Er-Ee 2) Including
47739, June 22 1983) relationship those of persons
LABOR ARBITER v. REGIONAL DIRECTOR in domestic or
Powers of the SLE v. Regional Director v. Labor Arbiter 2) Claimant is household
an Ee or service

UNIVERSITY OF SANTO TOMAS

193 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

person Constitution and CEDAW (Halaguena vs. PAL

employed in 3) Involving an Incorporated, G.R. No. 172013, October 2, 2009).
domestic or amount
household exceeding P5,000 REINSTATEMENT PENDING APPEAL
service or a
house helper 4) Whether or Effect of perfection of an appeal on execution
not accompanied
3) Complaint with a claim for The perfection of an appeal shall stay the execution of
does NOT reinstatement the decision of the LA on appeal, except execution for
include a reinstatement pending appeal.
claim for
reinstatement NOTE: The provision of Art. 223 of LC is clear that an award
by the LA for reinstatement shall be immediately executory
4) Aggregate even pending appeal and the posting of a bond by the Er shall
money claim not stay the execution for reinstatement (Pioneer
Texturizing Corp. v. NLRC, G.R. No. 118651, October 16,
of EACH
1997).
claimant does
not exceed
Ministerial duty of LA to implement reinstatement
P5,000
orders
Appealable to SLE
(In case Unless there is a restraining order, it is ministerial
Appealable to Appealable to
compliance order upon the LA to implement the order of reinstatement
NLRC NLRC
is issued by and it is mandatory on the Er to comply therewith
Regional Office) (Garcia v. PAL, G.R. No. 164856, January 20, 2009).

Q: FASAP, the sole and exclusive bargaining
representative of the flight attendants, flight
stewards and pursers of PAL, and respondent PAL
entered into a CBA incorporating the terms and
conditions of their agreement for the years 01-05.
Sec. 144, Part A of the CBA provides that compulsory
retirement shall be 55 for females and 60 for males.
They filed an action with the RTC claiming that the
CBA provision is discriminatory and hence
unconstitutional. The RTC issued a TRO. The
appellate court ruled that the RTC has no jurisdiction
over the case at bar. Does the RTC have jurisdiction
over the petitioners' action challenging the legality of
the provisions on the compulsory retirement age
contained in the CBA?
A: Yes. The subject of litigation is incapable of
pecuniary estimation, exclusively cognizable by the
RTC, pursuant to Sec. 19(1) of BP Blg. 129, as amended.
Being an ordinary civil action, the same is beyond the
jurisdiction of labor tribunals.
Not every controversy or money claim by an Ee against
the Er or vice-versa is within the exclusive jurisdiction
of the LA. Actions between Ees and Er where the Er-Ee
relationship is merely incidental and the cause of
action precedes from a different source of obligation
is within the exclusive jurisdiction of the regular court.
Here, the Er-Ee relationship between the parties is
merely incidental and the cause of action ultimately
arose from different sources of obligation, i.e., the
REQUIREMENTS TO PERFECT APPEAL TO NLRC
Perfection of appeal from LA to the NLRC
The appeal is perfected when the following concurs:
1. Filed within the reglementary period of 10 calendar
days from receipt if it involves a decision, award, or
order of the LA, or 5 calendar days from receipt if it
involves a decision or resolution of the RD
2. Verified by the appellant himself in accordance with
Sec. 4, Rule 7 of the Rules of Court, as amended
3. In the form of a memorandum of appeal which
shall state the grounds relied upon and the
arguments in support thereof, the relief prayed for,
and with a statement of the date the appellant
received the appealed decision, resolution or order
4. In 3 legibly typewritten or printed copies
5. Accompanied by (i) proof of payment of the
required appeal fee; (ii) posting of a cash or surety
bond as provided in Sec. 6 of this Rule; (iii) a certificate
of non-forum shopping; and (iv) proof of service upon
the other parties (Sec. 4, Rule VI, NLRC 2011 Rules of
Procedure)
NOTE: Mere notice of appeal without complying with the
aforementioned requisites shall not stop the running of the
period for perfecting an appeal.

UNIVERSITY OF SANTO TOMAS

2014 GOLDEN NOTES 194
 LABOR RELATIONS LAW
Grounds for filing an appeal
The appeal may be entertained only on any of the
following grounds
1. If there is prima facie evidence of abuse of
discretion on the part of the LA or RD;
2. If the decision, award or order was secured
through fraud or coercion, including graft and
corruption;
3. If made purely on questions of law; and/or
4. If serious errors in the findings of facts are raised
which, if not corrected, would cause grave or
irreparable damage or injury to the appellant
(Sec.2, Rule VI, NLRC 2011 Rules of Procedure.
Posting of an appeal bond
In case the decision of the LA or the RD involves a
monetary award, an appeal by the Er may be perfected
only upon the posting of a bond (Sec.6, Rule VI, NLRC
2011 Rules of Procedure).
Forms of appeal bond
It shall either be in the form of cash deposit or surety
bond equivalent in amount to the monetary award,
exclusive of damages and attorney's fees (Sec. 6, Rule
VI, NLRC 2011 Rules of Procedure).
Issuance of a surety bond
It shall be issued by a reputable bonding company duly
accredited by the NLRC or the SC, and shall be
accompanied by original or certified true copies of:
1. A joint declaration under oath by the Er,
his counsel, and the bonding company,
attesting that the bond posted is
genuine, and shall be in effect until final
disposition of the case.
2. An indemnity agreement between the
Er-appellant and bonding company;
3. Proof of security deposit or collateral
securing the bond: provided, that a check
shall not be considered as an acceptable
security;
4. A certificate of authority from the
Insurance Commission;
5. Certificate of registration from the SEC;
6. Certificate of authority to transact surety
business from the Office of the
President;
7. Certificate of accreditation and authority
from the SC; and
8. A notarized board resolution or
secretary's certificate from the bonding
company showing its authorized
195
signatories and their specimen
signatures (Sec. 6, Rule VI, NLRC 2011
Rules of Procedure).
NOTE: The appellant shall furnish the appellee with a
certified true copy of the said surety bond with all the above-
mentioned supporting documents.
Period within which a cash or surety bond shall be
valid and effective
From the date of deposit or posting, until the case is
finally decided, resolved or terminated, or the award
satisfied. This condition shall be deemed incorporated
in the terms and conditions of the surety bond, and
shall be binding on the appellants and the bonding
company (Sec. 6, Rule VI, NLRC 2011 Rules of
Procedure).
Effect if the bond is verified to be irregular or not
genuine
The Commission shall cause the immediate dismissal
of the appeal, and censure or cite in contempt the
responsible parties and their counsels, or subject them
to reasonable fine or penalty (NLRC 2011 Rules of
Procedure, Rule VI, Sec.6).
NOTE: The appellee shall verify the regularity and
genuineness of the bond and immediately report any
irregularity to the NLRC.
Reduction of bond
GR: Bond cannot be reduced.
XPN: On meritorious grounds, and only upon the
posting of a bond in a reasonable amount in relation
to the monetary award.
NOTE: The mere filing of a motion to reduce bond without
complying with the requisites in the preceding paragraphs
shall not stop the running of the period to perfect an appeal
(Sec. 6, Rule VI, NLRC 2011 Rules of Procedure).
Q: Company A, within the reglementary period,
appealed the decision of a LA directing therein
statement of an Ee and awarding backwages.
However, As cash bond was filed beyond the ten day
period. Should the NLRC entertain the appeal? Why?
(2001 Bar Question)
A: No. The NLRC should not entertain the appeal, as
the same was not perfected due to failure to file a
bond. An appeal may be perfected only upon the
posting of cash or surety bond issued by reputable
bonding company duly accredited by the Commission
the amount equivalent to the monetary award in the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
judgment appealed from (Aba v. NLRC, G.R No.
122627, July 28, 1999).
Motion for reconsideration (MR) of the NLRC decision
required before certiorari may be availed
A motion for reconsideration is required to enable
NLRC to correct its mistakes. If no MR is filed, NLRCs
decision becomes final and executory.
Remedy in case of denial of the MR
If the motion is denied, the aggrieved party may file a
petition for certiorari not later than 60 days from
notice of the judgment, order or resolution. In case a
MR or new trial is timely filed, whether such motion is
required or not, the 60 day period shall be counted
from notice of the denial of said motion. No extension
of time to file the petition shall be granted except for
compelling reason and in no case exceeding 15 days
(Sec. 4, Rule 65, Rules of Court).
Effect if no service of summons was made
In the absence of service of summons or a valid waiver
thereof, the hearings and judgment rendered by the
LA is null and void.
Compulsory arbitration
The process of settlement of labor disputes by a
government agency which has the authority to
investigate and make an award binding on all the
parties.
Authority of LA to conduct compulsory arbitration
Under the LC, it is the LA who is clothed with the
authority to conduct compulsory arbitration on cases
involving termination disputes (PAL v. NLRC, G.R. No.
55159, December 22, 1989).
Rules on venue of filing cases
1. All cases which the LAs have authority to decide
may be filed in the Regional Arbitration Branch
(RAB) having jurisdiction over the workplace of
the complainant /petitioner.
NOTE: Workplace is understood to be the place or
locality where the Ee is regularly assigned when
the cause of action arose. It shall include the place
where the Ee is supposed to report back after a
temporary detail, assignment or travel.
In case of field Ees, as well as ambulant or itinerant
workers, their workplace is where they are:
a. Regularly assigned
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
b. Supposed to regularly receive their salaries
and wages
c. Receive their work instructions from
d. Reporting the results of their assignment to
their Er
2. Where 2 or more RABs have jurisdiction over the
workplace, the first to acquire jurisdiction shall
exclude others.
3. Improper venue when not objected to before
filing of position papers shall be deemed waived.
4. Venue may be changed by written agreement of
the parties or when the NLRC or the LA so orders,
upon motion by the proper party in meritorious
cases.
5. For Overseas Contract Workers where the
complainant resides or where the principal office
of the respondent Er is located, at the option of
the complainant.
NOTE: The Rules of Procedure on Venue is merely
permissive, allowing a different venue when the interest of
substantial justice demands a different one (Dayag v.
Canizares, GR. No. 124193, March 6, 1998).
NATIONAL LABOR RELATIONS COMMISSION
NLRC
It is an administrative body with quasi-judicial
functions and the principal government agency that
hears and decides labor-management disputes; it is
attached to the DOLE solely for program and policy
coordination only.
Powers of the NLRC
1. Rule making power Promulgation of rules and
regulations:
a. Governing disposition of cases before any of
its division/regional offices.
b. Pertaining to its internal functions
c. As may be necessary to carry out the
purposes of the LC.
2. Power to issue compulsory processes (administer
oaths, summon parties, issue subpoenas)
3. Power to investigate matters and hear disputes
within its jurisdiction (adjudicatory power original
and appellate jurisdiction over cases)
4. Contempt power
5. Ocular Inspection
6. Power to issue injunctions and restraining orders
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 LABOR RELATIONS LAW
Allocation of the powers and functions of the NLRC
1. En Banc
a. Promulgating rules and regulations
and governing the hearings and
disposition of cases before any of its
divisions and regional branches.
b. Formulating policies affecting its
administration and operations.
c. On temporary or emergency basis, to
allow cases within the jurisdiction of
any division to be heard and decided
by any other division whose docket
allows the additional workload and
such transfer will not expose litigants
to unnecessary additional expense.
2. Division (8 Divisions with 3 members)
a. Adjudicatory;
b. All other powers, functions and duties;
c. Exclusive appellate jurisdiction over cases
within their respective territorial
jurisdiction.
Individual Commissioner does not have adjudicatory
power
The law lodges the adjudicatory power on each of the
eight divisions, neither on the individual commissioners
nor on the whole commission. The division is a legal
identity, not the person who sits in it. Hence, an
individual commissioner has no adjudicatory power,
although of course, he can concur or dissent in deciding
a case.
JURISDICTION
Kinds of jurisdiction of the NLRC
1. Exclusive Original Jurisdiction
Certified labor disputes causing or likely to cause a
strike or lockout in an industry indispensable to
national interest, certified to it by the SLE or the
President for compulsory arbitration
a. 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. Injunction in strikes or lockouts under Art. 264
of the LC
c. Contempt cases
2. Exclusive Appellate Jurisdiction
197
a. All cases decided by the LA under Art. 217(b)
of the LC and Sec. 10 of R.A.8042 (Migrant
Workers Act); and
b. Cases decided by the Regional Offices of DOLE
in the exercise of its adjudicatory function under
Art.129 of the LC over monetary claims of workers
amounting to not more than P5000 and not
accompanied by claim for reinstatement.
Composition of the NLRC
1. Chairman
2. 23 Members
a. 8 members each shall be chosen only from
among the nominees of the workers and Er
organization respectively.
b. The Chairman and the 7 remaining members
shall come from the public sector, with the
latter to be chosen preferably from among the
incumbent LAs.
c. Upon assumption into office, the members
nominated by the workers and Ers organization
shall divest themselves of any affiliation with
or interest in the federation or association to
which they belong.
NOTE: There is no need for the Commission on Appointments
to confirm the positions in the NLRC. Such requirement has
no constitutional basis (Calderon v. Carale, GR. No. 91636,
April 23, 1992).
Adjudication of cases by the NLRC
1. The NLRC adjudicates cases by division. A
concurrence of 2 votes is needed for a valid judgment.
NOTE: Whenever the required membership in a division is not
complete and the concurrence of the Commissioners to
arrive at judgment or resolution cannot be obtained, the
Chairman shall designate such number of additional
Commissioners from the other divisions as may be necessary.
2. It shall be mandatory for the division to meet for
purposes of consultation.
NOTE: The conclusion of a division on any case submitted to
it for decision should be reached in consultation before the
case is assigned to a member for the writing of the opinion.
3. A certification that a consultation has been
conducted, signed by the presiding commissioner of
the division, shall be issued (copy attached to the
record of case and served upon the parties).
Qualifications of the Chairman and the
Commissioners
1. Member of the Philippine Bar
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
2. Engaged in the practice of law in the Philippines for
at least 15 years
3. At least 5 years of experience or exposure in
handling labor management relations
4. Preferably a resident of the region where he is to
hold office
Qualifications of an Executive LA
1. Member of the Philippine Bar
2. Engaged in the practice of law in the Philippines for
at least 10 years
3. At least 5 years of experience or exposure in
handling labor management relations
Term of office of the Chairman, Commissioners and
LAs
They shall hold office during good behavior until they
reach the age of 65 unless removed for causes as
provided by law or become incapacitated to discharge
the function of his office.
Provided, however, that the President of the
Philippines may extend the services of the
Commissioners and LAs up to the maximum age of 70
years upon the recommendation of the Commission en
banc.
Q: Some disgruntled members of Bantay Labor
Union filed with the Regional Office of the DOLE a
written complaint against their union officers for
mismanagement of union funds. The RD did not rule
in the complainants' favor. Not satisfied, the
complainants elevated the RDs decision to the NLRC.
The union officers moved to dismiss on the ground of
lack of jurisdiction. Are the union officers correct?
Why? (2001 Bar Question)
A: Yes. The union officers are correct in claiming that
the NLRC has no jurisdiction over the appealed ruling
of the RD. In Barles v. Bitonio (G.R. No. 120220, June
16, 1999), the SC ruled appellate authority over
decisions of the RD involving examination of union
account is expressly conferred on the BLR under the
Rule of Procedure on Mediation-Arbitraion.
Sec. 4. Jurisdiction of the BLR(b) The BLR shall
exercise appellate jurisdiction over all cases
originating from the RD involving complaints for
examination of union books of accounts.
The language of the law is categorical. Any additional
explanation on the matter is superfluous.
Q: Company "A" and Union "B" could not resolve
their negotiations for a new CBA. After conciliation
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
proceedings before the NCMB proved futile, B went
on strike. Violence during the strike prompted A to
file charges against striker-members of B for their
illegal acts. The SLE assumed jurisdiction, referred
the strike to the NLRC and issued a return-to-work
order. The NLRC directed the parties to submit their
respective position papers and documentary
evidence. At the initial hearing before the NLRC, the
parties agreed to submit the case for resolution after
the submission of the position papers and evidence.
Subsequently, the NLRC issued an arbitral award
resolving the disputed provisions of the CBA and
ordered the dismissal of certain strikers for having
knowingly committed illegal acts during the strike.
The dismissed Ees elevated their dismissal to the CA
claiming that they were deprived of their right to due
process and that the affidavits submitted by A were
self-serving and of no probative value. Should the
appeal prosper? State the reason(s) for your answer
clearly. (2001 Bar Question)
A: The appeal should not prosper. The SC, in many
cases, has ruled that decisions made by the NLRC may
be based on position papers. In the question, it is
stated that the parties agreed to submit the case for
resolution after the submission of position papers and
evidence. Given this fact, the striker-members of B
cannot now complain that they were denied due
process. They are in estoppel. After voluntarily
submitting a case and encountering an adverse
decision on the merits, it is too late for the loser to
question the jurisdiction or power of the court. A party
cannot adopt a posture of double dealing (Marquez vs.
Secretary of Labor, G.R. No. 80685, March 16, 1989).
Non-availability of Barangay conciliation in labor
cases
Labor cases are not subject to barangay conciliation
since ordinary rules of procedure are merely
suppletory in character vis--vis labor disputes which
are primarily governed by labor laws (Montoya v.
Escayo, G.R. No. 82211-12, March 21, 1989).
EFFECT OF NLRC REVERSAL OF LABOR ARBITERS
ORDER OF REINSTATEMENT
Dismissed Ees may collect wages during the period
between the LAs order of reinstatement pending
appeal and the NLRC decision overturning that of the
LA
The LC provides that the decision of the LA reinstating
a dismissed or separated Ee, insofar as the
reinstatement aspect is concerned, shall immediately
be executory, pending appeal.
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 LABOR RELATIONS LAW
Even if the order of reinstatement of the LA is reversed
on appeal, it is obligatory on the part of the Er to
reinstate and pay the wages of the dismissed Ee during
the period of appeal until reversal by the higher court.
On the other hand, if the Ee has been reinstated during
the appeal period and such reinstatement order is
reversed with finality, the Ee is not required to
reimburse whatever salary he received for he is
entitled to such, more so if he actually rendered
services during the period (Pfizer v. Velasco, G.R. No.
177467, March 9, 2011).
REMEDIES
Availability of judicial review of the NLRCs decision
Judicial review of NLRCs decision is available through
petitions for certiorari (Rule 65) which should be
initially filed with the CA in strict observance of the
doctrine on the hierarchy of courts as the appropriate
forum for the relief desired. The CA is procedurally
equipped to resolve unclear or ambiguous factual
finding, aside from the increased number of its
component divisions (St. Martin Funeral Home v.
NLRC, G.R. No. 130866, September 16, 1998).
Injunction or a temporary restraining order (TRO)
Order which may require, forbid, or stop the doing of
an act. The power of the NLRC to enjoin or restrain any
actual or threatened commission from any or all
prohibited or unlawful acts under Art. 218 of LC can
only be exercised in labor disputes.
NOTE: A restraining order is generally regarded as an order
to maintain the subject of controversy in status quo until the
hearing of an application for a temporary injunction (BF
Homes v. Reyes, G.R. No. L-30690, November 19, 1982.)
Persons authorized to issue a TRO
1. President [Art.263(g), LC]
2. Secretary of Labor [Art.263(g), LC]
3. NLRC (Art.218, LC)
NOTE: Art. 218 of the LC limits the grant of injunctive power
to the NLRC. The LA is excluded statutorily. Hence, no NLRC
Rules can grant him that power.
Procedure for issuance of TRO/injunction
1. Filing of a verified petition
2. Hearing after due and personal notice has been
served in such manner as the Commission shall
direct to:
a. All known persons against whom relief is
sought
199
b. Also the President or other public officials of
the province or city within which the unlawful
acts have been threatened or commercial
charged with the duty to protect the
complainants property.
3. Reception at the hearing of the testimonies of the
witnesses with opportunity for cross-
examination, in support of the allegations of the
complaint made under oath as well as testimony
in opposition thereto.
4. Finding of fact of the Commission to the effect
that:
a. Prohibited or unlawful acts have been
threatened and will be committed, or have
been and will be continued unless restrained,
but no injunction or TRO shall be issued on
account of any threat, prohibited or unlawful
act, except against the persons, association or
organization making the threat or committing
the prohibited or unlawful act or actually
authorizing or ratifying the same after actual
knowledge thereof.
b. The substantial and irreparable injury to the
complainants property.
NOTE: Irreparable Injury - An injury which cannot
be adequately compensated in damages due to
the nature of the injury itself or the nature of the
right or property injured or when there exist no
pecuniary standard for the measurement of
damages.
c. That as to each item of relief to be granted,
greater injury will be inflicted upon the
complainant by the denial of the relief than
will be inflicted upon the defendants by the
granting of the relief.
d. That complainant has no adequate remedy at
law
NOTE: Adequate remedy One that affords relief
with reference to the matter in controversy and
which is appropriate to the particular
circumstances of the case if the remedy is
specifically provided by law (PAL v. NLRC, GR. No.
120567, March 20, 1998).
e. That public officers charged with the duty to
protect complainants property are unable or
unwilling to furnish adequate protection.
5. Posting of a bond.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
CERTIFIED CASES
Certified cases
These are cases certified or referred to the
Commission for compulsory arbitration under Art.
263(g) of the LC dealing about national interest cases.
A national interest dispute may be certified to the
NLRC even before a strike is declared since Art. 263(g)
of the LC does not require the existence of a strike, but
only of an industrial dispute [Government Service
Insurance System Employees Association (GSISEA), et
al. v. Court of Industrial Relations, G.R. No. L-18734,
December 30, 1961].
Function of the NLRC in certified cases
When sitting in a compulsory arbitration certified to by
the SLE, the NLRC is not sitting as a judicial court but
as an administrative body charged with the duty to
implement the order of the SLE. As an implementing
body, its authority did not include the power to amend
the Secretarys order (UST v. NLRC and UST Faculty
Union, G. R. No. 89920, October 18, 1990).
Procedure in deciding certified cases
1. Unless there is a necessity to conduct a
clarificatory hearing, the Commission shall resolve
all certified cases within 30 calendar days from
receipt by the assigned Commissioner of the
complete records, which shall include the position
papers of the parties and the order of the SLE
denying the motion for reconsideration of the
certification order, if such motion has been filed.
2. Where a clarificatory hearing is needed, the
Commission shall, within five days from receipt of
the records, issue a notice to be served on the
parties through the fastest means available,
requiring them to appear and submit additional
evidence, if any.
3. Notwithstanding the necessity for a clarificatory
hearing, all certified cases shall be resolved by the
Commission within 60 calendar days from receipt
of the complete records.
4. No motion for postponement or extension shall
be entertained (Sec. 5, Rule VIII, NLRC 2005 Rules).
Effect of defiance from the certification order
Non-compliance with the certification order of the SLE
shall be considered as an illegal act committed in the
course of the strike or lockout and shall authorize the
Commission to enforce the same under pain of
immediate disciplinary action, including dismissal or
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
loss of employment status or payment by the locking-
out Er of backwages, damages and/or other
affirmative relief, even criminal prosecution against
the liable parties (Sec. 4, Rule VIII, NLRC 2011 Rules).
BUREAU OF LABOR RELATIONS
MEDIATOR-ARBITERS
JURISDICTION (ORIGINAL AND APPELLATE)
Coverage of the BLRs jurisdiction and functions
The BLR no longer handles all labor management
disputes; rather its functions and jurisdiction are
largely confined to
1. Union matters
2. Collective bargaining registry and
3. Labor education.
NOTE: Jurisdiction over labor management problems or
disputes is also exercised by other offices
1. DOLE Regional Offices
2. Office of the Secretary of Labor
3. NLRC
4. POEA
5. OWWA
6. SSS-ECC
7. RTWPB
8. NWPC
9. Regular courts over intra-corporate disputes.
Original and exclusive jurisdiction of BLR
The BLR has original and exclusive jurisdiction over
1. Inter-union disputes
2. Intra-union disputes
3. Other related labor relations disputes
Extent of authority of the BLR
1. It may hold a referendum election among the
members of a union for the purpose of determining
whether or not they desire to be affiliated with a
federation.
2. But the BLR has no authority to:
a. Order a referendum among union
members to decide whether to expel or
suspend union officers.
b. Forward a case to the Trade Union
Congress of the Philippines for
arbitration and decision.
Administrative functions of the BLR
1. Regulation of the labor unions
2. Keeping the registry of labor unions
3. Maintenance of a file of the CBA
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 LABOR RELATIONS LAW
4. Maintenance of a file of all settlements or final
decisions of the SC, CA, NLRC and other agencies
on labor disputes
Mediator-arbiter (Med-arbiter)
An officer in the Regional Office or Bureau authorized
to hear, conciliate and decide representation cases or
assist in the disposition of intra or inter-union
disputes.
Coverage of inter/intra-union disputes
They shall include:
1. Conduct or nullification of election of union and
workers association officers
2. Audit/accounts examination of union or workers
association funds
3. Deregistration of CBAs
4. Validity/invalidity of union affiliation or
disaffiliation
5. Validity/invalidity of acceptance/ non-acceptance
for union membership
6. Validity/invalidity of voluntary recognition
7. Opposition to application for union or CBA
registration
8. Violations of or disagreements over any provision
of the constitution and by-laws of union or
workers association
9. Disagreements over chartering or registration of
labor organizations or the registration of CBAs;
10. Violations of the rights and conditions of
membership in a union or workers association;
11. Violations of the rights of LLO, except
interpretation of CBAs;
12. 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 requirements under Rule V;
13. Such other disputes or conflicts involving the
rights to self-organization, union membership and
CB
a. Between and among LLO and
b. Between and among members of a union or
workers association (Sec.1, Rule XI, Book V,
IRR as amended by D.O. 40-F-03).
Coverage of the phrase other related labor relations
disputes
1. Any conflict between:
a. A labor union and the Er; or
b. A labor union and a group that is not a LO; or
c. A labor union and an individual who is not a
member of such union
201
2. Cancellation of registration of unions and workers
associations filed by individual/s other than its
members, or group that is not a LO.
3. A petition for Interpleader involving labor relations
(Sec. 2, Rule XI, Book V, IRR as amended by D.O. 40-F-
03).
Filing a complaint or petition involving intra/inter-
union disputes
A LLO or its members may file a complaint or petition
involving intra/inter-union disputes (Sec. 5, Rule XI,
D.O. 40-03).
Signature requirement if the issue is involves the
entire membership
If the issue involves the entire membership, the
complaint must be signed by at least 30% of the entire
membership of the union.
Filing a complaint or petition if the issue involves a
member only
If the issue involves a member only, the affected
member may file the complaint (Sec. 5, Rule XI, D.O.
40-03).
NOTE:
GR: Redress must first be sought within the union itself in
accordance with its constitution and by-laws
XPNs:
1. Futility of intra-union remedies;
2. Improper expulsion procedure;
3. Undue delay in appeal as to constitute substantial
injustice;
4. The action is for damages;
5. Lack of jurisdiction of the investigating body; action for
the administrative agency is patently illegal, arbitrary
and oppressive;
6. Issue is purely a question of law;
7. Where the administrative agency had already
prejudged the case; and
8. Where the administrative agency was practically given
the opportunity to act on the case but it did not.
Effects of filing or pendency of inter/intra-union
dispute and other labor relations disputes
1. The rights relationships and obligations of the
party-litigants against each other and other
parties-in-interest prior to the institution of the
petition shall continue to remain during the
pendency of the petition and until the date of the
decision rendered therein. Thereafter, the rights,
relationships and obligations of the party-litigants
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
against each other and other parties-in-interest
shall be governed by the decision ordered.
2. The filing or pendency of any inter/intra union
disputes is not a prejudicial question to any
petition for certification election, hence it shall
not be a ground for the dismissal of a petition for
certification of election or suspension of the
proceedings for the certification of election (Sec.
3, Rule XI, DO 40-03).
Appeal of a decision in inter/intra-union dispute
A decision in an inter/intra-union dispute may be
appealed.
Rules on appeal in intra/inter-union disputes
1. Formal Requirements
a. Under oath
b. Consist of a memorandum of appeal.
c. Based on either of the following grounds:
i. Grave abuse of discretion
ii. Gross violation of the rules
iii. With supporting arguments and evidence
2. Period - Within 10 days from receipt of decision (Sec.
16, Rule XI, D.O. 40-03).
3. To whom appealable
a. BLR If the case originated from the Med-
Arbiter/Regional Director.
b. SLE If the case originated from the BLR.
4. Where Filed - Regional Office or to the BLR, where
the complaint originated. Records are transmitted to
the BLR or SLE within 24 hours from the receipt of the
memorandum of appeal (Rule XI, D.O. 40-03).
NATIONAL CONCILIATION AND MEDIATION BOARD
(NCMB)
NATURE OF PROCEEDINGS
Alternative modes of settlement of labor dispute
1. Voluntary Arbitration
2. Conciliation
3. Mediation
Nature of the proceedings
The proceedings are non-litigious.
Submission of all labor disputes to mandatory
conciliation-mediation
GR: All issues arising from labor and employment shall
be subject to mandatory conciliation-mediation. The
LA or the appropriate DOLE agency or office that has
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
jurisdiction over the dispute shall entertain only
endorsed or referred cases by the duly authorized
officer [Art. 228 (a), as amended by R.A. 103960].
XPNs:
1. Grievance machinery and Voluntary Arbitration, in
which case, their agreement will govern
2. When excepted by the SLE (Ibid.)
NOTE: Any or both parties involved in the dispute may pre-
terminate the conciliation-mediation proceedings and
request referral or endorsement to the appropriate DOLE
agency or office which has jurisdiction over the dispute, or if
both parties so agree, refer the unresolved issues to
voluntary arbitration" (Art. 228 (b), as amended by R.A.
10396).
Arbitration
It is the submission of a dispute to an impartial person
for determination on the basis of evidence and
arguments of the parties. The arbiters decision or
award is enforceable upon the disputants. It may be
voluntary by agreement, or compulsory which is
required by statutory provision (Luzon Devt Bank v.
Assn of Luzon Devt Bank Employees, G.R. No. 120319
October 6, 1995).
Court cannot fix resort to voluntary arbitration
Resort to voluntary arbitration dispute, should not be
fixed by the court but by the parties relying on their
strengths and resources.
Parties to labor relations cases
1. Ees organization
2. Management
3. The public
NOTE: Er and Ees are active parties while the public and the
State are passive parties (Poquiz, 2006).
Tripartism
It is the representation of 3 sectors in policy-making
bodies of the govt. These are
1. The public or the government
2. The employers
3. The workers
Workers cannot insist that they be represented in the
policy making in the company
Such kind of representation in the policy-making
bodies of private enterprises is not ordained, not even
by the Constitution. What is provided for is workers
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 LABOR RELATIONS LAW

participation in policy and decision-making process technicalities and, in the course thereof, afford
directly affecting their rights, benefits, and welfare. them wider latitude of possible approaches to the
problem.
CONCILIATION v. MEDIATION
Persons who can avail of conciliation and
CONCILIATION MEDIATION mediation services of the NCMB
Is conceived of as a mild Is a mild
form of intervention by intervention by a Any party to a labor dispute, either the union or
a neutral third party neutral third party management, may seek the assistance of NCMB or
The conciliator- The conciliator- any of its Regional Branches by means of formal
Mediator, relying on his mediator, whereby request for conciliation and preventive
persuasive expertise, he starts advising mediation. Depending on the nature of the
who takes an active role the parties or problem, a request may be filed in the form of
in assisting parties by offering solutions consultation, notice of preventive mediation or
trying to keep or alternatives to notice of strike/lockout.
disputants talking, the problems with
facilitating other the end in view of Where to file a request for conciliation and
procedural niceties, assisting them mediation
carrying messages back towards voluntarily
and forth between the reaching their own An informal or formal request for conciliation and
parties, and generally mutually mediation service can be filed at the NCMB Central
being a good fellow who acceptable Office or any of its Regional Branches. There are at
tries to keep things calm settlement of the present 14 regional offices of the NCMB which are
and forward-looking in a dispute strategically located all over the country for the
tense situation convenient use of prospective clients.
It is the process where a It is when a 3rd
disinterested 3rd party party studies each PREVENTIVE MEDIATION
meets with side of the dispute
management and labor, then makes Preventive mediation case
at their request or proposals for the
otherwise, during a disputants to Preventive mediation case refers to the potential
labor dispute or in CB consider. The labor dispute which is the subject of a formal or
conferences, and by mediator cannot informal request for conciliation and mediation
cooling tempers, aids in make an award nor assistance sought by either or both parties or upon
reaching an agreement render a decision the initiative of the NCMB to avoid the occurrence
of an actual labor dispute.
Basis of conciliation and mediation
Persons who may file a notice for preventive
Sec. 3, Art. 13 of the Constitution provides The mediation
State shall promote xxx the preferential use of
voluntary modes of setting disputes including Any certified or duly recognized bargaining
conciliation and shall ensure mutual compliance by representative may file a notice or declare a strike or
the parties thereof in order to foster industrial request for preventive mediation in cases of
peace. bargaining deadlocks and ULPs. The Er may file a
notice or declare a lockout or request for preventive
NOTE: A similar provision is echoed in the Declaration of mediation in the same cases. In the absence of a
Policy under Art. 211(a) of the LC, as amended. certified or duly recognized bargaining representative,
any LLO in the establishment may file a notice, request
Advantages that can be derived from conciliation preventive mediation or declare a strike, but only on
and mediation services grounds of ULP (Sec. 3, Rule IV of the NCMB Manual of
Procedure).
Conciliation and mediation is non-litigious/non-
adversarial, less expensive, and expeditious. Under NOTE: Only a certified or duly recognized bargaining agent
this informal set-up, the parties find it more may file a notice or request for preventive mediation. If the
expedient to fully ventilate their respective notice was filed not by the Union but by its individual
members, the NCMB has no jurisdiction to entertain it.
positions without running around with legal

UNIVERSITY OF SANTO TOMAS

203 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Moreover, the notice or request for preventive mediation
cannot be filed by the Federation on behalf of its
local/chapter. A local union does not owe its existence to the
federation with which it is affiliated. It is a separate and
distinct voluntary association owing its creation to the will of
its members. Mere affiliation does not divest the local union
of its own personality; neither does it give the mother
federation the license to act independently of the local
union. It only gives rise to a contract of agency, where the
former acts in representation of the latter. Hence, local
unions are considered principals while the federation is
deemed to be merely their agent (Insular Hotel Employees
Union-NFL v. Waterfront Insular Hotel Davao, G.R. Nos.
174040-41, September 22, 2010).
Valid issues for a notice of strike/lockout or
preventive mediation
A notice of strike or lockout maybe filed on ground
of ULP acts, gross violation of the CBA, or deadlock
in CBAs. A complaint on any of the above ground
must be specified in the NCMB Form or the proper
form used in the filing of complaint.
In case of preventive mediation, any issue may be
brought before the NCMB Central Office or its
regional offices for conciliation and possible
settlement through a letter. This method is more
preferable than a notice of strike/lockout because of
the non-adversarial atmosphere that pervades
during the conciliation conferences.
Binding effect of the agreement
The parties are bound to honor any agreement
entered into by them. It must be pointed out that
such an agreement came into existence as a result
of painstaking efforts among the union,
management, and the Conciliator-
Mediator. Therefore, it is only logical to assume that
the Conciliator assigned to the case has to follow up
and monitor the implementation of the agreement.
Conciliation and mediation service still possible
during actual strike or lockout
It is possible to subject an actual strike or actual
lockout to continuing conciliation and mediation
services. In fact, it is at this critical stage that such
conciliation and mediation services be fully given a
chance to work out possible solution to the labor
dispute. With the ability of the Conciliator-Mediator
to put the parties at ease and place them at a
cooperative mood, the final solutions of all the
issues involved may yet be effected and settled.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
Possibility of remanding the dispute already been
assumed or certified to the NLRC to conciliation
and mediation
The parties are not precluded from availing the
services of an NCMB Conciliator-Mediator as the
duty to bargain collectively subsists until the final
resolution of all issues involved in the
dispute. Conciliation is so pervasive in application
that, prior to a compulsory arbitration award, the
parties are encouraged to continue to exhaust all
possible avenues of mutually resolving their dispute,
especially through conciliation and mediation
services.
Benefits that the parties can have in appearing
during conciliation conferences
Generally speaking, any party appearing during
scheduled conciliation conferences has the advantage
of presenting its position on the labor
controversy. The issue raised in the complaint can be
better ventilated with the presence of the concerned
parties. Moreover, the parties can observe a norm of
conduct usually followed in like forum.
DOLE REGIONAL DIRECTORS
JURISDICTION
Money claims falling under the jurisdiction of the
DOLE Regional Directors (RD)
Under Art. 129 of the LC, the RDs or any of the duly
authorized hearing officers of DOLE have jurisdiction
over claims for recovery of wages, simple money
claims and other benefits, provided that
1. The claim must arise from Er-Ee relationship;
2. The claimant does not seek reinstatement;
and
3. The aggregate money claim of each Ee does
not exceed Php 5,000.00.
NOTE: In the absence of any of the ff. requisites, it is the LA
who shall have the jurisdiction over the claims arising from
Er-Ee relations, except claims for Ees compensation, SSS,
Philhealth, and maternity benefits, pursuant to Art.217 of
the LC.
The proceedings before the Regional Office shall be
summary and non-litigious in nature.
Adjudicatory power of the RD
The RD or any of his duly authorized hearing officers is
empowered through summary proceeding and after
due notice, to hear and decide cases involving
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 LABOR RELATIONS LAW
recovery of wages and other monetary claims and
benefits, including legal interests.
DOLE SECRETARY
VISITORIAL AND ENFORCEMENT POWERS
Powers of the SLE
1. Visitorial power
2. Enforcement power
3. Appellate or power to review
Visitorial power
It constitutes:
1. Access to Ers records and premises at any time of
the day or night, whenever work is being
undertaken
2. To copy from said records
3. Question any Ee and investigate any fact,
condition or matter which may be necessary to
determine violations or which may aid in the
enforcement of the LC and of any LC, wage order,
or rules and regulation issued pursuant thereto.
Instances where the visitorial power of the SLE may
be exercised under the LC
Power to:
1. Inspect books of accounts and records of any
person or entity engaged in recruitment and
placement, require it to submit reports regularly
on prescribed forms and act in violations of any
provisions of the LC on recruitment and
placement (Art. 37).
2. Have access to Ers records and premises to
determine violations of any provisions of the LC
on recruitment and placement (Art. 128).
NOTE: The following acts constitute as violations
under Art. 128 of the LC:
1. Obstruct, impede, delay or otherwise render
ineffective the orders of the SLE or his authorized
representatives
2. Any government employee found guilty of, or abuse
of authority, shall be subject to administrative
investigation and summary dismissal from service.
3. Conduct industrial safety inspections of
establishments (Art. 165).
4. Inquire into the financial activities of LLO and
examine their books of accounts upon the filing of
the complaint under oath and duly supported by
the written consent of at least 20% of the total
membership of the LO concerned.
205
Enforcement power
It is the power of the SLE to
1. Issue compliance orders
2. Issue writs of execution for the enforcement of
their orders, except in cases where the Er contests
the findings of the labor officer and raise issues
supported by documentary proof which were not
considered in the course of inspection
3. Order stoppage of work or suspension of
operation when non-compliance with the law or
implementing rules and regulations poses grave
and imminent danger to health and safety of
workers in the workplace
4. Require Ers to keep and maintain such
employment records as may be necessary in aid to
the visitorial and enforcement powers
5. Conduct hearings within 24 hours to determine
whether
a. An order for stoppage of work or
suspension of operations shall be lifted
or not; and
b. Er shall pay the concerned Ees their
salaries in case the violation is
attributable to his fault (As amended by
RA 7730); (Guico v. Secretary, G.R. No.
131750, November 16, 1998).
Limitations on inferior courts in relation to
enforcement orders
In relation to enforcement orders issued under Art.
128 of the LC, no inferior court or entity shall
1. Issue temporary or permanent injunction or
restraining order; or
2. Assume jurisdiction over any case
Instances when Enforcement power may not be used
1. Case does not arise from the exercise of visitorial
power
2. When Er-Ee relationship ceased to exist at the
time of the inspection
3. If Er contests the finding of the Labor Regulation
Officer and such contestable issue is not verifiable
in the normal course of inspection
SLEs visitorial and enforcement powers do not apply
in the absence of Er-Ee relationship
The visitorial and enforcement powers of the SLE come
into play only in cases when the relationship of Er-Ee
still exists. The SLEs power does not apply in two
instances, namely: (a) where the Er-Ee relationship has
ceased; and (b) where no such relationship has ever
existed. The question of Er-Ee relationship becomes a
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
battle of evidence, the determination of which should
be comprehensive and intensive and therefore best
left to the specialized quasi-judicial body that is the
NLRC (Peoples Broadcasting v. The Secretary of the
Department of Labor and Employment, G.R. No.
179652, May 8, 2009).
POWER TO SUSPEND EFFECTS OF TERMINATION
SLE has the power to suspend the effects of
termination
Under Art. 277(b) of the LC, the SLE 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 DOLE before whom such
dispute is pending that the termination may cause
serious labor dispute or is in implementation of a mass
layoff.
NOTE: Art. 277 (b) of LC, is applicable on suspension of the
effects of termination if there is a showing that the
termination may cause serious labor dispute within the
company while Art. 263 (g) of LC on assumption of
jurisdiction is applicable in cases of strike in establishments
affecting national interest, not just the company.
ASSUMPTION OF JURISDICTION
SLE can assume jurisdiction over a labor dispute
When there is a labor dispute causing or likely to cause
a strike affecting national interest, the SLE, on his own
initiative or upon petition by any of the parties, may
either assume jurisdiction or certify the dispute to the
NLRC for compulsory arbitration.
NOTE: Art. 263(g) of the LC is both an extraordinary and a
preemptive power to address an extraordinary situation (a
strike or lockout in an industry indispensable to the national
interest). As the term assume jurisdiction connotes the
intent of the law is to give the SLE full authority to resolve all
matters within the dispute that gave rise to or which arose
out of the strike or lockoutit includes and extends to all
questions and controversies arising from or related to the
dispute, including cases over which the LA has exclusive
jurisdiction (Bagong Pagkakaisa ng Manggagawa ng
Triumph International v. Secretary of the Department of
Labor and Employment, G.R. No. 167401, July 5, 2010).
Effect of the assumption or certification
It automatically enjoins the intended or impending
strike or lockout as specified in the assumption or
certification order. If one has already taken place at
the time of the assumption or certification, all striking
or locked out Ees shall immediately return to work and
the Er shall immediately resume operations and
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
readmit all workers under the same terms and
conditions prevailing before the strike or lockout.
Assumption of jurisdiction can be exercised without
the necessity of prior notice or hearing given to any
of the party disputants
The rationale for the SLEs assumption of jurisdiction
can justifiably rest on his own consideration of the
exigency of the situation in relation to the national
interests (Capitol Medical Center v. Trajano, G.R. No.
155690, June 30, 2005).
APPELLATE JURISDICTION
Cases within the appellate jurisdiction of the SLE
1. Appeal from and adverse decision of the POEA
(Sec. 1, Part VII, Rule V, 2003 POEA Rules and
Regulations; Eastern Mediterranean Maritime
Ltd. And Agemar Manning Agency Inc., v. Surio et.
al., G.R. No. 154213, August 23, 2012).
2. Appeal the order or results of a certification
election on the ground that the Rules and
Regulations or parts thereof established by the
SLE for the conduct of election have been violated
(Art. 259,LC).
3. A review of cancellation proceedings decided by
the BLR in the exercise of its exclusive and original
jurisdiction (Abbott Laboratories Philippines, Inc.
v. Abbott Laboratories Employees Union, G.R.
No.131374, January 26, 2000).
NOTE: The SLE has no jurisdiction over decisions of the BLR
rendered in the exercise of its appellate power to review the
decision of the RD in a petition to cancel the union's
certificate of registration, said decisions being final and
unappealable (Ibid.)
Secs. 7 to 9 of Rule II, Book V of the IRR of the LC provides for
two situations
a. The first situation involves a petition for cancellation of
union registration which is filed with a Regional
Office. A decision of a Regional Office canceling a
union's certificate of registration may be appealed to
the BLR whose decision on the matter shall be final and
unappealable.
b. The second situation involves a petition for cancellation
of certificate of union registration which is filed directly
with the BLR. A decision of the BLR canceling a union's
certificate of registration may be appealed to the SLE
whose decision on the matter shall be final and
unappealable (Ibid.)
SLE has no appellate jurisdiction over decisions of RD
involving petitions for examinations of union accounts. It is
the BLR which exercises appellate jurisdiction in such case
(Barles v. Bitonio, G.R. No. 120270, June 16, 1999).
206
 LABOR RELATIONS LAW
VOLUNTARY ARBITRATION POWERS
Powers of SLE regarding voluntary arbitration
The SLE may authorize any official to act as Voluntary
Arbitrator upon the written request and agreement of
the parties to a labor dispute [Art. 212 (n), LC]. He shall
also approve, upon recommendation of the NCMB the
guidelines in administering the Voluntary Arbitration
Fund [Art. 276 (f), LC].
GRIEVANCE MACHINERY AND VOLUNTARY
ARBITRATION
Grievance
Any question by either the Er or the union regarding
the interpretation or application of the CBA or
company personnel policies or any claim by either
party that the other party is violating any provision of
the CBA or company personnel policies.
Grievance machinery
It 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. It is part of the continuing
process of CB.
Grievance procedure
It is 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 CBA.
It refers to the system of grievance settlement at the
plant level as provided in the CBA. It usually consists of
successive steps starting as the level of the
complainant and his immediate supervisor and ending,
when necessary, at the level of the top union and
company officials.
SUBJECT MATTER OF GRIEVANCE
Cases falling under the jurisdiction of the Grievance
Machinery
Any grievance arising from
1. The interpretation or implementation of the
CBA; and
2. The interpretation or enforcement of
company personnel policies
207
NOTE: Art. 217(c) of the LC requires LAs to refer cases
involving the implementation of CBAs to the grievance
machinery provided therein and to voluntary arbitration.
Likewise, Art. 260 of the LC clarifies that such disputes must
be referred first to the grievance machinery and, if
unresolved within seven days, they shall automatically be
referred to voluntary arbitration (Miguela Santuyo v.
Remerco Garments Manufacturing, Inc., G.R. No. 174420,
March 22, 2010).
VOLUNTARY ARBITRATOR
JURISDICTION
Voluntary arbitrator (VA)
1. Any person accredited by the NCMB as such
2. Any person named or designated in the CBA by
the parties to act as their VA
3. One chosen with or without the assistance of the
NCMB, pursuant to a selection procedure agreed
upon in the CBA
4. Any official that may be authorized by the SLE to
act as VA upon the written request and agreement
of the parties to a labor dispute. (Art. 262LC,)
Powers of a voluntary arbitrator
1. Hold hearings
2. Receive evidence
3. Take whatever action necessary to resolve the
dispute including efforts to effect a voluntary
settlement between parties (Art. 262-A, LC).
Nature of power of the voluntary arbitrator
Arbitrators by the nature of their functions act in a
quasi-judicial capacity (BP 129, as amended by R.A.
9702); where a question of law is involved or there is
abuse of discretion, courts will not hesitate to pass
upon review of their acts.
Jurisdiction of the Voluntary Arbitrators
Generally, the arbitrator is expected to decide only
those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator
can assume that he has the necessary power to make
a final settlement since arbitration is the final resort
for the adjudication of the disputes (Ludo and Luym
Corp. v. Saornido, G.R. No. 140960, January 20, 2003).
Cases within the jurisdiction of VA
Original and exclusive jurisdiction over:
1. All unresolved grievances arising from the:
a. Implementation or interpretation of the CBA
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
b. Interpretation or enforcement of company
personnel policies
NOTE: Under Art. 217, it is clear that a LA has original
and exclusive jurisdiction over termination disputes.
However, under Art. 261, a VA has original and
exclusive jurisdiction over grievances arising from the
interpretation or enforcement of company policies. As
a general rule then, termination disputes should be
brought before an LA, except when the parties
unmistakably express that they agree to submit the
same to voluntary arbitration (Negros Metal
Corporation v. Armelo Lamayo, G.R. No. 186557, August
25, 2010).
2. Wage distortion issues arising from the
application of any wage orders in organized
establishments
3. Those arising from interpretation and
implementation of productivity incentive
programs under R.A. 6971
4. Violations of CBA provisions which are not gross in
character are no longer treated as ULP and shall
be resolved as grievances under the CBA
NOTE: Gross violation of CBA provisions shall mean
flagrant and/or malicious refusal to comply with the
economic provisions of such agreement.
5. Any other labor disputes upon agreement by the
parties including ULP and bargaining deadlock
(Art. 262, LC).
NLRC and DOLE cannot entertain
disputes/grievances/matters under the exclusive and
original jurisdiction of the VA
They must immediately dispose and refer the same to
the grievance machinery or voluntary arbitration
provided in the CBA.
The parties may choose to submit the dispute to
voluntary arbitration proceedings before or at the
stage of compulsory arbitration proceedings.
Jurisdiction over actual termination disputes and
complaints for illegal dismissal
The LA has jurisdiction over actual termination
disputes and complaints for illegal dismissal filed by
workers pursuant to the union security clause and not
the grievance machinery.
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
PROCEDURE
How to initiate arbitration
1. Submission Agreement Where the
parties define the disputes to be resolved
2. Demand notice Invoking collective
agreement arbitration clause
Procedure for choosing VA /panel
1. The parties in a CBA shall designate in advance a
VA/panel, preferably from the listing of qualified
VAs duly accredited by the NCMB, or
2. Include in the agreement a procedure for the
selection of such VA or panel of VAs, preferably
from the listing of qualified VAs duly accredited by
the NCMB [Art.260 (3), LC].
Party which will designate the VA /panel in case the
parties fail to select one
It is the NCMB that shall designate the VA panel based
on the selection procedure provided by the CBA
(Manila Central Line Free Workers Union v. Manila
Central Line Corp., G.R. No. 109383, June 15, 1998).
LAs can be designated as VAs
There is nothing in the law that prohibits LAs from also
acting as voluntary arbitrators as long as the parties
agree to have him hear and decide their dispute
(Manila Central Line Free Workers Union v. Manila
Central Line Corp., G.R. No. 109383, June 15, 1998).
Effect of the award of VA
The decision or award of the VA acting within the
scope of its authority shall determine the rights of the
parties and their decisions shall have the same legal
effects as judgment of the courts. Such matters on fact
and law are conclusive.
Q: Are both the employer and the bargaining
representative of the employees required to go
through the grievance machinery in case a grievance
arises?
A: Yes, because it is but logical, just and equitable that
whoever is aggrieved should initiate settlement of
grievance through the grievance machinery. To
impose compulsory procedure on Ers alone would be
oppressive of capital.
208
 LABOR RELATIONS LAW
REMEDIES
Decisions of VAs appealable
GR: Decisions of VA are final and executory after 10
calendar days from receipt of the copy of the award or
decision by the parties (Art. 262-A, LC).
NOTE: Art. 262-A deleted the word unappealable from Art.
263. It makes the voluntary arbitration award final and
executory after 10 calendar days from receipt of the copy of
the award or decision by the parties. Presumably, the
decision may still be reconsidered by the VA on the basis of
a motion for reconsideration duly filed during that period
(Albert Teng v. Alfredo Pahagac, G.R. No. 169704, November
17, 2010).
XPN: Appeal to the CA via Rule 43 of the Rules of Court
within 15 days from the date of receipt of VAs decision
(Luzon Devt Bank v. Assn of Luzon Devt Bank Ees,
G.R. No. 120319, October 6, 1995).
NOTE: A VA by the nature of his functions acts in quasi-
judicial capacity. There is no reason why the VAs decisions
involving interpretation of law should be beyond the SCs
review. Administrative officials are presumed to act in
accordance with law, yet the SC will not hesitate to pass
upon their work where a question of law is involved or where
a showing of abuse of authority or discretion in their official
acts is properly raised in petitions for certiorari (Continental
Marble Corporation v. NLRC, G.R. No. L-43825, May 9, 1988).
Q: PSSLU had an existing CBA with Sanyo Phils., Inc.
which contains a union security clause which
provides that: all members of the union covered by
this agreement must retain their membership in good
standing in the union as condition of his / her
continued employment with the company. On
account of anti-union activities, disloyalty and for
joining another union, PSSLU expelled 12 Ees from
the union. As a result, PSSLU recommended the
dismissal of said Ees pursuant to the union security
clause. Sanyo approved the recommendation and
considered the said Ees dismissed. Thereafter, the
dismissed Ees filed with the Arbitration Branch of the
NLRC a complaint for illegal dismissal.
Does the VA have jurisdiction over the case?
A: No. The VA has no jurisdiction over the case.
Although the dismissal of the Ees concerned was made
pursuant to the union security clause provided in the
CBA, there was no dispute whatsoever between PSSLU
and Sanyo as regards the interpretation or
implementation of the said union security clause. Both
PSSLU and Sanyo are united and have come to an
agreement regarding the dismissal of the Ees
concerned. Thus there is no grievance between the
209
union and management which could be brought to the
grievance machinery. The dispute is between PSSLU
and Sanyo. The dispute therefore, does not involve the
interpretation or implementation of a CBA (Sanyo
Philippines Workers Union-PSSLU v. Canizares, G.R. No.
101619, June 8, 1992).
Q: X was employed as telephone operator of Manila
Midtown Hotel. She was dismissed from her
employment for committing the following violations:
falsifying official documents and culpable
carelessness-negligence or failure to follow specific
instructions or established procedures. X then filed a
complaint for illegal dismissal with the Arbitration
branch of the NLRC. The Hotel challenged the
jurisdiction of the LA on the ground that the case falls
within the jurisdictional ambit of the grievance
procedure and voluntary arbitration under the CBA.
Does the LA have jurisdiction over the case?
A: Yes. The LA has jurisdiction. The dismissal of X does
not call for the interpretation or enforcement of
company personnel policies but is a termination
dispute which comes under the jurisdiction of the LA.
The dismissal of X is not an unresolved grievance.
Neither does it pertain to interpretation of company
personnel policy (Maneja v. NLRC, G.R. No. 124013,
June 5, 1998).
Q: Sime Darby Salaried Employees Association-ALU
(SDSEA-ALU) wrote petitioner Sime Darby Pilipinas
(SDP) demanding the implementation of a
performance bonus provision identical to the one
contained in their own CBA with SDP. Subsequently,
SDP called both respondents SDEA and SDEA-ALU to
a meeting wherein SDEA explained that it was unable
to grant the performance bonus. In a conciliation
meeting, both parties agreed to submit their dispute
to voluntary arbitration. Their agreement to arbitrate
stated, among other things, that they were
"submitting the issue of performance bonus to
voluntary arbitration."
Does the VA have the power to pass upon the
question of whether to grant the performance bonus
and to determine the amount thereof?
A: Yes. In their agreement to arbitrate, the parties
submitted to the VA the issue of performance
bonus. The language of the agreement to arbitrate
may be seen to be quite cryptic. There is no indication
at all that the parties to the arbitration agreement
regarded the issue of performance bonus as a two-
tiered issue, only one tier of which was being
submitted to arbitration. Possibly, Sime Darbys
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
counsel considered that issue as having dual aspects
and intended in his own mind to submit only one of
those aspects to the VA, if he did, however, he failed
to reflect his thinking and intent in the arbitration
agreement (Sime Darby Phils. v. Magsalin, G.R. No.
90426, December 15, 1989).
Q: Apalisok, production chief for RPN Station, was
dismissed due to her alleged hostile, arrogant,
disrespectful, and defiant behavior towards the
Station Manager. She informed RPN that she is
waiving her right to resolve her case through the
grievance machinery provided in the CBA. The VA
resolved the case in the Ees favor.
On appeal, the CA ruled in favor of RPN because it
considered Apalisoks waiver to file her complaint
before the grievance machinery as a relinquishment
of her right to avail herself of the aid of the VA. The
CA said that the waiver had the effect of resolving an
otherwise unresolved grievance, thus the decision of
the VA should be set aside for lack of jurisdiction. Is
the ruling of the CA correct?
A: No. Art. 262 of the LC provides that upon agreement
of the parties, the VA can hear and decide all other
labor disputes.
The Ees waiver of her option to submit her case to
grievance machinery did not amount to relinquishing
her right to avail herself of voluntary arbitration.
Contrary to the finding of the CA, voluntary arbitration
as a mode of settling the dispute was not forced upon
RPN. Both parties indeed agreed to submit the issue
of validity of the dismissal of petitioner to the
jurisdiction of the VA by the Submission Agreement
duly signed by their respective counsel. The VA had
jurisdiction over the parties controversy (Apalisok v.
RPN, G.R. No. 138094, May 29, 2003).
COURT OF APPEALS
RULE 65, RULES OF COURT
Remedy of a party aggrieved by a decision of the
NLRC
File a petition for certiorari (Rule 65) which should be
initially filed with the CA in strict observance of the
doctrine on the hierarchy of courts as the appropriate
forum for the relief desired. The CA is procedurally
equipped to resolve unclear or ambiguous factual
finding, aside from the increased number of its
component divisions (St. Martin Funeral Home v.
NLRC, G.R. No. 130866, September 16, 1998).
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
NOTE: Rule 65, Section 1, Rules of Court:
Petition for Certiorari - When any tribunal, board or officer
exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of
the judgment, order or resolution subject thereof, copies of
all pleadings and documents relevant and pertinent thereto,
and a sworn certification of non-forum shopping as provided
in the third paragraph of section 3, Rule 46.
Period when the petition for certiorari should be filed
with the CA
Under Sec. 4, Rule 65 (as amended by A.M. No. 00-2-
03-SC) of the Rules of Civil Procedure, the petition
must be filed within 60 days from notice of the
judgment or from notice of the resolution denying the
petitioners motion for reconsideration. This
amendment is effective September 1, 2000, but being
curative may be given retroactive application
(Narzoles v. NLRC, G.R. No. 141959, September 29,
2000).
Art. 224 of the LC, which requires that copies of final
decisions, orders or awards be furnished not only the
partys counsel of record but also the party himself
applies to the execution thereof and not to the filing
of an appeal or petition for certiorari. The period
within which a petition for certiorari against a decision
of the NLRC may be filed should be computed from the
date counsel of record of the party receives a copy of
the decision or resolution, and not from the date the
party himself receives a copy thereof (Ginete v. Sunrise
Manning Agency, G.R. No. 142023, June 21, 2001).
Q: Company A was sold to Company B with the
undertaking that Company B will absorb the formers
Ees. However, they were not hired by Company B or
given separation pay by Company A. They thus filed
an action for illegal dismissal but was denied. When
the case reached the CA via a petition for certiorari,
the same was dismissed outright considering that the
verification and certification against forum shopping
was signed only by 3 out of the 228 petitioners. Was
the CA correct?
210
 LABOR RELATIONS LAW

A: Yes. While litigation is not a game of technicalities, PRESCRIPTION OF ACTIONS

and that the rules of procedure should not be enforced
strictly at the cost of substantial justice, still it does not Policy of the SC regarding reglementary periods in
follow that the Rules of Court may be ignored at will appeals in labor cases
and at random to the prejudice of the orderly
presentation, assessment and just resolution of the The SC is very strict regarding appeals filed outside the
issues. The Rules of Court provide that a petition for reglementary period for filing the same. To extend the
certiorari must be verified and accompanied by a period of the appeal is to delay the case, a
sworn certification of non-forum shopping. Failure to circumstance which could give the employer the
comply with these mandatory requirements shall be chance to wear out the efforts and meager resources
sufficient ground for the dismissal of the of the worker that the latter is constrained to give up
petition. Considering that only 3 of the 228 named for less than what is due him (Firestone Tire and
petitioners signed the requirement, the CA dismissed Rubber Co. of the Philippines v. Firestone Tire and
the case against them, as they did not execute a Rubber Co. Employees Union, G.R. No. 75363, August
Verification and Certification against forum 4, 1992).
shopping. It does not involve a failure to attach the
Annexes. Rather, the procedural infirmity consists of Rules as regards to the prescriptive period provided
omission the failure to sign a Verification and for in the LC
Certification against forum shopping (Ramirez et. al. v.
Mar Fishing Co., Inc. et. al., G.R. No. 168208, June 13, SUBJECT PRESCRIPTIVE PERIOD
2012). 1 year from accrual of such
ULP; otherwise forever
ULP
XPN: The Court may recognize the merits of a case by barred
considering the special circumstances or compelling (Art. 290, LC)
reasons that justifies the relaxation of the rule GR: 3 years from the time
requiring verification and certification of non-forum the cause of action accrued;
shopping in the interest of substantial justice. (Ibid.) otherwise forever barred
Money Claims (Art. 291, LC)
SUPREME COURT
XPN: Promissory Estoppel
RULE 45, RULES OF COURT
Within 1 year from the date
Appeal from a judgment, or final order or resolution All money claims
of effectivity, in accordance
of the CA accruing prior to the
with IRR; otherwise, they
effectivity of the LC
shall forever be barred
A party desiring to appeal may file with the SC a Workmens
verified petition for review on certiorari under Rule 45 Compensation Dec. 31, 1974 shall be filed
within fifteen (15) days from notice of the judgment, claims accruing prior not later than Mar. 31,
final order or resolution appealed from (Sea Power to the effectivity of 1975 before the
Shipping Enterprises, Inc. v. CA, G.R. No. 138270, June the LC and between appropriate regional offices
28, 2001). Nov. 1, 1974-Dec. of the DOLE. (Art. 291, LC)
31, 1974
NOTE: Rule 45, Sec. 1, Rules of Court: After 3 years from the date
of submission of the annual
Filing of petition with SC.A party desiring to appeal by
certiorari from a judgment, final order or resolution of the
financial report to the DOLE
CA, the Sandiganbayan, the CTA, the RTC or other courts, or from the date the same
whenever authorized by law, may file with the SC a verified should have been
Union funds
petition for review on certiorari. The petition may include submitted as required by
an application for a writ of preliminary injunction or other law, whichever comes
provisional remedies and shall raise only questions of law, earlier (Sec. 5, Rule II, Book
which must be distinctly set forth. The petitioner may seek VII, Omnibus Rules
the same provisional remedies by verified motion filed in the Implementing the LC).
same action or proceeding at any time during its pendency.
4 years. It commences to
Illegal Dismissal
run from the date of formal
Cases
dismissal [Mendoza v.

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211 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
NLRC, G.R. No. 122481,
(1998)].
Promissory estoppel
It may arise from the making of a promise, even
though without consideration, if it was intended that
the promise should be relied upon. If in fact it was
relied on, a refusal to enforce it would virtually
sanction the perpetration of fraud or would result in
other injustice. It presupposes the existence of a
promise on the part of one against whom estoppel is
claimed. The promise must be plain and unambiguous
and sufficiently specific so that the court can
understand the obligation assumed and enforce the
promise according to its terms.
NOTE: In order to make out a claim of promissory estoppel,
a party bears the burden of establishing the following
elements: (1) a promise was reasonably expected to induce
action or forbearance; (2) such promise did, in fact, induce
such action or forbearance; and (3) the party suffered
detriment as a result.
Acts considered as criminal violations of the LC
Except as otherwise provided in the LC, or unless the
acts complained of hinge on a question of
interpretation or implementation of ambiguous
provisions of an existing CBA, any violation of the
provisions of the LC declared to be unlawful or penal
in nature shall be punished with a fine of not less than
Php 1,000.00 nor more than Php 10,000.00 or
imprisonment of not less than three months nor more
than three years, or both such fine and imprisonment
at the discretion of the court (Art. 288, LC).
1. Prohibition against transfer of employment - After
the issuance of an employment permit, the alien shall
not transfer to another job or change his Er without
prior approval of the SLE (Art. 41, LC).
2. Violation of the provisions on learnership (Art. 77,
LC)
3. In cases of unlawful withholding of wages, the
culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages
recovered (Art. 111, LC).
4. It shall be unlawful for any person to demand or
accept, in any judicial or administrative proceedings
for the recovery of wages, attorneys fees which
exceed ten percent of the amount of wages recovered
(Art. 111, LC).
5. It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the wages of
a worker or induce him to give up any part of his wages
by force, stealth, intimidation, threat or by any other
UNIVERSITY OF SANTO TOMAS
2014 GOLDEN NOTES
means whatsoever without the workers consent (Art.
116, LC).
6. It shall be unlawful to make any deduction from the
wages of any Ee for the benefit of the Er or his
representative or intermediary as consideration of a
promise of employment or retention in employment
(Art. 116, LC).
7. It shall be unlawful for an Er to refuse to pay or
reduce the wages and benefits, discharge or in any
manner discriminate against any Ee who has filed any
complaint or instituted any proceeding under this Title
or has testified or is about to testify in such
proceedings (Art. 118,LC).
8. It shall be unlawful for any person to make any
statement, report, or record filed or kept pursuant to
the provisions of this Code knowing such statement,
report or record to be false in any material respect
(Art. 119, LC).
9. It shall be unlawful for any person or entity to
obstruct, impede, delay or otherwise render
ineffective the orders of the SLE or his duly authorized
representatives issued pursuant to the authority
granted under this Article, and no inferior court or
entity shall issue temporary or permanent injunction
or restraining order or otherwise assume jurisdiction
over any case involving the enforcement orders issued
in accordance with this Article [Art. 128 (4), LC].
10. It shall be unlawful for any Er to discriminate
against any woman Ee with respect to terms and
conditions of employment solely on account of her sex
(Art. 135, LC).
11. It shall be unlawful for an Er to require as a
condition of employment or continuation of
employment that a woman Ee shall not get married, or
to stipulate expressly or tacitly that upon getting
married, a woman Ee shall be deemed resigned or
separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman Ee
merely by reason of her marriage (Art. 136, LC).
12. It shall be unlawful for any Er:
(a) to deny any woman Ee the benefits provided for in
this Chapter or to discharge any woman employed by
him for the purpose of preventing her from enjoying
any of the benefits provided under this Code;
(b) to discharge such woman on account of her
pregnancy, or while on leave or in confinement due to
her pregnancy; or
(c) to discharge or refuse the admission of such woman
upon returning to her work for fear that she may again
be pregnant.
13. Violations of rights and conditions of membership
in a labor organization (Art. 241, LC)
212
 LABOR RELATIONS LAW

14. Unfair labor practice of Ers (Art. 248,LC)

15. Unfair labor practice of labor organizations (Art.
249 in relation to Art. 247,LC)
16. Violation of the provision on retirement benefits
(Art. 287,LC)

NOTE: In addition to the penalty prescribed under Art. 288,

any alien found guilty shall be summarily deported upon
completion of service of sentence. (LC, Art. 288).

If the offense is committed by a corporation, trust, firm,

partnership, association or any other entity, the penalty shall
be imposed upon the guilty officer or officers of such
corporation, trust, firm, partnership, association or entity
(Art. 289, LC).

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213 FACULTY OF CIVIL LAW