Lab Law 2015

LABOR LAW
PRE-WEEK NOTES
FOR THE 2015 BAR EXAMS
By:
Prof. Joselito Guianan Chan
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TOPIC NO. 1
FUNDAMENTAL PRINCIPLES AND POLICIES
A.
CONSTITUTIONAL PROVISIONS
What are the significant constitutional principles
related to Labor Law?
The following principles are noteworthy:
Under Article II (Declaration of Principles and State
Policies):
a. Promotion of full employment, a rising standard of
living, and an improved quality of life for all.
b. Promotion of social justice in all phases of national
development.
c. Full respect for human rights.
d. Vital role of the youth in nation-building.
e. Role of women in nation-building, and fundamental
equality before the law of women and men.
f. Indispensable role of the private sector,
g. Protection-to-labor clause: Section 18. The State
affirms labor as a primary social economic force. It
shall protect the rights of workers and promote their
welfare.
NOTE: Article II is merely a statement of principles and state
policies. Its provisions are not self-executing. They do not
embody judicially enforceable constitutional rights but
guidelines for legislation. These broad constitutional
principles need legislative enactments to implement them.
The disregard of these provisions cannot give rise

to a cause of action in the courts. Consequently, no
case can be filed based on these principles. There
ODETTE E. PAGUIO Pg 1 of 380

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

Rights):
a. Protection-to-Labor Clause: VERY IMPORTANT
Section 3. The State shall afford full protection to labor,
local and overseas, organized and unorganized,
and promote full employment and equality of
employment opportunities for all.
It shall guarantee the rights of all workers to self-

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

The State shall promote the principle of shared
responsibility between workers and employers and the
preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share
in the fruits of production and the right of enterprises
to reasonable returns to investments, and to
expansion and growth.
What are the due process principles applicable in

termination of employment?
1. Constitutional due process is not applicable to
termination of employment. This means that the employee
undergoing investigation leading to his dismissal cannot
invoke constitutional due process if and when he is deprived of
due process by the employer. This is so because constitutional
due process may only be invoked against the State or
government. However, after being dismissed, the employee
who files an illegal dismissal case may invoke constitutional
due process in case he is deprived of due process by the Labor
Arbiter, the NLRC, or the Court of Appeals since, this time, it
is already the government which may be said to have deprived
him of due process.
2. At the company level investigation leading to an employees
dismissal, BOTH the following procedural due process must
be complied with:
a. Statutory due process per 2004 Agabon doctrine
which refers to the due process provision in the Labor Code
(Article 277[b]); AND
b. Contractual due process per 2013 Abbott
Laboratories doctrine1 which refers to the due process
prescribed by the employer itself in its Company rules and
regulations or Code of Discipline. Having prescribed the due
process itself, the employer is contractually bound to adhere to
and observe it.

Penalty for non-compliance with either or both statutory or
contractual due process - P30,000.00 indemnity in the
form of nominal damages.
Is assistance of counsel in termination cases
mandatory and indispensable?
NO, according to the 2011 case of Lopez v. Alturas Group
of Companies:
Except:
(1) When the employee himself requests for counsel; or
(2) When he manifests that he wants a formal hearing on the
charges against him.
B.
NEW CIVIL CODE
What is latest example of a labor case where
Article 1700 of the Civil Code was applied?
Article 1700 of the Civil Code provides:
Art. 1700. The relations between capital and labor are not
merely contractual. They are so impressed with public interest
that labor contracts must yield to the common good.
Therefore, such contracts are subject to the special laws on
labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and
similar subjects.
2011 case of Leyte Geothermal Power Progressive
Employees Union-ALU-TUCP v. Philippine National
Oil Company-Energy Development Corporation,3
involving the issue of whether the members of petitioner
union are project employees or regular employees. It was
pronounced that Article 280 of the Labor Code, as worded,
establishes that the nature of the employment is determined
by law, regardless of any contract expressing otherwise. The
supremacy of the law over the nomenclature of the contract
and the stipulations contained therein is to bring to life the
policy enshrined in the Constitution to "afford full protection
to labor." Thus, labor contracts are placed on a higher plane

than ordinary contracts; these are imbued with public interest
and therefore subject to the police power of the State.
However, notwithstanding the foregoing iterations, project
employment contracts which fix the employment for a specific
project or undertaking remain valid under the law. In the case
at bar, the records reveal that the officers and the members of
petitioner union signed employment contracts indicating the
specific project or phase of work for which they were hired,
with a fixed period of employment. As clearly shown by
petitioner unions own admission, both parties had executed
the contracts freely and voluntarily without force, duress or
acts tending to vitiate the workers consent. Thus, there is no
reason not to honor and give effect to the terms and conditions
stipulated therein.
How is Article 1702 of the Civil Code correlated

with Article 4 of the Labor Code?
Both Article 1702 of the Civil Code and Article 4 of the Labor
Code speak of the rule on interpretation and construction
provisions of law and labor contracts.
Article 1702 of the Civil Code provides:

Article 1702. In case of doubt, all labor legislation and all
labor contracts shall be construed in favor of the safety and
decent living for the laborer.
Article 4 of the Labor Code states:

Article 4. Construction in Favor of Labor. All doubts in the
implementation and interpretation of the provisions of this
Code, including its implementing rules and regulations, shall
be resolved in favor of labor.
Both articles above may be applied to doubts and ambiguities

in:
(1) labor contracts such as an employment contract or a
CBA; or
(2) evidence presented in labor cases.

C.
THE LABOR CODE
What are the distinctions between Labor
Relations and Labor Standards?
Labor standards law is that part of labor law which
prescribes the minimum terms and conditions of employment
which the employer is required to grant to its employees.
Labor relations law is that part of labor law (Book V of the

Labor Code) which deals with unionism, collective bargaining,
grievance machinery, voluntary arbitration, strike, picketing
and lockout.
Labor relations and labor standards laws are not mutually

exclusive. They are complementary to, and closely
interlinked with, each other. For instance, the laws on
collective bargaining, strikes and lockouts which are covered
by labor relations law necessarily relate to the laws on working
conditions found in Book III.
What is exclusive bargaining

representative/agent?
Exclusive bargaining representative or exclusive
bargaining agent refers to a legitimate labor organization
duly recognized or certified as the sole and exclusive
bargaining representative or agent of all the employees in a
bargaining unit.
Can individual employee or group of employees

bring grievable issues directly to their employer
without the participation of the bargaining union?
Yes. The designation of a bargaining agent does not deprive an

individual employee or group of employees to exercise their
right at any time to present grievances to their employer, with
or without the intervention of the bargaining agent.

Can individual employee or group of employees
bring grievable issues to voluntary arbitration
without the participation of the bargaining union?
No, as held in the 2009 case of Tabigue v. International

Copra Export Corporation,1 where the Supre me Court
clarified that an individual employee or group of employees
cannot be allowed to submit or refer unsettled grievances for
voluntary arbitration without the participation of the
bargaining union/agent. The reason is that it is the bargaining
union/agent which is a party to the CBA which contains the
provision on voluntary arbitration. Being a party thereto, it
cannot be disregarded when a grievable issue will be
submitted for voluntary arbitration.
In order to have legal standing, the individual members

should be shown to have been duly authorized to represent the
bargaining union/agent.
What is the principle of co-determination?

The principle of co-determination refers to the right given to
the employees to participate in policy and decision-making
processes that affect their rights, benefits and welfare.
In PAL v. NLRC and PALEA,2 it was held that the

formulation of a Code of Discipline among employees is a
shared responsibility of the employer and the employees. It
affirmed the decision of the NLRC which ordered that the New
Code of Discipline should be reviewed and discussed with the
union, particularly the disputed provisions and that copies
thereof be furnished each employee.
Does the grant of the right of participation mean co-

management of business or intrusion into
management prerogatives?
No. This principle does not mean that workers should approve

management policies or decisions.
Manila Electric Company v. Quisumbing - the grant of

this right is not an intrusion into the employers management
prerogative. The mandate of the Constitution and the law is
complied with when, for instance, the union is allowed to have
representatives in the employers Safety Committee, Uniform
Committee and other committees of similar nature. Certainly,
such participation by the union in the said committees is not
in the nature of a co-management control of the business of
the employer. What is granted therein is participation and
representation. Thus, there is no impairment of management
prerogatives.
What is Labor-Management Council (LMC)?

The establishment of LMC is mandated under the said
constitutional principle of co-determination. This is the body
where workers, through their representatives, together with
representatives of the employer, are allowed to participate in
policy and decision-making processes that affect their rights,
benefits and welfare.
What is the provision of the Labor Code

enunciating STATUTORY DUE PROCESS?
Article 277, paragraph (b) of the Labor Code enunciates the so-
called statutory due process.
TOPIC NO. 2
RECRUITMENT AND PLACEMENT
A.
RECRUITMENT OF LOCAL AND MIGRANT
WORKERS
I.
RECRUITMENT AND PLACEMENT FOR LOCAL
EMPLOYMENT
What is a Private Recruitment and Placement
Agency (PRPA)?

It refers to any individual, partnership, corporation or entity
engaged in the recruitment and placement of persons for
local employment.
What are the qualifications of a PRPA for local

employment?
An applicant for a license to operate a PRPA must possess the
following:
1. Must be a Filipino citizen, if single proprietorship. In case of
a partnership or a corporation, at least seventy-five percent
(75%) of the authorized capital stock must be owned and
controlled by Filipino citizens;
2. Must have a minimum net worth of P200,000.00 in the
case of single proprietorship and partnership or a minimum
paid-up capital of P500,000.00 in the case of a corporation.
3. The owner, partners or the officers of the corporation must
be of good moral character and not otherwise disqualified by
law;
4. Must have an office space with a minimum floor area
of fifty (50) square meters.
What is the period of validity of the license?

The license shall be valid all over the Philippines for two (2)
years from the date of issuance, upon submission of proof of
publication, unless sooner suspended, cancelled or revoked by
the DOLE Regional Director.
Is the license transferable to other persons or

entities?
No license shall be transferred, conveyed or assigned to any

other person or entity.
II.
RECRUITMENT AND PLACEMENT
FOR OVERSEAS EMPLOYMENT

What are the laws relevant to overseas
employment?
1. The Labor Code; and
2. Migrant Workers and Overseas Filipinos Act of 1995 [R. A.
No. 8042], as amended by R.A. No. 10022 (March 8, 2010).
What are the important terms related to overseas

employment?
1. Overseas Filipinos refer to migrant workers, other
Filipino nationals and their dependents abroad.
2. Overseas Filipino Worker or Migrant Worker
refers to a person who is to be engaged, is engaged, or has
been engaged in a remunerated activity in a state of which he
or she is not a citizen or on board a vessel navigating the
foreign seas other than a government ship used for
military or non-commercial purposes, or on an
installation located offshore or on the high seas. A
person to be engaged in a remunerated activity
refers to an applicant worker who has been promised or
assured employment overseas.
What are the entities authorized to engage in

recruitment and placement of workers?
The following are authorized to engage in recruitment and
placement of workers:
a. Public employment offices;
b. Philippine Overseas Employment Administration (POEA);
c. Private recruitment entities;
d. Private employment agencies;
e. Shipping or manning agents or representatives;
f. Such other persons or entities as may be authorized by the
DOLE Secretary; and
g. Construction contractors.
LICENSING AND REGULATION

FOR OVERSEAS RECRUITMENT AND PLACEMENT
What are the qualifications of a recruiter for

overseas employment?
Only those who possess the following qualifications may be
permitted to engage in the business of recruitment and
placement of overseas Filipino workers:
1. Filipino citizens, partnerships or corporations at least
seventy five percent (75%) of the authorized capital stock
of which is owned and controlled by Filipino citizens;
2. A minimum capitalization of Two Million Pesos
(P2,000,000.00) in case of a single proprietorship or
partnership and a minimum paid-up capital of Two Million
Pesos (P2,000,000.00) in case of a corporation; Provided,
that those with existing licenses shall, within four (4) years
from effectivity hereof, increase their capitalization or paid up
capital, as the case may be, to Two Million Pesos
(P2,000,000.00) at the rate of Two Hundred Fifty Thousand
Pesos (P250,000.00) every year; and
3. Those not otherwise disqualified by law or other
government regulations to engage in the recruitment and
placement of workers for overseas employment.
What are the disqualifications?

The following are not qualified to engage in the business of
recruitment and placement of Filipino workers overseas:
a. Travel agencies and sales agencies of airline

companies;
b. Officers or members of the Board of any corporation or
members in a partnership engaged in the business of a travel
agency;
c. Corporations and partnerships, when any of its officers,
members of the board or partners, is also an officer, member
of the board or partner of a corporation or partnership
engaged in the business of a travel agency;
d. Persons, partnerships or corporations which have
derogatory records, such as, but not limited to, the following:
1) Those certified to have derogatory record or information by

the NBI or by the Anti-Illegal Recruitment Branch of the
POEA;
2) Those against whom probable cause or prima facie finding
of guilt for illegal recruitment or other related cases exists;
3) Those convicted for illegal recruitment or other related
cases and/or crimes involving moral turpitude; and
4) Those agencies whose licenses have been previously
revoked or cancelled by the POEA for violation of R.A. No.
8042, the Labor Code (PD 442, as amended), and their
implementing rules and regulations. All applicants for
issuance/renewal of license shall be required to submit
clearances from the NBI and Anti- Illegal Recruitment Branch
of the POEA, including clearances for their respective officers
and employees.
e. Any official or employee of the DOLE, POEA, Overseas
Workers Welfare Administration (OWWA), Department of
Foreign Affairs (DFA) and other government agencies directly
involved in the implementation of R.A. No. 8042 and/or any
of his/her relatives within the fourth (4th) civil degree of
consanguinity or affinity; and
f. Persons or partners, officers and directors of corporations
whose licenses have been previously cancelled or revoked for
violation of recruitment laws.
What is the period of validity of license?

Every license shall be valid for four (4) years from the date
of issuance unless sooner cancelled, revoked or suspended for
violation of applicable Philippine law, the Rules and other
pertinent issuances. Such license shall be valid only at the
place/s stated therein and when used by the licensed person,
partnership or corporation.
Can a license be transferred?
No. The license shall not be transferred, conveyed or assigned
to any person, partnership or corporation. It shall not be used
directly or indirectly by any person, partnership or
corporation other than the one in whose favor it was issued.

ILLEGAL RECRUITMENT
(Section 5, R.A. No. 10022)
Who may commit illegal recruitment?
Broadly, illegal recruitment may be committed by any
person, regardless of whether such person is a:
1. Non-licensee;
2. Non-holder of authority;
3. Licensee; or
4. Holder of authority.
Any person, whether a non-licensee, non-holder,

licensee or holder of authority, may be held li able
forillegal recruitment. Under R.A. No, 8042, as
amended by R.A. No. 10022, license or authority of
the illegal recruiter is immaterial.
What constitutes illegal recruitment when

committed by a NON-LICENSEE or NON-HOLDER
OF AUTHORITY?
Illegal recruitment, when undertaken by non-licensee

or non-holder of authority, shall mean 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, Provided, That any such non-licensee or non-
holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be
deemed so engaged.
What constitutes illegal recruitment when

committed by ANY PERSON, whether a NON-
LICENSEE, NONHOLDER OF AUTHORITY or even
by a LICENSEE or HOLDER OF AUTHORITY?
(a) To charge or accept, directly or indirectly, any amount

greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor and Employment, or
to make a worker pay or acknowledge any amount greater
than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the Labor
Code, or for the purpose of documenting hired workers with
the POEA, which include the act of reprocessing workers
through a job order that pertains to non-existent work, work
different from the actual overseas work, or work with a
different employer whether registered or not with the POEA;
(d) To induce or attempt to induce a worker already employed
to quit his employment in order to offer him another unless
the transfer is designed to liberate a worker from oppressive
terms and conditions of employment;
(e) To influence or attempt to influence any person or entity
not to employ any worker who has not applied for employment
through his agency or who has formed, joined or supported, or
has contacted or is supported by any union or workers'
organization;
(f) To engage in the recruitment or placement of workers in
jobs harmful to public health or morality or to the dignity of
the Republic of the Philippines;
(g) To fail to submit reports on the status of employment,
placement vacancies, remittance of foreign exchange earnings,
separation from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and
Employment;
(h) To substitute or alter to the prejudice of the worker,
employment contracts approved and verified by the
Department of Labor and Employment from the time of actual
signing thereof by the parties up to and including the period of
the expiration of the same without the approval of the
Department of Labor and Employment;

(i) For an officer or agent of a recruitment or placement
agency to become an officer or member of the Board of any
corporation engaged in travel agency or to be engaged
directly or indirectly in the management of travel
agency;
(j) To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations, or for any other reasons, other than those
authorized under the Labor Code and its implementing rules
and regulations;
(k) Failure to actually deploy a contracted worker without
valid reason as determined by the Department of Labor and
Employment;
(l) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for
purposes of deployment, in cases where the deployment does
not actually take place without the worker's fault. Illegal
recruitment when committed by a syndicate or in
large scale shall be considered an offense involving
economic sabotage; and
(m) To allow a non-Filipino citizen to head or manage a
licensed recruitment/manning agency.
PROHIBITED ACTIVITIES
IN RELATION TO ILLEGAL RECRUITMENT
What are the prohibited activities in connection
with recruitment for overseas employment?
Besides illegal recruitment, the law additionally provides that
it shall also be unlawful for any person or entity to commit the
following prohibited acts:
(1) Grant a LOAN to an overseas Filipino worker with
interest exceeding eight percent (8%) per annum,
which will be used for payment of legal and allowable
placement fees and make the migrant worker issue, either
personally or through a guarantor or accommodation party,
post-dated checks in relation to the said loan;
(2) Impose a compulsory and exclusive arrangement whereby

an overseas Filipino worker is required to avail of a LOAN
only from specifically designated institutions, entities
or persons;
(3) Refuse to condone or renegotiate a LOAN incurred by an
overseas Filipino worker after the latter's employment
contract has been prematurely terminated through no fault of
his or her own;
an overseas Filipino worker is required to undergo
HEALTH EXAMINATIONS only from specifically
designated medical clinics, institutions, entities or
persons, except in the case of a seafarer whose
medical examination cost is shouldered by the
principal/shipowner;
an overseas Filipino worker is required to undergo
TRAINING, SEMINAR, INSTRUCTION OR
SCHOOLING of any kind only from specifically
designated institutions, entities or persons, except
for recommendatory trainings mandated by
principals/shipowners where the latter shoulder the
cost of such trainings;
(6) For a SUSPENDED RECRUITMENT/MANNING
AGENCY to engage in any kind of recruitment activity
including the processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign
principal/employer to pass on the overseas Filipino worker
or deduct from his or her salary the payment of the cost of
INSURANCE fees, premium or other insurance
related charges, as provided under the compulsory worker's
INSURANCE coverage.
LICENSE VS. AUTHORITY

What is a license for overseas recruitment?
License refers to the document issued by the DOLE
Secretary authorizing a person, partnership or corporation to
operate a private recruitment or manning agency.

What is an authority for overseas employment?
Authority refers to the document issued by the DOLE
Secretary authorizing the officers, personnel, agents or
representatives of a licensed recruitment or manning
agency to conduct recruitment and placement activities in a
place stated in the license or in a specified place.
ELEMENTS OF ILLEGAL RECRUITMENT

What are the elements of illegal recruitment?
The essential elements of illegal recruitment vary in
accordance with the following classifications:
(1) Simple illegal recruitment;
(2) When committed by a syndicate; or
(3) When committed in large scale.
When illegal recruitment is committed under either Nos. 2 or
3 above or both, it is considered an offense involving
economic sabotage.
SIMPLE ILLEGAL RECRUITMENT

What are the 2 elements of simple illegal
recruitment?
(1) The offender has no valid license or authority required
by law to enable one to lawfully engage in recruitment and
placement of workers; and
(2) He undertakes either any activity within the meaning of
recruitment and placement defined under Article
13(b), (see above enumeration) or any prohibited practices
(see above enumeration) under Article 34 of the Labor Code.
Can a recruiter be a natural or juridical person?

Yes.
What are some relevant principles on illegal

recruitment?
1. Mere impression that a person could deploy workers
overseas is sufficient to constitute illegal recruitment. But if no
such impression is given, the accused should not be convicted

for illegal recruitment.
2. Mere promise or offer of employment abroad amounts to
recruitment.
3. There is no need to show that accused represented himself
as a licensed recruiter.
4. Referrals may constitute illegal recruitment.
5. It is illegal recruitment to induce applicants to part with
their money upon false misrepresentations and promises in
assuring them that after they paid the placement fee, jobs
abroad were waiting for them and that they would be deployed
soon.
6. Recruitment whether done for profit or not is immaterial.
7. The act of receiving money far exceeding the amount as
required by law is not considered as recruitment and
placement as this phrase is contemplated under the law.
8. Actual receipt of fee is not an element of the crime of illegal
recruitment.
9. Conduct of interviews amounts to illegal recruitment.
10. Absence of receipt is not essential to hold a person guilty of
illegal recruitment.
11. Conviction for illegal recruitment may be made on the
strength of the testimonies of the complainants.
12. Absence of documents evidencing the recruitment
activities strengthens, not weakens, the case for illegal
recruitment.
13. Only one person recruited is sufficient to convict one for
illegal recruitment.
14. Non-prosecution of another suspect is immaterial.
15. Execution of affidavit of desistance affects only the civil
liability but has no effect on the criminal liability for illegal
recruitment.
16. Defense of denial cannot prevail over positive
identification. Positive identification where categorical and
consistent and not attended by any showing of ill motive on
the part of the eyewitnesses on the matter prevails over alibi
and denial.

Between the categorical statements of the prosecution
witnesses, on the one hand, and bare denials of the accused,
on the other hand, the former must prevail.
ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC

SABOTAGE
When is illegal recruitment considered a crime
involving economic sabotage?
1. when committed by a syndicate; or
2. when committed in large scale.
When is illegal recruitment committed by a

syndicate?
If it is carried out by a group of three (3) or more
persons conspiring or confederating with one another.
Elements of illegal recruitment by a syndicate.

The essential elements of the crime of illegal recruitment
committed by a syndicate are as follows:
1. There are at least three (3) persons who, conspiring and/or
confederating with one another, carried out any unlawful or
illegal recruitment and placement activities as defined under
Article 13(b) or committed any prohibited activities under
Article 34 of the Labor Code; and
2. Said persons are not licensed or authorized to do so, either
locally or overseas.
The law does not require that the syndicate should

recruit more than one (1) person in order to
constitute the crime of illegal recruitment by a
syndicate. Recruitment of one (1) person would
suffice to qualify the illegal recruitment act as having
been committed by a syndicate.
When is illegal recruitment considered in large

scale?
If committed against three (3) or more persons

individually or as a group.
Elements of illegal recruitment in large scale.
The elements of illegal recruitment in large scale, as

distinguished from simple illegal recruitment, are as follows:
1. The accused engages in the recruitment and placement of
workers as defined under Article 13(b) or committed any
prohibited activities under Article 34 of the Labor Code; and
2. The accused commits the same against three (3) or more
persons, individually or as a group.
Distinguished from illegal recruitment by a

syndicate.
As distinguished from illegal recruitment committed by a
syndicate, illegal recruitment in large scale may be committed
by only one (1) person. What is important as qualifying
element is that there should be at least three (3) victims of
such illegal recruitment, individually or as a group.
What are some relevant principles on illegal

recruitment involving economic sabotage?
1. The number of persons victimized is determinative of the
crime. A conviction for large scale illegal recruitment must be
based on a finding in each case of illegal recruitment of three
(3) or more persons having been recruited, whether
individually or as a group.
2. Failure to prove at least 3 persons recruited makes the
crime a case of simple illegal recruitment.
3. There is no illegal recruitment in large scale based on
several informations filed by only one complainant.
4. The number of offenders is not material in illegal
recruitment in large scale.
5. Recruitment in large scale or by a syndicate is malum
prohibitum and not malum in se.
ILLEGAL RECRUITMENT VS. ESTAFA

Can a person be charged and convicted separately

for illegal recruitment and estafa involving one and
the same act of recruitment?
Yes. It is clear that conviction under the Labor Code does not
preclude conviction for estafa or other crimes under other
laws.
Some relevant principles:

Same evidence to prove illegal recruitment may be used to
prove estafa.
Conviction for both illegal recruitment and estafa, not
double jeopardy.
NATURE OF LIABILITY OF LOCAL RECRUITMENT

AGENCY AND FOREIGN EMPLOYER
What is the nature of the liability between local
recruiter and its foreign principal?
The nature of their liability is solidary or joint and
several for any and all claims arising out of the employment
contract of OFWs.
Is the solidary liability of corporate officers with

the recruitment agency automatic in character?
No. In order to hold the officers of the agency solidarily liable,

it is required that there must be proof of their culpability
therefor. Thus, it was held in the 2013 case of Gagui v.
Dejero,1 that while it is true that R.A. 8042 and the
Corporation Code provide for solidary liability, this liability
must be so stated in the decision sought to be implemented.
Absent this express statement, a corporate officer may not be
impleaded and made to personally answer for the liability of
the corporation.
What are some relevant principles on the persons

liable for illegal recruitment?
1. Employees of a licensed recruitment agency may be held

liable for illegal recruitment as principal by direct
participation, together with his employer, if it is shown that he
actively and consciously participated in illegal recruitment.
2. Good faith and merely following orders of superiors are not
valid defenses of an employee.
3. A manager of a recruitment/manning agency is not a mere
employee. As such, he receives job applications, interviews
applicants and informs them of the agencys requirement of
payment of performance or cash bond prior to the applicants
deployment. As the crewing manager, he was at the forefront
of the companys recruitment activities.
THEORY OF IMPUTED KNOWLEDGE

What is meant by this theory?
Knowledge of the agent is deemed knowledge of the

principal but not the other way around.
The theory of imputed knowledge is a rule that any

information material to the transaction, either possessed by
the agent at the time of the transaction or acquired by him
before its completion, is deemed to be the knowledge of the
principal, at least insofar as the transaction is concerned,
even though the knowledge, in fact, is not communicated to
the principal at all.
Sunace International Management Services, Inc. v.

NLRC2 - The High Court here has the opportunity to discuss
the
application of the theory of imputed knowledge. The OFW
(Divina), a domestic helper in Taiwan, has extended her 12-
month contract, after its expiration, for two (2) more years
after which she returned to the Philippines. It was established
by evidence that the extension was without the knowledge of
the local recruitment agency, petitioner Sunace. The Court of
Appeals, however, affirmed the Labor Arbiters and NLRCs
finding that Sunace knew of and impliedly consented to the

extension of Divinas 2-year contract. It went on to state that
It is undisputed that [Sunace] was continually
communicating with [Divinas] foreign employer. It thus
concluded that [a]s agent of the foreign principal, petitioner
cannot profess ignorance of such extension as obviously, the
act of the principal extending complainant (sic) employment
contract necessarily bound it.
In finding that the application by the CA of this theory of

imputed knowledge was misplaced, the High Court ruled
that this theory ascribes the knowledge of the agent, Sunace,
to the principal, employer Xiong, not the other way around.
The knowledge of the principal-foreign employer cannot,
therefore, be imputed to its agent, Sunace. There being no
substantial proof that Sunace knew of and consented to be
bound under the 2-year employment contract extension, it
cannot be said to be privy thereto. As such, Sunace and its
owner cannot be held solidarily liable for any of Divinas
claims arising from the 2-year employment extension. As the
New Civil Code provides: Contracts take effect only between
the parties, their assigns, and heirs, except in case where the
rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision
of law.
PRE-TERMINATION OF CONTRACT OF MIGRANT

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

1. Indefinite period of employment of OFWs is not valid as it
contravenes the explicit provision of the POEA Rules and
Regulations on fixed-period employment.
2. OFWs do not become regular employees by reason of nature

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

employment but assigning him to local vessel?
As held in OSM Shipping Philippines, Inc. v. NLRC, the

non-deployment of the ship overseas did not affect the validity
of the perfected employment contract. After all, the decision to
use the vessel for coastwise shipping was made by petitioner
only and did not bear the written conformity of private
respondent. A contract cannot be novated by the will of only
one party. The claim of petitioner that it processed the
contract of private respondent with the POEA only after he
had started working is also without merit. Petitioner cannot
use its own misfeasance to defeat his claim.

What is the effect of non-deployment of OFW to
overseas employment?
Petitioner-seafarer, in Santiago v. CF Sharp Crew

Management, Inc.2 was not deployed overseas despite the
signing of a POEA-approved employment contract. One of his
contentions is that such failure to deploy was an act designed
to prevent him from attaining the status of a regular
employee. The Supreme Court, however, disagreed and ruled
that seafarers are considered contractual employees and
cannot be considered as regular employees under the Labor
Code. Their employment is governed by the contracts they
sign every time they are rehired and their employment is
terminated when the contract expires. The exigencies of their
work necessitate that they be employed on a contractual
basis.
What is doctrine of processual presumption?

Presumed-identity approach or processual presumption is
an International Law doctrine which dictates that where a
foreign law is not pleaded or, even if pleaded, is not proved,
the presumption is that foreign law is the same as Philippine
law.
Thus, under this situation, Philippine labor laws should apply

in determining the issues presented in a case.
Is due process under Philippine law applicable to

termination of employment of OFWs?
Yes. In the absence of proof of applicable foreign law, OFWs

are entitled to due process in accordance with Philippine laws.
Is the Agabon doctrine applicable to OFWs who

are dismissed for cause but without due process?
Yes. The Agabon doctrine of awarding indemnity in the form

of nominal damages in cases of valid termination for just or
authorized cause but without procedural due process also
applies to termination of OFWs.
Who has the burden of proof to show that the

dismissal of the OFW is legal?
Burden of proof devolves on both recruitment agency and its

foreign principal.
Are OFWs entitled to the reliefs under the Labor

Code?
No. They are not entitled to such reliefs under Article 279 as
reinstatement or separation pay in lieu of reinstatement or full
backwages.
What are the reliefs to which OFWs are entitled?

They are entitled to the reliefs provided under Section 10 of
R.A. No. 8042, as amended, to wit:
(1) All salaries for the unexpired portion of the contract;

(2) Full reimbursement of placement fees and deductions
made with interest at twelve percent (12%) per annum.
In other words, all the reliefs available to an illegally dismissed
OFW are always monetary in nature.
It must be noted that under the 2009 Serrano doctrine,

(Antonio M. Serrano v. Gallant Maritime Services,
Inc.,),1 an illegally dismissed OFW is now entitled to all the
salaries for the entire unexpired portion of their
employment contracts, irrespective of the stipulated
term or duration thereof. The underlined phrase in
Section 10 below has been declared unconstitutional in this
case:
In case of termination of overseas employment without just,

valid or authorized cause as defined by law or contract, or any
unauthorized deductions from the migrant worker's salary, the
worker shall be entitled to the full reimbursement of his
placement fee and the deductions made with interest at twelve
percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for
three (3) months for every year of the unexpired
term, whichever is less.
However, R.A. No. 10022 (March 8, 2010), which amended

R.A. No. 8042 (Migrant Workers and Overseas Filipinos Act of
1995), has replicated and re-enacted the same
unconstitutional provision exactly as above quoted. The
question is: was the unconstitutionality of the
above-underlined part of the provision cured by
such replication or re-enactment in the amendatory
law?
The 2014 en banc case of Sameer Overseas Placement

Agency, Inc. v. Joy C. Cabiles,2 answered this in the
negative. The said provision was thus declared still
unconstitutional and null and void despite its replication in
R.A. No. .
What are some principles in regard to monetary

awards to OFWs?
1. Monetary award to OFW is not in the nature of separation
pay or backwages but a form of indemnity.
2. Only salaries are to be included in the computation of the
amount due for the unexpired portion of the contract.
Overtime, holiday and leave pay and allowances are not
included. However, this rule on exclusion of allowance does
not apply in case it is encapsulated in the basic salary clause.
3. Entitlement to overtime pay of OFWs. - As far as
entitlement to overtime pay is concerned, the correct criterion
in determining whether or not sailors are entitled to overtime
pay is not whether they were on board and cannot leave ship

beyond the regular eight (8) working hours a day, but whether
they actually rendered service in excess of said number of
hours. An OFW is not entitled to overtime pay, even if
guaranteed, if he failed to present any evidence to prove that
he rendered service in excess of the regular eight (8) working
hours a day.
4. In case of unauthorized deductions from OFWs
salary, he shall be entitled to the full reimbursement of the
deductions made with interest at twelve percent (12%) per
annum. This is in addition to the full reimbursement of his
placement fee with the same interest of twelve percent (12%)
per annum plus his salaries for the unexpired portion of his
employment contract if he is terminated without just, valid or
authorized cause as defined by law or contract.
CLAIMS FOR DISABILITY AND DEATH BENEFITS

OF OFWs
Which/Who has jurisdiction over an OFWs claims
for disability and death benefits?
a. The Labor Arbiters, NOT the SSS, have jurisdiction over
claims for disability, death and other benefits of OFWs.
b. Labor Arbiters have jurisdiction even if the case is filed by
the heirs of the deceased OFW.
Is the Labor Codes concept of permanent total

disability similar to that of OFWs?
Yes. The concept of this kind of disability under Article 192 of
the Labor Code is applicable to them as reiterated lately
in the 2013 case of Kestrel Shipping Co., Inc. v. Munar.
What are the requisites for compensability of

injury or illness of seafarers?
1. It should be work-related; and
2. The injury or illness existed during the term of the
seafarers employment contract.

DIRECT HIRING
What is direct hiring?
Direct Hiring refers to the process of directly hiring

workers by employers for overseas employment as authorized
by the DOLE Secretary and processed by the POEA, including:
1. Those hired by international organizations;

2. Those hired by members of the diplomatic corps;
3. Name hires or workers who are able to secure overseas
employment opportunity with an employer without the
assistance or participation of any agency.
Does the POEA Administrator or the DOLE

Secretary or DOLE Regional Director have the
power to issue closure order?
Yes. If upon preliminary examination or surveillance, the

DOLE Secretary, the POEA Administrator or DOLE Regional
Director is satisfied that such danger or exploitation exists, a
written order may be issued for the closure of the
establishment being used for illegal recruitment activity.
Does the DOLE Secretary have the power to issue

warrant of arrest and search and seizure orders?
No. Salazar v. Achacoso,1 declared that the exercise by the

DOLE Secretary of his twin powers to issue arrest warrant and
search and seizure orders provided under Article 38[c] of the
Labor Code is unconstitutional. Only regular courts can
issue such orders.
REMITTANCE OF FOREIGN EXCHANGE EARNINGS

Is remittance of foreign exchange earnings by
OFWs mandatory?
Yes. It shall be mandatory for all Filipino workers abroad to

remit a portion of their foreign exchange earnings to their
families, dependents, and/or beneficiaries in the country in
accordance with rules and regulations prescribed by the DOLE
Secretary. It should be made through the Philippine banking
system.
------------oOo------------
TOPIC NO. 3
LABOR STANDARDS
A.
HOURS OF WORK
1.
COVERAGE/EXCLUSIONS
(Article 82, Labor Code)
Who are covered by the labor standards

provisions of the Labor Code?
Employees in all establishments, whether operated for profit
or not, are covered by the law on labor standards.
Who are excluded?

The following are excluded from the coverage of the law on
labor standards:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Domestic workers or kasambahay and persons in
the personal service of another;
e. Workers paid by results;
f. Non-agricultural field personnel; and
g. Members of the family of the employer.
2.
NORMAL HOURS OF WORK
What is the total normal hours of work per day?
Eight (8) hours daily.

What is overtime work?
Any work in excess of eight (8) hours is considered overtime
work.
May normal working hours be reduced?
Yes, provided that no corresponding reduction is made on the
employees wage or salary equivalent to an 8-hour work day.
In instances where the number of hours required by the nature
of work is less than 8 hours, such number of hours should be
regarded as the employees full working day.
What are flexible working hours?

Flexible work arrangements refer to alternative
arrangements or schedules other than the traditional or
standard work hours, workdays and workweek. The effectivity
and implementation of any of the flexible work arrangements
should be temporary in nature.
Under R.A. No. 8972, otherwise known as The Solo Parents

Welfare Act of 2000, solo parents are allowed to work on a
flexible schedule. The phrase flexible work schedule is
defined in the same law as the right granted to a solo parent
employee to vary his/her arrival and departure time without
affecting the core work hours as defined by the employer.
COMPRESSED WORK WEEK

What is compressed work week?
Compressed Workweek or CWW refers to a situation
where the normal workweek is reduced to less than six (6)
days but the total number of work-hours of 48 hours per week
remains. The normal workday is increased to more than eight
(8) hours but not to exceed twelve (12) hours, without
corresponding overtime premium. This concept can be
adjusted accordingly in cases where the normal workweek of
the firm is five (5) days.
What are the conditions for its validity?

The CWW scheme is undertaken as a result of an express

and voluntary agreement of majority of the covered
employees or their duly authorized representatives.
How should compensation be made under a valid

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

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

When is waiting time compensable?
Waiting time spent by an employee shall be considered as
working time if waiting is an integral part of his work or the
employee is required or engaged by the employer to wait. Time
spent waiting for work is compensable if it is spent primarily
for the benefit of the employer and [its] business.
OVERTIME WORK, OVERTIME PAY

What are some basic principles on overtime work?
1. Work rendered after normal eight (8) hours of work is
called overtime work.
2. In computing overtime work, "regular wage" or "basic
salary" means "cash" wage only without deduction for
facilities provided by the employer.
3. "Premium pay" means the additional compensation
required by law for work performed within eight (8) hours on
non-working days, such as regular holidays, special holidays
and rest days.
4. "Overtime pay" means the additional compensation for
work performed beyond eight (8) hours.
5. Illustrations on how overtime is computed:
a. For overtime work performed on an ordinary day,

the overtime pay is plus 25% of the basic hourly rate.
b. For overtime work performed on a rest day or on a
special day, the overtime pay is plus 30% of the basic hourly
rate which includes 30% additional compensation as
provided in Article 93 [a] of the Labor Code.
c. For overtime work performed on a rest day which
falls on a special day, the overtime pay is plus 30%
of the basic hourly rate which includes 50% additional
compensation as provided in Article 93 [c] of the Labor Code.
d. For overtime work performed on a regular holiday,
the overtime pay is plus 30% of the basic hourly rate which
includes 100% additional compensation as provided in
Article 94 [b] of the Labor Code.

e. For overtime work performed on a rest day which
falls on a regular holiday, the overtime pay is plus 30% of
the basic hourly rate which includes 160% additional
compensation.
What is the distinction between PREMIUM PAY

and OVERTIME PAY?
Premium pay refers to the additional compensation required
by law for work performed within eight (8) hours on non-
working days, such as rest days and regular and special
holidays.
Overtime pay refers to the additional compensation for work

performed beyond eight (8) hours a day. Every employee
who is entitled to premium pay is likewise entitled to the
benefit of overtime pay.
What is built-in overtime pay?

In case the employment contract stipulates that the
compensation includes built-in overtime pay and the same is
duly approved by the DOLE, the non-payment by the
employer of any overtime pay for overtime work is justified
and valid.
What is emergency overtime work? (Article 89,

Labor Code).
a. General rule.
The general rule remains that no employee may be compelled
to render overtime work against his will.
b. Exceptions when employee may be compelled to
render overtime work:
1. When the country is at war or when any other national or

local emergency has been declared by the National Assembly
or the Chief Executive;
2. When overtime work is necessary to prevent loss of life or
property or in case of imminent danger to public safety due to

actual or impending emergency in the locality caused by
serious accident, fire, floods, typhoons, earthquake, epidemic
or other disasters or calamities;
3. When there is urgent work to be performed on machines,
installations or equipment, or in order to avoid serious loss or
damage to the employer or some other causes of similar
nature;
4. When the work is necessary to prevent loss or damage to
perishable goods;
5. When the completion or continuation of work started before
the 8th hour is necessary to prevent serious obstruction or
prejudice to the business or operations of the employer; and
6. When overtime work is necessary to avail of favorable
weather or environmental conditions where performance or
quality of work is dependent thereon.
May an employee validly refuse to render

overtime work under any of the afore-said
circumstances?
No, When an employee refuses to render emergency overtime
work under any of the foregoing conditions, he may
bedismissed on the ground of insubordination or willful
disobedience of the lawful order of the employer.
Can overtime pay be waived?

NO. The right to claim overtime pay is not subject to a waiver.
Such right is governed by law and not merely by the agreement
of the parties.
NIGHT WORK (R.A. NO. 10151),

NIGHT SHIFT DIFFERENTIAL (ARTICLE 86, LABOR
CODE)
What is the new law on night work?
R.A. No. 10151 [JUNE 21, 2011].
a. Significance of the law.
R.A. No. 10151 has repealed Article 130 [Nightwork
Prohibition] and Article 131 [Exceptions] of the Labor Code

and accordingly renumbered the same articles. Additionally, it
has inserted a new Chapter V of Title III of Book III of the
Labor Code entitled Employment of Night Workers which
addresses the issue on nightwork of all employees, including
women workers.
Chapter V covers newly renumbered Articles 154 up to 161 of

the Labor Code.
b. Coverage of the law.
The law on nightwork applies not only to women but to all
persons, who shall be employed or permitted or suffered to
work at night, except those employed in agriculture, stock
raising, fishing, maritime transport and inland navigation,
during a period of not less than seven (7) consecutive
hours, including the interval from midnight to five
o'clock in the morning, to be determined by the DOLE
Secretary, after consulting the workers representatives/labor
organizations and employers.
c. Night worker, meaning.
"Night worker" means any employed person whose work
covers the period from 10 o'clock in the evening to 6
o'clock the following morning provided that the worker
performs no less than seven (7) consecutive hours of
work.
NIGHT SHIFT DIFFERENTIAL PAY

How is it reckoned and computed?
Night shift differential is equivalent to 10% of employee's
regular wage for each hour of work performed between 10:00
p.m. and 6:00 a.m. of the following day.
What is the distinction between night shift

differential pay and overtime pay?
When the work of an employee falls at night time, the receipt
of overtime pay shall not preclude the right to receive night
differential pay. The reason is the payment of the night
differential pay is for the work done during the night; while

the payment of the overtime pay is for work in excess of the
regular eight (8) working hours.
How is Night Shift Differential Pay computed?

1. Where night shift (10 p.m. to 6 a.m.) work is
regular work.
a. On an ordinary day: Plus 10% of the basic hourly rate or
a total of 110% of the basic hourly rate.
b. On a rest day, special day or regular holiday: Plus
10% of the regular hourly rate on a rest day, special day or
regular holiday or a total of 110% of the regular hourly rate.
2. Where night shift (10 p.m. to 6 a.m.) work is
overtime work.
a. On an ordinary day: Plus 10% of the overtime hourly
rate on an ordinary day or a total of 110% of the overtime
hourly rate on an ordinary day.
b. On a rest day or special day or regular holiday: Plus
10% of the overtime hourly rate on a rest day or special day or
regular holiday.
3. For overtime work in the night shift. Since overtime
work is not usually eight (8) hours, the compensation for
overtime night shift work is also computed on the basis of the
hourly rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly
rate or a total of 110% of 125% of basic hourly rate.
b. On a rest day or special day or regular holiday. Plus
10% of 130% of regular hourly rate on said days or a total of
110% of 130% of the applicable regular hourly rate.
PART-TIME WORK
What is part-time work?
Part-time work is a single, regular or voluntary form of
employment with hours of work substantially shorter than
those considered as normal in the establishment. A part-
time worker is an employed person whose normal hours of
work are less than those of comparable full-time workers.
Part-time work may take different forms depending on the

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

(SEE CIVIL CODE)
What is contract for piece work under the Civil
Code?
By the contract for a piece of work, the contractor binds
himself to execute a piece of work for the employer, in
consideration of a certain price or compensation. The
contractor may either employ only his labor or skill, or also
furnish the material.
B.
WAGES
WAGE VS. SALARY
What is the basic distinction between wage and
salary?
The term wage is used to characterize the compensation
paid for manual skilled or unskilled labor. Salary, on the
other hand, is used to describe the compensation for higher or
superior level of employment.
What is the distinction in respect to execution,

attachment or garnishment?
In cases of execution, attachment or garnishment of the
compensation of an employee received from work issued by
the court to satisfy a judicially-determined obligation, a
distinction should be made whether such compensation is
considered wage or salary. Under Article 1708 of the Civil
Code, if considered a wage, the employees compensation
shall not be subject to execution or attachment or
garnishment, except for debts incurred for food, shelter,
clothing and medical attendance.

If deemed a salary, such compensation is not exempt from
execution or attachment or garnishment. Thus, the salary,
commission and other remuneration received by a managerial
employee (as distinguished from an ordinary worker or
laborer) cannot be considered wages. Salary is understood to
relate to a position or office, or the compensation given for
official or other service; while wage is the compensation for
labor.
MINIMUM WAGE DEFINED

What are the attributes of wage?
Wage has the following attributes:
1. It is the remuneration or earnings, however designated, for
work done or to be done or for services rendered or to be
rendered;
2. It is capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece or commission basis,
or other method of calculating the same;
3. It is payable by an employer to an employee under a written
or unwritten contract of employment for work done or to be
done or for services rendered or to be rendered; and
4. It includes the fair and reasonable value, as determined by
the DOLE Secretary, of board, lodging, or other facilities
customarily furnished by the employer to the employee. Fair
and reasonable value shall not include any profit to the
employer or to any person affiliated with the employer.
What is basic wage?

Basic wage means all the remuneration or earnings paid
by an employer to a worker for services rendered on normal
working days and hours but does not include cost-of-living
allowances, profit-sharing payments, premium payments, 13th
month pay or other monetary benefits which are not
considered as part of or integrated into the regular salary of
the workers.

Further, as held in Honda Phils., Inc. v. Samahan ng
Malayang Manggagawa sa Honda, the following should
be excluded from the computation of basic salary, to wit:
payments for sick, vacation and maternity leaves,
night differentials, regular holiday pay and premiums
for work done on rest days and special holidays.
What is minimum wage?

The minimum wage rates prescribed by law shall be the
basic cash wages without deduction therefrom of whatever
benefits, supplements or allowances which the employees
enjoy free of charge aside from the basic pay.
What is statutory minimum wage?

The term statutory minimum wage refers simply to the
lowest basic wage rate fixed by law that an employer can pay
his workers.
What is regional minimum wage rate?

The term regional minimum wage rates refers to the
lowest basic wage rates that an employer can pay his
workers, as fixed by the Regional Tripartite Wages and
Productivity Boards (RTWPBs), and which shall not be
lower than the applicable statutory minimum wage rates.
What are included/excluded in the term wage

rate?
The term "wage rates" includes cost-of-living
allowances as fixed by the RTWPB, but excludes other
wage-related benefits such as overtime pay, bonuses, night
shift differential pay, holiday pay, premium pay, 13th month
pay, premium pay, leave benefits, among others.
Can COLA be integrated into the minimum wage?

Yes. The cost-of-living allowance (COLA) may be ordered
integrated into the minimum wage by the Regional Tripartite
Wages and Productivity Board (RTWPB or Regional

Board).
What is COLA?
COLA is not in the nature of an allowance intended to
reimburse expenses incurred by employees in the performance
of their official functions. It is not payment in consideration of
the fulfillment of official duty. As defined, cost of living
refers to the level of prices relating to a range of everyday
items or the cost of purchasing the goods and services which
are included in an accepted standard level of consumption.
Based on this premise, COLA is a benefit intended to cover
increases in the cost of living.
What is the NO WORK, NO PAY principle?

The no work, no pay or fair days wage for fair
days labor means that if the worker does not work, he is
generally not entitled to any wage or pay. The exception is
when it was the employer who unduly prevented him from
working despite his ableness, willingness and readiness to
work; or in cases where he is illegally locked out or illegally
suspended or illegally dismissed, or otherwise illegally
prevented from working, in which event, he should be entitled
to his wage.
MINIMUM WAGE SETTING

What is a Wage Order?
The term Wage Order refers to the order promulgated by
the Regional Board pursuant to its wage fixing authority.
When is it proper to issue a Wage Order?

Whenever conditions in the region so warrant, the Regional
Board shall investigate and study all pertinent facts and based
on the prescribed standards and criteria, shall proceed to
determine whether a Wage Order should be issued. Any such
Wage Order shall take effect after fifteen (15) days from its
complete publication in at least one (1) newspaper of general
circulation in the region.

What are the standards/criteria for minimum
wage fixing?
In the determination of regional minimum wages, the
Regional Board shall, among other relevant factors, consider
the following:
(1) Needs of workers and their families

1) Demand for living wages;
2) Wage adjustment vis--vis the consumer price index;
3) Cost of living and changes therein;
4) Needs of workers and their families;
5) Improvements in standards of living.
(2) Capacity to pay

1) Fair return on capital invested and capacity to pay of
employers;
2) Productivity.
(3) Comparable wages and incomes

1) Prevailing wage levels.
(4) Requirements of economic and social

development
1) Need to induce industries to invest in the countryside;
2) Effects on employment generation and family income;
3) Equitable distribution of income and wealth along the
imperatives of economic and social development.
What are the methods of fixing the minimum wage

rates?
There are two (2) methods, to wit:
1. Floor-Wage method which involves the fixing of a
determinate amount to be added to the prevailing statutory
minimum wage rates. This was applied in earlier wage orders;
and
2. Salary-Cap or Salary-Ceiling method where the

wage adjustment is to be applied to employees receiving a
certain denominated salary ceiling. In other words, workers
already being paid more than the existing minimum wage (up
to a certain amount stated in the Wage Order) are also to be
given a wage increase.
The Salary-Cap or Salary-Ceiling method is the preferred

mode.
The distinction between the two (2) methods is best shown by
way of an illustration. Under the Floor Wage Method, it
would be sufficient if the Wage Order simply set P15.00 as the
amount to be added to the prevailing statutory minimum wage
rates; while in the Salary-Ceiling Method, it would be
sufficient if the Wage Order states a specific salary, such as
P250.00, and only those earning below it shall be entitled to
the wage increase.
MINIMUM WAGE OF WORKERS PAID BY RESULTS

What are the minimum wage rates of workers paid
by results?
According to Article 124 of the Labor Code:
All workers paid by results, including those who are paid on
piecework, takay, pakyaw or task basis, shall receive
not less than the prescribed wage rates per eight (8) hours of
work a day, or a proportion thereof for working less than
eight (8) hours.
Who are workers paid by results?

They are workers who are engaged on pakyao, piecework, task
and other non-time work. They are so called because they
are paid not on the basis of the time spent on their work but
according to the quantity, quality or kind of job and the
consequent results thereof.
What are the categories of workers paid by results?

Workers paid by results may be classified into:
a. Supervised workers; and

b. Unsupervised workers.
As the term clearly connotes, supervised workers are those
whose manner of work is under the control of the employer;
while unsupervised workers are those whose work is
controlled more in the results than in the manner or
method of performing it.
The law does not make any categorical differentiation among

the workers paid by results. Thus, the workers may be on
pakyao (sometimes spelled pakyaw), takay or piece-rate
or output basis. All of them are similar in character in that
they are all paid on the basis of the results of their work. When
the law does not distinguish, we should not distinguish.
WAGE RATE OF APPRENTICES AND LEARNERS

What is the wage rate of apprentices and learners?
The wage rate of a learner or an apprentice is set at
seventy-five percent (75%) of the statutory minimum
wage.
WAGE RATE OF PERSONS WITH DISABILITY

(PWDs)
What is the wage rate of PWD?
Under R.A. No. 7277, the wage rate of PWDs had been
increased to and fixed at 100% of the applicable
minimum wage.
COMMISSIONS
What is commission?
Commission is the recompense, compensation or reward
of an employee, agent, salesman, executor, trustee, receiver,
factor, broker or bailee, when the same is calculated as a
percentage on the amount of his transactions or on the profit
of the principal.
Is commission part of wage?

Commission may or may not be considered part of

wage/salary depending on the peculiar circumstances of a case
and on the purpose for which the determination is being
made. For instance, the rule on the inclusion of commissions
for purposes of computing the separation pay may essentially
differ from the inclusionary rule thereof for purposes of
computing the 13th month pay.
Is there a law which mandates the payment of

commission?
None. According to Lagatic v. NLRC,1 there is no law which
requires employers to pay commissions.
Is there a standard formula to compute

commission?
None. There is no law which prescribes a method for
computing commission. The determination of the amount of
commissions is the result of collective bargaining negotiations,
individual employment contracts or established employer
practice.
DEDUCTIONS FROM WAGES

May employer deduct from wage of employees?
The general rule is that an employer, by himself or through his
representative, is prohibited from making any
deductions from the wages of his employees. The
employer is not allowed to make unnecessary deductions
without the knowledge or authorization of the employees.
Are there exceptions to this rule?

Yes.
(a) In cases where the worker is insured with his consent by
the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the
insurance;
(b) For union dues, in cases where the right of the worker or
his union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or
regulations issued by the DOLE Secretary.
(d) Deductions for loss or damage under Article 114 of the
Labor Code;
(e) Deductions made for agency fees from non-union
members who accept the benefits under the CBA negotiated by
the bargaining union. This form of deduction does not require
the written authorization of the non-bargaining union member
concerned;
(f) Deductions for value of meal and other facilities;
(g) Deductions for premiums for SSS, PhilHealth,
employees compensation and Pag-IBIG;
(h) Withholding tax mandated under the National Internal
Revenue Code (NIRC);
(i) Withholding of wages because of the employees debt to
the employer which is already due;
(j) Deductions made pursuant to a court judgment against
the worker under circumstances where the wages may be the
subject of attachment or execution but only for debts incurred
for food, clothing, shelter and medical attendance;
(k) When deductions from wages are ordered by the court;
NON-DIMINUTION OF BENEFITS
What is the applicability of the non-diminution
rule in Article 100 of the Labor Code?
Albeit Article 100 is clear that the principle of non-elimination
and non-diminution of benefits apply only to the benefits
being enjoyed at the time of the promulgation of the Labor
Code, the Supreme Court has consistently cited Article 100 as
being applicable even to benefits granted after said
promulgation. It has, in fact, been treated as the legal anchor
for the declaration of the invalidity of so many acts of
employers deemed to have eliminated or diminished the
benefits of employees.
The 2014 case of Wesleyan University-Philippines v.

Wesleyan University-Philippines Faculty and Staff

Association,1 succinctly pointed out that the Non-
Diminution Rule found in Article 100 of the Labor Code
explicitly prohibits employers from eliminating or reducing
the benefits received by their employees. This rule, however,
applies only if the benefit is based on any of the following:
(1) An express policy;
(2) A written contract; or
(3) A company practice.
There is not much controversy if the benefit involved is
provided for under Nos. 1 and 2 above. Thus, if it is expressly
laid down in a written policy unilaterally promulgated by the
employer, the employer is duty-bound to adhere and comply
by its own policy. It cannot be allowed to renege from its
commitment as expressed in the policy.
If the benefit is granted under a written contract such as an

employment contract or a collective bargaining agreement
(CBA), the employer is likewise under legal compulsion to so
comply therewith.
On No. 3 above, please see discussion below.
COMPANY PRACTICE
What is company practice?
Company practice is a custom or habit shown by an employers
repeated, habitual customary or succession of acts of similar
kind by reason of which, it gains the status of a company
policy that can no longer be disturbed or withdrawn.
To ripen into a company practice that is demandable as a

matter of right, the giving of the benefit should not be by
reason of a strict legal or contractual obligation but
by reason of an act of liberality on the part of the
employer.
What are the criteria that may be used to

determine existence of company practice?

Since there is no hard and fast rule which may be used and
applied in determining whether a certain act of the employer
may be considered as having ripened into a practice, the
following criteria may be used to determine whether an act has
ripened into a company practice:
(1) The act of the employer has been done for a considerable
period of time;
(2) The act should be done consistently and intentionally; and
(3) The act should not be a product of erroneous
interpretation or construction of a doubtful or difficult
question of law or provision in the CBA.
(See the 2013 case of Vergara, Jr. v. Coca-Cola Bottlers

Philippines, Inc.2)
1. THE ACT OF THE EMPLOYER HAS BEEN DONE
FOR A CONSIDERABLE PERIOD OF TIME.
If done only once as in the case of Philippine Appliance
Corporation (Philacor) v. CA,3 where the CBA signing
bonus was granted only once during the 1997 CBA negotiation,
the same cannot be considered as having ripened into a
company practice.
In the following cases, the act of the employer was declared

company practice because of the considerable period of time it
has been practiced:
(a) Davao Fruits Corporation v. Associated Labor
Unions.4 - The act of the company of freely and continuously
including in the computation of the 13th month pay, items that
were expressly excluded by law has lasted for six (6) years,
hence, was considered indicative of company practice.
(b) Sevilla Trading Company v. A. V. A. Semana.5 - The
act of including non-basic benefits such as paid leaves for
unused sick leave and vacation leave in the computation of the
employees 13th month pay for at least two (2) years was
considered a company practice.
(c) The 2010 case of Central Azucarera de Tarlac v.
Central Azucarera de Tarlac Labor Union-NLU,6 also

ruled as company practice the act of petitioner of granting for
thirty (30) years, its workers the mandatory 13th month pay
computed in accordance with the following formula: Total
Basic Annual Salary divided by twelve (12) and
Including in the computation of the Total Basic Annual Salary
the following: basic monthly salary; first eight (8) hours
overtime pay on Sunday and legal/special holiday; night
premium pay; and vacation and sick leaves for each year.
2. THE ACT SHOULD BE DONE CONSISTENTLY AND

INTENTIONALLY.
The following cases may be cited to illustrate this principle:
(a) Tiangco v. Leogardo, Jr.,1 where the employer has
consistently been granting fixed monthly emergency allowance
to the employees from November, 1976 but discontinued this
practice effective February, 1980 insofar as non-working days
are concerned based on the principle of no work, no pay.
The Supreme Court ruled that the discontinuance of said
benefit contravened Article 100 of the Labor Code which
prohibits the diminution of existing benefits.
3. THE ACT SHOULD NOT BE A PRODUCT OF

ERRONEOUS INTERPRETATION OR
CONSTRUCTION OF A DOUBTFUL OR DIFFICULT
QUESTION OF LAW OR PROVISION IN THE CBA.
The general rule is that if it is a past error that is being
corrected, no vested right may be said to have arisen
therefrom nor any diminution of benefit may have resulted by
virtue of the correction thereof. The error, however, must be
corrected immediately after its discovery; otherwise, the rule
on non-diminution of benefits would still apply.
The following cases would illuminate this principle:

(a) Globe Mackay Cable and Radio Corporation v.
NLRC,2 where the Supreme Court ruled on the proper
computation of the cost-of-living allowance (COLA) for
monthly-paid employees. Petitioner corporation, pursuant to

Wage Order No. 6 (effective October 30, 1984), increased the
COLA of its monthly-paid employees by multiplying the P3.00
daily COLA by 22 days which is the number of working days in
the company. The union disagreed with the computation,
claiming that the daily COLA rate of P3.00 should be
multiplied by 30 days which has been the practice of the
company for several years. The Supreme Court, however,
upheld the contention of the petitioner corporation. It held
that the grant by the employer of benefits through an
erroneous application of the law due to absence of clear
administrative guidelines is not considered a voluntary act
which cannot be unilaterally discontinued.
(b) TSPIC Corp. v. TSPIC Employees Union [FFW],3
where the Supreme Court reiterated the rule enunciated in
Globe-Mackay, that an erroneously granted benefit may be
withdrawn without violating the prohibition against non-
diminution of benefits. No vested right accrued to individual
respondents when TSPIC corrected its error by crediting the
salary increase for the year 2001 against the salary increase
granted under Wage Order No. 8, all in accordance with the
CBA. Hence, any amount given to the employees in excess of
what they were entitled to, as computed above, may be legally
deducted by TSPIC from the employees salaries.
But if the error does not proceed from the interpretation or

construction of a law or a provision in the CBA, the same may
ripen into a company practice.
Example:
(a) Hinatuan Mining Corporation and/or the Manager
v. NLRC,4 where the act of the employer in granting
separation pay to resigning employees, despite the fact that
the Labor Code does not grant it, was considered an
established employer practice.
BONUS
What is the rule on its demandability and

enforceability?
Bonus, as a general rule, is an amount granted and paid ex
gratia to the employee.
It cannot be forced upon the employer who may not be obliged

to assume the onerous burden of granting bonuses or other
benefits aside from the employees basic salaries or wages. If
there is no profit, there should be no bonus. If profit is
reduced, bonus should likewise be reduced, absent any
agreement making such bonus part of the compensation of the
employees.
When is bonus demandable and enforceable?

It becomes demandable and enforceable:
(1) If it has ripened into a company practice;
(2) If it is granted as an additional compensation which
the employer agreed to give without any condition such as
success of business or more efficient or more productive
operation, hence, it is deemed part of wage or salary.
(3) When considered as part of the compensation and
therefore demandable and enforceable, the amount is
usually fixed. If the amount thereof is dependent upon the
realization of profits, the bonus is not demandable and
enforceable.
FACILITIES VS. SUPPLEMENTS

What are facilities?
The term facilities includes articles or services for the
benefit of the employee or his family but does not
include tools of the trade or articles or services primarily for
the benefit of the employer or necessary to the conduct of the
employers business. They are items of expense necessary for
the laborers and his familys existence and subsistence which
form part of the wage and when furnished by the employer,
are deductible therefrom, since if they are not so furnished,
the laborer would spend and pay for them just the same.

What are supplements?
The term supplements means extra remuneration or special
privileges or benefits given to or received by the laborers
over and above their ordinary earnings or wages.
What are the distinctions between facilities and

supplements?
The benefit or privilege given to the employee which
constitutes an extra remuneration over and above his basic or
ordinary earning or wage is supplement; and when said
benefit or privilege is made part of the laborers basic wage, it
is a facility. The criterion is not so much with the kind of the
benefit or item (food, lodging, bonus or sick leave) given but
its purpose.
Thus, free meals supplied by the ship operator to crew

members, out of necessity, cannot be considered as facilities
but supplements which could not be reduced having been
given not as part of wages but as a necessary matter in the
maintenance of the health and efficiency of the crew during
the voyage.
What is the rule on deductibility of facilities and

supplements?
Facilities are deductible from wage but not supplements.
WAGE DISTORTION/RECTIFICATION
What is wage distortion?
Wage distortion contemplates a situation where an increase
in prescribed wage rates results in either of the following:
1. Elimination of the quantitative differences in the rates of
wages or salaries; or
2. Severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in
an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on the following
criteria:

a. Skills;
b. Length of service; or
c. Other logical bases of differentiation.
Wage distortion presupposes a classification of positions and

ranking of these positions at various levels. One visualizes a
hierarchy of positions with corresponding ranks basically in
terms of wages and other emoluments. Where a significant
change occurs at the lowest level of positions in terms of basic
wage without a corresponding change in the other level in the
hierarchy of positions, negating as a result thereof the
distinction between one level of position from the next higher
level, and resulting in a parity between the lowest level and the
next higher level or rank, between new entrants and old hires,
there exists a wage distortion. xxx. The concept of wage
distortion assumes an existing grouping or classification of
employees which establishes distinctions among such
employees on some relevant or legitimate basis. This
classification is reflected in a differing wage rate for each of
the existing classes of employees.
What are the elements of wage distortion?

The four (4) elements of wage distortion are as follows:
(1) An existing hierarchy of positions with corresponding
salary rates;
(2) A significant change in the salary rate of a lower pay
class without a concomitant increase in the salary rate of a
higher one;
(3) The elimination of the distinction between the two
levels; and
(4) The existence of the distortion in the same region
of the country.
Normally, a company has a wage structure or method of

determining the wages of its employees. In a problem dealing
with wage distortion, the basic assumption is that there
exists a grouping or classification of employees that

establishes distinctions among them on some relevant or
legitimate bases.
Involved in the classification of employees are various factors

such as the degrees of responsibility, the skills and
knowledge required, the complexity of the job, or other
logical basis of differentiation. The differing wage rate for
each of the existing classes of employees reflects this
classification.
What is the formula for rectifying or resolving

wage distortion?
Following is the formula for the correction of wage distortion
in the pay scale structures:
Minimum Wage = % x Prescribed Increase =
Distortion Adjustment Actual Salary
The above formula was held to be just and equitable.
DIVISOR TO DETERMINE DAILY RATE

Who is a monthly-paid employee?
A monthly-paid employee is one who is paid his wage or
salary for every day of the month, including unworked rest
days, special days or regular holidays.
Who is a daily-paid employee?

A daily-paid employee is one who is paid his wage or
salary only on the days he actually worked, except in cases of
regular holidays wherein he is paid his wage or salary even if
he does not work during those days, provided that he is
present or on leave of absence with pay on the working day
immediately preceding the regular holidays.
What are the factors/divisors in computing

benefits and wage deductions?
Equivalent daily rate (EDR), the basis for deductions for
absences and for computing overtime pay and other benefits.

Monthly Rate x 12
No. of Days Considered = Equivalent Daily Rate
(EDR) Paid in a Year
REST PERIODS
1.
WEEKLY REST DAY
What is the duration of weekly rest period?
It shall be the duty of every employer, whether operating for
profit or not, to provide each of his employees a rest period
of not less than twenty-four (24) consecutive hours
after every six (6) consecutive normal work days.
Is the employers prerogative to determine the rest

period of its employees subject to limitations?
Yes. The employer shall determine and schedule the weekly
rest day of his employees subject to CBA and to such rules and
regulations as the DOLE Secretary may provide. However, the
employer shall respect the preference of employees as to their
weekly rest day when such preference is based on religious
grounds.
2.
EMERGENCY REST DAY WORK
When can an employer require work on a rest day?
The employer may require any of its employees to work on
their scheduled rest day for the duration of the following
emergency and exceptional conditions:
a. In case of actual or impending emergencies caused by
serious accident, fire, flood, typhoon, earthquake, epidemic or
other disaster or calamity, to prevent loss of life and property,
or in case of force majeure or imminent danger to public
safety;
b. In case of urgent work to be performed on machineries,
equipment, or installations, to avoid serious loss which the
employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special

circumstances, where the employer cannot ordinarily be
expected to resort to other measures;
d. To prevent serious loss of perishable goods;
e. Where the nature of the work is such that the employees
have to work continuously for seven (7) days in a week or
more, as in the case of the crew members of a vessel to
complete a voyage and in other similar cases; and
f. When the work is necessary to avail of favorable weather or
environmental conditions where performance or quality of
work is dependent thereon.
HOLIDAY PAY/PREMIUM PAY

1.
COVERAGE, EXCLUSIONS
Who are covered by the law on holiday pay?
Generally, all employees are entitled to and covered by the law
on holiday pay.
Who are excluded from its coverage?

The following are excluded:
a. Those of the government and any of the political
subdivisions, including government-owned and controlled
corporations;
b. Those of retail and service establishments regularly
employing less than ten (10) workers;
c. Domestic workers or Kasambahays;
d. Persons in the personal service of another;
e. Managerial employees as defined in Book III of the Labor
Code;
f. Field personnel and other employees whose time and
performance is unsupervised by the employer;
g. Those who are engaged on task or contract basis or purely
commission basis;
h. Those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof;
i. Other officers and members of the managerial staff;
j. Members of the family of the employer who are dependent

on him for support.
What are REGULAR and SPECIAL HOLIDAYS?

A. Regular Holidays
New Years Day - 1 January (Wednesday)
Araw ng Kagitingan - 9 April (Wednesday)
Maundy Thursday - 17 April
Good Friday - 18 April
Labor Day - 1 May (Thursday)
Independence Day - 12 June (Thursday)
National Heroes Day - 25 August (Last Monday of August)
Bonifacio Day - 30 November (Sunday)
Christmas Day - 25 December (Thursday)
Rizal Day - 30 December (Tuesday)
B. Special (Non-Working) Days

Chinese New Year - 31 January (Friday)
Black Saturday - 19 April
Ninoy Aquino Day - 21 August (Thursday)
All Saints Day - 1 November (Saturday)
C. Special Holiday (for all schools)

EDSA Revolution
Anniversary 25 February (Tuesday)
Not included in the enumeration above on regular holidays are
(1) Eidl Fitr and (2) Eidul Adha.
The reason is that proclamations declaring the observance of

these national holidays are issued after the approximate dates
of the Islamic holidays have been determined in accordance
with the Islamic calendar (Hijra) or the lunar calendar, or
upon Islamic astronomical calculations, whichever is possible
or convenient.
To this end, the National Commission on Muslim Filipinos

(NCMF) shall inform the Office of the President on which days
the holidays shall respectively fall.

What is the total number of regular holidays?
The total number of regular holidays is twelve (12) days
per year. This is important for purposes of reckoning certain
divisors and computation of employee benefits.
What is premium pay for holidays and rest days?

Premium pay refers to the additional compensation
required by law to be paid for work performed within the
regular eight (8) hours on non-working days, such as rest
days, regular and special holidays.
How is premium pay for holidays computed?

a. Regular Holidays
If the employee did not work, he/she shall be paid 100 % of
his/her salary for that day. Computation: (Daily rate + Cost of
Living Allowance) x 100%. The COLA is included in the
computation of holiday pay.
If the employee worked, he/she shall be paid 200 % of
his/her regular salary for that day for the first eight hours.
Computation: (Daily rate + COLA) x 200%. The COLA is
also included in computation of holiday pay.
If the employee worked in excess of eight hours (overtime
work), he/she shall be paid an additional 30 percent of
his/her hourly rate on said day. Computation: Hourly rate of
the basic daily wage x 200% x 130% x number of hours
worked.
If the employee worked during a regular holiday that also
falls on his/her rest day, he/she shall be paid an additional 30
% of his/her daily rate of 200 %. Computation: (Daily rate +
COLA) x 200%] + (30% [Daily rate x 200%)].
work) during a regular holiday that also falls on his/her rest
day, he/she shall be paid an additional 30 % of his/her hourly
rate on said day. Computation: (Hourly rate of the basic daily
wage x 200% x 130% x 130% x number of hours worked);
b. Special (Non-Working) Days

If the employee did not work, the no work, no pay
principle shall apply, unless there is a favorable company
policy, practice, or CBA granting payment on a special day.
If the employee worked, he/she shall be paid an additional
30 % of his/her daily rate on the first eight hours of work.
Computation: [(Daily rate x 130%) + COLA).
work), he/she shall be paid an additional 30 % of his/her
hourly rate on said day. Computation: (Hourly rate of the basic
daily wage x 130% x 130% x number of hours worked).
If the employee worked during a special day that also falls
on his/her rest day, he/she shall be paid an additional 50% of
his/her daily rate on the first eight hours of work.
Computation: [(Daily rate x 150%) + COLA].
work) during a special day that also falls on his/her rest day,
he/she shall be paid an additional 30 % of his/her hourly rate
on said day. Computation: (Hourly rate of the basic daily wage
x 150% x 130% x number of hours worked).
c. Special Holiday for all schools

For private establishments, 25 February 2014 is an
ordinary workday and no premium is required to be paid for
work on said day.
On the other hand, employees in private schools, whether
academic or administrative personnel, shall be paid in
accordance with the rules for pay on special (non-working)
days as stated above.
What are the effects of absences on the

computation of holiday pay?
1. Employees on leave of absence with pay - entitled to
holiday pay when they are on leave of absence with pay.
2. Employees on leave of absence without pay on the
day immediately preceding the regular holiday - may
not be paid the required holiday pay if they have not worked
on such regular holiday.

3. Employees on leave while on SSS or employees
compensation benefits - Employers should grant the same
percentage of the holiday pay as the benefit granted by
competent authority in the form of employees compensation
or social security payment, whichever is higher, if they are not
reporting for work while on such benefits.
4. When day preceding regular holiday is a non-
working day or scheduled rest day - should not be
deemed to be on leave of absence on that day, in which case,
employees are entitled to the regular holiday pay if they
worked on the day immediately preceding the non-working
day or rest day.
2.
HOLIDAY PAY/PREMIUM PAY OF
TEACHERS, PIECE WORKERS, TAKAY,
SEASONAL WORKERS, SEAFARERS
Are private school teachers entitled to holiday pay
during semestral vacations? What about Christmas
vacation
No, as far as regular holidays during semestral vacations
are concerned.
Yes, as far as regular holidays during Christmas vacation

are concerned.
Are hourly-paid teachers entitled to holiday pay?

A school is exempted from paying hourly-paid faculty
members their pay for regular holidays, whether the same be
during the regular semesters of the school year or during
semestral, Christmas, or Holy Week vacations. However, it is
liable to pay the faculty members their regular hourly rate on
days declared as special holidays or if, for some reason,
classes are called off or shortened for the hours they are
supposed to have taught, whether extensions of class days be
ordered or not; and in case of extensions, said faculty
members shall likewise be paid their hourly rates should they

teach during said extensions.
Are piece-workers, takay and others paid by
results entitled to holiday pay?
Yes. Where a covered employee is paid by results or output
such as payment on piece-work, his holiday pay should not be
less than his average daily earnings for the last seven (7)
actual working days preceding the regular holiday. In no
case, however, should the holiday pay be less than the
applicable statutory minimum wage rate.
What are the distinctions between supervised
and unsupervised workers paid by results to
determine their entitlement to holiday pay?
The principal test to determine entitlement to holiday pay is
whether the employees time and performance of the work are
supervised or unsupervised by their employer. If
supervised, the employee is entitled to holiday pay. If
unsupervised, he is not.
The distinctions between supervised and unsupervised

workers paid by results are as follows:
(1) Those whose time and performance are supervised by the
employer. Here, there is an element of control and supervision
over the manner as to how the work is to be performed. A
piece-rate worker belongs to this category especially if he
performs his work in the company premises; and
(2) Those whose time and performance are unsupervised.
Here, the employers control is over the result of the work.
Workers on pakyao and takay basis belong to this group. Both
classes of workers are paid per unit accomplished. Piece-rate
payment is generally practiced in garment factories where
work is done in the company premises, while payment on
pakyao and takay basis is commonly observed in the
agricultural industry, such as in sugar plantations where the
work is performed in bulk or in volumes, hence, difficult to
quantify.
Are seasonal workers entitled to holiday pay?

Yes. Seasonal workers are entitled to holiday pay while
working during the season. They may not be paid the required
regular holiday pay during off-season where they are not at
work.
Are seafarers entitled to holiday pay?

Yes. Any hours of work or duty including hours of
watchkeeping performed by the seafarer on designated rest
days and holidays shall be paid rest day or holiday pay.
What are important principles on holiday pay?

In case of two (2) regular holidays falling on the same day,
the worker should be compensated as follows:
o If unworked 200% for the two regular holidays;
o If worked 200% for the two regular holidays plus
premium of 100% for work on that day.
Monthly-paid employees are not excluded from the
coverage of holiday pay.
LEAVES
1.
SERVICE INCENTIVE LEAVE
What is service incentive leave?
Every covered employee who has rendered at least one (1) year
of service is entitled to a yearly service incentive leave of five
(5) days with pay.
The term at least one year of service should mean

service within twelve (12) months, whether continuous or
broken, reckoned from the date the employee started working,
including authorized absences and paid regular holidays,
unless the number of working days in the establishment as a
matter of practice or policy, or that provided in the
employment contract, is less than twelve (12) months, in
which case, said period should be considered as one (1) year
for the purpose of determining entitlement to the service
incentive leave benefit.

All employees are covered by the rule on service incentive
leave except:
a. Those of the government and any of its political
subdivisions, including government-owned and controlled
corporations;
b. Domestic workers or kasambahays;
c. Persons in the personal service of another;
d. Managerial employees as defined in Book III of the Labor
Code;
e. Field personnel and other employees whose performance is
unsupervised by the employer;
f. Those who are engaged on task or contract basis, purely
commission basis, or those who are paid in a fixed amount for
performing work irrespective of the time consumed in the
performance thereof;
g. Those who are already enjoying the benefit provided in the
law;
h. Those enjoying vacation leave with pay of at least five (5)
days;
i. Those employed in establishments regularly employing less
than ten (10) employees;
j. Other officers and members of the managerial staff; and
k. Members of the family of the employer who are dependent
on him for support.
Are unavailed service incentive leaves commutable

to cash?
Yes. The service incentive leave is commutable to its money
equivalent if not used or exhausted at the end of the year.
2.
MATERNITY LEAVE
What is maternity leave?
Maternity leave is the period of time which may be availed
of by a woman employee, married or unmarried, to

undergo and recuperate from childbirth, miscarriage or
complete abortion during which she is permitted to retain
her rights and benefits flowing from her employment.
What is the period of leave?

60 days for normal delivery
78 days for caesarian delivery
What is the amount granted?
Daily maternity benefit equivalent to one hundred percent
(100%) of her average daily salary credit for sixty (60)
days or seventy-eight (78) days in case of caesarian delivery.
What is the number of delivery or miscarriage

covered?
The maternity benefits shall be paid only for the first four
(4) deliveries or miscarriages.
Is an unmarried woman entitled to maternity leave

benefit?
Yes. For as long as a woman is pregnant, she is entitled to
maternity leave benefit regardless of whether she is married or
unmarried.
PATERNITY LEAVE
What is paternity leave benefit?
Paternity leave covers a married male employee
allowing him not to report for work for seven (7) calendar
days but continues to earn the compensation therefor, on the
condition that his spouse has delivered a child or suffered
miscarriage for purposes of enabling him to effectively lend
support to his wife in her period of recovery and/or in the
nursing of the newlyborn child.
Delivery includes childbirth or any miscarriage.

Spouse refers to the lawful wife. For this purpose,
lawful wife refers to a woman who is legally married to the
male employee concerned.

Cohabiting refers to the obligation of the husband and
wife to live together.
What is the covered total number of deliveries?

Every married employee in the private and public sectors is
entitled to a paternity leave of seven (7) calendar days with full
pay for the first four (4) deliveries of the legitimate spouse
with whom he is cohabiting.
Paternity leave benefits are granted to the qualified employee

after the delivery by his wife, without prejudice to an employer
allowing an employee to avail of the benefit before or
during the delivery, provided that the total number of days
should not exceed seven (7) calendar days for each delivery.
Is an unavailed paternity leave benefit convertible

to cash?
No. In the event that the paternity leave benefit is not availed
of, said leave shall not be convertible to cash.
PARENTAL LEAVE
(R.A. No. 8972)
What is parental leave?
Parental leave is the leave benefit granted to a male or
female solo parent to enable him/her to perform parental
duties and responsibilities where physical presence is
required.
How many days may be availed of as parental

leave?
The parental leave shall not be more than seven (7) working
days every year to a solo parent who has rendered service of
at least one (1) year, to enable him/her to perform parental
duties and responsibilities where his/her physical presence is
required. This leave shall be non-cumulative. It bears noting
that this leave privilege is an additional leave benefit which is

separate and distinct from any other leave benefits provided
under existing laws or agreements.
Who is a solo parent?

The term "solo parent" refers to any individual who falls
under any of the following categories:
(1) A woman who gives birth as a result of rape and other
crimes against chastity even without a final conviction of
the offender: Provided, That the mother keeps and raises the
child;
(2) Parent left solo or alone with the responsibility of
parenthood due to death of spouse;
parenthood while the spouse is detained or is serving sentence
for a criminal conviction for at least one (1) year;
parenthood due to physical and/or mental incapacity of
spouse
as certified by a public medical practitioner;
parenthood due to legal separation or de facto separation from
spouse for at least one (1) year, as long as he/she is entrusted
with the custody of the children;
parenthood due to declaration of nullity or annulment of
marriage as decreed by a court or by a church as long as
he/she is entrusted with the custody of the children;
parenthood due to abandonment of spouse for at least one (1)
year;
(8) Unmarried mother/father who has preferred to keep and
rear her/his child/children instead of having others care for
them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and
support to a child or children;
(10) Any family member who assumes the responsibility of
head of family as a result of the death, abandonment,

disappearance or prolonged absence of the parents or solo
parent.
What is the effect of change of status of the solo

parent?
A change in the status or circumstance of the parent claiming
benefits under this Act, such that he/she is no longer left alone
with the responsibility of parenthood, shall terminate his/her
eligibility for these benefits.
Who are considered children under this law?

"Children" refer to those living with and dependent upon the
solo parent for support who are unmarried, unemployedand
not more than eighteen (18) years of age, or even over eighteen
(18) years but are incapable of self-support because of
mental and/or physical defect/disability.
Is an unavailed parental leave convertible to cash?
No. In the event that the parental leave is not availed of, said
leave shall not be convertible to cash unless specifically
agreed upon previously.
LEAVE FOR VICTIMS OF VIOLENCE

AGAINST WOMEN AND CHILDREN
(R.A. No. 9262)
What is this kind of leave?
This special leave is granted to a woman employee who is a
victim under this law. It is for a total of ten (10) days of paid
leave of absence, in addition to other paid leaves under the
law. It is extendible when the necessity arises as specified in
the protection order. Its purpose is to enable the woman
employee to attend to the medical and legal concerns
relative to said law. This leave is not convertible to cash.
What is the requirement for its entitlement?

At any time during the application of any protection order,
investigation, prosecution and/or trial of the criminal case, a
victim of Violence Against Women and their Children (VAWC)

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

What is this special leave benefit
[GYNECOLOGICAL SURGERY LEAVE]?
A special leave benefit for women was granted under R.A. No.
9710, otherwise known as The Magna Carta of Women
[August 14, 2009]. Thus, any female employee in the public
and private sector regardless of age and civil status shall be
entitled to a special leave of two (2) months with full pay
based on her gross monthly compensation subject to
existing laws, rules and regulations due to surgery caused
by gynecological disorders under the following terms and
conditions:
1. She has rendered at least six (6) months continuous
aggregate employment service for the last twelve (12) months
prior to surgery;
2. In the event that an extended leave is necessary, the female
employee may use her earned leave credits; and
3. This special leave shall be non-cumulative and non-
convertible to cash.
Gynecological disorders refer to disorders that would

require surgical procedures such as, but not limited to,
dilatation and curettage and those involving female
reproductive organs such as the vagina, cervix, uterus,
fallopian tubes, ovaries, breast, adnexa and pelvic floor, as
certified by a competent physician. Gynecological surgeries
shall also include hysterectomy, ovariectomy, and
mastectomy.
Is this leave similar to maternity leave?

No. This leave should be distinguished from maternity leave
benefit, a separate and distinct benefit, which may be availed
of in case of childbirth, miscarriage or complete
abortion.
A woman, therefore, may avail of this special leave benefit in

case she undergoes surgery caused by gynecological disorder
and at the same time maternity benefit as these two leaves are
not mutually exclusive.
SERVICE CHARGE
What are the kinds of establishment covered by the
law on service charge?
The rules on service charge apply only to establishments
collecting service charges, such as hotels, restaurants, lodging
houses, night clubs, cocktail lounges, massage clinics, bars,
casinos and gambling houses, and similar enterprises,
including those entities operating primarily as private
subsidiaries of the government.
Who are the employees covered by this law?

The same rules on service charges apply to all employees of
covered employers, regardless of their positions, designations
or employment status, and irrespective of the method by
which their wages are paid except those receiving more than
P2,000.00 a month.
Who are not covered?

Specifically excluded from coverage are employees who are
receiving wages of more than P2,000.00 a month. However,
it must be pointed out that the P2,000.00 ceiling is no longer
realistic considering the applicable minimum wages prevailing
in the country. Hence, it must be disregarded.
How is the service charge distributed?

a. Percentage of sharing.
All service charges collected by covered employers are

required to be distributed at the following rates:
1. 85% to be distributed equally among the covered
employees; and
2. 15% to management to answer for losses and breakages and
distribution to employees receiving more than P2,000.00 a
month, at the discretion of the management.
b. Frequency of distribution.
The share of the employees referred to above should be
distributed and paid to them not less often than once every
two (2) weeks or twice a month at intervals not exceeding
sixteen (16) days.
Can the service charge be integrated into the wages

of covered employees?
Yes. In case the service charge is abolished, the share of
covered employees should be considered integrated in their
wages, in accordance with Article 96 of the Labor Code. The
basis of the amount to be integrated is the average monthly
share of each employee for the past twelve (12) months
immediately preceding the abolition or withdrawal of such
charges.
What are some principles on service charge?

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

and, therefore, cannot be deducted from wage.
THIRTEENTH MONTH PAY

Who are covered by the 13th month pay law ?

Only rank-and-file employees, regardless of their
designation or employment status and irrespective of the
method by which their wages are paid, are entitled to the 13th
month pay benefit. Managerial employees are not
entitled to 13th month pay.
What is the minimum period of service required in
a calendar year to be entitled to 13th month pay?
To be entitled to the 13th month pay benefit, it is imposed as a
minimum service requirement that the employee should
have worked for at least one (1) month during a calendar
year.
When should 13th month pay be paid?
It must be paid not later than December 24 of every year.
The following employers are not covered by the 13th month
pay law:
1. The government and any of its political
subdivisions, including government-owned and
controlled corporations, except those corporations
operating essentially as private subsidiaries of the
government.
2. Employers already paying their employees 13th month pay
or more in a calendar year or its equivalent at the time of the
issuance of the Revised Guidelines.
3. Employers of those who are paid on purely commission,
boundary, or task basis, and those who are paid a
fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof,
except where the workers are paid on piece-rate basis, in
which case, the employer shall be covered by the Revised
Guidelines insofar as such workers are concerned. Workers
paid on piece-rate basis shall refer to those who are paid a
standard amount for every piece or unit of work produced that
is more or less regularly replicated without regard to the time
spent in producing the same.
Are domestic workers or Kasambahays covered?
Yes. They are now covered under the Kasambahay

Law.
Are extras, casuals and seasonal employees
entitled to 13th month pay?
Yes, they are entitled thereto.
Is 13th month pay part of wage?
13th month pay which is in the nature of additional
income, is based on wage but not part of wage.
What is the minimum amount of the 13th month
pay?
The minimum 13th month pay should not be less than one-
twelfth (1/12) of the total basic salary earned by an
employee within a calendar year.
What is meant by basic salary or basic wage?
Basic salary or basic wage contemplates work within the
normal eight (8) working hours in a day. This means that the
basic salary of an employee for purposes of computing the 13th
month pay should include all remunerations or earnings paid
by the employer for services rendered during normal working
hours.
For purposes of computing the 13th month pay, basic salary

should be interpreted to mean not the amount actually
received by an employee, but 1/12 of their standard monthly
wage multiplied by their length of service within a given
calendar year.
SEPARATION PAY
What are the separation pays expressly provided
under the Labor Code?
The Labor Code prescribes the payment of separation pay only
in the following four (4) situations:
(1) When termination is due to authorized causes:
(1) installation of labor-saving devices;
(2) redundancy;
(3) retrenchment; or
(4) closing or cessation of business operations; and
(5) disease.

What are separation pays provided in
jurisprudence?
In accordance with jurisprudence, the following separation
pay may be cited:
(1) Separation pay in lieu of reinstatement; and
(2) Separation pay as financial assistance in cases where
the dismissal was held valid and legal but the employee is
given financial assistance by reason of long years of service,
unblemished record, substantial justice, etc.
What is the prevailing doctrine regarding grant of

financial assistance?
THE TOYOTA DOCTRINE.
Under this doctrine, all grounds in Article 282 of the Labor
Code, except analogous causes, would not merit payment
of financial assistance.
In the following cases, the Toyota doctrine was applied; hence,

no financial assistance was awarded because the grounds
invoked are in accordance with Article 282:
Reno Foods v. Nagkakaisang Lakas ng Manggagawa

(NLM), where it was maintained that labor adjudicatory
officials and the Court of Appeals must demur the award of
separation pay based on social justice when an employees
dismissal is based on serious misconduct or willful
disobedience; gross and habitual neglect of duty; fraud or
willful breach of trust; or commission of a crime against the
person of the employer or his immediate family grounds
under Article 282 of the Labor Code that sanction dismissals
of employees.
Equitable PCI Bank v. Dompor, Moya v. First Solid

Rubber Industries, Inc., and Unilever Philippines, Inc.
v.
Rivera, where the infractions committed by the respondent

constituted serious misconduct or willful disobedience
resulting to loss of trust and confidence.
Central Philippines Bandag Retreaders, Inc. v.

Diasnes, and Quiambao v. Manila Electric Company,
involving gross and habitual neglect of duties due to
respondents repeated and continuous absences without prior
leave and frequent tardiness.
Exception to Toyota doctrine: When termination is

based on analogous causes.
Toyota, however, makes a distinction when the grounds cited
are the analogous causes for termination under Article
282(e), like inefficiency, incompetence, ineptitude, poor
performance and others. It declared that in these cases, the
NLRC or the courts may opt to grant separation pay anchored
on social justice in consideration of the length of service of the
employee, the amount involved, whether the act is the first
offense, the performance of the employee and the like, using
the guideposts enunciated in PLDT on the propriety of the
award of separation pay.
Illustrative cases.
Yrasuegui v. Philippine Airlines, Inc., where the
dismissal of petitioner (an international flight attendant) due
to his obesity was held valid as an analogous cause under
Article 282(e) of the Labor Code. The Supreme Court,
however, as an act of social justice and for reason of equity,
awarded him separation pay equivalent to one-half (1/2)
months pay for every year of service, including his regular
allowances. The Court observed that his dismissal occasioned
by his failure to meet the weight standards of his employer was
not for serious misconduct and does not reflect on his moral
character.
THE SOLIDBANK DOCTRINE.

Under this 2010 doctrine, as distinguished from just cause

termination, employees terminated due to authorized cause
are not entitled to be paid additional separation pay by way of
financial assistance.
The reason is that the employer is only required under the law
to pay his employees separation pay in accordance with Article
283 of the Labor Code. That is all that the law requires. The
Court should refrain from adding more than what the law
requires, as the same is within the realm of the legislature.
RETIREMENT PAY
a.
ELIGIBILITY
Who are covered under the retirement pay law?
The following employees are eligible to avail of retirement
benefits under Article 287 of the Labor Code:
1. All employees in the private sector, regardless of their
position, designation or status and irrespective of the method
by which their wages are paid;
2. Part-time employees;
3. Employees of service and other job contractors;
4. Domestic helpers or persons in the personal service
of another;
3. Underground mine workers;
4. Employees of government-owned and/or controlled
corporations organized under the Corporation Code (without
original charters).
Who are excluded?

Article 287, as amended, does not apply to the following
employees:
1. Employees of the national government and its political
subdivisions, including government-owned and/or controlled
corporations, if they are covered by the Civil Service Law and
its regulations.
2. Employees of retail, service and agricultural
establishments or operations regularly employing not more

than ten (10) employees. These terms are defined as follows:
a. Retail establishment is one principally engaged in the
sale of goods to end-users for personal or household use. It
shall lose its retail character qualified for exemption if it is
engaged in both retail and wholesale of goods.
b. Service establishment is one principally engaged in
the sale of service to individuals for their own or household
use and is generally recognized as such.
c. Agricultural establishment/operation refers to an
employer which is engaged in agriculture. This term refers to
all farming activities in all branches and includes, among
others, the cultivation and tillage of soil, production,
cultivation, growing and harvesting of any agricultural or
horticultural commodities, dairying, raising of livestock or
poultry, the culture of fish and other aquatic products in farms
or ponds, and any activities performed by a farmer or on a
farm as an incident to, or in conjunction with, such farming
operations, but does not include the manufacture and/or
processing of sugar, coconut, abaca, tobacco, pineapple,
aquatic or other farm products.
What is the optional and compulsory retirement

age?
a. Under Article 287.
This article provides for two (2) types of retirement:
(1) Optional retirement upon reaching the age of sixty (60)
years.
(2) Compulsory retirement upon reaching the age of sixty-
five (65) years.
It is the employee who exercises the option under No. 1 above.
b. Under retirement plan.
The optional and compulsory retirement schemes provided
under Article 287 come into play only in the absence of a
retirement plan or agreement setting forth other forms of
optional or compulsory retirement schemes. Thus, if there is a
retirement plan or agreement in an establishment providing
for an earlier or older age of retirement (but not beyond 65

which has been declared the compulsory retirement age), the
same shall be controlling.
c. Retirement at an earlier age or after rendering
certain period of service.
Based on Article 287 the employers and employees are free to
agree and stipulate on the retirement age, either in a CBA or
employment contract. It is only in the absence of such
agreement that the retirement age shall be fixed by law, that is,
in accordance with the optional and compulsory retirement
age prescribed under Article 287.
d. By mutual agreement, employers may be granted

the sole and exclusive prerogative to retire employees
at an earlier age or after rendering a certain period of
service.
Cainta Catholic School v. Cainta Catholic School

Employees Union [CCSEU], where the Supreme Court
upheld the exercise by the school of its option to retire
employees pursuant to the existing CBA where it is provided
that the school has the option to retire an employee
upon reaching the age limit of sixty (60) or after
having rendered at least twenty (20) years of service
to the school, the last three (3) years of which must be
continuous. Hence, the termination of employment of the
employees, arising as it did from an exercise of a management
prerogative granted by the mutually-negotiated CBA between
the school and the union is valid.
e. To be valid, retirement at an earlier age must be

voluntarily consented to by the employee.
In Jaculbe v. Silliman University, the Supreme Court
ruled that in order for retirement at an earlier age to be valid,
it must be shown that the employees participation in the plan
is voluntary. An employer is free to impose a retirement age of
less than 65 for as long as it has the employees consent. Stated
conversely, employees are free to accept the employers offer

to lower the retirement age if they feel they can get a better
deal with the retirement plan presented by the employer.
What is the minimum years of service required for

entitlement under the law?
Five (5) years is the minimum years of service that must be
rendered by the employee before he can avail of the retirement
benefits upon reaching optional or compulsory retirement age
under Article 287.
What is the retirement age of underground mine

workers?
The optional retirement age of underground mine workers is
50 years of age; while the compulsory retirement age is
60 years old.
What is the minimum number of years of service

required of underground mine workers?
Minimum years of service is also 5 years.
Are the retirement benefits of underground mine

workers similar to ordinary retirees?
Yes. In fact, other than the retirement age, all other
requirements as well as benefits provided in the law are
applicable to underground mine workers.
AMOUNT OF RETIREMENT PAY

What is retirement pay under the law?
a. One-half () month salary.
In the absence of a retirement plan or agreement providing
for retirement benefits of employees in the establishment, an
employee, upon reaching the optional or compulsory
retirement age specified in Article 287, shall be entitled to
retirement pay equivalent to at least one-half () month
salary for every year of service, a fraction of at least six (6)
months being considered as one (1) whole year.

b. Components of one-half () month salary.
For purposes of determining the minimum retirement pay due
an employee under Article 287, the term one-half month
salary shall include all of the following:
(1) Fifteen (15) days salary of the employee based on his
latest salary rate.
(2) The cash equivalent of five (5) days of service
incentive leave;
(3) One-twelfth (1/12) of the 13th month pay due the
employee; and
(4) All other benefits that the employer and employee may
agree upon that should be included in the computation of the
employees retirement pay.
c. One-half () month salary means 22.5 days.

One-half [] month salary is equivalent to 22.5
days arrived at after adding 15 days plus 2.5 days
representing one-twelfth [1/12] of the 13th month pay plus 5
days of service incentive leave.
What are some principles on retirement benefits?

1/12 of 13th month pay and 5 days of service incentive leave
(SIL) should not be included if the employee was not entitled
to 13th month pay and SIL during his employment.
Example: R & E Transport, Inc. v. Latag,1 where it was

held that employees who are not entitled to 13th month pay
and SIL pay while still working should not be paid the entire
22.5 days but only the fifteen (15) days salary. In other
words, the additional 2.5 days representing one-twelfth [1/12]
of the 13th month pay and the five (5) days of SIL should not
be included as part of the retirement benefits.
The employee in this case was a taxi driver who was being paid
on the boundary system basis. It was undisputed that he was
entitled to retirement benefits after working for fourteen (14)
years with R & E Transport, Inc. However, he was not entitled

to the 13th month pay since Section 3 of the Rules and
Regulations Implementing P.D. No. 851 exempts from its
coverage employers of those who are paid on purely boundary
basis. He was also not entitled to the 5-day service incentive
leave pay pursuant to the Rules to Implement the Labor Code
which expressly excepts field personnel and other employees
whose performance is unsupervised by the employer.
But in the 2010 case of Serrano v. Severino Santos

Transit,2 which involves a bus conductor (petitioner) who
worked for 14 years for respondent bus company which did
not adopt any retirement scheme. It was held herein that even
if petitioner as bus conductor was paid on commission basis,
he falls within the coverage of R.A. 7641 (Retirement Pay Law,
now Article 287 of Labor Code). This means that his
retirement pay should include the cash equivalent of the 5-day
SIL and 1/12 of the 13th month pay for a total of 22.5 days. The
affirmance by the Court of Appeals of the reliance by the
NLRC on R & E Transport case was held erroneous. For
purposes of applying the law on SIL as well as on retirement,
there is a difference between drivers paid under the boundary
system and conductors paid on commission basis. This is so
because in practice, taxi drivers do not receive fixed wages.
They retain only those sums in excess of the boundary or fee
they pay to the owners or operators of the vehicles.
Conductors, on the other hand, are paid a certain percentage
of the bus earnings for the day. It bears emphasis that under
P.D. No. 851 and the SIL Law, the exclusion from its coverage
of workers who are paid on a purely commission basis is only
with respect to field personnel.
RETIREMENT BENEFITS OF
WORKERS PAID BY RESULTS
What are the retirement benefits of workers paid
by results?
For covered workers who are paid by results and do not have
a fixed monthly rate, the basis for the determination of the

salary for fifteen (15) days shall be their average daily salary
(ADS). The ADS is the average salary for the last twelve (12)
months reckoned from the date of their retirement, divided by
the number of actual working days in that particular period.
RETIREMENT BENEFITS OF PART-TIME WORKERS

How should the retirement benefits of part-time
workers be computed?
Applying the principles under Article 287, as amended, the
components of retirement benefits of part-time workers may
also be computed at least in proportion to the salary and
related benefits due them.
J.
WOMEN WORKERS
a.
PROVISIONS AGAINST DISCRIMINATION
What are acts of discrimination under the Labor
Code?
(a) Payment of a lesser compensation, including wage, salary
or other form of remuneration and fringe benefits, to a female
employee as against a male employee, for work of equal value;
and
(b) Favoring a male employee over a female employee with
respect to promotion, training opportunities, study and
scholarship grants solely on account of their sexes.
What are acts of discrimination under the Magna

Carta of Women?
R.A. No. 9710, otherwise known as The Magna Carta of
Women, is a comprehensive womens human rights law that
seeks to eliminate discrimination against women by
recognizing, protecting, fulfilling and promoting the rights of
Filipino women, especially those in marginalized sector.
Based on the definition of the term Discrimination

Against Women in R.A. No. 9710, the following are

considered discriminatory acts:
1. Any gender-based distinction, exclusion, or restriction
which has the effect or purpose of impairing or nullifying the
recognition, enjoyment, or exercise by women, irrespective of
their marital status, on a basis of equality of men and women,
of human rights and fundamental freedoms in the political,
economic, social, cultural, civil or any other field;
2. Any act or omission, including by law, policy, administrative
measure, or practice, that directly or indirectly excludes or
restricts women in the recognition and promotion of their
rights and their access to and enjoyment of opportunities,
benefits or privileges;
3. A measure or practice of general application that fails to
provide for mechanisms to offset or address sex or gender-
based disadvantages or limitations of women, as a result of
which women are denied or restricted in the recognition and
protection of their rights and in their access to and enjoyment
of opportunities, benefits, or privileges; or women, more than
men, are shown to have suffered the greater adverse effects of
those measures or practices; and
4. Discrimination compounded by or intersecting with other

grounds, status, or condition, such as ethnicity, age, poverty
or religion.
Additionally, women are guaranteed their right to decent

work. The State shall progressively realize and ensure decent
work standards for women that involve the creation of jobs of
acceptable quality in conditions of freedom, equity, security
and human dignity.
b.
STIPULATION AGAINST MARRIAGE
Is the prohibition against marriage valid?
Article 136 of the Labor Code considers as an unlawful act of
the employer to require as a condition for or continuation of
employment that a woman employee shall not get married or

to stipulate expressly or tacitly that upon getting married, a
woman employee shall be deemed resigned or separated. It is
likewise an unlawful act of the employer, to actually dismiss,
discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.
What are the relevant pieces of jurisprudence on

marriage?
1. Philippine Telegraph and Telephone Company v.
NLRC.1 - It was declared here that the company policy of not
accepting or considering as disqualified from work any woman
worker who contracts marriage runs afoul of the test of, and
the right against, discrimination afforded all women workers
by our labor laws and by no less than the Constitution.
2. Star Paper Corp. v. Simbol, Comia and Estrella.2 -

The following policies were struck down as invalid for
violating the standard of reasonableness which is being
followed in our jurisdiction, otherwise called the
Reasonable Business Necessity Rule:
1. New applicants will not be allowed to be hired if in case
he/she has [a] relative, up to [the] 3rd degree of relationship,
already employed by the company.
2. In case of two of our employees (both singles [sic], one
male and another female) developed a friendly relationship
during the course of their employment and then decided to get
married, one of them should resign to preserve the policy
stated above.
3. Duncan Association of Detailman-PTGWO v. Glaxo
Welcome Philippines, Inc.3 In this case, the prohibition
against marriage embodied in the following stipulation in the
employment contract was held as valid:
10. You agree to disclose to management any existing or
future relationship you may have, either by consanguinity or
affinity with co-employees or employees of competing drug
companies. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily from

the Company as a matter of Company policy.
The Supreme Court ruled that the dismissal based on this
stipulation in the employment contract is a valid exercise of
management prerogative. The prohibition against personal or
marital relationships with employees of competitor companies
upon its employees was held reasonable under the
circumstances because relationships of that nature might
compromise the interests of the company. In laying down the
assailed company policy, the employer only aims to protect its
interests against the possibility that a competitor company will
gain access to its secrets and procedures.
c.
PROHIBITED ACTS
What are the prohibited acts against women under
the Labor Code?
Article 137 of the Labor Code and its implementing rule
consider unlawful the followings acts of the employer:
1. To discharge any woman employed by him for the purpose
of preventing such woman from enjoying maternity
leave, facilities and other benefits provided under the
Labor Code;
2. To discharge such woman on account of her pregnancy, or
while on leave or in confinement due to her pregnancy;
3. To discharge or refuse the admission of such woman upon
returning to her work for fear that she may again be
pregnant;
4. To discharge any woman or any other employee for having
filed a complaint or having testified or being about to
testify under the Labor Code; or
5. To require as a condition for or continuation of employment
that a woman employee shall not get married or to
stipulate expressly or tacitly that upon getting married, a
woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman
employee merely by reason of marriage.

d.
ANTI-SEXUAL HARASSMENT ACT
(R.A. No. 7877)
What are the 3 situations contemplated under this
law?
R.A. No. 7877 declares sexual harassment unlawful only in
three (3) situations, namely:
(1) employment;
(2) education; and
(3) training environment.
Can sexual harassment be committed also against

a man?
Yes. Sexual harassment is not the sole domain of women as
men may also be subjected to the same despicable act. Said
law does not limit the victim of sexual harassment to women.
Who are the persons who may be held liable for

sexual harassment?
Work, education or training-related sexual harassment is
committed by any employer, employee, manager, supervisor,
agent of the employer, teacher, instructor, professor, coach,
trainor, or any other person who, having authority, influence
or moral ascendancy over another in a work or training or
education environment, demands, requests or otherwise
requires any sexual favor from another, regardless of whether
the demand, request or requirement for submission is
accepted by the object of said act.
Further, any person who directs or induces another to commit

any act of sexual harassment as defined in the law, or who
cooperates in the commission thereof by another without
which it would not have been committed, shall also be held
liable under the law.

How is sexual harassment committed in a work-
related or employment environment?
In a work-related or employment environment, sexual
harassment is committed when:
1. The sexual favor is made a condition in the hiring or in the
employment, re-employment or continued employment of
said individual or in granting said individual favorable
compensation, terms, conditions, promotions, or privileges; or
the refusal to grant the sexual favor results in limiting,
segregating or classifying the employee which in any way
would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;
2. The above acts would impair the employees rights or
privileges under existing labor laws; or
3. The above acts would result in an intimidating, hostile, or
offensive environment for the employee.
What are duties of the employer in regard to sexual

harassment complaints?
It is the duty of the employer to prevent or deter the
commission of acts of sexual harassment and to provide the
procedures for the resolution or prosecution of acts of sexual
harassment.
The employer or head of office is required to:

1. promulgate appropriate rules and regulations, in
consultation with and jointly approved by the employees or
students or trainees, through their duly designated
representatives, prescribing the procedure for the
investigation of sexual harassment cases and the
administrative sanctions therefor. The said rules and
regulations issued shall include, among others, guidelines on
proper decorum in the workplace and educational or training
institutions.
2. create a committee on decorum and investigation of cases
on sexual harassment. The committee shall conduct meetings,
as the case may be, with officers and employees, teachers,

instructors, professors, coaches, trainors and students or
trainees to increase understanding and prevent incidents of
sexual harassment. It shall also conduct the investigation of
alleged cases constituting sexual harassment.
K.
EMPLOYMENT OF MINORS
(Labor Code and R.A. No. 7678, R.A. No. 9231)
Who is a child or working child?
For legal purposes, the term child refers to any person less
than eighteen (18) years of age.
A working child refers to any child engaged as follows:
i. when the child is below eighteen (18) years of age, in work or
economic activity that is not child labor; and
ii. when the child below fifteen (15) years of age:
(a) in work where he/she is directly under the responsibility of
his/her parents or legal guardian and where only members of
the childs family are employed; or
(b) in public entertainment or information which
refers to artistic, literary, and cultural performances for
television show, radio program, cinema or film, theater,
commercial advertisement, public relations activities or
campaigns, print materials, internet, and other media.
What are the working hours of a child?

The term hours of work includes (1) all time during which a
child is required to be at a prescribed workplace, and (2) all
time during which a child is suffered or permitted to work.
Rest periods of short duration during working hours shall be
counted as hours worked.
The following hours of work shall be observed for any child

allowed to work under R.A. No. 9231 and its Implementing
Rules:
(a) For a child below 15 years of age, the hours of work

shall not be more than twenty (20) hours per week, provided

that the work shall not be more than four (4) hours at any
given day;
(b) For a child 15 years of age but below 18, the hours of
work shall not be more than eight (8) hours a day, and in no
case beyond forty (40) hours a week; and
(c) No child below 15 years of age shall be allowed to work
between eight (8) oclock in the evening and six (6) oclock in
the morning of the following day and no child 15 years of
age but below 18 shall be allowed to work between ten (10)
oclock in the evening and six (6) oclock in the morning of the
following day.
What is the prohibition of employing minors in

certain undertakings and advertisements?
No child below 18 years of age is allowed to be employed as
a model in any advertisement directly or indirectly promoting
alcoholic beverages, intoxicating drinks, tobacco and its by-
products, gambling or any form of violence or pornography.
L.
HOUSEHELPERS
(Labor Code as amended by R.A. No. 7655,
An Act Increasing the Minimum Wage of
Househelpers;
See also Household Service under the Civil Code)

(NOTE: The above provisions of the Labor Code on
Househelpers cited in the 2014 Syllabus have already
been repealed by R.A. No. 10361, otherwise known as
Domestic Workers Act or Batas Kasambahay
approved by President Benigno S. Aquino III on
January 18, 2013).
What is the coverage of the Kasambahay Law?

R.A. No. 10361 applies to all domestic workers employed
and working within the country. It shall cover all parties to an
employment contract for the services of the following

Kasambahay, whether on a live-in or live-out
arrangement, such as, but not limited to:
(a) General househelp;
(b) Yaya;
(c) Cook;
(d) Gardener;
(e) Laundry person; or
(f) Any person who regularly performs domestic work in one
household on an occupational basis.

The following are not covered:
(a) Service providers;
(b) Family drivers;
(c) Children under foster family arrangement; and
(d) Any other person who performs work occasionally or
sporadically and not on an occupational basis.
Who is a domestic worker or kasambahay?

Domestic worker or kasambahay refers to any
person engaged in domestic work within an employment
relationship, whether on a live-in or live-out arrangement,
such as, but not limited to, general househelp, "yaya", cook,
gardener, or laundry person, but shall exclude service
providers, family drivers, children who are under foster family
arrangement, or any person who performs domestic work only
occasionally or sporadically and not on an occupational basis.
This term shall not include children who are under
foster family arrangement which refers to children who
are living with a family or household of relative/s and are
provided access to education and given an allowance
incidental to education, I.e., "baon", transportation, school
projects, and school activities. Because of these new
terminologies prescribed in the law, the use of the term
househelper may no longer be legally correct.
Is the employment contract required to be in

writing?
Yes. The employment contract must be in writing and should
contain the conditions set by law.
What are the rights and privileges of a

kasambahay?
The rights and privileges of the Kasambahay are as follows:
(a) Minimum wage;
(b) Other mandatory benefits, such as the daily and weekly
rest periods, service incentive leave, and 13th month pay;
(c) Freedom from employers' interference in the disposal of
wages;
(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
(e) Standard of treatment;
(f) Board, lodging and medical attendance;
(g) Right to privacy;
(h) Access to outside communication;
(i) Access to education and training;
(j) Right to form, join, or assist labor organization;
(k) Right to be provided a copy of the employment contract;
(I) Right to certificate of employment;
(m) Right to terminate the employment; and
(n) Right to exercise their own religious beliefs and cultural
practices.
The foregoing rights and privileges are discussed below.

What is the minimum wage of kasambahay?
Under the Kasambahay Law, the following are the minimum
wages of kasambahays:
(a) Two thousand five hundred pesos (P2,500.00) a
month for those employed in the National Capital Region
(NCR);
(b) Two thousand pesos (P2,000.00) a month for those
employed in chartered cities and first class municipalities; and
(c) One thousand five hundred pesos (P1,500.00) a
month for those employed in other municipalities.

Are the minimum wages subject to review by the
RTWPBs or Regional Boards?
Yes. After one (1) year from the effectivity of the Kasambahay
Law, and periodically thereafter, the Regional Tripartite and
Productivity Wage Boards (RTPWBs) shall review, and if
proper, determine and adjust the minimum wage rates of
domestic workers.
What are some important principles on wage of

kasambahay?
Frequency of payment of wages. - The wages of the
Kasambahay shall be paid at least once a month. This is so
because the minimum wage rates are on a monthly basis.
The equivalent minimum daily wage rate of the

Kasambahay shall be determined by dividing the applicable
minimum monthly rate by thirty (30) days.
The amount of the minimum wage depends on the

geographical area where the Kasambahay works.
Payment of wages:
1. To whom paid. - It should be made on time directly to the
Kasambahay to whom they are due in cash at least once a
month.
2. Deductions, prohibition; when allowed. - The
employer, unless allowed by the Kasambahay through a
written consent, shall make no deductions from the wages
other than that which is mandated by law such as for SSS,
Philhealth or Pag-IBIG contributions.
3. Mode of payment. - It should be paid in cash and not by
means of promissory notes, vouchers, coupons, tokens, tickets,
chits, or any object other than the cash wage as provided for
under this Act.
4. Pay slip. The employer shall at all times provide the
Kasambahay with a copy of the pay slip containing the amount
paid in cash every pay day, and indicating all deductions

made, if any. The copies of the pay slip shall be kept by the
employer for a period of three (3) years.
5. Prohibition on Interference in the disposal of
wages. It shall be unlawful for the employer to interfere
with the freedom of the Kasambahay in the disposition of
his/her wages, such as:
(a) Forcing, compelling, or obliging the Kasambahay to
purchase merchandise, commodities or other properties from
the employer or from any other person; or
(b) Making use of any store or services of such employer or
any other person.
6. Prohibition against withholding of wages. It shall

be unlawful for an employer, directly or indirectly, to withhold
the wages of the Kasambahay. If the Kasambahay leaves
without any justifiable reason, any unpaid salary for a period
not exceeding fifteen (15) days shall be forfeited. Likewise, the
employer shall not induce the Kasambahay to give up any part
of the wages by force, stealth, intimidation, threat or by any
other means whatsoever.
What are important terms and conditions of

employment of kasambahay?
The following is a rundown of the basic terms and conditions
that should be observed in the employment of a Kasambahay:
a. Employable age. - Children whose age is below 15 years

are absolutely prohibited to work as Kasambahay.
b. Normal daily hours of work. Because R.A. No. 10361

does not contain any provision on the number of normal hours
of work that a Kasambahay should render in a day but merely
prescribes said daily rest period of eight (8) hours per day, it
may be concluded that the Kasambahay should work for at
least a total of sixteen (16) hours per day as normal hours
of work. However, it must be noted that the Labor Code does
not contain any provision on the normal hours of work of

househelpers. Article 1695 of the Civil Code, however,
specifically provides that househelpers shall not be required
to work for more than ten (10) hours a day. Since R.A.
No. 10361, a special law, is the most recent piece of legislation,
it should prevail over the general provision of the Civil Code.
c. Normal daily hours of work for working child-

kasambahay is eight (8) hours per day.
d. 13th month pay. - The Kasambahay who has rendered at

least one (1) month of service is entitled to a 13th month
pay which shall not be less than one-twelfth (1/12) of his/her
total basic salary earned in a calendar year. The 13th month
pay shall be paid not later than December 24 of every year or
upon separation from employment.
e. Daily rest period. The Kasambahay shall be entitled to

an aggregate daily rest period of eight (8) hours.
f. Weekly rest period. - The Kasambahay shall be entitled

to at least twenty-four (24) consecutive hours of rest in a
week. The employer and the Kasambahay shall agree in
writing on the schedule of the weekly rest day but the
preference of the Kasambahay, when based on religious
grounds, shall be respected.
g. Service incentive leave. - A Kasambahay who has

rendered at least one (1) year of service shall be entitled to an
annual service incentive leave of at least five (5) days with pay.
Any unused portion of said annual leave shall not be
cumulative or carried over to the succeeding years. Unused
leaves shall not be convertible to cash.
h. Social security benefits. - A Kasambahay who has

rendered at least one (1) month of service shall be covered by
the Social Security System (SSS), Employees Compensation
Commission (ECC), Philippine Health Insurance Corporation

(PhilHealth), and Home Development Mutual Fund or Pag-
IBIG, and shall be entitled to all the benefits in accordance
with their respective policies, laws, rules and regulations.
i. Obligation of employer to register and enrol with

SSS, PhilHealth, and Pag-IBIG. - As employer of the
Kasambahay, he/she shall register himself/herself with, and
enroll the latter as his/her employee to the SSS, PhilHealth,
and Pag-IBIG.
j. Deposits for loss or damage. - It shall be unlawful for

the employer or any other person to require a Kasambahay to
make deposits from which deductions shall be made for the
reimbursement of loss or damage to tools, materials, furniture
and equipment in the household.
k. Standard of treatment. - The Kasambahay shall be

treated with respect by the employer or any member of the
household. He/she shall not be subjected to any kind of abuse,
including repeated verbal or psychological, nor be inflicted
with any form of physical violence or harassment or any act
tending to degrade his/her dignity, as defined under the
Revised Penal Code, Violence Against Women and their
Children Law (R.A. No. 9262), Special Protection of Children
Against Child Abuse, Exploitation and Discrimination Act
(R.A. No. 7610) as amended by R.A. No. 9231, Anti-Trafficking
in Persons Act of 2003 (R.A. No. 9208), and other applicable
laws.
l. Board, lodging and medical attendance. - The

employer shall provide for the basic necessities of the
Kasambahay, to include the following:
(1) At least three (3) adequate meals a day, taking into
consideration the Kasambahay's religious beliefs and cultural
practices;
(2) Humane sleeping condition that respects the person's
privacy for live-in arrangement; and

(3) Appropriate rest and medical assistance in the form of
first-aid medicines, in case of illnesses and injuries sustained
during service without loss of benefits.
m. Opportunities for education and training. - The

Kasambahay shall be afforded the opportunity to finish basic
education, which shall consist of elementary and secondary
education. He/she may be allowed access to alternative
learning systems and, as far as practicable, higher education or
technical vocational education and training.
n. Membership in labor organization. - The

Kasambahay shall have the right to join a labor organization of
his/her own choosing for purposes of mutual aid and
collective negotiation.
r. Health and safety. - The employer shall safeguard the

safety and health of the Kasambahay in accordance with the
standards which the DOLE shall develop through the Bureau
of Working Conditions (BWC) and the Occupational Safety
and Health Center (OSHC) within six (6) months from the
promulgation of this IRR. The said standards shall take into
account the peculiar nature of domestic work.
s. Prohibition on debt bondage. - It shall be unlawful for

the employer or any person acting on his/her behalf to place
the Kasambahay under debt bondage. Debt bondage
refers to the rendering of service by the Kasambahay as
security or payment for a debt where the length and nature of
service is not clearly defined or when the value of the service is
not reasonably applied in the payment of the debt.
t. Assignment to non-household work. - The employer

shall not assign the Kasambahay to work, whether in full or
part-time, in a commercial, industrial or agricultural
enterprise at a wage rate lower than that provided for
agricultural or nonagricultural workers.

If so assigned, the Kasambahay will no longer be
treated as such but as a regular employee of the
establishment.
What are the rules on termination of Kasambahay?
a. Pre-termination of employment. The following rules

shall be observed:
(1) In case the duration of employment is specified in the
contract, the Kasambahay and the employer may mutually
agree upon notice to terminate the contract of employment
before the expiration of its term.
(2) In case the duration is not determined by stipulation or by
nature of service, the employer or the Kasambahay may give
notice to end the employment relationship five (5) days before
the intended termination of employment.
b. Termination of employment initiated by the

Kasambahay. - The Kasambahay may terminate the
employment
relationship at any time before the expiration of the contract
for any of the following causes:
(1) Verbal or emotional abuse of the Kasambahay by the
employer or any member of the household;
(2) Inhuman treatment including physical abuse of the
Kasambahay by the employer or any member of the
household;
(3) Commission of a crime or offense against the Kasambahay
by the employer or any member of the household;
(4) Violation by the employer of the terms and conditions of
the employment contract and other standards set forth in the
law;
(5) Any disease prejudicial to the health of the Kasambahay,
the employer, or members of the household; and
(6) Other causes analogous to the foregoing.
If the Kasambahay leaves without cause, any unpaid salary
due, not exceeding the equivalent of 15 days work, shall be

forfeited. In addition, the employer may recover from the
Kasambahay deployment expenses, if any, if the services have
been terminated within six (6) months from employment.
c. Termination of employment initiated by the

employer. - An employer may terminate the employment of
the Kasambahay at any time before the expiration of the
contract for any of the following causes:
(1) Misconduct or willful disobedience by the Kasambahay of
the lawful order of the employer in connection with the
former's work;
(2) Gross or habitual neglect or inefficiency by the
Kasambahay in the performance of duties;
(3) Fraud or willful breach of the trust reposed by the
employer on the Kasambahay;
(4) Commission of a crime or offense by the Kasambahay
against the person of the employer or any immediate
member of the employer's family;
(5) Violation by the Kasambahay of the terms and conditions
of the employment contract and other standards set forth
under the law;
(6) Any disease prejudicial to the health of the Kasambahay,
the employer, or members of the household; and
(7) Other causes analogous to the foregoing.
If the employer dismissed the Kasambahay for reasons other
than the above, he/she shall pay the Kasambahay the
earned compensation plus indemnity in the amount
equivalent to fifteen (15) days work.
d. Invalid ground for termination. - Pregnancy and

marriage of the Kasambahay are not valid grounds for
termination of employment.
e. Employment Certification. - Upon the termination of

employment, the employer shall issue the Kasambahay, within
five (5) days from request, a certificate of employment
indicating the nature, duration of the service and work

description.
M.
EMPLOYMENT OF HOMEWORKERS
What are important terms that should be noted in
employment of homeworkers?
a. Industrial homeworker. It refers to a worker who is

engaged in industrial homework.
b. Industrial homework. It refers to a system of

production under which work for an employer or contractor is
carried out by a homeworker at his/her home. Materials may
or may not be furnished by the employer or contractor. It
differs from regular factory production principally in that, it is
a decentralized form of production where there is ordinarily
very little supervision or regulation of methods of work.
c. Home. - It means any nook, house, apartment or other

premises used regularly, in whole or in part, as a dwelling
place, except those situated within the premises or compound
of an employer, contractor/subcontractor and the work
performed therein is under the active or personal supervision
by or for the latter.
d. Field personnel. It refers to a non-agricultural

employee who regularly performs his duties away from the
principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be
determined with reasonable certainty.
e. Employer. It refers to any natural or artificial person

who, for his own account or benefit, or on behalf of any person
residing outside the Philippines, directly or indirectly, or
through any employee, agent, contractor, subcontractor or any
other person:
1. delivers or causes to be delivered any goods, articles or
materials to be processed or fabricated in or about a home and

thereafter to be returned or to be disposed of or distributed in
accordance with his direction; or
2. sells any goods, articles or materials for the purpose of
having such goods or articles processed in or about a home
and then repurchases them himself or through another after
such processing.
f. Contractor or subcontractor. - It refers to any

person who, for the account or benefit of an employer, delivers
or causes to be delivered to a homeworker, goods or articles to
be processed in or about his home and thereafter to be
returned, disposed of or distributed in accordance with the
direction of the employer.
g. Processing. - It refers to manufacturing, fabricating,

finishing, repairing, altering, packing, wrapping or handling in
any way connected with the production or preparation of an
article or material.
How is homework paid?

Immediately upon receipt of the finished goods or articles, the
employer is required to pay the homeworker or the contractor
or subcontractor, as the case may be, for the work performed
less the corresponding homeworkers share of SSS, PhilHealth
and ECC premium contributions which should be remitted by
the contractor or subcontractor or employer to the SSS with
the employers share. However, where payment is made to a
contractor or subcontractor, the homeworker should likewise
be paid immediately after the goods or articles have been
collected from the workers.
What are prohibited homeworks?

No homework shall be performed on the following:
1. Explosives, fireworks and articles of like character;
2. Drugs and poisons; and
3. Other articles, the processing of which requires exposure to
toxic substances.

N.
APPRENTICES AND LEARNERS
What are the distinctions between learnership and
apprenticeship?
The following are the distinctions:
1. Practical training. Both learnership and apprenticeship
involve practical training on-the-job.
2. Training agreement. Learnership is governed by a
learnership agreement; while apprenticeship is governed by an
apprenticeship agreement.
3. Occupation. Learnership involves learnable occupations
consisting of semi-skilled and other industrial occupations
which are non-apprenticeable; while apprenticeship concerns
apprenticeable occupations or any trade, form of employment
or occupation approved for apprenticeship by the DOLE
Secretary.
4. Theoretical instructions. Learnership may or may not
be supplemented by related theoretical instructions; while
apprenticeship should always be supplemented by related
theoretical instructions.
5. Ratio of theoretical instructions and on-the-job
training. For both learnership and apprenticeship, the
normal ratio is one hundred (100) hours of theoretical
instructions for every two thousand (2,000) hours of practical
or on-the-job training. Theoretical instruction time for
occupations requiring less than two thousand (2,000) hours
for proficiency should be computed on the basis of such ratio.
6. Competency-based system. Unlike in apprenticeship, it
is required in learnership that it be implemented based on the
TESDA-approved competency-based system.
7. Duration of training. Learnership involves practical
training on the job for a period not exceeding three (3)
months; while apprenticeship requires for proficiency, more
than three (3) months but not over six (6) months of
practical training on the job.
8. Qualifications. The law does not expressly mention any

qualifications for learners; while the following qualifications
are required to be met by apprentices under Article 59 of the
Labor Code:
(a) Be at least fourteen (14) years of age;
(b) Possess vocational aptitude and capacity for appropriate
tests; and
(c) Possess the ability to comprehend and follow oral and
written instructions.
9. Circumstances justifying hiring of trainees. Unlike
in apprenticeship, in learnership, the law, Article 74 of the
Labor Code, expressly prescribes the pre-requisites before
learners may be validly employed, to wit:
(a) When no experienced workers are available;
(b) The employment of learners is necessary to prevent
curtailment of employment opportunities; and
(c) The employment does not create unfair competition in
terms of labor costs or impair or lower working
standards.
10. Limitation on the number of trainees. In
learnership, a participating enterprise is allowed to take in
learners only up to a maximum of twenty percent (20%) of its
total regular workforce. No similar cap is imposed in the case
of apprenticeship.
11. Option to employ. In learnership, the enterprise is
obliged to hire the learner after the lapse of the learnership
period; while in apprenticeship, the enterprise is given only an
option to hire the apprentice as an employee.
12. Wage rate. The wage rate of a learner or an apprentice is
set at seventy-five percent (75%) of the statutory minimum
wage.
O.
PERSONS WITH DISABILITY
(R.A. No. 7277, as Amended by R.A. No. 9442)
Who are persons with disability (PWDs)?
Persons with Disability are those suffering from
restriction or different abilities, as a result of a mental,

physical or sensory impairment, to perform an activity in the
manner or within the range considered normal for a human
being.
What is impairment?
Impairment refers to any loss, diminution or aberration
of psychological, physiological, or anatomical structure or
function.
What is disability?
Disability means (1) a physical or mental impairment that
substantially limits one or more psychological, physiological or
anatomical functions of an individual or activities of such
individual; (2) a record of such an impairment; or (3) being
regarded as having such an impairment.
What is handicap?
Handicap refers to a disadvantage for a given individual,
resulting from an impairment or a disability that limits or
prevents the function or activity that is considered normal
given the age and sex of the individual.
b.
RIGHTS OF PERSONS WITH DISABILITY
What are the rights of PWDs?
Under the law, PWDs are entitled to equal opportunity for
employment. Consequently, no PWD shall be denied access to
opportunities for suitable employment. A qualified
employee with disability shall be subject to the same
terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits,
incentives or allowances as a qualified able-bodied
person.
What is the wage rate of PWDs?

The wage rate of PWDs is 100% of the applicable minimum
wage.

What is the wage rate of PWD if hired as apprentice
or learner?
A PWD hired as an apprentice or learner shall be paid not less
than seventy-five percent (75%) of the applicable minimum
wage.
c.
PROHIBITION ON DISCRIMINATION
AGAINST PERSONS WITH DISABILITY
What is the rule on discrimination against
employment of PWDs?
No entity, whether public or private, shall discriminate against
a qualified PWD by reason of disability in regard to job
application procedures, the hiring, promotion, or discharge of
employees, employee compensation, job training, and other
terms, conditions and privileges of employment. The following
constitute acts of discrimination:
(a) Limiting, segregating or classifying a job applicant with
disability in such a manner that adversely affects his work
opportunities;
(b) Using qualification standards, employment tests or other
selection criteria that screen out or tend to screen out a PWD
unless such standards, tests or other selection criteria are
shown to be job-related for the position in question and are
consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration
that:
(1) have the effect of discrimination on the basis of disability;
or
(2) perpetuate the discrimination of others who are subject to
common administrative control.
(d) Providing less compensation, such as salary, wage or other
forms of remuneration and fringe benefits, to a qualified
employee with disability, by reason of his disability, than the
amount to which a non-disabled person performing the same
work is entitled;

(e) Favoring a non-disabled employee over a qualified
employee with disability with respect to promotion, training
opportunities, study and scholarship grants, solely on account
of the latters disability;
(f) Re-assigning or transferring an employee with a disability
to a job or position he cannot perform by reason of his
disability;
(g) Dismissing or terminating the services of an employee with
disability by reason of his disability unless the employer can
prove that he impairs the satisfactory performance of the work
involved to the prejudice of the business entity; provided,
however, that the employer first sought to provide reasonable
accommodations for persons with disability;
(h) Failing to select or administer in the most effective manner
employment tests which accurately reflect the skills, aptitude
or other factor of the applicant or employee with disability that
such tests purports to measure, rather than the impaired
sensory, manual or speaking skills of such applicant or
employee, if any; and
(i) Excluding PWD from membership in labor unions or
similar organizations.
------------oOo------------
TOPIC NO. 4
TERMINATION OF EMPLOYMENT
A.
EMPLOYER-EMPLOYEE RELATIONSHIP
1.
Four-Fold Test
What is the 4-fold test of existence of employer-
employee relationship?
1. Selection and engagement of the employee;
2. Payment of wages or salaries;
3. Exercise of the power of dismissal; or
4. Exercise of the power to control the employees conduct.
These tests, however, are not fool-proof as they admit of

exceptions.
The control test is the controlling test which means that
the employer controls or has reserved the right to control
the employee not only as to the result of the work to be done
but also as to the means and methods by which the same is
to be accomplished.
What is the 2-tiered test of employment

relationship?
The two-tiered test enunciated in Francisco v. NLRC,1 is
composed of:
(1) The putative employers power to control the employee
with respect to the means and methods by which the work
is to be accomplished [control test]; and
(2) The underlying economic realities of the activity or

relationship [broader economic reality test].
Employment relationship under the control test is
determined by asking whether the person for whom the
services are performed reserves the right to control not only
the end to be achieved but also the manner and means to
be used in reaching such end.
The broader economic reality test calls for the

determination of the nature of the relationship based on the
circumstances of the whole economic activity, namely:
(1) The extent to which the services performed are an integral
part of the employers business;
(2) The extent of the workers investment in equipment and
facilities;
(3) The nature and degree of control exercised by the
employer;
(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 the employer; and
(7) The degree of dependency of the worker upon the employer
for his continued employment in that line of business.
Under the economic reality test, the proper standard of

economic dependence is whether the worker is dependent on
the alleged employer for his continued employment in that
line of business.
Following the broader economic reality test, the Supreme

Court found petitioner in Orozco v. The Fifth Division of the
Honorable Court of Appeals, who is a columnist in the
Philippine Daily Inquirer (PDI), not an employee of PDI but
an independent contractor. Thus:
Petitioners main occupation is not as a columnist for

respondent but as a womens rights advocate working in
various womens organizations. Likewise, she herself admits
that she also contributes articles to other publications. Thus, it
cannot be said that petitioner was dependent on respondent
PDI for her continued employment in respondents line of
business.
The inevitable conclusion is that petitioner was not

respondent PDIs employee but an independent contractor,
engaged to do independent work.
Is it necessary to have a written contract of

employment in order to establish employer-
employee relationship?
No. It may be an oral or written contract. A written contract is
not necessary for the creation and validity of the relationship.
The only exception is in the case of Kasambahay

where it is required that the contract of employment
should be in writing.

2.
KINDS OF EMPLOYMENT
What are the general classifications of
employment?
There are five (5) classifications of employment:
(a) Regular employees referring to those who have been

engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer;
(b) Project employees referring to those whose employment
has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at
the time of the engagement of the employee;
(c) Seasonal employees referring to those who work or
perform services which are seasonal in nature, and the
employment is for the duration of the season;
(d) Casual employees referring to those who are not regular,
project, or seasonal employees;
(e) Fixed-term employees whose term is freely and
voluntarily determined by the employer and the employee.
a.
PROBATIONARY EMPLOYMENT
How is probationary period, say, of 6 months
computed?
The 6-month probationary period should be reckoned from
the date of appointment up to the same calendar
date of the 6th month following.
May probationary period be extended?

Yes, but only upon the mutual agreement by the employer and
the probationary employee.
What is the effect of allowing a probationary

employee to work beyond the probationary period?
He is considered a regular employee.

What is the effect if there is no written contract
providing for probationary employment?
If there is no written contract, the employee is considered a
regular employee from day one of his employment. And even if
there is one, he is deemed regular if there is no stipulation on
probationary period.
What are the grounds to terminate probationary

employment?
Under Article 281, a probationary employee may be
terminated only on three (3) grounds, to wit:
1. For a just cause; or
2. For authorized cause; or
3. When the probationary employee fails to qualify as
a regular employee in accordance with reasonable
standards made known by the employer to the
employee at the start of the employment.
Is procedural due process required in termination

of probationary employment?
Yes, but only in the case of Numbers 1 and 2 above.
No, in the case of No. 3 above.
When should termination of probationary

employment be made?
Termination to be valid must be done prior to lapse of
probationary period. Termination a few days after lapse of
probationary period cannot be done without due process as he
has already become a regular employee by that time.
b.
REGULAR EMPLOYMENT
How does one become a regular employee?
Under the Labor Code, regular employment may be attained
in either of three (3) ways, namely:

1. By nature of work. - The employment is deemed regular
when the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business
or trade of the employer.
2. By period of service. - The employment is reckoned as

regular when the employee has rendered at least one (1) year
of service, whether such service is continuous or broken, with
respect to the activity in which he is employed and his
employment shall continue while such activity exists.
3. By probationary employment. - The employment is

considered regular when the employee is allowed to work after
a probationary period.
Is the manner or method of paying wage material

in determining regularity of employment?
No. The manner and method of payment of wage or salary is
immaterial to the issue of whether the employee is regular or
not.
c.
PROJECT EMPLOYMENT
What is the litmus test of project employment?
The litmus test of project employment, as distinguished from
regular employment, is whether or not the project employees
were assigned to carry out a specific project or
undertaking, the duration and scope of which were
specified at the time the employees were engaged for
that project.
A true project employee should be assigned to a project which

begins and ends at determined or determinable times and be
informed thereof at the time of hiring.
What are the indicators of project employment?

Either one or more of the following circumstances, among

others, may be considered as indicator/s that an employee is a
project employee:
1. The duration of the specific/identified undertaking

for which the worker is engaged is reasonably
determinable.
2. Such duration, as well as the specific work/service to be

performed, are defined in an employment agreement and is
made clear to the employee at the time of hiring.
3. The work/service performed by the employee is in

connection with the particular project or undertaking
for which he is engaged.
4. The employee, while not employed and awaiting

engagement, is free to offer his services to any other
employer.
5. A report of the termination of employment in the

particular project/undertaking is submitted to the DOLE
Regional Office having jurisdiction over the workplace, within
thirty (30) days following the date of his separation from
work.
6. An undertaking in the employment contract by the

employer to pay completion bonus to the project employee
as practiced by most construction companies.
Is length of service material in determining

validity of project employment?
No. Length of service is not a controlling determinant of
employment tenure.
What are some principles on project employment?

1. Project employees should be informed of their status as such
at inception of the employment relationship.

2. There must be a written contract of project employment
stating the duration of the project employment as well as the
particular work or service to be performed. A written project
employment contract is an indispensable requirement.
3. Intervals in employment contracts indicate project

employment.
4. Continuous, as opposed to intermittent, rehiring shows that

employee is regular.
5. Project-to-project basis of employment is valid.
On termination of project employment.

1. Project employees enjoy security of tenure only during the
term of their project employment.
2. Project employees have presumably become regular
employees if they are allowed to work beyond the completion
of the project or any phase thereof to which they were assigned
or after the day certain which they and their employer have
mutually agreed for its completion. Having become regular
employees, they can no longer be terminated on the basis of
the completion of the project or any phase thereof to which
they were deployed.
d.
SEASONAL EMPLOYMENT
Can a seasonal employee become a regular
seasonal employee?
Yes, provided the following requisites are complied with:
1. The seasonal employee should perform work or services that
are seasonal in nature; and
2. They must have also been employed for more than one
(1) season.
Can a regular seasonal worker file an illegal

dismissal case in the event he is not hired for the
next season?
Yes. The reason is, being a regular seasonal employee, the
employer should re-hire him in the next season. During off-
season, his employment is deemed suspended and he is
considered as being on leave of absence without pay.
e.
CASUAL EMPLOYMENT
What is the most important distinguishing feature
of casual employment?
The most important distinction is that the work or job for
which he was hired is merely incidental to the
principalbusiness of the employer and such work or job is for a
definite period made known to the employee at the time of
engagement.
When does a casual employee become regular?

Casual employee becomes regular after one year of service by
operation of law. The one (1) year period should be reckoned
from the hiring date. Repeated rehiring of a casual employee
makes him a regular employee.
f.
FIXED-TERM EMPLOYMENT
What are the requisites in order for fixed-term
employment to be valid?
The two (2) requisites or criteria for the validity of a fixed-
term contract of employment are as follows:
1. The fixed period of employment was knowingly and
voluntarily agreed upon by the parties, without any
force, duress or improper pressure being brought to
bear upon the employee and absent any other
circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and employee

dealt with each other on more or less equal terms with

no moral dominance whatever being exercised by the
former on the latter.
Is fixed-term employment valid if the job is

directly related to the principal business of the
employer?
Yes. Fixed-term employment is the only exception to the
rule that one becomes regular if he is made to perform
activities directly related to the principal business of the
employer (Regularity by virtue of nature of work)
When does a fixed-term employee become

regular?
1. When he is allowed to work beyond the agreed fixed term.
2. When there are successive renewals of fixed-period
contracts.
NOTE: The practice of hiring of employees on a uniformly

fixed 5-month basis and replacing them upon the expiration of
their contracts with other workers with the same employment
status circumvents their right to security of tenure.
3.
JOB CONTRACTING
Is job contracting valid if the contractor-supplied
employees are engaged to perform not merely
peripheral but core jobs with the principal?
Yes, per the 2012 case of Digital Telecommunications

Philippines, Inc. v. Digitel Employees Union (DEU),
where the Court recognized the management prerogative to
farm out any of its activities, regardless of whether such
activity is peripheral or core in nature.
b.
DEPARTMENT ORDER NO. 18-A (Series of 2011)
What is this issuance?

This is the prevailing implementing rules on legitimate job
contracting.
c.
DEPARTMENT CIRCULAR NO. 01-12
What is this issuance?
This was issued by the DOLE Secretary to clarify that
Department Order No. 18-A, Series of 2011, is not applicable
to Business Processing Outsourcing
(BPO)/Knowledge Process Outsourcing (KPO) and the
Construction Industry
because:
(1) BPOs and KPOs since these companies may hire employees
in accordance with applicable laws, and maintain these
employees based on business requirements, which may or may
not be for different clients of the BPOs at different periods of
the employees' employment.
(2) the Construction Industry because the licensing and the
exercise of regulatory powers over the construction industry
are lodged with the Philippine Contractors Accreditation
Board (PCAB), which is under the Construction Industry
Authority of the Philippines (ClAP), and not with the DOLE.
Thus, the DOLE, through its regional offices, shall not require
contractors licensed by PCAB in the Construction Industry to
register under D.O. 18-A, Series of 2011. Moreover, findings of
violation/s on labor standards and occupational health and
safety standards shall be coordinated with PCAB for its
appropriate action, including the possible
cancellation/suspension of the contractors license.
d.
TRILATERAL RELATIONSHIP IN JOB
CONTRACTING
What is meant by trilateral relationship?
As distinguished from employment contract which is
bilateral in nature, involving as it does only two (2) parties,
namely: (1) the employer, and (2) the employee, in legitimate

job contracting, there are three (3) parties involved, to wit:
1. The principal who decides to farm out a job, work or
service to a contractor;
2. The contractor who has the capacity to independently
undertake the performance of the job, work or service; and
3. The contractual workers engaged by the contractor to
accomplish the job, work or service.
e.
EFFECTS OF LABOR-ONLY CONTRACTING
LEGITIMATE JOB CONTRACTING.
What are the requisites of legitimate job
contracting?
(1) The contractor must be duly registered with the DOLE. If
not registered, the contractor is presumed a labor-only
contractor.
(2) The contractor carries a distinct and independent
business and undertakes to perform the job, work or service
on its own responsibility, according to its own manner
and method, and free from control and direction of
the principal in all matters connected with the
performance of the work except as to the results
thereof;
(3) The contractor has substantial capital and/or
investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in the
conduct of the business; and
(4) The Service Agreement between principal and
contractor should ensure compliance with all the rights and
benefits of workers under Labor Laws such as labor and
occupational safety and health standards, free exercise of the
right to self-organization, security of tenure, and social and
welfare benefits.
Absence of any of the foregoing requisites makes it a labor-

only contracting arrangement.

What is the amount of substantial capital under the
new Rules?
1. In the case of corporations, partnerships or
cooperatives paid-up capital stocks/shares of at least P3
Million; or
2. In the case of single proprietorship - a net worth of at
least P3 Million.
Substantial capital and investment in tools, etc.
are two separate requirements.
Substantial capital and investment in tools, equipment,

implements, machineries and work premises should be
treated as two (2) distinct and separate requirements in
determining whether there is legitimate job contracting
arrangement.
May individuals engage in legitimate job

contracting?
Yes. Legitimate job contracting may not only be engaged by
corporation, partnership or single proprietorship. Individuals
may become legitimate job contractors themselves for as long
as they have SPECIAL SKILLS or TALENTS.
Are individuals engaged as legitimate job

contractors required to fulfill the requisites of
legitimate job contracting as afore-described?
NO. They need not be registered as independent contractors
with DOLE; they need not have substantial capital. All that
they are required is to have their tools consisting of SPECIAL
SKILLS or TALENTS.
What are examples of individuals as independent

contractors?
1. Sonza v. ABS-CBN Broadcasting Corporation1 - TV
and radio talents and others with special talents and skills are
not employees but legitimate independent contractors.
2. Orozco v. The Fifth Division of the Honorable Court

of Appeals2 - A newspaper columnist is not an employee but
an independent contractor of the newspaper publishing the
column.
3. Jose Mel Bernarte v. Philippine Basketball
Association3 - Basketball or soccer referee or umpire, an
independent contractor.
4. Semblante and Pilar v. CA, Gallera de Mandaue, et
al.4 - Cockpit masiador and sentenciador are independent
contractors.
5. Escasinas v. Shangri-las Mactan Island Resort5 - A
doctor may be engaged as an independent contractor.
Respondent hotel resort, pursuant to Article 157 of the Labor
Code which requires that an employer which employs more
than 200 workers, should furnish its employees with the
services of a full-time registered nurse, a parttime physician
and dentist, and an emergency clinic, engaged the services of
respondent doctor who, in turn, hired petitioners as full-time
registered nurses. Petitioners contend that they are regular
employees of respondent hotel resort.
The Supreme Court, in holding that respondent doctor is an

independent contractor and that petitioners are employees of
the doctor and not of respondent hotel resort, declared:
Against the above-listed determinants, the Court holds that

respondent doctor is a legitimate independent contractor.
That Shangri-la provides the clinic premises and medical
supplies for use of its employees and guests does not
necessarily prove that respondent doctor lacks substantial
capital and investment. Besides, the maintenance of a clinic
and provision of medical services to its employees is required
under Art. 157, which are not directly related to Shangri-las
principal business - operation of hotels and restaurants.
As to payment of wages, respondent doctor is the one who

underwrites the following: salaries, SSS contributions and
other benefits of the staff; group life, group personal accident

insurance and life/death insurance for the staff with minimum
benefit payable at 12 times the employees last drawn salary, as
well as value added taxes and withholding taxes, sourced from
her P60,000.00 monthly retainer fee and 70% share of the
service charges from Shangri-las guests who avail of the clinic
services.
With respect to the supervision and control of the nurses and

clinic staff, it is not disputed that a document, Clinic Policies
and Employee Manual claimed to have been prepared by
respondent doctor exists, to which petitioners gave their
conformity and in which they acknowledged their co-terminus
employment status. It is thus presumed that said document,
and not the employee manual being followed by Shangri-las
regular workers, governs how they perform their respective
tasks and responsibilities.
Contrary to petitioners contention, the various office

directives issued by Shangri-las officers do not imply that it is
Shangri-las management and not respondent doctor who
exercises control over them or that Shangri-la has control over
how the doctor and the nurses perform their work. The letter
addressed to respondent doctor dated February 7, 2003 from a
certain Tata L. Reyes giving instructions regarding the
replenishment of emergency kits is, at most, administrative in
nature, related as it is to safety matters; while the letter dated
May 17, 2004 from Shangri-las Assistant Financial Controller,
Lotlot Dagat, forbidding the clinic from receiving cash
payments from the resorts guests is a matter of financial
policy in order to ensure proper sharing of the proceeds,
considering that Shangri-la and respondent doctor share in
the guests payments for medical services rendered. In fine, as
Shangri-la does not control how the work should be performed
by petitioners, it is not petitioners employer.
LABOR-ONLY CONTRACTING.
When is there labor-only contracting?

(a) The contractor does not have substantial capital or
investments in the form of tools, equipment, machineries,
work premises, among others, and the employees
recruited and placed are performing activities which
are usually necessary or desirable to the operation of
the company, or directly related to the main business
of the principal within a definite or predetermined
period, regardless of whether such job, work or service is to
be performed or completed within or outside the premises of
the principal; OR
(b) The contractor does not exercise the right of control over
the performance of the work of the employee.
NOTE: Even if only one of the two (2) elements above is

present, there is labor-only contracting.
What are the effects of labor-only contracting?

1. The labor-only contractor will be treated as the agent or
intermediary of the principal. Since the act of an agent is the
act of the principal, representations made by the labor-only
contractor to the employees will bind the principal.
2. The principal will become the employer as if it directly
employed the workers supplied by the labor-only contractor to
undertake the subcontracted job or service. It will be
responsible to them for all their entitlements and benefits
under labor laws.
3. The principal and the labor-only contractor will be solidarily
treated as the direct employer.
4. The employees will become employees of the principal,
subject to the classifications of employees under Article 280 of
the Labor Code.
What are the distinctions between legitimate job

contracting and labor-only contracting?
The chief distinctions between legitimate job contracting, on
the one hand, and the prohibited labor-only contracting, on

the other, may be summed up as follows:
1. In the former, no employer-employee relationship exists
between the contractual employees of the job contractor and
the principal; while in the latter, an employer-employee
relationship is created by law between the principal and the
contractual employees supplied by the labor-only contractor.
2. In the former, the principal is considered only an indirect
employer, as this term is understood under Article 107 of the
Labor Code; while in the latter, the principal is considered the
direct employer of the contractual employees in accordance
with the last paragraph of Article 106 of the Labor Code.
3. In the former, the joint and several obligation of the
principal and the legitimate job contractor is only for a
limited purpose, that is, to ensure that the employees are
paid their wages. Other than this obligation of paying the
wages, the principal is not responsible for any claim made by
the contractual employees; while in the latter, the principal
becomes jointly and severally or solidarily liable with the
labor-only contractor to the latters employees in the same
manner and extent that the principal is liable to employees
directly hired by him/her, as provided in Article 106 of the
Labor Code, as amended.
4. In the former, the legitimate job contractor undertakes to
perform a specific job for the principal; while in the latter, the
labor-only contractor merely provides, supplies, recruits and
places the personnel to work for the principal.
What are the prohibitions other than labor-only

contracting?
Contracting out of jobs, works or services when not
done in good faith and not justified by the exigencies
of the business such as the following:
(1) Contracting out of jobs, works or services when the same
results in the termination or reduction of regular employees
and reduction of work hours or reduction or splitting of the
bargaining unit.
(2) Contracting out of work with a "Cabo." "Cabo" refers to

a person or group of persons or to a labor group which, in the
guise of a labor organization, cooperative or any entity,
supplies workers to an employer, with or without any
monetary or other consideration, whether in the capacity of an
agent of the employer or as an ostensible independent
contractor.
(3) Taking undue advantage of the economic situation or lack
of bargaining strength of the contractor's employees, or
undermining their security of tenure or basic rights, or
circumventing the provisions of regular employment, in any of
the following instances:
(i) Requiring them to perform functions which are currently
being performed by the regular employees of the principal;
and
(ii) Requiring them to sign, as a precondition to employment
or continued employment, an antedated resignation letter; a
blank payroll; a waiver of labor standards including minimum
wages and social or welfare benefits; or a quitclaim releasing
the principal, contractor or from any liability as to payment of
future claims.
(4) Contracting out of a job, work or service through an in-
house agency.
(5) Contracting out of a job, work or service that is necessary
or desirable or directly related to the business or operation of
the principal by reason of a strike or lockout whether actual or
imminent.
(6) Contracting out of a job, work or service being performed
by union members when such will interfere with, restrain or
coerce employees in the exercise of their rights to self-
organization as provided in Art. 248 (c) of the Labor Code, as
amended.
(7) Repeated hiring of employees under an employment
contract of short duration or under a Service Agreement of
short duration with the same or different contractors, which
circumvents the Labor Code provisions on Security of Tenure.
(8) Requiring employees under a subcontracting arrangement
to sign a contract fixing the period of employment to a term

shorter than the term of the Service Agreement, unless the
contract is divisible into phases for which substantially
different skills are required and this is made known to the
employee at the time of engagement.
(9) Refusal to provide a copy of the Service Agreement and the
employment contracts between the contractor and the
employees deployed to work in the bargaining unit of the
principal's certified bargaining agent to the sole and exclusive
bargaining agent (SEBA).
(10) Engaging or maintaining by the principal of
subcontracted employees in excess of those provided for in the
applicable Collective Bargaining Agreement (CBA) or as set by
the Industry Tripartite Council (ITC).
B.
DISMISSAL FROM EMPLOYMENT
What is meant by two-fold due process
requirement?
Dismissal of employees requires the observance of the two-
fold due process requisites, namely:
1. Substantive aspect which means that the dismissal must
be for any of the (1) just causes provided under Article 282
of the Labor Code or the company rules and regulations
promulgated by the employer; or (2) authorized
causes under Articles 283 and 284 thereof; and
2. Procedural aspect which means that the employee must
be accorded due process, the elements of which are notice and
the opportunity to be heard and to defend himself.
What is the distinction between JUST CAUSES and

AUTHORIZED CAUSES?
A dismissal based on a just cause means that the employee
has committed a wrongful act or omission; while a dismissal
based on an authorized cause means that there exists a
ground which the law itself allows or authorizes to be invoked
to justify the termination of an employee even if he has not
committed any wrongful act or omission such as installation of

labor-saving devices, redundancy, retrenchment, closure or
cessation of business operations or disease.
1.
JUST CAUSES
What are the just causes under the Labor Code?
The just causes in the Labor Code are found in the following
provisions thereof:
(1) Article 282 - (Termination by the Employer) which
provides for the following grounds:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee against
the person of his employer or any immediate member of his
family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
(2) Article 264(a) - (Prohibited Activities) which provides

for the termination of the following:
(a) Union officers who knowingly participate in an illegal
strike and therefore deemed to have lost their employment
status.
(b) Any employee, union officer or ordinary member who
knowingly participates in the commission of illegal acts during
a strike (irrespective of whether the strike is legal or illegal), is
also deemed to have lost his employment status.
(3) Article 263(g) - (National Interest Cases) where strikers

who violate orders, prohibitions and/or injunctions as are
issued by the DOLE Secretary or the NLRC, may be imposed
immediate disciplinary action, including dismissal or loss of
employment status.

(4) Article 248(e) - (Union Security Clause) where violation
of the union security agreement in the CBA may result in
termination of employment. Under this clause, the bargaining
union can demand from the employer the dismissal of an
employee who commits a breach of union security
arrangement, such as failure to join the union or to maintain
his membership in good standing therein. The same union can
also demand the dismissal of a member who commits an act of
disloyalty against it, such as when the member organizes a
rival union.
What are just causes under jurisprudence?

In addition to the just causes mentioned in the Labor Code,
just causes are also found in prevailing jurisprudence. The
following may be cited as just causes in accordance with
prevailing jurisprudence:
1. Violation of Company Rules and Regulations or
Company Code of Discipline.
2. Theft of property owned by a co-employee as
distinguished from company-owned property which is
considered serious misconduct.
3. Incompetence, inefficiency or ineptitude.
4. Failure to attain work quota.
5. Failure to comply with weight standards of employer.
6. Attitude problem.
Is dismissal based on Company Code of Discipline

or Company Rules and Regulations illegal?
No.
In the 2013 case of Sampaguita Auto Transport
Corporation v. NLRC, the Supreme Court pronounced that
the Court of Appeals erred in ruling that the dismissal of
private respondent, a bus driver of petitioner, was illegal
because the grounds upon which petitioners based
respondents termination from employment, viz.: hindi lahat
ng schedule nailalabas, []mababa ang revenue ng bus,

laging kasama an[g] asawa sa byahe and maraming
naririnig na kwento tungkol sa kanya, naguutos ng
conductor para kumita sa hindi magandang paraan[,] xxx
are not among those enumerated under Article 282 of the
Labor Code as just causes for termination of employment.
The irregularities or infractions committed by private
respondent in connection with his work as a bus driver
constitute serious misconduct or, at the very least, conduct
analogous to serious misconduct, under the above-cited
Article 282 of the Labor Code. The requirement in the
company rules that:
3. to obey traffic rules and regulations as well as the

company policies.
4. to ensure the safety of the riding public as well as

the other vehicles and motorist (sic) is so fundamental
and so universal that any bus driver is expected to satisfy the
requirement whether or not he has been so informed.
I.
SERIOUS MISCONDUCT
1. REQUISITES.
For misconduct or improper behavior to be a just cause for
dismissal, the following requisites must concur:
1. It must be serious; and
2. It must relate to the performance of the employees duties;
and
3. It must show that he has become unfit to continue working
for the employer.
All the above three (3) requisites must concur.
2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.

Serious misconduct implies that it must be of such grave and
aggravated character and not merely trivial or unimportant.
Simple or minor misconduct would not justify the
termination of the services of an employee.

Possession or use of shabu or other drugs is a valid ground to
terminate employment.
Immorality, as a general rule, is not a just ground to
terminate employment. The exception is when such immoral
conduct is prejudicial or detrimental to the interest of the
employer.
Immoral act committed beyond office hours is a valid ground
to terminate employment.
Sexual intercourse inside company premises constitutes
serious misconduct.
The act of a 30-year old lady teacher in falling in love with a
16-year old student is not immoral.
Fighting is a ground for termination but only the instigator
or aggressor and not the victim who was constrained to defend
himself should be dismissed.
Challenging superiors to a fight is a just cause for
termination.
Assaulting another employee is a just cause for termination.
Utterance of obscene, insulting or offensive words
constitutes serious misconduct.
Gambling within company premises is a serious misconduct.
Rendering service to business rival is a just cause to
Selling products of a competitor is a just cause for
termination.
Organizing a credit union by employees in a bank is a serious
misconduct.
Deceiving a customer for personal gain is a just cause for
termination.
Contracting work in competition with employer constitutes
serious misconduct.
Intoxication which interferes with the employees work
constitutes serious misconduct.
The act of a teacher in pressuring a colleague to change the
failing grade of a student is serious misconduct.
Sexual harassment is a just ground to dismiss.
Sleeping while on duty is a ground for termination.

Dismissal is too harsh a penalty for eating while at work.
Pilferage or theft of company-owned property is a just cause
to terminate.
Theft of funds or property not owned by employer is
not a ground to terminate.
Act of falsification is a valid ground to terminate
employment.
Punching-in of time cards of other employees is a just cause
for termination.
II.
INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS
1. REQUISITES.
One of the fundamental duties of an employee is to obey all
reasonable rules, orders and instructions of the employer.
In order to validly invoke this ground, the following requisites

must be complied with, to wit:
1. The employees assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful
and perverse attitude; and
2. The order violated must be based on a reasonable and
lawful company rule, regulation or policy and made known to
the employee and must pertain to the duties for which he has
been engaged to discharge.
2. SOME PRINCIPLES ON INSUBORDINATION.

Making false allegations in complaint does not constitute
insubordination.
Failure to answer memo to explain constitutes willful
disobedience.
Another notice is required in case of termination on the
ground of failure to answer memo to explain.
Refusal to undergo random drug testing

constitutes both serious misconduct and

insubordination.
Refusal to render overtime to meet production deadline
constitutes insubordination.
Refusal to comply with a lawful transfer constitutes
insubordination.
III.
GROSS AND HABITUAL NEGLECT OF DUTIES
1. REQUISITES.
The following are the requisites:
(1) There must be negligence which is gross and/or habitual in
character; and
(2) It must be work-related as would make him unfit to work
for his employer.
2. SOME PRINCIPLES ON GROSS AND HABITUAL

NEGLECT OF DUTIES.
Simple negligence is not sufficient to terminate
employment.
The negligence must be gross in character which means
absence of that diligence that an ordinarily prudent man
would use in his own affairs.
As a general rule, negligence must be both gross and
habitual to be a valid ground to dismiss.
Habituality may be disregarded if negligence is gross or the
damage or loss is substantial. Habitual negligence implies
repeated failure to perform ones duties for a period of time,
depending upon the circumstances.
Actual damage, loss or injury is not an essential requisite.
Gross negligence may result to loss of trust and confidence.
Absences, if authorized, cannot be cited as a ground to
Tardiness or absenteeism, if not habitual, cannot be cited as
a ground to terminate employment.
Tardiness or absenteeism, if habitual, may be cited as a
ground to terminate employment.
Tardiness or absenteeism, if habitual, may be tantamount

to serious misconduct.
Absences or tardiness due to emergency, ailment or
fortuitous event are justified and may not be cited as just cause
to terminate employment.
Unsatisfactory or poor performance, inefficiency

and incompetence are considered just causes for dismissal
only if they amount to gross and habitual neglect of duties.
IV.
ABANDONMENT OF WORK
1. CONCEPT.
Abandonment is a form of neglect of duty; hence, a just cause
for termination of employment under Article 282 [b] of the
Labor Code.
2. REQUISITES.
To constitute abandonment, two (2) elements must concur,
namely:
1. The employee must have failed to report for work or must
have been absent without valid or justifiable reason; and
2. There must have been a clear intention on the part of the
employee to sever the employer-employee relationship
manifested by some overt act.
3. SOME PRINCIPLES ON ABANDONMENT.
Mere absence is not enough to constitute abandonment.
Clear intention to sever employment relationship is
necessary.
Due process in abandonment cases consists only of the
service of 2 notices to the employee, viz.:
a. First notice directing the employee to explain why he
should not be declared as having abandoned his job; and
b. Second notice to inform him of the employers decision to
dismiss him on the ground of abandonment.
No hearing is required to validly dismiss an employee for
abandonment.
Notices in abandonment cases must be sent to employees

last known address per record of the company. The
employer need not look for the employees current
whereabouts.
Immediate filing of a complaint for illegal dismissal praying
for reinstatement negates abandonment.
Lapse of time between dismissal and filing of a case is not a
material indication of abandonment. Hence, lapse of 2 years
and 5 months or 20 months or 9 months or 8 months before
filing the complaint for illegal dismissal is not an indication of
abandonment. Under the law, the employee has a 4-year
prescriptive period within which to institute his action for
illegal
dismissal.
Filing of a case to pre-empt investigation of the
administrative case is tantamount to abandonment.
When what is prayed for in the complaint is
separation pay and not reinstatement, the filing of
complaint does not
negate abandonment.
It is abandonment when what is prayed for in the complaint
is separation pay and it was only in the position paper that
reinstatement was prayed for.
Employment in another firm coinciding with the filing of
complaint does not indicate abandonment.
Offer of reinstatement by employer during proceedings
before Labor Arbiter and refusal by employee does not
indicate
abandonment but more of a symptom of strained relations
between the parties.
An employee may be absolved from the charge of

abandonment of work but adjudged guilty of AWOL. These
two grounds
are separate and distinct from each other.
An employee who failed to report for work after the
expiration of the duly approved leave of absence is considered
to have

abandoned his job.
An employee who failed to comply with the order for his
reinstatement is deemed to have abandoned his work.
An employee who, after being transferred to a new
assignment, did not report for work anymore is deemed to
have
abandoned his job.
An employee who deliberately absented from work without
leave or permission from his employer for the purpose of
looking
for a job elsewhere is deemed to have abandoned his work.
Imprisonment or detention by military does not constitute
abandonment.
Absence to evade arrest is not a valid justification. To do so
would be to place an imprimatur on the employees attempt to
derail the normal course of the administration of justice.
V.
FRAUD
1. REQUISITES.
The following are the requisites of this ground:
1. There must be an act, omission, or concealment;
2. The act, omission or concealment involves a breach of legal
duty, trust, or confidence justly reposed;
3. It must be committed against the employer or his/her
representative; and
4. It must be in connection with the employees' work.1
2. SOME PRINCIPLES ON FRAUD.
Failure to deposit collection constitutes fraud.
Lack of damage or losses is not necessary in fraud cases.
The fact that the employer did not suffer losses from the
dishonesty of the dismissed employee because of its timely
discovery does not excuse the latter from any culpability.
Lack of misappropriation or shortage is immaterial in case
of unauthorized encashment of personal checks by teller and
cashier.
Restitution does not have absolutory effect.
VI.

WILLFUL BREACH OF TRUST AND CONFIDENCE
1. REQUISITES.
For the doctrine of loss of trust and confidence to apply, the
following requisites must be satisfied:
(1) The employee holds a position of trust and confidence;
(2) There exists an act justifying the loss of trust and
confidence, which means that the act that betrays the
employers trust must be real, i.e., founded on clearly
established facts;
(3) The employees breach of the trust must be willful, i.e., it
was done intentionally, knowingly and purposely, without
justifiable excuse; and
(4) The act must be in relation to his work which would render
him unfit to perform it.
2. GUIDELINES.
As a safeguard against employers who indiscriminately use
loss of trust and confidence to justify arbitrary dismissal
of employees, the Supreme Court, in addition to the above
elements, came up with the following guidelines for the
application of
the doctrine:
(1) The loss of confidence must not be simulated;
(2) It should not be used as a subterfuge for causes which are
illegal, improper or unjustified;
(3) It may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and
(4) It must be genuine, not a mere afterthought, to justify
earlier action taken in bad faith.
The foregoing guidelines have been prescribed by the Supreme
Court due to the subjective nature of this ground which
makes termination based on loss of trust and confidence prone
to abuse.
3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS
OF TRUST AND CONFIDENCE.
Employees position must be reposed with trust and
confidence.
Position of trust and confidence is one where a person is

entrusted with confidence on delicate matters, or with the
custody, handling, or care and protection of the employers
property.
Two (2) classes of positions of trust. The first class
consists of managerial employees or those who, by the nature
of
their position, are entrusted with confidential and delicate
matters and from whom greater fidelity to duty is
correspondingly
expected. They refer to those vested with the powers or
prerogatives to lay down and execute management policies
and/or
to hire, transfer suspend, lay-off, recall, discharge, assign or
discipline employees or to effectively recommend such
managerial actions. Their primary duty consists of the
management of the establishment in which they are employed
or of a
department or a subdivision thereof.
The second class includes cashiers, auditors, property
custodians, or those who, in the normal and routine exercise of
their functions, regularly handle significant amounts of [the
employers] money or property. They are fiduciary rank-and-
file
employees who, though rank-and-file, are routinely charged
with the custody, handling or care and protection of the
employer's money or property, or entrusted with confidence
on delicate matters, and are thus classified as occupying
positions of trust and confidence.
1 Per latest DOLE Department Order No. 147-15, series of
2015, September 07, 2015.
Rules on termination of managerial and

supervisory employees different from those
applicable to rank-and-file
employees. Thus, with respect to rank-and-file
personnel, loss of trust and confidence as a ground for valid
dismissal

requires proof of involvement in the alleged events in
question and that mere uncorroborated assertions and
accusations
by the employer will not be sufficient. But as regards a
managerial employee, the mere existence of a basis for
believing
that he has breached the trust of his employer would suffice
for his dismissal.
There must be some basis for the loss of trust and
confidence which means that there is reasonable ground to
believe, if
not to entertain the moral conviction, that the concerned
employee is responsible for the misconduct and that the
nature of
his participation therein rendered him absolutely unworthy of
trust and confidence demanded by his position.
Dismissal due to feng shui mismatch is not a valid ground
to lose trust and confidence.
Command responsibility of managerial employees is a
ground to dismiss.
Confidential employee may be dismissed for loss of trust
and confidence.
Grant of promotions and bonuses negates loss of trust and
confidence.
Long years of service, absence of derogatory record and
small amount involved are deemed inconsequential insofar as
loss
of trust and confidence is concerned.
Dropping of criminal charges or acquittal in a criminal case
arising from the same act does not affect the validity of
dismissal
based on loss of trust and confidence.
Full restitution does not absolve employee of offense which
resulted in the loss of trust and confidence.
VII.
COMMISSION OF CRIME OR OFFENSE
1. REQUISITES.

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

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

Yes. An employee cannot be compelled to join a union based
on religious ground. For example: members of the
Iglesia ni Kristo (INK) cannot be compelled to join a union;
hence, they are not bound by the union security doctrine.
What are the requisites in order to validly
terminate employees based on this clause?

(1) The union security clause is applicable;
(2) The bargaining union is requesting for the termination of
employment due to enforcement of the union security
provision in the CBA; and
(3) There is sufficient evidence to support the unions decision
to expel the employee from the union.
All the foregoing requisites should be complied with to justify
the termination of employment.
OTHER CAUSES PER DEPARTMENT ORDER NO.
147-15, SERIES OF 2015 (07 SEPTEMBER 2015):1
An employee found positive for use of dangerous drugs
shall be dealt with administratively which shall be a
ground for suspension or termination.2
An employee shall not be terminated from work based on
actual, perceived or suspected HIV status.3
An employee shall not be terminated on basis of actual,
perceived or suspected Hepatitis B status.4
An employee who has or had Tuberculosis shall not be
discriminated against. He/she shall be entitled to work for
as long as they are certified by the company's accredited health
provider as medically fit and shall be restored to
work as soon as his/her illness is controlled.5
An employee may also be terminated based on the
grounds provided for under the CBA.
2.
AUTHORIZED CAUSES
What are the 2 classes of authorized cause
termination?
Under the Labor Code, authorized causes are classified into
two (2) classes, namely:
(1) Business-related causes. Referring to the grounds
specifically mentioned in Article 283, to wit:
a. Installation of labor-saving device;
b. Redundancy;
c. Retrenchment;
d. Closure or cessation of business operations NOT due to
serious business losses or financial reverses; and

e. Closure or cessation of business operations due to serious
business losses and financial reverses.
(2) Health-related causes. Referring to disease covered
by Article 284 of the Labor Code.
What are the common requisites applicable to the
authorized causes under Article 283?
The following are the five (5) common requisites applicable to
the ALL the grounds under Article 283:
1. There is good faith in effecting the termination;
2. The termination is a matter of last resort, there being no
other option available to the employer after resorting to
cost-cutting measures;
3. Two (2) separate written notices are served on both the
affected employees and the DOLE at least one (1)
month prior to the intended date of termination;
4. Separation pay is paid to the affected employees, to wit:
(a) If based on (1) installation of labor-saving device, or
(2) redundancy. - One (1) month pay or at least one (1)
month pay for every year of service, whichever is higher, a
fraction of at least six (6) months shall be
considered as one (1) whole year.
(b) If based on (1) retrenchment, or (2) closure NOT due
serious business losses or financial reverses. - One
(1) month pay or at least one-half () month pay for every
year of service, whichever is higher, a fraction of at
least six (6) months shall be considered as one (1) whole year.
(c) If closure is due to serious business losses or financial
reverses, NO separation pay is required to be paid.
(d) In case the CBA or company policy provides for a higher
separation pay, the same must be followed instead of
the one provided in Article 283.
5. Fair and reasonable criteria in ascertaining what
positions are to be affected by the termination, such as, but
not
limited to: nature of work; status of employment (whether
casual, temporary or regular); experience; efficiency;
seniority; dependability; adaptability; flexibility; trainability;

job performance; discipline; and attitude towards work.
Failure to follow fair and reasonable criteria in selecting who
to terminate would render the termination invalid.
I.
INSTALLATION OF LABOR-SAVING DEVICE
What are the additional requisites unique to this
ground?
In addition to the five (5) common requisites above, the
unique requisites are as follows:
1. There must be introduction of machinery, equipment or
other devices; and
2. The purpose for such introduction must be valid such as to
save on cost, enhance efficiency and other justifiable
economic reasons.1
II.
REDUNDANCY
ground?
The additional requisites are as follows:
1. There must be superfluous positions or services of
employees;
2. The positions or services are in excess of what is reasonably
demanded by the actual requirements of the enterprise
to operate in an economical and efficient manner; and
3. There must be an adequate proof of redundancy such as but
not limited to the new staffing pattern, feasibility
studies/proposal, on the viability of the newly created
positions, job description and the approval by the
management
of the restructuring.2
III.
RETRENCHMENT
ground?
Per latest issuance of the DOLE, 3 the following are the
additional requisites:
1. The retrenchment must be reasonably necessary and likely

to prevent business losses;
2. The losses, if already incurred, are not merely de
minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent;
3. The expected or actual losses must be proved by sufficient
and convincing evidence;4 and
4. The retrenchment must be in good faith for the
advancement of its interest and not to defeat or circumvent
the
employees' right to security of tenure.
This is the only statutory ground in Article 283 which requires
this kind of proof. The other grounds of closure or
cessation of business operations may be resorted to with or
without losses.
What are some relevant principles on
retrenchment?
The fact that there has been economic or other crisis
besetting a particular sector or the country as a whole is not
sufficient
justification for retrenchment.
The phrase retrenchment to prevent losses means
that retrenchment must be undertaken by the employer before
the
losses anticipated are actually sustained or realized. The
employer need not keep all his employees until after his losses
shall have materialized. Otherwise, the law could be
vulnerable to attack as undue taking of property for the benefit
of
another.
Best evidence of losses - financial statements
audited by independent auditors (not by internal
auditors).
Best evidence of losses in a government-controlled
corporation - financial statements audited by COA.
Income tax returns, not valid since they are self-
serving documents.
Mere affidavit on alleged losses is not sufficient.

Retrenchment effected long after the business losses is not
valid.
Profitable operations in the past do not affect the validity of
retrenchment.
Retrenchment due to liquidity problem is not valid.
Sharp drop in income is not a ground to justify
retrenchment. A mere decline in gross income cannot in any
manner be
considered as serious business losses. It should be substantial,
sustained and real.
Litany of woes, in the absence of any solid evidence that
they translated into specific and substantial losses that would
necessitate retrenchment, will not suffice to justify
retrenchment.
Rehiring of retrenched employees does not necessarily
indicate illegality of retrenchment.
In an enterprise which has several branches
nationwide, profitable operations in some of them
will not affect the
validity of the retrenchment if overall, the financial
condition thereof reflects losses.
IV.
CLOSURE OR CESSATION OF BUSINESS
OPERATIONS
Can an employer close its business even if it is not
suffering from business losses?
Yes. In fact, closure involves two (2) situations:
(a) When NOT due to serious business losses or financial
reverses; or
(b) When due to serious business losses or financial reverses
It is only in the first that payment of separation pay is
required. No such requirement is imposed in the second.
What are some relevant principles on closure?
Principle of closure under Article 283 applies in cases of
both total and partial closure or cessation of business
operations. Management may choose to close only a branch, a
department, a plant, or a shop.

Closure of department or section and hiring of workers
supplied by independent contractor as replacements is valid.
Relocation of business may amount to cessation of
operations.
Closure of business to merge or consolidate with another or
to sell or dispose all of its assets, held valid.
Audited financial statements necessary only in
closure due to losses.
V.
DISEASE
1. THE DEOFERIO DOCTRINE ON THE REQUISITES.
Disease is one of the authorized causes to terminate
employment. In the 2014 case of Deoferio v. Intel
Technology
Philippines, Inc.,1 the Supreme Court divided into two the
requisites that must be complied with before termination of
employment due to disease may be justified, namely:
(1) Substantive requisites; and
(2) Procedural requisites.
1.1. THE DEOFERIO RULE ON SUBSTANTIVE
REQUISITES.
The following are the three (3) substantive requisites:
(1) An employee has been found to be suffering from any
disease;
(2) His continued employment is prohibited by law or
prejudicial to his health, as well as to the health of his
coemployees;
and
(3) A competent public health authority issues a medical
certificate that the disease is of such nature or at such a
stage that it cannot be cured within a period of six (6) months
even with proper medical treatment.2
1.2. THE DEOFERIO RULE ON PROCEDURAL
REQUISITES.
Deoferio, finally pronounced the rule that the employer must
furnish the employee two (2) written notices in

terminations due to disease, namely:
(1) The notice to apprise the employee of the ground for which
his dismissal is sought; and
(2) The notice informing the employee of his dismissal, to be
issued after the employee has been given reasonable
opportunity to answer and to be heard on his defense.
Due process in termination due to disease is
similar to due process for just cause termination but
different
from authorized cause termination under Article
298 [283].
From these perspectives, it was held in Deoferio that the CA
erred in not finding that the NLRC gravely abused its
discretion when it ruled that the twin-notice requirement does
not apply to Article 284 (Disease) of the Labor Code. This
conclusion is totally devoid of any legal basis; its ruling is
wholly unsupported by law and jurisprudence. In other words,
the
NLRCs unprecedented, whimsical and arbitrary ruling, which
the CA erroneously affirmed, amounted to a jurisdictional
error.
2. THE FUJI RULE THE EMPLOYEE SHOULD BE
GIVEN THE CHANCE TO PRESENT
COUNTERVAILING MEDICAL
CERTIFICATES.
Subsequent to Deoferio, another 2014 case, Fuji Television
Network, Inc. v. Arlene S. Espiritu,3 has further
expounded on the due process requirement in termination due
to disease, this time by categorically specifying the right of the
ailing employee to present countervailing evidence in the form
of medical certificates to prove that his dismissal due to
disease is
not proper and therefore illegal.
Respondent Arlene was petitioners news
correspondent/producer tasked to report Philippine news to
Fuji through its
Manila Bureau field office. She was successively given yearly

fixed-term employment contracts until she was diagnosed
with
lung cancer sometime in January 2009 when the Chief of
News Agency of Fuji informed her that the company will have
a
problem renewing her contract since it would be difficult for
her to perform her job. She, however, insisted that she was
still fit to
work as certified by her attending physician. Subsequently,
Arlene and Fuji signed a non-renewal contract where it was
stipulated that her contract would no longer be renewed after
its expiration on May 31, 2009 and that the parties release
each
other from liabilities and responsibilities under the
employment contract. Arlene received her unpaid salaries and
bonuses but
she affixed her signature on the non-renewal contract with the
initials U.P. for under protest. The day after Arlene signed
the
non-renewal contract, she filed a complaint for illegal
dismissal and attorneys fees with the Labor Arbiter, alleging
that she was
forced to sign the non-renewal contract when Fuji came to
know of her illness and that Fuji withheld her salaries and
other
benefits for March and April 2009 when she refused to sign.
Arlene claimed that she was left with no other recourse but to
sign
the non-renewal contract, and it was only upon signing that
she was given her salaries and bonuses, in addition to
separation
pay equivalent to 4 years.
The Supreme Court declared respondent Arlene as having
been constructively dismissed. It was likewise held here
that respondent was not afforded due process, thus:
There is no evidence showing that Arlene was accorded due
process. After informing her

employer of her lung cancer, she was not given the
chance to present medical certificates. Fuji
immediately concluded that Arlene could no longer perform
her duties because of chemotherapy. It
did not ask her how her condition would affect her work.
Neither did it suggest for her to take a
leave, even though she was entitled to sick leaves. Worse, it did
not present any certificate from a
competent public health authority. What Fuji did was to
inform her that her contract would no
longer be renewed, and when she did not agree, her salary was
withheld. Thus, the Court of
Appeals correctly upheld the finding of the National Labor
Relations Commission that for failure of
Fuji to comply with due process, Arlene was illegally
dismissed.
What are some salient points to consider under

this ground?
If the disease or ailment can be cured within the period of
six (6) months with proper medical treatment, the employer
should not terminate the employee but merely ask him to take
a leave of absence. The employer should reinstate him to
his former position immediately upon the restoration of his
normal health.
In case the employee unreasonably refuses to submit to
medical examination or treatment upon being requested to do
so, the employer may terminate his services on the ground of
insubordination or willful disobedience of lawful
order.
A medical certificate issued by a companys own
physician is not an acceptable certificate for purposes of
terminating an employment based on Article 284, it having
been issued not by a competent public health authority, the
person referred to in the law.
A competent public health authority refers to a
government doctor whose medical specialization

pertains to the
disease being suffered by the employee. For instance, if
the employee suffers from tuberculosis, the medical certificate
should be issued by a government-employed pulmonologist
who is competent to make an opinion thereon. If the
employee has cardiac symptoms, the competent physician in
this case would be a cardiologist.
The medical certificate should be procured by the
employer and not by the employee.
3.
DUE PROCESS
(a) Twin-Notice Requirement
(b) Hearing; Meaning of Opportunity to be Heard
What is the latest rule on due process?
Due process means compliance with both
STATUTORY due process and CONTRACTUAL due
process.
CONSTITUTIONAL due process is not applicable (Per
Agabon doctrine).
Statutory due process refers to the one prescribed in the
Labor Code (Article 277[b]); while contractual due process
refers to the one prescribed in the Company Rules and
Regulations (Per Abbott Laboratories doctrine).
Contractual due process was enunciated in the 2013 en
banc ruling in Abbott Laboratories, Philippines v.
Pearlie
Ann F. Alcaraz.1 Thus, it is now required that in addition
to compliance with the statutory due process, the employer
should still
comply with the due process procedure prescribed in its own
company rules. The employers failure to observe its own
company-prescribed due process will make it liable to pay an
indemnity in the form of nominal damages, the amount of
which is
equivalent to the P30,000.00 awarded under the Agabon
doctrine.
Are the twin-notice requirement and hearing

required in all cases of termination?
No. The two-notice requirement and hearing are required only
in case of just cause termination in the following order:
1. Service of first written notice;
2. Conduct of hearing; and
3. Service of second written notice.
What is the King of Kings Transport doctrine on
just cause procedural due process?
Based on this doctrine which was enunciated in King of
Kings Transport, Inc. v. Mamac,2 the following
requirements
should be complied with in just cause termination:
(1) First written notice.
The first written notice to be served on the employee should:
a) Contain the specific causes or grounds for termination
against him;
b) Contain a directive that the employee is given the
opportunity to submit his written explanation within the
reasonable period of FIVE (5) CALENDAR DAYS from
receipt of the notice:
1) to enable him to prepare adequately for his defense;
2) to study the accusation against him;
3) to consult a union official or lawyer;
4) to gather data and evidence; and
5) to decide on the defenses he will raise against the
complaint.
c) Contain a detailed narration of the facts and circumstances
that will serve as basis for the charge against the
employee. This is required in order to enable him to
intelligently prepare his explanation and defenses. A
general description of the charge will not suffice.
d) Specifically mention which company rules, if any, are
violated and/or which among the grounds under Article 282
is being charged against the employee.
(2) Hearing required,
After serving the first notice, the employer should schedule
and conduct a hearing or conference wherein the

employee will be given the opportunity to:
1) explain and clarify his defenses to the charge/s against him;
2) present evidence in support of his defenses; and
3) rebut the evidence presented against him by the
management.
During the hearing or conference, the employee is given the

chance to defend himself personally, with the assistance
of a representative or counsel of his choice. Moreover, this
conference or hearing could be used by the parties as an
opportunity
to come to an amicable settlement.
(3) Second written notice.
After determining that termination of employment is justified,
the employer shall serve the employees a written notice
of termination indicating that:
1) all circumstances involving the charge/s against the
employee have been considered; and
2) grounds have been established to justify the severance of his
employment.
What is the Perez doctrine on hearing?
The Perez doctrine enunciates the new guiding principle on
the hearing requirement. It has interpreted the term
ample opportunity to be heard as follows:
(a) Ample opportunity to be heard means any
meaningful opportunity (verbal or written) given to the
employee to
answer the charges against him and submit evidence in
support of his defense, whether in a hearing, conference
or some other fair, just and reasonable way.
(b) A formal hearing or conference is no longer
mandatory. It becomes mandatory only under any of the
following circumstances:
(1) When requested by the employee in writing; or
(2) When substantial evidentiary disputes exist; or
(3) When a company rule or practice requires it; or
(4) When similar circumstances justify it.

(c) the ample opportunity to be heard standard in the
Labor Code prevails over the hearing or conference
requirement in its Implementing Rules and Regulations. This
is how the Supreme Court resolved the conflict in the
following provisions of the Labor Code and its implementing
rules:
The Perez doctrine is now the prevailing rule as shown by a
catena of cases which cited it after its promulgation.
applicable to authorized cause termination?
No. Due process in authorized cause termination is deemed
complied with upon the separate and simultaneous
service of a written notice of the intended termination to
both:
(1) the employee to be terminated; and
(2) the appropriate DOLE Regional Office, at least one (1)
month before the intended date of the termination
specifying the ground/s therefor and the undertaking to pay
the separation pay required under Article 283 of the
Labor Code.
For obvious reason, hearing is not required.
applicable to an abandonment case which is a just
cause to terminate
employment?
No. Although considered as a just cause to terminate
employment, the due process requirement is different. No
hearing is required (since the employee has already
abandoned his job) but the following notices should be
complied with:
1) First notice asking the employee to explain why he should
not be declared as having abandoned his job; and
2) Second notice informing him of the employers decision to
dismiss him on the ground of abandonment.
What are some notable principles on the hearing
requirement?
If employee does not answer, hearing should still proceed.

Outright termination violates due process.
Investigation still required even if incident was witnessed
by many.
Meeting, dialogue, consultation or interview is not the
hearing required by law. It may not be a substitute for the
actual
holding of a hearing.
Prior consultation with union is not part of the due process
requirement.
Cross-examination or confrontation of witnesses is not
necessary in company investigations.
Co-conspirators confession is not sufficient to merit
dismissal.
What are the instances where hearing is not
required?
Hearing is not required in the following cases:
1. Termination of project, seasonal, casual or fixed-term
employment.
2. Termination of probationary employment on the
ground of failure of the probationary employee to
qualify as
a regular employee in accordance with reasonable
standards made known to him at the start of the
employment.
3. Termination due to abandonment of work.
4. Termination due to authorized causes under Article 283
(installation of labor-saving device, redundancy,
retrenchment or closure of business or cessation of
operations). In such cases, there are no allegations which the
employees should refute and defend themselves from.
5. Termination due to disease under Article 284.
6. Termination by the employee (resignation) under Article
285.
7. Termination after 6 months of bona-fide suspension of
operation under Article 286. For purposes of satisfying due
process, what is required is simply that the notices provided
under Article 283 be served to both the affected

employees and the DOLE at least one (1) month before the
termination becomes effective.
8. Termination due to retirement under Article 287.
9. Termination due to closure or stoppage of work by
government authorities when non-compliance with the
law
or implementing rules and regulations poses grave and
imminent danger to the health and safety of workers in the
workplace.
10. Termination of employee who has admitted his guilt for
the offense charged.
What are the seven (7) standard situations in
termination cases?
The rules on termination of employment in the Labor Code
and pertinent jurisprudence are applicable to seven (7)
different situations, namely:
1. The dismissal was for a just cause under Article 282, for an
authorized cause under Article 283, or for health reasons
under Article 284, and due process was observed This
termination is LEGAL.
2. The dismissal was without a just or authorized cause but
due process was observed This termination is ILLEGAL.
3. The dismissal was without a just or authorized cause and
due process was not observed This termination is
ILLEGAL.
4. The dismissal was for a just or authorized cause but due
process was not observed This termination is LEGAL.
5. The dismissal was for a non-existent cause This
termination is ILLEGAL.
6. The dismissal was not supported by any evidence of
termination This termination is NEITHER LEGAL NOR
ILLEGAL as there is no dismissal to speak of.
Reinstatement is ordered not as a relief for illegal dismissal
but on
equitable ground.
7. The dismissal was brought about by the implementation of a
law This termination is LEGAL.

C.
RELIEFS FOR ILLEGAL DISMISSAL
1. RELIEFS UNDER ARTICLE 279 OF THE LABOR
CODE.
Under this article, an illegally dismissed employee is entitled
to the following reliefs:
(1) Reinstatement without loss of seniority rights and other
privileges;
(2) Full backwages, inclusive of regular allowances; and
(3) Other benefits or their monetary equivalent.
2. OTHER RELIEFS NOT FOUND IN ARTICLE 279

BUT AWARDED IN ILLEGAL DISMISSAL CASES PER
JURISPRUDENCE.
The following reliefs that are awarded in illegal dismissal cases
are missing in Article 279:
(1) Award of separation pay in lieu of reinstatement.
(2) Award of penalty in the form of nominal damages in
case of termination due to just or authorized cause but without
observance of procedural due process.
(3) Reliefs to illegally dismissed employee whose employment
is for a fixed period. The proper relief is only the payment of
the employees salaries corresponding to the unexpired
portion of the employment contract.
(4) Award of damages and attorneys fees.
(5) Award of financial assistance in cases where the
employees dismissal is declared legal but because of long
years of service, and other considerations, financial assistance
is awarded.
(6) Imposition of legal interest on separation pay,
backwages and other monetary awards.
1.
REINSTATEMENT
a.
REINSTATEMENT PENDING APPEAL

Is reinstatement pending appeal solely applicable
to reinstatement ordered by the Labor Arbiter?
Yes. Reinstatement is self-executory or immediately executory
only if it is ordered by the Labor Arbiter. This means that the
employee ordered reinstated need not file any motion for the
issuance of writ of execution to enforce reinstatement.
The employer, in fact, is required to manifest within 10 days
from his receipt of the order of reinstatement which of the two
(2) options he is taking:
(1) To reinstate the employee to his former position or to a
substantially equivalent position; or
(2) To reinstate him in the payroll, which means the employee
need not report for work but only for the purpose of getting his
wage.
There is no way the employer can disregard the reinstatement

order. Posting of a bond does not stay the execution of
immediate reinstatement.
In contrast, if ordered by the NLRC, on appeal, or the Court

of Appeals, under a Rule 65 certiorari petition, or even by the
Supreme Court, reinstatement is not immediately executory.
This means that the employee reinstated should still file a
motion for issuance of writ of execution to enforce the
reinstatement.
Are there instances where writ of execution of
Labor Arbiters reinstatement order is still required?
Yes, under the 2011 NLRC Rules of Procedure, there are two
(2) instances when a writ of execution should still be issued
immediately by the Labor Arbiter to implement his order of
reinstatement, even pending appeal, viz.:
(1) When the employer disobeys the Rules-prescribed directive

to submit a report of compliance within ten (10) calendar days
from receipt of the decision; or
(2) When the employer refuses to reinstate the dismissed

employee.
The Labor Arbiter shall motu proprio issue a corresponding

writ to satisfy the reinstatement wages as they accrue until
actual reinstatement or reversal of the order of reinstatement.
The employee need not file a motion for the issuance of the
writ of execution since the Labor Arbiter shall thereafter motu
proprio issue the writ. Employer may be cited for contempt for
his refusal to comply with the order of reinstatement.
Employer is liable to pay the salaries for the period that the
employee was ordered reinstated pending appeal even if
his dismissal is later finally found to be legal on appeal.
What are some relevant principles on

reinstatement pending appeal?
The Labor Arbiter cannot exercise option of employer by
choosing payroll reinstatement pending appeal.
If the former position is already filled up, the employee
ordered reinstated under Article 223 should be admitted back
to work in a substantially equivalent position.
Reinstatement to a position lower in rank is not proper.
Reinstatement cannot be refused on the basis of the
employment elsewhere of the employee ordered reinstated.
The failure of the illegally dismissed employee who was
ordered reinstated to report back to work does not give the
employer the right to remove him, especially when there is a
reasonable explanation for his failure.
No reinstatement pending appeal should be made when
antipathy and antagonism exist.
If reinstatement is not stated in the Labor Arbiters decision
(neither in the dispositive portion nor in the text thereof),
reinstatement is not warranted.
b.
SEPARATION PAY IN LIEU OF REINSTATEMENT
Is separation pay applicable only to

reinstatement as an alternative remedy?
Yes. Separation pay, as a substitute remedy, is only proper for
reinstatement but not for backwages.
This remedy is not found in the Labor Code but is granted in
case reinstatement is no longer possible or feasible, such as
when any of the following circumstances exists:
(1) Where the continued relationship between the employer
and the employee is no longer viable due to the strained
relations and antagonism between them (Doctrine of
Strained Relations).
(2) When reinstatement proves impossible, impracticable, not
feasible or unwarranted for varied reasons and thus hardly in
the best interest of the parties such as:
(a) Where the employee has already been replaced
permanently as when his position has already been taken over
by a regular employee and there is no substantially equivalent
position to which he may be reinstated.
(b) Where the dismissed employees position is no longer
available at the time of reinstatement for reasons not
attributable to the fault of the employer.
(c) When there has been long lapse or passage of time that the
employee was out of employers employ from the date of the
dismissal to the final resolution of the case or because of the
realities of the situation.
(d) By reason of the injury suffered by the employee.
(e) The employee has already reached retirement age under a
Retirement Plan.
(f) When the illegally dismissed employees are over-age or
beyond the compulsory retirement age and their
reinstatement would unjustly prejudice their employer.
(3) Where the employee decides not to be reinstated as when
he does not pray for reinstatement in his complaint or position
paper but asked for separation pay instead.
(4) When reinstatement is rendered moot and academic due to
supervening events, such as:
(a) Death of the illegally dismissed employee.
(b) Declaration of insolvency of the employer by the court.

(c) Fire which gutted the employers establishment and
resulted in its total destruction.
(d) In case the establishment where the employee is to be
reinstated has closed or ceased operations.
(5) To prevent further delay in the execution of the decision to
the prejudice of private respondent.
(6) Other circumstances such as (a) when reinstatement is
inimical to the employers interest; (b) reinstatement does not
serve the best interests of the parties involved; (c) the
employer is prejudiced by the workers continued
employment; or (d) that it will not serve any prudent purpose
as when supervening facts transpired which made execution
unjust or inequitable.
What is the amount of separation pay in lieu of

reinstatement?
Per prevailing jurisprudence, the following are the
components of separation pay in lieu of reinstatement> (1)
The amount equivalent to at least one (1) month salary or to
one (1) month salary for every year of service, whichever is
higher, a fraction of at least six (6) months being considered as
one (1) whole year.
(2) Allowances that the employee has been receiving on a

regular basis.
What is the period covered?
From start of employment up to the date of finality of decision
except when the employer has ceased its operation earlier, in
which case, the same should be computed up to the date of
closure.
What is the salary rate to be used in computing it?
The salary rate prevailing at the end of the period of
putative service should be the basis for computation which
refers to the period of imputed service for which the
employee is entitled to backwages.
What are some important principles on

separation pay in lieu of reinstatement?
1. Award of separation pay and backwages are not inconsistent
with each other. Hence, both may be awarded to an illegally
dismissed employee. The payment of separation pay is in
addition to payment of backwages.
2. Reinstatement cannot be granted when what is prayed for
by employee is separation pay in lieu thereof.
BACKWAGES
What is the Bustamante doctrine?
In 1996, the Supreme Court changed the rule on the reckoning
of backwages. It announced a new doctrine in the case of
Bustamante v. NLRC,1 which is now known as the
Bustamante doctrine. Under this rule, the term full
backwages should mean exactly that, i.e., without
deducting from backwages the earnings derived elsewhere by
the concerned employee during the period of his illegal
dismissal.
What are the components of backwages?
The components of backwages are as follows:
1. Salaries or wages computed on the basis of the wage
rate level at the time of the illegal dismissal and not in
accordance with the latest, current wage level of the
employees position.
2. Allowances and other benefits regularly granted to and
received by the employee should be made part of backwages.
What are some principles on backwages?
Salary increases during period of unemployment
are not included as component in the computation of
backwages.
Dismissed employees ability to earn is irrelevant in the
award of backwages.
In case reinstatement is ordered, full backwages
should be reckoned from the time the compensation was
withheld (which, as a rule, is from the time of illegal dismissal)
up to the time of reinstatement, whether actual or in the
payroll.
If separation pay is ordered in lieu of
reinstatement, full backwages should be computed from the
time of illegal dismissal until the finality of the decision. The
justification is that along with the finality of the Supreme
Courts decision, the issue on the illegality of the dismissal is
finally laid to rest.
If the illegally dismissed employee has reached the
optional retirement age of 60 years, his backwages
should only cover the time when he was illegally dismissed up
to the time when he reached 60 years. Under Article 287, 60
years is the optional retirement age.
If the employee has reached 65 years of age or beyond,
his full backwages should be computed only up to said age.
The contention of the employer that backwages should be
reckoned only up to age 60 cannot be sustained.
If employer has already ceased operations, full backwages
should be computed only up to the date of the closure. To
allow the computation of the backwages to be based on a
period beyond that would be an injustice to the employer.
Any amount received during payroll reinstatement
is deductible from backwages.
LIMITED BACKWAGES
When is the award of backwages limited?
(1) When the dismissal is deemed too harsh a penalty;
(2) When the employer acted in good faith; or
(3) Where there is no evidence that the employer dismissed
the employee.
Thus, the backwages will not be granted in full but limited to 1

year, 2 years or 5 years.
PREVENTIVE SUSPENSION
When is preventive suspension proper to be
imposed?
Preventive suspension may be legally imposed against an

errant employee only while he is undergoing an investigation
for certain serious offenses. Consequently, its purpose is to
prevent him from causing harm or injury to the company as
well as to his fellow employees. It is justified only in cases
where the employees continued presence in the
company premises during the investigation poses a
serious and imminent threat to the life or property of
the employer or of the employees co-workers.
Without this threat, preventive suspension is not
proper.
What are some relevant principles in preventive
suspension?
Preventive suspension is not a penalty. Preventive
suspension, by itself, does not signify that the company has
already adjudged the employee guilty of the charges for which
she was asked to answer and explain.
Preventive suspension is neither equivalent nor tantamount
to dismissal.
If the basis of the preventive suspension is the employees
absences and tardiness, the imposition of preventive
suspension on him is not justified as his presence in the
company premises does not pose any such serious or
imminent threat to the life or property of the employer or of
the employees co-workers simply by incurring repeated
absences and tardiness.
Preventive suspension does not mean that due process may
be disregarded.
Preventive suspension should only be for a maximum
period of thirty (30) days. After the lapse of the 30-day period,
the employer is required to reinstate the worker to his former
position or to a substantially equivalent position.
During the 30-day preventive suspension, the worker is not

entitled to his wages and other benefits. However, if the
employer decides, for a justifiable reason, to extend the period
of preventive suspension beyond said 30-day period, he is
obligated to pay the wages and other benefits due the worker
during said period of extension. In such a case, the worker is
not bound to reimburse the amount paid to him during the
extension if the employer decides to dismiss him after the
completion of the investigation.
Extension of period must be justified. During the 30-day
period of preventive suspension, the employer is expected to
conduct and finish the investigation of the employees
administrative case. The period of thirty (30) days may only be
extended if the employer failed to complete the hearing or
investigation within said period due to justifiable grounds. No
extension thereof can be made based on whimsical, capricious
or unreasonable grounds.
Preventive suspension lasting longer than 30 days, without

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

person in the employees position would have felt compelled to
give up his position under the circumstances. It is an act
amounting to dismissal but made to appear as if it were not. In
fact, the employee who is constructively dismissed may be
allowed to keep on coming to work. Constructive dismissal is,
therefore, a dismissal in disguise. The law recognizes and
resolves this situation in favor of the employees in order to
protect their rights and interests from the coercive acts of the
employer.
What are examples of constructive dismissal or
forced resignation?
Denying to the workers entry to their work area and placing
them on shifts not by weeks but almost by month by
reducing their workweek to three days.
Barring the employees from entering the premises
whenever they would report for work in the morning without
any justifiable reason, and they were made to wait for a certain
employee who would arrive in the office at around noon, after
they had waited for a long time and had left.
Sending to an employee a notice of indefinite suspension
which is tantamount to dismissal.
Imposing indefinite preventive suspension without actually
conducting any investigation.
Changing the employees status from regular to casual
constitutes constructive dismissal.
Preventing the employee from reporting for work by
ordering the guards not to let her in. This is clear notice of
dismissal.
------------oOo------------
TOPIC NO. 5
MANAGEMENT PREROGATIVES
What are management prerogatives?
Management prerogatives are granted to the employer to
regulate every aspect of their business, generally without
restraint in accordance with their own discretion and

judgment. This privilege is inherent in the right of
employers to control and manage their enterprise
effectively. Such aspects of employment include hiring, work
assignments, working methods, time, place and manner of
work, tools to be used, processes to be followed, supervision of
workers, working regulations, transfer of employees, lay-off of
workers and the discipline, dismissal and recall of workers.
What are the limitations to the exercise of these
prerogatives?
1. Limitations imposed by:
a) law;
b) CBA;
c) employment contract;
d) employer policy;
e) employer practice; and
f) general principles of fair play and justice.
2. It is subject to police power.

3. Its exercise should be without abuse of discretion.
4. It should be done in good faith and with due regard to the
rights of labor.
A.
DISCIPLINE
What are the components of the right to
discipline?
The right or prerogative to discipline covers the following:
1) Right to discipline;
2) Right to dismiss;
3) Right to determine who to punish;
4) Right to promulgate rules and regulations;
5) Right to impose penalty; proportionality rule;
6) Right to choose which penalty to impose; and
7) Right to impose heavier penalty than what the company
rules prescribe.
B.

TRANSFER OF EMPLOYEES
What are the various kinds of transfer?
a. Two (2) kinds of transfer. - A transfer means a
movement:
1. From one position to another of equivalent rank, level or
salary, without a break in the service; or
2. From one office to another within the same business
establishment.
What are salient points to consider in transfer?
The exercise of the prerogative to transfer or assign
employees from one office or area of operation to another is
valid
provided there is no demotion in rank or diminution
of salary, benefits and other privileges. The transfer
should not be motivated by discrimination or made in bad
faith or effected as a form of punishment or demotion without
sufficient cause.
Commitment made by the employee like a
salesman in the employment contract to be re-
assigned anywhere in the Philippines is binding on
him.
Even if the employee is performing well in his
present assignment, management may reassign him
to a new post.
The transfer of an employee may constitute constructive
dismissal when:
1) When the transfer is unreasonable, inconvenient or
prejudicial to the employee;
2) When the transfer involves a demotion in rank or
diminution of salaries, benefits and other privileges; and
3) When the employer performs a clear act of discrimination,
insensibility, or disdain towards the employee, which
forecloses any choice by the latter except to forego his
The refusal of an employee to be transferred may be held
justified if there is a showing that the transfer was directed by
the employer under questionable circumstances. For instance,

the transfer of employees during the height of their
unions concerted activities in the company where
they were active participants is illegal.
An employee who refuses to be transferred, when
such transfer is valid, is guilty of insubordination or
willful disobedience of a lawful order of an employer
under Article 282 of the Labor Code.
Refusal to transfer due to parental obligations,
additional expenses, inconvenience, hardship and
anguish is not valid. An employee could not validly
refuse lawful orders to transfer based on these
grounds.
Refusal to transfer to overseas assignment is valid.
Refusal to transfer consequent to promotion is valid.
Transfer to avoid conflict of interest is valid.
A transfer from one position to another occasioned by the
abolition of the position is valid.
C.
PRODUCTIVITY STANDARD
How may productivity standards be imposed?
The employer has the prerogative to prescribe the standards of
productivity which the employees should comply. The
productivity standards may be used by the employer as:
1. an incentive scheme; and/or
2. a disciplinary scheme.
As an incentive scheme, employees who surpass the
productivity standards or quota are usually given additional
benefits.
As a disciplinary scheme, employees may be sanctioned or
dismissed for failure to meet the productivity standards or
quota.
Illustrative cases:
In the 2014 case of International School Manila v.
International School Alliance of Educators (ISAE),1

the teacher was held guilty of gross inefficiency meriting her
dismissal on the basis of the Courts finding that she failed to
measure up to the standards set by the school in teaching
Filipino classes.
In the 2012 case of Reyes-Rayel v. Philippine Luen Thai
Holdings Corp.,2 the validity of the dismissal of petitioner
who was the Corporate Human Resources (CHR) Director for
Manufacturing of respondent company, on the ground of
inefficiency and ineptitude, was affirmed on the basis of the
Courts finding that petitioner, on two occasions, gave wrong
information regarding issues on leave and holiday pay which
generated confusion among employees in the computation of
salaries and wages.
In another 2012 case, Realda v. New Age Graphics, Inc.,3

petitioner, a machine operator of respondent company, was
dismissed on the ground, among others, of inefficiency. In
affirming the validity of his dismissal, the Supreme Court
reasoned:
xxx (T)he petitioners failure to observe Graphics, Inc.s work
standards constitutes inefficiency that is a valid cause for
dismissal. 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.
D.
GRANT OF BONUS
See discussion on this under Topic III (Labor
Standards) above.
E.
CHANGE OF WORKING HOURS
What is the extent of the exercise of this
prerogative?
Employers have the freedom and prerogative, according to
their discretion and best judgment, to regulate and control the
time when workers should report for work and perform their
respective functions.
Manila Jockey Club Employees Labor Union

PTGWO, v. Manila Jockey Club, Inc.4 - The validity of
the exercise of the same prerogative to change the working
hours was affirmed in this case. It was found that while
Section 1, Article IV of the CBA provides for a 7-hour work
schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to
5:00 p.m. from Mondays to Saturdays, Section 2, Article XI
thereof expressly reserves to respondent the prerogative to
change existing methods or facilities and to change the
schedules of work. Consequently, the hours of work of regular
monthly-paid employees were changed from the original 9:00
a.m. to 5:00 p.m. schedule to 1:00 p.m. to 8:00 p.m. when
horse races are held, that is, every Tuesday and Thursday. The
9:00 a.m. to 5:00 p.m. schedule for non-race days was,
however, retained. Respondent, as employer, cited the change
in the program of horse races as reason for the adjustment of
the work schedule. It rationalized that when the CBA was
signed, the horse races started at 10:00 a.m. When the races
were moved to 2:00 p.m., there was no other choice for
management but to change the work schedule as there was no
work to be done in the morning. Evidently, the adjustment in
the work schedule is justified.
F.
RULES ON MARRIAGE BETWEEN EMPLOYEES OF
COMPETITOR-EMPLOYERS
What is the best illustrative case of this
prerogative?
Duncan Association of Detailman-PTGWO v. Glaxo
Welcome Philippines, Inc.5 - The contract of employment
in this case expressly prohibited an employee from having a
relationship with an employee of a competitor company. It
provides:
10. You agree to disclose to management any existing or
future relationship you may have, either by consanguinity or
affinity with co-employees or employees of competing drug
companies. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily from
the Company as a matter of Company policy.
The Supreme Court ruled that this stipulation is a valid
exercise of management prerogative. The prohibition against
personal or marital relationships with employees of
competitor-companies upon its employees is reasonable under
the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the
assailed company policy, the employer only aims to protect its
interests against the possibility that a competitor company will
gain access to its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and
information.
G.
POST-EMPLOYMENT BAN
Is a non-compete clause valid?
Yes. The employer and the employee are free to stipulate in an
employment contract prohibiting the employee within a
certain period from and after the termination of his
employment, from:
(1) starting a similar business, profession or trade; or
(2) working in an entity that is engaged in a similar business
that might compete with the employer.
The non-compete clause is agreed upon to prevent the

possibility that upon an employees termination or
resignation, he might start a business or work for a competitor
with the full competitive advantage of knowing and exploiting
confidential and sensitive information, trade secrets,
marketing plans, customer/client lists, business practices,

upcoming products, etc., which he acquired and gained from
his employment with the former employer. Contracts which
prohibit an employee from engaging in business in
competition with the employer are not necessarily void for
being in restraint of trade.
What are the requisites in order for a non-

compete clause to be valid?
A non-compete clause is not necessarily void for being in
restraint of trade as long as there are reasonable
limitations as to time, trade, and place.
Example:
The non-compete clause (called Non-Involvement Provision)
in the 2007 case of Daisy B. Tiu v. Platinum Plans
Philippines, Inc., provides as follows:
8. NON-INVOLVEMENT PROVISION The EMPLOYEE
further undertakes that during his/her engagement with
EMPLOYER and in case of separation from the Company,
whether voluntary or for cause, he/she shall not, for the next
TWO (2) years thereafter, engage in or be involved with any
corporation, association or entity, whether directly or
indirectly, engaged in the same business or belonging to the
same pre-need industry as the EMPLOYER. Any breach of the
foregoing provision shall render the EMPLOYEE liable to the
EMPLOYER in the amount of One Hundred Thousand Pesos
(P100,000.00) for and as liquidated damages.
Starting on January 1, 1993, petitioner worked for respondent
as Senior Assistant Vice-President and Territorial Operations
Head in charge of its Hongkong and Asean operations under a
5-year contract of employment containing the aforequoted
clause. On September 16, 1995, petitioner stopped reporting
for work. In November 1995, she became the Vice- President
for Sales of Professional Pension Plans, Inc., a corporation
engaged also in the pre-need industry. Consequently,
respondent sued petitioner for damages before the RTC of
Pasig City. Respondent alleged, among others, that petitioners
employment with Professional Pension Plans, Inc. violated the
above-quoted non-involvement clause in her contract of
employment. Respondent thus prayed for P100,000 as
compensatory damages; P200,000 as moral damages;
P100,000 as exemplary damages; and 25% of the total amount
due plus P1,000 per counsels court appearance, as attorneys
fees.
Petitioner countered that the non-involvement clause was

unenforceable for being against public order or public policy:
First, the restraint imposed was much greater than what was
necessary to afford respondent a fair and reasonable
protection.
Petitioner contended that the transfer to a rival company was
an accepted practice in the pre-need industry. Since the
products sold by the companies were more or less the same,
there was nothing peculiar or unique to protect. Second,
respondent did not invest in petitioners training or
improvement. At the time petitioner was recruited, she already
possessed the knowledge and expertise required in the pre-
need industry and respondent benefited tremendously from it.
Third, a strict application of the non-involvement clause
would amount to a deprivation of petitioners right to engage
in the only work she knew.
In upholding the validity of the non-involvement
clause, the trial court ruled that a contract in
restraint of trade is valid provided that there is a
limitation upon either time or place. In the case of the
pre-need industry, the trial court found the two-year
restriction to be valid and reasonable.
On appeal, the Court of Appeals affirmed the trial courts

ruling. It reasoned that petitioner entered into the contract on
her own will and volition. Thus, she bound herself to fulfill not
only what was expressly stipulated in the contract, but also all
its consequences that were not against good faith, usage, and
law. The appellate court also ruled that the stipulation
prohibiting non-employment for two years was valid and
enforceable considering the nature of respondents business.
In affirming the validity of the Non-Involvement Clause, the
Supreme Court ratiocinated as follows:
xxx a non-involvement clause is not necessarily void

for being in restraint of trade as long as there are
reasonable limitations as to time, trade, and place.
In this case, the non-involvement clause has a time
limit: two years from the time petitioners
employment with respondent ends. It is also limited
as to trade, since it only prohibits petitioner from
engaging in any pre-need business akin to
respondents. It is limited as to place since the pprohibition
covers only Hongkong and Asean operations.
More significantly, since petitioner was the Senior Assistant
Vice-President and Territorial Operations Head in charge of
respondents Hongkong and Asean operations, she had been
privy to confidential and highly sensitive marketing strategies
of respondents business. To allow her to engage in a rival
business soon after she leaves would make respondents trade
secrets vulnerable especially in a highly competitive marketing
environment. In sum, we find the non-involvement
clause not contrary to public welfare and not greater
than is necessary to afford a fair and reasonable
protection to respondent.
Thus, as held by the trial court and the Court of Appeals,
petitioner is bound to pay respondent P100,000 as
liquidated damages. While we have equitably reduced
liquidated damages in certain cases, we cannot do so in this
case, since it appears that even from the start, petitioner had
not shown the least intention to fulfill the non-involvement
clause in good faith.
------------oOo------------

TOPIC NO. 6
SOCIAL WELFARE LEGISLATION
A.
SSS LAW
(R.A. No. 8282)
Who are covered employers?
a. An employer or any person who uses the services of another
person in business, trade, industry or any undertaking.
b. A social, civic, professional, charitable and other non-profit
organizations which hire the services of employees are
considered employers.
c. A foreign government, international organization or its
wholly-owned instrumentality such as an embassy in the
Philippines, may enter into an administrative agreement with
the SSS for the coverage of its Filipino employees.
Who are compulsorily covered employees?

a. A private employee, whether permanent, temporary or
provisional, who is not over 60 years old.
b. A domestic worker or kasambahay who has rendered at
least one (1) month of service.
c. A Filipino seafarer upon the signing of the standard contract
of employment between the seafarer and the manning agency
which, together with the foreign ship owner, act as employers.
d. An employee of a foreign government, international
organization or their wholly-owned instrumentality based in
the Philippines, which entered into an administrative
agreement with the SSS for the coverage of its Filipino
workers.
e. The parent, spouse or child below 21 years old of the owner
of a single proprietorship business.
Are self-employed persons covered?

Yes. A self-employed person, regardless of trade, business or
occupation, with an income of at least P1,000 a month and not
over 60 years old, should register with the SSS. Included, but
not limited to, are the following self-employed persons:

a. Self-employed professionals;
b. Business partners, single proprietors and board directors;
c. Actors, actresses, directors, scriptwriters and news reporters
who are not under an employer-employee
relationship;
d. Professional athletes, coaches, trainers and jockeys;
e. Farmers and fisherfolks; and
f. Workers in the informal sector such as cigarette vendors,
watch-your-car boys, hospitality girls, among others.
Unless otherwise specified, all provisions of the law, R.A. No.

8282, applicable to covered employees shall also be applicable
to the covered self-employed persons.
A self-employed person shall be both employee and employer

at the same time.
Who may be covered voluntarily?

1. Separated Members
A member who is separated from employment or ceased to be
self-employed/OFW/non-working spouse and would like to
continue contributing.
2. Overseas Filipino Workers (OFWs)
A Filipino recruited in the Philippines by a foreign-based
employer for employment abroad or one who legitimately
entered a foreign country (i.e., tourist, student) and is
eventually employed.
3. Non-working spouses of SSS members
A person legally married to a currently employed and actively
paying SSS member who devotes full time in the management
of household and family affairs may be covered on a voluntary
basis, provided there is the approval of the working spouse.
The person should never have been a member of the SSS. The
contributions will be based on 50 percent (50%) of the
working spouses last posted monthly salary credit but in no
case shall it be lower than P1,000.

What is the effective date of coverage?
For compulsory coverage:
1. For employer - Compulsory coverage of the employer shall
take effect on the first day of his operation or on the first day
he hires employee/s. The employer is given only 30 days from
the date of employment of employee to report the person for
coverage to the SSS.
2. For employee - Compulsory coverage of the employee shall
take effect on the first day of his employment.
3. For self-employed - The compulsory coverage of the self-
employed person shall take effect upon his registration with
the SSS or upon payment of the first valid contribution, in case
of initial coverage.
For voluntary coverage:
1. For an OFW upon first payment of contribution, in case
of initial coverage.
2. For a non-working spouse upon first payment of
contribution.
3. For a separated member on the month he/she
resumed payment of contribution.
Who are excluded employers?

Government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled
by the Government with original charters.
Who are excluded employees?

Workers whose employment or service falls under any of the
following circumstances are not covered:
(1) Employment purely casual and not for the purpose of
occupation or business of the employer;
(2) Service performed on or in connection with an alien
vessel by an employee if he is employed when such vessel is
outside the Philippines;
(3) Service performed in the employ of the Philippine
Government or instrumentality or agency thereof;

(4) Service performed in the employ of a foreign government
or international organization, or their wholly-owned
instrumentality: Provided, however, That this exemption
notwithstanding, any foreign government, international
organization or their wholly-owned instrumentality employing
workers in the Philippines or employing Filipinos outside of
the Philippines, may enter into an agreement with the
Philippine Government for the inclusion of such employees in
the SSS except those already covered by their respective civil
service retirement systems: Provided, further, That the terms
of such agreement shall conform with the provisions of R.A.
No. 8282 on coverage and amount of payment of
contributions and benefits: Provided, finally, That the
provisions of this Act shall be supplementary to any such
agreement; and
(5) Such other services performed by temporary and other
employees which may be excluded by regulation of the Social
Security Commission. Employees of bona-fide independent
contractors shall not be deemed employees of the employer
engaging the service of said contractors.
What are the classifications of benefits?
The SSS benefits may be classified into two (2) as follows:
(a) Social security benefits:
1) Sickness
2) Maternity
3) Retirement
4) Disability
5) Death and funeral.
(b) Employees compensation benefits.
Who are primary beneficiaries?
The following are primary beneficiaries:
1. The dependent spouse until he or she remarries;
2. The dependent legitimate, legitimated or legally
adopted, and illegitimate children who are not yet 21
years of age.

The dependent illegitimate children shall be entitled to
50% of the share of the legitimate, legitimated or legally
adopted children. However, in the absence of the dependent
legitimate, legitimated children of the member, his/her
dependent illegitimate children shall be entitled to 100%
of the benefits
Who are secondary beneficiaries?
The following are secondary beneficiaries:
1. The dependent parents, in the absence of the primary
beneficiaries.
2. Any other person designated by the member as his/her
secondary beneficiary, in the absence of all the foregoing
primary beneficiaries and dependent parents.
B.
GSIS LAW
(R.A. No. 8291)
Who are compulsorily required to become
members of the GSIS?
1. All government personnel, whether elective or appointive,
irrespective of status of appointment, provided they are
receiving fixed monthly compensation and have not reached
the mandatory retirement age of 65 years, are compulsorily
covered as members of the GSIS and shall be required to pay
contributions.
2. However, employees who have reached the retirement age
of 65 or more shall also be covered, subject to the following
rules:
An employee who is already beyond the mandatory retirement

age of 65 shall be compulsorily covered and be required to pay
both the life and retirement premiums under the following
situations:
a. An elective official who at the time of election to public
office is below 65 years of age and will be 65 years or more at
the end of his term of office, including the period/s of his re-
election to public office thereafter without interruption.
b. Appointive officials who, before reaching the mandatory
age of 65, are appointed to government position by the
President of the Republic of the Philippines and shall remain
in government service at age beyond 65.
c. Contractual employees including casuals and other
employees with an employee-government agency relationship
are also compulsorily covered, provided they are receiving
fixed monthly compensation and rendering the required
number of working hours for the month.
What are the classes of membership in the GSIS?
Membership in the GSIS is classified either by type or status
of membership.
As to type of members, there are regular and special
members:
(a) Regular Members are those employed by the
government of the Republic of the Philippines, national or
local, legislative bodies, government-owned and controlled
corporations (GOCC) with original charters, government
financial institutions (GFIs), except uniformed personnel of
the Armed Forces of the Philippines, the Philippine National
Police, Bureau of Jail Management and Penology (BJMP) and
Bureau of Fire Protection (BFP), who are required by law to
remit regular monthly contributions to the GSIS.
(b) Special Members are constitutional commissioners,
members of the judiciary, including those with equivalent
ranks, who are required by law to remit regular monthly
contributions for life insurance policies to the GSIS in order to
answer for their life insurance benefits defined under RA 8291.
As to status of membership, there are active and inactive
members.
(a) Active member refers to a member of the GSIS,
whether regular or special, who is still in the government
service and together with the government agency to which he
belongs, is required to pay the monthly contribution.
(b) Inactive member a member who is separated from the
service either by resignation, retirement, disability, dismissal

from the service, retrenchment or, who is deemed retired from
the service under this Act.
When does membership become effective?
The effective date of membership shall be the date of the
members assumption to duty on his original appointment or
election to public office.
What is the effect of separation from the service?

A member separated from the service shall continue to be a
member, and shall be entitled to whatever benefits he has
qualified to in the event of any contingency compensable
under the GSIS Law.
Who are excluded from the compulsory coverage

of the GSIS Law?
The following employees are excluded from compulsory
coverage:
(a) Uniformed personnel of the Armed Forces of the
Philippines (AFP), Philippine National Police (PNP), Bureau
of Fire Protection (BFP) and Bureau of Jail Management and
Penology (BJMP);
(b) Barangay and Sanggunian Officials who are not
receiving fixed monthly compensation;
(c) Contractual Employees who are not receiving fixed
monthly compensation; and
(d) Employees who do not have monthly regular hours of
work and are not receiving fixed monthly compensation.
What are the kinds of benefits under the GSIS
Law?
The following are the benefits under the GSIS Law:
(a) Compulsory Life Insurance Benefits under the Life
Endowment Policy (LEP)
(b) Compulsory Life Insurance Benefits under the Enhanced
Life Policy (ELP)
(c) Retirement Benefits
(d) Separation Benefit
(e) Unemployment Benefit
(f) Disability Benefits
(g) Survivorship Benefits
(h) Funeral Benefits
Who are beneficiaries under the GSIS Law?

There are two (2) kinds of beneficiaries under the GSIS Law as
follows:
1. Primary beneficiaries The legal dependent spouse
until he/she remarries and the dependent children.
2. Secondary beneficiaries The dependent parents and,
subject to the restrictions on dependent children, the
legitimate descendants.
Who are dependents under the GSIS Law?

Dependents shall be the following:
(a) the legitimate spouse dependent for support upon the
member or pensioner;
(b) the legitimate, legitimated, legally adopted child, including
the illegitimate child, who is unmarried, not gainfully
employed, not over the age of majority, or is over the age of
majority but incapacitated and incapable of self support due to
a mental or physical defect acquired prior to age of majority;
and
(c) the parents dependent upon the member for support.
Gainful Occupation Any productive activity that provided

the member with income at least equal to the minimum
compensation of government employees.
C.
LIMITED PORTABILITY LAW
(R.A. No. 7699)
What is limited portability scheme?
R.A. No. 7699 was enacted to enable those from the private
sector who transfer to the government service or from the
government sector to the private sector to combine their years

of service and contributions which have been credited with the
SSS or GSIS, as the case may be, to satisfy the required
number of years of service for entitlement to the benefits
under the applicable laws.
What is totalization?
The term totalization refers to the process of adding up the
periods of creditable services or contributions under each of
the Systems, SSS or GSIS, for the purpose of eligibility and
computation of benefits.
What is portability?
On the other hand, the term portability refers to the transfer
of funds for the account and benefit of a worker who transfers
from one system to the other.
How are benefits computed?
All services rendered or contributions paid by a member
personally and those that were paid by the employers to either
System shall be considered in the computation of benefits
which may be claimed from either or both Systems. However,
the amount of benefits to be paid by one System shall be in
proportion to the services rendered or periods of contributions
made to that System.
Benefits refer to the following:
1. Old-age benefit;
2. Disability benefit;
3. Survivorship benefit;
4. Sickness benefit;
5. Medicare benefit, provided that the member shall claim
said benefit from the System where he was last a member;
and
6. Such other benefits common to both Systems that may be
availed of through totalization.
When does totalization apply?

a. if a worker is not qualified for any benefits from both

Systems; or
b. if a worker in the public sector is not qualified for any
benefits from the GSIS; or
c. if a worker in the private sector is not qualified for any
benefits from the SSS.
For purposes of computation of benefits, totalization applies in

all cases so that the contributions made by the worker member
in both Systems shall provide maximum benefits which
otherwise will not be available. In no case shall the
contribution be lost or forfeited.
What is the effect if worker is not qualified after

totalization?
If after totalization, the worker-member still does not qualify
for any benefit as listed in the law, the member will then get
whatever benefits correspond to his/her contributions in
either or both Systems.
What is the effect if worker qualifies for benefits

in both Systems?
If a worker qualifies for benefits in both Systems, totalization
shall not apply.
D.
EMPLOYEES COMPENSATION
COVERAGE AND WHEN COMPENSABLE
What is the State Insurance Fund [SIF]?
The State Insurance Fund (SIF) is built up by the
contributions of employers based on the salaries of their
employees as provided under the Labor Code.
There are two (2) separate and distinct State Insurance Funds:
one established under the SSS for private sector employees;
and the other, under the GSIS for public sector employees. The
management and investment of the Funds are done separately
and distinctly by the SSS and the GSIS. It is used exclusively

for payment of the employees compensation benefits and no
amount thereof is authorized to be used for any other purpose.
What are the agencies involved in the

implementation of the Employees Compensation
Program (ECP)?
There are three (3) agencies involved in the implementation of
the Employees Compensation Program (ECP). These are: (1)
The Employees Compensation Commission (ECC)
which is mandated to initiate, rationalize and coordinate
policies of the ECP and to review appealed cases from (2) the
Government Service Insurance System (GSIS) and (3)
the Social Security System (SSS), the administering
agencies of the ECP.
Who are covered by the ECP?
a. General coverage. The following shall be covered by
the Employees Compensation Program (ECP):
1. All employers;
2. Every employee not over sixty (60) years of age;
3. An employee over 60 years of age who had been paying
contributions to the System (GSIS/SSS) prior to age sixty (60)
and has not been compulsorily retired; and
4. Any employee who is coverable by both the GSIS and SSS
and should be compulsorily covered by both Systems.
b. Sectors of employees covered by the ECP. - The

following sectors are covered under the ECP:
1. All public sector employees including those of government-
owned and/or controlled corporations and local government
units covered by the GSIS;
2. All private sector employees covered by the SSS; and
3. Overseas Filipino workers (OFWs), namely:
a. Filipino seafarers compulsorily covered under the SSS.
b. Land-based contract workers provided that their employer,
natural or juridical, is engaged in any trade, industry or

business undertaking in the Philippines; otherwise, they shall
not be covered by the ECP.
When is the start of coverage of employees under

the ECP?
The coverage under the ECP of employees in the private and
public sectors starts on the first day of their employment.
What are the benefits under the ECP?

The following are the benefits provided under the Labor Code:
a. Medical Benefits
b. Disability Benefits
1. Temporary total disability
2. Permanent total disability
3. Permanent partial disability
c. Death Benefit
d. Funeral Benefit
------------oOo------------
TOPIC NO. 7
LABOR RELATIONS LAW
A.
RIGHT TO SELF-ORGANIZATION
1.
WHO MAY UNIONIZE
FOR PURPOSES OF COLLECTIVE BARGAINING
Who are eligible to join, form or assist a labor
organization for purposes of collective bargaining?
In the private sector:
1. All persons employed in commercial, industrial and
agricultural enterprises;
2. Employees of government-owned and/or controlled
corporations without original charters established under the
Corporation Code;
3. Employees of religious, charitable, medical or educational
institutions, whether operating for profit or not;
4. Front-line managers, commonly known as supervisory
employees [See discussion below];
5. Alien employees [See discussion below];
6. Working children [See discussion below];
7. Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
9. Employees of legitimate contractors not with the principals
but with the contractors
In the public sector:

All rank-and-file employees of all branches, subdivisions,
instrumentalities, and agencies of government, including
government-owned and/or controlled corporations with
original charters, can form, join or assist employees
organizations of their own choosing.
Are front-line managers or supervisors eligible to
join, form or assist a labor organization?
Yes, but only among themselves. They cannot join a rank-and-
file union.
Is mixed membership of supervisors and rank-

and-file union in one union a ground to cancel its
registration?
No. In case there is mixed membership of supervisors and
rank-and-file employees in one union, the new rule enunciated
in Article 245-A of the Labor Code, unlike in the old law, is
that it cannot be invoked as a ground for the cancellation of
the registration of the union. The employees so improperly
included are automatically deemed removed from the list of
members of said union. In other words, their removal from the
said list is by operation of law.
Do alien employees have the right to join a labor
organization?
No, except if the following requisites are complied with:
(1) He should have a valid working permit issued by the
DOLE; and
(2) He is a national of a country which grants the same or
similar rights to Filipino workers or which has ratified either
ILO Convention No. 87 or ILO Convention No. 98, as certified
by the Philippine Department of Foreign Affairs (DFA).
Do members of cooperatives have the right to join,

form or assist a labor organization?
No, because they are co-owners co-owners of the cooperative.
What about employees of a cooperative?

Yes, because they have employer-employee relationship with
the cooperative.
What about members who are at the same time

employees of the cooperative?
No, because the prohibition covers employees of the
cooperative who are at the same time members thereof. But
employee-members of a cooperative may withdraw as
members of the cooperative for purposes of joining a labor
union.
Can employees of job contractors join, form or

assist a labor organization?
Yes, but not for the purpose of collective bargaining with the
principal but with their direct employer the job contractor.
Are self-employed persons allowed to join, form or

assist a labor organization?
Yes, for their mutual aid and protection but not for collective
bargaining purposes since they have no employers but
themselves.
This rule applies as well to ambulant, intermittent and other

workers, rural workers and those without any definite
employers. The reason for this rule is that these persons have
no employers with whom they can collectively bargain.
(a)

WHO CANNOT FORM, JOIN OR ASSIST LABOR
ORGANIZATIONS
1. PERSONS NOT ALLOWED TO FORM, JOIN OR

ASSIST LABOR ORGANIZATIONS.
a. In the private sector.
1. Top and middle level managerial employees; and
2. Confidential employees.
b. In the public sector.
The following are not eligible to form employees
organizations:
1. High-level employees whose functions are normally
considered as policy-making or managerial or whose duties
are of a highly confidential nature;
2. Members of the Armed Forces of the Philippines;
3. Police officers;
4. Policemen;
5. Firemen; and
6. Jail guards.
Are managerial employees allowed unionize?

There are 3 types of managerial employees:
1. Top Management
2. Middle Management
3. First-Line Management (also called supervisory level)
The first two above are absolutely prohibited; but the third
are allowed but only among themselves.
Are confidential employees allowed to join, form
or assist a labor organization?
No, under the confidential employee rule.
Confidential employees are those who meet the following
criteria:
(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate, determine, and
effectuate management policies specifically in the field of

labor relations.
The two (2) criteria are cumulative and both must be met if an
employee is to be considered a confidential employee
that would deprive him of his right to form, join or assist a
labor organization.
What are some principles on the right to self-
organization?
a. Some principles on the right to self-organization.
Any employee, whether employed for a definite period or
not, shall, beginning on the first day of his service, be eligible
for membership in any labor organization.
Right to join a union cannot be made subject of a CBA
stipulation.
2.
BARGAINING UNIT
What is a bargaining unit?
A bargaining unit refers to a group of employees sharing
mutual interests within a given employer unit, comprised of all
or less than all of the entire body of employees in the employer
unit or any specific occupational or geographical grouping
within such employer unit. It may also refer to the group or
cluster of jobs or positions within the employers
establishment that supports the labor organization which is
applying for registration.
(a)
TEST TO DETERMINE THE CONSTITUENCY
OF AN APPROPRIATE BARGAINING UNIT
What are the four tests to determine appropriate
bargaining unit?
Based on jurisprudence, there are certain tests which may be
used in determining the appropriate collective bargaining unit,
to wit:
(1) Community or mutuality of interest doctrine;
(2) Globe doctrine or will of the members;

(3) Collective bargaining history doctrine; and
(4) Employment status doctrine.
1. COMMUNITY OR MUTUALITY OF INTEREST
DOCTRINE.
Under this doctrine, the employees sought to be represented
by the collective bargaining agent must have community or
mutuality of interest in terms of employment and working
conditions as evinced by the type of work they perform. It is
characterized by similarity of employment status, same duties
and responsibilities and substantially similar compensation
and working conditions.
St. James School of Quezon City v. Samahang

Manggagawa sa St. James School of Quezon City.1 -
Respondent union sought to represent the rank-and-file
employees (consisting of the motor pool, construction and
transportation employees) of petitioner-schools Tandang Sora
campus. Petitioner-school opposed it by contending that the
bargaining unit should not only be composed of said
employees but must include administrative, teaching and
office personnel in its five (5) campuses. The Supreme Court
disagreed with said contention. The motor pool, construction
and transportation employees of the Tandang Sora campus
had 149 qualified voters at the time of the certification
election, hence, it was ruled that the 149 qualified voters
should be used to determine the existence of a quorum during
the election. Since a majority or 84 out of the 149 qualified
voters cast their votes, a quorum existed during the
certification election. The computation of the quorum should
be G.R. No. 151326, Nov. 23, 2005. based on the rank-and-file
motor pool, construction and transportation employees of the
Tandang Sora campus and not on all the employees in
petitioners five (5) campuses. Moreover, the administrative,
teaching and office personnel are not members of the union.
They do not belong to the bargaining unit that the union seeks
to represent.

2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called
Globe doctrine because this principle was first enunciated in
the United States case of Globe Machine and Stamping
Co.,1 where it was ruled, in defining the appropriate
bargaining unit, that in a case where the companys
production workers can be considered either as a single
bargaining unit appropriate for purposes of collective
bargaining or as three (3) separate and distinct bargaining
units, the determining factor is the desire of the workers
themselves. Consequently, a certification election should be
held separately to choose which representative union will be
chosen by the workers.
International School Alliance of Educators [ISAE] v.
Quisumbing.2 - The Supreme Court ruled here that foreign
hired teachers do not belong to the bargaining unit of the
local-hires because the former have not indicated their
intention to be grouped with the latter for purposes of
collective bargaining. Moreover, the collective bargaining
history of the school also shows
that these groups were always treated separately.
3. COLLECTIVE BARGAINING HISTORY DOCTRINE.
This principle puts premium to the prior collective bargaining
history and affinity of the employees in determining the
appropriate bargaining unit. However, the existence of a prior
collective bargaining history has been held as neither decisive
nor conclusive in the determination of what constitutes an
appropriate bargaining unit.
National Association of Free Trade Unions v. Mainit

Lumber Development Company Workers Union.3 - It
was ruled here that there is mutuality of interest among the
workers in the sawmill division and logging division as to
justify their formation of a single bargaining unit. This holds
true despite the history of said two divisions being treated as

separate units and notwithstanding their geographical
distance from each other.
4. EMPLOYMENT STATUS DOCTRINE.
The determination of the appropriate bargaining unit based on
the employment status of the employees is considered an
acceptable mode. For instance, casual employees and those
employed on a day-to-day basis, according to the Supreme
Court in Philippine Land-Air-Sea Labor Union v. CIR, 4
do not have the mutuality or community of interest with
regular and permanent employees. Hence, their inclusion in
the bargaining unit composed of the latter is not justified.
Confidential employees, by the very nature of their functions,
assist and act in a confidential capacity to, or have access to
confidential matters of, persons who exercise managerial
functions in the field of labor relations. As such, the rationale
behind the ineligibility of managerial employees to form, assist
or join a labor union equally applies to them. Hence, they
cannot be allowed to be included in the rank-and-file
employees bargaining unit. The rationale for this inhibition is
that if these managerial employees would belong to or be
affiliated with a union, the latter might not be assured of their
loyalty to the union in view of evident conflict of interest. The
union can also become company-dominated with the presence
of managerial employees in its membership.
3.
BARGAINING AGENT
What is an exclusive bargaining agent?
The term exclusive bargaining representative or exclusive
bargaining agent refers to a legitimate labor union duly
recognized or certified as the sole and exclusive bargaining
representative or agent of all the employees in a bargaining
unit.
What are the modes of determining the sole and
exclusive bargaining agent?
The following are the modes:

1. Voluntary recognition;
2. Certification election;
3. Consent election;
4. Run-off election;
5. Re-run election.
(a)
VOLUNTARY RECOGNITION
What is voluntary recognition?
Voluntary recognition refers to the process by which a
legitimate labor union is voluntarily recognized by the
employer as the exclusive bargaining representative or agent
in a bargaining unit and reported as such with the Regional
Office in accordance with the Rules to Implement the Labor
Code.
When is voluntary recognition proper?
Voluntary recognition is proper only in cases where there is
only one legitimate labor organization existing and operating
in a bargaining unit. It cannot be done in case there are two or
more unions in contention.
CERTIFICATION ELECTION
What is certification election?
Certification election refers to the process of determining
through secret ballot the sole and exclusive bargaining agent
of the employees in an appropriate bargaining unit for
purposes of collective bargaining or negotiations.
Who may file a petition for certification election?
The petition may be filed by:
1. A legitimate labor organization which may be:
(a) an independent union; or
(b) a national union or federation which has already
issued a charter certificate to its local chapter participating in
the certification election; or
(c) a local chapter which has been issued a charter
certificate by the national union or federation.
2. An employer, when requested by a labor organization to
bargain collectively and its majority status is in doubt.
What are the rules prohibiting the filing of
petition for certification election (bar rules)?
a. General rule.
The general rule is that in the absence of a CBA duly registered
in accordance with Article 231 of the Labor Code, a petition for
certification election may be filed at any time.
b. Bar rules.
No certification election may be held under the following
rules:
1. Certification year bar rule;
2. Negotiations bar rule;
3. Bargaining deadlock bar rule; or
4. Contract bar rule.
1. CERTIFICATION YEAR BAR RULE.
Under this rule, a petition for certification election may not be
filed within one (1) year:
1. from the date the fact of voluntary recognition has been
entered; or
2. from the date a valid certification, consent, run-off or re-run
election has been conducted within the bargaining unit.
2. NEGOTIATIONS BAR RULE.

Under this rule, no petition for certification election should be
entertained while the sole and exclusive bargaining agent and
the employer have commenced and sustained negotiations in
good faith within the period of one (1) year from the date of a
valid certification, consent, run-off or re-run election or from
the date of voluntary recognition.
Once the CBA negotiations have commenced and while the

parties are in the process of negotiating the terms and
conditions of the CBA, no challenging union is allowed to file a

petition for certification election that would disturb the
process and unduly forestall the early conclusion of the
agreement.
3. BARGAINING DEADLOCK BAR RULE.

entertained when a bargaining deadlock to which an
incumbent or certified bargaining agent is a party has been
submitted to conciliation or arbitration or has become the
subject of a valid notice of strike or lockout.
Kaisahan ng Manggagawang Pilipino [KAMPIL-

KATIPUNAN] v. Trajano. - The bargaining deadlock-bar
rule was not applied here because for more than four (4) years
after it was certified as the exclusive bargaining agent of all the
rank-and file employees, it did not take any action to legally
compel the employer to comply with its duty to bargain
collectively, hence, no CBA was executed. Neither did it file
any unfair labor practice suit against the employer nor did it
initiate a strike against the latter. Under the circumstances, a
certification election may be validly ordered and held.
4. CONTRACT BAR RULE.
filed when a CBA between the employer and a duly recognized
or certified bargaining agent has been registered with the
Bureau of Labor Relations (BLR) in accordance with the Labor
Code. Where the CBA is duly registered, a petition for
certification election may be filed only within the 60-day
freedom period prior to its expiry. The purpose of this rule is
to ensure stability in the relationship of the workers and the
employer by preventing frequent modifications of any CBA
earlier entered into by them in good faith and for the
stipulated original period.
When contract bar rule does not apply.

The contract-bar rule does not apply in the following cases:

1. Where there is an automatic renewal provision in the CBA
but prior to the date when such automatic renewal became
effective, the employer seasonably filed a manifestation with
the Bureau of Labor Relations of its intention to terminate the
said agreement if and when it is established that the
bargaining agent does not represent anymore the majority of
the workers in the bargaining unit. 2. Where the CBA, despite
its due registration, is found in appropriate proceedings that:
(a) it contains provisions lower than the standards fixed by
law; or (b) the documents supporting its registration are
falsified, fraudulent or tainted with misrepresentation.
3. Where the CBA does not foster industrial stability, such as

contracts where the identity of the representative is in doubt
since the employer extended direct recognition to the union
and concluded a CBA therewith less than one (1) year from the
time a certification election was conducted where the no
union vote won. This situation obtains in a case where the
company entered into a CBA with the union when its status as
exclusive bargaining agent of the employees has not been
established yet.
4. Where the CBA was registered before or during the last sixty
(60) days of a subsisting agreement or during the pendency of
a representation case. It is well-settled that the 60-day
freedom period based on the original CBA should not be
affected by any amendment, extension or renewal of the CBA
for purposes of certification election.
What are the requisites for the validity of the

petition for certification election?
The following requisites should concur:
1. The union should be legitimate which means that it is duly
registered and listed in the registry of legitimate labor unions
of the BLR or that its legal personality has not been revoked or
cancelled with finality.
2. In case of organized establishments, the petition for

certification election is filed during (and not before or
after) the 60-day freedom period of a duly registered
CBA.
3. In case of organized establishments, the petition complied
with the 25% written support of the members of the
bargaining unit.
4. The petition is filed not in violation of any of the four (4) bar
rules [See above discussion thereof].
What are the two (2) kinds of majorities?

The process of certification election requires two (2) kinds of
majority votes, viz.:
1. Number of votes required for the validity of the
process of certification election itself. In order to have a
valid certification election, at least a majority of all
eligible voters in the appropriate bargaining unit
must have cast their votes.
2. Number of votes required to be certified as the
collective bargaining agent. To be certified as the sole and
exclusive bargaining agent, the union should obtain a
majority of the valid votes cast.
What are some pertinent principles on
certification election?
The pendency of a petition to cancel the certificate of
registration of a union participating in a certification election
does not stay the conduct thereof.
The pendency of an unfair labor practice case filed against a
labor organization participating in the certification election
does not stay the holding thereof.
Direct certification as a method of selecting the
exclusive bargaining agent of the employees is not allowed.
This is because the conduct of a certification election is still
necessary in order to arrive in a manner definitive and certain
concerning the choice of the labor organization to represent
the workers in a collective bargaining unit.

The No Union vote is always one of the choices in a
certification election. Where majority of the valid votes cast
results in No Union obtaining the majority, the Med-Arbiter
shall declare such fact in the order.
Only persons who have direct employment
relationship with the employer may vote in the certification
election, regardless of their period of employment.
IN AN UNORGANIZED ESTABLISHMENT
What is meant by unorganized establishment?
As distinguished from organized establishment, an
unorganized establishment is an employer entity where
there is no recognized or certified collective bargaining union
or agent.
A company or an employer-entity, however, may still be

considered an unorganized establishment even if there are
unions in existence therein for as long as not one of them is
duly certified as the sole and exclusive bargaining
representative of the employees in the particular bargaining
unit it seeks to operate and represent.
Further, a company remains unorganized even if there is a

duly recognized or certified bargaining agent for rank-and-file
employees, for purposes of the petition for certification
election filed by supervisors. The reason is that the bargaining
unit composed of supervisors is separate and distinct from the
unionized bargaining unit of rank-and-file employees. Hence,
being unorganized, the 25% required minimum support of
employees within the bargaining unit of the supervisors need
not be complied with.
How should certification election be conducted in

an unorganized establishment?
In case of a petition filed by a legitimate organization involving

an unorganized establishment, the Med-Arbiter is required
to immediately order the conduct of a certification election
upon filing of a petition for certification election by a
legitimate labor organization.
IN AN ORGANIZED ESTABLISHMENT
What are the requisites for the conduct of a
certification election in an organized establishment?
The Med-Arbiter is required to automatically order the
conduct of a certification election by secret ballot in an
organized establishment as soon as the following requisites are
fully met:
1. That a petition questioning the majority status of the
incumbent bargaining agent is filed before the DOLE within
the 60-day freedom period;
2. That such petition is verified; and
3. That the petition is supported by the written consent of at
least twenty-five percent (25%) of all the employees in the
bargaining unit.
RUN-OFF ELECTION
What is run-off election?
A run-off election refers to an election between the labor
unions receiving the two (2) highest number of votes in a
certification election or consent election with three (3) or more
choices, where such a certification election or consent election
results in none of the three (3) or more choices receiving the
majority of the valid votes cast, provided that the total number
of votes for all contending unions is at least fifty percent
(50%) of the number of votes cast.
RE-RUN ELECTION
When should a re-run election be conducted?
A re-run election may be justified if certain irregularities have
been committed during the conduct of the certification
election such as, inter alia, disenfranchisement of the
voters, lack of secrecy in the voting, fraud or bribery,

in which case, the certification election should be invalidated.
Such invalidation would necessitate the conduct of a re-run
election among the contending unions to determine the true
will and desire of the employee-electorates.
CONSENT ELECTION
What is consent election?
A consent election refers to the process of determining
through secret ballot the sole and exclusive representative of
the employees in an appropriate bargaining unit for purposes
of collective bargaining and negotiation. It is voluntarily
agreed upon by the parties, with or without the intervention of
the DOLE.
What is the distinction between consent election
and certification election?
A consent election is one mutually agreed upon by the
parties, with or without the intervention of the DOLE, its
purpose being merely to determine the issue of majority
representation of all the workers in an appropriate collective
bargaining unit; while a certification election is one which
is ordered by the DOLE. The purpose for both electoral
exercise is the same, i.e., to determine the sole and exclusive
bargaining agent of all the employees in an appropriate
bargaining unit for the purpose of collective bargaining. From
the very nature of consent election, it is a separate and distinct
process from certification election and has nothing to do with
the import and effect of the latter.
Can the parties agree to the conduct of consent
election even during the pendency of certification
election?
Yes. In fact, the Med-Arbiter is required to determine if the
contending labor unions are willing to submit themselves to a
consent election. And if they do, the Med-Arbiter should
conduct consent election instead of certification election.
AFFILIATION AND DISAFFILIATION OF THE

LOCAL UNION FROM THE MOTHER UNION
1. AFFILIATION.
a. Mother union.
In relation to an affiliate, the federation or national union is
commonly known as the mother union. This term is not
found in law but oftentimes, the Supreme Court uses this term
to describe a federation or a national union.
b. Affiliate.
An affiliate refers to:
(1) An independent union affiliated with a federation or a
national union; or
(2) A local chapter which has been subsequently granted
independent registration but did not disaffiliate from the
federation or national union which created it.
c. A chartered local/local chapter, not an affiliate.
Based on the above definition and description, technically, a
local chapter created through the mode of chartering by a
mother union under Article 234-A of the Labor Code, cannot
be properly called an affiliate if it has not acquired any
independent registration of its own.
d. Purpose of affiliation.
The purpose is to further strengthen the collective bargaining
leverage of the affiliate. No doubt, the purpose of affiliation by
a local union with a mother union (federation or national
union) is to increase by collective action its bargaining power
in respect of the terms and conditions of labor.
e. Contract of agency.
The mother union, acting for and in behalf of its affiliate, has
the status of an agent while the local union remains the
principal the basic unit of the association free to serve the
common interest of all its members subject only to the
restraints imposed by the constitution and by-laws of the
association.

f. Some principles on affiliation.
Independent legal personality of an affiliate union is not
affected by affiliation.
Affiliate union becomes subject of the rules of the
federation or national union.
The appendage of the acronym of the federation or national
union after the name of the affiliate union in the registration
with the DOLE does not change the principal-agent
relationship between them. Such inclusion of the acronym is
merely to indicate that the local union is affiliated with the
federation or national union at the time of the registration. It
does not mean that the affiliate union cannot independently
stand on its own.
The fact that it was the federation which negotiated
the CBA does not make it the principal and the
affiliate or local union which it represents, the agent.
In case of illegal strike, the local union, not the
mother union, is liable for damages.
2. DISAFFILIATION.
a. Right to disaffiliate.
The right of the affiliate union to disaffiliate from its mother
federation or national union is a constitutionally-guaranteed
right which may be invoked by the former at any time. It is
axiomatic that an affiliate union is a separate and voluntary
association free to serve the interest of all its members -
consistent with the freedom of association guaranteed in the
Constitution.
b. Disaffiliation of independently-registered union

and local chapter, distinguished.
The disaffiliation of an independently-registered union does
not affect its legitimate status as a labor organization.
However, the same thing may not be said of a local chapter
which has no independent registration since its creation was
effected pursuant to the charter certificate issued to it by the

federation or national union. Once a local chapter disaffiliates
from the federation or national union which created it, it
ceases to be entitled to the rights and privileges granted to a
legitimate labor organization. Hence, it cannot, by itself, file a
petition for certification election.
c. Some principles on disaffiliation.

Disaffiliation does not divest an affiliate union of its legal
personality.
Disaffiliation of an affiliate union is not an act of disloyalty.
Disaffiliation for purposes of forming a new union does not
terminate the status of the members thereof as employees of
the company. By said act of disaffiliation, the employees who
are members of the local union did not form a new union but
merely exercised their right to register their local union. The
local union is free to disaffiliate from its mother union.
Disaffiliation should be approved by the majority of the
union members.
Disaffiliation terminates the right to check-off federation
dues. The obligation to check-off federation dues is terminated
with the valid disaffiliation of the affiliate union from the
federation with which it was previously affiliated.
Disaffiliation does not affect the CBA. It does not operate to
amend it or change the administration of the contract.
Disaffiliating from the federation and entering into a CBA
with the employer does not constitute an unfair labor practice.
Disaffiliation is not a violation of the union security clause.
(i)
SUBSTITUTIONARY DOCTRINE
1. CHANGE OF BARGAINING REPRESENTATIVE
DURING THE LIFE OF A CBA.
It simply refers to the substitution of the bargaining agent by a
newly certified agent which defeated in in the certification
election. As new bargaining agent, it is duty-bound to respect
the existing CBA but it can renegotiate for new terms and
conditions therein.

2. EFFECT OF SUBSTITUTIONARY DOCTRINE ON
THE DEPOSED UNIONS PERSONAL
UNDERTAKINGS.
In case of change of bargaining agent under the
substitutionary doctrine, the new bargaining agent is not
bound by the personal undertakings of the deposed union
like the no strike, no lockout clause in a CBA which is the
personal undertaking of the bargaining agent which
negotiated it.
3. SOME PRINCIPLES ON SUBSTITUTIONARY
DOCTRINE.
The substitutionary doctrine cannot be invoked to subvert
an existing CBA, in derogation of the principle of freedom of
contract. The substitution of a bargaining agent cannot be
allowed if the purpose is to subvert an existing CBA freely
entered into by the parties. Such act cannot be sanctioned in
law or in equity as it is in derogation of the principle
underlying the freedom of contract and good faith in
contractual relations.
The substitutionary doctrine is applicable also to a situation
where the local union, which was created through the process
of chartering by the mother union, disaffiliates from the latter
after it secured an independent registration. The local union
will thus be substituted to that of the federation which
negotiated the CBA as in Elisco-Elirol Labor Union
[NAFLU] v. Noriel, where petitioner union was created
through the mode of chartering by the National Federation of
Labor Unions (NAFLU) and later, it secured its independent
registration with the BLR and disaffiliated with NAFLU by
virtue of a resolution by its general membership.
(b)
UNION DUES AND SPECIAL ASSESSMENTS
1. REQUISITES FOR VALIDITY OF UNION DUES
AND SPECIAL ASSESSMENTS.
The following requisites must concur in order for union dues
and special assessments for the unions incidental expenses,

attorneys fees and representation expenses to be valid,
namely:
(a) Authorization by a written resolution of the majority
of all the members at a general membership meeting
duly called for the purpose;
(b) Secretarys record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly
signed by the employees concerned.
2. ASSESSMENT FOR ATTORNEYS FEES,
NEGOTIATION FEES AND SIMILAR CHARGES.
The rule is that no such attorneys fees, negotiation fees or
similar charges of any kind arising from the negotiation or
conclusion of the CBA shall be imposed on any individual
member of the contracting union. Such fees may be
charged only against the union funds in an amount to
be agreed upon by the parties. Any contract, agreement
or arrangement of any sort to the contrary is deemed null and
void. Clearly, what is prohibited is the payment of
attorneys fees when it is effected through forced
contributions from the workers from their own funds
as distinguished from the union funds.
4. CHECK-OFF OF UNION DUES AND
ASSESSMENTS.
Check-off means a method of deducting from the
employees pay at prescribed periods, any amount due for fees,
fines or assessments. It is a process or device whereby the
employer, on agreement with the union recognized as the
proper bargaining representative, or on prior authorization
from its employees, deducts union dues and assessments from
the latters wages and remits them directly to the union.
5. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN

REQUIRED.
The law strictly prohibits the check-off from any amount due
an employee who is a member of the union, of any union dues,
special assessment, attorneys fees, negotiation fees or any
other extraordinary fees other than for mandatory activities
under the Labor Code, without the individual written
authorization duly signed by the employee. Such authorization
must specifically state the amount, purpose and beneficiary of
the deduction. The purpose of the individual written
authorization is to protect the employees from unwarranted
practices that diminish their compensation without their
knowledge or consent.
6. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN

NOT REQUIRED.
In the following cases, individual written authorization is not
required:
a. Assessment from non-members of the bargaining agent of
agency fees which should be equivalent to the dues and
other fees paid by members of the recognized bargaining
agent, if such non-members accept the benefits under the
CBA.
b. Deductions for fees for mandatory activities such as
labor relations seminars and labor education
activities.
c. Deductions for withholding tax mandated under the
National Internal Revenue Code.
e. Deductions for withholding of wages because of employees
debt to the employer which is already due.
f. Deductions made pursuant to a judgment against the
worker under circumstances where the wages may be the
subject of attachment or execution but only for debts
incurred for food, clothing, shelter and medical
attendance.
g. Deductions from wages ordered by the court.
h. Deductions authorized by law such as for premiums
for PhilHealth, SSS, Pag-IBIG, employees
compensation and the like.
(c)
AGENCY FEES

(i)
REQUISITES FOR ASSESSMENT
1. NATURE OF AGENCY FEE - NEITHER
CONTRACTUAL NOR STATUTORY BUT QUASI-
CONTRACTUAL.
The bargaining agent which successfully negotiated the CBA
with the employer is given the right to collect a reasonable fee,
called agency fee from its non-members - who are
employees covered by the bargaining unit being represented
by the bargaining agent - in case they accept the benefits
under the CBA. It is called agency fees because by availing of
the benefits of the CBA, they, in effect, recognize and accept
the bargaining union as their agent as well.
2. A NON-BARGAINING UNION MEMBER HAS THE
RIGHT TO ACCEPT OR NOT THE BENEFITS OF THE
CBA.
There is no law that compels a non-bargaining union member
to accept the benefits provided in the CBA. He has the freedom
to choose between accepting and rejecting the CBA itself by
not accepting any of the benefits flowing therefrom.
Consequently, if a non-bargaining union member does not

accept or refuses to avail of the CBA-based benefits, he is not
under any obligation to pay the agency fees since, in effect,
he does not give recognition to the status of the bargaining
union as his agent.
3. LIMITATION ON THE AMOUNT OF AGENCY FEE.

The bargaining union cannot capriciously fix the amount of
agency fees it may collect from its non-members. Article
248(e) of the Labor Code expressly sets forth the limitation in
fixing the amount of the agency fees, thus:
(1) It should be reasonable in amount; and
(2) It should be equivalent to the dues and other fees paid by
members of the recognized collective bargaining agent.
Thus, any agency fee collected in excess of this limitation is a
nullity.
4. NON-MEMBERS OF THE CERTIFIED
BARGAINING AGENT NEED NOT BECOME
MEMBERS THEREOF.
The employees who are not members of the certified
bargaining agent which successfully concluded the CBA are
not required to become members of the latter. Their
acceptance of the benefits flowing from the CBA and their act
of paying the agency fees do not make them members thereof.
5. CHECK-OFF OF AGENCY FEES.
Check-off of agency fees is a process or device whereby the
employer, upon agreement with the bargaining union, deducts
agency fees from the wages of non-bargaining union
members who avail of the benefits from the CBA and remits
them directly to the bargaining union.
6. ACCRUAL OF RIGHT OF BARGAINING UNION TO
DEMAND CHECK-OFF OF AGENCY FEES.
The right of the bargaining union to demand check-off of
agency fees accrues from the moment the non-bargaining
union member accepts and receives the benefits from the
CBA. This is the operative fact that would trigger such liability.
7. NO INDIVIDUAL WRITTEN AUTHORIZATION BY
NON-BARGAINING UNION MEMBERS REQUIRED.
To effect the check-off of agency fees, no individual written
authorization from the non-bargaining union members who
accept the benefits resulting from the CBA is necessary.
8. EMPLOYERS DUTY TO CHECK-OFF AGENCY

FEES.
It is the duty of the employer to deduct or check-off the sum
equivalent to the amount of agency fees from the
nonbargaining union members' wages for direct remittance to
the bargaining union.
10. MINORITY UNION CANNOT DEMAND FROM
THE EMPLOYER TO GRANT IT THE RIGHT TO

CHECK-OFF OF UNION DUES AND ASSESSMENTS
FROM THEIR MEMBERS.
The obligation on the part of the employer to undertake the
duty to check-off union dues and special assessments holds
and applies only to the bargaining agent and not to any other
union/s (called Minority Union/s).
B.
RIGHT TO COLLECTIVE BARGAINING
DUTY TO BARGAIN COLLECTIVELY
1. MEANING OF DUTY TO BARGAIN
COLLECTIVELY.
The duty to bargain collectively means the performance
of a mutual obligation to meet and convene promptly
and expeditiously in good faith for the purpose of
negotiating an agreement with respect to wages, hours
of work and all other terms and conditions of
employment, including proposals for adjusting any
grievances or questions arising under such agreement and
executing a contract incorporating such agreements if
requested by either party but such duty does not compel any
party to agree to a proposal or to make any concession.
The duty does not compel any party to agree blindly
to a proposal nor to make concession. While the law
imposes on both the employer and the bargaining union the
mutual duty to bargain collectively, the employer is not under
any legal obligation to initiate collective bargaining
negotiations.
2. TWO (2) SITUATIONS CONTEMPLATED.
The duty to bargain collectively involves two (2) situations,
namely:
1. Duty to bargain collectively in the absence of a CBA
under Article 251 of the Labor Code.
2. Duty to bargain collectively when there is an existing
CBA under Article 253 of the Labor Code.
WHEN THERE IS ABSENCE OF A CBA
1. HOW DUTY SHOULD BE DISCHARGED WHEN
THERE IS NO CBA YET.
The duty to bargain collectively when there has yet been no
CBA in the bargaining unit where the bargaining agent seeks
to operate should be complied with in the following order:
First, in accordance with any agreement or voluntary
arrangement between the employer and the bargaining agent
providing for a more expeditious manner of collective
bargaining; and
Secondly, in its absence, in accordance with the provisions of
the Labor Code, referring to Article 250 thereof which lays
down the procedure in collective bargaining.
WHEN THERE IS A CBA
1. CONCEPT.
When there is a CBA, the duty to bargain collectively shall
mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve
a written notice to terminate or modify the agreement at least
sixty (60) days prior to its expiration date. It shall be
the duty of both parties to keep the status quo and to continue
in full force and effect the terms and conditions of the existing
agreement during the 60-day period and/or until a new
agreement is reached by the parties.
2. FREEDOM PERIOD.
The last sixty (60) days of the 5-year lifetime of a CBA
immediately prior to its expiration is called the freedom
period.
It is denominated as such because it is the only time when the

law allows the parties to freely serve a notice to terminate,

alter or modify the existing CBA. It is also the time when the
majority status of the bargaining agent may be challenged by
another union by filing the appropriate petition for
certification election.
3. AUTOMATIC RENEWAL CLAUSE.

a. Automatic renewal clause deemed incorporated in
all CBAs.
Pending the renewal of the CBA, the parties are bound to keep
the status quo and to treat the terms and conditions embodied
therein still in full force and effect during the 60-day freedom
period and/or until a new agreement is negotiated and
ultimately concluded and reached by the parties. This
principle is otherwise known as the automatic renewal
clause which is mandated by law and therefore deemed
incorporated in all CBAs.
For its part, the employer cannot discontinue the grant of the
benefits embodied in the CBA which just expired as it is duty-
bound to maintain the status quo by continuing to give the
same benefits until a renewal thereof is reached by the parties.
On the part of the union, it has to observe and continue to
abide by its undertakings and commitments under the expired
CBA until the same is renewed.
4. KIOK LOY DOCTRINE.

This doctrine is based on the ruling In Kiok Loy v. NLRC, 1
where the petitioner, Sweden Ice Cream Plant, refused to
submit any counter-proposal to the CBA proposed by its
employees certified bargaining agent. The High Court ruled
that the employer had thereby lost its right to bargain the
terms and conditions of the CBA. Thus, the CBA proposed by
the union was imposed lock, stock and barrel on the erring
company.
The Kiok Loy case epitomizes the classic case of negotiating
a CBA in bad faith consisting of the employers refusal to
bargain with the collective bargaining agent by ignoring all
notices for negotiations and requests for counter-proposals.
Such refusal to send a counter-proposal to the union and to
bargain on the economic terms of the CBA constitutes an
unfair labor practice under Article 248(g) of the Labor Code.
2.
COLLECTIVE BARGAINING AGREEMENT (CBA)
1. CBA.
A Collective Bargaining Agreement or CBA for short,
refers to the negotiated contract between a duly recognized or
certified exclusive bargaining agent of workers and their
employer, concerning wages, hours of work and all other
terms and conditions of employment in the appropriate
bargaining unit, including mandatory provisions for
grievances and arbitration machineries. It is executed not only
upon the request of the exclusive bargaining representative
but also by the employer.
2. ESSENTIAL REQUISITES OF COLLECTIVE
BARGAINING.
Prior to any collective bargaining negotiations between the
employer and the bargaining union, the following requisites
must first be satisfied:
1. Employer-employee relationship must exist between
the employer and the members of the bargaining unit being
represented by the bargaining agent;
2. The bargaining agent must have the majority support
of the members of the bargaining unit established through
the modes sanctioned by law; and
3. A lawful demand to bargain is made in accordance with
law.
3. SOME PRINCIPLES ON CBA.
CBA is the law between the parties during its
lifetime and thus must be complied with in good faith.
Being the law between the parties, any violation
thereof can be subject of redress in court.

Non-impairment of obligations of contract. A
contract is the law between the parties and courts have no
choice but to enforce such contract so long as it is not contrary
to law, morals, good customs or public policy. Otherwise,
courts would be interfering with the freedom of contract of the
parties.
CBA is not an ordinary contract as it is impressed with
public interest.
Automatic Incorporation Clause law is presumed
part of the CBA.
The benefits derived from the CBA and the law are
separate and distinct from each other.
Workers are allowed to negotiate wage increases
separately and distinctly from legislated wage
increases. The parties may validly agree in the CBA to
reduce wages and benefits of employees provided
such reduction does not go below the minimum
standards.
Ratification of the CBA by majority of all the workers in
the bargaining unit makes the same binding on all employees
therein.
Employees entitled to CBA benefits. The following are
entitled to the benefits of the CBA:
(1) Members of the bargaining union;
(2) Non-members of the bargaining union but are
members of the bargaining unit;
(3) Members of the minority union/s who paid agency fees
to the bargaining union; and
(4) Employees hired after the expiration of the CBA.
Pendency of a petition for cancellation of union
registration is not a prejudicial question before CBA
negotiation may proceed.
CBA should be construed liberally. If the terms of a
CBA are clear and there is no doubt as to the intention of the
contracting parties, the literal meaning of its stipulation shall
prevail.

(a)
MANDATORY PROVISIONS OF CBA
1. MANDATORY STIPULATIONS OF THE CBA.
The Syllabus mentions 4 provisions that are mandatorily
required to be stated in the CBA, to wit:
1. Grievance Procedure;
2. Voluntary Arbitration;
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC).
If these provisions are not reflected in the CBA, its registration
will be denied by the BLR.
(i)
GRIEVANCE PROCEDURE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A grievance or grievable issue is any question raised
by either the employer or the union regarding any of the
following issues or controversies:
1. The interpretation or implementation of the CBA;
2. The interpretation or enforcement of company personnel
policies; or
3. Any claim by either party that the other party is violating
any provisions of the CBA or company personnel
policies.
In order to be grievable, the violations of the CBA should
be ordinary and not gross in character; otherwise, they
shall be considered as unfair labor practice (ULP).
Gross violation of the CBA is defined as flagrant and/or
malicious refusal by a party thereto to comply with
the economic provisions thereof. If what is violated,
therefore, is a non-economic or a political provision of the
CBA, the same shall not be considered as unfair labor practice
and may thus be processed as a grievable issue in accordance
with and following the grievance machinery laid down in the
CBA.
2. GRIEVANCE MACHINERY.
Grievance machinery refers to the mechanism for the
adjustment and resolution of grievances arising from the
interpretation or implementation of a CBA and those arising
from the interpretation or enforcement of company personnel
policies.
3. GRIEVANCE PROCEDURE.
Grievance procedure refers to the internal rules of
procedure established by the parties in their CBA with
voluntary arbitration as the terminal step, which are intended
to resolve all issues arising from the implementation and
interpretation of their collective agreement. It is that part of
the CBA which provides for a peaceful way of settling
differences and misunderstanding between the parties.
The terms grievance procedure and grievance
machinery may be used interchangeably.
(ii)
VOLUNTARY ARBITRATION
1. VOLUNTARY ARBITRATION.
Voluntary arbitration refers to the mode of settling
labor-management disputes in which the parties select a
competent, trained and impartial third person who is tasked to
decide on the merits of the case and whose decision is final
and executory.
2. VOLUNTARY ARBITRATOR.
A Voluntary Arbitrator refers to any person who has
been mutually named or designated by the parties to the CBA
the employer and the bargaining agent - to hear and decide
the issues between them.
A Voluntary Arbitrator is not an employee, functionary or part
of the government or of the Department of Labor and
Employment, but he is authorized to render arbitration
services provided under labor laws.

(iii)
NO STRIKE, NO LOCKOUT CLAUSE
1. SIGNIFICANCE OF THE CLAUSE.
A No Strike, No Lockout clause in the CBA is an
expression of the firm commitment of the parties thereto that,
on the part of the union, it will not mount a strike during the
effectivity of the CBA, and on the part of the employer, that it
will not stage a lockout during the lifetime thereof.
This clause may be invoked by an employer only when the
strike is economic in nature or one which is conducted to
force wage or other concessions from the employer that are
not mandated to be granted by the law itself. It does not bar
strikes grounded on unfair labor practices. This is so
because it is presumed that all economic issues between the
employer and the bargaining agent are deemed resolved with
the signing of the CBA.
The same rule also applies in case of lockout. The said clause
may only be invoked by the union in case the ground for the
lockout is economic in nature but it may not be so cited if
the ground is unfair labor practice committed by the
union.
2. EFFECT OF VIOLATION OF THE CLAUSE.
A strike conducted in violation of this clause is illegal.
(iv)
LABOR-MANAGEMENT COUNCIL
1. CREATION OF LMC, CONSTITUTIONALLY AND
LEGALLY JUSTIFIED.
The Labor-Management Council (LMC) whose creation is
mandated under the Labor Code, is meant to implement the
constitutionally mandated right of workers to participate
in policy and decision-making processes of the
establishment where they are employed insofar as said
processes will directly affect their rights, benefits and
welfare. This is the body that implements the policy of co-

determination in the Constitution.
The LMC is mandated to be created in both organized and
unorganized establishments.
2. SELECTION OF REPRESENTATIVES TO LMC.

In organized establishments, the workers representatives
to the committee or council should be nominated by the
exclusive bargaining representative.
In establishments where no legitimate labor
organization exists, the workers representative should be
elected directly by the employees at large.
3. LABOR-MANAGEMENT COUNCIL (LMC) VS.
GRIEVANCE MACHINERY (GM).
To avoid confusion and possible major legal complication, a
clear distinction line should be drawn between LMC and GM.
The following may be cited:
1. Constitutional origin. The creation of the LMC is based
on the constitutional grant to workers of the right to
participate in policy and decision-making processes under the
1st paragraph, Section 3, Article XIII of the 1987
Constitution, thus:
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making
processes affecting their rights and benefits as may be
provided by law.
The creation of a GM, on the other hand, is based on a
different constitutional provision, the 2nd paragraph,
Section 3, Article XIII of the 1987 Constitution, which provides
as follows:

The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.
2. Legal anchor. - The creation of LMC is provided under
Article 255 of the Labor Code; while the formation of a GM is
mandated under Article 260 of the same Code.
3. Compulsory provision in the CBA. - Both LMC and
GM are compulsorily required to be embodied in the CBA in
order for it to be considered a valid agreement.
4. Purpose for creation. - The LMC is created for the
purpose of affording workers the right to participate in policy
and decision-making processes in matters affecting their
rights, benefits and welfare; while that of the GM is to resolve
disputes and grievances arising from such policies or decisions
or more specifically, to adjust and resolve grievances arising
from (1) the interpretation or implementation of the CBA or
(2) the interpretation or enforcement of company personnel
policies.
5. Nature of functions. - The LMC is in the nature of a
preventive mechanism meant to prevent and avoid disputes or
grievances by co-determining the proper policies that should
be implemented by the employer in respect of the workers
rights, benefits and welfare; while a GM is an adjudicatory
mechanism which is set into motion only when a dispute or
grievance occurs.
6. Nature of cognizable issues. The LMC performs non-

adversarial and non-adjudicatory tasks as it concerns itself
only with policy formulations and decisions affecting the
workers rights, benefits and welfare and not violations or
transgressions of any policy, rule or regulation; while that of
the GM is adversarial and adjudicatory in character since its
jurisdiction is confined to resolving and deciding disputes and

grievances between management and the workers arising from
violations or transgressions of existing policies, rules or
regulations. In other words, the LMC does not resolve
grievable or contentious issues; the GM does.
A case illustrative of this principle is the 2011 case of Cirtek
Employees Labor Union-Federation of Free Workers
v. Cirtek Electronics, Inc. The CBA negotiation between
petitioner union and respondent company was deadlocked
resulting in the staging of a strike by the former. The DOLE
Secretary assumed jurisdiction over the labor dispute but
before he could rule on the controversy, respondent created a
Labor-Management Council (LMC) through which it
concluded with the remaining officers of petitioner a
Memorandum of Agreement (MOA) providing for daily wage
increases of P6.00 per day effective January 1, 2004 and
P9.00 per day effective January 1, 2005. Petitioner submitted
the MOA to the DOLE Secretary, alleging that the remaining
officers signed the MOA under respondents assurance that
should the Secretary order a higher award of wage increase,
respondent would comply.
Respecting the MOA, petitioner posits that it was
surreptitiously entered into [in] bad faith, it having been
forged without the assistance of the Federation of Free
Workers or counsel, adding that respondent could have waited
for the Secretarys resolution of the pending CBA deadlock or
that the MOA could have been concluded before
representatives of the DOLE Secretary. As found by the DOLE
Secretary, the MOA came about as a result of the constitution,
at respondent's behest, of the LMC which, he reminded the
parties, should not be used as an avenue for bargaining but for
the purpose of affording workers to participate in policy and
decision-making. Hence, the agreements embodied in the
MOA were not the proper subject of the LMC deliberation or
procedure but of CBA negotiations and, therefore, deserving
little weight.

7. Composition. - The representatives of the workers to the
LMC may or may not be nominated by the recognized or
certified bargaining agent, depending on whether the
establishment is organized or unorganized. Thus, in
organized establishments, the workers representatives to
the LMC should be nominated by the exclusive bargaining
agent. In establishments where no legitimate labor
organization exists, the workers representatives should be
elected directly by the employees of the establishment at large;
while those in the GM are nominated solely by the bargaining
agent.
(b)
DURATION OF CBA
(i)
FOR ECONOMIC PROVISIONS
(ii)
FOR NON-ECONOMIC PROVISIONS
1. TERMS OF A CBA.
The terms of a CBA are classified into two (2), viz.:
(a) Representation aspect 5 years which is the lifetime
of a CBA;
(b) All other provisions Subject to renegotiation after
first 3 years of the 5-year lifetime of CBA.
2. REPRESENTATION ASPECT.
The phrase representation aspect in Article 253-A of the
Labor Code refers to the identity and majority status of the
bargaining agent that successfully negotiated the CBA as the
exclusive bargaining representative of the employees in the
appropriate bargaining unit concerned.
The 5-year representation status of the incumbent exclusive

bargaining agent should be reckoned from the effectivity of the
CBA. This means that no petition for certification election
questioning its majority status may be entertained during the
lifetime of the CBA except within the 60-day freedom period
immediately preceding the expiry date of the 5-year term.
Suspension of CBA for a period longer than 5 years,

held valid.
The case of Rivera v. Espiritu,1 is in point. It was held here
that the suspension of the CBA between PAL and PALEA for
ten (10) years in order to resolve the strike is not violative of
the Constitution or the law. This is so because the right to free
collective bargaining includes the right to suspend it. There is
nothing in Article 253-A which prohibits the parties from
waiving or suspending the mandatory timetables and agreeing
on the remedies to enforce the same.
Article 253-A has a two-fold purpose. One is to promote

industrial stability and predictability. Inasmuch as the
agreement sought to promote industrial peace at PAL during
its rehabilitation, said agreement satisfies the first purpose of
Article 253-A. The other is to assign specific timetables
wherein negotiations become a matter of right and
requirement. Nothing in Article 253-A prohibits the parties
from waiving or suspending the mandatory timetables and
agreeing on the remedies to enforce the same. The suspension
agreement is a valid exercise of the freedom to contract. Under
the principle of inviolability of contracts guaranteed by the
Constitution, the contract must be upheld. The agreement
afforded full protection to labor; promoted the shared
responsibility between workers and employers; and exercised
the voluntary modes in settling disputes, including
conciliation to foster industrial peace.
3. RE-NEGOTIATION OF ALL PROVISIONS OTHER
THAN THE REPRESENTATION ASPECT OF THE CBA
SHOULD BE MADE AFTER FIRST 3 YEARS FROM
EFFECTIVITY.
Considering that the five (5) year period is quite long during
which the economic situations of the parties may have already
changed, Article 253-A recognizes the need for the parties to

re-assess and re-negotiate all the provisions of the CBA, except
its representation aspect, after the lapse of the first three (3)
years of its 5-year lifetime. Such re-negotiation, however,
should only pertain to the terms and conditions of the parties
relationship for the last remaining two (2) years of the CBAs
5-year term. This re-negotiation process may be invoked by
any of the parties as a matter of right.
4. ALL OTHER PROVISIONS, REFER TO BOTH

ECONOMIC AND NON-ECONOMIC PROVISIONS.
The phrase all other provisions mentioned in Article 253-A
simply refers to all the provisions of the CBA irrespective of
whether they are economic or non-economic in
nature. The only item excepted therefrom is the
representation status of the incumbent exclusive bargaining
agent which may only be questioned during the 60-day
freedom period.
5. RETROACTIVITY OF THE CBA.
The application of the rules on retroactivity depends on any of
the following two (2) situations:
(a) When the CBA is voluntarily concluded by the
parties; or
(b) When the CBA is concluded through arbitral award.
6. RULE WHEN VOLUNTARILY CONCLUDED BY
THE PARTIES IN THE NEGOTIATING TABLE.
(a) The effectivity of the CBA shall retroact to the day
immediately after the date of expiry of the old CBA in case the
new CBA is concluded and entered into within six (6)
months from the said expiry date.
(b) If the new CBA is entered into beyond six (6) months
from the expiry date of the old CBA, the parties are given
the right to negotiate the duration of the retroactivity
thereof.
7. RULE ON RETROACTIVITY IN CASE OF
CONCLUSION OF CBA THROUGH ARBITRAL
AWARD.
a. No law on retroactivity in case of CBA arbitral
awards.
The law is silent as to the retroactivity of a CBA secured
through arbitral award or that granted not by virtue of the
mutual agreement of the parties but by intervention of the
government.
b. Variations in the application of the retroactivity
rule.
The rule laid down by the Supreme Court in cases involving
this particular issue of retroactivity varies from case to case.
Basically, the rule, based on jurisprudence, may be restated in
the following manner:
(1) Prospectivity rule;
(2) Retroactivity rule which makes the CBA retroactively
effective to:
(a) the date of the expiration of the previous CBA; and
(b) the first day after the six-month period following the
expiration of the last day of the CBA.
(iii)
FREEDOM PERIOD
1. 60-DAY FREEDOM PERIOD.
When there is an existing CBA, the parties thereto are bound
to observe the terms and conditions therein set forth until its
expiration. Neither party is allowed to terminate nor modify
such agreement during its lifetime. The only time the parties
are allowed to terminate or modify the agreement is within the
so-called freedom period of at least sixty (60) days prior to
its expiration date by serving a notice to that effect.
2. REASON IT IS CALLED FREEDOM PERIOD.

The last 60 days of the 5-year lifetime of a CBA immediately
prior to its expiration is called the freedom period
because:
(a) it is the only time when the law allows the parties to freely
serve a notice to terminate, alter or modify the existing CBA;

and
(b) it is also the time when the majority status of the
bargaining agent may be challenged by another union by filing
the appropriate petition for certification election.
3. RULE ON FILING OF CERTIFICATION ELECTION

VIS--VIS FREEDOM PERIOD.
In a petition involving an organized establishment or
enterprise where the majority status of the incumbent
collective bargaining union is questioned by a legitimate labor
organization, the Med-Arbiter shall immediately order the
conduct of a certification election if the petition is filed during
the last sixty (60) days of the CBA. Any petition filed
before or after the 60- day freedom period shall be
dismissed outright.
The 60-day freedom period based on the original
collective bargaining agreement shall not be affected
by any amendment, extension or renewal of the CBA
for purposes of certification election.
4. AUTOMATIC RENEWAL CLAUSE.

A petition for certification election challenging the majority
status of the existing bargaining agent should be filed within
and not before or after - said 60-day freedom period. Upon
the expiration of the said period and no petition for
certification election is filed by a challenging union, the
employer is duty-bound to continue to recognize the majority
status of the incumbent bargaining agent. Negotiation for a
new CBA may even validly commence between the
incumbent bargaining agent and the employer during
the 60-day freedom period if no challenge to the
bargaining agents majority status is posed by
another union.
3.
UNION SECURITY
1. NATURE AND PURPOSE OF UNION SECURITY
CLAUSE.
The union security clause allows the parties thereto to enter
into an agreement requiring compulsory membership in
the bargaining agent which successfully negotiated said
CBA as a condition for continued employment with the
exception of employees who are already members of another
union at the time of the signing of the CBA.
Union security is a generic term which is applied to and
comprehends closed shop, union shop, maintenance of
membership or any other form of agreement which imposes
upon the employees the obligation to acquire or retain union
membership as a condition to their continued employment. In
other words, the purpose of a union security
arrangement is to guarantee the continued existence
of the union through enforced membership for the
benefit of the workers.
Without this clause, the existence of the union is always
subject to uncertainty as its members may resign anytime
resulting in the decimation of its ranks. The union becomes
gradually weakened and increasingly vulnerable to company
machinations. In this security clause lies the strength of the
union during the enforcement of the CBA. It is this clause that
provides labor with substantial power in collective bargaining.
2. THE RIGHT NOT TO JOIN A UNION IS NOT

ABSOLUTE SINCE IT MAY BE RESTRICTED.
The right of an employee not to join a union is not absolute
and must give way to the collective good of all members of the
bargaining unit. When certain employees are obliged to join a
particular union as a requisite for continued employment, as
in the case of a union security clause, this condition is a valid
restriction on the freedom or right not to join any labor
organization because it is in favor of unionism.
3. UNION SECURITY CLAUSE DOES NOT VIOLATE
CONSTITUTIONAL RIGHT TO FREEDOM OF

ASSOCIATION.
A union security clause in a CBA is not a violation or a
restriction of the employees right to freedom of association
guaranteed by the Constitution. Labor, being the weaker in
economic power and resources than capital, deserves
protection that is actually substantial and material.
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4. EMPLOYEES EXEMPTED FROM COVERAGE OF
UNION SECURITY CLAUSE.
All employees in the bargaining unit covered by a Union
Security Clause in their CBA with the employer are subject to
its terms. However, under law and established jurisprudence,
the following kinds of employees are exempted from its
coverage,
namely:
1. Employees who, at the time the union security agreement
takes effect, are bona-fide members of a religious
organization which prohibits its members from
joining labor unions on religious grounds;
2. Employees who are already members of a union other
than the bargaining agent at the time the union security
agreement took effect;
3. Confidential employees who are excluded from the
rank-and-file or supervisory bargaining unit;
4. Supervisory employees who are excluded from becoming
members of the rank-and-file union and vice-versa; and
5. Employees excluded from the union security clause
by express terms of the agreement.
(a)
UNION SECURITY CLAUSES:
CLOSED SHOP, UNION SHOP, MAINTENANCE OF
MEMBERSHIP SHOP, ETC.
1. CLASSIFICATION OF UNION SECURITY
ARRANGEMENTS.
Generally, a union security clause may take the form of:
1. Closed-shop agreement;

2. Maintenance of membership agreement;
3. Union shop agreement;
4. Modified union shop agreement;
5. Exclusive bargaining agreement;
6. Bargaining for members only agreement;
7. Agency shop agreement; or
8. Preferential hiring agreement.
Modification of arrangements.
The above classification admits of certain modified types
which the parties may agree upon in the CBA depending on
the peculiar requirements of the situation.
2. CLOSED-SHOP AGREEMENT.
A closed-shop may be defined as a scheme in which, by
agreement between the employer and its employees
through their bargaining union/agent, no person may be
employed unless he or she is, becomes, and, for the duration of
the
agreement, remains a member in good standing of the
bargaining union. Basically, this kind of agreement stipulates
the
undertaking by the employer not to hire or employ any person
who is not a member of the bargaining union. Once employed,
it
is required that the said person should remain a member of
the bargaining union in good standing as a condition for
continued
employment, at least during the whole duration of the CBA.
3. MAINTENANCE OF MEMBERSHIP AGREEMENT.
There is maintenance of membership agreement
when employees, who are union members as of the effective
date of the agreement, or who thereafter become members,
must maintain union membership as a condition for
continued
employment until they are promoted or transferred out of the
bargaining unit, or the agreement is terminated. Its role is to
protect
the unions current membership. By its express terms, it

covers and renders continued union membership compulsory
for: (1)
those who were already union members at the time the CBA
was signed; and (2) the new employees who will become
regular
during the life of the CBA.
4. UNION SHOP AGREEMENT.
There is union shop when all new regular employees
are required to join the union within a certain period as a
condition for their continued employment. Its role is to
compel the membership of those who are not yet union
members. Under
this scheme, the employer is given the freedom to hire and
employ any person who is not a member of the bargaining
agent.
Once such person becomes an employee, he is required to
become a member of the bargaining agent and to remain as
such
member in good standing for the whole period of the
effectivity of the CBA as a condition for his continued
employment.
5. MODIFIED UNION SHOP AGREEMENT.
Employees under this arrangement who are not union
members at the time of the signing or execution of the CBA are
not required to join the bargaining union. However, any and
all workers hired or employed after the signing or
execution of
the CBA are required to join the bargaining union.
6. EXCLUSIVE BARGAINING AGENT AGREEMENT.
The union which negotiated and concluded the CBA with
management is considered and recognized as the sole and
exclusive bargaining agent of all the covered employees in the
bargaining unit, whether they be members or not of the said
agent.
7. BARGAINING FOR MEMBERS ONLY
AGREEMENT.
Under this arrangement, the union which negotiated and

concluded the CBA with management is recognized as the
bargaining agent only for its own members.
8. AGENCY SHOP AGREEMENT.
Under this scheme, there is no requirement for non-members
of the bargaining agent to become its members.
However, it is required that such non-union members should
pay to the bargaining agent an agency fee as a condition for
their
9. PREFERENTIAL HIRING AGREEMENT.
It is the principal feature of this arrangement that the
employer gives preference in hiring to the members of the
bargaining agent under equal circumstances and
qualifications. Once hired or employed, they are required to
maintain their
membership in good standing in the bargaining agent for the
duration of the CBA as a condition for their continued
employment.
10. DISMISSAL DUE TO VIOLATION OF UNION
SECURITY CLAUSE.
a. Requisites for valid termination based on union
security clause.
The following are the requisites that the employer should
comply prior to terminating the employment of an employee
by virtue of the enforcement of the union security clause:
(1) The union security clause is applicable;
(2) The union is requesting for the enforcement of the union
security provision in the CBA; and
(3) There is sufficient evidence to support the unions decision
to expel the employee from the union.
The foregoing requisites constitute a just cause for terminating

an employee based on the CBAs union security
provision.
b. The due process afforded by the union prior to
expulsion is different from the due process required
prior to

termination of employment.
The distinction is not hard to comprehend. The due process
afforded by the union is meant solely and exclusively to
address the issue of validity of the termination of the
membership of the employee in the union; while that required
of the
employer is aimed at addressing the issue of validity of the
employees termination of employment. Hence, it is complete
error on
the part of the employer to adopt as its own due process what
has been earlier afforded by the union to the erring employee
without conducting its own independent and separate due
process.
Thus, in declaring the illegality of the dismissal of petitioner in
Cario v. NLRC,1 the Supreme Court noted in regard to
the involvement of the company in his dismissal, that the
company, upon being formally advised in writing of the
expulsion of
petitioner Cario from the union, in turn simply issued a
termination letter to Cario, the termination being made
effective the very
next day. The Company should have given petitioner Cario an
opportunity to explain his side of the controversy with the
union.
Notwithstanding the union security clause in the CBA, the
company should have reasonably satisfied itself by its own
inquiry that
the union had not been merely acting arbitrarily and
capriciously in impeaching and expelling petitioner Cario.
Had the company
taken the trouble to investigate the acts and proceedings of the
union, it could have very easily determined that the union had
acted arbitrarily in impeaching and expelling from its ranks
petitioner Cario.
11. SOME PRINCIPLES ON TERMINATION DUE TO
VIOLATION OF UNION SECURITY CLAUSE.
Employer is obligated to act upon being demanded by the

union to terminate the employment of its errant members.
Members of the minority union cannot be
compelled to join the bargaining union. The union
security clause
therefore does not cover employees who are members of the
union/s other than the bargaining union. Not being so
covered, they cannot be dismissed for violation of said clause.
The employer has the right to be reimbursed for payment
of any claims arising out of dismissals demanded by the union
under the union security clause. Such right of reimbursement
may be invoked:
(1) By express provision in the CBA to that effect; or
(2) By securing it through judicial directive.
(b)
CHECK-OFF; UNION DUES, AGENCY FEES
1. CHECK-OFF OF AGENCY FEE, DIFFERENT FROM
CHECK-OFF OF UNION DUES AND ASSESSMENTS.
Check-off of agency fee does not require the execution by
the non-bargaining union members of individual written
authorizations; while such is an indispensable requisite for
check-off of union dues and special assessments from
members
of the bargaining union.
4.
UNFAIR LABOR PRACTICE
IN COLLECTIVE BARGAINING
(a)
BARGAINING IN BAD FAITH
1. BASIC PRINCIPLES.
It is essential that the employer and the employees should
both act in good faith.
Where an employer did not even bother to submit an answer
to the bargaining proposals of the union, there is a clear
evasion of the duty to bargain collectively.
2. MAKING A PROMISE DURING THE CBA
NEGOTIATIONS, NOT AN INDICATION OF BAD
FAITH.

Promises made by management during the CBA negotiations
may not be considered an indication of bad faith or a
scheme of feigning to undertake the negotiation proceedings
through empty promises.
3. ADAMANT STANCE RESULTING IN AN IMPASSE,
NOT AN INDICIUM OF BAD FAITH.
The adamant insistence on a bargaining position to the point
where the negotiations reach an impasse does not
establish bad faith. Neither can bad faith be inferred from a
partys insistence on the inclusion of a particular substantive
provision unless it concerns trivial matters or is obviously
intolerable.
4. PARTIES HAVE NO OBLIGATION TO
PRECIPITATELY AGREE TO THE PROPOSALS OF
EACH OTHER.
While the law makes it an obligation for the employer and the
employees to bargain collectively with each other, such
compulsion does not include the commitment to precipitately
accept or agree to the proposals of the other. All it
contemplates is
that both parties should approach the negotiation with an
open mind and make reasonable effort to reach a common
ground of
agreement.
5. ALLEGATIONS OF BAD FAITH WIPED OUT WITH
THE SIGNING OF THE CBA.
With the execution of the CBA, bad faith bargaining can no
longer be imputed upon any of the parties thereto. All
provisions in the CBA are supposed to have been jointly and
voluntarily incorporated therein by the parties. The CBA is
proof
enough that the company exerted reasonable effort at good
faith bargaining.
(b)
REFUSAL TO BARGAIN
1. FAILURE OR REFUSAL OF MANAGEMENT TO

GIVE COUNTER-PROPOSALS TO THE UNIONS
DEMANDS.
The failure of the employer to submit its counter-proposals
to the demands of the bargaining union does not, by itself,
constitute refusal to bargain. However, it is different if the
employer refuses to submit an answer or reply to the written
bargaining proposals of the certified bargaining union. In this
case, unfair labor practice is committed.
In General Milling Corporation v. CA,1 the Supreme
Court found the petitioner guilty of unfair labor practice for
refusing to send a counter-proposal to the union and to
bargain anew on the economic terms of the CBA.
Similarly, in the earlier case of Colegio de San Juan de
Letran v. Association of Employees and Faculty of
Letran,2 the petitioner school was declared guilty of unfair
labor practice when it failed to make a timely reply to the
proposals of the certified bargaining union more than
a month after the same were submitted to it. In
explaining its
failure to reply, the school merely offered the feeble excuse
that its Board of Trustees had not yet convened to discuss the
matter. Clearly, its actuation showed a lack of sincere desire to
negotiate the CBA thereby rendering it guilty of unfair labor
practice.
2. REFUSAL OF A PARTY TO SIGN THE CBA.
A party to a fully-concluded CBA may be compelled to sign it,
especially if said refusal to sign is the only remaining
hitch to its being implemented. Such refusal is considered an
unfair labor practice.
(c)
INDIVIDUAL BARGAINING
1. EMPLOYERS ACT OF NEGOTIATING WITH
UNION MEMBERS INDIVIDUALLY, A ULP.
To negotiate or attempt to negotiate with individual workers
rather than with the certified bargaining agent is an unfair
labor practice.
In Insular Life Assurance Co., Ltd., Employees

Association-NATU v. Insular Life Assurance Co.,
Ltd.,3
respondent company, through its president, sent two (2) sets
of letters to the individual strikers during the strike. The first
contained promises of benefits to the employees in order to
entice them to return to work; while the second contained
threats to
obtain replacements for the striking employees in the event
they did not report for work on June 2, 1958. The respondents
contend that the sending of the letters constituted a legitimate
exercise of their freedom of speech. The Supreme Court,
however, disagreed. The said letters were directed to the
striking employees individually - by registered special delivery
mail at
that - without being coursed through the unions which were
representing the employees in collective bargaining.
Moreover, the
sending of these letters is not protected by the free speech
provision of the Constitution. The free speech protection
under the
Constitution is inapplicable where the expression of opinion
by the employer or his agent contains a promise of benefit or
threats
or reprisal.
2. UNION CANNOT VALIDLY BARGAIN IN BEHALF
OF ITS MEMBERS ONLY.
Respondent union in Philippine Diamond Hotel and
Resort, Inc. [Manila Diamond Hotel] v. Manila
Diamond Hotel
Employees Union,4 insists that it could validly bargain in
behalf of its members only. The Supreme Court, however,
ruled that
the same would only fragment the employees of
petitioner. What respondent union will be achieving is to
divide the
employees, more particularly, the rank-and-file employees of
petitioner hotel. The other workers who are not members are

at a
serious disadvantage, because if the same shall be allowed,
employees who are non-union members will be economically
impaired and will not be able to negotiate their terms and
conditions of work, thus defeating the very essence and reason
of
collective bargaining which is an effective safeguard against
the evil schemes of employers in terms and conditions of
work. Petitioners refusal to bargain then with
respondent cannot be considered an unfair labor
practice to justify the
staging of the strike.
(d)
BLUE-SKY BARGAINING
1. CONCEPT.
Blue-sky bargaining means making exaggerated or
unreasonable proposals. This kind of unfair labor practice act
may only be committed by the bargaining union.
(e)
SURFACE BARGAINING
1. CONCEPT.
Surface bargaining is defined as going through the
motions of negotiating without any legal intent to reach an
agreement. This kind of unfair labor practice may only be
committed by the employer.
5.
UNFAIR LABOR PRACTICE
(ULP)
(a)
NATURE OF ULP
1. WHEN AN ACT CONSTITUTES ULP.
At the outset, it must be clarified that not all unfair acts
constitute ULPs. While an act or decision of an employer or
a union may be unfair, certainly not every unfair act or
decision thereof may constitute ULP as defined and
enumerated under

the law.
The act complained of as ULP must have a proximate and
causal connection with any of the following 3 rights:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the
technical signification of the term unfair labor practice.
2. THE ONLY ULP WHICH MAY OR MAY NOT BE
RELATED TO THE EXERCISE OF THE RIGHT TO
SELFORGANIZATION
AND COLLECTIVE BARGAINING.
The only ULP which is the exception as it may or may not
relate to the exercise of the right to self-organization and
collective bargaining is the act described under Article 248 [f],
i.e., to dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or
being about to give testimony under the Labor Code.
3. LABOR CODE PROVISIONS ON ULP.
Under the Labor Code, there are only five (5) provisions
related to ULP, to wit:
1. Article 247 which describes the concept of ULPs and
prescribes the procedure for their prosecution;
2. Article 248 which enumerates the ULPs that may be
committed by employers;
3. Article 249 which enumerates the ULPs that may be
committed by labor organizations;
4. Article 261 which considers violations of the CBA as no
longer ULPs unless the same are gross in character which
means flagrant and/or malicious refusal to comply with the
economic provisions thereof.
5. Article 263 [c] which refers to union-busting, a form of
ULP, involving the dismissal from employment of union
officers duly elected in accordance with the union constitution
and by-laws, where the existence of the union is
threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP.

A ULP may be committed by an employer or by a labor
organization. Article 248 describes the ULPs that may be
committed by an employer; while Article 249 enumerates
those which may be committed by a labor organization.
On the part of the employer, only the officers and agents of
corporations, associations or partnerships who have
actually participated in or authorized or ratified ULPs are
criminally liable.
On the part of the union, only the officers, members of
governing boards, representatives or agents or members of
labor associations or organizations who have actually
participated in or authorized or ratified the ULPs are
criminally liable.
5. ELEMENTS OF ULP.
Before an employer or labor organization may be said to have
committed ULP, the following elements must concur:
1. There should exist an employer-employee relationship
between the offended party and the offender; and
2. The act complained of must be expressly mentioned
and defined in the Labor Code as an unfair labor
practice.
Absent one of the elements aforementioned will not make the
act an unfair labor practice.
6. ASPECTS OF ULP.
Under Article 247, a ULP has two (2) aspects, namely:
1. Civil aspect; and
2. Criminal aspect.
The civil aspect of an unfair labor practice includes claims for
actual, moral and exemplary damages, attorneys fees
and other affirmative reliefs. Generally, these civil claims
should be asserted in the labor case before the Labor
Arbiters who
have original and exclusive jurisdiction over unfair labor
practices. The criminal aspect, on the other hand, can only
be asserted
before the regular court.

(b)
ULP OF EMPLOYERS
I.
INTERFERENCE WITH, RESTRAINT OR COERCION
OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-
ORGANIZATION
1. TEST OF INTERFERENCE, RESTRAINT OR
COERCION.
The terms interfere, restrain and coerce are very broad
that any act of management that may reasonably tend to
have an influence or effect on the exercise by the employees of
their right to self-organize may fall within their meaning and
coverage. According to the Supreme Court in Insular Life
Assurance Co., Ltd., Employees Association-NATU v.
Insular
Life Assurance Co., Ltd.,1 the test of whether an employer
has interfered with or restrained or coerced employees within
the
meaning of the law is whether the employer has engaged in
conduct which may reasonably tend to interfere with the free
exercise of the employees rights. It is not necessary that
there be direct evidence that any employee was in fact
intimidated
or coerced by the statements or threats of the employer if there
is a reasonable inference that the anti-union conduct of the
employer does have an adverse effect on the exercise of the
right to self-organization and collective bargaining.
2. TOTALITY OF CONDUCT DOCTRINE.
In ascertaining whether the act of the employer constitutes
interference with, restraint or coercion of the employees
exercise of their right to self-organization and collective
bargaining, the totality of conduct doctrine may be applied.
The totality of conduct doctrine means that expressions of
opinion by an employer, though innocent in themselves,
may be held to constitute an unfair labor practice because of
the circumstances under which they were uttered, the history

of the
particular employers labor relations or anti-union bias or
because of their connection with an established collateral plan
of
coercion or interference. An expression which may be
permissibly uttered by one employer, might, in the mouth of a
more hostile
employer, be deemed improper and consequently actionable
as an unfair labor practice. The past conduct of the employer
and
like considerations, coupled with an intimate connection
between the employers action and the union affiliation or
activities of the
particular employee or employees taken as a whole, may raise
a suspicion as to the motivation for the employers conduct.
The
failure of the employer to ascribe a valid reason therefor may
justify an inference that his unexplained conduct in respect of
the
particular employee or employees was inspired by the latters
union membership and activities.
3. INTERFERENCE IN THE EMPLOYEES RIGHT TO
SELF-ORGANIZATION.
a. Interference is always ULP.
The judicial dictum is that any act of interference by the
employer in the exercise by employees of their right to
selforganization
constitutes an unfair labor practice. This is the very core of
ULP.
In Hacienda Fatima v. National Federation of
Sugarcane Workers Food and General Trade,2 the
Supreme
Court upheld the factual findings of the NLRC and the Court of
Appeals that from the employers refusal to bargain to its acts
of
economic inducements resulting in the promotion of those
who withdrew from the union, the use of armed guards to

prevent the
organizers to come in, and the dismissal of union officials and
members, one cannot but conclude that the employer did not
want
a union in its hacienda - a clear interference in the right of the
workers to self-organization. Hence, the employer was held
guilty
of unfair labor practice.
b. Formation of a union is never a valid ground to
dismiss.
c. It is ULP to dismiss a union officer or an employee
for his union activities.
II.
YELLOW DOG CONTRACT
1. WHAT IS A YELLOW DOG CONTRACT?
It is one which exacts from workers as a condition of
employment that they shall not join or belong to a labor
organization, or attempt to organize one during their
period of employment or that they shall withdraw
therefrom in
case they are already members of a labor
organization.
2. COMMON STIPULATIONS IN A YELLOW DOG
CONTRACT.
A typical yellow dog contract embodies the following
stipulations:
(1) A representation by the employee that he is not a
member of a labor organization;
(2) A promise by the employee that he will not join a
union; and
(3) A promise by the employee that upon joining a
labor organization, he will quit his employment.
The act of the employer in imposing such a condition
constitutes unfair labor practice under Article 248(b) of the
Labor
Code. Such stipulation in the contract is null and void.
III.

CONTRACTING OUT OF SERVICES AND FUNCTIONS
1. GENERAL RULE.
As a general rule, the act of an employer in having work or
certain services or functions being performed by union
members contracted out is not per se an unfair labor practice.
This is so because contracting-out of a job, work or service is
clearly an exercise by the employer of its business judgment
and its inherent management rights and prerogatives. Hiring
of
workers is within the employers inherent freedom to regulate

its business and is a valid exercise of its management
prerogative
subject only to special laws and agreements on the matter and
the fair standards of justice. The employer cannot be denied
the
faculty of promoting efficiency and attaining economy by a
study of what units are essential for its operation. It has the
ultimate
right to determine whether services should be performed by its
personnel or contracted to outside agencies.
2. WHEN CONTRACTING-OUT BECOMES ULP.
It is only when the contracting out of a job, work or service
being performed by union members will interfere with,
restrain or coerce employees in the exercise of their right to
self-organization that it shall constitute an unfair labor
practice. Thus,
it is not unfair labor practice to contract out work for reasons
of business decline, inadequacy of facilities and
equipment,
reduction of cost and similar reasonable grounds.
IV.
COMPANY UNION
1. COMPANY INITIATED, DOMINATED OR
ASSISTED UNION.
Paragraph [d] of Article 248 considers it an unfair labor
practice to initiate, dominate, assist or otherwise interfere with

the formation or administration of any labor organization,
including the giving of financial or other support to it or its
organizers or
supporters. Such union is called company union as its
formation, function or administration has been assisted by any
act
defined as unfair labor practice under the Labor Code.
V.
DISCRIMINATION
1. COVERAGE OF PROHIBITION.
What is prohibited as unfair labor practice under the law is to
discriminate in regard to wages, hours of work, and other
terms and conditions of employment in order to encourage or
discourage membership in any labor organization.
4. MATERIALITY OF PURPOSE OF ALLEGED
DISCRIMINATORY ACT.
In Manila Pencil Co., Inc. v. CIR,1 it was ruled that even
assuming that business conditions justify the dismissal of
employees, it is an unfair labor practice of employer to
dismiss permanently only union members and not
non-unionists.
In Manila Railroad Co. v. Kapisanan ng mga
Manggagawa sa Manila Railroad Co.,2 the non-
regularization of
long-time employees because of their affiliation with the
union while new employees were immediately regularized was
declared an act of discrimination.
VI.
FILING OF CHARGES OR GIVING OF TESTIMONY
1. CONCEPT.
Under paragraph [f] of Article 248 of the Labor Code, it is an
unfair labor practice for an employer to dismiss, discharge
or otherwise prejudice or discriminate against an employee for
having given or being about to give testimony under the Labor
Code.
2. THE ONLY ULP NOT REQUIRED TO BE RELATED
TO EMPLOYEES EXERCISE OF THE RIGHT TO

SELFORGANIZATION
AND COLLECTIVE BARGAINING.
It must be underscored that Article 248(f) is the only unfair
labor practice that need not be related to the exercise by the
employees of their right to self-organization and collective
bargaining.
In Itogon-Suyoc Mines, Inc. v. Baldo,3 it was declared
that an unfair labor practice was committed by the employer
when it dismissed the worker who had testified in the hearing
of a certification election case despite its prior request for the
employee not to testify in the said proceeding accompanied
with a promise of being reinstated if he followed said request.
VII.
CBA-RELATED ULPs
1. THREE (3) CBA-RELATED ULPs.
Article 248 enunciates three (3) CBA-related unfair labor
practices, to wit:
1. To violate the duty to bargain collectively as
prescribed in the Labor Code.
2. To pay negotiation or attorneys fees to the union
or its officers or agents as part of the settlement of
any
issue in collective bargaining or any other dispute.
3. To violate a collective bargaining agreement.
VII-A.
PAYMENT OF NEGOTIATION AND ATTORNEYS
FEES
1. WHEN PAYMENT CONSIDERED ULP.
Article 248(h) of the Labor Code considers as an unfair labor
practice the act of the employer in paying negotiation fees
or attorneys fees to the union or its officers or agents as part
of the settlement of any issue in collective bargaining or any
other
dispute.
VII-B.
VIOLATION OF THE CBA

1. CORRELATION.
Article 248(i) of the Labor Code should be read in relation to
Article 261 thereof. Under Article 261, as amended,
violations of a CBA, except those which are gross in
character, shall no longer be treated as an unfair labor practice
and shall be
resolved as grievances under the CBA. Gross violations of
CBA shall mean flagrant and/or malicious refusal to comply
with the
economic provisions of such agreement.
2. CASE LAW.
The act of the employer in refusing to implement the
negotiated wage increase stipulated in the CBA, which
increase is
intended to be distinct and separate from any other benefits or
privileges that may be forthcoming to the employees, is an
unfair
labor practice.
Refusal for a considerable number of years to give salary
adjustments according to the improved salary scales in the
CBA is an unfair labor practice.
ULP OF LABOR ORGANIZATIONS
I.
RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-
ORGANIZATION
1. UNION MAY INTERFERE WITH BUT NOT
RESTRAIN OR COERCE EMPLOYEES IN THE
EXERCISE OF THEIR RIGHT TO
SELF-ORGANIZE.
Under Article 249(a), it is ULP for a labor organization, its
officers, agents or representatives to restrain or coerce
employees in the exercise of their right to self-organization.
Compared to similar provision of Article 248(a) of the Labor
Code,
notably lacking is the use of the word interfere in the
exercise of the employees right to self-organize. The

significance in the
omission of this term lies in the grant of unrestricted license to
the labor organization, its officers, agents or representatives to
interfere with the exercise by the employees of their right to
self-organization. Such interference is not unlawful since
without it,
no labor organization can be formed as the act of recruiting
and convincing the employees is definitely an act of
interference.
II.
DISCRIMINATION
1. CONCEPT.
Under Article 249(b), it is ULP for a labor organization, its
officers, agents or representatives to cause or attempt to
cause an employer to discriminate against an employee,
including discrimination against an employee with respect to
whom
membership in such organization has been denied, or to
terminate an employee on any ground other than the usual
terms and
conditions under which membership or continuation of
membership is made available to other members.
III.
DUTY OF UNION TO BARGAIN COLLECTIVELY
1. CONCEPT.
Under Article 249(c), it is ULP for a duly certified sole and
exclusive bargaining union, its officers, agents or
representatives to refuse or violate the duty to bargain
collectively with the employer. This is the counterpart
provision of Article
248(g) respecting the violation by the employer of its duty to
bargain collectively.
2. PURPOSE.
The obvious purpose of the law is to ensure that the union will
negotiate with management in good faith and for the
purpose of concluding a mutually beneficial agreement
regarding the terms and conditions of their employment

relationship.
IV.
ANTI-FEATHERBEDDING DOCTRINE
1. CONCEPT.
Under Article 249(d), it is ULP for a labor organization, its
officers, agents or representatives to cause or attempt to
cause an employer to pay or deliver or agree to pay or deliver
any money or other things of value, in the nature of an
exaction,
for services which are not performed or not to be performed,
including the demand for fee for union negotiations.
This practice of the union is commonly known as
featherbedding as it unduly and unnecessarily maintains or
increases the number of employees used or the amount of time
consumed to work on a specific job. This is done by the
employees to unduly secure their jobs in the face of
technological advances or as required by minimum health and
safety
standards, among other justifications. These featherbedding
practices have been found to be wasteful and without
legitimate
justifications.
2. DEMAND FOR PAYMENT OF STANDBY

SERVICES.
A union commits an unfair labor practice under this provision
by causing or attempting to cause an employer to pay or
agree to pay for standby services. Payments for standing-by,
or for the substantial equivalent of standing-by, are not
payments for services performed within the meaning of the
law. When an employer received a bona-fide offer of
competent
performance of relevant services, it remains for the employer,
through free and fair negotiation, to determine whether such
offer
should be accepted and what compensation should be paid for
the work done.

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

C.
RIGHT TO PEACEFUL CONCERTED ACTIVITIES
1.
FORMS OF CONCERTED ACTIVITIES
1. FORMS OF CONCERTED ACTIVITIES.
There are three (3) forms of concerted activities, namely:
1. Strike;
2. Lockout; and
3. Picketing.
2. STRIKE.
Strike means any temporary stoppage of work by the
concerted action of the employees as a result of an industrial
or labor dispute.
b. Forms and classification of strikes.
A strike may be classified:
1. As to nature:
a. Legal strike - one called for a valid purpose and conducted
through means allowed by law.
b. Illegal strike - one staged for a purpose not recognized by
law or, if for a valid purpose, it is conducted through
means not sanctioned by law.
c. Economic strike - one declared to demand higher wages,
overtime pay, holiday pay, vacation pay, etc. It is one
which is declared for the purpose of forcing wage or other
concessions from the employer for which he is not
required by law to grant.
d. Unfair labor practice (ULP) or political strike - one called
to protest against the employers unfair labor practices
enumerated in Article 248 of the Labor Code, including gross
violation of the CBA under Article 261 and unionbusting
under Article 263(c) of the Labor Code.
e. Slowdown strike - one staged without the workers
quitting their work but by merely slackening or reducing their
normal work output. It is also called a strike on the
installment plan.
f. Mass leaves - One where the employees simultaneously
filed leaves of absence based on various reasons such

as, inter alia, vacation and sick leaves.
g. Wildcat strike - one declared and staged without the
majority approval of the recognized bargaining agent.
h. Sitdown strike - one where the workers stop working but
do not leave their place of work.
i. Overtime boycott one involving the act of the workers
in refusing to render overtime work in violation of the
CBA, resorted to as a means to coerce the employer to yield to
their demands.
j. Boycott of products one which involves the concerted
refusal to patronize an employer's goods or services
and to persuade others to a like refusal.
k. Attempts to damage, destroy or sabotage plant equipment
and facilities and similar activities;
l. The sporting by the workers of closely cropped hair
or cleanly shaven heads after their union filed a
notice of strike as a result of a CBA deadlock is a form
of illegal strike.1
2. As to coverage:
a. General strike one which covers and extends over a whole
province or country. In this kind of strike, the
employees of various companies and industries cease to work
in sympathy with striking workers of another
company. It is also resorted to for the purpose of putting
pressure on the government to enact certain laborrelated
measures such as mandated wage increases or to cease from
implementing a law which workers
consider inimical to their interest. It is also mounted for
purposes of paralyzing or crippling the entire economic
dispensation.
b. Particular strike one which covers a particular
establishment or employer or one industry involving one
union or
federation.
3. As to purpose:
a. Economic strike.
b. Unfair labor practice strike or political strike.

4. As to the nature of the strikers action:
a. Partial strike one which consists of unannounced work
stoppages such as slowdowns, walkouts or
unauthorized extension of rest periods.
b. Sit-down strike.
c. Slowdown strike.
5. As to the extent of the interest of strikers:
a. Primary strike refers to a strike conducted by the workers
against their employer, involving a labor dispute
directly affecting them.
b. Secondary strike - refers to a strike staged by the workers of
an employer involving an issue which does not
directly concern or affect their relationship but rather, by
some circumstances affecting the workers such as
when the employer persists to deal with a third person against
whom the workers have an existing grievance.
Workers stage this kind of strike to secure the economic
assistance of their employer to force the third person to
yield to the union on the issues involving it and said third
person.
c. Sympathy strike - refers to a strike where the strikers have
no demands or grievances or labor dispute of their
own against their employer but nonetheless stage the strike for
the purpose of aiding, directly or indirectly, other
strikers in other establishments or companies, without
necessarily having any direct relation to the advancement
of the strikers interest. This is patently an illegal strike. An
example of a sympathy strike is the welga ng
bayan where workers refuse to render work to join a
general strike which does not involve a labor or industrial
dispute between the strikers and the employer struck against
but it is staged in pursuit of certain ends such as
reduction in the electric power rates, increase in the legislated
wages, etc.
3. LOCKOUT.
Lockout means the temporary refusal by an employer to
furnish work as a result of an industrial or labor dispute.

It consists of the following:
1. Shutdowns;
2. Mass retrenchment and dismissals initiated by the
employer.
3. The employers act of excluding employees who are union
members.
4. PICKETING.
Picketing is the act of workers in peacefully marching to and
fro before an establishment involved in a labor dispute
generally accompanied by the carrying and display of signs,
placards and banners intended to inform the public about the
dispute.
2.
WHO MAY DECLARE A STRIKE OR LOCKOUT?
1. WHO MAY DECLARE A STRIKE?
a. Proper party.
Only a legitimate labor organization may declare a strike. For
obvious reason, the employer cannot.
b. Basic requirements.
As to the personality of the union, the following requirements
should be shown before a strike may be validly declared
and staged:
a. The union should be legitimate. A strike conducted by a
union which has not been shown to be a legitimate labor
organization is illegal.
b. In organized establishment where there is a certified
bargaining agent, only the recognized or certified collective
bargaining union can validly stage a strike. A minority
union cannot stage a strike. A strike conducted by a
minority union is patently illegal because no labor
dispute which will justify the conduct of a strike may
exist between the employer and a minority union. To
permit the unions picketing activities would be to flaunt at
the will of the majority.
c. In unorganized establishment where there is no
certified bargaining agent, any legitimate labor
organization in

the establishment may declare a strike but only on the
ground of unfair labor practice. The only other ground of
bargaining deadlock cannot be invoked in support of a strike
in an unorganized establishment for the simple
reason that no CBA can be negotiated and concluded absent
such recognized or certified collective bargaining
agent. In this situation, the existence of a bargaining deadlock
is an impossibility.
2. WHO MAY DECLARE A LOCKOUT?
a. Proper party.
Only the employer can declare and stage a lockout. For
obvious reason, no union can.
b. Grounds.
The employer may declare a lockout based on any of the two
(2) grounds that may similarly be invoked by the union in
staging a strike, i.e., (1) bargaining deadlock; and/or (2) unfair
labor practice.
3. WHO MAY STAGE A PICKET?
Although not mentioned in the syllabus, it is important to
discuss this point. Distinctively, in case of picketing, the
absence of employment relationship between the
employer and the picketers or some of them does not
affect its
validity. Picketing, if peacefully carried out, cannot be
prohibited even in the absence of employer-employee
relationship. Example: A picket conducted by the employees
with the participation of militant groups like Bayan, Gabriela,
etc.
will not make the picket illegal.
3.
REQUISITES FOR A VALID STRIKE
1. REQUISITES FOR A VALID STRIKE.
a. Procedural but mandatory requisites.
In accordance with Article 263 and pertinent prevailing
jurisprudence, a strike, in order to be valid and legal, must
conform to the following procedural requisites:
1st requisite - It must be based on a valid and factual

ground;
2nd requisite - A notice of strike must be filed with the
NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE
at least twenty-four (24) hours prior to the taking of the
strike vote by secret balloting, informing said office of the
decision to conduct a strike vote, and the
date, place, and time thereof;
4th requisite - A strike vote must be taken where a majority
of the members of the union obtained by secret ballot in
a meeting called for the purpose, must approve it;
5th requisite - A strike vote report should be submitted to
the NCMB-DOLE at least seven (7) days before the
intended date of the strike;
6th requisite - Except in cases of union-busting, the cooling-
off period of 15 days, in case of unfair labor practices of
the employer, or 30 days, in case of collective bargaining
deadlock, should be fully observed; and
7th requisite - The 7-day waiting period/strike ban reckoned
after the submission of the strike vote report to the
NCMB-DOLE should also be fully observed in all cases.
All the foregoing requisites, although procedural in nature, are
mandatory and failure of the union to comply with any
of them would render the strike illegal.
I.
FIRST REQUISITE:
EXISTENCE OF VALID AND FACTUAL GROUND/S
1. VALID GROUNDS.
The law recognizes only 2 grounds in support of a valid strike,
viz.:
1. Collective bargaining deadlock (Economic Strike); and/or
2. Unfair labor practice (Political Strike).
A strike not based on any of these two grounds is illegal.
2. SOME PRINCIPLES ON THE FIRST REQUISITE.
Violation of CBA, except when gross, is not an unfair
labor practice, hence, may not be cited as ground for a
valid strike. Ordinary violation of a CBA is no longer treated as

an unfair labor practice but as a mere grievance
which should be processed through the grievance machinery
and voluntary arbitration.
Inter-union or intra-union dispute is not a valid ground.
Violation of labor standards is not a valid ground.
Wage distortion is not a valid ground.
II.
SECOND REQUISITE:
FILING OF A NOTICE OF STRIKE
1. NOTICE OF STRIKE.
No labor organization shall declare a strike without first
having filed a notice of strike.
III.
THIRD REQUISITE:
SERVICE OF A 24-HOUR PRIOR NOTICE
In the 2005 case of Capitol Medical Center, Inc. v.
NLRC, it was imposed as additional requisite that a 24-hour
notice
must be served to the NCMB-DOLE prior to the taking of the
strike vote by secret balloting, informing it of the unions
decision to
conduct a strike vote as well as the date, place, and time
thereof.
IV.
FOURTH REQUISITE:
CONDUCT OF A STRIKE VOTE
1. MAJORITY APPROVAL OF THE STRIKE.
No labor organization shall declare a strike without the
necessary strike vote first having been obtained and reported
to
the NCMB-DOLE.
A decision to declare a strike must be approved by a majority
of the total union membership in the bargaining unit
concerned, obtained by secret ballot in meetings or referenda
called for that purpose. This process is called strike vote
balloting.
2. PURPOSE.

The purpose of a strike vote is to ensure that the decision to
strike broadly rests with the majority of the union members
in general and not with a mere minority.
3. DURATION OF THE VALIDITY OF THE MAJORITY
APPROVAL OF A STRIKE.
The majority decision to stage a strike is valid for the duration
of the dispute based on substantially the same grounds
considered when the strike vote was taken.
V.
FIFTH REQUISITE:
SUBMISSION OF THE STRIKE VOTE TO NCMB-
DOLE
1. PURPOSE FOR REQUIRING A STRIKE VOTE
REPORT.
The evident intention of the law in mandatorily requiring the
submission of the strike vote report is to afford the NCMB
of opportunity to verify the truth and veracity of the majority
vote by the union members in support of the intended strike.
2. WHEN TO SUBMIT THE STRIKE VOTE REPORT.
The strike vote report should be submitted to the NCMB-
DOLE at least seven (7) days before the actual staging of the
intended strike, subject to the observance of the cooling-off
periods provided under the law.
VI.
SIXTH REQUISITE:
OBSERVANCE OF THE COOLING-OFF PERIOD
1. GENERAL RULE.
The cooling-off periods provided under the law before the
intended date of the actual mounting of the strike are as
follows:
1. In case of bargaining deadlock, the cooling-off period is
thirty (30) days from the filing of the notice of strike; or
2. In case of unfair labor practice, the cooling-off period is
fifteen (15) days from the filing of the notice of strike.
2. EXCEPTION: IN CASE OF UNION-BUSTING.
In case of dismissal from employment of union officers (not
ordinary members) duly elected in accordance with the

union constitution and by-laws which may constitute union-
busting because the existence of the union is threatened by
reason
of such dismissal, the 15-day cooling-off period does not
apply and the union may take action immediately after the
strike
vote is conducted and the results thereof duly submitted to the
regional branch of the NCMB.
In cases of union-busting, only the 15-day cooling-off period
need not be observed; all the other requisites must be
fully complied with.
3. RECKONING OF THE COOLING-OFF PERIODS.
The start of the cooling-off periods should be reckoned from
the time the notice of strike is filed with the NCMB-DOLE,
a copy thereof having been served on the other party
concerned.
4. PURPOSE OF THE COOLING-OFF PERIODS.
The purpose of the cooling-off periods is to provide an
opportunity for mediation and conciliation of the dispute by
the
NCMB-DOLE with the end in view of amicably settling it.
VII.
SEVENTH REQUISITE:
7-DAY WAITING PERIOD OR STRIKE BAN
1. PURPOSE OF THE 7-DAY WAITING PERIOD OR
STRIKE BAN.
The seven (7) day waiting period is intended to give the
NCMB-DOLE an opportunity to verify whether the projected
strike really carries the approval of the majority of the union
members.
2. WAITING PERIOD/STRIKE BAN VS. COOLING-
OFF PERIOD.
The 7-day waiting period or strike ban is a distinct and
separate requirement from the cooling-off period prescribed
by
law. The latter cannot be substituted for the former and vice-
versa.

The cooling-off period is counted from the time of the filing of
the notice of strike. The 7-day waiting period/strike ban,
on the other hand, is reckoned from the time the strike vote
report is submitted to the NCMB-DOLE.
Consequently, a strike is illegal for failure to comply with the
prescribed mandatory cooling-off period and the 7-day
waiting period/strike ban after the submission of the report on
the strike vote.
3. BOTH MUST BE COMPLIED WITH SEPARATELY
AND DISTINCTLY FROM EACH OTHER.
The requirements of cooling-off period and 7-day waiting
period/strike ban must both be complied with. The labor
union
may take the strike vote and report the same to the NCMB-
DOLE within the statutory cooling-off period. In this case, the
7-day
waiting period/strike ban should be counted from the day
following the expiration of the cooling-off period. A contrary
view would
certainly defeat and render nugatory the salutary purposes
behind the distinct requirements of cooling-off period and the
waiting
period/strike ban.
The NCMB Primer on Strike, Picketing and Lockout,1 issued
by the NCMB, the agency of government directly tasked
with the implementation and enforcement of this particular
legal provision and requirement, is very clear on this point,
thus:
In the event the result of the strike/lockout vote
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.2
In other words, the seven (7) days should be added to the
cooling-off period of fifteen (15) days, in case of unfair labor
practice, or thirty (30) days, in case of collective bargaining
deadlock and it is only after the lapse of the total number of

days
after adding the two (2) periods that the strike/lockout may be
lawfully and validly staged.
While there was no categorical declaration on this point, the
Supreme Court, in holding in the 2010 case of Phimco
Industries, Inc. v. Phimco Industries Labor
Association (PILA),3 that respondents fully satisfied the
legal procedural
requirements, noted that the strike notice grounded on
collective bargaining deadlock was filed on March 9, 1995.
Consequently,
the 30-day cooling-off period would have lapsed on April 9,
1995. The strike vote was reached on March 16, 1995 and
the
notification thereof was filed with the DOLE on March 17,
1995 or well within the cooling-off period. Based on the said
rule in the
NCMB Primer, the strike could only be validly staged starting
from April 17, 1995 and onwards, i.e., after the lapse of 7
days
from April 9, 1995. Hence, since the actual strike was
launched only on April 25, 1995, there was clearly full
compliance with
the requisites.
Example: In a case where the notice of strike grounded on
ULP is filed on October 1, 2015, and the strike vote is
taken within the cooling-off period, say, on October 5, 2015
and the strike vote report showing majority support for the
intended
strike is submitted to the NCMB-DOLE the following day,
October 6, 2015, the question is when can the union legally
stage the
strike?
Following the above principle, the answer obviously is on
October 24, 2015 or any day thereafter. This is so because
the 15-day cooling-off period for ULP expires on October 16
and adding the 7-day strike ban which should be counted

from the
day following the expiration of the cooling-off period, the 7th
day would be on October 23, 2015. Obviously, the strike
cannot be
conducted on the 7th day but rather after the lapse thereof;
hence, it is only on October 24, 2015 and onwards that the
union
may lawfully conduct the strike.
4. SOME PRINCIPLES ON COOLING-OFF PERIOD
AND 7-DAY WAITING PERIOD.
Deficiency of even one (1) day of the cooling-off period and
7-day strike ban is fatal.
One-day strike without complying with the 7-day strike ban
is illegal.
4.
REQUISITES FOR A VALID LOCKOUT
1. SUBSTANTIALLY SIMILAR REQUISITES AS IN
STRIKE.
With a slight, insignificant variation, the procedural but
mandatory requisites for a valid strike discussed above are
substantially similar to those applicable for valid lockout. For
purposes of ease and clarity, the same are presented as
follows:
1st requisite - It must be based on a valid and factual
ground;
2nd requisite - A notice of lockout must be filed with the
NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-
DOLE at least twenty-four (24) hours prior to the taking of the
lockout vote by secret balloting, informing said office of the
decision to conduct a lockout vote, and the date, place,
and time thereof;
4th requisite - A lockout vote must be taken where a
majority of the members of the Board of Directors of the
corporation or association or of the partners in a partnership
obtained by secret ballot in a meeting called for the
purpose, must approve it;

5th requisite - A lockout vote report should be submitted
to the NCMB-DOLE at least seven (7) days before the
intended date of the lockout;
6th requisite - The cooling-off period of 15 days, in case of
unfair labor practices of the labor organization, or 30
days, in case of collective bargaining deadlock, should be fully
observed; and
7th requisite - The 7-day waiting period/lockout ban
reckoned after the submission of the lockout vote report to the
NCMB-DOLE should also be fully observed in all cases.
5.
REQUISITES FOR LAWFUL PICKETING
1. THE REQUISITES FOR A VALID STRIKE ARE NOT
APPLICABLE TO PICKETING.
The seven (7) requisites for a valid strike discussed above do
not apply to picketing.
2. REQUISITES FOR LAWFUL PICKETING.
The most singular requirement to make picketing valid and
legal is that it should be peacefully conducted.
Based on the foregoing provision, the requisites may be
summed up as follows:
1. The picket should be peacefully carried out;
2. There should be no act of violence, coercion or intimidation
attendant thereto;
3. The ingress to (entrance) or egress from (exit) the company
premises should not be obstructed; and
4. Public thoroughfares should not be impeded.
3. RIGHT TO PICKET IS PROTECTED BY THE
CONSTITUTION AND THE LAW.
Unlike a strike which is guaranteed under the Constitutional
provision on the right of workers to conduct peaceful
concerted activities under Section 3, Article XIII thereof, the
right to picket is guaranteed under the freedom of
speech and
of expression and to peaceably assemble to air
grievances under Section 4, Article III (Bill of Rights)
thereof.

4. EFFECT OF THE USE OF FOUL LANGUAGE
DURING THE CONDUCT OF THE PICKET.
In the event the picketers employ discourteous and impolite
language in their picket, such may not result in, or give rise
to, libel or action for damages.
5. PICKETING VS. STRIKE.
(a) To strike is to withhold or to stop work by the concerted
action of employees as a result of an industrial or labor
dispute. The work stoppage may be accompanied by picketing
by the striking employees outside of the company compound.
(b) While a strike focuses on stoppage of work, picketing
focuses on publicizing the labor dispute and its incidents to
inform the public of what is happening in the company being
picketed.
(c) A picket simply means to march to and fro in front of the
employers premises, usually accompanied by the display
of placards and other signs making known the facts involved
in a labor dispute. It is but one strike activity separate and
different
from the actual stoppage of work.
Phimco Industries, Inc. v. Phimco Industries Labor
Association (PILA).1 - While the right of employees to
publicize their dispute falls within the protection of freedom of
expression and the right to peaceably assemble to air
grievances,
these rights are by no means absolute. Protected picketing
does not extend to blocking ingress to and egress
from the
company premises. That the picket was moving, was
peaceful and was not attended by actual violence may
not free it
from taints of illegality if the picket effectively
blocked entry to and exit from the company premises.
6. WHEN PICKET CONSIDERED A STRIKE.
In distinguishing between a picket and a strike, the totality of
the circumstances obtaining in a case should be taken
into account.

Santa Rosa Coca-Cola Plant Employees Union v. Coca-
Cola Bottlers Phils., Inc.2 - Petitioners contend that what
they conducted was a mere picketing and not a strike. In
disagreeing to this contention, the High Court emphasized
that it is not
an issue in this case that there was a labor dispute between the
parties as petitioners had notified the respondent of their
intention to stage a strike, and not merely to picket.
Petitioners insistence to stage a strike is evident in the fact
that an amended
notice of strike was filed even as respondent moved to dismiss
the first notice. The basic elements of a strike are present in
this
case: 106 members of petitioner Union, whose respective
applications for leave of absence on September 21, 1999 were
disapproved, opted not to report for work on said date, and
gathered in front of the company premises to hold a mass
protest
action. Petitioners deliberately absented themselves and
instead wore red ribbons and carried placards with slogans
such as:
YES KAMI SA STRIKE, PROTESTA KAMI, SAHOD,
KARAPATAN NG MANGGAGAWA IPAGLABAN,
CBA-WAG
BABOYIN, STOP UNION BUSTING. They marched to and
fro in front of the companys premises during working hours.
Thus,
petitioners engaged in a concerted activity which already
affected the companys operations. The mass concerted
activity
obviously constitutes a strike. Moreover, the bare fact that
petitioners were given a Mayors permit is not conclusive
evidence
that their action/activity did not amount to a strike. The
Mayors description of what activities petitioners were allowed
to conduct
is inconsequential. To repeat, what is definitive of whether the

action staged by petitioners is a strike and not merely a picket
is
the totality of the circumstances surrounding the situation.
Petitioner union in the 2011 case of Leyte Geothermal
Power Progressive Employees Union-ALU-TUCP v.
Philippine National Oil Company Energy
Development Corporation,1 contends that there was no
stoppage of work; hence,
they did not strike. Euphemistically, petitioner union avers
that it only engaged in picketing, and maintains that
without any
work stoppage, [its officers and members] only engaged in xxx
protest activity. The Supreme Court, however, ruled that it
was a
strike and not picketing or protest activity that petitioner
union staged. It found the following circumstances in support
of such
finding:
(1) Petitioner union filed a Notice of Strike on December 28,
1998 with the DOLE grounded on respondents purported
unfair labor practices, i.e., refusal to bargain collectively,
union busting and mass termination. On even date, petitioner
Union
declared and staged a strike.
(2) The DOLE Secretary intervened and issued a Return-to-
Work Order dated January 4, 1999, certifying the labor
dispute to the NLRC for compulsory arbitration. The Order
indicated the following facts: (1) filing of the notice of strike;
(2)
staging of the strike and taking control over respondents
facilities of its Leyte Geothermal Project on the same day
petitioner
union filed the notice of strike; (3) attempts by the NCMB to
forge a mutually acceptable solution proved futile; (4) in the
meantime, the strike continued with no settlement in sight
placing in jeopardy the supply of much needed power supply
in the

Luzon and Visayas grids.
(3) Petitioner union itself, in its pleadings, used the word
strike.
(4) Petitioner unions asseverations are belied by the factual
findings of the NLRC, as affirmed by the CA thus: The
failure to comply with the mandatory requisites for the
conduct of strike is both admitted and clearly shown on
record. Hence, it is
undisputed that no strike vote was conducted; likewise, the
cooling-off period was not observed and that the 7-day strike
ban
after the submission of the strike vote was not complied with
since there was no strike vote taken.
In fine, petitioner unions bare contention that it did not hold
a strike cannot trump the factual findings of the NLRC that
petitioner union indeed struck against respondent. In fact, and
more importantly, petitioner union failed to comply with the
requirements set by law prior to holding a strike.
6.
ASSUMPTION OF JURISDICTION BY THE DOLE
SECRETARY OR CERTIFICATION OF
THE LABOR DISPUTE TO THE NLRC FOR
COMPULSORY ARBITRATION
1. WHEN DOLE SECRETARY MAY ASSUME OR
CERTIFY A LABOR DISPUTE.
Article 263(g) of the Labor Code provides that when in the
opinion of the DOLE Secretary, the labor dispute
causes or will likely to cause a strike or lockout in an
industry indispensable to the national interest, he is
empowered to
do either of 2 things:
1. He may assume jurisdiction over the labor dispute and
decide it himself; or
2. He may certify it to the NLRC for compulsory arbitration,
in which case, it will be the NLRC which shall hear and
decide it.
This power may be exercised by the DOLE Secretary even

before the actual staging of a strike or lockout since
Article 263(g) does not require the existence of a strike or
lockout but only of a labor dispute involving national interest.
2. WHAT CONSTITUTES A NATIONAL INTEREST
CASE?
The Labor Code vests in the DOLE Secretary the discretion to
determine what industries are indispensable to the
national interest. Accordingly, upon the determination by the
DOLE Secretary that such industry is indispensable to the
national
interest, he has authority to assume jurisdiction over the labor
dispute in the said industry or certify it to the NLRC for
compulsory
arbitration.
Past issuances of the DOLE Secretary have not made nor
attempted to mention specifically what the industries
indispensable to the national interest are. It was only in
Department Order No. 40-H-13, Series of 2013, that certain
industries
were specifically named, thus:
Section 16. Industries Indispensable to the National
Interest. For the guidance of the workers and
employers in the filing of petition for assumption of
jurisdiction, the following industries/services are hereby
recognized as
deemed indispensable to the national interest:
a. Hospital sector;
b. Electric power industry;
c. Water supply services, to exclude small water
supply services such as bottling and refilling
stations;
d. Air traffic control; and
e. Such other industries as may be recommended by
the National Tripartite Industrial Peace Council
(TIPC).
Obviously, the above enumerated industries are not exclusive
as other industries may be considered indispensable to

the national interest based on the appreciation and discretion
of the DOLE Secretary or as may be recommended by TIPC.
3. DIFFERENT RULE ON STRIKES AND LOCKOUTS
IN HOSPITALS, CLINICS AND MEDICAL
INSTITUTIONS.
As a general rule, strikes and lockouts in hospitals, clinics and
similar medical institutions should be avoided.
In case a strike or lockout is staged, it shall be the duty of the
striking union or locking-out employer to provide and
maintain an effective skeletal workforce of medical and
other health personnel whose movement and services shall be
unhampered and unrestricted as are necessary to insure the
proper and adequate protection of the life and health of its
patients,
most especially emergency cases, for the duration of the strike
or lockout.
The DOLE Secretary may immediately assume, within twenty
four (24) hours from knowledge of the occurrence of
such a strike or lockout, jurisdiction over the same or certify it
to the NLRC for compulsory arbitration.
4. SOME PRINCIPLES ON
ASSUMPTION/CERTIFICATION POWER OF THE
DOLE SECRETARY.
Prior notice and hearing are not required in the issuance of
the assumption or certification order.
The DOLE Secretary may seek the assistance of law
enforcement agencies like the Philippine National Police to
ensure
compliance with the provision thereof as well as with such
orders as he may issue to enforce the same.
5. RETURN-TO-WORK ORDER.
a. It is always part of assumption/certification order
even if not expressly stated therein.
The moment the DOLE Secretary assumes jurisdiction over a
labor dispute involving national interest or certifies it to
the NLRC for compulsory arbitration, such assumption or
certification has the effect of automatically enjoining the

intended or
impending strike or, if one has already been commenced, of
automatically prohibiting its continuation. The mere issuance
of an
assumption or certification order automatically carries with it
a return-to-work order, even if the directive to return to work
is not
expressly stated therein. It is thus not necessary for the DOLE
Secretary to issue another order directing the strikers to return
to
work.
It is error therefore for striking workers to continue with their
strike alleging absence of a return-to-work order since
Article 263(g) is clear that once an assumption/certification
order is issued, strikes are enjoined or, if one has already
taken
place, all strikers should immediately return to work.
b. Nature of return-to-work order.
Return-to-work order is compulsory and immediately
executory in character. It should be strictly complied with
by the
parties even during the pendency of any petition questioning
its validity in order to maintain the status quo while the
determination is being made. Filing of a motion for
reconsideration does not affect the enforcement of a
return-to-work
order which is immediately executory.
c. Some principles on return-to-work order.
The issue of legality of strike is immaterial in enforcing
the return-to-work order.
Upon assumption or certification, the parties should revert
to the status quo ante litem which refers to the state of
things as it was before the labor dispute or the state of affairs
existing at the time of the filing of the case. It is the last
actual, peaceful and uncontested status that preceded the
actual controversy.
To implement the return-to-work order, the norm is actual

reinstatement. However, payroll reinstatement in lieu of
actual reinstatement may properly be resorted to when
special circumstances exist that render actual
reinstatement impracticable or otherwise not conducive to
attaining the purposes of the law.
Example:
University of Sto. Tomas v. NLRC, where the teachers
ordered to return to work could not be given back their
academic assignments since the return-to-work order of the
DOLE Secretary was issued in the middle of the first
semester of the academic year. The Supreme Court affirmed
the validity of the payroll reinstatement order of the
NLRC and ruled that the NLRC did not commit grave abuse of
discretion in providing for the alternative remedy of
payroll reinstatement. It observed that the NLRC was only
trying its best to work out a satisfactory ad hoc solution to
a festering and serious problem.
7.
NATURE OF ASSUMPTION ORDER
OR CERTIFICATION ORDER
1. A POLICE POWER MEASURE.
The power to issue assumption or certification orders is an
extraordinary authority granted to the President and to
his
alter ego, the DOLE Secretary, the exercise of which should be
strictly limited to national interest cases. It is in the nature of
a
police power measure. This is done for the promotion of
the common good considering that a prolonged strike or
lockout can
be inimical to the national economy.
8.
EFFECT OF DEFIANCE OF
ASSUMPTION OR CERTIFICATION ORDERS
1. DEFIANCE OF THE ORDER, A VALID GROUND TO
DISMISS.
The defiance by the union, its officers and members of the

Labor Secretary's assumption of jurisdiction or certification
order constitutes a valid ground for dismissal.
The following are the justifications:
1. A strike that is undertaken after the issuance by the DOLE
Secretary of an assumption or certification order
becomes a prohibited activity and thus illegal. The defiant
striking union officers and members, as a result, are
deemed to have lost their employment status for having
knowingly participated in an illegal strike.
2. From the moment a worker defies a return-to-work order,
he is deemed to have abandoned his job.
3. By so defying, the workers have forfeited their right to
be readmitted to work.
2. ALL DEFIANT STRIKERS, REGARDLESS OF

WHETHER THEY ARE OFFICERS OR ORDINARY
MEMBERS, ARE
DEEMED DISMISSED.
Once the DOLE Secretary assumes jurisdiction over a labor
dispute or certifies it to the NLRC for compulsory
arbitration, such jurisdiction should not be interfered with by
the application of the coercive processes of a strike or lockout.
Any
defiance thereof is a valid ground for the loss of employment
status.
3. PERIOD OF DEFIANCE OF THE RETURN-TO-
WORK ORDER, NOT MATERIAL.
The length of time within which the return-to-work order was
defied by the strikers is not significant in determining their
liability for the legal consequences thereof. The following cases
are illustrative of this rule:
a. University of San Agustin Employees Union-FFW
v. The CA.1 - The period of defiance was less than nine (9)
hours from 8:45 a.m. to 5:25 p.m. on September 19,
2003.
b. Federation of Free Workers v. Inciong. 2 - The period
of defiance was only nine (9) days.

4. SOME PRINCIPLES ON DEFIANCE OF THE
ASSUMPTION/CERTIFICATION ORDER.
The assumption/certification order may be served at any
time of the day or night.
No practice of giving 24 hours to strikers within
which to return to work. There is no law or jurisprudence
recognizing
this practice.
The defiant strikers could be validly replaced.
The refusal to acknowledge receipt of the
assumption/certification orders and other processes is
an apparent attempt
to frustrate the ends of justice, hence, invalid. The union
cannot be allowed to thwart the efficacy of the said orders
issued in
the national interest through the simple expediency of refusing
to acknowledge receipt thereof.
9.
ILLEGAL STRIKE
1. WHEN IS A STRIKE CONSIDERED ILLEGAL?
A strike is illegal if it is declared and staged:
1) Without complying with the procedural but mandatory
requisites (See 7 requisites above).
2) For unlawful purpose such as to compel the dismissal of
an employee or to force recognition of the union or for
trivial and puerile purpose or to circumvent contracts and
judicial orders.
3) Based on non-strikeable or invalid grounds such as:
a) Inter-union or intra-union disputes.
b) Simple violation of CBA in contrast to gross violation
thereof which is deemed ULP.
c) Violation of labor standards.
d) Legislated wage orders (wage distortion).
4) Without first having bargained collectively.
5) In violation of the no strike, no lockout clause in the CBA.
6) Without submitting the issues to the grievance machinery
or voluntary arbitration or failing to exhaust the steps

provided therein.
7) While conciliation and mediation proceeding is on-going at
the NCMB.
8) Based on issues already brought to voluntary or compulsory
arbitration.
9) During the pendency of a case involving the same ground/s
cited in the notice of strike.
10) In defiance of an assumption or certification or return-to-
work order.
11) In violation of a temporary restraining order or an
injunction order.
12) After the conversion of the notice of strike into a
preventive mediation case.
13) Against the prohibition by law.
14) By a minority union.
15) By an illegitimate union.
16) By dismissed employees.
17) In violation of the company code of conduct which
prohibits inciting or participating in riots, disorders, alleged
strikes or concerted actions detrimental to [Toyotas] interest,
The penalty for which is dismissal.
18) As protest rallies in front of government offices such as
in the following cases:
Toyota Motor Phils. Corp. Workers Association
[TMPCWA] v. NLRC,3 where the Supreme Court ruled that
the protest rallies staged by the employees from February 21 to
23, 2001 in front of the offices of the Bureau of
Labor Relations (BLR) and the DOLE Secretary constitute
illegal strike and not legitimate exercise of their right
to peaceably assemble and petition the government for redress
of grievances. It was illegal for having been
undertaken without satisfying the mandatory pre-requisites
for a valid strike under Article 263 of the Labor Code.
The ruling in Toyota was cited in Solidbank Corporation
v. Gamier, 4 as basis in declaring the protest action of
the employees of petitioner Solidbank which was staged in
front of the Office of the DOLE Secretary in

Intramuros, Manila, as constitutive of illegal strike since it
paralyzed the operations of the bank. The protest
action in this case was conducted because of the CBA
deadlock.
19) As welga ng bayan which is in the nature of a general
strike as well as an extended sympathy strike.
(a)
LIABILITY OF UNION OFFICERS
(b)
LIABILITY OF ORDINARY WORKERS
These two topics will be discussed jointly because of
their close interrelation.
1. PARTICIPATION IN LAWFUL STRIKE.
An employee who participates in a lawful strike is not
deemed to have abandoned his employment. Such
participation
should not constitute sufficient ground for the termination of
his employment even if a replacement has already been hired
by the
employer during such lawful strike.
2. PARTICIPATION IN ILLEGAL STRIKE.
a. Distinction in the liability between union officers
and ordinary union members.
1. Union officers.
The mere finding or declaration of illegality of the strike
will result in the termination of all union officers who
knowingly participated in the illegal strike. Unlike ordinary
members, it is not required, for purposes of termination, that
the
officers should commit an illegal act during the strike.
However, absent any showing that the employees are union
officers, they cannot be dismissed based solely on
the illegality of the strike.
To illustrate how the knowing participation of union
officers may be ascertained and established, the following
factors were taken into account in another 2011 case, Abaria

v. NLRC,1 which led to the declaration that they knowingly
participated in the illegal strike:
(1) Their persistence in holding picketing activities despite the
declaration by the NCMB that their union was not duly
registered as a legitimate labor organization and
notwithstanding the letter from the federations legal counsel
informing them
that their acts constituted disloyalty to the national federation;
and
(2) Their filing of the notice of strike and conducting a strike
vote despite the fact that their union has no legal
personality to negotiate with their employer for collective
bargaining purposes.
2. Ordinary union members.
The mere finding or declaration of illegality of a strike will not
result in termination of ordinary union members. For an
ordinary union member to suffer termination, it must be
shown by clear evidence that he has committed illegal acts
during the
strike.
b. Reason for the distinction.
The reason for this distinction is that the union officers have
the duty to guide their members to respect the law. If
instead of doing so, the officers urged the members to violate
the law and defy the duly constituted authorities, their
dismissal
from the service is a just penalty or sanction for their unlawful
act. Their responsibility as main players in an illegal strike is
greater than that of the ordinary union members and,
therefore, limiting the penalty of dismissal only to the former
for their
participation in an illegal strike is in order.
c. Some principles on illegality of a strike.
The fact that the employees are signatories to the CBA does
not in itself sufficiently establish their status as union
officers during the illegal strike. Neither were their active roles
during the bargaining negotiations be considered as

evidence of their being union officers.
Only the union officers during the period of illegal
strike are liable. If the employees acted as union officers
after the strike, they may not be held liable and, therefore,
could not be terminated in their capacity as such.
Shop stewards are union officers. Hence, they should
be terminated upon the declaration of the illegality of the
strike.
Union officers may be dismissed despite the fact
that the illegal strike was staged only for 1 day or even
for less than 10 hours. This holds true in cases of defiance
of the assumption/ certification order issued in
national interest cases.
If the dispositive portion of the decision failed to
mention the names of union officers, resort should be
made to the text of the decision.
No wholesale dismissal of strikers allowed. The
employer cannot just unceremoniously dismiss a hundred of
its employees in the absence of clear and convincing proof that
these people were indeed guilty of the acts
charged and then, afterwards, go to court to seek validation of
the dismissal it whimsically executed. That
certainly cannot be allowed.
3. PARTICIPATION IN THE COMMISSION OF
ILLEGAL ACTS DURING A STRIKE.
a. Legality or illegality of strike, immaterial.
As far as liability for commission of illegal acts during the
strike is concerned, the issue of legality or illegality of the
strike is irrelevant. As long as the union officer or
member commits an illegal act in the course of the
strike, be it legal or
illegal, his employment can be validly terminated.
b. Meaning of illegal acts.
The term illegal acts under Article 264(a) may encompass
a number of acts that violate existing labor or criminal
laws, such as the following:

(1) Violation of Article 264(e) of the Labor Code which
provides that [n]o person engaged in picketing shall commit
any act of violence, coercion or intimidation or obstruct the
free ingress to or egress from the employers premises
for lawful purposes, or obstruct public thoroughfares.
(2) Commission of crimes and other unlawful acts in carrying
out the strike.
(3) Violation of any order, prohibition, or injunction issued by
the DOLE Secretary or NLRC in connection with the
assumption of jurisdiction or certification order under Article
263(g) of the Labor Code.
This enumeration is not exclusive as jurisprudence abounds
where the term illegal acts has been interpreted and
construed to cover other breaches of existing laws.
Liability for illegal acts should be determined on an
individual basis. For this purpose, the individual identity
of
the union members who participated in the commission of
illegal acts may be proved thru affidavits and photographs.
Simply
referring to them as strikers, or complainants in
this case is not enough to justify their dismissal.
d. Some principles on commission of illegal acts in
the course of the strike.
Only members who are identified as having
participated in the commission of illegal acts are liable.
Those
who did not participate should not be blamed therefor.
To effectively hold ordinary union members liable, those
who participated in the commission of illegal acts must
not only be identified but the specific illegal acts they
each committed should be described with
particularity.
If violence was committed by both employer and
employees, the same cannot be cited as a ground to declare the
strike illegal.
(c)

LIABILITY OF EMPLOYER
I.
LIABILITY OF EMPLOYER IN CASE OF STRIKE
1. LIABILITY FOR REINSTATEMENT OF STRIKERS.
a. Reinstatement, when proper.
Reinstatement (without backwages) of ordinary rank-and-file
union members who did not participate in the
commission of illegal acts during the conduct of the illegal
strike may be ordered.
b. No reinstatement for strikers who committed
illegal acts.
The strikers who committed illegal acts during and in the
course of a strike may be terminated. They are not entitled
to be reinstated. Additionally, they may be held criminally
liable therefor.
c. Strikers who failed to return to work forfeit
reinstatement.
Strikers who failed to report for work without proper
justification and despite the order reinstating them to their job
are
deemed to have forfeited their right to reinstatement.
d. Employer who fails to reinstate strikers who were
ordered reinstated by the Labor Arbiter is liable to
pay
them backwages reckoned from Labor Arbiters
issuance of the reinstatement order up to its reversal
by the
NLRC.
2. SEPARATION PAY IN LIEU OF REINSTATEMENT
IN STRIKE CASES.
a. Separation pay in lieu of reinstatement, when
proper.
In strike cases, the award of separation pay in lieu of
reinstatement is proper only when the strikers did not
participate
in the commission of illegal acts in the course thereof.
3. BACKWAGES IN STRIKE CASES.

a. If the strike is illegal, no backwages should be paid.
Thus, in the case of Arellano University Employees and
Workers Union v. CA,1 where the strike was declared
illegal, petitioner-union members who were found not to have
participated in the commission of illegal acts during the strike
were
ordered reinstated to their former positions but without
backwages. If reinstatement is no longer possible, they
should receive
separation pay of one (1) month for every year of service in
accordance with existing jurisprudence. With respect to the
union
officers, their mere participation in the illegal strike warrants
their dismissal.
(d)
WAIVER OF ILLEGALITY OF STRIKE
1. VOLUNTARY REINSTATEMENT CONSTITUTES A
WAIVER OF THE ILLEGALITY OF THE STRIKE.
In Citizens Labor Union v. Standard Vacuum Oil Co.,2
the act of the employer in inviting the workers to return to
their posts without making any reference to the pending case
involving the issue of the illegality of the strike or imposing
any
condition or alteration of the terms of their employment was
deemed a waiver of its right to consider the strikers as
wrongdoers.
More so in this case when such invitation was accepted by the
strikers. By said act, the parties may be said to have both
abandoned their original positions and come to a virtual
compromise to resume unconditionally their former relations.
10.
INJUNCTIONS
I.
INJUNCTION IN PICKETING, STRIKE OR LOCKOUT
CASES
1. PROHIBITION ON INJUNCTION AGAINST THE

CONDUCT OF STRIKES AND LOCKOUTS.
As a general rule, strikes and lockouts that are validly declared
enjoy the protection of the law and cannot be enjoined
unless illegal acts are committed or threatened to be
committed in the course thereof. In the case of strikes, this
policy applies
even if the strike appears to be illegal in nature. The rationale
for this policy is the protection extended to the right to strike
under
the Constitution and the law. It is basically treated as a
weapon that the law guarantees to employees for the
advancement of
their interest and for their protection.
2. EXCEPTIONS WHEN THE STRIKE ITSELF MAY
BE ENJOINED.
However, in some cases, injunctions issued to enjoin the
conduct of the strike itself and not only the commission of
illegal or prohibited acts in the course thereof, were held to be
valid.
For instance, in San Miguel Corporation v. NLRC,1 the
Supreme Court ruled that injunction may be issued not only
against the commission of illegal acts in the course of the
strike but against the strike itself because the notice of strike
filed by
the union has been converted into a preventive
mediation case. Having been so converted, a strike can no
longer be staged
based on said notice. Upon such conversion, the legal effect is
that there is no more notice of strike to speak of.
In the earlier case of San Miguel Corporation v. NLRC,2
the Supreme Court ruled that the NLRC committed grave
abuse of discretion when it denied the petition for injunction
to restrain the union from declaring a strike based on non-
strikeable
grounds.
3. REGULAR COURTS ARE PROHIBITED FROM
ISSUING INJUNCTION AGAINST STRIKES OR

LOCKOUT.
The cases cited above involve the issuance of restraining order
or injunction by the NLRC pursuant to the exercise of
its injunctive power. In contrast, regular courts are absolutely
prohibited to grant any injunctive relief in cases of strikes or
lockouts.
II.
INJUNCTION IN PICKETING CASES
1. PROHIBITION ON INJUNCTION AGAINST
PEACEFUL PICKETING.
As a general rule, injunction cannot be issued against the
conduct of picketing by the workers. Under our constitutional
set up, picketing is considered part of the freedom of speech
duly guaranteed by the Constitution. However, excepted from
this
legal proscription are the situations mentioned below.
2. EXCEPTIONS.
Under the following circumstances, picketing may be enjoined
by the NLRC:
(1) Where picketing is carried out through the use of illegal
means;
(2) Where picketing involves the use of violence and other
illegal acts;
(3) Where picketing affects the rights of third parties and
injunction becomes necessary to protect such rights.
(b)
INNOCENT BYSTANDER RULE
1. WHEN INJUNCTION ON PICKETING IS ALLOWED
THROUGH THE REGULAR COURTS AND NOT
THROUGH THE
NLRC.
In situations where the picket affects not only the employer
but also the business operations of other establishments
owned by third parties, an injunction may be secured by the
latter from the regular courts to enjoin the picket under the
Innocent Bystander Rule. Under this rule, the third-
party employers or innocent bystanders who have no

employeremployee
relationship with the picketing strikers, may apply for
injunction with the regular courts (not with the NLRC) to
enjoin
the conduct of the picket.
Because of the absence of such employer-employee
relationship, the NLRC cannot entertain such application for
injunction from innocent bystanders. Only the employer of
the picketers can apply for injunctive relief from the NLRC.
------------oOo------------
TOPIC NO. 8
PROCEDURE AND JURISDICTION
PRELIMINARY CONSIDERATIONS
ON PROCEDURE AND JURISDICTION
1. EXISTENCE OF EMPLOYER-EMPLOYEE
RELATIONSHIP.
The existence of employer-employee relationship between the
parties-litigants, or a reasonable causal connection to
such relationship is a jurisdictional pre-requisite for the
exercise of jurisdiction over a labor dispute by the Labor
Arbiters or any
other labor tribunals.
2. THE CAUSE OF ACTION MUST ARISE FROM THE
EMPLOYER-EMPLOYEE RELATIONSHIP.
Even if there is employer-employee relationship, if the cause
of action did not arise out of or was not incurred in
connection with the employer-employee relationship, Labor
Arbiters and other labor tribunals have no jurisdiction
thereover.
Actions between employers and employees where the
employer-employee relationship is merely incidental are
within
the exclusive original jurisdiction of the regular courts.
3. REASONABLE CAUSAL CONNECTION RULE
THE RULE IN CASE OF CONFLICT OF
JURISDICTION BETWEEN

LABOR COURT AND REGULAR COURT.
Under this rule, if there is a reasonable causal connection
between the claim asserted and the employer-employee
relations, then the case is within the jurisdiction of labor
courts.
In the absence of such nexus, it is the regular courts that have
jurisdiction.
4. THE POWER TO DETERMINE EXISTENCE OF
EMPLOYMENT RELATIONSHIP.
Under labor laws, it is not only the Labor Arbiters and the
NLRC who/which are vested with the power to determine the
existence of employer-employee relationship.
The following have also the power to make similar
determination:
(1) The DOLE Secretary and the DOLE Regional
Directors, to the exclusion of the Labor Arbiter and
the NLRC;
(2) The Med-Arbiter;
(3) The Social Security Commission (SSC).
5. IN CASES FILED BY OFWs, LABOR ARBITERS
MAY EXERCISE JURISDICTION EVEN ABSENT THE
EMPLOYMENT
RELATIONSHIP.
In Santiago v. CF Sharp Crew Management, Inc.,1 it
was held that a seafarer who has already signed a
POEAapproved
employment contract but was not deployed overseas and,
therefore, there is no employer-employee relationship, may
file his monetary claims case with the Labor Arbiter. This is
because the jurisdiction of Labor Arbiters is not limited to
claims
arising from employer-employee relationships. Under Section
10 of R. A. No. 8042 (Migrant Workers and Overseas
Filipinos Act
of 1995), as amended, the Labor Arbiter may exercise
jurisdiction over the claims of OFWs arising out of an
employer-employee

relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment,
including claims for
actual, moral, exemplary and other forms of damage. (See also
the 2012 case of Bright Maritime Corporation v.
Fantonial2).
6. LABOR ARBITERS HAVE JURISDICTION EVEN IF
THE CASE IS FILED BY THE HEIRS OF THE OFW.
This was the ruling in Medline Management, Inc. v.
Roslinda.3 As heirs, the wife and son of Juliano Roslinda,
the
deceased OFW, have the personality to file the claim for death
compensation, reimbursement of medical expenses, damages
and attorney's fees before the Labor Arbiter of the NLRC.
7. LABOR DISPUTES, NOT SUBJECT TO BARANGAY
CONCILIATION.
Labor cases are not subject to the conciliation proceedings
prescribed under P.D. No. 1508 requiring the submission of
disputes before the Barangay Lupong Tagapayapa prior to
their filing with the court or other government offices. Instead
of
simplifying labor proceedings designed at expeditious
settlement or referral to the proper courts or offices to decide
them finally,
the conciliation of the issues before the Barangay Lupong
Tagapayapa would only duplicate the conciliation
proceedings and
unduly delay the disposition of labor cases.
A.
LABOR ARBITER
1. THE LABOR ARBITER.
The Labor Arbiter is an official in the Arbitration Branch of the
National Labor Relations Commission (NLRC) who hears
and decides cases falling under his original and exclusive
jurisdiction as provided by law.
2. LABOR ARBITERS HAVE NO INJUNCTIVE
POWER; ONLY THE COMMISSION (NLRC) HAS

THIS POWER.
Previously, Labor Arbiters are possessed of injunctive power.
This grant of injunctive power, however, was deleted in
recent NLRC Rules. The Labor Arbiter thus has no more
injunctive power. Only the Commission (NLRC) has that
power.
1.
JURISDICTION
1. NATURE OF JURISDICTION OF LABOR ARBITERS
- ORIGINAL AND EXCLUSIVE.
The jurisdiction conferred by Article 217 upon the Labor
Arbiters is both original and exclusive, meaning, no other
officers or tribunals can take cognizance of, or hear and
decide, any of the cases therein enumerated.
2. EXCEPTIONS TO THE ORIGINAL AND
EXCLUSIVE JURISDICTION OF LABOR ARBITERS.
The following cases are the exceptions when the Labor
Arbiters may not exercise their original and exclusive
jurisdiction:
1. In assumed cases. When the DOLE Secretary or the
President exercises his power under Article 263(g) of the
Labor Code to assume jurisdiction over national interest cases
and decide them himself.
2. In certified cases. When the NLRC exercises its power of
compulsory arbitration over similar national interest
cases that are certified to it by the DOLE Secretary pursuant to
the exercise by the latter of his certification power
under the same Article 263(g).
3. In cases arising from CBA. - When cases arise from the
interpretation or implementation of collective bargaining
agreements and from the interpretation or enforcement of
company personnel policies which shall be disposed of
by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration, as may be
provided in said agreements.
4. In cases submitted for voluntary arbitration. - When

the parties agree to submit the case to voluntary arbitration
before a Voluntary Arbitrator or panel of Voluntary
Arbitrators who, under Articles 261 and 262 of the Labor
Code,
are also possessed of original and exclusive jurisdiction to hear
and decide cases mutually submitted to them by
the parties for arbitration and adjudication.
3. RUNDOWN OF ALL CASES FALLING UNDER THE
JURISDICTION OF THE LABOR ARBITERS.
More particularly, Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide the following cases
involving all workers, whether agricultural or non-
agricultural:
1. Under Article 217 of the Labor Code:
(a) Unfair labor practice cases;
(b) Termination disputes (Illegal dismissal cases);
(c) Money claims exceeding P5,000.00.
(d) Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations; and
(e) Cases involving the legality of strikes and lockouts.
NOTE: Claims for employees compensation, SSS, Philhealth
(Medicare) and maternity benefits do not fall under the
jurisdiction of the Labor Arbiter because these fall under the
jurisdiction of other government agencies.
2. Under Article 124 of the Labor Code, as amended
by R.A. No. 6727:
Disputes involving legislated wage increases and wage
distortion in unorganized establishments not voluntarily
settled by the parties pursuant to R.A. No. 6727.
3. Under Article 128(b) of the Labor Code, as
amended by R.A. No. 7730:
Contested cases under the exception clause in Article
128(b) of the Labor Code.
4. Under Article 227 of the Labor Code:
Enforcement of compromise agreements when there is
non-compliance by any of the parties thereto,
pursuant to Article 227 of the Labor Code.

5. Under Article 262-A of the Labor Code:
Issuance of writ of execution to enforce decisions of
Voluntary Arbitrators or panel of Voluntary
Arbitrators,
in case of their absence or incapacity, for any reason.
6. Under Section 10 of R.A. No. 8042, as amended by
R.A. No. 10022:
Money claims of OFWs arising out of employer-employee
relationship or by virtue of any law or contract, including
claims death and disability benefits and for actual, moral,
exemplary and other forms of damages.
7. Other cases as may be provided by law.
I.
JURISDICTION OVER UNFAIR LABOR PRACTICE
CASES
1. SOME PRINCIPLES ON JURISDICTION OVER
ULPs.
The Labor Arbiter has jurisdiction over all ULPs whether
committed by the employers or the labor organizations.
The Labor Arbiter has jurisdiction only over the civil aspect
of ULP, the criminal aspect being lodged with the regular
courts.
II.
JURISDICTION OVER ILLEGAL DISMISSAL CASES
TERMINATION CASES.
The validity of the exercise of jurisdiction by Labor Arbiters
over illegal dismissal cases is not dependent on the
kind or nature of the ground cited in support of the
dismissal; hence, whether the dismissal is for just
cause
or authorized cause, it is of no consequence.
In case of conflict of jurisdiction between Labor
Arbiter and the Voluntary Arbitrator over termination
cases,
the formers jurisdiction shall prevail for the following
reasons:

(1) Termination of employment is not a grievable issue that
must be submitted to the grievance machinery or
voluntary arbitration for adjudication. The jurisdiction
thereover remains within the original and exclusive ambit
of the Labor Arbiter and not of the Voluntary Arbitrator.
(2) Even if the CBA provides that termination disputes are
grievable, the same is merely discretionary on the part
of the parties thereto.
(3) Once there is actual termination, jurisdiction is conferred
upon Labor Arbiters by operation of law.
(4) Interpretation of CBA and enforcement of company
personnel policies are merely corollary to an illegal
dismissal case.
(5) Article 217 is deemed written into the CBA being an
intrinsic part thereof.
In other words, the Voluntary Arbitrator will only have
jurisdiction over illegal dismissal cases when there is express
agreement of the parties to the CBA, i.e., the employer
and the bargaining agent, to submit the termination
case to voluntary arbitration. Absent the mutual express
agreement of the parties, Voluntary Arbitrator cannot
acquire jurisdiction over termination cases.
The express agreement must be stated in the CBA or
there must be enough evidence on record unmistakably
showing that the parties have agreed to resort to voluntary
arbitration.
III.
JURISDICTION OVER MONEY CLAIMS CASES
1. CLASSIFICATION OF MONEY CLAIMS.
Money claims falling within the original and exclusive
jurisdiction of the Labor Arbiters may be classified as follows:
1. Any money claim, regardless of amount, when
asserted in an illegal dismissal case (hence,
accompanied
with a claim for reinstatement). Here, the money claim is
but an accompanying remedy subordinated to the
principal cause of action, i.e., illegal dismissal; or

2. Any money claim exceeding the amount of P5,000.00
per claimant.
If the amount does not exceed P5,000.00, it is, under Article
129, the DOLE Regional Director has jurisdiction to take
cognizance thereof.
MONEY CLAIMS.
Award of statutory benefits even if not prayed for is valid.
Claim for notarial fees by a lawyer employed by a company
is within the jurisdiction of the Labor Arbiter.
(a)
VERSUS REGIONAL DIRECTOR
1. LABOR ARBITERS HAVE NO JURISDICTION
OVER SMALL MONEY CLAIMS LODGED UNDER
ARTICLE 129.
As earlier emphasized, under Article 129 of the Labor Code,
DOLE Regional Directors have jurisdiction over claims
amounting to P5,000 or below, provided the following
requisites concur:
1. The claim must arise from employer-employee relationship;
2. The claimant does not seek reinstatement; and
3. The aggregate money claim of each employee does not
exceed P5,000.00.
2. IN INSPECTION OF ESTABLISHMENT CASES
UNDER ARTICLE 128, DOLE REGIONAL DIRECTORS
HAVE
JURISDICTION REGARDLESS OF WHETHER OR
NOT THE TOTAL AMOUNT OF CLAIMS PER
EMPLOYEE EXCEEDS
P5,000.00.
a. Requisites.
For the valid exercise by the DOLE Secretary or any of his duly
authorized representatives (DOLE Regional Directors)
of the visitorial and enforcement powers provided under
Article 128(b), the following requisites should concur:
(1) The employer-employee relationship should still exist;
(2) The findings in question were made in the course of

inspection by labor inspectors; and
(3) The employees have not yet initiated any claim or
complaint with the DOLE Regional Director under Article 129,
or the Labor Arbiter under Article 217.
3. HOWEVER, JURISDICTION OVER CONTESTED
CASES UNDER THE EXCEPTION CLAUSE IN
ARTICLE 128(b) OF THE
LABOR CODE INVOLVING INSPECTION OF
ESTABLISHMENTS BELONGS TO THE LABOR
ARBITERS AND NOT TO
DOLE REGIONAL DIRECTORS.
a. Relation of paragraph (b) of Article 128 to the
jurisdiction of Labor Arbiters.
The Labor Arbiters have jurisdiction over contested cases
under the exception clause in Article 128(b). which states:
xxx. The Secretary or his duly authorized representatives
shall issue writs of execution to the appropriate authority for
the
enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and
enforcement
officer and raises issues supported by documentary proofs
which were not considered in the course of inspection.
In interpreting the afore-quoted provision of the exception
clause, three (3) elements must concur to divest the
Regional Directors or their representatives of jurisdiction
thereunder, to wit:
(a) That the employer contests the findings of the

labor regulations officer and raises issues thereon;
(b) That in order to resolve such issues, there is a
need to examine evidentiary matters; and
(c) That such matters are not verifiable in the normal
course of inspection.
The 2009 case of Meteoro v. Creative Creatures, Inc.,1
best illustrates the application of the exception clause. Here,
it was held that the Court of Appeals aptly applied the

exception clause because at the earliest opportunity,
respondent
company registered its objection to the findings of the labor
inspector on the ground that there was no employer-employee
relationship between petitioners and respondent company.
The labor inspector, in fact, noted in his report that
respondent
alleged that petitioners were contractual workers and/or
independent and talent workers without control or supervision
and also
supplied with tools and apparatus pertaining to their job. In
its position paper, respondent again insisted that petitioners
were
not its employees. It then questioned the Regional Directors
jurisdiction to entertain the matter before it, primarily because
of
the absence of an employer-employee relationship. Finally, it
raised the same arguments before the Secretary of Labor and
the
appellate court. It is, therefore, clear that respondent
contested and continues to contest the findings and
conclusions of the
labor inspector. To resolve the issue raised by respondent, that
is, the existence of an employer-employee relationship, there
is a
need to examine evidentiary matters.
IV.
JURISDICTION OVER CLAIMS FOR DAMAGES
1. LABOR ARBITERS HAVE JURISDICTION OVER
CLAIMS FOR DAMAGES.
It is now a well-settled rule that claims for damages as well as
attorneys fees in labor cases are cognizable by the
Labor Arbiters, to the exclusion of all other courts. Rulings to
the contrary are deemed abandoned or modified accordingly.
2. CLAIMS FOR DAMAGES OF OVERSEAS FILIPINO
WORKERS (OFWs).
Claims for actual, moral, exemplary and other forms of

damages that may be lodged by overseas Filipino workers are
cognizable by the Labor Arbiters.
V.
JURISDICTION OVER LEGALITY OF STRIKES AND
LOCKOUTS
JURISDICTIONAL INTERPLAY IN STRIKE OR
LOCKOUT CASES
1. A STRIKE OR LOCKOUT IS CROSS-
JURISDICTIONAL IN NATURE.
Based on the pertinent provisions of the Labor Code, below is
an outline of the interplay in jurisdiction among them.
1. Filing of a notice of strike or lockout with NCMB. - A
union which intends to stage a strike or an employer which
desires to mount a lockout should file a notice of strike or
notice of lockout, as the case may be, with the NCMB and not
with any
other office. It must be noted, however, that the NCMB, per
Tabigue v. International Copra Export Corporation,2
is not a
quasi-judicial body; hence, the Conciliators-Mediators
of the NCMB do not have any decision-making power.
They
cannot issue decisions to resolve the issues raised in the notice
of strike or lockout. Their role is confined solely to the
conciliation and mediation of the said issues, although they
can suggest to the parties that they submit their dispute to
voluntary
arbitration through the Voluntary Arbitrators accredited by
the NCMB.
2. Filing of a complaint to declare the illegality of the
strike or lockout with the Labor Arbiter or Voluntary
Arbitrator or panel of Voluntary Arbitrator. - In case a
party wants to have the strike or lockout declared illegal, a
complaint
should be filed either with the Labor Arbiter under Article
217(a)(5) of the Labor Code or, upon mutual agreement of the
parties,

with the Voluntary Arbitrator or panel of Voluntary
Arbitrators under Article 262 of the same Code. The issue of
illegality of the
strike or lockout cannot be resolved by the Conciliators-
Mediators of the NCMB as earlier pointed out and discussed.
3. Filing of an injunction petition with the
Commission (NLRC). - In case illegal acts violative of
Article 264 are
committed in the course of the strike or lockout, a party may
file a petition for injunction directly with the Commission
(NLRC)
under Article 218(e) of the Labor Code for purposes of
securing a temporary restraining order (TRO) and injunction.
The Labor
Arbiters or Voluntary Arbitrators are not possessed of any
injunctive power under the Labor Code. In other words, the
aggrieved
party, despite the pendency of the case for the declaration of
the illegality of the strike or lockout with the Labor Arbiter or
Voluntary Arbitrator, as the case may be, may directly go to
the Commission to secure the injunctive relief.
4. Assumption of jurisdiction by the DOLE Secretary.
Under Article 263(g) of the Labor Code, the DOLE
Secretary has the power to assume jurisdiction over labor
disputes which, in his opinion, may cause or likely to cause a
strike or
lockout in industries indispensable to the national interest (so-
called national interest cases). Once he makes the
assumption,
he shall decide all the issues related to the labor dispute
himself, to the exclusion of all other labor authorities.
5. Certification of the labor dispute to the NLRC. -
Under the same provision of Article 263(g) of the Labor Code,
the DOLE Secretary has the option of not assuming
jurisdiction over the labor dispute in national interest cases.
Instead, he may
certify it to the NLRC for compulsory arbitration, in which

case, it will be the NLRC which shall hear and decide all the
issues
subject of the certification order.
In case at the time of the said assumption or certification,
there is a pending case before the Labor Arbiter or Voluntary
Arbitrator on the issue of illegality of the strike or lockout, the
same shall be deemed subsumed in the assumed or certified
case.
Resultantly, it is no longer the Labor Arbiter or the Voluntary
Arbitrator who should decide the said case but the DOLE
Secretary,
in the case of assumed cases, or the NLRC, in the case of
certified cases.
6. Assumption of jurisdiction over a national interest
case by the President. - The President of the Philippines is
not precluded from intervening in a national interest case by
exercising himself the powers of his alter ego, the DOLE
Secretary,
granted under Article 263(g) by assuming jurisdiction over the
same for purposes of settling or terminating it.
7. Submission of a national interest case to voluntary
arbitration. - Despite the pendency of the assumed or
certified national interest case, the parties are allowed to
submit any issues raised therein to voluntary arbitration at
any stage of
the proceeding, by virtue of Article 263(h) which provides that
(b)efore or at any stage of the compulsory arbitration
process, the
parties may opt to submit their dispute to voluntary
arbitration.
The foregoing interplay explains why Article 263(i) makes
specific reference to the President of the Philippines, the
Secretary of Labor and Employment, the Commission (NLRC)
or the Voluntary Arbitrator in connection with the law on
strike,
lockout and picketing embodied in Article 263. The only labor
official not so mentioned therein but who has a significant role

to
play in the interaction of labor officials and tribunals in strike
or lockout cases, is the Labor Arbiter. This is understandable
in the
light of the separate express grant of jurisdiction to the Labor
Arbiters under Article 217(a)(5) as above discussed.
VI.
JURISDICTION OVER CASES INVOLVING
LEGISLATED WAGE INCREASES AND WAGE
DISTORTION
1. CASES IN ORGANIZED ESTABLISHMENTS.
Jurisdiction is with the Voluntary Arbitrator.
2. CASES IN UNORGANIZED ESTABLISHMENTS.
Jurisdiction is with Labor Arbiter.
VII.
JURISDICTION OVER ENFORCEMENT OR
ANNULMENT
OF COMPROMISE AGREEMENTS
1. LEGAL BASIS.
Article 227 clearly embodies the following provisions on
compromise agreements:
Article 227. Compromise Agreements. - Any compromise
settlement, including those involving labor
standard laws, voluntarily agreed upon by the parties with the
assistance of the Bureau or the regional office of the
Department of Labor, shall be final and binding upon the
parties. The National Labor Relations Commission or
any
court shall not assume jurisdiction over issues
involved therein except in case of non-compliance
thereof or if
there is prima facie evidence that the settlement was
obtained through fraud, misrepresentation, or
coercion.
Clear from the foregoing provision that, although the
compromise agreement may have been entered into by the
parties

before the Bureau of Labor Relations (BLR) or the DOLE
Regional Office, it is the Labor Arbiter who has jurisdiction to
take
cognizance of the following issues related thereto, to the
exclusion of the BLR and the DOLE Regional Directors:
(1) To enforce the compromise agreement in case of non-
compliance therewith by any of the parties thereto; or
(2) To nullify it if there is prima facie evidence that the
settlement was obtained through fraud, misrepresentation, or
coercion.
VIII.
JURISDICTION OVER EXECUTION AND
ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS
1. DECISIONS OF VOLUNTARY ARBITRATORS.
Article 262-A of the Labor Code prescribes the procedures that
Voluntary Arbitrators or panel of Voluntary Arbitrators
should follow in adjudicating cases filed before them. Once a
decision has been rendered in a case and subsequently
becomes
final and executory, it may be enforced through the writ of
execution issued by the same Voluntary Arbitrator or panel of
Voluntary Arbitrators who rendered it, addressed to and
requiring certain public officers to execute the final decision,
order or
award.
2. LABOR ARBITERS MAY ISSUE THE WRIT OF
EXECUTION.
In situations, however, where the Voluntary Arbitrator or the
panel of Voluntary Arbitrators who rendered the decision is
absent or incapacitated for any reason, Article 262-A grants
jurisdiction to any Labor Arbiter in the region where the
winning party
resides, to take cognizance of a motion for the issuance of the
writ of execution filed by such party and accordingly issue
such
writ addressed to and requiring the public officers mentioned

above to execute the final decision, order or award of the
Voluntary
Arbitrator or panel of Voluntary Arbitrators.
IX.
JURISDICTION OVER CASES OF OVERSEAS
FILIPINO WORKERS (OFWs)
1. LABOR ARBITERS HAVE JURISDICTION OVER
ALL MONEY CLAIMS OF OFWs.
All claims of OFWs with a sign of peso are cognizable by the
Labor Arbiters, including claims for disability and death
benefits.
2. EXCEPTION: VOLUNTARY ARBITRATORS HAVE
JURISDICTION OVER MONEY CLAIMS IF THERE
EXISTS A CBA.
If there is a CBA between the foreign employer and the
bargaining union of the OFWs, the jurisdiction over monetary
claims of OFWs belongs to the Voluntary Arbitrator and not to
the Labor Arbiter.
3. OFW-RELATED CASES OVER WHICH THE POEA,
AND NOT THE LABOR ARBITERS, HAS
JURISDICTION.
The Philippine Overseas Employment Administration (POEA)
has original and exclusive jurisdiction to hear and
decide:
(a) All cases which are administrative in character, involving
or arising out of violation of rules and regulations relating
to licensing and registration of recruitment and employment
agencies or entities, including refund of fees collected
from workers and violation of the conditions for the issuance
of license to recruit workers.
(b) Disciplinary action cases and other special cases which are
administrative in character, involving employers,
principals, contracting partners and Filipino migrant workers.
No. 1 above covers recruitment violations or violations of

conditions of license; while No. 2 above involves (a)
disciplinary action cases against foreign principals or

employers, and (a) disciplinary action cases against land-
based OFWs and
seafarers.
X.
OTHER ISSUES OVER WHICH LABOR ARBITERS
HAVE JURISDICTION
1. JURISDICTION OVER CERTAIN ISSUES AS
PROVIDED IN JURISPRUDENCE.
In accordance with well-entrenched jurisprudence, the issues,
claims or cases of the following fall under the jurisdiction
of the Labor Arbiters:
(a) Employees in government-owned and/or controlled
corporations without original charters;
(b) Domestic workers or kasambahay;
(c) Employees of cooperatives;
(d) Counter-claims of employers against employees.
JURISDICTION OVER CASES OF
DOMESTIC WORKERS OR KASAMBAHAY
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdiction if the amount of the claim
exceeds P5,000.00; otherwise, the jurisdiction is vested
with the DOLE Regional Director under Article 129 of the
Labor Code.
Incidentally, it is no longer legally correct to use the term
domestic servant or househelper in reference to a person
who performs domestic work. Under R.A. No. 10361,
domestic servant or househelper should now be referred to
as
domestic worker or kasambahay.
JURISDICTION OVER CASES OF
EMPLOYEES OF COOPERATIVES
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdiction only over monetary claims
and illegal dismissal cases involving employees of
cooperatives but not the claims or termination of membership
of members thereof. Cooperatives organized under R.A. No.
6938,

are composed of members; hence, issues on the termination of
their membership with the cooperative do not fall within the
jurisdiction of the Labor Arbiters.
Perpetual Help Credit Cooperative, Inc. v. Faburada.
- Petitioner in this case contends that the Labor Arbiter has no
jurisdiction to take cognizance of the complaint of private
respondents who are not members but employees of the
cooperative.
The Supreme Court ruled that there is no evidence that private
respondents are members of petitioner cooperative and even if
they are, the dispute is about payment of wages, overtime pay,
rest day and termination of employment. Under Article 217 of
the
Labor Code, these disputes are within the original and
exclusive jurisdiction of the Labor Arbiters.
In the 2010 case of San Miguel Corp. v. Semillano,1
petitioner asserts that the present case is outside the
jurisdiction
of the labor tribunals because respondent Vicente Semillano is
a member of the Alilgilan Multi-Purpose Coop (AMPCO), not
an
employee of petitioner SMC. Petitioner is of the position that
the instant dispute is intra-cooperative in nature falling
within the
jurisdiction of the Arbitration Committee of the Cooperative
Development Authority. AMPCO was contracted by petitioner
to
supply it with workers to perform the task of segregating
bottles, removing dirt therefrom, filing them in designated
places,
loading and unloading the bottles to and from the delivery
trucks, and to perform other tasks as may be ordered by SMCs
officers. Semillano, together with the other respondents, filed
the complaint for regularization with petitioner SMC,
contending
that AMPCO was a mere labor-only contractor. The High
Court declared in this case that AMPCO was a labor-only

contractor
and consequently pronounced that all the respondents,
including Semillano, were regular employees of petitioner. On
this issue
of jurisdiction, the High Court held that the Labor Arbiter has
jurisdiction because precisely, Semillano has joined the others
in
filing this complaint because it is his position that petitioner
SMC is his true employer and liable for all his claims under the
Labor
Code.
JURISDICTION OVER COUNTER-CLAIMS OF
EMPLOYERS
1. EMPLOYERS MAY ASSERT COUNTER-CLAIMS
AGAINST EMPLOYEES FILED BY THE LATTER
BEFORE THE LABOR
ARBITERS.
Almost all labor cases decided by labor courts involve claims
asserted by the workers. The question that may be
propounded is whether the employers can assert counter-
claims against their employees before the Labor Arbiters. The
Supreme Court answered this poser in the affirmative.
Baez v. Hon. Valdevilla.2 - The jurisdiction of Labor
Arbiters and the NLRC is comprehensive enough to include
claims for all forms of damages arising from the employer-
employee relations. By this clause, Article 217 should apply
with
equal force to the claim of an employer for actual damages
against its dismissed employee, where the basis for the claim
arises
from or is necessarily connected with the fact of termination,
and should be entered as a counter-claim in the illegal
dismissal
case. This is in accord with paragraph 6 of Article 217(a),
which covers all other claims, arising from employer-
employee
relations.

But such counter-claim, being a factual issue, must be asserted
before the Labor Arbiter; otherwise, it can no longer be
passed upon by a reviewing court.
XI.
ISSUES AND CASES OVER WHICH
LABOR ARBITERS HAVE NO JURISDICTION
1. LABOR ARBITERS HAVE NO JURISDICTION
OVER CERTAIN ISSUES AND CASES.
The following issues or cases do not fall under the jurisdiction
of Labor Arbiters:
(a) Claims for damages arising from breach of a non-
compete clause and other post-employment prohibitions;
(b) Claims for payment of cash advances, car, appliance
and other loans of employees;
(c) Dismissal of corporate officers and their monetary
claims;
(d) Cases involving entities immune from suit;
(e) Cases falling under the doctrine of forum non conveniens;
(f) Constitutionality of CBA provisions.
XI-A.
CLAIMS FOR DAMAGES ARISING FROM BREACH
OF NON-COMPETE CLAUSE AND OTHER
POST-EMPLOYMENT PROHIBITIONS
1. JURISDICTION IS LODGED WITH THE REGULAR
COURTS.
In case of violation of the non-compete clause and similar
post-employment bans or prohibitions, the employer can
assert his claim for damages against the erring employee with
the regular courts and not with the labor courts.
XI-B.
EMPLOYERS CLAIMS FOR CASH ADVANCES, CAR,
APPLIANCE
AND OTHER PERSONAL LOANS OF EMPLOYEES
1. LABOR ARBITERS HAVE NO JURISDICTION.
With respect to resolving issues involving loans availed of by
employees from their employers, it has been the
consistent ruling of the Supreme Court that the Labor Arbiters

have no jurisdiction thereover but the regular courts.
Where the claim to the principal relief sought is to be
resolved not by reference to the Labor Code or other labor
relations statute or a collective bargaining agreement but by
the general civil law, the jurisdiction over the dispute belongs
to the
regular courts of justice and not to the Labor Arbiter and the
NLRC. In such situations, resolutions of the dispute requires
expertise, not in labor management relations nor in wage
structures and other terms and conditions of employment, but
rather in
the application of the general civil law. Clearly, such claims fall
outside the area of competence or expertise ordinarily ascribed
to
Labor Arbiters and the NLRC and the rationale for granting
jurisdiction over such claims to these agencies disappears.
The following loans may be cited:
a. Cash loans/advances are in the nature of simple
collection of a sum of money brought by the employer, as
creditor, against the employee, as debtor. The fact that they
were employer and employee at the time of the
transaction does not negate the civil jurisdiction of the trial
court. The case does not involve adjudication of a labor
dispute but recovery of a sum of money based on our civil laws
on obligation and contract.
b. Car loans such as those granted to sales or medical
representatives by reason of the nature of their work. The
employers demand for payment of the employees
amortizations on their car loans, or, in the alternative, the
return
of the cars to the company, is not a labor, but a civil, dispute. It
involves debtor-creditor relations, rather than
employee-employer relations.
c. Appliance loans concern the enforcement of a loan
agreement involving debtor-creditor relations founded on
contract and do not in any way concern employee relations. As
such it should be enforced through a separate civil

action in the regular courts and not before the Labor Arbiter.
d. Loans from retirement fund also involve the same
principle as above; hence, collection therefor may only be
made through the regular courts and not through the Labor
Arbiter or any labor tribunal.
XI-C.
DISMISSAL OF DIRECTORS AND CORPORATE
OFFICERS
1. LABOR ARBITERS HAVE NO JURISDICTION.
The dismissal of a director or corporate officer is an intra-
corporate dispute cognizable by the Regional Trial Court and
not by the Labor Arbiter.
2. MATLING DOCTRINE.
Under this doctrine,1 the following rules should be observed:
(1) The dismissal of regular employees falls under the
jurisdiction of Labor Arbiters; while that of corporate
officers
falls within the jurisdiction of the regular courts.
(2) The term corporate officers refers only to those
expressly mentioned in the Corporation Code and By-Laws;
all other officers not so mentioned therein are deemed
employees.
(3) Corporate officers are elected or appointed by the
directors or stockholders, and those who are given that
character either by the Corporation Code or by the
corporations by-laws.
(4) The Corporation Code specifically mentions only the
following corporate officers, to wit: president,
secretary
and treasurer and such other officers as may be provided for
in the by-laws.
(5) The Board of Directors can no longer create
corporate offices because the power of the Board of
Directors to create a corporate office cannot be
delegated. Therefore, the term corporate officers
should
only refer to the above and to no other. A different

interpretation can easily leave the way open for the Board of
Directors to circumvent the constitutionally guaranteed
security of tenure of the employee by the expedient
inclusion in the By-Laws of an enabling clause on the creation
of just any corporate officer position.
(6) Distinction between a corporate officer and an
employee. - An office is created by the charter of the
corporation and the corporate officer is elected by the
directors or stockholders. On the other hand, an
employee occupies no office and generally is employed not
by the action of the directors or stockholders but by
the managing officer of the corporation who also determines
the compensation to be paid to such employee.
(7) Because of the Matling doctrine, the rulings in Tabang
and Nacpil, are no longer controlling because they are
too sweeping and do not accord with reason, justice, and fair
play.
(8) The status of an employee as director and
stockholder does not automatically convert his
dismissal into
an intra-corporate dispute.
(9) Two (2) elements to determine whether a dispute
is intra-corporate or not.
(a) The status or relationship of the parties (Relationship
test); and
(b) The nature of the question that is the subject of their
controversy. (Nature of controversy test).
In the absence of any one of these factors, the RTC
will not have jurisdiction.
(10) The criteria do not depend on the services
performed but on the manner of creation of the
office.
In Matling, respondent Corros was supposedly at once an
employee, a stockholder, and a Director of Matling. The
circumstances surrounding his appointment to office must be
fully considered to determine whether the dismissal
constituted an intra-corporate controversy or a labor

termination dispute. It must also be considered whether his
status as Director and stockholder had any relation at all to his
appointment and subsequent dismissal as Vice
President for Finance and Administration.
Obviously enough, the respondent was not appointed as Vice
President for Finance and Administration because
of his being a stockholder or Director of Matling. He had
started working for Matling on September 8, 1966, and
had been employed continuously for 33 years until his
termination on April 17, 2000. His first work as a
bookkeeper and his climb in 1987 to his last position as Vice
President for Finance and Administration had been
gradual but steady. Even though he might have become a
stockholder of Matling in 1992, his promotion to the
position of Vice President for Finance and Administration in
1987 was by virtue of the length of quality service he
had rendered as an employee of Matling. His subsequent
acquisition of the status of Director/stockholder had no
relation to his promotion. Besides, his status of
Director/stockholder was unaffected by his dismissal from
employment as Vice President for Finance and
Administration.
3. SIGNIFICANT CASES DECIDED BASED ON THE
MATLING DOCTRINE.
a. Cosare v. Broadcom Asia, Inc., (2014)
In this 2014 case, the Supreme Court ruled that the Labor
Arbiter, not the regular courts, has original jurisdiction over
the illegal dismissal case filed by petitioner Cosare who was an
incorporator of respondent Broadcom and was holding the
position of Assistant Vice President for Sales (AVP for Sales)
and Head of the Technical Coordination at the time of his
termination. The following justifications were cited in support
of this ruling:
(1) The mere fact that a person was a stockholder and an
officer of the company at the time the subject controversy
developed does not necessarily make the case an intra-
corporate dispute.

(2) A person, although an officer of the company, is not
necessarily a corporate officer thereof.
(3) General Information Sheet (GIS) submitted to SEC neither
governs nor establishes the nature of office.
(4) The Nature of the Controversy Test: The mere fact that a
person was a stockholder at the time of the filing of the
illegal dismissal case does not make the action an intra-
corporate dispute.
b. Other cases:
(1) Barba v. Liceo de Cagayan University (2012);
(2) Marc II Marketing, Inc. and Lucila V. Joson v.
Alfredo M. Joson (2011);
(3) Real v. Sangu Philippines, Inc. (2011).
XI-D.
LABOR CASES INVOLVING ENTITIES IMMUNE
FROM SUIT
1. IMMUNE ENTITIES CANNOT BE SUED FOR
LABOR LAW VIOLATIONS.
In this jurisdiction, the generally accepted principles of
international law are recognized and adopted as part of the
law
of the land. Immunity of a State and international
organizations from suit is one of these universally recognized
principles. It is on
this basis that Labor Arbiters or other labor tribunals have no
jurisdiction over immune entities.
2. ILLUSTRATIVE CASE.
In Department of Foreign Affairs v. NLRC,1 involving an
illegal dismissal case filed against the Asian Development
Bank (ADB), it was ruled that said entity enjoys immunity
from legal process of every form and therefore the suit against
it cannot
prosper. And this immunity extends to its officers who also
enjoy immunity in respect of all acts performed by them in
their
official capacity. The Charter and the Headquarters Agreement
granting these immunities and privileges to the ADB are treaty

covenants and commitments voluntarily assumed by the
Philippine government which must be respected.
3. EXCEPTION TO THE RULE.
There is an exception to the immunity rule as exemplified by
the case of United States v. Hon. Rodrigo,2 where it was
held that when the function of the foreign entity otherwise
immune from suit partakes of the nature of a proprietary
activity, such
as the restaurant services offered at John Hay Air Station
undertaken by the United States Government as a commercial
activity
for profit and not in its governmental capacity, the case for
illegal dismissal filed by a Filipino cook working therein is well
within
the jurisdiction of Philippine courts. The reason is that by
entering into the employment contract with the cook in the
discharge of
its proprietary functions, it impliedly divested itself of its
sovereign immunity from suit.
4. ESTOPPEL DOES NOT CONFER JURISDICTION

OVER AN IMMUNE ENTITY.
An entity immune from suit cannot be estopped from claiming
such diplomatic immunity since estoppel does not
operate to confer jurisdiction to a tribunal that has none over a
cause of action.
XI-E.
DOCTRINE OF FORUM NON CONVENIENS
1. REQUISITES.
This doctrine is an international law principle which has been
applied to labor cases. The following are the requisites
for its applicability:
(1) That the Philippine court is one to which the parties may
conveniently resort;
(2) That the Philippine court is in a position to make an
intelligent decision as to the law and the facts; and
(3) That the Philippine court has or is likely to have power to

enforce its decision.
2. APPLICATION TO LABOR CASES.
a. Case where doctrine was rejected.
Petitioners invocation of this principle was rejected in Pacific
Consultants International Asia, Inc. v. Schonfeld.1
Petitioners insistence was based on the fact that respondent is
a Canadian citizen and was a repatriate. In so rejecting
petitioners contention, the Supreme Court cited the following
reasons that do not warrant the application of the said
principle: (1)
the Labor Code does not include forum non
conveniens as a ground for the dismissal of the
complaint; and (2) the
propriety of dismissing a case based on this principle
requires a factual determination; hence, it is properly
considered
as a defense.
b. Case where doctrine was applied.
This doctrine was applied in the case of The Manila Hotel
Corp. and Manila Hotel International Limited v.
NLRC,2
where private respondent Marcelo Santos was an overseas
worker employed as a printer in a printing press in the
Sultanate of
Oman when he was directly hired by the Palace Hotel, Beijing,
Peoples Republic of China to work in its print shop. This hotel
was being managed by the Manila Hotel International Ltd., a
foreign entity registered under the laws of Hong Kong. Later,
he
was terminated due to retrenchment occasioned by business
reverses brought about by the political upheaval in China
(referring
to the Tiananmen Square incident) which severely affected the
hotels operations.
In holding that the NLRC was a seriously inconvenient forum,
the Supreme Court noted that the main aspects of the
case transpired in two foreign jurisdictions and the case

involves purely foreign elements. The only link that the
Philippines has
with the case is that the private respondent employee (Marcelo
Santos) is a Filipino citizen. The Palace Hotel and MHICL are
foreign corporations. Consequently, not all cases involving
Filipino citizens can be tried here. Respondent employee was
hired
directly by the Beijing Palace Hotel, a foreign employer,
through correspondence sent to him while he was working at
the
Sultanate of Oman. He was hired without the intervention of
the POEA or any authorized recruitment agency of the
government.
Hence, the NLRC is an inconvenient forum given that all the
incidents of the case - from the time of recruitment, to
employment
to dismissal - occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper
defendants, the
Palace Hotel and MHICL, are not nationals of the Philippines.
Neither are they doing business in the Philippines. Likewise,
the
main witnesses, Mr. Shmidt (General Manager of the Palace
Hotel) and Mr. Henk (Palace Hotels Manager) are non-
residents of
the Philippines.
Neither can an intelligent decision be made as to the law
governing the employment contract as such was perfected in
foreign soil. This calls to fore the application of the principle of
lex loci contractus (the law of the place where the contract was
made). It must be noted that the employment contract was not
perfected in the Philippines. Private respondent employee
signified his acceptance thereof by writing a letter while he
was in the Sultanate of Oman. This letter was sent to the
Palace
Hotel in the Peoples Republic of China. Neither can the NLRC
determine the facts surrounding the alleged illegal dismissal as

all
acts complained of took place in Beijing, Peoples Republic of
China. The NLRC was not in a position to determine whether
the
Tiananmen Square incident truly adversely affected the
operations of the Palace Hotel as to justify respondent
employees
retrenchment.
Even assuming that a proper decision could be reached by the
NLRC, such would not have any binding effect against
the employer, the Palace Hotel, which is a corporation
incorporated under the laws of China and was not even served
with
summons. Jurisdiction over its person was not acquired. This
is not to say that Philippine courts and agencies have no power
to
solve controversies involving foreign employers. Neither could
it be said that the Supreme Court does not have power over an
employment contract executed in a foreign country. If the
respondent employee were an overseas contract worker, a
Philippine
forum, specifically the POEA, not the NLRC, would protect
him. He is not an overseas contract worker, a fact which he
admits
with conviction.
XI-F.
CONSTITUTIONALITY OF LABOR CONTRACT
STIPULATIONS
1. THE HALAGUEA DOCTRINE.
In Halaguea v. Philippine Airlines, Inc.,3 it was
pronounced that it is not the Labor Arbiter but the regular
court which
has jurisdiction to rule on the constitutionality of labor
contracts such as a CBA. Petitioners were female flight
attendants of
respondent Philippine Airlines (PAL) and are members of the
Flight Attendants and Stewards Association of the Philippines

(FASAP), the sole and exclusive bargaining representative of
the flight attendants, flight stewards and pursers of
respondent.
The July 11, 2001 CBA between PAL and FASAP provides that
the compulsory retirement for female flight attendants is fifty-
five
(55) and sixty (60) for their male counterpart.
Claiming that said CBA provision is discriminatory against
them, petitioners filed against respondent a Special Civil
Action for Declaratory Relief with Prayer for the Issuance of
Temporary Restraining Order and Writ of Preliminary
Injunction with
the Regional Trial Court (RTC) of Makati City.
In ruling that the RTC has jurisdiction, the Supreme Court
cited the following reasons:
(1) The case is an ordinary civil action, hence, beyond the
jurisdiction of labor tribunals.
(2) The said issue cannot be resolved solely by applying the
Labor Code. Rather, it requires the application of the
Constitution, labor statutes, law on contracts and the
Convention on the Elimination of All Forms of Discrimination
Against Women (CEDAW). The power to apply and interpret
the constitution and CEDAW is within the jurisdiction
of trial courts, a court of general jurisdiction.
(3) Not every controversy or money claim by an employee
against the employer or vice-versa is within the exclusive
jurisdiction of the Labor Arbiter. Actions between employees
and employer where the employer-employee
relationship is merely incidental and the cause of action
proceeds from a different source of obligation are within
the exclusive jurisdiction of the regular courts. Here, the
employer-employee relationship between the parties is
merely incidental and the cause of action ultimately arose
from different sources of obligation, i.e., the
Constitution and CEDAW.
2.
REINSTATEMENT PENDING APPEAL

1. PIONEER TEXTURIZING DOCTRINE:
REINSTATEMENT ASPECT OF LABOR ARBITERS
DECISION, IMMEDIATELY
EXECUTORY EVEN PENDING APPEAL; NO WRIT OF
EXECUTION REQUIRED.
According to the Pioneer Texturizing doctrine, an order of
reinstatement issued by the Labor Arbiter under Article 223
of the Labor Code is self-executory or immediately executory
even pending appeal. This means that the perfection of an
appeal
shall stay the execution of the decision of the Labor Arbiter
except execution of the reinstatement pending appeal.
2. REINSTATEMENT PENDING APPEAL,
APPLICABLE ONLY TO THE REINSTATEMENT
ORDER ISSUED BY THE
LABOR ARBITER; WRIT OF EXECUTION REQUIRED
WHEN REINSTATEMENT IS ORDERED BY NLRC ON
APPEAL,
OR SUBSEQUENTLY BY THE COURT OF APPEALS
OR SUPREME COURT, AS THE CASE MAY BE.
By way of distinction, the rule on reinstatement pending
appeal applies only to the order of reinstatement issued by the
Labor Arbiter and to no other. This means that if the
reinstatement order is issued by the NLRC on appeal, or by the
Court of
Appeals or by the Supreme Court, there is a need to secure a
writ of execution from the Labor Arbiter of origin to enforce
the
reinstatement of the employee whose dismissal is declared
illegal.
3. TWO (2) OPTIONS OF EMPLOYER.
To implement the reinstatement aspect of a Labor Arbiters
decision, there are only two (2) options available to the
employer, to wit:
1. Actual reinstatement. - The employee should be
reinstated to his position which he occupies prior to his illegal
dismissal under the same terms and conditions prevailing

prior to his dismissal or separation or, if no longer
available, to a substantially-equivalent position; or
2. Payroll reinstatement. The employee should be
reinstated in the payroll of the company without requiring him
to
report back to his work.
4. DUTY OF EMPLOYER TO NOTIFY EMPLOYEE
ORDERED REINSTATED.
It is required that in case the decision of the Labor Arbiter
includes an order of reinstatement, it should contain:
(a) A statement that the reinstatement aspect is immediately
executory; and
(b) A directive for the employer to submit a report of
compliance within ten (10) calendar days from receipt of the
said
decision.
Disobedience of this directive clearly denotes a refusal to
reinstate. The employee need not file a motion for the
issuance of the writ of execution since the Labor Arbiter is
mandated thereafter to motu proprio issue the writ. With the
new rules
in place, there is hardly any difficulty in determining the
employers intransigence in immediately complying with the
order.
5. INSTANCES WHEN WRIT OF EXECUTION OF
LABOR ARBITERS REINSTATEMENT ORDER STILL
REQUIRED.
Under the 2011 NLRC Rules of Procedure, there are two (2)
instances when a writ of execution should still be issued
immediately by the Labor Arbiter to implement his order of
reinstatement, even pending appeal, viz.:
(1) When the employer disobeys the prescribed directive to
submit a report of compliance within ten (10) calendar
days from receipt of the decision; or
(2) When the employer refuses to reinstate the dismissed
employee.
The Labor Arbiter shall motu proprio issue a corresponding

writ to satisfy the reinstatement wages as they accrue
until actual reinstatement or reversal of the order of
reinstatement.
6. SOME PRINCIPLES ON REINSTATEMENT
PENDING APPEAL.
Employer has no way of staying execution of
immediate reinstatement. He cannot post bond to prevent
its execution.
Reinstatement pending appeal applies to all kinds of
illegal dismissal cases, regardless of the grounds
thereof.
Reinstatement pending appeal does not apply when the
dismissal is legal but reinstatement is ordered for
some
reasons like equity and compassionate justice.
The failure of employee ordered reinstated pending appeal
to report back to work as directed by the employer does not
give the employer the right to remove him, especially when
there is a reasonable explanation for his failure.
When former position is already filled up, the employee
ordered reinstated pending appeal should be reinstated to a
substantially equivalent position.
Reinstatement to a position lower in rank is not
proper.
In case of two successive dismissals, the order of
reinstatement pending appeal under Article 223 issued in the
first
case shall apply only to the first case and should not affect the
second dismissal. According to Sevilla v. NLRC, the
Labor Arbiter was correct in denying the third motion for
reinstatement filed by the petitioner because what she
should have filed was a new complaint based on the second
dismissal. The second dismissal gave rise to a new
cause of action. Inasmuch as no new complaint was filed, the
Labor Arbiter could not have ruled on the legality of
the second dismissal.
Reinstatement pending appeal is not affected by the

reinstated employees employment elsewhere.
Effect of grant of achievement award during
reinstatement pending appeal.
In the 2014 case of Garza v. Coca-Cola Bottlers
Philippines, Inc.,1 it was pronounced that the act of
respondent CCBPI
in giving an award of a Certificate of Achievement to petitioner
for his exemplary sales performance during his
reinstatement ordered by the Labor Arbiter, while
respondents appeal with the NLRC was still pending,
constitutes
recognition of petitioners abilities and accomplishments. It
indicates that he is a responsible, trustworthy and
hardworking
employee of CCBPI. It constitutes adequate proof weighing in
his favor.
3.
REQUIREMENTS TO PERFECT APPEAL TO NLRC
I.
APPEAL IN GENERAL
1. APPEAL, MEANING AND NATURE.
The term appeal refers to the elevation by an aggrieved
party to an agency vested with appellate authority of any
decision, resolution or order disposing the principal issues of a
case rendered by an agency vested with original jurisdiction,
undertaken by filing a memorandum of appeal.
2. SOME PRINCIPLES ON APPEAL.
Appeals under Article 223 apply only to appeals from the
Labor Arbiters decisions, awards or orders to the Commission
(NLRC).
There is no appeal from the decisions, orders or awards of
the NLRC. Clearly, therefore, Article 223 of the Labor Code is
not the proper basis for elevating the case to the Court of
Appeals or to the Supreme Court. The proper remedy from the
decisions, awards or orders of the NLRC to the Court of
Appeals is a Rule 65 petition for certiorari and from the Court
of

Appeals to the Supreme Court, a Rule 45 petition for review on
certiorari.
Appeal from the NLRC to the DOLE Secretary and
to the President had long been abolished.
Appeal is not a constitutional right but a mere statutory
privilege. Hence, parties who seek to avail of it must comply
with the
statutes or rules allowing it.
A motion for reconsideration is unavailing as a remedy
against a decision of the Labor Arbiter. The Labor Arbiter
should
treat the said motion as an appeal to the NLRC.
A Petition for Relief should be treated as appeal.
Affirmative relief is not available to a party who
failed to appeal. A party who does not appeal from a
decision of a court
cannot obtain affirmative relief other than the ones granted in
the appealed decision.
3. GROUNDS FOR APPEAL TO THE COMMISSION
(NLRC).
The appeal to the NLRC may be entertained only on any of the
following grounds:
a. If there is a prima facie evidence of abuse of discretion
on the part of the Labor Arbiter;
b. If the decision, order or award was secured through fraud or
coercion, including graft and corruption;
c. If made purely on questions of law; and/or
d. If serious errors in the findings of fact are raised which, if
not corrected, would cause grave or irreparable damage or
injury to the appellant.
NLRC has certiorari power.
The first ground above regarding prima facie evidence of
abuse of discretion on the part of the Labor Arbiter is
actually an exercise of certiorari power by the NLRC. The case
of Triad Security & Allied Services, Inc. v. Ortega,2
expressly
recognized this certiorari power of the NLRC. Clearly,

according to the 2012 case of Auza, Jr. v. MOL
Philippines, Inc.,3 the
NLRC is possessed of the power to rectify any abuse of
discretion committed by the Labor Arbiter.
II.
PERFECTION OF APPEAL
1. EFFECT OF PERFECTION OF APPEAL ON
EXECUTION.
To reiterate, the perfection of an appeal shall stay the
execution of the decision of the Labor Arbiter except
execution
for reinstatement pending appeal.
2. PERFECTION OF APPEAL, MANDATORY AND
JURISDICTIONAL.
The perfection of appeal within the period and in the manner
prescribed by law is jurisdictional and non-compliance
with the legal requirements is fatal and has the effect of
rendering the judgment final and executory, hence,
unappealable.
3. REQUISITES.
The requisites for perfection of appeal to the NLRC are as
follows:
(1) Observance of the reglementary period;
(2) Payment of appeal and legal research fee;
(3) Filing of a Memorandum of Appeal;
(4) Proof of service to the other party; and
(5) Posting of cash, property or surety bond, in case of
monetary awards.
The foregoing are discussed below.
III.
REGLEMENTARY PERIOD
1. TWO (2) KINDS OF REGLEMENTARY PERIOD.
The reglementary period depends on where the appeal comes
from, viz.:
1. Ten (10) calendar days in the case of appeals from
decisions of the Labor Arbiters under Article 223 of the Labor

Code; and
2. Five (5) calendar days in the case of appeals from
decisions of the DOLE Regional Director under Article 129
of the Labor Code.
Calendar days and not working days.
The shortened period of ten (10) days fixed by Article 223
contemplates calendar days and not working days. The
same holds true in the case of the 5-day reglementary period
under Article 129 of the Labor Code. Consequently,
Saturdays,
Sundays and legal holidays are included in
reckoning and computing the reglementary period.
2. EXCEPTIONS TO THE 10-CALENDAR DAY OR 5-
CALENDAR DAY REGLEMENTARY PERIOD RULE.
The following are the specific instances where the rules on the
reckoning of the reglementary period have not been
strictly observed:
1) 10th day (or 5th day) falling on a Saturday, Sunday or
holiday, in which case, the appeal may be filed in the next
working day.
2) Reliance on erroneous notice of decision as when the notice
expressly states working days and not calendar
days.
3) Appeal from decisions of Labor Arbiters in direct contempt
cases five (5) calendar days.
4) Filing of petition for extraordinary remedies from
orders or resolutions of Labor Arbiters or on third party
claims
ten (10) calendar days.
5) When NLRC exercises its power to correct, amend, or
waive any error, defect or irregularity whether in substance
or form in the exercise of its appellate jurisdiction, as
provided under Article 218(c) of the Labor Code, in which
case, the late filing of the appeal is excused.
6) When technical rules are disregarded under Article 221.
7) When there are some compelling reasons that justify the
allowance of the appeal despite its late filing such as

when it is granted in the interest of substantial justice.
3. SOME PRINCIPLES ON REGLEMENTARY
PERIOD.
The reglementary period is mandatory and not a mere
technicality.
The failure to appeal within the reglementary
period renders the judgment appealed from final and
executory by
operation of law. Consequently, the prevailing party is
entitled, as a matter of right, to a writ of execution and the
issuance
thereof becomes a ministerial duty which may be compelled
through the remedy of mandamus.
The date of receipt of decisions, resolutions or orders by
the parties is of no moment. For purposes of appeal, the
reglementary period shall be counted from receipt of such
decisions, resolutions, or orders by the counsel or
representative of record.
Miscomputation of the reglementary period will not
forestall the finality of the judgment. It is in the interest of
everyone that
the date when judgments become final and executory should
remain fixed and ascertainable.
Date of mailing by registered mail of the appeal
memorandum is the date of its filing.
Motion for extension of time to perfect an appeal is not
allowed. This kind of motion is a prohibited pleading.
Motion for extension of time to file the memorandum of
appeal is not allowed.
Motion for extension of time to file appeal bond is not
allowed.
IV.
APPEAL FEE AND LEGAL RESEARCH FEE
1. PAYMENT OF APPEAL FEE AND LEGAL
RESEARCH FEE, MANDATORY AND
JURISDICTIONAL.
The payment by the appellant of the prevailing appeal fee

and legal research fee is both mandatory and
jurisdictional. An appeal is perfected only when there is
proof of payment of the appeal fee. It is by no means a mere
technicality. If not paid, the running of the reglementary
period for perfecting an appeal will not be tolled.
V.
MEMORANDUM OF APPEAL
1. REQUISITES.
The requisites for a valid Memorandum of Appeal are as
follows:
1. The Memorandum of Appeal should be verified by the
appellant himself in accordance with the Rules of Court, as
amended;
2. It should be presented in three (3) legibly typewritten or
printed copies;
3. It shall state the grounds relied upon and the arguments in
support thereof, including the relief prayed for;
4. It shall contain a statement of the date the appellant
received the appealed decision, award or order; and
5. It shall be accompanied by:
(i) proof of payment of the required appeal fee and legal
research fee;
(ii) posting of a cash or surety bond (in case of monetary
awards); and
(iii) proof of service upon the other party.
2. REQUIREMENTS NOT JURISDICTIONAL.

The aforesaid requirements that should be complied with in a
Memorandum of Appeal are merely a rundown of the
contents of the required appeal memorandum to be submitted
by the appellant. They are not jurisdictional requirements.
3. SOME PRINCIPLES ON MEMORANDUM OF
APPEAL.
Mere notice of appeal without complying with the
other requisites aforestated shall not stop the
running of the
period for perfecting an appeal.

Memorandum of appeal is not similar to motion for
reconsideration.
Lack of verification in a memorandum of appeal is
not a fatal defect. It may easily be corrected by
requiring an
oath.
An appeal will be dismissed if signed only by an
unauthorized representative.
Only complainants who signed the memorandum
of appeal are deemed to have appealed the Labor
Arbiters
decision. The prevailing doctrine in labor cases is that a party
who has not appealed cannot obtain from the appellate court
any affirmative relief other than those granted, if any, in the
decision of the lower tribunal.
VI.
PROOF OF SERVICE TO ADVERSE PARTY
1. FAILURE TO SERVE COPY TO ADVERSE PARTY,
NOT FATAL.
While it is required that in all cases, the appellant shall
furnish a copy of the Memorandum of Appeal to the other
party
(appellee), non-compliance therewith, however, will not be an
obstacle to the perfection of the appeal; nor will it amount to a
jurisdictional defect on the NLRCs taking cognizance thereof.
VII.
POSTING OF BOND
1. WHEN POSTING OF BOND REQUIRED.
Only in case the decision of the Labor Arbiter or the DOLE
Regional Director (under Article 129 of the Labor Code)
involves a monetary award, that an appeal by the employer
may be perfected only upon the posting of a bond, which shall
either be in the form of (1) cash deposit, (2) surety bond or
(3) property bond, equivalent in amount to the monetary
award,
but excluding the amount of damages (moral and
exemplary) and attorneys fees. In other words, only

monetary awards
(such as unpaid wages, backwages, separation pay,
13th month pay, etc.) are required to be covered by
the bond. Moral
and exemplary damages and attorneys fees are
excluded.
2. SOME PRINCIPLES ON POSTING OF BOND.
Posting of bond is mandatory and jurisdictional.
The cash or surety bond required for the perfection
of appeal should be posted within the reglementary
period. If a
party failed to perfect his appeal by the non-payment of the
appeal bond within the 10-calendar day period provided by
law,
the decision of the Labor Arbiter becomes final and executory
upon the expiration of the said period.
In case the employer failed to post a bond to
perfect its appeal, the remedy of the employee is to
file a motion to
dismiss the appeal and not a petition for mandamus
for the issuance of a writ of execution.
Surety bond must be issued by a reputable bonding
company duly accredited by the Commission (NLRC) or the
Supreme
Court.
The bond shall be valid and effective from the date of
deposit or posting, until the case is finally decided, resolved or
terminated, or the award satisfied.
Posting of a bank guarantee or bank certification is
not sufficient compliance with the bond requirement.
It is not
equivalent to nor can be considered compliance with the cash,
surety or property bond.
Cooperatives are not exempted from posting bond.
Government is exempt from posting of bond;
government-owned and/or controlled corporations,
however, are not

exempt therefrom.
Bond is not required for the NLRC to entertain a
motion for reconsideration. An appeal bond is required
only for the
perfection of an appeal of a Labor Arbiters decision involving
a monetary award.
Bond is not required to file a Rule 65 petition for
certiorari.
3. JUSTIFICATIONS FOR NON-POSTING OF BOND.
No monetary award, no bond required. The rule is
clear that when the judgment of the Labor Arbiter does not
involve any
monetary award, no appeal bond is necessary.
There is no duty to post a bond if the monetary
award is not specified in the decision. The Labor
Arbiters decision or
order should state the amount awarded. If the amount of the
monetary award is not contained or fixed in the judgment, the
appeal bond is not required to be posted.
In case of conflict between the body and the fallo of
the decision, the latter should prevail.
VII-A.
RULE ON REDUCTION OF APPEAL BOND
1. REQUISITES WHEN THE AMOUNT OF APPEAL
BOND MAY BE REDUCED.
(1) The motion should be filed within the reglementary period;
(2) The motion to reduce bond should be based on meritorious
grounds; and
(3) The motion should be accompanied by a partial bond, the
amount of which should be reasonable in relation to the
monetary awards.
2. THE MCBURNIE DOCTRINE: NEW GUIDELINES

FOR FILING AND ACCEPTANCE OF MOTIONS TO
REDUCE BOND.
The 2013 en banc decision rendered in the case of Andrew
James Mcburnie v. Eulalio Ganzon,1 has enunciated the

following guidelines that must be observed in the matter of the
filing and acceptance of motions to reduce appeal bond, as
provided in Section 6, Rule VI of the 2011 NLRC Rules of
Procedure:
(a) The filing of a motion to reduce appeal bond shall be
entertained by the NLRC subject to the following conditions:
(1) there is meritorious ground; and (2) a bond in a reasonable
amount is posted;
(b) For purposes of compliance with condition no. (2) above, a
motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to ten percent
(10%) of the monetary award subject of the appeal,
exclusive of damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to
suspend the running of the 10-day reglementary period
to perfect an appeal from the Labor Arbiters decision to the
NLRC;
(d) The NLRC retains its authority and duty to resolve the
motion to reduce bond and determine the final amount of
bond that shall be posted by the appellant, still in accordance
with the standards of meritorious grounds and
reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce
bond, or requires a bond that exceeds the amount of the
provisional bond, the appellant shall be given a fresh period of
ten (10) days from notice of the NLRC order within
which to perfect the appeal by posting the required appeal
bond.
This Mcburnie ruling has completely overhauled the rules on
motion to reduce bond. Before its advent, the issue of
what amount to post by way of partial or provisional bond has
continued to hound the party litigants and the courts. Now,
the
fixing of ten percent (10%) of the monetary award subject
of the appeal, exclusive of damages and attorney's fees as the
reasonable amount that should be posted has completely
eradicated any and all controversies thereon. In other words,

no
more motion for reduction of bond accompanied by said 10%
requirement would be denied outright on the ground of
insufficiency
or inadequacy of the partial or provisional bond.
What is left for the determination by the NLRC, using its
sound judgment and discretion, are only the issues of (1) the
reasonable final amount of the bond; and (2) what constitute
meritorious grounds. This determination is important since
in all
cases, the reduction of the appeal bond shall be justified by
meritorious grounds and accompanied by the posting of the
required
appeal bond in a reasonable amount.2
The rule set in McBurnie was clarified3 by the Court in the
consolidated cases of Sara Lee Philippines v. Ermilinda
Macatlang.4 Thus, while McBurnie has effectively addressed
the preliminary amount of the bond to be posted in order to
toll the
running of the period to appeal, there is no hard and fast rule
in determining whether the additional bond to be posted is
reasonable in relation to the judgment award. In this case of
Sara Lee, petitioner companies5 were held liable by the Labor
Arbiter for the illegal dismissal of 5,984 employees with
accompanying award of separation pay and other monetary
benefits
amounting to P3,453,664,710.86. Petitioner companies filed
their Notice of Appeal with Motion to Reduce Appeal Bond
and To
Admit Reduced Amount with the NLRC. They asked the NLRC
to reduce the appeal bond to P1 Million each on the grounds
that
it is impossible for any insurance company to cover such huge
amount and that, in requiring them to post in full the appeal
bond,
it would be tantamount to denying them their right to appeal.
In light of the impossibility for any surety company to cover

the appeal bond and the huge economic losses which the
companies and their employees might suffer if the P3.45
Billion bond is sustained, the NLRC granted the reduction of
the appeal
bond. The NLRC issued an Order dated 31 March 2006
directing petitioner corporations to post an additional P4.5
Million bond,
bringing the total posted bond to P9 Million. The Court of
Appeals, however, reversed and set aside the said 31 March
2006
NLRC Resolution and deemed it reasonable under the
circumstances of the case to order the posting of an additional
appeal
bond of P1 Billion.
Considering the peculiar circumstances in Sara Lee, the Court
has to determine what is the reasonable amount of
appeal bond. The fact was underscored that the amount of
10% of the award is not a permissible bond but is only such
amount
that shall be deemed reasonable in the meantime that the
appellants motion is pending resolution by the NLRC. The
actual
reasonable amount yet to be determined is necessarily a
bigger amount. In an effort to strike a balance between the
constitutional obligation of the state to afford protection to
labor, on the one hand, and the opportunity afforded to the
employer to
appeal, on the other, it considered the appeal bond in the
amount of P725M which is equivalent to 25% of the monetary
award
sufficient to perfect the appeal, viz.:
We sustain the Court of Appeals in so far as it increases the
amount of the required appeal bond. But we
deem it reasonable to reduce the amount of the appeal bond to
P725 Million. This directive already considers
that the award if not illegal, is extraordinarily huge and that no
insurance company would be willing to issue a

bond for such big money. The amount of P725 Million is
approximately 25% of the basis above calculated. It
is a balancing of the constitutional obligation of the state to
afford protection to labor which, specific to this
case, is assurance that in case of affirmance of the award,
recovery is not negated; and on the other end of
the spectrum, the opportunity of the employer to appeal.
By reducing the amount of the appeal bond in this case, the
employees would still be assured of at least
substantial compensation, in case a judgment award is
affirmed. On the other hand, management will not be
effectively denied of its statutory privilege of appeal.
In line with Sara Lee and the objective that the appeal on the
merits to be threshed out soonest by the NLRC, the
Court, in the 2015 case of Balite v. SS Ventures
International, Inc.,6 held that the appeal bond of
P100,000.00 posted by the
respondent company for the total monetary award of
P490,308.00, which is equivalent to around 20% thereof, is
sufficient to
perfect the appeal. With the employer's demonstrated good
faith in filing the motion to reduce the bond on demonstrable
grounds
coupled with the posting of the appeal bond in the requested
amount, as well as the filing of the memorandum of appeal,
the
right of the employer to appeal must be upheld. This is in
recognition of the importance of the remedy of appeal, which
is an
essential part of our judicial system and the need to ensure
that every party litigant is given the amplest opportunity for
the
proper and just disposition of his cause freed from the
constraints of technicalities.
B.
NATIONAL LABOR RELATIONS COMMISSION
(NLRC)

1. NATURE.
The NLRC is an administrative quasi-judicial body. It is an
agency attached to the DOLE solely for program and policy
coordination only. It is in charge of deciding labor cases
through compulsory arbitration.
2. COMPOSITION OF THE NLRC.
The NLRC is composed of a Chairman and twenty-three (23)
members called Commissioners.
The NLRC has tripartite composition. Eight (8) members
thereof should be chosen only from among the nominees of
the workers sector and another eight (8) from the
employers sector. The Chairman and the seven (7)
remaining members
shall come from the public sector, with the latter to be
chosen preferably from among the incumbent Labor Arbiters.
3. COMMISSION EN BANC.
The Commission sits en banc only for the following purposes:
(1) To promulgate rules and regulations governing the hearing
and disposition of cases before any of its divisions and
regional branches; and
(2) To formulate policies affecting its administration and
operations.
The NLRC does not sit en banc to hear and decide
cases. The banc has no adjudicatory power. The
Commission exercises its adjudicatory and all other
powers, functions, and duties through its eight (8)
Divisions.
4. NLRCS EIGHT (8) DIVISIONS.
The NLRC is divided into eight (8) divisions, each one is
comprised of three (3) members. Each Division shall consist
of one (1) member from the public sector who shall act as its
Presiding Commissioner and one (1) member each from the
workers and employers sectors, respectively.
The various Divisions of the Commission have
exclusive appellate jurisdiction over cases within
their
respective territorial jurisdictions.

1.
JURISDICTION
1. TWO (2) KINDS OF JURISDICTION.
The NLRC exercises two (2) kinds of jurisdiction:
1. Exclusive original jurisdiction; and
2. Exclusive appellate jurisdiction.
2. EXCLUSIVE ORIGINAL JURISDICTION.
The NLRC exercises exclusive and original jurisdiction over
the following cases:
a. Petition for injunction in ordinary labor disputes to
enjoin or restrain any actual or threatened commission of
any or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute which, if
not restrained or performed forthwith, may cause grave or
irreparable damage to any party.
b. Petition for injunction in strikes or lockouts under
Article 264 of the Labor Code.
c. Certified cases which refer to labor disputes causing or
likely to cause a strike or lockout in an industry
indispensable to the national interest, certified to it by the
Secretary of Labor and Employment for compulsory
arbitration by virtue of Article 263(g) of the Labor Code.
d. Petition to annul or modify the order or resolution
(including those issued during execution proceedings) of the
Labor Arbiter.
3. EXCLUSIVE APPELLATE JURISDICTION.
The NLRC exercises exclusive appellate jurisdiction over the
following:
a. All cases decided by the Labor Arbiters.
b. Cases decided by the DOLE Regional Directors or hearing
officers involving small money claims under Article 129
of the Labor Code.
c. Contempt cases decided by the Labor Arbiters.
2.
EFFECT OF NLRC REVERSAL OF
LABOR ARBITERS ORDER OF REINSTATEMENT

1. EFFECT OF REVERSAL OF REINSTATEMENT
ORDER WHEN EMPLOYEE WAS ACTUALLY
REINSTATED.
The BERGONIO Rule:
Bergonio, Jr. v. South East Asian Airlines, April 21,
2014.
After reversal of Labor Arbiters decision, the employers
duty to reinstate the dismissed employee in the actual
service or in the payroll is effectively terminated. The
employee, in turn, is not required to return the wages that he
had received prior to the reversal of the LAs decision.
ORDER WHEN EMPLOYEE WAS REINSTATED IN
THE PAYROLL.
The GENUINO Doctrine:
Marilou S. Genuino v. NLRC, Citibank, N.A., Dec. 4,
2007.
The Refund Doctrine in Genuino no longer applies, per
Garcia Doctrine.
The WENPHIL Rule: (The prevailing rule)
Wenphil Corporation v. Abing, April 7, 2014.
The period for computing the backwages due to the
dismissed employees during the period of appeal should END
on the date that a higher court (in this case the CA) reversed
the labor arbitration ruling of illegal dismissal.
ORDER WHEN EMPLOYEE WAS NEITHER
REINSTATED TO HIS
FORMER POSITION OR IN THE PAYROLL.
Entitlement to reinstatement salaries/wages,
allowances and benefits under the following doctrines:
(1) ROQUERO doctrine; and
(2) GARCIA doctrine.
Roquero v. Philippine Air Lines, Inc., April 22, 2003.
Garcia v. Philippine Airlines, Inc., Jan. 20, 2009 (En
Banc).
3.1. ENTITLEMENT TO REINSTATEMENT WAGES.

From the moment an employee is ordered reinstated by the
Labor Arbiter on the basis of the finding that his dismissal
is illegal, up to the time that an appellate tribunal like the
NLRC, Court of Appeals and Supreme Court, as the case may
be,
reverses the said finding, the employee is generally entitled to
his so-called reinstatement wages. The issue of
entitlement to
this benefit has been the subject of several doctrinal rulings
now known as follows:
(1) Roquero doctrine; and
(3) Garcia doctrine.
3.1.1. ROQUERO DOCTRINE.
The Roquero doctrine, enunciates the rule that in cases where
an employee is ordered reinstated by the Labor Arbiter
and the employer fails or refuses to obey the reinstatement
order but initiates an appeal, the employers success in having
the
decision of the Labor Arbiters decision reversed on appeal will
not exculpate him from the liability to pay the reinstatement
wages of the employee reckoned and computed from the time
the employee was ordered reinstated by the Labor Arbiter
until the
date of its reversal on appeal.
In this case of Roquero, the dismissal of petitioners Roquero
and Pabayo was held valid by the Labor Arbiter. On
appeal to the NLRC, the Labor Arbiters decision was reversed
and consequently, petitioners were ordered reinstated. They
did
not appeal from that decision of the NLRC but filed a motion
for the issuance of a writ of execution of the order of
reinstatement.
The Labor Arbiter granted the motion but respondent PAL
refused to comply with the said order on the ground that it has
filed a
Petition for Review before the Supreme Court. Subsequently,
the CA reversed the decision of the NLRC and ruled that the

dismissal of petitioners was valid. The Supreme Court later
affirmed the CAs decision but it held that the unjustified
refusal by
PAL to reinstate Roquero who, unlike Pabayo, has not
amicably settled his case, entitles him to the payment of his
reinstatement
wages effective from the time PAL failed to reinstate him
despite the issuance of the writ of execution. Thus, it was
mandatory for
PAL to actually reinstate Roquero or reinstate him in the
payroll. Having failed to do so, the former must pay the latter
the
salaries he is entitled to, as if he was reinstated, from the time
of the decision of the NLRC until the finality of the decision of
the
Supreme Court.
Following Roquero, it is now the norm that even if the order of
reinstatement of the Labor Arbiter is reversed on appeal,
it is obligatory on the part of the employer to reinstate and pay
the wages of the dismissed employee during the period of
appeal
until its reversal by the NLRC, or the Court of Appeals or the
Supreme Court, as the case may be. If the employee has been
reinstated during the appeal period and such reinstatement
order is subsequently reversed on appeal with finality, the
employee
is not required to reimburse whatever salaries he has received
for he is entitled to such, more so if he actually rendered
services
during the said period.
3.1.2. GARCIA DOCTRINE.
a. Modification of the Roquero and Genuino
doctrines.
The Roquero and Genuino doctrines have been modified by
the Garcia doctrine. In this case, while respondent
Philippine Airlines (PAL) was undergoing rehabilitation
receivership, an illegal dismissal case was filed by petitioners

against
respondent PAL which was decided by the Labor Arbiter in
their favor thus ordering PAL to, inter alia, immediately
comply with
the reinstatement aspect of the decision. On appeal, the NLRC
reversed the ruling of the Labor Arbiter and held that their
dismissal was valid. The issue of whether petitioners may
collect their reinstatement wages during the period between
the Labor
Arbiters order of reinstatement pending appeal and the NLRC
decision overturning that of the Labor Arbiter, now that
respondent PAL has terminated and exited from rehabilitation
proceedings, was resolved in the negative by the Supreme
Court.
The following ratiocinations were cited:
(1) Re: modification of the Genuino doctrine. - The
refund doctrine in Genuino should no longer be observed
because it easily demonstrates how a favorable decision by the
Labor Arbiter could harm, more than help, a dismissed
employee. The employee, to make both ends meet, would
necessarily have to use up the salaries received during the
pendency of the appeal, only to end up having to refund the
sum in case of a final unfavorable decision. It is mirage of a
stopgap
leading the employee to a risky cliff of insolvency. Further, the
Genuino ruling not only disregards the social justice
principles behind the rule, but also institutes a scheme unduly
favorable to management. Under such scheme, the salaries
dispensed pendente lite merely serve as a bond posted in
installment by the employer. For in the event of a reversal of
the
Labor Arbiters decision ordering reinstatement, the employer
gets back the same amount without having to spend ordinarily
for
bond premiums. This circumvents, if not directly contradicts,
the proscription that the posting of a bond [even a cash bond]
by

the employer shall not stay the execution for reinstatement.
(2) Re: modification of the Roquero doctrine. The
Roquero doctrine was reaffirmed but with the modification
that
[a]fter the Labor Arbiters decision is reversed by a higher
tribunal, the employee may be barred from collecting the
accrued
wages, if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of
the employer.
b. Two-fold test under the Garcia doctrine.
Under Garcia, the test to determine the liability of the
employer (who did not reinstate the employee pending appeal)
to
pay the wages of the dismissed employee covering the period
from the time he was ordered reinstated by the Labor Arbiter
to
the reversal of the Labor Arbiters decision either by the
NLRC, the Court of Appeals or the High Court, is two-fold, to
wit:
(1) There must be actual delay or the fact that the order of
reinstatement pending appeal was not executed prior to its
reversal; and
(2) The delay must not be due to the employers unjustified act
or omission. If the delay is due to the employers
unjustified refusal, the employer may still be required to pay
the salaries notwithstanding the reversal of the Labor
Arbiters decision.
In Garcia, there was actual delay in reinstating petitioners but
respondent PAL was justified in not complying with the
reinstatement order of the Labor Arbiter because during the
pendency of the illegal dismissal case, the SEC placed
respondent
PAL under an Interim Rehabilitation Receiver who, after the
Labor Arbiter rendered his decision, was replaced with a
Permanent
Rehabilitation Receiver. It is settled that upon appointment by

the SEC of a rehabilitation receiver, all actions for claims
before
any court, tribunal or board against the corporation shall ipso
jure be suspended. Resultantly, respondent PALs failure to
exercise the alternative options of actual reinstatement and
payroll reinstatement was thus justified. Such being the case,
respondents obligation to pay the salaries pending appeal, as
the normal effect of the non-exercise of the options, did not
attach.
c. Cases decided after the promulgation of the Garcia
doctrine.
Subsequent to Garcia, some of the cases decided in
accordance with this doctrine are as follows:
(1) College of the Immaculate Conception v. NLRC
(2010);
(2) Islriz Trading v. Capada (2011);
(3) Pfizer, Inc. v. Velasco (2011); and
(4) C. Alcantara & Sons, Inc. v. CA (2012).
2. RECKONING OF THE PERIOD COVERED BY
ACCRUED REINSTATEMENT WAGES.
To clarify, employees ordered reinstated by the Labor Arbiter
are entitled to accrued reinstatement wages only from
the time the employer received a copy of the Labor
Arbiters decision declaring the employees termination
illegal and
ordering their reinstatement up to the date of the decision
of the appellate tribunal overturning that of the Labor
Arbiter. It
is not accurate therefore to state that such entitlement
commences from the moment the reinstatement order was
issued up to
the date when the same was reversed by a higher court without
fear of refunding what he had received.
4. SOME PRINCIPLES ON REINSTATEMENT
WAGES.
Employer is not liable to pay any reinstatement backwages
if reinstatement is ordered not by the Labor Arbiter but by the

NLRC on appeal and it was not executed by writ and its
finding of illegal dismissal is later reversed by the Court of
Appeals
and/or Supreme Court.
Payroll-reinstated employee is entitled not only to
reinstatement wages but also to other benefits during
the period of
payroll reinstatement until the illegal dismissal case
is reversed by a higher tribunal.
Award of additional backwages and other benefits from the
time the Labor Arbiter ordered reinstatement until actual or
payroll reinstatement is proper and valid.
3.
REMEDIES
1. EXTRAORDINARY REMEDIES.
a. Nature.
The power of the Commission (NLRC) to grant extraordinary
remedies mentioned in No. 3 above is not provided in the
Labor Code or in any other laws. It is a newly created remedy
which saw light for the first time under Rule XII of the 2011
NLRC
Rules of Procedure. Past NLRC Rules did not provide therefor.
Since this is a recent newly minted remedy, there has yet been
no decision by the Supreme Court dwelling on its
validity.
What is clear though is that this remedy is not equivalent to
nor a substitute for appeal. It is directed against orders or
resolutions issued by the Labor Arbiter in the course of the
proceedings before him where the remedy of appeal is not
available. Notably, the remedy of appeal is available only
against the main decision of a case. But orders or resolutions
issued
prior to the rendition of the decision in the main as well as
orders or resolutions issued thereafter, specifically during the
execution stage, are subject of this rule on extraordinary
remedies.

b. Grounds.
The petition filed under this Rule may be entertained only on
any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on
the part of the Labor Arbiter;
(b) If serious errors in the findings of facts are raised which, if
not corrected, would cause grave or irreparable
damage or injury to the petitioner;
(c) If a party by fraud, accident, mistake or excusable
negligence has been prevented from taking an appeal;
(d) If made purely on questions of law; or
(e) If the order or resolution will cause injustice if not
rectified.
c. Initiation through verified petition.
To secure these extraordinary remedies, a party aggrieved by
any order or resolution of the Labor Arbiter including
those issued during execution proceedings may file a verified
petition to annul or modify such order or resolution. The
petition
may be accompanied by an application for the issuance of a
temporary restraining order and/or writ of preliminary or
permanent
injunction to enjoin the Labor Arbiter, or any person acting
under his/her authority, to desist from enforcing said
resolution or
order.
4.
CERTIFIED CASES
1. CERTIFIED LABOR DISPUTES.
Certified labor disputes are national interest cases certified
by the DOLE Secretary to the Commission (NLRC) for
compulsory arbitration under Article 263(g) of the Labor
Code.
2. EFFECTS OF CERTIFICATION OF LABOR
DISPUTES.
The certification of a labor dispute to the NLRC has the
following effects:

(1) On intended or impending strike or lockout. - Upon
certification, the intended or impending strike or lockout is
automatically enjoined, notwithstanding the filing of any
motion for reconsideration of the certification order or the
non-resolution
of any such motion which may have been duly submitted to
the DOLE Secretary.
(2) On actual strike or lockout. - If a work stoppage has
already taken place at the time of the certification, all striking
or locked out employees shall immediately return to work and
the employer shall immediately resume operations and
readmit all
workers under the same terms and conditions prevailing
before the strike or lockout.
(3) On cases already filed or may be filed. - All cases
between the same parties, except where the certification order
specifies otherwise the issues submitted for arbitration which
are already filed or may be filed, and are relevant to or are
proper
incidents of the certified case, shall be considered subsumed
or absorbed by the certified case, and shall be decided by the
appropriate Division of the Commission.
(4) On other pending cases. - The parties to a certified
case, under pain of contempt, shall inform their counsels and
the Division concerned of all cases pending with the Regional
Arbitration Branches and the Voluntary Arbitrators relative or
incident to the certified case before it.
(5) On which Division should take cognizance of the
certified case in case entity has several workplaces in
different regions. - Whenever a certified labor dispute
involves a business entity with several workplaces located in
different
regions, the Division having territorial jurisdiction over the
principal office of the company shall acquire jurisdiction to
decide such
labor dispute; unless the certification order provides
otherwise.

Same effect of certification to the NLRC as in cases
assumed directly by DOLE Secretary.
The effects described above are also applicable when the
DOLE Secretary directly assumes jurisdiction over a labor
dispute affecting industries imbued with national interest and
decides it himself.
C.
BUREAU OF LABOR RELATIONS
MED-ARBITERS
1. MED-ARBITER OR MEDIATOR-ARBITER.
Med-Arbiter or Mediator-Arbiter refers to an officer
in the Regional Office or in the BLR authorized to hear and
decide representation cases, inter-union or intra-union
disputes and other related labor relations disputes, except
cancellation of
union registration cases.
Some principles on Med-Arbiter.
Injunctive power. The Med-Arbiter is possessed of the
power to issue temporary restraining order and the writ of
injunction in appropriate cases.
Contempt power. The Med-Arbiter has contempt power.
Factual findings of Med-Arbiters are accorded
great respect. They are binding if they are supported by
substantial evidence and there exists no capricious exercise of
judgment warranting reversal by certiorari.
Execution of decisions, orders or awards of Med-
Arbiters. The Med-Arbiter may, upon his own initiative or on
motion of any interested party, issue a writ of execution on a
judgment within five (5) years from the date it becomes
final and executory, requiring the Sheriff or a duly deputized
officer to execute or enforce the same.
1.
JURISDICTION
(ORIGINAL AND APPELLATE)
I.
CASES FALLING UNDER THE JURISDICTION OF
THE MED-ARBITERS,

DOLE DIRECTORS AND BLR DIRECTOR, IN
GENERAL
1. INTRODUCTION.
For purposes of clarity in the otherwise labyrinthine issue of
jurisdiction and procedure in the BLR, there is a need to
cite first the cases over which the following officials have their
respective jurisdictions:
(1) Mediator-Arbiter (Med-Arbiter);
(2) DOLE Regional Director; and
(3) BLR Director.
The Mediator-Arbiter and the DOLE Regional Director
exercise original and exclusive jurisdiction over specified
cases mentioned below. For his part, the BLR Director
exercises not only appellate but original jurisdiction over
some particular
cases.
2. CASES COVERED.
There are three (3) general classifications of the cases
covered by the jurisdiction of said officials, to wit:
(a) Inter-union disputes;
(b) Intra-union disputes; and
(c) Other related labor relations disputes.
I-A.
INTER-UNION OR INTRA-UNION DISPUTES
1. INTER-UNION OR REPRESENTATION DISPUTES.
An inter-union dispute or representation dispute is one
occurring or carried on between or among unions. It refers to
a case involving a petition for certification election filed
by a duly registered labor organization which is seeking to be
recognized as the sole and exclusive bargaining agent of the
rank-and-file employees or supervisory employees, as the case
may be, in the appropriate bargaining unit of a company, firm
or establishment.
Broadly, an inter-union dispute refers to any conflict
between and among legitimate labor unions involving
representation questions for purposes of collective bargaining
or to any other conflict or dispute between legitimate labor

unions.
2. INTRA-UNION OR INTERNAL UNION DISPUTES.
An intra-union dispute or internal union dispute refers to
a conflict within or inside a labor union. It is any conflict
between and among union members, including grievances
arising from any violation of the rights and conditions of
membership,
violation of or disagreement over any provision of the unions
constitution and by-laws or disputes arising from chartering or
affiliation of a union. It refers to a case involving the control,
supervision and management of the internal affairs of a duly
registered labor union such as those relating to specific
violations of the unions constitution and by-laws.
A complaint for any violation of the constitution and by-laws
and the rights and conditions of union membership under
Article 241 of the Labor Code, may be filed in the Regional
Office where the union is domiciled.
3. RUNDOWN OF INTER-UNION/INTRA-UNION
CASES.
The following is a rundown of all possible inter-union/intra-
union disputes:
1) Inter-union disputes:
(a) Validity/invalidity of voluntary recognition, certification
election, consent election, run-off election or re-run
election;
(b) Such other disputes or conflicts involving the rights to self-
organization, union membership and collective
bargaining between and among legitimate labor organizations.
2) Intra-union disputes:
(a) Conduct or nullification of election of officers of
unions and workers' association;
(b) Audit or accounts examination of union or
workers' association funds;
(c) Deregistration of collective bargaining agreements;
(d) Validity/invalidity of union affiliation or disaffiliation;
(e) Validity/invalidity of acceptance/non-acceptance for union
membership;

(f) Opposition to application for union or CBA registration;
(g) Violations of or disagreements over any provision of the
Constitution and By-Laws of a union or workers'
association;
(h) Disagreements over chartering or registration of labor
organizations or the registration of collective bargaining
agreements;
(i) Violations of the rights and conditions of membership in a
union or workers' association;
(j) Violations of the rights of legitimate labor organizations,
except interpretation of CBAs;
(k) Validity/Invalidity of impeachment/expulsion/suspension
or any disciplinary action meted against any officer and
member, including those arising from non-compliance with
the reportorial requirement;
(l) Such other disputes or conflicts involving the rights to self-

organization, union membership and collective
bargaining between and among members of a union or
workers association.
1-B.
OTHER RELATED LABOR RELATIONS DISPUTES
1. MEANING OF RELATED LABOR RELATIONS
DISPUTES.
Related labor relations dispute refers to any conflict
between a labor union and the employer or any individual,
entity
or group that is not a labor union or workers association.
2. COVERAGE OF RELATED LABOR RELATIONS
DISPUTES NOT OTHERWISE COVERED BY ARTICLE
217.
(a) Any conflict between:
(1) a labor union and the employer, or
(2) a labor union and a group that is not a labor organization;
or
(3) a labor union and an individual who is not a member of
such union;

(b) Cancellation of registration of unions and workers
associations filed by individuals other than its members, or
group that is not a labor organization; and
(c) A petition for interpleader involving labor relations.
Interpleader refers to a proceeding brought by a party
against two or more parties with conflicting claims, compelling
the claimants to litigate between and among themselves their
respective rights to the claim, thereby relieving the party so
filing
from suits they may otherwise bring against it.
II.
ORIGINAL AND EXCLUSIVE JURISDICTION OF
MED-ARBITERS,
DOLE DIRECTORS AND BLR DIRECTOR
Having known the various cases afore-described, a discussion
of the respective jurisdictions of the Med-Arbiters,
DOLE Directors and BLR Director over these cases may now
be made with greater clarity.
1. ORIGINAL AND EXCLUSIVE JURISDICTION OF
THE MED-ARBITERS.
The cases falling under the original and exclusive jurisdiction
of the Med-Arbiters are as follows:
(a) Inter-union disputes, also known as
representation/certification election conflicts;
(b) Intra-union disputes;
(c) Other related labor relations disputes; and
(d) Contempt cases.
Excepted from their jurisdiction is cancellation of union
registration cases which are cognizable by the DOLE
Regional Directors.
THE DOLE REGIONAL DIRECTORS.
The cases falling under the original and exclusive jurisdiction
of the DOLE Regional Directors are as follows:
(1) Petitions for cancellation of registration of independent
unions, local chapters and workers associations;
(2) Petitions for deregistration of CBAs;

(3) Request for examination of books of accounts of said
labor organizations under Article 274 of the Labor Code.
On No. 3 [Examination of Books of Accounts] above, there is
a need to point out that although by nature, this is an
intra-union dispute, the rules treat this separately from those
applicable to intra-union disputes and vest jurisdiction
thereover in
the DOLE Regional Directors and not in the Med-Arbiters.
The case in point is La Tondena Workers Union vs.
Secretary of Labor. Intra-union conflicts such as
examinations
of accounts are under the jurisdiction of the BLR. However,
the Rules of Procedure on Mediation-Arbitration purposely
and
expressly separated or distinguished examinations of union
accounts from the genus of intra-union conflicts and provided
a
different procedure for the resolution of the same. Original
jurisdiction over complaints for examinations of union
accounts is
vested in the Regional Director and appellate jurisdiction over
decisions of the former is lodged with the BLR. This is
apparent
from Sections 3 and 4, Rule II of the Med-Arbitration Rules.
Contrast these two sections from Section 2 and Section 5 of the
same Rules. Section 2 expressly vests upon Med-Arbiters
original and exclusive jurisdiction to hear and decide, inter
alia, all
other inter-union or internal union disputes. Section 5 states
that the decisions of the Med-Arbiter shall be appealable to the
DOLE Secretary. These are the provisions consistent with
Section 5 of Rule VIII of the Implementing Rules of the Labor
Code.
THE BLR DIRECTOR.
At the outset, it must be stressed that reference in the law and
pertinent rules to BLR, as far as the issue of

jurisdiction is concerned, should rightfully mean BLR
Director.
The BLR Director, therefore, as head of the agency, has the
original and exclusive jurisdiction over the following:
(1) Complaints and petitions involving the registration or
cancellation of registration of federations, national
unions, industry unions, trade union centers and their
local chapters, affiliates and member organizations;
(2) Request for examination of books of accounts of said labor
organizations (federations, national unions,
industry unions and trade union centers) under Article
274 of the Labor Code;
(3) Intra-union disputes involving said labor organizations
(federations, national unions, industry unions and
trade union centers); and
(4) Contempt cases.
As far as No. 3 [Intra-Union Disputes] above is concerned,
the 2010 case of Atty. Montao v. Atty. Verceles,1 is
relevant. Petitioner here claimed that under the Implementing
Rules, it is the Regional Director of the DOLE and not the BLR
who has jurisdiction over intra-union disputes involving
federations which, in this case, pertains to the election
protests in connection with the election of officers of the
federation (Federation of Free Workers [FFW]). In finding no
merit in petitioners contention, the
High Court pointed out that Article 226 of the Labor Code
clearly provides that the BLR and the Regional Directors of
DOLE have concurrent jurisdiction over inter-union and intra-
union disputes. Such disputes include the conduct or
nullification of election of union and workers association
officers. There is, thus, no doubt as to the BLRs jurisdiction
over the instant dispute involving member-unions of a
federation arising from disagreement over the provisions of
the federations constitution and by-laws. It agreed with the
following observation of the BLR:
Rule XVI lays down the decentralized intra-union dispute

settlement mechanism. Section 1 states that any complaint in
this regard shall be filed in the Regional Office where the
union is domiciled. The concept of domicile in labor relations
regulation is equivalent to the place where the union seeks to
operate or has established a geographical presence for
purposes of collective bargaining or for dealing with employers
concerning terms and conditions of employment.
The matter of venue becomes problematic when the intra-
union dispute involves a federation, because the geographical
presence of a federation may encompass more than one
administrative region. Pursuant to its authority under Article
226, this Bureau exercises original jurisdiction over intra-
union disputes involving federations. It is well-settled that
FFW, having local unions all over the country, operates in
more than one administrative region. Therefore, this Bureau
maintains original and exclusive jurisdiction over disputes
arising from any violation of or disagreement over any
provision of its constitution and bylaws.
II.
APPELLATE JURISDICTION OF THE BLR DIRECTOR
1. CASES FALLING UNDER THE APPELLATE
JURISDICTION OF THE BLR DIRECTOR.
The BLR Director exercises exclusive appellate jurisdiction
over the following cases:
(a) All decisions of the Med-Arbiters in (1) intra-union
disputes, and (2) other related labor relations disputes.
NOTE: Decisions in inter-union disputes or
representation/certification election conflicts, are NOT
appealable to the BLR Director but directly to the DOLE
Secretary. [See discussion below].
(b) All decisions originating from the DOLE Regional
Directors in the cases falling under their original jurisdiction
as
enumerated above.
2. APPELLATE JURISDICTION OVER MED-
ARBITERS DECISIONS IN INTER-UNION DISPUTES
OR CERTIFICATION

ELECTION CASES IS LODGED WITH THE DOLE
SECRETARY AND NOT WITH THE BLR DIRECTOR.
To reiterate, decisions of Med-Arbiters in certification election
cases or inter-union disputes are appealable not to the
BLR Director but directly to the DOLE Secretary by virtue of
Article 259 of the Labor Code.
It must be noted that the rule on appeal in certification
election cases in unorganized establishments is different
from
that of organized establishments.
(a) Rule on appeal in unorganized establishments. -
The order granting the conduct of a certification election in
an
unorganized establishment is not subject to appeal. Any
issue arising from its conduct or from its results is
proper subject of a protest. Appeal may only be made to the
DOLE Secretary in case of denial of the petition
within ten (10) days from receipt of the decision of denial.
(b) Rule on appeal in organized establishments. - The
order granting the conduct of a certification election in an
organized establishment and the decision dismissing or
denying the petition may be appealed to the DOLE
Secretary within ten (10) days from receipt thereof.
3. APPEALS AND REMEDIES FROM DECISIONS OF
THE BLR DIRECTOR.
a. Jurisdictional distinctions.
The distinctions pointed out above between the respective
jurisdictions of the DOLE Regional Directors, Med-Arbiters
and the BLR Director find significance in determining which
of the cases may be appealed to the BLR Director and those
that
may be appealed to the DOLE Secretary. Thus, the rule may be
stated as follows:
(1) Decisions in cases cognizable by the BLR Director in the
exercise of his original and exclusive jurisdiction are
appealable to the DOLE Secretary;
(2) Decisions in cases cognizable by the Med-Arbiters in

their original and exclusive jurisdiction are appealable to
the BLR Director with the single exception of decisions in
certification election or inter-union disputes which, as
earlier emphasized, are directly appealable to the DOLE
Secretary as mandated under Article 259 of the Labor
Code; and
(3) Decisions in cases cognizable by the DOLE Regional
Directors in their original and exclusive jurisdiction are
appealable to the BLR Director.
b. Remedies.
(1) On No. 1 above. The decision rendered by the DOLE
Secretary in his appellate jurisdiction may be elevated to
the Court of Appeals by way of Rule 65 petition for certiorari.
(2) On Nos. 2 and 3 above. - The decisions rendered by the
BLR Director in his appellate jurisdiction may be
elevated directly to the Court of Appeals by way of Rule 65
petition for certiorari. It cannot be appealed to the
DOLE Secretary because they were rendered by the BLR
Director in the exercise of his appellate jurisdiction.
Simply stated, another appeal to the DOLE Secretary is not
allowed under the situations contemplated in Nos. 2
and 3 above, the decisions being final and executory.
4. EXAMPLES OF SPECIFIC CASES.
a. APPEALS FROM DENIAL OF APPLICATION FOR
REGISTRATION AND CANCELLATION OF
REGISTRATION
OF LABOR ORGANIZATIONS.
For purposes of appeal, the issue of union registration involves
two (2) situations, to wit:
(1) Denial of application for union registration; and
(2) Revocation or cancellation of union registration.
On denial of application for union registration.

(1) If the denial is made by the Regional Office in cases
involving application for registration of independent
unions, local chapters and workers associations, the
same may be appealed to the BLR Director; or

(2) If the denial is made by the BLR Director in cases
involving federations, national unions, industry
unions
and trade union centers, the same is appealable to the
DOLE Secretary.
On revocation or cancellation of union
registration.
(1) If decision is rendered by the Regional Director. -
The decision of the Regional Director in the cases over
which he has original jurisdiction, may be appealed to the
BLR Director by any of the parties within ten (10)
days from receipt thereof, copy furnished the opposing party.
(2) If decision is rendered by the BLR Director. - The
decision of the BLR Director, in the exercise of his
original jurisdiction, may be appealed to the DOLE Secretary
by any party within the same period of ten (10)
days, copy furnished the opposing party.
5. EXCEPTION WHEN DOLE SECRETARY MAY
ENTERTAIN APPEAL DIRECTLY FROM THE DOLE
REGIONAL
DIRECTORS DECISION WITHOUT PASSING
THROUGH THE BLR DIRECTOR.
The Heritage Hotel Manila v. National Union of
Workers in the Hotel, Restaurant and Allied
Industries-Heritage
Hotel Manila Supervisors Chapter (NUWHRAIN-
HHMSC).1 In this 2011 case, the Supreme Court allowed a
deviation from the
standing rule on the appellate jurisdiction of the BLR Director
over a decision of the DOLE Regional Director when the BLR
Director inhibited himself from taking cognizance of the
appeal from the decision of the DOLE Regional Director
because he
was a former counsel of respondent. The DOLE Secretary may
thus legally assume jurisdiction over an appeal from the
decision
of the DOLE Regional Director in the event that the BLR

Director inhibits himself from the case. In the absence of
the BLR
Director, there is no person more competent to
resolve the appeal than the DOLE Secretary. Thus,
jurisdiction remained
with the BLR despite the BLR Directors inhibition. When the
DOLE Secretary resolved the appeal, she merely stepped into
the
shoes of the BLR Director and performed a function that the
latter could not himself perform. She did so pursuant to her
power of
supervision and control over the BLR.
III.
ADMINISTRATIVE FUNCTIONS OF THE BLR AND
LRDs
In addition to the afore-mentioned controversies over which
they have concurrent original and exclusive jurisdiction, the
BLR and the Labor Relations Divisions (LRDs) in the DOLE
Regional Offices likewise have concurrent jurisdiction over the
following administrative functions:
1. Registration of labor unions;
2. Keeping of registry of labor unions;
3. Maintenance and custody of the files of Collective
Bargaining Agreements (CBAs) and other related agreements.
4. Records of settlement of labor disputes; and
5. Copies of orders and decisions of Voluntary Arbitrators.
It must be noted that it is the registration of the labor
organization with the BLR and not with the Securities
and Exchange Commission (SEC) which makes it a
legitimate labor organization with rights and
privileges granted
under the Labor Code.
D.
NATIONAL CONCILIATION AND MEDIATION
BOARD
(NCMB)
1.

NATURE OF PROCEEDINGS
1. NCMB IS NOT A QUASI-JUDICIAL AGENCY.
NCMB is not a quasi-judicial agency, according to the 2009
case of Tabigue v. International Copra Export
Corporation. 2
Quasi-judicial function is a term which applies to the
action, discretion, etc. of public administrative officers or
bodies, who are required to investigate facts or ascertain the
existence of facts, hold hearings, and draw conclusions from
them
as a basis for their official action and to exercise discretion of a
judicial nature.
2. NOT BEING A QUASI-JUDICIAL AGENCY, NCMBS
RULINGS CANNOT BE ELEVATED TO, AND
COGNIZABLE BY, THE
COURT OF APPEALS.
Rule 43 of the Rules of Court applies only to awards,
judgments, final orders or resolutions of or authorized by any
quasi-judicial agency in the exercise of its quasi-judicial
functions. Hence, NCMBs decision, not having been rendered
by a
quasi-judicial body, cannot be elevated to the Court of Appeals
under said rule.
2.
CONCILIATION VS. MEDIATION
1. CONCILIATION AND MEDIATION, MEANING.
Both the terms conciliation and mediation refer to a
process whereby a third person usually called Conciliator (in
case of conciliation) or Mediator (in case of mediation),
intervenes in a dispute involving two or more conflicting
parties for the
purpose of reconciling their differences or persuading them
into adjusting or settling their dispute. The Conciliator or
Mediator
normally does not make or render any decision, his role being
confined to the functions afore-described.

3. DISTINCTION BETWEEN CONCILIATION AND
MEDIATION.
Generally, there are no marked distinctions between
conciliation and mediation. The reason is that In both cases, a
neutral third party (called Conciliator or Mediator) is
tasked to assist two or more opposing parties in finding
appropriate
resolution to a dispute.
In the NCMB, the hearing officer is called Conciliator-
Mediator. There is no separate classification between
conciliators and mediators. When the Conciliator-Mediator
performs his task, he does not make any distinction when he is
acting
as Conciliator or as Mediator.
In other jurisdictions, the principal distinction
between conciliation and mediation lies on the extent
of the
power and authority granted to the neutral third
party.
In mediation, the Mediator normally facilitates a
deliberation or discussion of the issues between the parties.
He may
or may not offer any opinions on the strength and weaknesses
of each party's positions and arguments. Thus, mediation may
be
classified into two, namely:
1. Facilitative Mediation where the Mediator does not
make or offer any opinion; or
2. Evaluative Mediation where the Mediator offers an
opinion which is not binding on the parties.
It bears stressing, however, that regardless of which of the 2
methods above is chosen, the Mediator is not empowered
to impose his will on the parties.
In conciliation, the Conciliator is given more power and
authority in that he may not only offer an opinion on the
issues
at hand but may actually make a binding opinion thereon

provided the parties stipulate in advance to this effect. His
opinion is
based on the facts and the law involved in the controversy
before him.
It may thus be observed that conciliation is more formal
than mediation in the sense that the Conciliators opinion,
unlike the Mediators, may be binding on the parties, although
it may be merely temporary in character.
3.
PREVENTIVE MEDIATION
1. PREVENTIVE MEDIATION AS A REMEDY.
Preventive mediation, as a remedy, is not found in the Labor
Code. But under the law which created the NCMB, it is
expressly stated that one of its functions is to provide
preventive mediation to disputing parties.
The term preventive mediation case refers to the potential
or brewing labor dispute which is the subject of a formal or
informal request for conciliation and mediation assistance
sought by either or both parties in order to remedy, contain or
prevent
its degeneration into a full blown dispute through amicable
settlement.
2. HOW TO INITIATE PREVENTIVE MEDIATION.
Preventive mediation proceeding may be initiated in two (2)
ways:
(1) By filing a notice or request of preventive
mediation, as distinguished from a notice of strike/lockout;
or
(2) By conversion of the notice of strike/lockout into a
preventive mediation case.
3. AUTHORITY TO CONVERT A NOTICE OF
STRIKE/LOCKOUT INTO A PREVENTIVE
MEDIATION CASE.
The NCMB has the authority to convert a notice of
strike/lockout filed by the union/employer into a preventive
mediation case under any of the following circumstances:
1. When the issues raised in the notice of strike/lockout are

not strikeable in character.
2. When the party which filed the notice of strike/lockout
voluntarily asks for the conversion.
3. When both parties to a labor dispute mutually agree to have
it subjected to preventive mediation proceeding.
Such authority is in pursuance of the NCMBs duty to exert all
efforts at mediation and conciliation to enable the parties
to settle their dispute amicably and in line with the State
policy of favoring voluntary modes of settling labor disputes.
4. CONVERSION OF A NOTICE OF STRIKE OR
NOTICE OF LOCKOUT INTO A PREVENTIVE
MEDIATION CASE RESULTS
IN ITS DISMISSAL.
Once the notice of strike is converted into a preventive
mediation case, the notice is deemed dropped from the
dockets
as if no notice of strike has been filed. Since there is no more
notice of strike to speak about, any strike subsequently staged
by
the union after the conversion is deemed not to have complied
with the requirements of a valid strike and therefore illegal.
The same rule applies in the case of lockout by an employer.
5. RELEVANT CASES.
A case in point is Philippine Airlines, Inc. v. Secretary of
Labor and Employment,1 where the strike was declared
illegal for lack of a valid notice of strike in view of the NCMBs
conversion of said notice into a preventive mediation case.
It is clear, according to San Miguel Corporation v.
NLRC,2 that the moment the NCMB orders the preventive
mediation in a strike case, the union thereupon loses the
notice of strike it had filed. Consequently, if it still defiantly
proceeds
with the strike while mediation is on-going, the strike is illegal.
E.
DOLE REGIONAL DIRECTORS
1.

JURISDICTION
1. JURISDICTION OF THE DOLE REGIONAL
DIRECTORS.
The DOLE Regional Directors have original and exclusive
jurisdiction over the following cases:
(a) Labor standards enforcement cases under Article 128;
(b) Small money claims cases arising from labor standards
violations in the amount not exceeding P5,000.00 and not
accompanied with a claim for reinstatement under Article
129;
(c) Occupational safety and health violations;
(d) Registration of unions and cancellation thereof, cases filed
against unions and other labor relations related cases;
(e) Complaints against private recruitment and placement
agencies (PRPAs) for local employment; and
(f) Cases submitted to them for voluntary arbitration in their
capacity as Ex-Officio Voluntary Arbitrators (EVAs)
under Department Order No. 83-07, Series of 2007.
I.
LABOR STANDARDS ENFORCEMENT CASES
1. SUBJECT OF THE VISITORIAL AND
ENFORCEMENT POWERS: THE ESTABLISHMENT
AND NOT THE EMPLOYEES
THEREIN.
The subject of the visitorial and enforcement powers granted
to the DOLE Secretary or his duly authorized
representatives under Article 128 is the establishment
which is under inspection and not the employees thereof.
Consequently, any awards granted are not confined to
employees who signed the complaint inspection but are
equally
applicable to all those who were employed by the
establishment concerned at the time the complaint
was filed, even if
they were not signatories thereto. The reason is that
the visitorial and enforcement powers are relevant to,
and may be

exercised over, establishments, not over individual
employees thereof, to determine compliance by such
establishments with labor standards laws.
Necessarily, in case of an award from such violation
by the establishment,
all its existing employees should be benefited thereby.
It must be stressed, however, that such award should not
apply to
those who resigned, retired or ceased to be employees at the
time the complaint was filed.
2. ORIGINAL JURISDICTION.
The DOLE Regional Directors exercise original jurisdiction
over the following:
(a) Cases involving inspection of establishments to determine
compliance with labor standards (Visitorial Power); and
(b) Cases involving issuance of compliance orders and writs
of execution (Enforcement Power).
3. VISITORIAL POWER OF REGIONAL DIRECTORS
UNDER ARTICLE 128(a).
Pursuant to their visitorial power under Article 128(a), the
DOLE Regional Directors shall have:
(a) access to employers records and premises at any time of
the day or night, whenever work is being undertaken
therein; and
(b) the right:
(1) to copy from said records;
(2) to question any employee and investigate any fact,
condition or matter which may be necessary to determine
violations or which may aid in the enforcement of the Labor
Code and of any labor law, wage order, or rules
and regulations issued pursuant thereto.
4. ENFORCEMENT POWER OF REGIONAL
DIRECTORS UNDER ARTICLE 128(b).
The statutory basis of the authority of the DOLE Regional
Directors to administer and enforce labor standards is found
in Article 128(b) of the Labor Code, as amended.
Pursuant thereto, the DOLE Regional Director, in cases where

the employer-employee relationship still exists, shall
have the power:
a. to issue compliance orders to give effect to the labor
standards provisions of the Labor Code and other labor
legislations based on the findings of labor employment and
enforcement officers or industrial safety engineers
made in the course of inspection.
b. to issue writs of execution to the appropriate authority
for the enforcement of their orders, except in cases
where the employer contests the findings of the labor
employment and enforcement officer and raises issues
supported by documentary proofs which were not considered
in the course of inspection, in which case, the
contested case shall fall under the jurisdiction of the Labor
Arbiter to whom it should be endorsed by the Regional
Director.
c. to order stoppage of work or suspension of
operations of any unit or department of an establishment
when
non-compliance with the law or implementing rules and
regulations poses grave and imminent danger to the
health and safety of workers in the workplace. Within 24
hours, a hearing shall be conducted to determine
whether an order for the stoppage of work or suspension of
operations shall be lifted or not. In case the violation is
attributable to the fault of the employer, he shall pay the
employees concerned their salaries or wages during the
period of such stoppage of work or suspension of operation.
d. to require employers, by appropriate regulations, to keep
and maintain such employment records as may be
necessary in aid of his visitorial and enforcement powers
under the Labor Code.
II.
SMALL MONEY CLAIMS CASES
1. JURISDICTION OVER CLAIMS NOT EXCEEDING
P5,000.

The DOLE Regional Director has original jurisdiction over
small money claims cases arising from labor standards
violations in the amount not exceeding P5,000.00 and not
accompanied with a claim for reinstatement under Article
129 of the
Labor Code.
Article 129 contemplates the recovery of wages and other
monetary claims and benefits, including legal interest, owing
to an employee or domestic worker or kasambahay, arising
from employer-employee relations provided the claim does
not
exceed P5,000.00.
2. REQUISITES FOR THE VALID EXERCISE OF
JURISDICTION BY DOLE REGIONAL DIRECTORS
UNDER ARTICLE 129.
The following requisites must all concur, to wit:
(1) The claim is presented by an employee or domestic worker
or kasambahay;
(2) The claimant, no longer being employed, does not seek
reinstatement; and
(3) The aggregate money claim of the employee or domestic
worker or kasambahay does not exceed P5,000.00.
In the absence of any of the aforesaid three (3) requisites, the
Labor Arbiters have original and exclusive
jurisdiction over all claims arising from employer-employee
relations, other than claims for employees compensation,
social
security, PhilHealth and maternity benefits.
III.
CASES SUBMITTED TO REGIONAL DIRECTORS AND
ASSISTANT REGIONAL
DIRECTORS FOR VOLUNTARY ARBITRATION IN
THEIR CAPACITY AS EX-OFFICIO
VOLUNTARY ARBITRATORS (EVAs)
1. JURISDICTION.
As EVAs, the DOLE Regional Directors and their Assistants
have jurisdiction over the following cases:

(a) All grievances arising from the interpretation or
implementation of the CBA;
(b) All grievances arising from the interpretation or
enforcement of company personnel policies which remain
unresolved after exhaustion of the grievance procedure;
(c) Cases referred to them by the DOLE Secretary under the
DOLEs Administrative Intervention for Dispute
Avoidance (AIDA) initiative (provided under DOLE
Circular No. 1, Series of 2006); and
(d) Upon agreement of the parties, any other labor dispute
may be submitted to the EVAs for voluntary arbitration.
F.
DOLE SECRETARY
1. POWERS OF THE DOLE SECRETARY.
The DOLE Secretary, being the head of the Department of
Labor and Employment, is possessed of a number of
powers, some of which are mentioned in the syllabus, to wit:
1. Visitorial and enforcement powers;
2. Power to suspend/effects of termination;
3. Assumption of jurisdiction;
4. Appellate jurisdiction; and
5. Voluntary arbitration powers.
1.
VISITORIAL AND ENFORCEMENT POWERS
1. THREE (3) KINDS OF POWER UNDER ARTICLE
128.
Article 128 of the Labor Code, as amended, basically
enunciates the three (3) kinds of power which the DOLE
Secretary and/or the Regional Directors, his duly authorized
representatives, may exercise in connection with the
administration
and enforcement of the labor standards provisions of the
Labor Code and of any labor law, wage order or rules and
regulations
issued pursuant thereto.
The three (3) kinds of power are as follows:
1) Visitorial power:

2) Enforcement power: and
3) Appellate power or power of review.
2. WHO EXERCISE THE POWERS.
Nos. 1 and 2 above are exercised under the original
jurisdiction of the DOLE Regional Directors.
This has been earlier discussed under the separate topic of
VII. PROCEDURE AND JURISDICTION, E. DOLE
Regional
Directors, 1. Jurisdiction, supra. Hence, the same will no
longer be touched under the instant topical discussion.
The appellate power in No. 3 above may only be exercised by
the DOLE Secretary in respect to any decision, order or
award issued by the DOLE Regional Directors.
3. NATURE OF THE VISITORIAL AND
ENFORCEMENT POWERS.
The visitorial and enforcement powers granted to the DOLE
Secretary and the DOLE Regional Directors who are his
duly authorized representatives, are quasi-judicial in nature.
4. IT IS THE REGIONAL DIRECTORS WHO HAVE

ORIGINAL JURISDICTION TO EXERCISE THE
VISITORIAL AND
ENFORCEMENT POWERS UNDER ARTICLES 37, 128
AND 274.
In the instances contemplated under Articles 37, 128 and 274,
it is the DOLE Regional Directors, the DOLE Secretarys
duly authorized representatives commonly referred to in these
three (3) articles, who have the original jurisdiction to
exercise
the visitorial power granted therein.
5. THE ROLE OF THE DOLE SECRETARY IN THE
EXERCISE OF VISITORIAL AND ENFORCEMENT
POWERS IS
APPELLATE IN NATURE.
It is clear from the above disquisition that the original
jurisdiction over the exercise of the visitorial and enforcement
powers belongs to the DOLE Regional Directors, as the duly

authorized representatives of the DOLE Secretary.
The role of the DOLE Secretary is confined to the exercise of
his appellate jurisdiction over the decisions, orders and
awards of the DOLE Regional Directors in cases brought
before them for adjudication under Articles 128 and 274.
2.
POWER TO SUSPEND EFFECTS OF TERMINATION
1. GROUNDS.
The DOLE Secretary may suspend the effects of termination
pending resolution of the dispute in the event of a prima
facie finding by the appropriate official of the DOLE before
whom the dispute is pending that:
1. the termination may cause a serious labor dispute; and/or
2. the termination is in implementation of a mass lay-off.
2. RATIONALE FOR SUSPENDING THE EFFECTS OF
TERMINATION.
The obvious purpose behind this rule is to bring the parties
back to the status quo ante litem, that is, their state of
relationship prior to the termination. In this way, the workers
will be litigating the issue of the validity or legality of their
termination
on more or less equal footing with the employer since they will
be immediately reinstated and accordingly not be deprived of
their
wages while the litigation is on-going.
3. REINSTATEMENT PENDING RESOLUTION OF
THE TERMINATION DISPUTE.
Suspension of the effects of termination will necessarily result
in the immediate reinstatement of the terminated
employees. An order of reinstatement pending resolution of
the case may thus be issued by the DOLE Secretary pursuant
to this
power.
4. DISTINGUISHED FROM DOLE SECRETARYS
POWER OF ASSUMPTION OR CERTIFICATION IN
NATIONAL INTEREST
CASES.

a. Different power of the DOLE Secretary.
This power of the DOLE Secretary granted under Article
277(b) should be distinguished from his power to assume or
certify labor disputes involving industries indispensable to the
national interest under Article 263(g). The following
distinctions
may be cited:
First, the exercise of the power to suspend the effects of
termination involves only the issue of termination of
employment which may cause a serious labor dispute or is in
implementation of a mass lay-off; while the power to assume
or
certify labor disputes is applicable to all labor disputes,
irrespective of the grounds therefor, provided such labor
disputes will
cause or likely to cause strikes or lockouts in industries
indispensable to the national interest.
Second, the former requires the conduct of preliminary
determination of the existence of prima facie evidence that the
termination may cause a serious labor dispute or is in
implementation of a mass lay-off to be conducted by the
appropriate
official of the DOLE before whom the termination dispute is
pending; while the latter does not require such preliminary
prima
facie determination. In fact, prior notice and hearing are not
required before the DOLE Secretary may issue an assumption
or
certification order.
Third, the serious labor dispute contemplated under the
former may or may not involve a strike or lockout; while the
labor dispute referred to in the latter will cause or likely to
cause a strike or lockout.
Fourth, the former may be exercised in cases of termination
of employment for as long as any of the two (2) grounds
mentioned in Article 277(b) exists, irrespective of the nature of
the business of the employer; while the latter may only be

exercised in industries indispensable to the national interest.
Fifth, the remedy under the former is immediate
reinstatement pending resolution of the termination case;
while in the
latter, the remedy is the automatic return to work of the
strikers or locked-out employees, if the strike or lock-out is on-
going at
the time of the issuance of the assumption/certification order
or the enjoining of the strike or lockout, if one has not taken
place,
pending the resolution of the issues raised in the notice of
strike or lockout.
3.
ASSUMPTION OF JURISDICTION
The DOLE Secretary is granted under Article 263(g) of the
Labor Code, the extraordinary police power of assuming
jurisdiction over a labor dispute which, in his opinion, will
cause or likely to cause a strike or lockout in an industry
indispensable
to the national interest, or the so-called national interest
cases. Alternatively, he may certify the labor dispute to the
NLRC for
compulsory arbitration.
4.
APPELLATE JURISDICTION
I.
VARIOUS APPEALS TO THE DOLE SECRETARY
UNDER THE LABOR CODE AND APPLICABLE
RULES
1. OFFICES FROM WHICH APPEALS MAY
ORIGINATE.
Appeals to the DOLE Secretary may originate from any of the
following offices:
(1) DOLE Regional Directors;
(2) Med-Arbiters;
(3) Director of the Bureau of Labor Relations (BLR); and

(4) Philippine Overseas Employment Administration (POEA).
2. CASES NOT APPEALABLE TO THE DOLE
SECRETARY.
The following decisions, awards or orders are not appealable
to the Office of the DOLE Secretary:
(1) Those rendered by Labor Arbiters that are appealable to
the Commission (NLRC) which has exclusive appellate
jurisdiction thereover;
(2) Those rendered by the Commission (NLRC) since they can
be elevated directly to the CA by way of a Rule 65
certiorari petition;
(3) Those rendered by the BLR Director in the exercise of his
appellate jurisdiction since they can be brought directly
to the CA under Rule 65 certiorari petition;
(4) Those rendered by DOLE Regional Directors under Article
129 of the Labor Code since they are appealable to the
NLRC;
(5) Those issued by DOLE Regional Directors in their capacity
as Ex-Officio Voluntary Arbitrators (EVAs) since they
can be brought directly to the CA under Rule 43 of the Rules of
Court; and
(6) Those rendered by Voluntary Arbitrators which are
appealable directly to the CA under Rule 43 of the Rules of
Court.
II.
APPEALS FROM DOLE REGIONAL DIRECTORS
1. CASES APPEALABLE TO DOLE SECRETARY.
Not all decisions, awards or orders rendered by the DOLE
Regional Directors are appealable to the DOLE Secretary.
Only those issued in the following cases are so appealable:
(a) Labor standards enforcement cases under Article 128;
(b) Occupational safety and health violations; and
(c) Complaints against private recruitment and placement
agencies (PRPAs) for local employment.
2. CASES NOT APPEALABLE TO THE DOLE
SECRETARY.
As earlier pointed out, the following cases decided by the

DOLE Regional Directors are not appealable to the DOLE
Secretary but to some other agencies/tribunals indicated
below:
(a) Decisions in small money claims cases arising from labor
standards violations in the amount not exceeding
P5,000.00 and not accompanied with a claim for
reinstatement under Article 129 are appealable to the
NLRC;
(b) Decisions in cases submitted to DOLE Regional Directors
for voluntary arbitration in their capacity as Ex-Officio
Voluntary Arbitrators (EVAs) under Department Order No.
83-07, Series of 2007 may be elevated directly to the
Court of Appeals by way of a Rule 43 petition. This is so
because the DOLE Regional Directors, in so deciding,
are acting as Voluntary Arbitrators; hence, what should apply
are the rules on appeal applicable to voluntary
arbitration.
III.
APPEALS FROM DECISIONS OF
MEDIATORS-ARBITERS (MED-ARBITERS) AND BLR
DIRECTOR
(NOTE: The discussion of this sub-topic is presented
alongside the comments on the topic of VIII.
PROCEDURE
AND JURISDICTION, C. Bureau of Labor Relations
Med-Arbiters, 1. Jurisdiction (Original and
Appellate),
supra)
V.
APPEALS FROM DECISIONS OF POEA
1. CASES APPEALABLE TO THE DOLE SECRETARY.
The decisions in the following cases rendered by the Philippine
Overseas Employment Administration (POEA) in its
original jurisdiction are appealable to the DOLE Secretary:
(a) Recruitment violations and other related cases. -
All cases which are administrative in character, involving or
arising out of violation of rules and regulations relating to

licensing and registration of recruitment and
employment agencies or entities, including refund of fees
collected from workers and violation of the conditions
for the issuance of license to recruit workers.
(b) Disciplinary action cases and other special cases
which are administrative in character, involving employers,
principals, contracting partners and Filipino migrant workers.
It must be noted that the POEA ceased to have any jurisdiction
over money claims of OFWs, or those arising out of
an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms
of damages. The jurisdiction over these claims was transferred
to
the Labor Arbiters of the NLRC by virtue of Section 10 of R.A.
No. 8042, as amended. Hence, appeals therefrom may be
instituted to the Commission (NLRC).
5.
VOLUNTARY ARBITRATION POWERS
1. AIDA.
a. New rule on voluntary arbitration by the DOLE
Secretary.
A new form of dispute settlement by the DOLE Secretary was
introduced by DOLE Circular No. 1, Series of 2006.
Called Administrative Intervention for Dispute
Avoidance (AIDA), this is a new administrative procedure
for the voluntary
settlement of labor disputes in line with the objectives of R.A.
No. 9285, Executive Order No. 523 and the mandate of the
DOLE
to promote industrial peace.
b. Nature of administrative intervention by DOLE
Secretary.
This recourse is separate from the established dispute
resolution modes of mediation, conciliation and arbitration
under the Labor Code, and is an alternative to other
voluntary modes of dispute resolution such as the voluntary

submission of
a dispute to the Regional Director for mediation, to the NCMB
for preventive mediation, or to the intervention of a regional
or
local tripartite peace council for the same purpose.
c. Parties who may request for DOLE Secretarys
intervention.
Either or both the employer and the certified collective
bargaining agent (or the representative of the employees
where
there is no certified bargaining agent) may voluntarily bring to
the Office of the DOLE Secretary, through a Request for
Intervention, any potential or ongoing dispute defined
below.
d. Potential or on-going dispute.
A potential or on-going dispute refers to:
(a) a live and active dispute;
(b) that may lead to a strike or lockout or to massive labor
unrest; and
(c) is not the subject of any complaint or notice of strike or
lockout at the time a Request for Intervention is made.
2. VOLUNTARY ARBITRATION BY DOLE
SECRETARY.
If the intervention through AIDA fails, either or both parties
may avail themselves of the remedies provided under the
Labor Code. Alternatively, the parties may submit their
dispute to the Office of the DOLE Secretary for voluntary
arbitration. Such
voluntary arbitration should be limited to the issues defined in
the parties' submission to voluntary arbitration agreement and
should be decided on the basis of the parties' position papers
and submitted evidence. The Office of the DOLE Secretary is
mandated to resolve the dispute within sixty (60) days from
the parties' submission of the dispute for resolution.
3. DOES THE DOLE SECRETARY ASSUME THE ROLE
OF VOLUNTARY ARBITRATOR ONCE HE ASSUMES
JURISDICTION OVER A LABOR DISPUTE?

In the 2014 case of Philtranco Service Enterprises, Inc.
v. Philtranco Workers Union-Association of Genuine
Labor Organizations (PWU-AGLO),1 this poser was
answered in the negative. A notice of strike was filed by
respondent union
which, after failure of conciliation and mediation by the
NCMB, was referred by the Conciliator-Mediator to the Office
of the DOLE
Secretary who thereby assumed jurisdiction over the labor
dispute. The case was resolved by the Acting DOLE Secretary
in
favor of respondent union. A motion for reconsideration was
filed by petitioner company. The DOLE Secretary, however,
declined to rule on the motion citing a DOLE regulation,
applicable to voluntary arbitration, which provided that the
Voluntary
Arbitrators decisions, orders, resolutions or awards shall not
be the subject of motions for reconsideration. The DOLE
Secretary
took the position that when he assumed jurisdiction over the
labor dispute, he was acting as a Voluntary Arbitrator.
Petitioner
subsequently filed a Rule 65 certiorari petition with the CA.
The CA, however, dismissed petitioner companys Rule 65
certiorari
petition on the ground, among others, that the decision of the
DOLE Secretary, having been rendered by him in his capacity
as
Voluntary Arbitrator, is not subject to a Rule 65 certiorari
petition but to a Rule 43 petition for review which properly
covers
decisions of Voluntary Arbitrators.
Before the Supreme Court, petitioner asserted that, contrary to
the CAs ruling, the case is not a simple voluntary
arbitration case. The character of the case, which involves an
impending strike by petitioners employees; the nature of
petitioners business as a public transportation company,

which is imbued with public interest; the merits of its case;
and the
assumption of jurisdiction by the DOLE Secretary all these
circumstances removed the case from the coverage of Article
262,
and instead placed it under Article 263, of the Labor Code. For
its part, respondent union argued that the DOLE Secretary
decided the assumed case in his capacity as Voluntary
Arbitrator; thus, his decision, being that of a Voluntary
Arbitrator, is only
assailable via a petition for review under Rule 43.
The Supreme Court, however, pronounced that:
It cannot be said that in taking cognizance of NCMB-NCR
CASE No. NS-02-028-07, the Secretary of Labor did so in a
limited capacity, i.e., as a voluntary arbitrator. The fact is
undeniable that by referring the case to the Secretary of Labor,
Conciliator-Mediator Aglibut conceded that the case fell
within the coverage of Article 263 of the Labor Code; the
impending
strike in Philtranco, a public transportation company whose
business is imbued with public interest, required that the
Secretary
of Labor assume jurisdiction over the case, which he in fact
did. By assuming jurisdiction over the case, the provisions of
Article 263 became applicable, any representation to the
contrary or that he is deciding the case in his capacity as a
voluntary
arbitrator notwithstanding.
Consequently, the Supreme Court reversed and set aside the
CA ruling and reinstated the case and directed the CA
to resolve the same with deliberate dispatch.
G.
GRIEVANCE MACHINERY
AND VOLUNTARY ARBITRATION
1.
SUBJECT MATTER OF GRIEVANCE

1. GRIEVANCE OR GRIEVABLE ISSUE.
A grievance or grievable issue is any question raised by
either the employer or the union regarding any of the
following issues or controversies:
1. The interpretation or application of the CBA;
2. The interpretation or enforcement of company personnel
policies; or
3. Violation of any provisions of the CBA or company
personnel policies.
4.
2. VALIDITY AND BINDING EFFECT OF DECISIONS
OF GRIEVANCE COMMITTEE.
A member of the bargaining union who brought his grievable
issue for resolution by the Grievance Committee is bound by
whatever disposition the latter may render thereon.
ELEVATION OF GRIEVANCE TO VOLUNTARY
ARBITRATION
1. UNRESOLVED GRIEVANCES.
All grievances submitted to the grievance machinery which are
not settled within seven (7) calendar days from the date of
their submission for resolution should automatically be
referred to voluntary arbitration prescribed in the CBA.
The various internal procedural steps or stages of resolving
grievances under the grievance machinery in a CBA should be
fully exhausted before resort to voluntary arbitration may be
made. The 7-calendar day period is usually reckoned from the
date of their submission for resolution to the last step of the
internal grievance machinery. Simply stated, only after
exhausting all the internal procedures and only after the lapse
of this period that unsettled or unadjusted grievances should
automatically be referred to voluntary arbitration enunciated
in the CBA.
2. A PARTY IS NOT ALLOWED TO GO DIRECTLY TO
COURT IN DISREGARD OF VOLUNTARY
ARBITRATION AFTER DECISION IS RENDERED BY
GRIEVANCE COMMITTEE.
Before a party is allowed to seek the intervention of the court,

it is a precondition that he should have availed of all the
means of administrative processes afforded him. Hence, if a
remedy within the administrative machinery can still be
resorted to by giving the administrative officer concerned
every opportunity to decide on a matter that comes within his
jurisdiction, then such remedy should be exhausted first
before the courts judicial power can be sought. The premature
invocation of the courts judicial intervention is fatal to ones
cause of action. Indeed, the underlying principle of the rule
on exhaustion of administrative remedies rests on the
presumption that when the administrative body, or grievance
machinery, is afforded a chance to pass upon the matter, it will
decide the same correctly.
2.
VOLUNTARY ARBITRATOR
1. VOLUNTARY ARBITRATION.
Voluntary arbitration refers to the mode of settling labor-
management disputes in which the parties select a competent,
trained and impartial third person who is tasked to decide on
the merits of the case and whose decision is final and
executory. It is a third-party settlement of a labor dispute
involving the mutual consent by the representatives of the
employer and the labor union involved in a labor dispute to
submit their case for arbitration.
2. VOLUNTARY ARBITRATOR.
a. Who is a Voluntary Arbitrator?
A Voluntary Arbitrator refers to:
(1) any person who has been accredited by the National
Conciliation and Mediation Board (NCMB or Board) as
such; or
(2) any person named or designated in the CBA by the parties
as their Voluntary Arbitrator; or
(3) one chosen by the parties with or without the assistance of
the NCMB, pursuant to a selection procedure agreed upon in
the CBA; or
(4) one appointed by the NCMB in case either of the parties to
the CBA refuses to submit to voluntary arbitration.

This term includes a panel of Voluntary Arbitrators.
3. VOLUNTARY ARBITRATOR ACTS IN QUASI-
JUDICIAL CAPACITY.
Although not a part of a government unit or a personnel of the
Department of Labor and Employment, a Voluntary
Arbitrator, by the nature of his functions, acts in a quasi-
judicial capacity. He is a means by which government acts, or
by which a certain government act or function is performed.
He performs a state function pursuant to a governmental
power delegated to him under the Labor Code. The landmark
case of Luzon Development Bank v. Association of
Luzon Development Bank Employees,1 clearly
declared that a Voluntary Arbitrator, whether acting
solely or in a panel, enjoys in law the status of a quasi-
judicial agency.
(a)
JURISDICTION
1. ORIGINAL AND EXCLUSIVE JURISDICTION.
a. In general.
The Voluntary Arbitrator or panel of Voluntary Arbitrators
shall have exclusive and original jurisdiction over the
following cases:
(1) Unresolved grievances arising from the interpretation or
implementation of the collective bargaining agreement
(CBA).
(2) Unresolved grievances arising from the interpretation or
enforcement of company personnel policies.
(3) Violations of the CBA which are not gross in character.
(4) Other labor disputes, including unfair labor practices and
bargaining deadlocks, upon agreement of the parties.
(5) National interest cases.
(6) Wage distortion issues arising from the application of any
wage orders in organized establishments.
(7) Unresolved grievances arising from the interpretation and
implementation of the Productivity Incentive Programs under
R.A. No. 6971.

b. Rights disputes.
Nos. 1, 2 and 3 above, which are provided for under Article
261 of the Labor Code, are commonly known as rights
disputes. This kind of disputes contemplates the existence of
a CBA already concluded or, at any rate, a situation in which
no effort is made to bring about a formal change in its terms or
to create a new one. The dispute relates either to the meaning
or proper application of a particular provision therein with
reference to a specific situation or to an omitted case. In the
latter event, the claim is founded upon some incident of the
employment relation or asserted one, independent of those
covered by the collective agreement. In either case, the claim is
to rights accrued and not merely to new ones created for the
future.
c. Interest disputes.
Bargaining deadlocks are often referred to as interest
disputes. This kind of disputes relates to disputes over the
formation of collective agreements or efforts to secure them.
They arise where there is no such agreement or where it is
sought to change the terms of one and therefore the issue is
not whether an existing agreement controls the controversy.
They look to the acquisition of rights for the future, not to
assertion of rights claimed to have vested in the past.
I.
III.
JURISDICTION OVER OTHER LABOR DISPUTES
Under Article 262 of the Labor Code, upon agreement of the
parties, the Voluntary Arbitrator or panel of Voluntary
Arbitrators may also hear and decide all other labor
disputes, including unfair labor practices and
bargaining deadlocks.
For this purpose, before or at any stage of the compulsory
arbitration process, parties to a labor dispute may agree to
submit their case to voluntary arbitration.
IV.
JURISDICTION OVER NATIONAL INTEREST CASES
Article 263(g) of the Labor Code which involves the DOLE

Secretarys power of assumption of jurisdiction or certification
to the NLRC of labor disputes affecting industries
indispensable to the national interest, also provides that
[b]efore or at any stage of the compulsory
arbitration process, the parties may opt to submit
their dispute to voluntary arbitration.
This means that even if the case has already been assumed by
the DOLE Secretary or certified to the NLRC for compulsory
arbitration, or even during its pendency therewith, the parties
thereto may still withdraw the case from the DOLE Secretary
or NLRC, as the case may be, and submit it to a Voluntary
Arbitrator for voluntary arbitration purposes.
V.
JURISDICTION OVER WAGE DISTORTION CASES
Jurisdiction over wage distortion cases depends on
whether the establishment is organized or
unorganized.
In organized establishments, the employer and the union
are required to negotiate to correct the wage distortion.
Any dispute arising from such wage distortion should be
resolved through the grievance procedure under the CBA and
if it remains unresolved, through voluntary arbitration.
In unorganized establishments, where there are no CBAs
or recognized or certified collective bargaining unions, the
jurisdiction is with the Labor Arbiter.
VI.
EXERCISE OF JURISDICTION
1. HOW VOLUNTARY ARBITRATOR ACQUIRES
JURISDICTION.
shall exercise jurisdiction over a specific case only under the
following:
(1) Upon receipt of a Submission Agreement duly signed
by both parties;
(2) Upon receipt of a Notice to Arbitrate when there is
refusal to arbitrate by one party;
(3) Upon receipt of an appointment or designation as

Voluntary Arbitrator by the NCMB (Board) in either of the
following circumstances:
(3.1.) In the event that the parties failed to select a Voluntary
Arbitrator; or
(3.2.) In the absence of a named Voluntary Arbitrator in the
CBA and the party upon whom the Notice to Arbitrate is
served does not favorably reply within seven (7) days from
receipt of such notice.
2. HOW INITIATED.
Based on the foregoing discussion, an arbitration may be
initiated either by way of:
(1) A Submission Agreement; or
(2) A Demand or Notice to Arbitrate invoking the arbitration
clause in the CBA; or
(3) An Appointment from the NCMB.
A Submission Agreement refers to a written agreement by
the parties submitting their case for arbitration, containing a
statement of the issues, the name of their chosen Voluntary
Arbitrator and a stipulation and an undertaking to abide by
and comply with the resolution that may be rendered therein,
including the cost of arbitration.
A Notice to Arbitrate refers to a formal demand made by one
party to the other for the arbitration of a particular dispute in
the event of refusal by one party in a CBA to submit the same
to arbitration
3. SOME PRINCIPLES.
1) Cases cognizable by Voluntary Arbitrators in their
original jurisdiction but filed with Labor Arbiters,
DOLE Regional Offices or NCMB should be disposed
of by referring them to the Voluntary Arbitrators or panel
of Voluntary Arbitrators mutually chosen by the parties.
2) Cases cognizable by Voluntary Arbitrators but filed
with regular courts should be dismissed.
3) THE WELL-ENTRENCHED RULE IS THAT WHEN
A CASE DOES NOT INVOLVE THE PARTIES TO A
CBA THE EMPLOYER AND THE BARGAINING

UNION - IT IS NOT SUBJECT TO VOLUNTARY
ARBITRATION. While individual or group of
employees, without the participation of the union, are
granted the right to bring grievance directly to the
employer, they cannot submit the same grievance, if
unresolved by the employer, for voluntary arbitration
without the unions approval and participation. The
reason is that it is the union which is the party to the
CBA, and not the individual or group of employees. -
This rule was lately affirmed in the 2009 case of Tabigue v.
International Copra Export Corporation. Pursuant to
Article 260 of the Labor Code, the parties to a CBA shall name
or designate their respective representatives to the grievance
machinery and if the grievance is unsettled in that level, it
shall automatically be referred to the voluntary arbitrators
designated in advance by parties to a CBA. Consequently only
disputes involving the union and the company shall
be referred to the grievance machinery or voluntary
arbitrators.
(b)
PROCEDURE
EXECUTION PROCEEDINGS
IN VOLUNTARY ARBITRATION CASES
1. PROCEDURAL RULES IN THE ENFORCEMENT OF
WRIT OF EXECUTION.
In the enforcement of a writ of execution, the Sheriff or other
authorized officer should be guided by the Procedural
Guidelines in the Execution of Voluntary Arbitration
Awards/Decisions. These Guidelines should be followed in the
execution of the awards or decision of Voluntary Arbitrators or
panel of Voluntary Arbitrators. Other rules that may be
pertinently observed and followed are the following:
(1) 2012 NLRC Sheriffs Manual on Execution of Judgment;
(2) Memorandum of Agreement between the NLRC and the
NCMB dated July 26, 1996; and
(3) Revised Rules of Court, as amended, in the absence of
applicable rules.

2. EXECUTION MOTU PROPRIO OR UPON MERE
MOTION WITHIN FIVE (5) YEARS FROM FINALITY
OF DECISION.
may, motu proprio or on motion of any interested party, issue
a writ of execution on a judgment within five (5) years from
the date it becomes final and executory.
3. WHEN LABOR ARBITER MAY ISSUE THE WRIT
OF EXECUTION.
In case the Voluntary Arbitrator or panel of Voluntary
Arbitrators who rendered and issued the decision, order or
award is, for any reason, absent or incapacitated, the Labor
Arbiter in the region where the movant resides, may
issue the writ of execution. But unlike the Voluntary Arbitrator
or panel of Voluntary Arbitrators who issued the decision,
order or award, the Labor Arbiter cannot issue such writ motu
proprio but only upon motion of any interested party.
4. PERSONS WHO MAY ENFORCE THE WRIT OF
EXECUTION.
Any of the following persons may be required to enforce the
writ of execution:
(1) The Sheriff of the Commission (NLRC);
(2) A duly deputized officer;
(3) A Special Sheriff;
(4) The Sheriff of the regular courts; or
(5) Any public official whom the parties may designate in the
submission agreement to execute the final decision, order or
award.
(c)
REMEDIES
1. RELIEFS AND REMEDIES THAT MAY BE
GRANTED BY VOLUNTARY ARBITRATORS.
Besides the procedural remedies discussed above, the
Voluntary Arbitrator or panel of Voluntary Arbitrators may
grant the same reliefs and remedies granted by Labor Arbiters
under Article 279 of the Labor Code, such as:
(1) In illegal dismissal cases:

(a) Actual reinstatement;
(b) Separation pay in lieu of reinstatement, in case
reinstatement becomes impossible, non-feasible or
impractical;
(c) Full backwages;
(d) Moral and exemplary damages; and
(e) Attorneys fees.
(2) Monetary awards in monetary claims cases in
which case, the decision should specify the amount granted
and the formula used in the computation thereof.
H.
COURT OF APPEALS
1.
RULE 65, RULES OF COURT
1. RULE 65 PETITION FOR CERTIORARI, THE ONLY
MODE OF ELEVATING A LABOR CASE TO THE
COURT OF APPEALS.
The only mode by which a labor case decided by any of the
following labor authorities/tribunals may reach the Court of
Appeals is through a Rule 65 petition for certiorari.
(a) the DOLE Secretary;
(b) the Commission (NLRC); and
(c) the Director of the Bureau of Labor Relations (BLR) in
cases decided by him in his appellate jurisdiction (as
distinguished from those he decides in his original
jurisdiction which are appealable to the DOLE Secretary). The
remedy of ordinary appeal to the Court of Appeals is not
available from their decisions, orders or awards. The reason
for this rule is that their decisions, orders or awards are final
and executory and therefore inappealable.
2. THE ONLY EXCEPTION.
The only exception to the foregoing rule is in the case of
decisions, orders or awards issued by the Voluntary
Arbitrator or panel of Voluntary Arbitrators which
may be elevated to the Court of Appeals by way of an ordinary
appeal under a Rule 43 petition for review.
3. FILING OF MOTION FOR RECONSIDERATION OF

THE DECISION OF THE DOLE SECRETARY, THE
COMMISSION (NLRC) OR THE BLR DIRECTOR, A
PRE-REQUISITE TO FILING OF RULE 65 PETITION
FOR CERTIORARI.
The rule on the filing of a Motion for Reconsideration of the
decision of the DOLE Secretary, the NLRC and the BLR
Director is mandatory and jurisdictional. Failure to
comply therewith would result in the dismissal of the Rule 65
certiorari petition. Jurisprudence abounds enunciating the
rule that a motion for reconsideration is a pre-requisite for the
filing of a special civil action for certiorari.
The reason for this rule is that in labor cases, a
motion for reconsideration is the plain and adequate
remedy from an adverse decision of the DOLE
Secretary, the NLRC and the BLR Director.
THE PHILTRANCO DOCTRINE: a motion for
reconsideration should be filed even though it is not
required or even prohibited by the concerned
government office. This was the rule enunciated in the
2014 case of Philtranco Service Enterprises, Inc. v.
Philtranco Workers Union-Association of Genuine
Labor Organizations (PWUAGLO).
1 Thus, while a government office may prohibit altogether
the filing of a motion for reconsideration with respect to its
decisions or orders, the fact remains that certiorari inherently
requires the filing of a motion for reconsideration which is the
tangible representation of the opportunity given to the office
to correct itself. Unless it is filed, there could be no occasion to
rectify. Worse, the remedy of certiorari would be unavailing.
Simply put, regardless of the proscription against the filing of
a motion for reconsideration, the same may be filed on the
assumption that rectification of the decision or order must be
obtained and before a petition for certiorari may be instituted.
4. CERTIORARI PETITION MAY BE FILED EVEN IF
THE DECISION OF THE DOLE SECRETARY, THE
COMMISSION (NLRC), OR THE BLR DIRECTOR HAS
ALREADY BECOME FINAL AND EXECUTORY.

This rule applies to the decisions rendered by the DOLE
Secretary, the NLRC or the BLR Director (in cases which he
decided in his appellate jurisdiction).
If the CA grants the petition and nullifies their decisions on
the ground of grave abuse of discretion amounting to excess or
lack of jurisdiction, such decisions are, in contemplation of
law, null and void ab initio; hence, they never became final
and executory.
JUDICIAL REVIEW OF DECISIONS
OF VOLUNTARY ARBITRATORS
1. DECISIONS, FINAL AND EXECUTORY.
As a general rule, decisions or awards of Voluntary Arbitrators
are final, inappealable and executory after ten (10) calendar
days from receipt of a copy thereof by the parties.
2. ORDINARY APPEAL UNDER RULE 43 OF THE
1997 RULES OF CIVIL PROCEDURE VOLUNTARY
ARBITRATORS
ARE OF THE SAME LEVEL AS RTC JUDGES.
Being a quasi-judicial agency, the decisions and awards of a
Voluntary Arbitrator are appealable by way of a petition for
review to the Court of Appeals under Revised Administrative
Circular No. 1-95 which provides for a uniform procedure for
appellate review of all adjudications of quasi-judicial entities
and which is now embodied in Section 1, Rule 43 of the 1997
Rules of Civil Procedure.
The ruling in Luzon Development Bank v. Association
of Luzon Development Bank Employees,2 in effect,
equates the decisions or awards of the Voluntary Arbitrator to
those of the Regional Trial Court (RTC). Hence, in a petition
for certiorari from the awards or decisions of the Voluntary
Arbitrator, the Court of Appeals has concurrent jurisdiction
with the Supreme Court.
In Alcantara, Jr. v. CA,1 it was held that Luzon

Development Bank is still a good law.
3. PERIOD OF APPEAL 15 DAYS.
Rule 43 of the Rules of Court requires that the petition for

review to be taken to the Court of Appeals should be filed
within fifteen (15) days from notice of the award, judgment or
final order or resolution of the Voluntary Arbitrator.
I.
SUPREME COURT
1.
RULE 45, RULES OF COURT
1. RULE 45 PETITION FOR REVIEW ON
CERTIORARI, THE ONLY MODE BY WHICH A
LABOR CASE MAY REACH THE
SUPREME COURT.
Since the Court of Appeals has jurisdiction over the petition
for certiorari under Rule 65 that may be filed before it from
the decisions of the NLRC or the DOLE Secretary or the BLR
Director (in cases decided by him in his appellate jurisdiction),
any alleged errors committed by it in the exercise of its
jurisdiction would be errors of judgment which are reviewable
by means of a timely appeal to the Supreme Court and not by a
special civil action of certiorari.
If the aggrieved party fails to do so within the reglementary
period and the decision accordingly becomes final and
executory, he cannot avail himself of the writ of certiorari, his
predicament being the effect of his deliberate inaction. A
petition for certiorari under Rule 65 cannot be a
substitute for a lost appeal under Rule 45; hence, it
should be dismissed.
2. THE NEYPES DOCTRINE (FRESH PERIOD RULE) -
FRESH PERIOD FROM DENIAL OF MOTION FOR
RECONSIDERATION.
In the 2013 case of Elizabeth Gagui v. Dejero,2 petitioner
successively filed two Motions for Reconsideration of the CAs
decision but both were denied. Petitioner elevated the case to
the Supreme Court under Rule 45. In their comment,
respondents alleged that the instant petition had been filed 15
days after the prescriptive period of appeal under Section 2,
Rule 45 of the Rules of Court. In her reply, petitioner
countered that she has a fresh period of 15 days from the date

she received the Resolution of the CA to file the instant Rule
45 petition. In affirming the contention of petitioner, the
Supreme Court cited the en banc ruling in the case of Neypes
v. CA3 which standardized the appeal periods, thus:
To standardize the appeal periods provided in the Rules and
to afford litigants fair opportunity to appeal their cases, the
Court deems it practical to allow a fresh period of 15 days
within which to file the notice of appeal in the Regional Trial
Court, counted from receipt of the order dismissing a motion
for a new trial or motion for reconsideration.
Henceforth, this fresh period rule shall also apply to Rule 40
governing appeals from the Municipal Trial Courts to the
Regional Trial Courts; Rule 42 on petitions for review from the
Regional Trial Courts to the Court of Appeals; Rule 43 on
appeals from quasi-judicial agencies to the Court of
Appeals and Rule 45 governing appeals by certiorari
to the
Supreme Court. The new rule aims to regiment or make the
appeal period uniform, to be counted from receipt of the order
denying the motion for new trial, motion for reconsideration
(whether full or partial) or any final order or resolution.
Consequently, since petitioner in Gagui received the CA
Resolution denying her two Motions for Reconsideration only
on 16 March 2011, she had another 15 days within which to file
her Petition, or until 31 March 2011. This Petition, filed on 30
March 2011, fell within the prescribed 15-day period.
J.
PRESCRIPTION OF ACTIONS
1. MONEY CLAIMS CASES.
a. Prescriptive period is three (3) years under Article
291 of the Labor Code. - The prescriptive period of all
money claims and benefits arising from employer-employee
relations is 3 years from the time the cause of action accrued;
otherwise, they shall be forever barred.
b. All other money claims of workers prescribe in 3
years. - Article 291 contemplates all money claims arising
from employer-employee relationship, including:

1. Money claims arising from the CBA.
2. Incremental proceeds from tuition increases.
3. Money claims of Overseas Filipino Workers (OFWs).
Note must be made that in the 2010 case of Southeastern
Shipping v. Navarra, Jr.,4 the 1-year prescriptive
period in Section 28 of POEA-SEC was declared null
and void. The reason is that Article 291 of the Labor Code is
the law governing the prescription of money claims of
seafarers, a class of overseas contract workers. This law
prevails over said Section 28.
2. ILLEGAL DISMISSAL CASES.
a. Legal basis is not Article 291 of the Labor Code but
Article 1146 of the Civil Code. - The 3-year prescriptive
period in Article 291 solely applies to money claims but not to
illegal dismissal cases which are not in the nature of money
claims. The prescriptive period of illegal dismissal cases is 4
years under Article 1146 of the Civil Code.
3. UNFAIR LABOR PRACTICE (ULP) CASES.
a. Prescriptive period of ULP cases is 1 year (Article
290, Labor Code). - The prescriptive period for all
complaints involving unfair labor practices is one (1) year from
the time the acts complained of were committed; otherwise,
they shall be forever barred.
b. Pre-requisite for prosecution of criminal cases. -

Before a criminal action for ULP may be filed, it is a condition
sine qua non that a final judgment finding that an unfair
labor practice act was committed by the respondent should
first be secured or obtained in the labor case initiated before
the Labor Arbiter or the Voluntary Arbitrator, as the case may
be. Final judgment is one that finally disposes of the action or
proceeding. For instance, if the remedy of appeal is available
but no appeal is made, then, the judgment is deemed final and
executory. If an appeal is made, then the final judgment
rendered by the last tribunal, say the Supreme Court, to which
the case was elevated should be the reckoning factor.
c. Interruption of prescriptive period of offenses. - As

far as ULP cases are concerned, the running of the one (1) year
prescriptive period is interrupted during the pendency of the
labor proceeding.
d. Evidentiary value of the final judgment in the labor
case. - In ULP cases, the final judgment in the labor case
cannot be presented as evidence of the facts proven therein or
as evidence of the guilt of the respondent therein.
Its evidentiary or probative value is confined merely in
proving the fact of compliance with the condition sine qua non
prescribed by law, i.e., that a final judgment has been secured
in the labor proceeding finding that an unfair labor practice
act was in fact committed by the respondent.
4. OFFENSES PENALIZED UNDER THE LABOR
CODE AND ITS IMPLEMENTING RULES AND
REGULATIONS (IRR).
a. Prescriptive period is 3 years (Article 290, Labor
Code). - The prescriptive period of all criminal offenses
penalized under the Labor Code and the Rules to Implement
the Labor Code is three (3) years from the time of commission
thereof.
b. Consequence of non-compliance with prescriptive
period under Article 290. - Failure to initiate or file the
criminal action or complaint within the prescriptive period
shall forever bar such action.
c. Illegal dismissal is not an offense under Article
290. - The act of the employer in dismissing an employee
without cause, although a violation of the Labor Code and its
implementing rules, does not amount to an offense as this
term is understood and contemplated under Article 290.
5. ILLEGAL RECRUITMENT CASES.
a. Simple illegal recruitment cases. The prescriptive
period is five (5) years.
b. Illegal recruitment cases involving economic
sabotage. The prescriptive period is twenty (20) years.
6. ACTIONS INVOLVING UNION FUNDS.
A complaint or petition for audit or examination of funds and
books of accounts prescribes within three (3) years:

(a) from the date of submission of the annual financial report
to the DOLE; or
(b) from the date the same should have been submitted as
required by law, whichever comes earlier.
It should be noted, however, that this provision on the
prescriptive period applies only to a legitimate labor
organization which has submitted the financial report
required under the Labor Code.
7. CLAIMS FOR SSS BENEFITS.
a. Action against employer.
The right to institute the necessary action against the
employer for non-remittance of contributions may be
commenced within twenty (20) years:
(1) from the time the delinquency is known; or
(2) from the time the assessment is made by the SSS; or
(3) from the time the benefit accrues, as the case may be.
b. Action for disability claims.
The prescriptive period in the filing of disability benefit claim
is ten (10) years from the date of occurrence of disability.
8. CLAIMS FOR GSIS BENEFITS.
Claims for benefits, except for life and retirement,
prescribe after four (4) years from the date of contingency.
------------oOo------------

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LABOR LAW

The disregard of these provisions cannot give rise

ODETTE E. PAGUIO Pg 1 of 380

Under Article XIII (Social Justice and Human

It shall guarantee the rights of all workers to self-

ODETTE E. PAGUIO Pg 2 of 380

What are the due process principles applicable in

ODETTE E. PAGUIO Pg 3 of 380

ODETTE E. PAGUIO Pg 4 of 380

How is Article 1702 of the Civil Code correlated

Article 1702 of the Civil Code provides:

Article 4 of the Labor Code states:

Both articles above may be applied to doubts and ambiguities

ODETTE E. PAGUIO Pg 5 of 380

Labor relations law is that part of labor law (Book V of the

Labor relations and labor standards laws are not mutually

What is exclusive bargaining

Can individual employee or group of employees

Yes. The designation of a bargaining agent does not deprive an

ODETTE E. PAGUIO Pg 6 of 380

No, as held in the 2009 case of Tabigue v. International

In order to have legal standing, the individual members

What is the principle of co-determination?

In PAL v. NLRC and PALEA,2 it was held that the

Does the grant of the right of participation mean co-

ODETTE E. PAGUIO Pg 7 of 380

Manila Electric Company v. Quisumbing - the grant of

What is Labor-Management Council (LMC)?

What is the provision of the Labor Code

ODETTE E. PAGUIO Pg 8 of 380

What are the qualifications of a PRPA for local

What is the period of validity of the license?

Is the license transferable to other persons or

No license shall be transferred, conveyed or assigned to any

ODETTE E. PAGUIO Pg 9 of 380

What are the important terms related to overseas

What are the entities authorized to engage in

LICENSING AND REGULATION

ODETTE E. PAGUIO Pg 10 of 380

What are the disqualifications?

a. Travel agencies and sales agencies of airline

1) Those certified to have derogatory record or information by

ODETTE E. PAGUIO Pg 11 of 380

What is the period of validity of license?

ODETTE E. PAGUIO Pg 12 of 380

Any person, whether a non-licensee, non-holder,

What constitutes illegal recruitment when

Illegal recruitment, when undertaken by non-licensee

What constitutes illegal recruitment when

(a) To charge or accept, directly or indirectly, any amount

ODETTE E. PAGUIO Pg 13 of 380

ODETTE E. PAGUIO Pg 14 of 380

ODETTE E. PAGUIO Pg 15 of 380

LICENSE VS. AUTHORITY

ODETTE E. PAGUIO Pg 16 of 380

ELEMENTS OF ILLEGAL RECRUITMENT

SIMPLE ILLEGAL RECRUITMENT

Can a recruiter be a natural or juridical person?

What are some relevant principles on illegal

ODETTE E. PAGUIO Pg 17 of 380

ODETTE E. PAGUIO Pg 18 of 380

ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC

When is illegal recruitment committed by a

Elements of illegal recruitment by a syndicate.