UP WOMEN IN LAW

For there must be courage in wisdom, grace in strength.

PANIC BOOKLET and QUIZZER

Labor Law and Social Legislation

UP WINLAW Executive Board (2007-2008)

President: Angel Manalaysay
VP-Academics: May Caniba
VP-Externals: Suz Ojeda
VP-Finance: Jan Lee
VP-Internals: Miles Malaya
VP-Publicity: Cha Valdez
4th year Rep: Len Abellar
3rd Year Rep: Weng Salonga
2nd Year Rep: Arianne Reyes
Bar Ops Head: Karra dela Paz

Updated by: Allelu de Jesus

 TABLE OF CONTENTS

INTRODUCTION
A. General Principles 6
B. Labor and the Constitution 12
C. Interpretation of Labor Laws 15

LABOR STANDARDS
A. Work Relationship 16
1. Employer-Employee Relationship 16
2. Contracting Arrangements 20
B. Employee Classification 24
1. Regular 24
2. Casual 25
3. Project 26
4. Seasonal 30
5. Fixed Term 30
6. Probationary 31
C. Recruitment and Placement 32
1. Employment Agencies 33
2. Prohibited Entities 33
3. Techniques of Regulation 34
4. Illegal Recruitment 35
D. Alien Employment 38
E. Working Conditions and Rest Periods 38
1. Hours of Work 39
2. Meal Periods 40
3. Rules on Compensable Hours of Work 40
4. Night Shift Differential 42
5. Overtime Work 43
6. Weekly Rest Periods 44
7. Holiday Pay 45
8. Leaves 47
F. Wages 50
1. Payment of Wages 52
2. Prohibition Re Wages 52
3. Other Forms of Remuneration 54
a. Service Charge
b. 13th month pay (PD 851)
c. Bonus
4. Non-Diminution Rule 57
5. Wage Recovery, Liabilities and Worker Preference 58
6. Minimum Wages 62
a. Wage Order 62
b. Wage Distortion 63
G. Special Workers 65
1. Handicapped Workers
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 2. Learners/ Apprentices
H. Women Workers 68
1. Nightwork Prohibition
2. Prohibited Acts 70
3. Classification of Certain Women Workers 71
4. Anti-Sexual Harassmetn Law (RA 7877) 72
I. Minors 76
J. Househelpers 79
K. Homeworkers 80
L. Termination of Employment 82
1. Termination by Employee (Resignation) 82
2. Termination by Employer 82
a. Substantive Due Process 83
i. Just Causes 83
ii. Authorized Causes 91
iii. Disease 98
b. Procedural Due Process 99
c. Effect of dismissal without procedural due process
but with cause (Agabon doctrine) 103
d. Effect of Illegal dismissal (i.e., without cause) 104
3. Employment Not Deemed Terminated (Art. 286) 112
M. Retirement 114

LABOR RELATIONS
A. Right to Self-Organization 116
1. Coverage
Workers with right for purposes of collective bargaining 118
i. Government Employees (EO 180; CSC Memo Circular 6)
ii. Supervisory Employees
iii. Aliens
iv. Security Guards
Workers without right for purposes of collective bargaining 121
i. Managerial Employees
ii. Confidential Employees
iii. Workers-Members of a Cooperative
iv. Employees of International Organizations
v. Non-employees
B. Labor Organization 125
1. Labor Organization v. Worker’s Association 126
2. Requirements of Registration 126
a. Independent Labor Organization
b. Federation/ National Union
c. Worker’s Association
3. Grounds for Cancellation of Union Registration 128
4. Rights and Conditions of Membership in a Labor Org 129
a. Political Rights
b. Deliberative and decision-making rights
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 c. Right to be informed
d. Rights over money matter
i. Valid Levy
ii. Valid Check-off
5. Rights of Legitimate Labor Orgs 133
C. The Appropriate Bargaining Unit 134
D. Union Representation: Establishing Majority Status 135
a. Exclusive Bargaining Agent
b. Selection Sole And Exclusive Bargaining Agent (SEBA) 137
i. Voluntary Recognition by ER
ii. Certification Election (CE)
iii. Consent Election
iv. Run-off Election
c. Certification Election (CE) 138
E. Collective Bargaining 147
a. Procedure 148
b. CBA 148
F. Unfair Labor Practice (ULP) 154
a. ULP of Employers 155
i. Union Security Clause 158
b. ULP of Labor Orgs 161
G. Union Concerted Activities
a. Labor Dispute 162
b. Strike/ Lockout 162
i. Grounds 163
ii. Procedure 164
iii. Assumption of Jurisdiction by the Sec. of Labor/
Certification to NLRC for compulsory arbitration 166
c. Picketing 169
d. Prohibited Activities 169
e. Consequences of Concerted Actions on the Employment Status 170
f. When Is A Strike Illegal 172
g. Improved Offer Balloting 173
h. Labor Injunction On Labor Disputes 174

SUMMARY OF JURISDICTION
A. Voluntary Arbitrators 176
B. National Conciliation and Mediation Board (NCMB) 178
B. National Labor Relations Commission (NLRC) 178
C. Bureau of Labor Relations (BLR) 180
D. Administration and Enforcement of Labor Laws (Arts. 128 and 129) 182

SOCIAL LEGISLATION
A. Salient Features of Social Security Act (RA 8282) and
Government Service Insurance Act (RA 8291) 187

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 GENERAL PRINCIPLES

LABOR LAW—the law governing the rights and duties of the employer and
employees:
(1) with respect to the terms and conditions of employment and
(2) with respect to labor disputes arising from collective bargaining
respecting such terms and conditions

- labor law is a regulatory device seeking to regulate the relationship

between two factors of production – ER (capital) and EE (labor)

LAW CLASSIFICATION
(1) Labor Standards (Books 1, 2, 3, 4 & 6)
- provide minimum terms and conditions of employment, below which it
cannot be allowed to fall. (statutory floor)

CASE: Maternity Children’s Hospital v. Sec. of Labor, 1989

 Labor standards are the minimum requirements prescribed by existing
laws, rules and regulations relating to wages, hours of work, cost-of-
living allowance, and other monetary and welfare benefits, including
occupational safety, and health standards.

(2) Labor Relations (Book 5)

- regulate the institutional relationship between the workers organized into
a union and the employers.

(3) Welfare Laws/ Social Legislation (Social Security Act of 1997, RA

8282; Government Service Insurance System of 1997, RA 8291;
Employment Compensation and State Insurance Fund; National Health
Insurance Act of 1995, RA 7875)
- designed to take care of the contingencies which may affect the workers,
e.g., where there is loss of income for reasons beyond control, i.e.,
sickness, death, accident, etc.

TEST YOURSELF
Q: Differentiate labor standards law from labor relations law. Are the two mutually
exclusive? (1997 Bar Question)
Q: How do the provisions of the law on labor relations interrelate, if at all, with the
provisions pertaining to labor standards? (2003 Bar Question)

Suggested Answer:
Labor relations law focuses its provisions on the collective aspects of employer-
employee relationship. Its legal provisions deal with employees organizing unions
and how through these unions, employees are able to have collective bargaining
with their employer.

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 On the other hand, labor standards law focuses on the terms and conditions
of employment of employees as individual employees or those provisions dealing
with wages, hours of work and other terms and conditions of employment.
There may be instances when the provisions of labor relations law may
interrelate with provisions of labor standards law. Thus, a CBA which is dealt with
in labor relations law may have provisions that improves upon the minimum terms
and conditions of employment prescribed in labor standards law, like a CBA
providing for a higher minimum wage, or for the computation of a higher overtime
pay or the payment of holiday pay not only for regular holidays but also for certain
special holidays.

TEST YOURSELF
Q: What is the purpose of labor legislation?

Suggested Answer:
There are these state policies and mandates dealing with labor in the 1987
Constitution: (1) the State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare; (2) the State shall afford
full protection to labor, local and overseas, organized and unorganized. It is the
purpose of labor legislation to implement the aforesaid state policies and mandates
enunciated in the Constitution.

Another suggested answer:

The purpose of labor legislation is to afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employers. The State shall assure the
rights of workers to self-organization, collective bargaining, security of tenure, and
just and humane conditions of work.

Another suggested answer:

Purpose of labor legislation
1. Labor Standards Law- to provide minimum terms and conditions of
employment necessary to maintain decent living conditions, safety and welfare
of workers and their families.
2. Labor Relations Law- to regulate the relationships of
a. Employer and employees organized into a union
b. Union and its members
c. State and the unions
d. Unions as institutions
The purpose of labor legislation is social justice, which was defined in Calalang
v. Williams as the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular conception
may at least be approximated. (Anflo Management and Investment Corp et al. v.
Bolanio) (2006 Bar Question)

LAW AND WORKER

CASE: Cebu Royal Plant v Deputy Minister of Labor, 1987
 The SC reaffirmed its concern for the lowly worker who, often at the
mercy of his employer must look up to the law for his protection.
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 Fittingly, the law regards him with tenderness and even favor and
always with faith and hope in his capacity to help in shaping the
nation’s future.

MANAGEMENT PREROGATIVE
Rule: Employers are free to regulate, according to their discretion and best
judgment, all aspects of employment, including work assignment,
working methods, processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of workers.

CASES: Great Pacific Employees Union v. Great Pacific Life Assurance, 1999
 (Management) prerogative flowed from the established rule that labor
laws do not authorize substitution of judgment of the employer in the
conduct of his business.

Duncan Association etc. v. Glaxo Wellcome Phils, Inc, 2004

 Glaxo’s policy of prohibiting an employee from having a relationship
with an employee of a competitor company is a valid exercise of
management prerogative... The challenged company policy does not
violate the equal protection clause of the Constitution... Glaxo does
not impose an absolute prohibition against relationships between its
employees and those of competitor companies. What the company
merely seeks to avoid is a conflict of interest between the employee
and the company that may arise out of such relationships.

Limitations:
CASES: DOLE Phils. V. Pawis ng Makabayang Obrero, 2003
 The exercise of management prerogative is not unlimited. It is subject
to the limitations found in law, a CBA, or the general principles of fair
play and justice.

Great Pacific Employees Union v. Great Pacific Life Assurance, 1999;

Valiao v. CA, 2004
Requisites for valid exercise of management prerogatives:
 The employer can exercise this prerogative without fear of liability so
long as:
1. it is done in good faith;
2. for the advancement of his interest; and,
3. not for the purpose of defeating or circumventing the rights of
the employees under special laws or valid agreements

QUITCLAIMS
Rule: Quitclaims, waivers or releases are looked upon with disfavor and are
commonly frowned upon as contrary to public policy and ineffective
to bar claims for the measure of a worker’s legal rights. (Phil. Employ
Services and Resources, Inc. v. Paramio, 2004)
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  Deeds of release of quitclaim cannot bar employees from demanding
benefits to which they are legally entitled or from contesting the
legality of their dismissal, and their acceptance of those benefits would
not amount to estoppel. (EMCO Plywood Corporation v. Abelgas,
2004)

Requisites for validity of waiver/compromise agreement

1. clear and unequivocal language showing intention of a party to give
up a right or benefit w/c legally pertains to him
2. compliance with labor standards, particularly amounts involved in the
EE’s money claims
3. relative equality n the bargaining positions of the parties
4. voluntariness, esp. on the part of the EE

CASE: Periquet v. NLRC, 1990

 Not all waivers and quitclaims are invalid as against public policy.
 It is only where there is clear proof that the waiver was wangled from
an unsuspecting or gullible person, or the terms of the settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction.
 Where it is shown that the person making the waiver did so (1)
voluntarily, (2) with full understanding of what he was doing, and (3)
the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as valid and binding.

TEST YOURSELF
Q: Jose applied with Mercure Drug Company for the position of Sales Clerk. Mercure
Drug Company maintains a chain of drug stores that are open everyday till late at
night. Jose was informed that he had to work on Sundays and holidays at night as
part of the regular course of employment. He was presented with a contact of
employment setting for this compensation on an annual basis with an express
waiver of extra compensation for work on Sundays and holidays, which Jose signed.
Is such a waiver binding on Jose? Explain.

Suggested Answer:
As long as the annual compensation is an amount that is not less than what
Jose should receive for all the days that he works, plus the extra compensation that
he should receive for work on his weekly rest days and on special and regular
holidays and for night differential pay for late night work, considering the laws and
wage orders providing for minimum wages, and the pertinent provisions of the
Labor Code, then the waiver that Jose signed is binding on him for he is not really
waiving any right under the Labor law. It is not contrary to law, morals, good
customs, public order or public policy for an employer and employee to enter into
a contract where the employees’ compensation that is agreed upon already includes
all the amounts that he is to receive for overtime work and for work on weekly rest
days and holidays and for night differential pay for late night work..

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Alternative Answer:
The waiver of benefits provided for by law is void. Art 6 of the New Civil Code
provides that rights may be waived, unless the waiver is contrary to law, morals,
good customs, public order or public policy. (1996 Bar Question)

Q: Can a final and executory judgment be compromised under a “Release and

Quitclaim” for a lesser amount?

Suggested Answer:
Yes, as long as the “Release and Quitclaim” is signed by the very same person
entitled to receive whatever is to be paid under the final and executory judgment
that was the subject of the compromise agreement and that the “Release and
Quitclaim” was signed voluntarily.
In Alba Patio de Makati v. NLRC: A final and executory judgment can no longer
be altered, even if the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification is
attempted to be made by the court rendering it or by the highest court of the land.
Moreover, a final and executory judgment cannot be negotiated; hence, any act to
subvert it is contemptuous.
It was incumbent upon the counsel for the complainant to have seen to it that
the interest of all complainants was protected. The quitclaim and the release in the
preparation of which he assisted clearly worked to the grave disadvantage of the
complainants. To render the decision of this Court meaningless by paying the
backwages of the affected EE in a much lesser amount clearly manifested a willful
disrespect of the authority of this Court as the final arbiter of cases brought to it.
Final and executory judgment cannot be compromised under a “Release and
Quitclaim” if said “Release and Quitclaim” is clearly to the grave disadvantage of
the affected EEs by paying them much lesser amounts than what they were entitled
to receive under the judgment. (See Alba Patio de Makati vs. NLRC, 201 SCRA 355)
(1999 Bar Question)

Q: Can the quitclaim be annulled on the ground of “dire necessity”? Why?

Suggested Answer:
A quitclaim case can be annulled on the ground of its being entered into
involuntarily by EEs because of “dire necessity.” Thus, if it was dire necessity that
forced a worker to sign a quitclaim even if the mount of money given to him by the
ER was very much less that what the workers was entitled to receive, then the
quitclaim was not voluntary, and thus, the said quitclaim is null and void. In a case
(Veloso v. DOLE, 200 SCRA 201) the Supreme Court held that “dire necessity” is
not an acceptable ground for annulling the releases, especially since it has not been
shown that the EEs had been forced to execute them. It has not been proven that
the considerations for he quitclaims were unconscionably low and that the
petitioners had been tricked into accepting them. (1999 Bar Question)

SOURCES OF LAW
A. The Constitution
B. Statutory Sources (Labor Code, IRR, and related special legislation)

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 C. Contract – Art. 1305- 1306
D. Collective Bargaining Agreement – like any other contract in civil law
which gives rise to obligations between parties

E. Past Practices – practices observed by ERs which grant benefits to

EEs, but which are not embodied in law or a formal instrument
Requisites: 1. must have been done over a long period of time and
must have been shown to be consistent and deliberate
2. must have been instituted by the ER voluntarily and
without compulsion of law

CASES: Davao Fruits Corp. v. Associated Labor Union, 1993

 Benefits being enjoyed by EEs arising from an established
company practice favorable to them cannot be diminished,
discontinued, or removed by their ER by virtue of Sec. 10 of the
Rules and Regulations Implementing PD 851, and Art. 100, LC,
which prohibit the diminution or elimination by the ER of the EEs’
existing benefits.

American Wire and Cable Daily Rated EEs Union v. American Wire
and Cable Co. Inc, 2005
 To be considered regular practice, the giving of the bonus should
have been consistent and deliberate. The downtrend in the grant
of the two bonuses over the years demonstrates that there is
nothing consistent about it.

F. Company Policies – written or oral policies of the ER with respect to

labor management relations are generally valid and binding unless
contrary to law or are grossly oppressive.

TEST YOURSELF
Q: Little Hands Garment Company. An unorganized manufacturer of children’s
apparel with around 1,000 workers suffered losses for the first time in history when
its US and European customers shifted their huge orders to China and Bangladesh.
The management informed its EEs that it could no longer afford to provide
transportation shuttle services. Consequently, it announced that a nominal fare
would be charged depending on the distance traveled by the workers availing of
the service.
Was the Little Hands Garments Company within its rights to withdraw this
benefit which it had unilaterally been providing to its EEs? Select the best answer(s)
and briefly explain your reason(s) therefor.
(a) Yes, because it can withdraw a benefit that is unilaterally given;
(b) Yes, because it is suffering losses for the first time;
(c) Yes, because this is a management prerogative which is not due to any legal
or contractual obligation
(d) No, because this amounts to a diminution of benefits which is prohibited by
the Labor Code;

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 (e) No, because it is a fringe benefit that has already ripened into a demandable
right or entitlement.

Suggested Answer:
(c) Yes, because this is a management prerogative which is not due to any
legal or contractual obligation. The facts of the case do not state the circumstances
through which the shuttle service may be considered as a benefit that ripened into
a demandable right. There is no showing that the benefit has been deliberately and
consistently granted, i.e. with the ER’s full consciousness that despite its not being
bound by law or contract to grant it, it just the same granted the benefit.

Another Suggested Answer:

(c) Yes, because this is a management prerogative which is not due to any
legal or contractual obligation.
An ER cannot be forced to continue giving a benefit, which is unilaterally given
as a management prerogative, when it can no longer afford to pay for it. To hold
otherwise would be to penalize the ER for his past generosity. [Producers Bank of
the Phils. V NLRC, 355 SCRA 489 (2001)].

Another Suggested Answer:

(a) Yes, because it can withdraw a benefit that is unilaterally given. The shuttle
service was not payable pursuant to a contract.
In the Manila Bank case, it was held that there is nothing to compel the ER to
be liberal and generous to its EEs in granting benefits when the ER is suffering
losses. (2005 Bar Question, similar to a 2002 Bar Question)

Q: XYZ Employees Association filed a complaint against ABC Bank for wrongful
diminution of benefits. It alleged that the bank had been providing for a mid-year
bonus equivalent to one-month basic pay and a Christmas bonus equivalent to one-
month basic pay since 1971. Upon the effectivity of Presidential Decree (P.D.) No.
851 in 1975 which granted the 13th month pay, the bank started giving its
employees a one-month basic pay as mid-year bonus, one-month basic pay as
Christmas bonus, and one-month basic pay as 13th month pay. In 1980, the bank
was placed under conservatorship and by virtue of a monetary board resolution of
the Central Bank, the bank only gave one month basic pay mandated by P.D. 851,
and it no longer gave its employees the traditional mid-year and Christmas bonuses.
Could ABC Bank be compelled, given the circumstances, to continue paying its
employees the traditional mid-year and Christmas bonuses in addition to 13 th month
pay?

Suggested Answer:
No. The grant of a bonus is a prerogative, not an obligation, of the employer.
(Traders Royal Bank v. NLRC, 189 SCRA 274 [1990]). The matter of giving a bonus
over and above that which is required by law is entirely dependent on the financial
capability of the employer to give it. (Businessday v. NLRC, 221 SCRA 9 [1993]).
Hence, given the circumstances, ABC Bank cannot be compelled to continue
paying its employees the traditional mid-year and Christmas bonuses in addition to
the 13th month pay. (2003 Bar Question)

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 LABOR AND THE CONSTITUTION
 Constitutional foundations of labor law are found in
 Art. II, Section 10, Section 18
 Art. XIII, Section 3
 7 Cardinal Rights of Workers (SCoPe, THuLiP)
Right to
(1) Self-Organization
(2) Collective Bargaining and negotiations
(3) Peaceful concerted activities including the right to strike in
accordance with law
(4) Security of Tenure
(5) Humane conditions of work
(6) Living Wage
(7) Participate in policy and decision-making processes affecting their
rights and benefits as may be provided by law

Q: What are the salient features of the protection to labor provision of the
Constitution?

Suggested Answer:
The salient features of the protection to labor provision of the Constitution (Art XIII,
Sec 3) are as follows:
1. Extent of Protection- full protection to labor;
2. Coverage of protection- local and overseas, organized and unorganized;
3. Employment policy- full employment and equality of employment
opportunities for all;
4. Guarantees
a. Unionism and Method of Determination Conditions of Employment –
Right of all workers to self-organization, collective bargaining and
negotiations
b. Concerted Activities- right to engage in peaceful concerted activities,
including the right t strike in accordance with law.
c. Working Conditions- Right to security of tenure, humane conditions of
work and a living wage.
d. Decision Making Process- Right to participate in policy and decision-
making processes affecting their rights and benefits as way to
provided by law.
e. Share in Fruits of Production- Recognition of right of labor to its just
share in fruits of production.

Another suggested answer:

The Constitution (in Article XIII, Section 3) provides that the State shall afford
protection to labor, local and overseas, organized and unorganized.
The State shall afford protection to labor by promoting full employment and
equality of employment opportunities for all.
Workers are entitled to security of tenure, humane conditions of work and a
living wage.

Page 12 of 195
 The State shall guarantee the right of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right
to strike, in accordance with law.
Workers shall 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 labor
disputes, including conciliation, and shall enforce 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 on investment, and to expansion and
growth. (1996 Bar Question)
*Related Question
Q: What are the rights of an employer and an employee?

Suggested Answer:
The Constitution in Article XIII, Section provides for the following rights of
employers and employee:
A. ER’s Right to a reasonable return on investments, and to expansion and
growth.
B. To a just share in the fruits of production;
C. Right to self-organization, collective bargaining and negotiations and peaceful
concerted activities, including the right to strike in accordance with law;
D. To security of tenure, humane conditions of work, and a living wage; and
E. To participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law. (1996 Bar Question)

Q: what property right is conferred upon an employee once there is an employer-

employee relationship?

Suggested answer:
The right to employment and the right to continue in one’s employment
constitute the property right conferred upon an employee once there is an
employer-employee relationship. Thus, the very important constitutional right that
“no person may be deprived of life, liberty or property without due process of law”
is violated when an employer terminates the employment of an employee without
due process of law because said employment is a property right of the latter.

Another suggested answer:

In Callanta v. NLRC. The Court ruled: “it is a principle in American jurisprudence
which, undoubtedly, is well recognized this jurisdiction that one’s employment,
profession, trade or calling is a “property right,” and the wrongful interference
therewith is an actionable wrong. The right is considered to be property within the
protection of a constitutional guaranty of due process of law.” (2006 Bar
Question)

Nature of Constitutional Provisions

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Social Justice and Protection to Labor
- the purpose of the law is to place the workingman on an equal plane with
management – with all its power and influence – in negotiating for the
advancement of his interests and the defense of his rights.

CASE: Philippine Airlines, Inc. v. Santos, 1993

 The sympathy of the court is on the side of the laboring classes not
only because the Constitution imposes such sympathy, but because
of the one-sided relation between labor and capital. The constitutional
mandate for the protection of labor is as explicit as it is demanding.

Limits of Use
-protection should be equally and evenly extended to all groups as a combined
force in our social and economic life

CASE: PLDT Co, NLRC, 1988

 The policy of social justice is not intended to countenance wrongdoing
simply because it is committed by the underprivileged.
 Only those with clean hands and blameless motives may invoke social
justice and not merely because they happen to be poor.

Agabon v. NLRC
 The constitutional policy to provide full protection to labor is not
meant to be a sword to oppress ERs. The commitment of the courts
to the cause of labor does not prevent them from sustaining the ER
when it is in the right.

Q: May social justice as a guiding principle in labor law be so used by the courts in
sympathy with the working man if it collides with the equal protection clause of the
Constitution? Explain.

SUGGESTED ANSWER:
Yes. The state is bound under the Constitution to afford full protection to
Labor; and when conflicting interests collide and they are to be weighed on the
scales of social justice, the law should accord more sympathy and compassion to
the less privileged workingman. (Fuentes v. NLRC, 266 SCRA 24 [1997]) However,
it should be borne in mind that social justice ceases to be an effective instrument
for the “equalization of the social and economic forces” by the State when it is used
to shield wrongdoing. (Corazon Jamer v. NLRC, 278 SCRA 632 [1997])

ANOTHER SUGGESTED ANSWER:

No, social justice as a guiding principle in law may not be used by the courts if
it collides with the equal protection clause of the Constitution. Social justice is not
a magic and wand applicable in all circumstances. Not all labor cases will be
automatically decided in favor of the worker. Management of has also rights which
are entitled to recognition and protection; justice must be dispensed according to
facts and law; and social justice is not designed to destroy or oppress the employer.

Page 14 of 195
ANOTHER SUGGESTED ANSWER:
Social justice as a guiding principle in Labor law can be implemented side by
side with the equal protection clause of the Constitution.
In the implementation of the principle of social justice, the Constitution
commands that the State shall afford protection to labor. Thus Labor Law may be
pro-labor in the sense that labor is given certain benefits not given to management.
But this is not necessarily violative of the equal protection clause of the Constitution
because said clause allows reasonable classification. (2003 Bar Question)

INTERPRETATION OF LABOR LAWS

 2 provisions of law govern the interpretation of labor laws:
- Art. 4, Labor Code
- Art. 1702, Civil Code
 Both provisions are of the tenor that labor laws (as well as labor contracts)
should be liberally construed in favor of labor

Q: What is the concept of liberal approach in interpreting the Labor Code and its
Implementing Rules and Regulations in favor of labor?

Suggested answer:
In carrying out and interpreting the Labor Code’s provisions and its
implementing regulations, the workingman’s welfare should be the primordial and
paramount consideration, this kind of interpretation gives meaning and substance
to the liberal and compassionate spirit of the law as provided in Art 4, LC, as
amended, which states that “ all doubts in the implementation and interpretation
of the provisions of the Labor Code including its implementing rules and regulations
shall be resolved in favor of labor,” as well as the Constitutional mandate that the
State shall afford full protection to labor and promote full employment opportunities
for all. (PLDT v. NLRC) (2006 Bar Question)

LABOR STANDARDS

Part 1
WORK RELATIONSHIP

Employer— includes any person acting directly or indirectly in the interest of

an employer in relation to an employee [Art.97 (b)]

Employee— includes any individual employed by an employer. [Art. 97 (c)]

Also, it includes any individual whose work has ceased as a result
of or in connection with any current labor dispute or because of any
ULP if he has not obtained any other substantially equivalent and
regular employment. [Art. 212 (f)]
Page 15 of 195
EMPLOYER-EMPLOYEE RELATIONSHIP
 The existence of an employer-employees relation is a question of law
and being such, it cannot be made the subject of agreement. (Tabas
v. California Manufacturing Co. 1990)

 It has long been established that in administrative and quasi-judicial

proceedings, substantial evidence is sufficient as a basis for judgment
on the existence of employer-employee relationship. No particular
form of evidence is required to prove the existence of such. (Domasig
v NLRC, 1996)

Jurisprudential Tests
(1) Four-fold Test
(a) Does the ER have the power over the selection and engagement
of the EE?
(b) Does the ER pay wages?
(c) Does the ER have the power to discipline and dismiss the EE?
(d) Does the ER have control over the EE’s conduct? (Control Test)
i. control over both the results to be achieved and the means
to be used to achieve such results
ii. does not require the actual exercise of control but only the
mere existence of the right to control

 The so-called “control test” is the most important element… The

greater the supervision and control the hirer exercises, the more likely
the worker is deemed an employee. The less control the hirer
exercise, the more likely the worker is considered an independent
contractor. Applying the control test, Sonza is not an employee but
an independent contractor. ABS-CBN did not exercise control over
the means and methods of performance of Sonza’s work. (Sonza v.
ABS-CBN Broadcasting Corp., 2004)

(2) Economic Relations Test

- In addition to the standard right of control, the existing economic
conditions prevailing between the parties, like the inclusion of the EE
in the payrolls, had been considered in determining the existence of
ER-EE relations. (Sevilla v. CA, 1988)
-Rationale: The application of a strict test such as the four-fold test
may result in the mischief of an injustice to the EE.

TEST YOURSELF
Q: Metro Grocery Inc. arranged with Mr. Juan Dado, a Barangay Chairman, to
provide the grocery with workers who will work as cashiers, bag boys, shelf counter
helpers and sanitation workers. The grocery will pay Mr. Dado an amount equivalent
to the direct and hidden costs of the wages of each worker assigned, plus 10% to
cover the administrative costs related to their arrangement. Mr. Dao, in turn, will
Page 16 of 195
pay directly the workers their wages. As far as the workers are concerned, Mr. Dado
is their employer. A group of concerned workers consulted you if Mr. Dado is really
under the law their law their employer.
a. How will you analyze the problem in order to formulate your answer?
b. What is the legal significance, if any, of the question of the concerned
workers as to who is their employer?

Suggested answer:
I will analyze the problem by applying four-fold test of employer-employee
relationship. I will examine if Mr. Dado exercises power of control or supervision
over the worker’s manner and method of doing their work. Control is the most
important factor in examining employer-employee relationship. The other factors
are hiring, payment of wages, and power to dismiss. I will also examine whether
there was job contracting or labor-only contracting.

Another suggested answer:

My analytical framework will be an analysis of the law on independent
contractor and labor only contracting.
If there is a valid independent contractor situation, Mr. Dado will be the direct
employer, and the Metro Grocery will be the indirect employer.
If there is a labor—contractor only relationship, the Metro Grocery will be the
employer as it directly hired the employees.

The legal significance is the determination of employer-employee relationship,

which gives rise to certain to certain obligations of both employer and employee,
such as SSS membership, union membership, security of tenure, etc. (2000 Bar
Question)
* Related Question:
Q: When does an employer-employee relationship exist? (1996 Bar Question)

Q: Ruben Padilla entered into a written agreement with Gomburza College to work
for the latter in exchange for the privilege of studying in said institution. Ruben’s
work was confined to keeping clean the lavatory facilities of the school. One school
day, Ruben got into a fistfight with a classmate, Victor Monteverde, as a result of
which the latter sustained a fractured arm.
Victor Monteverde filed a civil case for damages against Ruben Padilla,
impleading Gomburza College due to the latter’s alleged liabilities as employer of
Ruben Padilla.
Under the circumstances, could Gomburza College be held liable by Victor
Monteverde as an employer of Ruben Padilla?

Answer:
Gomburza College is not liable for the acts of Ruben Padilla because there is
no employer-employee relationship between them. As provided in the Rules and
Regulations implementing the Labor Code “there is no employer-employee
relationship between students on one hand, and schools, colleges, or universities
on the other, where students work with the latter in exchange for the privilege or
study free of charge, provided the students are given real opportunity including

Page 17 of 195
such facilities as may be reasonable and necessary to finish their chose courses
under such arrangements.”

Alternative Answer:
Gomburza College can be held liable by Victor Monteverde as an employer of
Ruben Padilla.
Applying the control test, the College is the employer of Padilla because in the
latter’s work of keeping clean the lavatory facilities of the school, he is under the
control of the College as regards his employment.
However, Ruben Padilla was not acting within is assigned tasks. Art 2180, CC
provides: “The obligation imposed by Art. 2176 (Quasi-delicts) is demandable xxx
(also from) employers (who) shall be liable for the damages caused by their
employees xxx acting within the scope of their assigned tasks, even though the
former are not engaged in any business or industry.” It could be argued that
Ruben Padilla was not acting within the scope of his assigned tasks; thus, his
employer, Gomburza College is not liable. (1997 Bar Question)

Q: TRX, a local shipping firm, maintains a fleet of motorized boats plying the island
barangays of AP, a coastal town. At day’s end the boat operators/crew members
turn over to the boat owner their cash collections from cargo fees and passenger
fares, less the expenses for diesel, fuel, food, landing fees and spare parts.
Fifty percent (50%) of the monthly income or earnings derived from the
operations of the boats are given to the boatmen by way of compensation.
Deducted from the individual shares of the boatmen are their cash advance and
peso value of their absences, if any.
Are these boatmen entitled to overtime pay, holiday pay, and 13 th month pay?

Suggested Answer:
If the boatmen are considered employees, like the jeepney drivers paid on a
boundary system, the boatmen are not entitled to overtime and holiday pay
because they are workers who are paid by results. Said workers, under the Labor
Code are not entitled to overtime and holiday pay.
In accordance with the Rules and Regulations implementing the 13 th month
pay law, however, the boatmen are entitled to the 13 th month pay.

Another Suggested Answer:

No. The arrangement between the boat owner and the boat operators/crew
members partook of the nature or a joint venture. The boatmen did not receive
fixed compensation as they shared only in the cash collections from cargo fees and
passenger fares, less expenses for fuel, food, landing fees and spare parts. It
appears that there was neither right of control nor actual exercise of such right on
the part of the boat owner over the boatmen. It is clear that there was no
employer-employee relationship between the boat owner and the boatmen. As
such, these boatmen are not entitled to overtime pay, holiday pay and 13th month
pay. (2004 Bar Question)

Q: Pandoy, an electronics technician, worked within the premises of perfect

Triangle, an auto accessory shop. He filed a complaint for illegal dismissal, overtime
pay and other benefits against Perfect Triangle, which refused to pay his claims on
Page 18 of 195
the ground that Pandoy was not its EE but was an independent contractor. It was
common practice for shops like Perfect Triangle to collect the service fees from
customers and pay the same to the independent contractors at the end of the week.
The auto shop explained that Pandoy was like a partner who worked within its
premises, using parts provided by the shop, but otherwise Pandoy was free to
render service I the other auto shops. On the other hand, Pandoy insisted that he
still was entitled to the benefits because he was loyal to Perfect Triangle, it being
the fact that he did no work for anyone else. Is Pandoy correct? Explain briefly.

Suggested Answer:
Pandoy is not correct.
He is not an EE because he does not meet the four fold test for him to be an
EE of Perfect Triangle. All that he could claim is: he worked within the premises of
Perfect Triangle. Pandoy was NOT engaged as an EE by Perfect Triangle. He was
NOT paid wages by Perfect Triangle. Perfect Triangle does NOT have the power to
dismiss him although Perfect Triangle may not continue to allow him to work within
its premises. And most important of all, Pandoy was NOT under the control of
Perfect Triangle as regards the work he performs for customers.
The Supreme Court has ruled: “In stark contrast to the Company’s regular EEs,
there are independent, free lance operators who are permitted by the Company to
position themselves proximate to the Company premises. These independent
operators are allowed by the Company to wait on Company customers who would
be requiring their services. In exchange for the privileges of favorable
recommendation by the Company and immediate access to the customers in need
of their services, these independent operators allow the Company to collect their
service fee from the customer and this fee is given back to the independent operator
at the end of the week. In effect they do not earn fixed wages from the Company
as their variable fees are earned by them from the customers of the Company. The
Company has no control over and does not restrict the methodology or means and
manner by which these operators perform their work. These operators are not
supervised by any EE of the Company since the results of their work is controlled
by the customers who hire them. Likewise, the Company has no control as an ER
over these operators. They are not subject to the regular hours and days of work
and may come and go as they wish. They are not subject to any disciplinary
measures from the Company, save merely for the inherent rules of general behavior
and good conduct.” [Ushio Marketing v. NLRC, 294 SCRA 673 (1998)] (2002 Bar
Question)

CONTRACTING ARRANGEMENTS (Arts. 106-109) (DO 18-02 is the present

administrative regulation implementing these provisions. It only enumerates
what it prohibits and does not itemize what it allows.)

Prohibited Contracting
 Labor-only contracting
 Arrangements that violate public policy (e.g., contracting with a
“cabo”, contracting because of a strike or lockout, contracting that
terminates employment of regular EEs or reducing their working
hours, etc)

Page 19 of 195
  Contracting between the principal and the contractor that are
exploitative of the contractual workers per Sec. 6 (c) of the DO

Labor-only contracting
Elements:
1. the contractor or subcontractor merely recruits, supplies or place
workers to perform a job, work or service for a principal (essential
element), and
2. any of these are present (confirming elements):
(a) - The contractor or subcontractor does not have substantial
capital or investment which relates to the job, work or service
to be performed and
- the EEs recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly
related to the main business of the principal; or
(b) The contractor does not exercise the right to control over the
performance of the work of the contractual EE

Substantial capital or investment— capital stock, tools, equipment,

implements, machineries actually and directly used by the contractor
in the performance or completion of the job.
Substantial capital need not be coupled with investment. If one
has capital although without investment in tools and equipment, it is
not a labor-only contracting (Neri v. NLRC, 1993)

Control— right to determine not only the end to be achieved but also the
means to be used

Legitimate contracting
 The principal agrees to put out the performance or completion of a
specific job, work, or service within a definite or predetermined
period, regardless of whether such job, work, or service is to be
performed or completed within or outside the premises of the
principal
 Job contractor must be properly registered in accordance with DO 18-
02 (if not registered, he is presumed by law as labor-only contractor)

Q: Distinguish between “job contracting” and “labor-only contracting.”

Answer:
When a person, not being an ER, contracts with an independent contractor for
the performance of any work, task, job or project, there is “job contracting.” When
the independent contractor does the work that is contracted out, he is not under
the control of the person who contracted out the work to be done.
In “labor-only contracting”, a person supplies workers to an ER. Said person
does not have substantial capital or investments in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed
Page 20 of 195
by such person are performing activities related to the principal business of the ER
to whom the workers are supplied. (1997 Bar Question)

Liability
Labor-only Contracting
› principal is directly responsible to the EEs as if such EEs had
been directly hired by him
› contractor is merely an agent of the principal hence there is ER-
EE relationship between the principal and the EEs
› the law creates an ER-EE relationship between the principal and
the EE for a limited purpose – to ensure that EEs are paid their
wages. The principal becomes solidarily liable with the job
contractor only for the payment of the EEs’ wages (including SIL
and other benefits provided by law) whenever the contractor
fails to pay the same.

Legitimate Contracting
› In legitimate contracting, there exists a trilateral relationship --
Parties: principal, contractor/ subcontractor, contractual workers
› A contract for a specific job exists between the principal and the
contractor/ subcontractor and a contract of employment exists
between the contractor and its workers.
› Principal ER and job contractor are solidarily liable for all the
rightful claims (includes wages, SIL, other benefits provided by
law, separation pay and backwages in case of illegal dismissal)
of the EEs.
› Principal EE may be held solidary liable if found that he conspired
with the contractor in the illegal dismissal.

Rights of Contractual EEs

— same with other EEs of the principal or of the contractor/ subcontractor
(e.g., SIL, rest day, OT pay, holiday pay, social security benefits, self-org,
collective bargaining, security of tenure)

TEST YOURSELF
Q: Sta. Monica Plywood Corp. entered into a contract with Arnold for the milling of
lumber as well as the hauling of waste wood products. The company provided the
equipment and tools because Arnold had neither tools nor capital for the job. Their
wages were paid by Sta. Monica Plywood to Arnold based on their production or
the number of workers and the time used in certain areas of work. All work activities
and schedules were fixed by the company.

A. Is Arnold a job contactor? Explain briefly.

B. Who is liable for he claims of the workers hired by Arnold? Explain briefly.

Suggested Answer:

Page 21 of 195
A. No. in two cases decided by the Supreme Court, it was held that there is “job
contracting” where (1) the contractor carries on an independent business and
undertakes the contract work in his own account, under his own responsibility
according to his own manner and method, free from the control and direction of is
ER or principal in all matters connected with the performance of the work except
as to the results thereof; and (2) the contractor has substantial capital or
investment in the form of tools, equipment, machineries, work premises and other
materials which are necessary in the conduct of his business. [Lim v. NLRC, 303
SCRA 432 (1999); Baguio v. NLRC, 202 SCRA 465 (1991)].
In the problem given, Arnold did not have sufficient capital or investment for
one. For another Arnold was not free from the control and direction of Sta. Monica
Plywood because all work activities and schedules were fixed by the company.
Therefore, Arnold is not a job contractor. He is engaged in labor-only
contracting.

B. Sta. Monica Plywood is liable for the claims of the workers hired by Arnold. A
finding that Arnold is a labor only contractor is equivalent to declaring that there
exists an ER-EE relationship between Sta. Monica Plywood and workers hired by
Arnold. This is so because Arnold is considered a mere agent of Sta. Monica Plywood
Corp. [Lim v. NLRC, 303 SCRA 432, (1999); Baguio et. al. v. NLRC, 202 SCRA 465
(1991)] (2002 Bar Question)

*Related Questions:
1999 Bar Question – contract bet. security agency and hotel for former to supply
the latter with security guards; Answer: apply the four-fold test
2001 Bar Question – Company X provides Company Y with janitorial services;
Answer: considered the fact that Co. Y possesses necessary capital &
equipments
Alternative answer: considered “control test” as the most impt. Factor in
determining ER-EE relationship. Apply Traders Royal Bank v. NLRC (1999) and
Religious of the Virgin Mary v. NLRC (1999)
2005 Bar Question – Ms. Vartan is a radio-TV talk show host; argue both sides
Answer: For Network (no ER-EE rel.)- apply Sonza v. ABS-CBN (2004)
For Ms. Vartan (ER-EE rel. exists) – apply Art. 280, LC and the four-
fold test

Q: Antonio Antuquin, a security guard, was caught sleeping on the job while on
duty at the Yosi Cigarette Factory. As a result, he was dismissed from employment
by the Wagan Security Agency, an independent contractor. At the time of his
dismissal, Antonio had been serving as a watchman on he factory for many years,
often at stretches of up to 12 hours, even on Sundays and holidays, without
overtime, nighttime and rest day benefits. He thereafter filed a complaint for illegal
dismissal and non-payment of benefits against Yosi Cigarette Factory, which he
claimed was his actual and direct ER.
As the Labor Arbiter assigned to hear the case, how would you correctly resolve
the following:

(a) Antonio’s charge of dismissal; and

(b) Antonio’s claim for overtime and other benefits.
Page 22 of 195
Suggested Answer:
(a) This is a case involving permissible job contracting. Antonio’s charge of
illegal dismissal against Yosi Cigarette Factory will not prosper. Wagan Security
Agency, an independent contractor, is Antonio’s direct ER. Yosi is only Antonio’s
indirect ER (Art 109, LC). By force of law, there is in reaity no ER-EE relationship
between Yosi and Antonio (Baguio, et al. v. NLRC)

(b) Antonio’s claim for overtime and other benefits should be paid by Yosi
Cigarette Factory. The Labor Code provides that in the event that the contractor
or subcontractor fails to pay the wages of his EEs, the ER shall be jointly and
severally liable to the extent of the work performed under the contract in the same
manner and extent that he is liable to EEs directly employed by his contractor or
subcontractor for any violation of any provision of the Labor Code. (2005 Bar
Question)

Q: Clean Manpower Inc. (CMI) had provided janitorial services to the National
Economic Development Authority (NEDA) since April 1988. Its service contract was
renewed every three months.. However, in the bidding held on July 1992, CMI was
disqualified and excluded. In 1993, six janitors of CMI formerly assigned to NEDA
were impleaded as respondents for failure to comply with NCR Wage Order Nos.
01 and 02, which took effect on November 1, 1990 and January 2, 1992,
respectively.
Should NEDA, a government agency subject to budgetary constraints, be held
liable solidarily with CMI for the payment of salary differentials due the
complainants? Cite the legal basis for your answer.

Suggested Answer:
NEDA shall be held solidarily liable with CMI for the payment of salary differentials
due to the complainants. The Labor Code provides that xxx(a) person, partnership,
association or corporation which, not being an employer, contracts with an
independent contractor for the performance of any work, task, job or project” xxx
“shall be jointly and severally liable with his contractor to such employees (of the
contractor) to the extent of work performed under the contract xxx.” (Arts. 106 and
107, LC) (2004 Bar Question)

Q: Banco de Manila and the Ang Husay Janitorial and Pest Control Agency entered
into an Independent Contractor Agreement with the usual stipulations; specifically,
the absence of ER-EE relationship, and the relief from liability clauses. Can the
Bank, as a client, and the Agency, as an independent contractor, stipulate that no
ER-EE relationship exists between the Bank and the EEs of the Agency who may be
assigned to work in the Bank? Reason.

Suggested answer:
They can so stipulate if the relationship is indeed job contracting. Yet the
stipulation cannot prevail over the facts and the laws. The existence of ER-EE
relationship is determined by the facts and law and not by stipulation of the parties.
(Insular life Assurance Co., Ltd. V. NLRC (1998))

Page 23 of 195
Another suggested answer:
Yes, they can stipulate provided that the contract of independent contractor is
valid in accordance with Art 106, LC. (2000 Bar Question)

PART 2
EMPLOYEE CLASSIFICATION

(1) REGULAR
(a) EE engaged to perform activities which are usually
necessary and desirable in the usual business or trade of the ER
(Art. 280, 1st par.);

Hacienda Fatima v. National Federation of Sugarcane Workers, 2003

 Primary standard of determining a regular employment is the
reasonable connection between the particular activity performed by
the EE in relation to the usual business or trade of the ER.
 The connection can be determined by considering the nature of the
work performed and its relation to the scheme of the particular
business or trade in its entirety.
 The test is whether it is usually necessary or desirable in the usual
business or trade of the ER.

(b) A casual EE who has rendered at least 1 year of service, whether

continuous or broken, shall be considered a regular EE with respect
to the activity in w/c he is employed and his employment shall
continue while such activity exists (Art. 280, 2nd par.)
› It is not the nature of his work but the passage of time that
gives him a regular status.
› IMPT: the one-year period in Art. 280, 2nd par. applies only to
casual EEs.

(c) A project or work pool EE who has been:

1. continuously re-hired (as opposed to intermittently) by the same
employer, for the same tasks or nature of tasks; and
2. these tasks are vital, necessary and indispensable to the usual
business or trade of the ER. (Maraguinot v. NLRC, 1998)

(d) Regular seasonal EEs

Manila v. CIR, 1963; Tacloban Sagkahan Rice, et al v. NLRC, 1990
› Those called to work from time to time
› The nature of their relationship is such that during off-season
they are temporarily laid off.
› Strictly speaking, they are not separated from service but are
merely considered as on leave of absence without pay until re-
employed.

Page 24 of 195
 › Their employment relationship is never severed but only
suspended. As such those EEs can be considered as in the
regular employment of the ER.
› they are regular EEs because of the nature of their work and
not because of the length of time the have worked

(e) A probationary employee who is allowed to work after the

probationary period (Art. 281, last sentence);

(f) All learners who has been allowed or suffered to work during the
first 2 months shall be deemed regular EEs if training is terminated
by the ER before the end of the stipulated period through no fault of
the learner [Art. 75(d)].

Special Rule for Private School Teachers

UST, et al v. NLRC, (1990),
The ff. are the legal requisites for their acquisition of permanent
employment or security of tenure:
1. the teacher is a full-time teacher;
2. the teacher must have rendered 3 consecutive years of service; and
3. such service must have been satisfactory.

(2) CASUAL (Art. 280, 2nd par.)— activity performed is not usually necessary
or desirable in the usual business or trade of the ER (not regular); not
project; not seasonal.
› He is uniquely regular because his “regularness” attaches only to the
particular activity that he has been doing while still a casual.

(AM Oreta & Co., Inc v. NLRC, 1989)

 What determines regularity or casualness is not the employment
contract, written or otherwise, but the nature of the job. If the job is
usually necessary or desirable to the main business of the ER, then
employment is regular.

(3) PROJECT (Art. 280, 1st par.) — those workers hired

(1) for a specific project or undertaking; and
(2) the completion or termination of such project or undertaking has
been determined at the time of engagement of the employee.
› the period is not the determining factor, so that even if the period
is more than 1 year, employee does not necessarily become
regular
› The 2nd paragraph of Art. 280, providing that an employee, who
has rendered service for at least 1 year, shall be considered a
regular employee, pertains to casual employees and not to
project employees. (Palomares v. NLRC, 1997)

Page 25 of 195
  Under Policy Instruction No. 20 of the Secretary of Labor, project EEs
are those employed in connection with a particular project. Non-
project or regular EEs are those employed without reference to any
particular project.

 In Maraguinot v. NLRC (1998), it was held that a project or work pool

EE becomes regular when:
(1) continuously re-hired (as opposed to intermittently) by the same
ER, for the same tasks or nature of tasks; and
(2) these tasks are vital, necessary and indispensable to the usual
business or trade of the ER.
› The length of time during which the EE was continuously rehired
is not controlling, but merely serves as a badge of regular
employment.

 An employment ceases to be coterminous with specific projects when

the EE is continuously rehired due to the demands of the ER’s
business and re-engaged for many more projects without
interruption. (Chua v. CA, 2004)
 BUT in CE Construction Corp v Cioco (2004), it was held that the re-
hiring of the construction workers on a project-to-project basis did
not confer upon them regular employment status. The re-hiring was
based on practical consideration that experienced construction
workers are more preferred.

Work pool
(Ocampo v. NLRC, 1990)
 It was stressed that contract workers are not regular EEs, their
services being needed only when there are projects to be
undertaken.
 The rationale of this rule is that if a project has already been
completed, it would be unjust to maintain these EEs in the payroll
while they are doing nothing except waiting for another project.
 In effect, these stand-by workers would be collecting payment
for work not done. This can only lead to a coddling of labor at
the expense of management which is not fair by any standard

(Aguilar Corp. v. NLRC, 1997)

 However, members of a work pool from which a construction
company draws its project EEs, if considered EEs of the
construction company while in the work pool, are non-project
EEs, or EEs for an indefinite period.
 If they are employed in a particular project, the completion of
the project or any phase thereof will not mean severance of the
ER-EE relationship.

Q: Distinguish the project employees from regular employees?

Page 26 of 195
Suggested
Answer:

A regular EE is one engaged to perform activities which are usually necessary

or desirable in the usual business or trade of the ER. On the other hand, project
EE is one whose employment is fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the
engagement of the EE. (Art 280, LC) (1996 Bar Question)

Q: How is a project worker different from a casual or contractual worker? Briefly

explain your answer.

Suggested Answer:
A project worker is employed for a specific project or undertaking the
completion or termination of which is determined at the time of his engagement.
His work need not be incidental to the business of the ER. His employment may
exceed 1 year without necessarily making him a regular EE.
A casual EE is engaged to perform a job, work, or service which is incidental
to the business of the ER; moreover, the definite period of his employment is made
known to him at the time of his engagement. His continued employment after the
lapse of 1 year makes him a regular EE. Under the Social Security Law, employment
that is purely casual and not for the purpose of occupation or business of the ER is
not under the coverage of the aforesaid law.
A “project worker”, on the other hand, is a specific term used to designate
workers in the construction industry hired to perform a specific undertaking for a
fixed period which is co-terminus with a project or phase thereof determined at the
time of the engagement of the EE (policy Instruction No. 19, DOLE), and it is
mandatorily required that a termination report be submitted to the nearest public
employment office upon the completion of the constriction project [Aurora Land
Projects Corp. v. NLRC, 266 SCRA 48 (Jan. 2, 1997)]. There is no such requirement
for an ordinary contractual worker. (2005 Bar Question)

Q: Asia Security & Investigation Agency (ASIA) executed a one-year contract with
the Baron Hotel (Baron) for the former to provide the latter with 20 security guards
to safeguard the persons and belongings of hotel guests, among others. After the
expiration of the contract with Asia, Baron did not renew the same and instead
executed another contract for security services with another security agency. Asia
placed the affected security guards on “floating status” on “no work, no pay” basis.
Assuming that ASIA is the ER, is the act of ASIA in placing the security guards
on “floating status” lawful? Why?

Suggested Answer:
It is lawful for a private security guard agency to place its security guard on a
“floating status” if it has no assignment to give to said security guards.
But if the security guards are placed on a “floating status” for more than
months, the security guards may consider themselves as having been dismissed.
(1999 Bar Question)

Page 27 of 195
Q: A Construction Group hired Engineer A as a Project Engineer in 1987. He was
assigned to five successive separate projects. All 5 Contracts of Employment he
signed specified the name of the project, its duration, and the temporary- project
nature of the engagement of his services. Upon completion of the 5 th project in
August 1998, his services were terminated. He worked for a total of 10 years (1987-
1998) in the 5 separate projects.
Six months after his separation, the Group won a bid for a large construction
project. The Group did not engage the services of Engineer A as a Project Engineer
for this new project; instead, it engaged the services of Engineer B. Engineer A
claims that by virtue of the nature of his functions, i.e. Engineer in a Construction
Group, and his long years of service he had rendered to the Group, he is a regular
EE and not a project engineer at the time he was first hired. Furthermore, the hiring
of Engineer B showed that there is a continuing need for his services.
Is the claim of Engineer A correct?

Suggested answer:
The claim of Engineer A that he is a regular EE and not a project EE is not
correct. The Labor Code provides:
“Art 280. Regular and casual employment. –An employment shall be deemed
to be regular where the EE has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the ER, except, where the
employment has been fixed for a specific project or undertaking the completion of
which has been determined at the time of the engagement of the EE.”
In all the 5 successive contracts of employment of Engineer A, the name of
the project, its duration, and the temporary project nature of the engagement of
his services are clearly stated; hence, engineer A falls within the exemption of Art
280.
The Supreme Court has ruled as follows:
Manansag v. NLRC (1993) “The fact that the petitioners worked for several
projects of private respondent company is no basis to consider them as regular EEs.
By the very nature of their ER’s business, they will always remain project EEs
regardless of the number of projects in which they have worked.
De Ocampo v. NLRC (1990) “(Project EEs) are not considered regular EEs, their
services, being needed only when there are projects to be undertaken. The
rationale for this rule is that if a project has already been completed, it would be
unjust to require an ER to maintain them in the payroll while they are doing
absolutely nothing except waiting for another project.

Another suggested answer:

The claim of Engineer A is not correct.
The fact that he has been working for Construction Group for a total of 10
years does not make him a regular EE when it is very clear from the Contracts of
Employment he signed, that he was always being engaged as a project EE.
The tenure of a project EE is co-terminus with the project in connection with
which his services were engaged. Thus, after the end of the project, the ER-EE
relationship ceases to exist. Such project employee has no legal right to insist that
he should be employed by the Construction Group for a subsequent project of said
Group. (1998 Bar Question)

Page 28 of 195
*Related Questions:
2002 Bar Question – Hired for a 2-year contract for construction. Contract was
extended for 9mos. Regular EE?
Answer: Yes, apply Philex Mining Corp. v. NLRC, 312 SCRA 119 (1999)
[ER’s duty to inform EE of duration and scope] and Aurora Land Projects
Corp. v. NLRC, 266 SCRA 48 (1997) [re-hiring]
Alternative Ans.: No, A project EE who is hired for a specific project only
is not a regular EE notwithstanding an extension of the project provided
that the contract of project employment clearly specifies the project and
the duration thereof. [Palomares v. NLRC, 277 SCRA 439 (1997)]
2005 Bar Question – regularization after 1 year applies only to casual EEs
2005 Bar Question (again) – re-hiring: basis for regularization

Q: Tomas and Cruz have been employed for he last 22 years in various capacities
on board the ships of BARKO Shipping Company. Their employment was made
through a local manning company. They have signed several 10-month employment
contracts with BARKO Shipping. The NLRC ruled that they were contractual EEs and
that their employment was terminated each time their contracts expired. Is the
ruling of the NLRC correct? Explain your answer fully.

Suggested Answer:
Yes. A contract of employment for a definite period terminates by its own terms
at the end of such period. Since Tomas and Cruz signed 10-month contracts, their
employment terminates by its own terms at the end of each 10-month period.
The decisive determinant in term employment should not be the activities that
the EE is called upon to perform but the day certain agreed upon by the parties for
the commencement and termination of their employment relation (not the character
of his duties as being “usually necessary or desirable in the usual business of the
ER”).
Stipulation in the employment contracts providing for “term employment” or
“fixed period employment” are valid when the period are agreed upon knowingly
and voluntarily by the parties without force, duress, improper pressure exerted on
the EE; and when such stipulations were not designed to circumvent the laws on
security of tenure. [Brent School v. Zamora (1990)]
Moreover, in Brent School v. Zamora the Supreme Court stated that Art. 280,
LC does not apply to overseas employment.
In Pablo Coyoca v. NLRC, 243 SCRA 190 (1995) the Supreme Court also held
that a seafarer is not a regular EE and Filipino seamen are not governed by the
rules and regulations governing overseas employment and the said rules do not
provide for separation or termination pay.
From the foregoing cases, it is clear that seafarers are considered contractual
EEs. they cannot be considered as regular EEs under Art. 280, LC. Their
employment is governed by the contracts they sign every time they are rehired and
their employment is terminated when their contract expires. Their employment is
contractually fixed for a certain period of time. They fall under the exception of Art.
280 whose employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of engagement
of the EE or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season. We need not depart from the
Page 29 of 195
rulings of this court in the two aforementioned cases which indeed constitute stare
decisis with respect to the employment status of seafarer. [Milares v. NLRC, (2000)]
Therefore, Tomas and Cruz are contractual EEs. The ruling of the NLRC is
correct.

Another Suggested Answer:

No. the ruling of the NLRC is not correct. Such repeated re-hiring, which
continued for twenty years cannot but he appreciated as sufficient evidence of the
necessity and indispensability of petitioner’s service to the ER’s trade. Verily, as
petitioners had rendered 20 years of service, performing activities that were
necessary and desirable in the trade of the ER, they are, by express provision of
Art. 280, LC, considered regular EEs. [Millares v.NLRC (2000)] (2002 Bar
Question)

(4) SEASONAL (Art. 280, 1st par.)— one whose work or services to be
performed is seasonal in nature and the employment is for the duration of
the season.

(5) FIXED TERM

— As held in Brent School v. Zamora (1990), it is valid when:
(1) a fixed period of employment was agreed upon knowingly and
voluntarily by the parties; or
(2) where it satisfactorily appears that the ER and EE dealt with each
other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter; or
(3) it was not intended to defeat workers’ rights (otherwise, it will not be
considered valid where it is apparent that periods have been imposed
to preclude acquisition of tenurial security of employee)

(6) PROBATIONARY (Art. 281)

Gen. Rule: probationary employment should not exceed 6 months
› A probationary EE allowed to work beyond the probationary period is
deemed regular even without formal appointment
› Abbreviation of probationary period is allowed since there is no
provision prohibiting the same
› Lengthening of period is valid only under the ff. circumstances:
(a) if covered by an apprenticeship agreement stipulating a longer
period
(b) voluntary agreement of the parties, esp. when it is a company
policy or when the nature of the work requires a longer period.
(Buiser v. Leogardo, 1984) (this is a recognition of the exercise
of managerial prerogatives in requiring a longer period of
probationary employment)
(c) the ER gives the EE a second chance to pass the probation
standards (Mariwasa Mfg., Inc., v. Leogardo, 1989)

Grounds for Termination

Page 30 of 195
 (1) for just or authorized cause; or
(2) when he fails to qualify as a regular EE in accordance with
reasonable standards made known by the ER to EE at the time
of his engagement [Orient Express Placement Phils. v. NLRC
(1997)]
* The ER is not required to finish the entire period of probation. He may
pre-terminate services as long as there is compliance with the
abovementioned grounds.

Q: What limitations, if any, do the law and jurisprudence impose on an ER’s right
to terminate the services of a probationary EE? (2001 Bar Question)

Q: The services of an EE were terminated upon the completion of the probationary

period of employment for failure to qualify for the position. The EE filed a complaint
for Illegal Dismissal on the ground that the ER failed to inform him in writing the
reasonable standards for regular employment.
Will the complaint for Illegal Dismissal prosper? (1998 Bar Question)

Suggested answer:
Yes, the Complaint for Illegal Dismissal will prosper. The Labor Code provides:
Art 281. Probationary employment.- xxx The services of an employee who has
been engaged on a probationary basis may be terminated xxx when he fails to
qualify as a regular employee in accordance with reasonable standards made known
to an employee at the time of his engagement.
The Supreme Court in A.M. Oreta and Co., inc. v. NLRC (1989), ruled:
“The law is clear to the effect that in all cases involving employees engaged
on probationary basis, the employer shall make known to the employee at the time
he is hired, the standards by which he will qualify as a regular employee.”
The failure of the ER to inform the EE of the qualifications for regularization is
fatal. The failure violates the rules of fair play which is a cherished concept in labor
law.

Another suggested answer:

The complaint for illegal dismissal will prosper.
The Labor Code (in Art 281) provides that a probationary EE may be
terminated when he fails to qualify as a regular EE in accordance with reasonable
standards made known by the ER to the EE at the time of the latter’s engagement.
In the question, the probationary EE was not informed of such reasonable standards
at the time he was employed. Thus, if he is to be legally terminated, it should be
because of gross and habitual neglect of duties.

PART 3
RECRUITMENT AND PLACEMENT

RECRUITMENT AND PLACEMENT [Art. 13 (b)]

Basic rule: any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers, and includes referrals, contact

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 services, promising or advertising for employment, locally or abroad, for
profit or not; (mnemonic: CETCHUP includes CRAP)

Proviso: PROVIDED, that any person or entity which, in any manner,

offers or promises, for a fee, employment to two or more persons shall be
deemed engaged in recruitment and placement.

Acts No. of Consideration

Worker
Basic canvassing, enlisting, At least 1 for profit or not
rule contracting, transporting,
utilizing,
hiring, or procuring workers, and
includes referrals, contact
services, promising or advertising
for employment
Proviso offers or promises employment 2 or for a fee
more

 The number of persons dealt with is not the basis of determining WON
an act constitutes recruitment and placement. Any of the acts in Art.
13 (b) will constitute recruitment and placement.

 The proviso merely lays down a rule of evidence:

fee + promise or offer of employment + 2 or more persons = individual
dealing with them shall be deemed (presumption) engaged in the act of
recruitment and placement. (Ppl v Panis, 1986)

EMPLOYMENT AGENCIES
Document issued
Entity Act by DOLE for
operation
Private fee-charging Engaged in recruitment License
employment agency and placement for a fee [Art. 13(d)]
[Art. 13(c)]
Private recruitment entity Engaged in recruitment Authority
[Art. 13(e)] and placement without [Art. 13(f)]
charging

PROHIBITED ENTITIES
Private recruitment – except as provided in Ch. II, of this title, no person or
entity, other than the public employment offices and the POEA for overseas
employment shall engage in the recruitment and placement of workers. (Art.
16)

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Ban on direct hiring – No ER may hire a Filipino worker for overseas
employment except through the Boards and entities authorized by the DOLE.
Direct hiring by members of the diplomatic service, officials, and EEs of
international organizations and such other ERs as may be allowed by the DOLE
is exempt from this provision. (Art. 18)

Travel Agencies prohibited to recruit – Travel agencies and sales agencies

of airline companies are prohibited from engaging in the business of
recruitment and placement of workers for overseas employment whether for
profit or not. (Art. 26)

Q: Wonder Travel and Tours Agency is a well-known travel agency and an

authorized sales agent of the Philippine Air Lines. Since majority of its passengers
are overseas workers, WTTA applied fpor a license for recruitment and placemnt
activiuties. It stated in its application that its purpose is not for profit but to help
Filipinos find employment abroad.
Should the application be approved?

Suggested answer:
The application should be disapproved. Despite WTTA’s noble purpose, travel
agencies and sales agencies of airline companies are prohibited form engaging
recruitment and placement of workers for overseas employment, whether for profit
or not. (Art 26, LC) (2006 Bar Question)

TECHNIQUES OF REGULATION
Licensing
Citizenship requirement – limited to Filipino citizens or Corporations,
partnerships or entities 75% of which is Filipino-owned

Q: Is a corporation, 70% of the authorized and voting capital of which is owned

and controlled by Filipino citizens, allowed to engage in the recruitment and
placement of workers, locally or overseas? Explain briefly.

Suggested Answer:
No. A corporation, 70% of the authorized and voting capital stock of which is
owned and controlled by Filipino citizens cannot be permitted to participate in the
recruitment and placement of workers, locally or overseas, because Art. 27, LC
requires at least 75%. (2002 Bar Question)

Capitalization – applicants for authority to hire or renewal of license to

recruit are required to have such substantial capitalization as
determined by the Secretary of Labor.

Non-Transferability – no license or authorization may be used, directly

or indirectly by any person other than the grantee
- license or authority may not be transferred, conveyed, or assigned

Page 33 of 195
 - transfer of business address, appointment or designation of
agent, including establishment of additional officers shall be subject to
prior approval of the DOLE.

Q: A Recruitment and Placement Agency declared voluntary bankruptcy. Among its

assets is its license to engage in business.
Is the license of the bankrupt agency an asset which can be sold in public
auction by the liquidator?

Suggested answer:

No, because of the non-transferability of the license to engage in recruitment

and placement.
The Labor Code (in Art 29) provides that no license to engage in recruitment
and placement shall be used directly or indirectly by any person other than the pone
in whose favor it was issued nor may such license be transferred, conveyed, or
assigned to any other person or entity.
It may be noted that the grant of a license is a governmental act by the DOLE
based on personal qualifications, and citizenship and capitalization requirements.
(Art 27-28, LC) (1998 Bar Question)

Registration Fees and Bonds – requisites for issuance of license/

authority

Suspension and/or Cancellation – power is lodged in the Secretary of

Labor

Q: Concerned Filipino Contract workers in the Middle East reported to the

Department of Foreign Affairs (DFA) that XYZ, a private recruitment and placement
agency, is covertly transporting extremists to terrorist training camps abroad.
Intelligence agencies of the government allegedly confirmed the report.
Upon being alerted by the DFA, the Department of Labor and Employment
issued orders canceling the licenses of XYZ, and imposing an immediate travel ban
on its recruits to the Middle East. XYZ appealed to the Office of the President to
reverse and set aside the DOLE orders, citing damages from loss of employment of
its recruits, and violations of due process including lack of notice and hearing by
the DOLE. The DOLE in its answer claimed the existence of an emergency in the
Middle East which required prompt measures to protect the life and limb of OFWs
from clear and present danger posed by the ongoing war against terrorism.
Should the DOLE orders be upheld or set aside?

Suggested Answer:
The DOLE order canceling the licenses of XYZ is void because a report that an
agency is covertly transporting extremists is not a valid ground for cancellation of
a Certificate of Registration (Art. 239, LC) and there is failure of due process as no
hearing was conducted prior to the cancellation (Art. 238, LC).
The DOLE order imposing the travel ban is valid because it is a valid exercise
of police power to protect the national interest (Sec. 3, Art. XIII, Constitution on

Page 34 of 195
full protection to labor safety of the workers) and the rule making authority of the
Secretary of Labor (Art. 4, LC; Phil. Assn. of Service Exporters v. Drilon).

Another Suggested Answer:

The DOLE orders should be set aside. It is true that the Migrant Workers and
Overseas Filipinos Act, particularly its Section 5, could be the basis of the power of
DOLE to effect a ban on the deployment of OFWs by XYZ. If the ban, however, is
for the purpose of preventing XYZ from transporting extremists to terrorist training
camps abroad, this is a police and national security problem better dealt with by
the police or the Office of the National Security Adviser.
More importantly, the cancellation of the license of XYZ requires notice and hearing.
Absent such notice and hearing, the order of cancellation of the Secretary of Labor
and Employment is null and void because of the denial of due process. (2004 Bar
Question)

ILLEGAL RECRUITMENT
Any of these acts constitutes illegal recruitment [Art. 38 of the LC, as amended
by Sec. 6, RA 8042 (Migrant Workers and Overseas Filipinos Act of 1995)]:

 Doer: A non-licensee or non-holder of authority

(a) commission of any of the recruitment activities in Art. 13 (b), LC

 Doer: Whether a non-licensee or non-holder of authority or a licensee or

holder of authority
(a) commission of the prohibited practices under Art. 34 of the LC;
(b) failure to deploy its recruits without valid reason;
(c) failure to reimburse documentation and processing expenses incurred
by the worker who is not deployed without his fault

Illegal recruitment committed by a syndicate

Elements:
(1) any of the abovementioned acts of illegal recruitment (take note of
the doer); and
(2) carried out by a group of 3 or more persons conspiring or
confederating with one another.

Illegal recruitment committed in large scale

Elements:
(1) any of the abovementioned acts of illegal recruitment (take note of
the doer); and
(2) committed against 3 or more persons individually or as a group.

 Illegal recruitment, when committed by a syndicate or in large scale,

shall be considered an offense involving economic sabotage.

Page 35 of 195
Q: What qualifying circumstances will convert “illegal recruitment” to “economic
sabotage”, thus subjecting its perpetrator or perpetrators to a penalty of life
imprisonment and a fine of at least P500,000.00?

Suggested answer:
Art. 38(b) of the LC, as amended by RA 8042 (migrant Workers’ Act) provides
that illegal recruitment shall be considered an offense involving economic sabotage
if any of the following qualifying circumstances exists”
(a)When illegal recruitment is committed by a syndicate. A syndicate exists when
three or more persons conspire or confederate with one another in carrying
out any unlawful or illegal transaction, enterprise or scheme;
(b) When illegal recruitment is committed in large scale, as when it is committed
against three or more persons individually or as a group. [People v. Navarra,
352 SCRA 84 (Feb. 19, 2001)]. (2005 & 2002 Bar Questions)

Q: Mayrose Ganda’s application for the renewal of her license to recruit workers for
overseas employment was still pending with the POEA. Nevertheless, she recruited
Alma, and her three sisters, Ana, Joan and Mavic for employment as housemaids
in Saudi Arabia. Mayrose represented to the sisters that she had a license to recruit
workers for overseas employment. Mayrose also demanded and received P30,000
from each of them for her service. However, Mayrose’s application for the renewal
of her license was denied, and consequently failed to employ the four sisters in
Saudi Arabia.
The sisters charged Mayrose with large scale illegal recruitment. Testifying in
her defense, Mayrose declared that she acted in good faith because she believed
that the application for the renewal of her license will be approved. Mayrose
adduced in evidence the Affidavits of Desistance which the four private
complainants had executed after the prosecution rested its case. In the said
affidavits, they acknowledged the receipt of the refund by Mayrose of the total
amount of 120,000 and indicated that they were no longer interested to pursue the
case against Mayrose.
Resolve the case with reasons.

Suggested answer:
Mayrose is still criminally liable for large scale illegal recruitment. Good faith is
not a defense in illegal recruitment as defined in Sec. 6, RA 8042. illegal recruitment
is malum prohibitum.
Refund of the P120,000 she received does not likewise extinguish her criminal
liability. If at all, it satisfies only her civil liability.
The affidavit of desistance, moreover, does not bar Mayrose’s prosecution. The
criminal offense is not extinguished by such desistance. Besides, affidavit of
desistance, as a rule, is frowned upon. (2005 Bar Question)

Venue
A criminal action arising from illegal recruitment shall be filed with the RTC of
the province or city where the offense was committed or where the
offended party actually resides at the time of the commission of the
offense. (Sec. 9, RA 8042)

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Prescriptive period (Sec. 12, RA 8042)
Illegal recruitment: 5 yrs
If involving economic sabotage: 20 yrs

Remittance
Q: Can an overseas worker refuse to remit his earnings to his dependents and
deposit the same in the country where he works to gain more interest? Explain.

Suggested answer:
No. Art 22, LC provides that 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 Secretary of Labor and Employment.

Another suggested answer:

The answer must be qualified. While Art 22, LC provides that it shall be
mandatory for all Filipino workers abroad to remit a portion of foreign exchange
earnings to beneficiaries in the Philippines, such an imposition can be implemented
“in accordance with rules and regulations prescribed by the Secretary of Labor.”
There are currently no rules issued by the Secretary pertaining to Art 22. There was
a mandatory remittance provision in the 1991 POEA Rules and Regulations, but
such provision was deleted in the 2002 POEA Rules and Regulations.
The answer is likewise, “no” if the overseas worker signs an employment
contract with a mandatory remittance provision. Such us the case for seafarers,
where the standard practice is to have a provision on mandatory remittance
amounting to 80% of their salary.

Another suggested answer:

No. Art 22, LC provides that 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 the rules and regulations
prescribed by the Secretary of Labor and Employment.
EO 857 prescribes the percentage of foreign exchange remittance from 50%
to 80% of the basic salary, depending on the worker’s kind of job.
An overseas worker, therefore, cannot refuse to remit the earnings. (2006
Bar Question)

PART 4
ALIEN EMPLOYMENT

ALIEN EMPLOYMENT REGISTRATION CERTIFICATE (AERC)

The ff. should secure AERC:
(1) All foreign nationals seeking admission to the Phils. for the purpose of
employment
(2) All nonresident foreign nationals already working in the Phils.

Page 37 of 195
(3) Nonresident foreign nationals admitted to the Phils. on nonworking visas
and who wish to seek employment; and
(4) Missionaries or religious workers who intend to engage in gainful
employment
 The AERC may be issued after a determination of the non-availability of a
person in the Philippines who is competent, able and willing at the time of
the application to perform the services for which the alien is desired. (Art.
40)

PART 5
WORKING CONDITIONS
AND REST PERIODS

Coverage (Art. 82): this Title (Title I: Working Conditions and Rest Periods)
shall apply to employees in all establishments and undertakings whether for
profit or not

Exempt:
(1) Government EEs
- These refer only to employees of government agencies,
instrumentalities or political subdivisions and of government corps.
that are not incorporated under the Corporation Code
- Those incorporated under the Corp. Code are covered by the LC;
and thus, are not exempt

(2) Managerial EEs

- those whose primary duty consists of the management of the
establishment in which they are employed
- also, the other officers or members of the managerial staff [cf.
definition of managerial EEs in labor relations (Art. 212 (m)]

(3) Members of the employer’s family dependent on him for support

(4) Domestic helpers (cf. Arts. 141-152)

(5) Persons in the personal service of another

(6) Field personnel regularly performing duties away from office

- refer to non-agricultural employees who regularly perform their
duties away from the principal place of business and whose actual
hours of work in the field cannot be determined with reasonable
certainty
- Field personnel are employees whose time and performance is
unsupervised by the employer. (Salazar v. NLRC, 1996)

(7) Workers paid by results, as determined by the Sec. of Labor

Page 38 of 195
 - their pay is dependent on the unit of product finished, not on the
time spent working
- 2 categories:
(1) those who are paid piece rates which are prescribed in Piece
Rate Orders of DOLE (they are not covered by the rules on
hours of work and overtime pay)
(2) those who are paid output rates which are prescribed by the
ER and not yet approved by DOLE.

-Piece-rate EEs are entitled to these benefits:

a. Holiday pay
b. Applicable statutory minimum daily rate
c. Night differential pay
d. Service incentive leave
e. Meal and rest periods
f. Overtime pay (conditional)
g. Premium pay (conditional)
h. 13th month pay
i. other benefits granted by law, individual or CBA or company
policy
HOURS OF WORK (Arts. 83-84)
Normal Hours—shall not exceed 8 hours

Hours Worked (hence compensable) — shall include:

(1) all time during which an employee is required to be on duty or to be
at a prescribed workplace, and
(2) all time during which an employee is suffered or permitted to work
(3) also, rest period of short duration during working hours shall be
counted as hours worked

Q: Under what conditions may a “compressed work week” schedule be legally

authorized as an exception to the “eight-hour a day” requirement under the Labor
Code?
State your answers and your reasons therefor.

Suggested Answer:
A “compressed work week” schedule may be authorized under the following
conditions:
i. The EE voluntarily agrees to it.
ii. There is no diminution in their weekly or monthly take home pay or fringe
benefits.
iii. The benefits are more than or at least commensurate or equal to what is
due the EEs without the compressed work week.
iv. Overtime pay will be due and demandable when they are required to work
on those days which should have ceased to be working days because of
the compressed work week schedule.
v. No strenuous physical exertion or that they are given adequate rest periods.

Page 39 of 195
 vi. It must be for a temporary duration as determined by the DOLE. (2005
Bar Question)

MEAL PERIODS (Art. 85)

Rule: ER should give his EEs not less than 60 mins. time-off for regular
meals (this is not compensable. Less than a 60-min meal time is
compensable.)

RULES ON COMPENSABLE HOURS OF WORK

(Book III, Rule I of the IRR)
Compensable working Not compensable
time working time
If waiting is an integral part of
Waiting
the work or the EE is required
Time
or engaged by the ER to wait
If required to remain on call in If EE is not required to
the ER’s premises or close leave word at his home
EE is on call thereto that he cannot use his or with company officials
time effectively for his own where he may be
purpose reached
If all these conditions are
met:
1. attendance is outside of
Attendance
the EE’s regular working
at lectures,
hours;
meetings,
2. voluntary attendance;
training
and
programs
3. the EE does not perform
any productive work
during such attendance
If meal period of not less than
20 mins. is given by the ER in
the ff. cases:
- Non-manual work or
does not involve
strenuous physical
exertion;
Meal and
- establishment regularly
rest periods
operates not less than 16
hrs/day
- actual or impending
emergencies or urgent
work is to be performed
on machineries to avoid
serious loss to ER

Page 40 of 195
 - work is necessary to
prevent serious loss of
perishable goods
Rest periods
or coffee If 5-20 mins only
breaks

Q: Lito Kulangkulang and Bong Urongsulong are employed as truck drivers of Line
Movers, Inc. Usually, Lito is required by the personnel manager to just stay at head
office after office hours because he could be called to drive the trucks. While at the
head office, Lito merely waits in the manager’s reception room. On the other hand,
Bong is allowed to go home after office hours but is required to keep his cellphone
on so that he could be contacted whenever his services as driver become necessary.
Would the hours that Lito and Bong are on call be considered compensable
working hours?

Answer:
The hours of Lito and Bong while on call can be considered compensable hours.
The applicable rule is: “An EE who is required to remain on call in the ER’s premises
or so close thereto that he cannot use the time effectively and gainfully or his own
purpose shall be considered as working while on call. An EE who is not required to
leave word at his home or with company officials where he may be reached is not
working while on call.” Here, Bong is required to stay at the office after office hours
so he could be called to drive the cars of the Company. As for Bong, he is required
to keep his cellphone on so that he could be contacted whenever his services as
driver are needed. Thus, the waiting time of Lito and Bong should be considered as
compensable hours.
Note: It could be argued that in the case of Bong who is not required to stay
in the office but is allowed to go home, if he is not actually asked by cellphone to
report to the office to drive, he can use his time effectively and gainfully to his own
purpose, thus, the time that he is at home may mean that they are not compensable
hours. (1997 Bar Question) (*similar question: 2004 Bar Question)

NIGHT SHIFT DIFFERENTIAL (Art. 86)

Rule: not less than 10% of regular wage for every hour of work
performed from 10pm-6am*
*If 10pm-6am is overtime work, the 10% should be based on
overtime rate

Does not apply to

(1) Government EEs
(2) Retail businesses with less than 5 workers
(3) Domestic helpers
(4) Managerial EEs
(5) Field personnel

Page 41 of 195
Q: A. As a tireman in a gasoline station, open 24 hours a day with only 5 EEs, Game
worked from 10:00pm until 7:00am of the following day. He claims he is entitled to
night shift differential. Is he correct? Explain briefly.
B. On orders of his superior, Efren, a high-speed sewing machine technician,
worked on May 1, Labor Day. If he worked 8 hours on that day, how much should
he receive if his daily rate is P400?

Suggested Answer:
A. Yes. Under Art. 86, LC, night shift differential shall be paid to every EE for
work performed between 10:00 in the evening to 6:00 in the morning.
Therefore, Goma is entitled to night shift differential for work performed from
10:00pm until 6:00am of the day following, but not from 6:00am to 7:00am of the
same day.

Another Suggested answer:

The Omnibus Rules Implementing the Labor Code (in Book III, Rule II dealing
with night shift differential) provides that its provisions on night shift differential
shall NOT apply to EE of “retail and service establishments regularly employing not
more than five workers.” Because of this provision, Goma is not entitled to night
shift differential because the gasoline station where he works has only 5 EEs.

Suggested Answer:
B. Efren should receive P800. Art. 92, LC provides that the ER may require an
EE to work on any regular holiday but such EE shall be paid a compensation
equivalent to twice his regular rate. (2002 Bar Question)

OVERTIME WORK (Arts. 87-89) — work performed beyond 8 hours

Premium rate
Overtime on a
 normal workday - 25% of reg. rate/hr
 holiday/rest day - 30% of holiday/rest day rate/hr
 special day - 30% of rate/hr of a special day

Emergency OT work (Art. 89; Book III, Rule I)

1. country is at war/ national or local emergency
2. necessary to prevent loss of life/ property or in case of imminent
danger to public safety
3. urgent work to be performed on machines to avoid serious loss or
damage to employer
4. necessary to prevent loss or damage to perishable goods
5. completion of work started before the 8th hour and is necessary to
prevent serious obstruction or prejudice to business
6. necessary to avail of favorable weather or environmental condition

Offsetting
 Undertime work on any particular day shall not be offset by overtime
work on any other day. (Art. 88)
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Q: Danilo Flores applied for the position driver in the motorpool of Gold Company,
a multinational corporation. Danilo was informed that he would frequently be
working overtime as e would have to drive for the company’s executives beyond
the ordinary 8-hour wok day. He was provided with a contract of employment
wherein he would be paid a monthly rate equivalent to 35 times his daily wage,
regular sick and vacation leaves, 5-day leave with pay every month and time off
with pay when the company’s executives using the cars do not need Danilo’s service
for more than 8 hours a day, in lieu of overtime.
Are the above provisions of the contract of employment in conformity with, or
violative of, the law?

Answer:
Except for the provision that Danilo shall have time off with pay when the
company’s executives using the cars do not need Danilo’s service for more than
eight hours a day, in lieu of overtime, the provisions of the contract of employment
of Danilo are not violative of any labor law because they instead improve upon the
present provisions of pertinent labor laws.
Thus, the monthly rate equivalent to 35 times daily wage may be sufficient to
include overtime pay.
There is no labor law requiring the payment of sick and vacation laves except
the provision for five-day service incentive leave in the Labor Code.
As for the provision in Danilo’s contract of employment that he shall receive
time off with pay in lieu of overtime, this violates the provision of the Labor Code
which states that undertime work on any particular day shall not be offset by
overtime work on an other day. Permission given to the employer to go on leave
on some other day of the week shall not exempt the employer from paying the
additional compensation required by the Labor Code. (1997 Bar Question)
(*Similar Question -- 2003 Bar Question)

Proof
 Entitlement to overtime pay must first be established by proof that said
overtime work was actually performed, before an employee may avail
of said benefit. (Lagatic v. NLRC, 1998)

Waiver
 As a rule, the right to overtime pay cannot be waived. The right is
intended for the benefit of the laborers and employees. BUT when the
alleged waiver is in consideration of benefits and privileges which may
even exceed the overtime pay, the waiver may be permitted.
Computation
 For purposes of computing overtime and other additional
remunerations, the “regular wage” of an EE shall include the cash wage
only, w/o deduction of facilities provided by the ER. (Art. 90)

Q: Socorro is a clerk-typist in the Hospicio de San Jose, a charitable institution

dependent for its existence on contributions and donations from well-wishers. She
renders work 11 hours a day but has not been given overtime pay since her place
Page 43 of 195
of work is a charitable institution. Is Socorro entitled to overtime pay? Explain
briefly.

Suggested Answer:
Yes. Socorro is entitled to overtime compensation. She does not fall under any
of the exceptions to the coverage of Art. 82, under the provisions of Hours of Work.
The Labor Code is equally applicable to non-profit institutions. A covered EE who
works beyond 8 hours is entitled to overtime compensation. (2002 Bar Question)

WEEKLY REST PERIODS (Arts. 91-93)

Rule: not less than 24 consecutive hours after every 6 consecutive
normal work days

Premium Pay on a rest day (Art. 93)

Work performed on a
 Scheduled rest day - 30% of reg. wage

 Sundays (only if it is his - 30% of reg. wage

established rest day; or if he has
no reg. workdays and rest days)

 Special holiday, not rest day - 30% of reg. wage

 Special holiday and rest day - 50% of reg. wage

For special day: NO WORK, NO PAY

Authorized Work on a Rest day

1. Actual impending emergency
2. Urgent work to be performed on machinery
3. Abnormal pressure of work and ER cannot resort to other measures
4. Prevent loss/ damage to perishable goods
5. Nature of work requires continuous operation
6. Analogous circumstances

Q: A Ladies Dormitory run or managed by a charitable non-profit organization

claims that it is exempt from the coverage of the Weekly rest Period provision of
the Labor Code.
Is the claim valid?

Suggested answer:
No. the claim is not valid.
The provisions on weekly rest periods in the Labor Code cover every ER,
whether operating for profit or not. (See Art 91, LC) (1998 Bar Question)

HOLIDAY PAY (Art. 94)

Premium Pay
Page 44 of 195
  If worked - 200% of reg. rate
 If unworked (compare this - 100%
with a special day)

 If also a rest day - 230%

 Double holiday, unworked - 200%

 Double holiday, worked - 300%

Who cannot avail

Those who are not covered (Book III, Rule IV)
 Government employees
 Retail and service establishments employing less than 10 workers
 Domestic helpers and those in the personal service of others
 Managerial employees
 Field personnel

Those who are covered but (Book III, Rule IV)

- are absent without pay on the day preceding the holiday unless he
works on the regular holiday
- In case the holiday is preceded by a non-working day or rest day,
EEs who are absent on the day preceding that nonworking day or
rest day

Legal/ Regular Holidays (EO 203, Jun 20, 1987)

1. New Year’s Day - Jan 1
2. Holy Thursday - movable date
3. Good Friday - movable date
4. Araw ng Kagitingan - Apr 9
5. Labor Day - May 1
6. Independence Day - Jun 12
7. National Heroes Day - last Sun of Aug
8. Bonifacio Day - Nov 30
9. Christmas Day - Dec 25
10. Rizal Day - Dec 30

Nationwide Special Days

1. All Saints Day - Nov 1
2. Last day of the year - Dec 31

Muslim Holidays
- dates shall be determined by the Office of the President

Page 45 of 195
 - Both Muslims and Christians working within the Muslim areas may not
report for work on these days.

Q: This year, National Heroes Day (Aug. 25) falls on a Sunday. Sunday is a rest day
of Bonifacio whose daily rate is P500.
A. If Bonifacio is required by his ER to work on that day for 8 hours, how much
should he be paid for his work? Explain.
B. if he works for 10 hours on that day, how much should he receive for his
work? Explain.

Suggested Answer:
A. For working on his scheduled rest day, according to Art. 93 (a) Bonifacio
should be paid P500 (his daily rate) plus P150 (30% of his daily rate = P650. This
amount of P650 should be multiplied by 2 = P1,300. This is the amount that
Bonifacio as EE working on his scheduled rest day which is also a regular holiday,
should receive. Art. 94(c) of the Labor Code provides that an EE shall be paid a
compensation equivalent to twice his regular rate for work on any regular holiday.
The “regular rate” of Bonifacio on May 1, 2002 is with an additional thirty percent
because the day is also his scheduled rest day.

B. P1,300 which is the amount that Bonifacio is to receive for working on May
1, 2002 should be divided by 8 to determine his hourly rate of P162.50. this hourly
rate should be multiplied by 2 (the number of hours he worked overtime). Thus,
the amount that Bonifacio is entitled to receive for his overtime work on May 1,
2002 is P325. (2002 Bar Question)

*Similar Question:
2005 Bar Question: 2 holidays falling on the same day; how much will EE receive?
Answer: If he does not work – 200% of his daily wage
If he works – 400% of his daily wage [Asian Transmission Corp. v.
CA, 425 SCRA 478 (2004)

LEAVES
Note: These are the leaves required by law
- Mandatory/ statutory benefits:
 Service Incentive Leave (SIL)
 Paternity Leave and
 Maternity Leave
- The grant of vacation leave (VL) or sick leave (SL) depends on voluntary
ER policy or collective bargaining.

(1) Service Incentive Leave (Art. 95)

- 5 days with pay for EEs who has rendered at least 1 year* of service
*1 year = 12 months service, continuous or broken, from time EE started
working
 Commutable to its money equivalent if not used at the end of the year
(Book III, Rule V, IRR)

Page 46 of 195
  Does not apply to
1. Those who are already enjoying the benefit
2. Those enjoying vacation leave with pay for 5 days
3. Those employed in establishments employing less than 10 EEs
4. Or in establishments exempted by the Sec. of Labor
5. Government EEs
6. Domestic helpers and those in the personal service of another
7. Managerial EEs
8. Field personnel including those in contract basis

(2) Paternity Leave [RA 8187(Jul 8, 1996)]

- 7 days with full pay to married male EEs in the public and private sectors

Conditions for entitlement

1. The claimant, a married male EE, is employed at the time of delivery
of his child
- “delivery” shall include childbirth or any miscarriage
2. He is cohabiting with his spouse at the time she gives birth or
suffers a miscarriage;
3. He has applied for paternity leave; and
4. His wife has given birth or suffered a miscarriage (available for the
first 4 deliveries only)
- “Wife” refers to the woman who is legally married to the male
EE

(3) Maternity Leave [Art. 133, as amended by RA 7332 and RA 8282,

amending RA 1161 (SSS law)]
- 100% of average daily salary credit for 60 days, or 78 days in case of
caesarian delivery

Pre-requisite:
- that the female member has paid at least 3 monthly contributions
in the 12-month period preceding the semester of her childbirth or
miscarriage

Conditions
1. The EE notified her ER of her pregnancy and the probable date of
childbirth, which notice shall be transmitted to the SSS
2. Full payment shall be advanced by the ER within 30 days from the
filing of maternity leave application
3. Payment of daily maternity benefits is a bar to the recovery of
sickness benefits for the same period for which daily maternity
benefits have been received
4. Maternity benefits shall be paid only for the first 4 deliveries or
miscarriages
5. SSS shall immediately reimburse the ER 100% of the maternity
benefits; and
Page 47 of 195
 6. ER shall pay damages to SSS if the EE did not have the required
contributions having been remitted for her by her ER or if ER did
not notify the SSS of the time of EE’s pregnancy

(4) Vacation Leave and Sick Leave

- depends on voluntary ER policy or on a collective bargaining agreement
- these are voluntary benefits.

Q: Mans Weto had been an EE of Nopolt Assurance Company for the last ten (10)
years. His wife of six (6) years died last year. They had four children. He then fell
in love with Jovy, his co-EE, and they got married.
In October this year, Weto’s new wife is expected to give birth to her first child.
He has accordingly filed his application for paternity leave, conformably with the
provisions of the Paternity Leave Law which took effect in 1996. The HRD manager
of the assurance firm denied his application, on the ground that Weto had already
used up his entitlement under that law. Weto argued that he has a new wife who
will be giving birth for the first time, therefore, his entitlement to paternity leave
benefits would begin to run anew.

(a) Whose contention is correct, Weto or the HRD manager?

Suggested Answer:
The contention of Weto is correct. The law provides that every married male
is entitled to a paternity leave of seven (7) days for the first four (4) deliveries of
the legitimate spouse with whom he is cohabiting (Sec. 2, RA 8187). Jovy is Weto’s
legitimate spouse with whom he is cohabiting. The fact that Jovy is his second wife
and that Weto had 4 children with his first wife is beside the point. The important
fact is that this is the first child of Jovy with Weto. The law did not distinguish and
we should therefore not distinguish.
The paternity leave was intended to enable the husband to effectively lend
support to his wife in her period of recovery and/or nursing of the newly-born child
(Sec. 3, RA 8187). To deny Weto this benefit would be to defeat the rationale of
the law.

Another Suggested Answer:

The HRD manager is correct. Since it is conceded that Weto earlier availed of
four (4) paternity leaves when his first wife gave birth to their four children, he
clearly “already used up his entitlement under the law”. His new wife’s giving birth
for the first time would not matter as the benefit granted to a father “for the first 4
deliveries of the legitimate spouse with whom he is cohabiting”.

(b) Is Jovy entitled to maternity leave benefits?

Suggested Answer:
Yes, if Jovy, as a female EE, has paid at least 3 monthly contributions in the
twelve-month period immediately preceding the semester of her childbirth (Sec.
14-A, RA 1161, as amended); otherwise, she is not entitled to the benefit. (2005
Bar Question)

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 -o0o0o0o-
Q: Ms. Sara Mira is an unwed mother with three children from three different
fathers. In 1999, she became a member of the Social Security System. In August
2000, she suffered a miscarriage also out of wedlock, and again by a different
father. Can Ms. Mira claim maternity benefits under the Social Security of 1997?
Reason.

Suggested answer:
Yes, she can claim maternity benefit. Entitlement thereto is not dependent on
the claimant’s being legally married. (Sec 14-A, Social Security Act of 1997) (2000
Bar Question)

-o0o0o0o-
Q: How many times may a male EE go on Paternity Leave? Can he avail himself of
this benefit, for example, 50days after the first delivery by his wife?

Suggested Answer:
A male EE may go on Paternity Leave up to 4 children. (Sec. 2 , RA 8187) On
the question of whether or not he can avail himself of this benefit 50 days after the
delivery of his wife, the answer is : Yes, he can because the Rules Implementing
Paternity Leave Act says that the availment should not be later than 60days after
the date of delivery. (2002 Bar Question)

PART 6
WAGES

WAGES [Art. 97(f)]

› the remuneration of earnings, however designated,
› 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,
› which is payable by an ER to an EE under a written or unwritten
contract of employment
› for work done or to be done, or for services rendered or to be
rendered
› and includes the reasonable value, as determined by the Sec. of
Labor, of board and lodging or other facilities customarily furnished
by the ER to the EE.
 “fair reasonable value” shall not include any profit to the ER.
 IRR provides that the Sec. of Labor shall fix the fair and
reasonable value of facilities furnished to EEs.

Facilities v. Supplements
Criterion: purpose of the item (not its kind)
Facilities - items of expense necessary for wage-deductible
the EE’s and his family’s

Page 49 of 195
 existence and subsistence (such
as board and lodging);
- does not include articles or
services primarily for the benefit
of the ER.
Supplements - extra remuneration or special not wage-deductible
privileges or benefits given to or
received by the laborers over
and above their wages

Legal requirements (before deduction)

(1) Proof must be shown that such facilities are customarily furnished by
the trade
(2) Provision of deductible facilities must be voluntarily accepted by the
EE
(3) Facilities must be charged at fair and reasonable value

Wages v. Salary (Gaa v CA, 1985)

Distinction important for purposes of Art. 1708 of the New Civil Code
(Laborer’s wages are not subject to execution or attachment except for
debts for food, shelter, clothing, medical attendance)
Wages applies to the compensation for manual labor, skilled or
unskilled, paid at stated times, and measured by the day,
week, month, or season.
indicates considerable pay for a lower and less responsible
character of employment.
Salary denotes a higher degree of employment, or a superior
grade of services, and implies a position of office.
suggestive of a larger and more important service.

Payment by results
- The Secretary of Labor and Employment shall regulate the payment of
wages by results including pakyao, piecework, and other non-time work,
n order to ensure the payment of fair and reasonable wage rates,
preferably through time and motion studies or in consultation with
representatives of workers’ and ERs’ organizations. (Art. 101, LC)
-
Q: Nemia earns P7.00 for every manicure she does in the barber shop of a friend
which has 19 EEs. At times she takes home P175 a day and at other times she
earns nothing. she now claims holiday pay. Is Nemia entitled to this benefit? Explain
briefly.

Suggested Answer:
No, Nemia is no entitled to holiday pay.
Page 50 of 195
 Art. 82, LC provides that workers who are paid by results are, among others,
not entitled to holiday pay. Nemia is a worker who is paid by results. She earns
P7.00 for every manicure she does.

Another Suggested Answer:

Yes. Nemia is entitled to holiday pay.
The Supreme Court has ruled: “As to the other benefits, namely, holiday pay,
premium pay, 13th month pay, and service incentive leave which the labor arbiter
failed to rule on but which the petitioners prayed for in their complaint, we hold
that petitioners are so entitled to these benefits. 3 factors lead us to conclude that
petitioners, although piece rate workers, were regular EEs of private respondents.
First as to the nature of the petitioner’s tasks, their job of repacking snack food as
necessary or desirable in the usual business of private respondents, who are
engaged in the manufacture and selling of such food products; second, petitioners
worked for private respondents throughout the year, their employment not having
been dependent on a specific project or season; and third, the length of time that
petitioners worked for private respondents. Thus, while petitioner’s mode of
compensation was on a “per piece basis” the status and nature of their employment
was that of regular EEs.”[Labor Congress of the Phils. v. NLRC, 290 SCRA 509
(1998)] (2002 Bar Question)

PAYMENT OF WAGES
Rule (Art 105): Wages shall be paid directly to the workers
Exceptions:
(1) In cases of force majeure (FM), payment to another person with
written authority from the EE
(2) In case the EE died, payment to the heirs

› The IRR requires every ER to pay his EEs through payroll which should
show the EE’s pay rate, deductions made, and the amount actually
made (Book III, Rule X)

Form (Art 102)

- legal tender only
- other forms, e.g., promissory notes, vouchers, etc., are prohibited
even when expressly requested by the EE
EXCEPTIONS (where payment by checks or money order is allowed):
(1) Such manner of payment is customary on the date of effectivity of
the LC; or
(2) Necessary because of special circs. as specified in appropriate
regulations of the Sec. of Labor

Time (Art. 103)

Rule: wages shall be paid at least once every 2 weeks or twice a month
at intervals not exceeding 16 days

Exceptions:

Page 51 of 195
 (1) In cases of force majeure (FM), provided that ER shall pay
immediately after cessation of FM
(2) The payment of EEs whose tasks cannot be completed in 2 weeks
is subject to these conditions:
(a) Payments at intervals not exceeding 16 days, in proportion
to the amount of work completed;
(b) Final settlement is made upon completion of the work

Place (Art. 104)

- at or near the place of undertaking EXCEPT if otherwise provided by
regulations of the Sec of Labor
- payment of wages through ATMs is now allowed under a labor
advisory dated Nov 25, 1996

PROHIBITION RE WAGES
(1) ER shall not interfere with the freedom of any EE to dispose of his
wages. (Art. 112)

(2) No ER shall make any deduction except (Art. 113)

a. Where worker is insured and deduction is to recompense ER for
the amount he paid as a premium on the insurance
b. For union dues -- where the right to check-off by union has been
recognized by ER or individual EE has given written authorization.
[cf. Art. 241 (o)]
c. ER is authorized by law or regulations of Sec. of Labor.
i. EE has due debt to ER (Art. 1706, NCC)
ii. In court awards, wages may be attached for debts
incurred for food, shelter, clothing, and medical
attendance (Art. 1708, NCC)
iii. Withholding tax
iv. Salary deductions of a member of a legally established
cooperative (RA 6398)
v. Deductions for payment to 3rd persons, with written
authority of the EE (Book III, Rule VIII, IRR)
vi. Agency fee (Art. 248)
vii. Deductions for value of meals and other facilities
viii. Deductions for loss or damage (Art. 114)
ix. SSS, Medicare, Pag-IBIG premiums.

CASE: (Jardin v NLRC, 2000)

› With regard to the amount deducted for washing of the taxi
units, we view the same as not illegal in the context of the law.
We note that after a tour of duty, it is incumbent upon the
driver to restore the unit he has driven to the same clean
condition when he took it out. Car washing after a tour of duty
is indeed a practice in the taxi industry and is in fact dictated

Page 52 of 195
 by fair play. The drivers are not entitled to reimbursement of
the washing charges.

(3) No EE shall make deposits to reimburse loss of or damage of tools,

materials supplied by the ER except
a. when ER is engaged in such business where deductions or
making deposits is a recognized practice
b. when necessary or desirable as determined by the Sec. of Labor.
(Art. 114)

(4) No deduction from the deposits for the actual amount of loss or damage
unless
a. the EE is shown to be responsible for the loss or damage
b. the EE is given ample opportunity to show cause why deduction
should not be made;
c. the amount of deduction is fair and reasonable and shall not
exceed the actual loss or damage; and
d. the deduction does not exceed 20% of the EE’s wage in a week.
(Art 115; Book III, Rule VIII, IRR)

(5) Withholding any amount from EE’s wages by force, stealth, intimidation,
threat etc. (Art. 116)
- The wages must be paid on time and in full.
- Violation of an EE of a company violation is not a valid ground for
refusing to pay him his wages. Such violation can be acted upon in
some ways, not by withholding his wages.

(6) Deduction from the wages for the benefit of the ER as consideration of
a promise of employment or retention in employment. (Art. 117)

(7) Refusal of payment of wages and benefits of or to discharge or

discriminate an EE who:
 has filed any complaint or instituted any proceeding under this Title
(Title II: Wages); or,
 has testified or is about to testify in such proceedings. (Art. 118)

(8) Making any statement, report, or record filed knowing such statement,
report or record to be false. (Art. 119)
CASE: South Motorist Enterprises v. Tosoc, 1990
› All employment records of the EEs of an ER shall be kept and
maintained in or about the premises of the workplace (i.e., the
main or branch office or establishment).
› The keeping of the employee's records in another place is
prohibited.

OTHER FORMS OF REMUNERATION

(1) Service Charge (Art. 96; Book III, Rule VI, IRR)
Page 53 of 195
  Distribution scheme
for all covered EEs (equally distributed among them,
85%
regardless of position or employment status)
for management (this share may answer for the losses
15%
and breakages, or may be distributed to managers)

 Coverage
Covered ERs: establishments collecting service charges such as
hotels, restaurants, lodging houses, casinos, night clubs, etc.,
including those entities operating primarily as private subsidiaries
of the Government.

Covered EEs: to all EEs of the covered ERs except those receiving
more than P2,000/month

 Frequency of Distributions— not less than once every 2 weeks or

twice a month of intervals not exceeding 16 days

 In case service charge is abolished, the share shall be considered

integrated in the EEs’ wages.
- basis of the amt to be integrated: ave. monthly share of each
EE for the past 12 months immediately preceding the abolition

 Service charge ≠ Tip

Tips— dependent on the will and generosity of the customer. It is paid
by the customer, not the ER. (Ace Navigation Co. Inc., v. CA, 2000)

(2) 13th-Month Pay [PD 851; Revised Guidelines on the Implementation of

PD 851 (Nov 16, 1987)]
Min. Amt. of 13th-month pay = 1/12 x total basic salary earned within a
calendar year

Basic Salary = includes all remunerations or earnings paid by ER for

services rendered BUT does not include allowances and
monetary benefits which are not considered or integrated as
part of the regular or basic salary, such as cash equivalent of
unused vacation and sick leave credits, OT premium, night
differential, holiday pay, and COLA unless these items are
treated as part of the basic salary by individual or collective
agreement, company practice or policy

Nature
- an additional income based on wage but is not part of the wage
- demandable as a legal obligation
- not computed as additional benefits
Page 54 of 195
 Who are entitled
(a) all rank-and-file EEs who worked at least 1 month
(b) those with multiple ERs
(c) EEs paid by results
(d) Private school teachers who have rendered service for at least 1
month
(e) Resigned or separated EEs (proportional)

ERs who are exempted

(a) Government
(b) ERs already paying 13th month pay or its equivalent*
 “its equivalent”
- shall include Christmas bonus, mid-year bonus, cash
bonuses and other payments amounting to not less than
1/12 of the basic salary
- but shall not include cash/ stock dividends, COLA, and
other allowances regularly enjoyed by EEs.
 If the amount of such benefits less than 1/12 of the EE’s basic
salary, ER shall pay the difference.
(c) ERs of household helpers and persons who are in the personal
service of another
(d) ERs of those who are paid on commission, boundary, or task
basis

Time of payment
- Rule: not later than Dec 24.
- However, ER may give ½ of the 13th-month pay before the opening
of the regular schoolyear and the other half on or before Dec 24.
Frequency of payment may be the subject of agreement between
the ER and EE

Q: What would be your advice to your client, a manufacturing company, who asks
for your legal opinion on whether or not the 13 th Month Pay Law (PD 851) covers a
casual employee who is paid a daily wage?

Suggested answer:
I will advise the manufacturing company to pay the casual employee 13 th
Month Pay if such casual employee has worked for at least 1 month during a
calendar year.
The law on the 13th Month Pay provides that employees are entitled to the
benefits of said law regardless of their designation or employment status.
The Supreme Court ruled in Jackson Building Condominium Corp. v. NLRC
(1995) interpreting PD 851, as follows:
“xxx employees are entitled to the 13th month pay benefits regardless of their
designation and irrespective of the method by which their wages are paid. (1998
Bar Question)

Page 55 of 195
 (3) Bonus— an amount granted and paid to an employee for his industry
and loyalty which contributed to the success of the employer's business
and made possible the realization of profits. (Luzon Stevedoring
Corporation v. CIR 1965)

Nature
- it is not a demandable and enforceable obligation
- it is only a gratuity on the part of the ER

When demandable
- If made a part of the wage or salary or compensation (Luzon
Stevedoring Corporation v. CIR 1965)
- WoN a bonus forms part of wages would depend on the
circumstances and the conditions for its payment. If it is promised
without any conditions imposed, then it is part of wages. But if it is
paid only if profits are realized or if a certain level of productivity is
achieved, it is not part of wages. (PNCC. v. NLRC, 1999)
- Given for a long period of time (Liberation Steamship Co. Inc. v. CIR,
1968)
- Giving of such bonus has been the company's long and regular
practice. (to be considered “regular practice," the giving of the bonus
should have been done over a long period of time, and must be shown
to have been consistent and deliberate, per Manila Electric Co. v.
Quisumbing, 1999)

Q: Lita Cruz, a full time professor in San Ildefonso University, is paid on a regular
monthly basis. Cruz teaches for a period of ten months n a schoolyear, excluding
the 2 months’ summer break.
During the semestral break, the University did not pay Lit her Emergency Cost
of Living Allowance (ECOLA) although she received her regular salary since the
semestral break was allegedly not an integral part of the schoolyear and no teaching
service were actually rendered by her. In short, the University invoked the principle
of “no work, no pay.”
Lita Cruz seeks your advice on whether or not she is entitled to receive her
ECOLA during her semestral breaks. How would you respond to the query?

Answer:
There is no longer any law making it the legal obligation of an ER to grant
ECOLA. Effective 1981, the mandatory living allowances provided for in earlier
Presidential Decrees were integrated into the basic pay of all covered EEs.
Thus, whether the ECOLA will be paid or not during the semestral break now
depends on the provisions of the applicable wage order or contract, which may be
a CBA, that may grant said ECOLA.

Alternative Answer:
The “no work, no pay” principle does not apply. The teachers receive their
regular salaries during the semestral break. The law granting ECOLA was designed
Page 56 of 195
to augment the income of EEs to enable them to cope with the rising cost of living
and inflation. It was enacted pursuant to the State’s duty to protect labor and to
alleviate the plight of workers. To uphold the school’s interpretation of the law
would run counter to the intent of the law and constitution. (University of
Pangasinan Faculty Union v. University of Pangasinan, 127 SCRA 691) (1997 Bar
Question)

NON-DIMINUTION RULE (Art. 100)— benefits enjoyed by the EEs, at the

time of the promulgation of the LC, cannot be taken back or reduced
unilaterally by the ER because the benefits are already part of the
employment contract.

Q: Can an employer and employee enter into an agreement reducing or increasing

the minimum percentage provided for night differential pay, overtime pay, and
premium pay?

Suggested answer:
An ER and EE can enter into a contract increasing night differential pay,
overtime pay, and premium pay benefits, as this is beneficial to the worker and no
fraud or vice of consent could be inferred form it.
An ER and EE could not, however, enter into a contract reducing the minimum
pay from the above-stated benefits, as these would be against public policy and
therefore void ab initio. (2006 Bar Question)

WAGE RECOVERY, LIABILITIES, and WORKER PREFERENCE

(1) Principal’s Liabilities under Arts. 106-109
In Labor-only Contracting— the principal is directly responsible to
the EEs as if such EEs had been directly hired by him.
- The contractor is merely an agent of the principal hence there is
ER-EE relationship between the principal and the EEs

In Legitimate Contracting—in legitimate contracting, there exists

a trilateral relationship.
- A contract for a specific job exists between the principal and the
contractor/ subcontractor and a contract of employment exists
between the contractor and its workers.
- Parties: principal, contractor/ subcontractor, contractual workers

1. Payment of wages/ money claims of EEs— solidary liability with

the contractor “to the extent of the work performed under the
contract”.
- The principal (indirect ER) cannot escape this liability even it
has paid the wages of the EEs in accordance with his contract
with the contractor.
- The EEs are not privy to this contract.
- In any case, principal can recover from contractor based on
their contract.

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 2. As to other violations—qualified or limited liability
- if for payment of min. wage, service incentive leave, or other
benefits provided by law— solidarily liable with the contractor,
as if he were a direct ER
- if for payment of separation pay, backwages because of illegal
dismissal (hence, punitive char.)— contractor is solely liable,
unless principal conspired with the contractor in the
commission of illegal dismissal

(2) Worker’s Preference (bankruptcy)

(Art. 110 cf. Arts. 1707, 2241, 2242, 2244, NCC)—
- workers shall enjoy preference as regards their wages and other
monetary claims in the event of bankruptcy or liquidation of an ER’s
business.
- Such unpaid wages and monetary claims shall be paid in full before
the claims of the government and other creditors may be paid.
* a declaration of bankruptcy or judicial liquidation must happen before
the worker’s preference may be enforced

(DBP v. Sec. of Labor, 1989)

 Article 110 of the Labor Code cannot be viewed in isolation but
must be read in relation to the Civil Code scheme on classification
and preference of credits…
 What Art. 110 establishes is not a lien, but a preference of credit in
favor of EEs.
 During bankruptcy, insolvency or liquidation proceedings involving
the properties of the ER, the EEs have the advantage of having
their unpaid wages satisfied ahead of certain other claims.

Q: Premiere Bank, a banking corporation, being the creditor-mortgagee of XYZ

&Co., a garment firm, foreclosed the hypothecated assets of the latter. Despite the
foreclosure, XYZ & Co. continued its business operations. A year later, the bank
took possession of the foreclosed property. The garment firm’s business operations
ceased without a declaration of bankruptcy. Jose Gaspar, an employee of XYZ &
Co., was dismissed from employment due to the cessation of business of the firm.
He filed a complaint against XYZ & Co. and the bank. The Labor Arbiter, after
hearing, so found the company liable, as claimed by Jose Gaspar, for separation
pay. Premiere Bank was additionally found subsidiarily liable upon the thesis that
the satisfaction of labor benefits due to the employee is superior to the right of a
mortgagee of property. Was the Labor Arbiter correct in his decision?

Suggested Answer:
No. The preference of credits established in Art. 110 of the Labor Code cannot be
invoked in the absence of any insolvency proceedings, declaration of bankruptcy,
or judicial liquidation. (DBP v. Santos, 171 SCRA 138 [1989]).

Another Suggested Answer:

Page 58 of 195
No. What Art. 110 of the Labor Code establishes is not a lien but a preference of
credit in favor of the employees. Unlike a lien, a preference of credit does not
create a charge upon any particular property of the debtor.

Another Suggested Answer:

The Decision of the Labor Arbiter holding the Premiers Bank (as foreclosing
mortgagee-creditor) subsidiarily liable for a money obligation of XYZ & Co. (as
mortgagor) to Gaspar, its employee has no legal basis.
1. There is no privity of relationship between the Bank and Gaspar. The
relationship, upon which the obligation to pay a sum of money is based, is
between XYZ (the mortgagor) and Gaspar as its employee arising from the
Labor Code provision requiring an employer to pay separation pay, re: other
causes of employment.
2. At both times – Labor Arbiter Decision to pay separation pay an foreclose –
XYZ & Co. was an existing business entity and neither bankrupt or in
liquidation, although its business operations after the foreclosure ceased.
3. The decision of the Labor Arbiter for XYZ & Co. to pay a sum of money to
Gaspar was based on an action in personam, not in rem, enforceable against
any party. (Sundowner Corporation vS. Drilon, 180 SCRA 14 [1989])
4. The reference in the decision to “labor benefits due to an employee is superior
to the right of a mortgagee of the property” is misplaced. The preferential
claim rule has no basis and runs contrary to law and jurisprudence. (2003
Bar Question)

*similar to (1999 Bar Question) – see also Peralta v. Republic (1987)

(3) Wage Recovery and Atty’s Fees (Art. 111)— it is unlawful to demand
or accept atty’s fees more than 10% of the amt of wages recovered in
proceedings for recovery of wages. (cf. Arts. 128, 129, 217)

Q: An explosion in a mine site resulted in the death of fifty miners. At the time of
the accident:
1. the Mining Company has not yet pad the wages, overtime, holiday and rest
day compensation of the deceased miners
2. all the deceased miners owed the Miners Cooperative Union sums of money
3. the Mining Company was served by a sheriff Writs of Garnishment of Wages
of some of the deceased miners by virtue of final judgments in several
collection suits.

After the accident, the wives, paramours, brothers, sisters and parents of the
deceased miners filed their claims for unpaid wages, overtime, holiday and rest day
compensation. The Company has acknowledged its obligations. However, it is in a
quandary as to how to adjudicate the conflicting claims; and whether it can deduct
from the monies due the miners their unpaid debts with the credit union.
How will you advise the mining company on the following:
1. Can the Mining Company defer payment of the money claims until an
appropriate court has ruled on the conflicting claims?
2. Can the Mining Company deduct from the amount due to each miner an
amount equivalent to their debt and remit the same to the Credit Union?
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Suggested answer:
1. I will advise the Mining Company to pay to the respective heirs of the deceased
miners whatever were the unpaid wages, overtime, holiday and rest day
compensation of said deceased miners without necessity of intestate
proceedings. The claimants, if they are all of age, shall execute an affidavit
attesting to their relationship to the deceased and the fact that they are his
heirs, to the exclusion of all other persons. If any of the heirs is a minor, the
affidavit shall be executed on his behalf by his natural guardian or next of kin.
The affidavit shall be presented to the employer who shall make payment
through the Secretary of Labor or his representative. The representative of the
secretary of Labor shall act as referee in dividing the amount paid among the
heirs. (see Art 105 (b), LC)
2. I will advise the Mining Company not to deduct from the amount due to each
miner the amount equivalent to his debt to the Credit Union. The debt of a
deceased worker to the Credit Union is not one of the allowable deductions
under the Labor Code, or any rules and regulations of the DOLE. (see Art 113,
LC)

Another suggested answer:

Yes, if pursuant to CBA provision or authorized by the worker in writing;
otherwise, no. (1998 Bar Question)

Attorney’s Fees
“A”, an employee sued company “B” for unfair labor practice, illegal dismissal
and damages as a consequence thereof. The Arbiter granted A’s prayer for
reinstatement, backwages and included an award for attorney’s fees. On appeal to
the NLRC, the Commission affirmed the Arbiter’s decision but delete the award for
attorney’s fees since fees were not claimed in A’s complaint.
1. Who was correct, the Arbiter or the NLRC? Why?

Suggested answer:
The NLRC was correct in deleting the award for attorney’s fees if an employee
did not include the attorney’s fees among his claims and, therefore, did not give
any evidence to support the payment of attorney’s fees.

Another suggested answer:

The decision of the Arbiter to award attorney’s fees even if the same is not
claimed is correct. Art 2208 of the New Civil Code allows the award of attorney’s
fees when the defendant’s act or omission has compelled the plaintiff to litigate or
incur expenses to protect his interest. Attorney’s fees may be considered as a part
of an equitable relief awarded in the concept of damages.

2. Would your answer be different if the attorney’s fees awarded by the Arbiter
was over 15% of the total award? Why?

Suggested answer:
An award of attorney’s fees which is over 15% of the total award is not in
conformity with the provision of the Labor Code (Art 111(a)) that in cases of
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unlawful withholding of wages, the culpable party may be assessed attorney’s fees
equivalent to 10% of the amount of wages recovered.

Q: May the Labor Arbiter, NLRC or Court of Appeals validly award attorney’s fees
in favor of complainant even if not claimed or proven in the proceedings.

Suggested answer:
A Labor Arbiter, NLRC, and Court of Appeals may validly award attorney’s fees
in favor of a complainant only if the claimant claimed and proved that he is entitled
to attorney’s fees.

Another suggested answer:

Art 2208 of the New Civil Code allows the award of attorney’s fees when the
defendant’s act or omission has compelled the plaintiff to litigate or incur expenses
to protect his interest. Attorney’s fees may be considered as a part of an equitable
relief awarded in the concept of damages. (2001 Bar Question)

MINIMUM WAGES
Agencies for wage-fixing machinery (Arts. 120, 121, 122)
(1) National Wages and Productivity Commission (NWPC)
(2) Regional Tripartite Wages and Productivity Board (RTWPB)

 No injunction or TRO may be issued against any proceedings before the

NWPC or RTWB. (Art. 126)

Per Nasipit Lumber Co. v. NLRC (1998)

NWPC power to prescribe the rules and guidelines for the
determination of minimum wage and productivity measures
RTWPB the power to issue wage orders under, subject to guidelines
issued by the Commission [Article 122 (b)] (hence, guidelines
issued by RTWPB without approval of NWPC are ineffectual)
In short, the NWPC lays down the guidelines which the RTWPB
implements.

Wage Order (Art. 123-127)

Requirements of a valid wage order:
(1) public hearings/ consultations conducted by the RTWPB
(2) newspaper publication
* A wage order without following these requirements is null and void.
(Cagayan Sugar Milling Co. v. Sec of Labor, 1998)

 No wage order shall provide for wage rates lower than the statutory
minimum wage rates prescribed by Congress (Art. 127) and no wage order
shall prevent workers from bargaining for higher wages with their ERs.
(Art. 125)

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 Remedy of aggrieved party (Art. 123): appeal to NWPC within 10
calendar days from publication of wage order.
- NWPC shall decide within 60 calendar days from filing.
- appeal does not stay the wage order unless the person appealing shall
file with NWPC an undertaking with surety/sureties for the payment
to the EEs affected by the wage order, in case it is affirmed.

Criteria for Minimum Wage Fixing (Art. 124)

- regional min. wages shall be as nearly adequate as is economically
feasible to maintain the min. standards of living.
- These are the relevant factors to be considered:
(1) Demand for living wages
(2) Wage adjustment vis-à-vis consumer price index
(3) Cost of living
(4) Needs of workers and their families
(5) Need to induce industries to invest in the countryside
(6) Improvements in standards of living
(7) Prevailing wage levels
(8) Fair return of the capital and ER’s capacity to pay
(9) Effects on employment generation and family income
(10) Equitable distribution of income

Wage Distortion
- a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among EE groups in an
establishment as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or other logical
bases of differentiation.
- test: severe contraction or elimination of existing wage differentials

Q: when is there a wage distortion? (2006 Bar Question)

Q: Define wage distortion. (1997 Bar Question)

Suggested answer:
There is a wage distortion where an increase in prescribed wage rates results
in the elimination or severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in an establishment so
as to effectively obliterate the distinction embodied in such wage structure based
on skills, length of service, or other logical bases of differentiation.

Another suggested answer:

Wage distortion arises when four (4) essential elements are present:
a. an existing hierarchy of positions with corresponding salary rate;
b. a significant change or increase in the salary rate of a lower pay class without
a corresponding increase in the salary of a higher one;
c. the elimination of the distinction between two groups or classes; and

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d. the distortion exists in the same region of the country (Prubankers Association
v. Prudential Bank and Trust Co.)

Ilaw at Buklod ng Mangagawa v. NLRC, 1991

 Both the ER and EE cannot use economic weapons (ER cannot declare
a lock-out; EE cannot declare a strike) because the law has provided
for a procedure for settling wage distortion.

Q: May a wage distortion, alleged by the employees but rejected by the employer
to be such, be a valid ground for staging a strike?

Answer:
No. The existence of wage distortion is not a valid ground for a strike because
Art. 124 of the Labor Code provides for a specific method of procedure for
correcting wage distortion. In Ilaw at Buklod ng Manggagawa vs. NLRC, the Court
said—

“It goes without saying that these joint or coordinated activities may be
forbidden or restricted by law or contract. For the particular instance of “distortions
of the wage structure within an establishment” resulting from the application of any
prescribed wage increase by virtue of a law or wage order, Section 3 of RA 6727
prescribes a specific, detailed, and comprehensive procedure for the correction
thereof, thereby implicitly excluding strikes or lockouts or other concerted activities
as modes of settlement of the issue.”

Alternative Answer:
A wage distortion, alleged by the employees but rejected by the employer can
be a valid ground for staging a strike if it happens that in rejecting the allegation of
wage distortion, the employer refuses to consider the issue under the grievance
procedure provided for in the applicable CBA, and later on through Voluntary
Arbitration. These acts of the employer could be considered as a violation of its
duty to bargain collectively which is unfair labor practice (ULP). A ULP strike is legal.
(1997 and 2006 Bar Question)

Prubankers Assn., v. Prudential Bank, 1999

 Wage-fixing has been regionalized by RA 6727 (Wage Rationalization
Act).
 Each region has a regional wage board which, in fixing the wage-
level, considers standards existing in the region.
 Hence, wage distortion involves comparison of jobs located in the
same region of the same employer, and not comparison of jobs in
different regions.
 Comparison of salaries has to be intra-region, not inter-region.
 There is no wage-distortion when EEs in one branch have higher pay
than their counterparts in other branches in other regions.
4 Elements of Wage distortion:
(1) an existing hierarchy of positions with corresponding salary rates

Page 63 of 195
 (2) significant change in the salary of a lower pay class without a
concomitant increase in the salary rate of a higher one
(3) elimination of distinction between the 2 levels
(4) existence of distortion in the same region. (Prubankers Assn., v.
Prudential Bank, 1999)

Procedure for Correcting Wage Distortion (pendency of a dispute

from wage distortion shall not delay the applicability of any increase in
the wage order)

Organized Establishment Unorganized Establishment

Grievance procedure ER and workers will endeavor to correct

the distortion

Voluntary Arbitration (should NCMB

be decided (to settle any
within 10 days) dispute arising from the correction)

NLRC
(if it remains unresolved after 10
calendar days from conciliation; NLRC
will decide within 20 days from
submission)

Q: How should a wage distortion be settled?

Suggested answer:
Any dispute arising from wage distortion shall be resolved through any
grievance procedure as provided in the applicable collective bargaining agreement
and, if the dispute remains unresolved, then through voluntary arbitration. (Art.
124)
In cases where there are no collective bargaining agreements or recognized
labor unions, the employers and workers shall endeavor to correct such wage
distortions. Any dispute arising therefrom shall be settled through the National
Conciliation and Mediation Board and, if it remains unresolved after 10 calendar
days of conciliation, the issue of wage distortion shall be referred to the appropriate
branch of the National Labor Relations Commission. (2002 & 2006 Bar
Question)

PART 7
SPECIAL WORKERS
Page 64 of 195
HANDICAPPED WORKERS (Art. 78)
- workers whose earning capacity is impaired by age and physical/
mental defects
- Can be regular EE if work is usually or necessary or desirable to the
business (Bernardo v. NLRC, 1999)
-
Q: Ana Cruz has a low IQ. She has to be told at least three times before she
understands her daily work assignment. However, her work output is at least equal
to the output of the least efficient worker in her work section. Is Ms. Cruz a
handicapped worker? Explain.

Suggested answer:
No, low IQ or low efficiency does not make the worker “handicapped” in the
contemplation of law. Handicap means such physical or mental infirmity that impairs
capacity to work. The deficiency may also be due to age or injury. (Art 78, LC)

When Employable (Art. 79)

(1) Necessary to prevent curtailment of employment opportunities; and
(2) Does not create unfair competition in labor costs or impairing working
standards

Employment Agreement shall include (Art. 80)

 Names and addresses of the handicapped workers to be employed
 Rate to be paid (not less than 75% of applicable legal minimum wage)
 Duration of employment period
 Work to be performed by handicapped (the agreement is always subject
to inspection by Sec. of Labor or duly authorized representative)

Eligibility for Apprenticeship (Art. 81)

- if their handicap is not such as to effectively impede the performance of
job operations in the particular occupations for which they are hired

Q: A lady worker was born with a physical deformity, specifically, hard of hearing,
speech impaired and color blind. However, these deficiencies do not impair her
working ability.
Can the employer classify her as a handicapped worker so that her daily wage
will only be seventy-five per cent (75%) of the applicable daily minimum wage?

Suggested answer:
No, the employer cannot classify the lady worker as a handicapped worker
because according to the facts in the question, her deficiencies do not impair her
working ability. If her earning capacity is therefore not also impaired, then she
cannot be considered a handicapped worker.
Because of the above fact, the employer shall not pay her less than the
applicable daily minimum wage. (Art 78, LC)

Another suggested answer:

Page 65 of 195
 Yes, the employer can classify her as a handicapped worker because her
earning capacity may be impaired by her physical deficiencies. As such handicapped
worker, the employer may enter into an employment agreement with her whereby
the rate to be paid to her may be less than the applicable legal minimum wage but
not less than 75% of such wage. (1998 Bar Question)

Q: For humanitarian reasons, a bank hired several handicapped workers to count

and sort out currencies. Their employment contract was for six months. The bank
terminated their employment on the ground that their contract has expired
prompting them to file with the Labor Arbiter a complaint for illegal dismissal.
Will their action prosper?

Suggested answer:
Yes, their action will prosper. They are doing necessary or desirable jobs and
are qualified for the job, and therefore they should be treated like other qualified
able-bodied employees. (Bernardo v. NLRC and Far East Bank) They cannot be
terminated simply because of the expiration of the contract. The nature of their
work gives them the status of regular employees. What determines regularity is not
the employment contract but the nature of the job. (AM Oreta and Co. Inc. v. NLRC)

Another suggested answer:

No, their action will not prosper. The employment contract in this case is an
example of a fixed-term employment contract, i.e. one to which the parties by free
choice have assigned a specific date of termination. It is not per se illegal or against
public policy. To be valid, it must be shown that the fixed period was knowingly and
voluntarily agreed upon by the parties. There should have been no force, duress or
improper pressure brought to bear upon the employee. Neither should there be any
other circumstance that vitiates the employee’s consent. Moreover, the employer
and employee must have dealt with each other on moiré or less equal terms with
no moral dominance being exercised by the employer over the employee. Should
the contract in the case at bar be shown to comply with the aforementioned
requirements, the action for illegal dismissal will not prosper; otherwise, it should.
(Brent School v. Zamora) (2006 Bar Question)

LEARNERS/ APPRENTICES(Art. 59-73)

Learners Apprentices
Persons hired as trainees Persons hired as trainees
in semi-skilled and in a highly skilled job
other industrial or in a job found only
occupations which are in a highly technical
non-apprenticeable industry
What
*apprenticeable
occupation
- any trade, form of
employment or
occupation which

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 requires more than
3 mos. of practical
training on the job
supplemented by
related theoretical
instruction

Duration Not exceeding 3 months Not exceeding 6 months

No experienced workers Only ERs in highly
available; technical industries
Employment of learners is may employ
necessary to prevent apprentice; and
curtailment of Only in apprenticeable
employment occupations
When may be
opportunities; and
hired
Employment does not
create unfair
competition in labor
costs and lower
working standards

Learnership agreements Apprenticeship program

do not need approval of needs prior approval
DOLE, but are subject of DOLE
Approval of to DOLE’s inspection *if employed without a
DOLE pre-approved
apprenticeship
program, he is
deemed a regular EE
Not below 75% of the Same
applicable min. wage *Sec. may authorize
hiring of apprentices
without compensation
Compensation whose training on the
job is required by the
school as requisite for
graduation / board
exam
There is commitment to No commitment
employ learners as an
ER’s EE after the training
commitment period
to hire *Learners allowed to work
during the first 2
months shall be

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 deemed regular EEs if
training is terminated
by the ER before the
end of the stipulated
period through no fault
of the learner

PART 8
WOMEN WORKERS

NIGHTWORK PROHIBITION(Art. 130)

No woman shall be employed in:

1. Industrial Undertaking - 10pm-6am

2. Commercial or non-industrial - 12am-6am

or branch thereof, other than
agricultural

3. Agricultural undertaking - Nighttime, unless given a

period of rest not less
than 9 consecutive hours

Exceptions(Art. 131)
(1) Actual or impending emergencies to prevent loss of life/ property or
force majeure or imminent danger to public safety
(2) Urgent work to be performed to avoid serious loss to ER
(3) Necessary to prevent serious loss of perishable goods
(4) Holds a responsible position of managerial or technical nature or
engaged to provide health or welfare service
(5) Nature of work requires the manual skill and dexterity of women
workers and the same cannot be performed with equal efficiency by
male workers
(6) Immediate members of the family operating the establishment or
undertaking
(7) Other analogous cases

FACILITIES FOR WOMEN (Art. 132)

(1) To provide seats for women
(2) Establish separate toilet rooms and lavatories and provide at least a
dressing room for women
(3) Establish a nursery in a workplace for the benefit of the women EEs

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 (4) Determine appropriate min. age and other standards for retirement and
termination in special occupations such as those of flight attendants and
the like

MATERNITY LEAVE and PATERNITY LEAVE BENEFITS

-Pls. see discussion above under Hours of Work: Leaves

FAMILY PLANNING SERVICES, INCENTIVES FOR FAMILY PLANNING

(Art. 134)
 Those establishments required to maintain a clinic or infirmary shall
provide free family planning service
 Develop and prescribe incentive bonus schemes to encourage family
planning among female workers in any establishment/ enterprise

DISCRIMINATION PROHIBITED (Art. 135)

Acts of Discrimination
 Payment of lesser compensation to a female as against the male, for
work of equal value
 Favoring over promotion, training opportunities, study and scholarship
grants solely on account of their sexes

 Institution of any criminal action under this shall not bar the aggrieved EE
from filing an entirely separate and distinct action for money claims, which
may include claims for damages and other affirmative relief
 Actions authorized shall proceed independently of each other

STIPULATIONS AGAINST MARRIAGE (Art. 136)

- unlawful, either as a condition for employment or for continuing
employment

PROHIBITED ACTS (Art. 137)

1. Deny benefits or discharge any woman employed to avoid giving
benefits
2. Discharge such woman on account of her pregnancy or while on leave
or in confinement due to her pregnancy
3. Discharge or refuse the admission of such woman upon returning to
her work for fear she may again be pregnant

Q: At any given time, approximately 90% of the production workforce of a semi-

conductor company are females. 75% of the female workers are married and are
of child-bearing years. It is imperative that the Company must operate with a
minimum number of absences to meet strict delivery schedules. In view of the very
high number of lost working hours due to absences for family reasons and maternity
leaves, the Company adopted a policy that it will employ married women as
production workers only if they are at least 35 years of age.
Is the policy violative of any law?

Page 69 of 195
Suggested answer:
Yes, it is violative of Art 140, LC which provides that no employer shall
discriminate against any person in respect to terms and conditions of employment
on account of his age.

Another suggested answer:

The policy of the company to employ married women as production workers
only if they are at least 35 years of age is valid. There is no prohibition in the Labor
Code for such an employer to exercise this management function. There is a
justifiable basis for the company policy, i.e., the need for continuity of production
with minimum absence because of the peculiar business conditions and needs of
the company, i.e., very tight delivery schedules. The company respects the
institution of marriage as shown by the fact that it employs married women. There
is no violation of the stipulation against marriage (Art 136), and prohibited acts (Art
137) of the Labor Code.

Another suggested answer:

It may be noted that the policy is directed only to married women. This may
violate the spirit of Art 136 of the Labor Code which provides that it shall be unlawful
for an ER to require as a condition of employment or continuation of employment
that a woman shall not get married. (1998 Bar Question)

Q: An exclusive school for girls, run by a religious order, has a policy of not
employing unwed mothers, women with live-in partners, and lesbians. Is the policy
violative of any provision of the Labor Code on employment of women?

Suggested answer:
No, the policy does not violate the Labor Code. The practice is a valid exercise
of management function. Considering the nature and reason for existence of the
school, it may adopt such policy as will advance its laudable objectives. In fact, the
policy accords with the constitutional precept of inculcating ethical and moral values
in schools. The school policy does not discriminate against women solely on account
sex (Art 135, LC) nor are the acts prohibited under Art 137, LC.

Another suggested answer:

The school violated Art 137 (2) of the Labor Code which states that: “It shall
be unlawful for any employer to discharge such woman on account of pregnancy”.
The pregnancy here could obviously have resulted from love and such only lends
substance to the saying that “the heart has reasons of its own which reason does
not know”, a matter that cannot “be so casually equated with immorality”. [Chua-
Qua v. Clave (1990)]

Q: The same school dismissed two female faculty members on account of

pregnancy out of wedlock. Did the school violate any provision of the Labor Code
on employment of women?

Suggested answer:

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 No, because to tolerate pregnancy out of wedlock will be a blatant
contradiction of the school’s laudable mission which, as already stated, accords with
high constitutional precepts.
This answer does not contradict the ruling in Chua-Qua where the teacher
merely fell in love with a bachelor student and the teacher merely fell in love with
a bachelor student and the teacher, also single, did not get pregnant out of wedlock.
(2000 Bar Question)

CLASSIFICATION OF CERTAIN WOMEN WORKERS (Art. 137)

- any woman permitted or suffered to work in a night club, cocktail
lounge, massage clinic, bar or similar establishment, under effective
control or supervision of the ER for substantial period determined by the
Sec. of Labor, shall be considered as EE of such establishments

Q: Dinna Ignacio was hired by Stag Karaoke Club as guest relations officer. Dinna
was also required to sing and dance with the guests of the club.
In Dinna’s employment contract, which she signed, the ff. stipulations
appeared:

Compensation : tips and commissions coming from the guests shall be subjected
to 15% deductions
Hours of work : 5 pm up to 2a.m. daily including Sundays and holidays
Other conditions : Must maintain a body weight of 95 lbs., remain single. Marriage
or pregnancy will be considered as a valid ground for
termination of employment.

A year later, Dinna requested to go on leave because she would be getting

married to one of the club’s regular guests. The management of the club dismissed
her.
Dinna filed a complaint for illegal dismissal, night shift differential pay,
backwages, overtime pay and holiday pay. Discuss the merits of Dinna’s complaint.

Answer:
The first issue to be resolved is: Is Dinna an EE of the Star Karaoke Club? Yes,
she is an EE as per the provision of the LC that states: “Any woman who is permitted
or suffered to work, with or without compensation, in an night club, cocktail lounge,
massage clinic, bar, or similar establishment under the effective control or
supervision of the ER for a substantial period shall be considered an EE of such
establishment for purposes of labor and social legislation.” (Art. 138) And Dinna’s
conditions of employment have all the aforesaid characteristics.
She had been illegally dismissed. The Labor Code expressly provides that “it
shall be unlawful for an ER to require as a condition of employment or continuation
of employment that a woman EE shall not get married, or to stipulate expressly or
tacitly that upon getting married a woman EE shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman EE merely by reason of her marriage.” (Art. 136)
Because of her illegal dismissal, she is entitled to backwages from the time her
compensation was withheld from her to the time of her actual reinstatement.

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 Dinna is not entitled to night differential pay, overtime pay and holiday pay
because she belongs to one of those classes of EEs who are not covered by the
provision of the Labor Code providing for these benefits. She is a worker paid by
results since her compensation is determined by the tips and commission that she
receives from her guests. (1997 Bar Question)

ANTI-SEXUAL HARASSMENT LAW (RA 7877)

Committed in these situations only:
(1) Work-related or employment environment
(2) Education or training environment

Offender
- ER, EE, manager, supervisor, agent of the ER, teacher, instructor
professor, coach, trainor, or any other person who has authority,
influence, or moral ascendancy over another (hence, victim may be
male or female)

Q: Pedrito Masculado, a college graduate from the province, tried his luck in the
city and landed a job as utility/maintenance man at the warehouse of a big shopping
mall. After working as a casual EE for six months, he signed a contract for
probationary employment for six months. Being well-built and physically attractive,
his supervisor, Mr. Hercules Barak, took special interest to befriend him. When his
probationary period was about to expire, he was surprised when one afternoon
after working hours, Mr. Barak followed him to the men’s comfort room. After
seeing that no one else was around, Mr. Barak placed his arm over Pedrito’s
shoulder and softly said: “You have a great potential to become regular EE and I
think I can give you a favorable recommendation. Can you come over to may
condo unit on Saturday evening so we can have a little drink? I’m alone and I’m
sure you want to stay longer with the company.”
Is Mr. Barak liable for sexual harassment committed in a work-related or
employment environment?

Suggested Answer:
Yes, the elements of sexual harassment are all present.
The act of Mr. Barak was committed in a workplace.
Mr. Barak, as supervisor of Pedrito Masculado, has authority, influence and
moral ascendancy over Masculado.
Given the specific circumstances mentioned in the question like Mr. Barak
following Masculado to the comfort room, etc. Mr. Barak was requesting a sexual
favor from Masculado for a favorable recommendation regarding the latter’s
employment.
It is not impossible for a male, who is a homosexual, to ask for a sexual favor
from another male.

Another Suggested Answer:

I do not see any sexual favor being solicited. Having a “little drink” in Mr.
Barak’s condo unit, as a condition for a “favorable recommendation” is not one of

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the prohibited acts enumerated in Sec. 3 (a) of RA 7877, otherwise known as the
Anti-Sexual Harassment Act of 1995. (2004 Bar Question)

How Committed
- offender demands, requests or otherwise requires any sexual favor
from the other, regardless of whether the demand, request or
requirement for submission is accepted by the object

Q: Can an individual, the sole proprietor of a business enterprise, be said to have

violated the Anti-Sexual Harassment Act of 1995 if he clearly discriminates against
women in the adoption of policy standards for employment and promotions in the
enterprise? Explain.

Suggested Answer:
When an ER discriminates against women in the adoption of policy standards
for employment and promotion in his enterprise, he is not guilty of sexual
harassment. Instead, the ER is guilty of discrimination against women employees
which is declared to be unlawful by the Labor Code.
For an ER to commit sexual harassment he – as a person of authority, influence
or moral ascendancy – should have demanded, requested or otherwise required
asexual favor from his EE whether the demand, request or requirement for
submission is accepted by the object of said act.
In the question, no such act was committed by the sole proprietor. (2003 Bar
Question)

Q: As a condition for her employment, Josephine signed an agreement with her ER

that she will not get married, otherwise, she will be considered resigned or
separated from the service.
Josephine got married. She asked Owen, the personnel manager, if the
company can reconsider the agreement. He told Josephine he can do something
about it, insinuating some sexual favors. She complained to higher authorities but
to no avail. She hires you as her counsel. What action or actions will you take?
Explain.

Suggested answer:
As counsel for Josephine, I will file a complaint for work-related sexual
harassment which, as in the case at bar, occurs when a person who has authority,
influence or moral ascendancy over another demands, requests, or otherwise
requires any sexual favor from the latter as a condition for, inter alia, the continued
employment of said individual. (Sec 3, RA 7877)
I will likewise file a complaint for illegal dismissal citing Art 136, LC which
provides that it is unlawful for an employer to require as a condition of continued
employment 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
or discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.

Another suggested answer:

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 I shall advise my client to file a complaint with the grievance machinery (if the
establishment is organized) or with the company’s Committee on Decorum and
Investigation (organized or unorganized) tasked to investigate sexual harassment
cases. The personnel manager Owen can definitely be helved administratively liable
for his action.
I shall also advise my client to file a criminal case for sexual harassment
pursuant to RA 7877.

Another suggested answer:

I will not take any action at all because “insinuating sexual favor” is not an act
of sexual harassment which require “demands, requests, or otherwise require any
sexual favor from the other” (Sec 3, RA 7877) (2006 Bar Question)

Q: A Personnel Manager, while interviewing an attractive female applicant for

employment, stared directly at her for prolonged periods, albeit in a friendly
manner. After the interview, the manager accompanied the applicant to the door,
shook her hand and patted her on the shoulder. He also asked the applicant if he
could invite her for dinner and dancing at some future time. Did the personnel
manager, by the above acts, commit sexual harassment? Reason.

Suggested answer:
Yes, because the personnel manager, a man, is in a position to grant or not to
grant a favor (a job) to the applicant. Under the circumstances, inviting the
applicant for dinner or dancing creates a situation hostile or unfriendly to the
applicant’s chances for a job if she turns down the invitation. (Sec 3(a)(3), RA 7877,
Anti-Sexual Harassment Act)

Another suggested answer:

There is no sexual harassment because there was no solicitation of sexual
favor in exchange of employment. Neither was there any intimidating, hostile or
offensive environment for the applicant.

Q: In the course of an interview, another female applicant inquired fro the same
personnel manager if she had the physical attributes required for the position
applied for. The personnel manager replied: “You will be more attractive if you will
wear micro-mini dresses without the undergarments that ladies normally wear.” Did
the personnel manager, by the above reply, commit an act of sexual harassment?
Reason.

Suggested answer:
No, the personnel manager’s reply to the applicant’s question whether she
qualifies for the position she is applying for does not constitute sexual harassment.
The personnel manager did not ask for or insinuate a request for a sexual favor in
return for a favorable action on her application for a job. But the manager’s
statement may be offensive if attire or physical look is not a criterion fro the job
being applied for.

Another suggested answer:

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 Yes, the remarks would result in an offensive or hostile environment for the
employee. Moreover, the remarks did not give due regard to the applicants’ feelings
and it is a chauvinistic disdain of her honor, justifying the finding of sexual
harassment. (Villarama v. NLRC (1994)) (2000 Bar Question)

Duty/ Liability of ER or Head of Office

 Duty— to prevent or deter the commission of acts of sexual
harassment and to provide for the resolution, settlement or
prosecution of acts of sexual harassment

 Liability— solidarily liable for damages arising from the acts of sexual
harassment if s/he is informed of such acts by the offended party and
no immediate action is taken thereon.

Independent Action for Damages

- the victim is not precluded from instituting a separate and
independent action for damages and other affirmative relief
Q: xxx Carissa… filed a complaint for sexual harassment against Mr. Winkle with
the DOLE. In his counter-affidavit… he also alleged that the complaint was
premature because Carissa failed to refer the matter to the Committee on Decorum
and Discipline for investigation and resolution before the case against him was filed.
In her reply affidavit, Carissa claimed that there was no need for a prior referral to
the Committee on Decorum and Discipline of her complaint.
Resolve the case with reason.

Suggested Answer:
xxx
Carissa is correct in stating that there was no need for a prior referral of her
complaint to the Committee on Decorum and Discipline because nothing in the law
shall preclude the victim of sexual harassment from instituting a separate and
independent action for damages and other affirmative relief. (Sec. 6, RA 7877)
(2005 Bar Question) *the first part was omitted bec. it deals with an issue similar
to the Bar Questions previously quoted, i.e. elements of Sexual Harrassment.

 Commission of sexual harassment is a valid reason to dismiss an EE.

(Villarama v. NLRC, 1994)

 Certain acts, like caressing the nape of the secretary, amount to sexual
harassment “as generally understood by the public” which justifies the
dismissal of the harasser. (Libres v. NLRC, 1999)

PART 9
MINORS

MINIMUM EMPLOYABLE AGE (Arts. 139-140)

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Below Gen. Rule: shall not be employed
15 yrs Exceptions*: (RA 7610, as amended by RA 7658)
old (1) If working under parent’s responsibility and where only
members of the ER’s family are employed:
Requisites:
a. His employment does not endanger his life, safety,
health and morals, nor impair his normal
development; and
b. The parent or legal guardian shall provide said minor
with the prescribed primary and/or secondary
education

(2) Working in public entertainment

Requisites:
a. Child’s employment in public and entertainment or
information through cinema, theater or radio or
radio or television is essential;
b. Employment contract is concluded by child’s
parents or guardian with express agreement of
child, if possible, and with DOLE approval; and
c. Strictly compliance with the ff:
(i) ER ensures child’s protection, health, safety
and morals
(ii) ER institutes measures to prevent the
exploitation of the child; and
(iii) ER implements a continuing program for
training and skills of the child
*in these cases, ER shall first secure a work permit from the
DOLE before engaging the child
15- Can be employed in undertakings which are not hazardous
below or deleterious (i.e., EE is not exposed to any risk which
18 yrs constitutes an imminent danger to his safety and health)
old
These are hazardous and deleterious:
Exposes workers to dangerous environmental elements,
contaminations or work conditions including ionizing
radiations, chemicals, fire, flammable substances,
noxious components and the like
Engaged in construction work, logging, fire-fighting,
mining, quarrying, blasting, stevedoring, dock work,
deep-sea fishing and mechanized farming
Engaged in the manufacture or handling of explosives and
other pyrotechnic products
Exposed to or use of heavy or power-driven machinery or
equipment
Use or are exposed to power-driven tools
Page 76 of 195
 18 yrs No prohibition

Q: Determine whether the following minors should be prohibited from being hired
and from performing their respective duties indicated hereunder:

1. a 17-year old boy working as a miner at the Walwaldi Mining Corporation

Suggested answer:
Yes, he should be prohibited from being hired and from performing the duties
of a miner because such constitutes hazardous work under D.O. No. 04 Series of
1999. Art 139 (c), LC expressly prohibits the employment of persons below 18 years
of age in an undertaking which is hazardous or deleterious in nature as determined
by the Secretary of Labor. (similar to a 2002 Bar Question)

2. an 11-year old boy who is an accomplished singer and performer in different

parts of the country.
Suggested answer:
No, he should not be prohibited form being hired and from performing as a
singer. Under Art VIII Sec 12 par 2 of RA 7610 as amended by RA 7658, this
constitutes an exception to the general prohibition against the employment of
children below 15 years of age, provided that the following requirements are strictly
complied with: (a) the employer shall ensure the protection, health, safety and
morals of the child; (b) the employer shall institutes measures to prevent the child’s
exploitation or discrimination taking into account the system and level of
remuneration, and the duration and arrangement of working time; and (c) the
employer shall formulate and implement, subject to the approval and supervision
of competent authorities, a continuing program for training and skill acquisition of
the child. Moreover, the child must be directly under the sole responsibility of his
parents or guardian and his employment should not in any way interfere with his
schooling.

3. a 15-year old girl working as a library assistant in a girl’s high school.

Suggested answer:
No, she should not be prohibited from working as a library assistant because
the prohibition in the Labor Code against employment of persons below 18 years
of age merely pertains to employment in an undertaking which is hazardous or
deleterious in nature as identified in the guidelines issued by the DOLE Secretary.
Working as a library assistant is not one of the undertakings identified to be
hazardous under D.O. No. 04 Series of 1999.

4. a 16- year old girl working as a model promoting alcoholic beverages.

Suggested answer:
Yes, she should be prohibited form working as a model promoting alcoholic
beverages. RA 7610 categorically prohibits the employment of child models in all
commercial or advertisements promoting alcoholic beverages and intoxicating
drinks, among other things.

5. a 17-year old boy working as a dealer in a casino.

Suggested answer:

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 Yes, he should be prohibited from working as a dealer in a casino because Art
140, LC prohibits the employment of persons below 18 years of age in an
undertaking which is hazardous or deleterious in nature as identified in the
guidelines issued by DOLE Secretary. Working as a dealer in a casino is classified
as hazardous under D.O. No. 04 Series of 1999 as it exposes children to physical,
psychological or sexual abuses. (2006 Bar Question)
o0o0o0o

Q: A spinster school teacher took pity on one of her pupils, a robust and precocious
12-year old boy whose poor family could barely afford the cost of high schooling.
She lives alone at her house near the school after her housemaid left. In the
afternoon, she lets the boy do various chores as cleaning, fetching water and all
kinds of errands after school hours. She gives him rice and P30.00 before the boy
goes home at 7:00 every night. The school principal learned about it and charged
her with violating the law which prohibits the employment of children below 15
years of age. In her defense, the teacher stated that the work performed by her
pupil is not hazardous, and she invoked the exception provided in the Department
Order of DOLE for the engagement of persons in domestic and household service.
Is her defense tenable? Reason.

Suggested Answer:
No, her defense is not tenable. Under Article 139 of the Labor Code on
“minimum employable age”, no child below 15 years of age shall be employed
except when he works directly under the sole responsibility of his parents or
guardian, the provisions of the alleged Department Order cannot prevail over the
express prohibitory provisions of Labor Code.

[Note: Sec. 3, RA9231 allows a child below 15 years of age to work for not more
than 20 hours a week; provided, that the work shall not be more than 4 hours at
any given day; provided further, that he does not work between 8 o’clock in the
evening and 6 o’clock in the morning of the following day; and provided finally, that
the work is not hazardous or deleterious to his health or morals. THIS IS A RECENT
LAW APPROVED ONLY ON JULY 28, 2003, which is beyond the cut-off period of the
Bar Exams.] (2004 Bar Question)

PART 10
HOUSEHELPERS

EMPLOYMENT OF HOUSEHELPERS (Arts. 141-152; cf. Arts 1689-1699,

NCC)

Coverage: shall apply to all persons rendering services in the household

for compensation

 Domestic or household service

- shall mean services in the ER’s home which are usually necessary
or desirable for the maintenance and enjoyment thereof

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 - includes ministering to the personal comfort and convenience of
the members of the ER’s household
- also includes the services of family drivers

 “Househelper” is synonymous to the term “domestic servant”. (Apex

Mining Co., v. NLRC, 1991)

Pertinent provisions
(1) Original contract— not more than 2 years but may be renewed upon
agreement of the parties
(2) If assigned to work in a commercial, industrial, or agricultural
enterprise, must not be paid lower than agricultural or non-
agricultural workers
(3) If househelper is under 18 years of age, must be given opportunity
to finish at least elementary schooling. The cost of education shall
be a part of compensation
(4) Should be treated in a just and humane manner
(5) Free: sanitary and suitable living quarters, adequate food and
medical attendance
(6) If period of household service is fixed, neither the parties may
terminate contract prior expiration of term; if not fixed, either of the
parties may terminate by giving notice 5 days before the intended
termination
(7) If EE is unjustly dismissed, indemnity = compensation earned +
compensation for 15 days; if EE leaves without justifiable reason, s/he
shall forfeit any unpaid salary not exceeding 15 days.

Q: The weekly work schedule of a driver is as follows:

Monday, Wednesday, Friday- Drive the family car to bring and fetch the
children to and from the school.
Tuesday, Thursday, Saturday- Drive the family van to fetch merchandise from
suppliers and deliver the same to a boutique in a mall owned by the
family.
Is the driver a househelper?

The same driver claims that for work performed on Tuesday, Thursday and
Saturday, he should be paid the minimum daily wage of a driver of a commercial
establishment.
Is the claim of the driver valid?

Suggested answer:
The driver is a househelper. A person is a househelper or is engaged in
domestic or household service if he/ she renders services in the employer’s home
which are usually necessary or desirable fro the maintenance and enjoyment
thereof and includes ministering to the employer’s household including the service
of family drivers.
A family driver who drives the family van to fetch merchandise form suppliers
and delivers the same to a boutique in a mall owned by the family for whom he
Page 79 of 195
works should be paid the minimum daily wage of a driver in a commercial
establishment.
The Labor Code (in Art 143) provides that no househelper shall be assigned to
work in a commercial, industrial or agricultural enterprise at a wage or salary rate
lower than that provided by law for agricultural or non-agricultural workers. (1998
Bar Question)

PART 11
HOMEWORKERS

EMPLOYMENT OF HOMEWORKERS (Arts. 153-155; Dept. Order No. 5,

1992)

Coverage: shall apply to any person who performs industrial homework

for an employer, contractor or sub-contractor.

Industrial Homework—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.

Employers of Homeworkers
(1) Delivers, or causes to be delivered, any goods, articles or materials
to be processed or fabricated in or about a home and thereafter to
be returned or to be disposed of or distributed in accordance with
his directions; or
(2) Sells any goods, articles or materials for the purpose of having such
goods or articles processed or fabricated in or about a home and
then repurchases them after such processing or fabrication, either
himself or through some other person.

 The IRR allows the formation and registration of labor organization of

industrial homeworkers.
 It also makes explicit the ER’s duty to pay SSS, Medicare and ECC
premiums.

Q: 1. Nova Banking Corporation has a rest house and recreational facility in the
highlands of Tagaytay City for the use of its top executives and corporate clients.
The rest house staff includes a caretaker, two cooks and a laundrywoman. All of
them are reported to the Social Security System as domestic or household
employees of the rest house and recreational facility and not of the bank. Can the
bank legally consider the caretaker, cooks, and laundrywoman as domestic
employees of the rest house and not of the bank?

2. Mrs. Josie Juan is the confidential secretary of the Chairman of the Board
of the Bank. She is presently on maternity leave. In an arrangement where the
Chairman of the Board can still have access to her services, the bank allows her to

Page 80 of 195
work in her residence during her leave. For this purpose, the bank installed a fax
machine in her residence and gave her a cellphone and a beeper. Is Mrs. Juan a
homeworker under the law?

Suggested answer:

1. No, they are not domestic employees. They are bank employees because
the rest house and recreational facility are business facilities as they are for the use
of the top executives and clients of the bank. [Art 141, LC, Apex Mining Co., Inc. v.
NLRC (1991); Traders Royal Bank v. NLRC (1999)]

2. No, she is actually an office worker. She is not an industrial homeworker

who accepts work to be fabricated or processed at home for a contractor, which
work, when finished, will be returned to or repurchased by said contractor. (Art
155, LC) (2000 Bar Question)

PART 12
TERMINATION OF EMPLOYMENT

SECURITY OF TENURE (Art. 279; Art. XIII, Sec. 3, Const.)

- in cases of regular employment, the ER shall not terminate the services of
an EE except for a just cause or when authorized
- Although the provision states only regular employment, right to security
of tenure is also available to non-regular EE (e.g., fixed-term employment,
probationary EE, project EE). The ER cannot terminate before the end of
the agreed period unless there is a just cause.

TERMINATION BY EMPLOYEE (RESIGNATION)

Without cause [Art. 285 (a)]
- EE must serve notice to ER at least 1 month in advance
- if no such notice, EE may be liable for damages

With just cause [Art. 285 (b)]

- no notice is needed
Grounds:
a. Serious insult on the honor and person of the EE by the ER or his
representative
b. Inhumane and unbearable treatment accorded to the EE
c. Commission of a crime against the person of the EE or any of the
immediate members of his family
d. Analogous cases

Voluntary Resignation— act of an EE who finds himself in a situation

where he believes that personal reasons cannot be sacrificed in favor of
the exigency of the service and he has no other choice but to disassociate
himself from his employment (Habana v. NLRC, 1998)

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TERMINATION BY EMPLOYER
2 Facets of a valid termination (Orlando Farms Growers v. NLRC, 1998;
Salaw v. NLRC, 1991);
1. Substantive due process—legality of the act of the dismissal, i.e.,
the dismissal must be under any of the just causes or authorized
causes (Arts 279, 281, 282-284)
2. Procedural due process—the legality of the manner of dismissal
For just causes
- there must be observance of the requirements of the two-notice
rule:
i. a written notice containing a statement of the cause for
termination and to afford him opportunity to be heard and
to defend himself; and
ii. to notify the worker in writing of the decision to dismiss him,
stating clearly the reasons therefore

For authorized causes

- written notice to EE and DOLE Secretary at least 1 month before
intended date

Q: Distinguish between dismissal of an employee for just cause and termination of

employment for authorized cause. Enumerate examples of just cause and
authorized cause.

Suggested answer:
Dismissal for a just cause is founded on faults or misdeeds of the employee.
Separation pay, as a rule, will not be paid. Examples: serious misconduct, willful
disobedience, commission of crime, gross and habitual neglect, fraud and other
causes analogous to the foregoing. (Art 282, Labor Code)
Termination for authorized causes is based on business exigencies or measures
adopted by the employer, not constituting faults of the employee.
Payment of separation pay at varying amounts is required. According to Art.
283, LC, the lawful or authorized causes for the termination of an EE are:
1. installation of labor saving devices
2. redundancy
3. retrenchment to prevent losses or;
4. closing or cessation of operation of the establishment or undertaking, unless the
closing is for the purpose of circumventing the provisions of the Labor Code.
Art. 284 also provides that an ER may terminate the services of an EE who has
been found to be suffering from any disease and whose continued employment is
prohibited or prejudicial to his health as well as to the health of his co-EEs. (2000,
2002 and 2004 Bar Questions)

Substantive due process

Just Causes (Art. 282) - an ER may terminate an employment for any of
the ff. causes:

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 1. Serious misconduct or willful disobedience by the EE of the lawful
orders of ER/ his rep in connection with his work
“Serious Misconduct”
- improper or wrong conduct
- the transgression of some established and definite rule of action
- a forbidden act, a dereliction of duty, willful in character, and
implies a wrongful intent and not mere error in judgment.
*NB: Such misconduct, however serious, must nevertheless be in
connection with the work of the EE

Elements of Misconduct as just cause:

 it must be serious;
 must relate to the performance of the employee’s duties; and
 must show that the employee has become unfit to continue
working for the employer. (Phil. Aeolus Automotive United Corp.
v. NLRC, 2000)

Q: Sergio, an EE of Encarnado Philippines Inc. (EPI), was at the company canteen

when Corazon, a canteen helper, questioned him for his use of somebody else’s ID.
Sergio flared up and shouted at Corazon “Wala kang pakialam! Kung gusto mo,
itapon ko itong mga pagkain nyo!” When Sergio noticed that some people were
staring at him rather menacingly, he left the canteen but returned a few minutes
later to remark challengingly “Sino ba nagagalit?” Sergio then began smashing
some food items that were n display for sale in the canteen, after which she slapped
Corazon which caused her to all and suffer contusions. The incident prompted
Corazon to file a written complaint with Gustavo, the personnel manager of EPI
against Sergio.
Gustavo required Sergio to explain in writing why no disciplinary action should
be taken against him. In his written explanation, Sergio admitted his misconduct
but tried to explain it away by saying that he was under the influence of liquor at
the time of the incident. Gustavo thereafter issued a letter of termination from the
employment of Sergio for serious misconduct.
Sergio now files a complaint for illegal dismissal, arguing that his acts id not
constitute serious misconduct that would justify his dismissal.
Decide.

Suggested Answer:
The acts of Sergio constituted serious misconduct. Thus, there was just cause
for his termination.
The fact that he was under the influence of liquor at the time that he did what
he did does not mitigate, instead it aggravates, his misconduct.
Being under the influence of liquor while at work is by itself a serious
misconduct.

Alternative Answer:
The dismissal is not justified because the serous misconduct committed by the
EE is not in connection with his work. Art. 282 (g), LC was interpreted by the
Supreme Court in Arts Philippines, Inc. v. NLRC, as follows:

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 “It is not disputed that private respondent has done, indeed he admitted to
have committed, a serious misconduct. In order to constitute a “just cause” for
dismissal, however, the act complained of must be related to the performance of
the duties of the EE such as would show him to be thereby unfit to continue working
for the ER.” (1996 Bar Question)

Q: Marimar was a teacher in the high school and Sergio was a student. She taught
him remedial lessons after regular class hours. They fell in love and later got
married. Marimar is 31 years old while Sergio is 16. The high school wants to
terminate the employment of Marimar fro abusive and unethical conduct
unbecoming of a dignified schoolteacher and that her continued employment is
inimical to the best interest would downgrade the high moral values of the school.
According to the school, Marimar recklessly took advantage of her position as a
teacher by luring a graduating student under her advisory section and 15 years her
junior into an amorous relationship, I violation of he Code of Ethics for teachers
which states, among others, that a “school official or teacher should never take
advantage of his/her position to court a pupil or student.” While no one directly saw
Marimar and Sergio doing any intimate acts inside the classroom, the school
nonetheless maintains that the marriage between the two is the best proof which
confirms the suspicion that Marimar and Sergio indulged in amorous relations inside
the classroom after class hours.
Marimar, on the other hand, contends that there is nothing wrong with a
teacher falling in love with her pupil and consequently, contracting marriage with
him. Decide the case.

Suggested Answer:
The fact that they got married is not by itself sufficient proof that Marimar, as
a 31-year-old teacher, took advantage of her position to court Sergio, a 16-yar old
student, when she was tutoring after regular class hours. Thus, Marimar could not
be considered as violating the school’s Code of Ethics which could have been a valid
use for her termination. Marimar’s falling in love with her student cannot be
considered serious misconduct which is just cause for termination for employment.
Of course, if t is proven that Marimar and Sergio indulged in amorous relations
inside the classroom after class hours, this would constitute serious misconduct on
the part of Marimar as a teacher and could be just cause of the termination of her
employment.

Alternative Answer:
The case should be decided in favor of Marimar, the school teacher. Te school
failed to adduce evidence in support of its claim of immoral conduct on the part of
Marimar; hence, its claim that “the marriage between the two is best proof which
confirms the suspicion that Marimar and Sergio indulged in amorous relation inside
the classroom after office hours” is a gratuitous statement. Furthermore, marriage
between two parties of disparate ages, even a between an older teacher and a
younger student is not an immoral act.
In Chua Qua v. Clave, a case which is exactly similar to the problem, the
Supreme Court ruled:
Where there is no substantial evidence of the imputed immoral acts, it follows
that the alleged violation of the Code of Ethics would have no basis. If the two
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eventually fell in love, despite the disparity on their ages and academic levels, this
only lends substance, to the truism that the heart has reasons of its own which
reason does t know. But, definitely yielding to this gentle and universal emotion is
not to be casually equated with immorality. The deviation of the circumstances of
their marriage from the usual societal pattern cannot be considered as a defiance
of contemporary social norms. (1996 Bar Question)

Elements of Willful Disobedience as just cause:

 the EE's assailed conduct must have been willful or intentional,
the willfulness being characterized by a wrongful and perverse
attitude; and
 the order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he
has been engaged to discharge. (Westin Phil. Plaza Hotel v.
NLRC, 1999)

Elements of orders of ER:

(1) Reasonable and lawful;
(2) Sufficiently known to the EE; and
(3) In connection with the duties which the EE has been engaged
to discharge

 The EE’s disobedience, to justify his dismissal, must relate to

substantial matters and that the disobedience to be considered
willful must be resorted to without regard to its consequence.

Willful Disobedience
Q: Oscar Pimentel was an agent supervisor, rising from the ranks, in a corporation
engaged in real estate. In order to promote the business, the company issued a
memorandum to all agent supervisors requiring them to submit feasibility study
within their respective areas of operation. All agent supervisors complied except
Oscar. Reminded by the company to comply with the memorandum, Oscar
explained that being a drop-out in school and uneducated, he would be unable to
submit the required study. The company found the explanation unacceptable and
terminated his employment. Aggrieved, Oscar filed a complaint for illegal dismissal
against the company. Decide the case.

Suggested Answer:
For failure to comply with the memorandum to submit a feasibility study on his area
of operation, Oscar can not be terminated (presumably for insubordination or willful
disobedience) because the same envisages the concurrence of at least two
requisites: (1) the employee’s assailed conduct must have been willful or
intentional, the willingness being characterized by a wrongful and perverse
attitude.; and (2) the order violated must have been reasonable, or lawful, made
known to the employee and must pertain to the duties which he had been engaged
to discharge.

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In the case at bar, at least two requisites are absent, namely: (1) Oscar did not
willfully disobey the memorandum with a perverse attitude; and (2) the directive to
make a feasibility study did not pertain to his duties. Hence, the termination from
employment of Oscar Pimentel is not lawful. (2003 Bar Question)

2. Gross and habitual neglect by the EE of his duties

- Neglect of duties must not only be gross but also habitual
- Single acts of negligence is not a just cause for the dismissal of the
EE
- It is not necessary to show that ER incurred actual loss/ damage.
- It is sufficient that the neglect of the EE tends to prejudice the
interest of ER.
- Abandonment is a form of neglect of duty

To constitute abandonment, these must concur:

a. the failure to report for work or absence without valid or
justifiable reason, and
b. clear intention to sever the ER-EE relationship.

* 2nd element is the more determinative factor. Mere absence is not

sufficient (Labor et al, v. NLRC, 1995)

Q: During their probationary employment, eight (8) employees were berated and
insulted by their supervisor. In protest, they walked out. The supervisor shouted
at them to go home and never to report back to work. Later, the personnel
manager required them to explain why they should not be dismissed from
employment for a abandonment and failure to qualify for the positions applied for.
They filed a complaint for illegal dismissal against their employer. As a Labor
Arbiter, how will you resolve the case?

Suggested Answer:
I will rule in favor of the management.
First of all, there was no abandonment because there was no intention not to
return to work. It was just that the 8 employees were berated and insulted and
even told never to report back to work. It was but natural for them to feel
demoralized, but there was never an indication to abandon their employment.
The probationary workers could, however, be terminated for failing to meet
probationary standards. If the reason for the supervisor’s berating and insulting
behavior were poor or substandard performance on the part of the workers, their
probationary employment could be legally terminated.

Another Suggested Answer:

I will rule against the employer. The probationary employees are entitled to
security of tenure and may not be dismissed except for cause, and are entitled to
be hired as regular employees if they are qualified for the position.
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 There is no abandonment, because the absence of the employees has valid
and justifiable cause, and they did not intend to sever employment or lose the
intention to return to work.

Another Suggested Answer:

As Labor Arbiter, I will rule that the complaint for illegal dismissal is premature.
What the supervisor did- he told eight employees to go home and never to
report back to work- did not have the effect of terminating the employment of said
employees. As supervisor, he is not a managerial employee with the power, among
others, to discharge employees. (2006 Bar Question)

3. Fraud or willful breach by the EE of the trust reposed in him by his ER/
rep
- The fraud must be committed against the ER or his rep, not against
third person
- Basic premise of dismissal: EE concerned holds a position of trust
and confidence.
- For rank-and-file EEs, there must be an overt/actual act,
furthermore, the worker should have been entrusted with the
custody of money or property of the ER. Mere accusations by the
ER will not suffice.
- For managerial/ confidential EEs, acts are not necessary; mere
circumstances tending to show loss of confidence are enough.

Q: “A” worked for company “B” as a rank and file employee until April 1990 when
A’s services were terminated due to loss of confidence in A. However, before
effecting A’s dismissal, B accorded A due process including full opportunity to
answer the charges against him in the course of the investigation. Was B justified
in dismissing A after the investigation? Why?

Suggested answer:
In the case of PLDT v. NLRC, the Supreme Court ruled that the basic requisite
for dismissal on the ground of loss of trust and confidence is that the employee
concerned must be one holding a position of trust and confidence.
Rank and file employees may only be dismissed for loss of confidence if the
same is because of a willful breach of trust by a rank and file employee of the trust
reposed in him by his employer or duly authorized representative. (Art 286 (c ), LC)

Another suggested answer:

“B” is justified in dismissing “A” for loss of confidence after according him the
right to procedural due process. However, the following guidelines must be
observed, as ruled in Nokom v. NLRC:
a. loss of confidence should not be simulated;
b. it should not be used as a subterfuge for causes which are improper, illegal
or unjustified;
c. it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and

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d. it must be genuine, not a mere afterthought to justify their action. (2001 Bar
Question)

Q: May an ordinary rank-and file EE be terminated for loss of trust and confidence?
If so, what proof is required? If not, why not?

Suggested Answer:
An ordinary rank-and-file EE may be terminated for loss of trust and confidence
as long as loss of trust and confidence is brought about objectively due to a willful
breach by the EE of the trust reposed in him by his ER or duly authorized
representative, and said willful breach is proven by substantial evidence.
When adequately proven, the dual grounds of breach and loss of confidence
constitute valid and ample bases to warrant termination of an errant EE. As a
general rule, however, ERs are allowed a wider altitude of discretion in terminating
the employment of managerial personnel or those of similar rank performing
functions which by their nature requires the ER’s full trust and confidence, than in
case of an ordinary rank-and-file EE, whose termination on the basis of these same
grounds requires proof of involvement in the events in question; mere
uncorroborated assertions and accusations by the ER will not suffice. (Manila
Midtown Commercial Corp. v. Nuwhrain, 159 SCRA 212) (1999 Bar Question)

4. Commission of a crime or offense by the EE against the person of his

ER or any immediate member of his family or duly authorized rep
- A criminal case need not be actually filed. Commission of acts
constituting a crime is sufficient.
- “Immediate member”— spouse, ascendants, descendants, or
legitimate, natural, or adopted brothers or sisters of the ER or of
his relative by affinity in the same degrees, and those by
consanguinity within the 4th civil degree.

5. Analogous cases
 Would depend upon the circumstances of each case. They must be
work-related.
 Conviction of a crime involving moral turpitude against a third
person, if not work-related, is not a just cause for dismissal (IRRI
v. NLRC, 1993)
 Immorality— for private sector EEs, it can only be a ground if it is
work-related but for public sector EEs, immorality is sufficient
cause for termination
 Sexual harassment is serious misconduct. (Villarama v. NLRC,
1994)
 Being quarrelsome/Bossy (analogous to serious misconduct/
insubordination, per Cathedral School of Tech. v. NLRC, 1992)
 Gross inefficiency (analogous to gross neglect, per Lim v NLRC,
1996)

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  Violation of a company rule prohibiting the infliction of harm or
physical injury against any person under particular circumstances
(analogous to serious misconduct, per Oania v. NLRC, 1995)
 Acquittal of the employee in the criminal case is not a bar to his
dismissal on the ground of loss of confidence. (Ramos v. NLRC,
1998)
- But in Quiambao v. NLRC (1996), this rule was qualified, saying
that acquittal in the criminal case will bar dismissal on the
ground of loss of confidence if the charges against the EE were
not substantiated by evidence
- as long as there is substantial evidence that EE is guilty, not
proof beyond reasonable doubt (hence the acquittal), dismissal
is warranted. If none, then EE should not be dismissed based
on the acquittal.

Q: President FX, head of a newly formed labor union composed of 1/3 of the total
number of rank-and-file employees in Super Stores, Inc., agitated his fellow
employees to demand from management pay increases and overtime pay. His
supervisor summoned him to explain his tardiness and refusal to obey regulations.
Feeling threatened, he gathered 20 of his members and staged a 2-day picket in
front of the shopping mall. Security staff arrived and dismantled the placards and
barricades blocking the employees’ entry to the mall. In retaliation, FX threw stones
at the guards, but the other striking workers just stood by watching him. Seven
days after the picket, FX who had gone absent without leave returned to the mall
and announced that he had filed a complaint for illegal dismissal and unfair labor
practices.
SSI learned that FX’s group was not registered. No strike vote and strike notice
were filed prior to the picket. The guards were told not to allow FX entry to the
company premises as management considered him effectively terminated. Other
union members were accepted back to work by SSI.
Was the dismissal of FX for a valid cause? Was due process observed?

Suggested Answer:
There is a valid cause for the dismissal of FX, but due process was not
observed.
Peaceful picketing is part of the constitutional freedom of speech. The right
to free speech, however, has its limits, and picketing as a concerted activity is
subject to the same limitations as a strike, particularly as to lawful purpose and
lawful means. But it does not have to comply with the procedural requirements for
a lawful strike, like the notice of strike or strike vote. However, in the problem
given, picketing became illegal because of unlawful means, as barricades blocked
the employees’ entry to the mall, and violence, ensued when FX threw stones at
the guards. There was thus, valid cause for the dismissal of FX, however, due
process was not observed because SSI did not comply with the twin requirements
of notice and hearing. (2004 Bar Question)

Q: FACTS: Mariet Demetrio as a clerk-typist in the Office of the President of a multi-

national corporation. One day she was berated by the President of the company,
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the latter shouting invectives at her in the presence of EEs and visitors for a minor
infraction she committed. Mariet was reduced to tears out of shame and felt so
bitter about the incident that she filed a civil case for damages against the company
president before the regular courts. Soon thereafter, Mariet received a
memorandum transferring her to the Office of the General Manager without
demotion in rank or diminution in pay. Mariet refused to transfer.
With respect to the civil suit for damages, the company lawyer filed a Motion
to Dismiss for lack of jurisdiction considering the existence of an ER-EE relationship
and therefore, it is claimed that the case should have been filed before the Labor
Arbiter.

1. Will Mariet’s refusal to transfer constitute the offense of insubordination?

Explain briefly.

Suggested Answer:
Mariet Demetrio’s refusal to transfer constitutes the offense of insubordination.
The transfer is a lawful order of the ER.
It is the ER’s prerogative, based on its assessment and perception of its EEa’
qualification, aptitudes and competence, to move its EEs around in the various
areas of its business operations in order to ascertain where they will function with
maximum benefit to the company. An EE’s right to security of tenure does not give
him such vested right in his position as would deprive the company of its prerogative
to change his assignment or transfer him where he will be most useful. When his
transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does
not involve a demotion in rank or diminution in his salaries, benefits and other
privileges, the EE may not refuse to obey the order of transfer. [Philippine Japan
Active Carbon Corp. v. NLRC, 171 SCRA 164] (1999 Bar Question)

Authorized Causes(Art. 283)

- Authorized causes generally entail payment of separation pay. Just
causes generally do not.

1. Installation of labor saving devices (Automation)

- reduction of the number of workers in a company’s factory made
necessary by the introduction of machinery in the manufacture of
its products

2. Redundancy
- where services of an EE are in excess of what is reasonably
demanded by the actual requirements of the enterprise.
- It only requires superfluity, not duplication of work

When is a position redundant?

 When it is superfluous as an outcome of a number of factors,
e.g., overhiring of workers, decreased volume of business,
dropping of a particular product line previously manufactured.

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  The ER has no legal obligation to keep in its payroll more EEs
than are necessary for the operation of its business (Wiltshire File
Co., Inc., v. NLRC, 1991)

Q: FACTS: Harvester Independent Ventures (HIV) adopted a redundancy program

to streamline operations Positions which overlapped each other, or which are in
excess of the requirements of the service, were declared redundant. This program
resulted in the reduction of manpower complement and consequent termination of
15 EEs, which included the secretary of the local union and the company’s Pollution
Control Officer.
Ilaw at Buklod ng Manggagawa (IBM), questioned the termination of the 15
EEs, contending that the same constituted union busting and therefore, illegal, if
the same is undertaken without prior union approval.

1. Is IBM correct in its contention that redundancy can be implemented by HIV

only upon prior union approval? Why?

Suggested Answer:
The Labor Code (in Art. 283) very clearly gives the ER the right to terminate
any of its EEs for redundancy.

2. Can the position of Pollution Control Officer be declared redundant? Why?

Suggested Answer:
If there is a law requiring companies to have a Pollution Officer, then HiV
cannot declare such office redundant.
If there is no such law, then the Pollution Officer could be considered
redundant.
Panel: Consider case of Escareal. A position created by law cannot be declared
redundant. (1999 Bar Question)

Q: 1. Can redundancy exist where the same is due to the company’s failure to
properly forecast its manpower requirements?

2. Can redundancy exist where the work performed by 12 workers can be

performed as efficiently by 10 workers by increasing the speed of a machine without
detriment to the health and safety of the workers?

Suggested answer:
1. Yes, redundancy exists when a position has become an excess or
superfluous which, in turn, may be caused by reorganization, closure of a section
or department, or adoption of labor-saving arrangements. Poor forecasting does
not invalidate redundancy. Forecasting after all is not fail-free. (Wiltshire File Co.,
Inc. v. NLRC)

2. Yes, redundancy can exist where work efficiency has been improved
mechanically thus resulting in excessive or superfluous manpower. (Wiltshire File
co., Inc. v. NLRC (1991)) (2000 Bar Question)
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 3. Retrenchment to prevent losses
Requisites for a valid retrenchment:
(1) It is intended to prevent losses;
(2) Written notices are served on the workers and DOLE at least 1
month before the retrenchment; and
(3) Separation pay is paid to affected workers (Fuentes v. NLRC,
1992)

4 standards/justification of retrenchment
(1) the losses expected should be substantial and not merely de
minimis in extent
(2) the substantial loss apprehended must be reasonably
imminent, and such imminence can be perceived objectively
and in good faith by the ER
(3) reasonably necessary and likely to effectively prevent the
expected losses
* the ER should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other costs than
labor costs
(4) the alleged losses if already realized, and the expected
imminent losses sought to be forestalled, must be proven by
sufficient and convincing evidence (Lopez Sugar Corp., v. FFW,
1990)

Procedure for retrenchment to be valid:

(1) 1-month prior notice to the EE; and
(2) use of a fair and reasonable criteria in carrying out the
retrenchment program, such as less preferred status (as in the
case of temporary EEs), efficiency rating, seniority, and proof
of claimed financial losses

Q: Soon after the Asian meltdown began in October 1997, ABC Realty and
Management Corporation undertook a downsizing program and terminated nearly
a third of its regular workforce. The affected employees questioned their
termination arguing that the action was precipitate in that ABAC had not proved
that it sustained any losses. Is the claim of the employees correct? Explain your
answer.

Suggested answer:
The claim of the employees may or may not be correct.
When the corporation undertook its downsizing” program, it may have
terminated its employees on either one of two grounds, namely, redundancy or
retrenchment.
For redundancy, there is no requirement of losses, whereas in retrenchment,
substantial loss, actual or anticipated, is a requirement. (Art 283, LC) in Atlantic
Gulf and Pacific Company v. “…it is necessary to distinguish redundancy from

Page 92 of 195
retrenchment… Redundancy exists when the services of an employee are in excess
of what is required by the enterprise. Retrenchment on the other hand… is resorted
to primarily to avoid or minimize business losses.”
In Escareal v. NLRC (1992), the Supreme Court ruled that the law does not
require financial loss as a basis for redundancy.

Q: What conditions must prevail and what requirements, if any, must an employer
comply with to justify/ effect a valid retrenchment program?

Suggested answer:
In the case of Asian Alcohol Corp v. NLRC (1999), the Supreme Court stated
that the requirements for a valid retrenchment must be proved by clear and
convincing evidence: (1) that the retrenchment is reasonably necessary and likely
to prevent business losses, which, if already incurred, are not merely de minimis,
but substantial, serious, actual and real or if only expected, are reasonably
imminent as perceived objectively and in good faith by the employer; (2) that the
employer served written notice both to the employees and to DOLE at least one
month prior to the intended date of retrenchment; (3) that the employer pays the
retrenched employees separation pay equivalent to one month pay for every year
of service, whichever is higher; (4) that the employer exercise its prerogative to
retrench employees in good faith for the advancement of its interest and not to
defeat or circumvent the employees’ right to security of tenure; and (5) that the
employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status (whether they
are temporary, casual, regular or managerial employees), efficiency, seniority,
physical fitness, age and financial hardship for certain workers.

Q: what conditions must prevail and what requirements, if any, must an employer
comply with to justify/ effect a valid redundancy program?

Suggested answer:
In the case of Asian Alcohol Corp v. NLRC (1999), the Supreme Court stated
that redundancy exists when the service capability of the work is I excess of what
is reasonably needed to meet the demands of the enterprise. A redundant position
is one rendered superfluous by any number of factors, such as overhiring or
workers, decreased volume of business, dropping of a particular line previously
manufactured by the company or phasing out of a service activity previously
undertaken by the business. Under these conditions, the employer has no legal
obligation to keep in its payroll more employees than are necessary for the
operation of its business.
For the implementation of a redundancy program to be valid, the employer
must comply with the following requisites: (1) written notice served on both the
employees and DOLE at least one month prior to the intended date for
retrenchment; (2) payment of separation pay equivalent to at least one month pay
or at least one month pay for every year of service whichever is higher; (3) good
faith in abolishing the redundant positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and accordingly abolished.

Page 93 of 195
Q: Is the seniority rule or “last in, first out” policy to be strictly followed in effecting
a retrenchment/ redundancy program?

Suggested answer:
Again, in Asian Alcohol Corp., the Supreme Court stated that with regard to
the policy of “first in, last out” in choosing which positions to declare as redundant
or whom to retrench to prevent further business losses, there is no law that
mandates such a policy. The reason is simple enough. A host of relevant factors
come into play in determining cost efficient measure and in choosing the employees
who will be retained or separated to save the company form closing shop. In
determining these issues, management plays a pre-eminent role. The
characterization of positions as redundant is an exercise of business judgment on
the part of the employer. It will be upheld as long as it passes the test of
arbitrariness. (2001 Bar Question)

Q: The Company Legal Counsel advised the Board of Directors as follows: “A

company cannot retrench to prevent losses until actual losses occur. The Company
must wait until the end of the Business Year when its Books of Accounts, Profit and
Loss Statement showing the actual loss and Balance Sheet have been audited by
an independent auditing firm.”
Is the legal advice of counsel correct?

Suggested answer:
The legal advice is not correct.
The Labor Code (in Art 283) provides that retrenchment may be resorted to
“to prevent losses”. Thus, there could be legal basis for retrenchment even before
actual losses as long as the losses are imminent and serious.

Another suggested answer:

The advice of the Company Legal Counsel that an employer cannot retrench
to prevent losses until actual losses occur is not correct. The Labor Code provides:
Art 283. Closure of establishment and reduction of personnel.- The employer
may also terminate the employment of any employee xxx retrenchment to prevent
losses.
The law does not require that retrenchment can be undertaken by an employer
only after an actual business loss occurs. The Supreme Court in Lopez Sugar Corp.
v. Federation of Free Workers (1990), said:
“In its ordinary connotation, the phrase “to prevent losses” means that the
retrenchment or termination of some employees is authorized to be undertaken by
the employer sometime before the losses anticipated are actually sustained or
realized. It is not, in other words, the intention of the lawmaker to compel the
employer to stay his hand and keep all his employees until sometime after losses
shall have in fact materialized; if such an intent were expressly written into law, the
law may well be vulnerable to constitutional attack as taking property from one
man to another. (underscoring supplied) (1998 Bar Question)

Q: Daisy’s Department Store hired Leo as a checker to apprehend shoplifters. Leo

later became Chief of the Checkers Section and acquired the status of a regular
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employee. By way of cost-cutting measure, Daisy’s decided to abolish the entire
Checkers Section. The services of Leo, along with those of his co-employees
working in the same section, were terminated on the same day. A month after the
dismissal of Leo, Daisy’s engaged the services of another person as an ordinary
checker with a salary much lower than that which Leo used to receive. Given the
above factual settings (nothing more having been established), could the dismissal
of Leo be successfully assailed by him?

Suggested Answer:
Yes. Given the factual setting in the problem, and since “nothing more have been
established”, the dismissal of Leo can be successfully assailed by him. This is so
because the burden of proof is upon the employer to show compliance with the
following requisites for reduction of personnel:
1. Losses or expected losses should be substantial and not merely de minimis;
2. The expected losses must be reasonably imminent, and such imminence can
be perceived objectively and in good faith by the employer.
3. It must be necessary and likely to prevent the expected losses. The employer
must have taken other measures to cut costs other than labor costs; and
4. Losses if already realized, or the expected losses must be proved by sufficient
and convincing evidence. (Lopez Sugar Corp. v. Federation of Sugar Workers,
189 SCRA 179 [1990]).

Moreover, the notice requirements to be given by Daisy’s Department Store to DOLE

and the employees concerned 30 days prior to the intended date of termination, as
well as the requisite separation pay, were not complied with.

Another Suggested Answer:

Yes. The authorized cause to dismiss due to redundancy or retrenchment under
Art. 283 of the Labor Code has been disproved by Daisy’s engaging the services of
a substitute checker at a salary lower than that which Leo used to receive. Also, it
appears that the one (1) month notice rule required in the said law was not
complied with. Such being the case, the twin requirements for a valid dismissal
under Arts 277(b) and 283 of the Code have clearly not been complied with. That
no separation pay was paid Leo, in violation of Art. 283 of the Code, his dismissal
can all the more be successfully assailed. (2003 Bar Question)

4. Closure or cessation of operations

Closure may be:
(a) due to business losses; or
(b) not due to business losses
Requirements (if not due to losses):
a. Written notice to EE and DOLE 1 month before closure
b. Cessation of business operations must be bona fide
character; and
c. Payment to the EEs of separation pay
- 1/2 month pay, or 1 month pay for every year of service,
whichever is higher

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 - if closure is due to losses, there is no need to pay
separation pay

 It is management’s prerogative to close or cease its business

operations even though t is not suffering from any loss. (Cattista
v. NLRC, 1995)

Q: ABC Tomato Corporation, owned and managed by three (3) elderly brothers and
two (2) sisters, has been in the business for 40 years. Due to serious business
losses and financial reverses during the last five (5) years, they decided to close
the business.

1. As counsel for the corporation, what steps will you take prior to its closure?

Suggested Answer:
As counsel for the corporation, I will see to it that the corporation shall serve
a written notice on its intended date of closing or cessation of operation on the
workers of the corporation and the DOLE at least one month before the intended
date of the closure or cessation of operation.

2. Are the employees entitled to separation pay?

Suggested Answer:
The employees of the corporation are not entitled to separation pay because
Art. 283 of the LC expressly provides that if the closure or cessation of operation of
an establishment is due to serious business losses or financial reverses, the
employees are not entitled to separation pay. In the case of National Federation of
Labor v. NLRC (2000), the Supreme Court ruled that there is no obligation to pay
separation pay if the closure is not a unilateral and voluntary act of the employer.

Q: If the reason for the closure is due to old age of the brothers and sisters:
1. Is the closure allowed by law?

Suggested Answer:
Yes, the closure is allowed by law. For bona fide reason, an employer can
lawfully close shop at any time. Just as no law forces anyone to go into business,
no law can compel anybody to continue the same. It would be stretching the intent
and spirit of the law if the Court interferes with management’s prerogative to close
or cease its business operations just because the business is not suffering from any
loss or because of the desire to provide workers continued employment (Alabang
Country Club, Inc v. NLRC)

2. Are the employees entitled to separation benefits?

Suggested Answer:
The EEs of the corporation are entitled to separation pay because the Labor
Code expressly provides that the only time that they are not entitled to separation
pay is when the closure or cessation of operation is due to serious business losses
or financial reverses. (2006 Bar Question with similar 2001 Bar Question))
Page 96 of 195
 Disease (Art. 284)—
(1) When EE suffers from a disease; and
(2) continued employment is prohibited by law or prejudicial to his
health or to the health of his co-EEs

- IRR requires a certification by a competent public health

authority that the disease is of such nature or at such a stage
that it cannot be cured within 6 months even with proper medical
treatment before an EE is dismissed.

- Company’s own physician is not a “competent public health

authority” hence his medical certificate is not in compliance with
the requirement. (Cebu Royal Plant v. NLRC, 1987)

Q: Gabriela Liwanag has been working as bookkeeper at Great Foods, Inc., which
operates a chain of high-end restaurants throughout the country, since 1970 when
it was still a small eatery at Binondo. In the early part of the year 2003, Gabriela,
who was already 50 years old, reported for work after a week-long vacation in her
province. It was the height of SARS (Severe Acute Respiratory Syndrome) scare,
and the management learned that the first confirmed SARS death case in the
Philippines, a “balikbayan” nurse from Canada, is a townmate of Gabriela.
Immediately, a memorandum was issued by management terminating the services
of Gabriela on the ground that she is a probable carrier of SARS virus and that her
continued employment is prejudicial to the health of her co-employees.
Is the action taken by the employer justified?

Suggested Answer:
The employer’s act of terminating the employment of Gabriela is not justified.
There is no showing that said employee is sick with SARS, or that she associated
or had contact with the deceased nurse. They are merely townmates.
Furthermore, there is no certification by a competent public health authority that
the disease is of such nature or such a stage that it cannot be cured within a period
of six (6) months even with proper medical treatment. (Implementing Rules and
Regulation, Book VI, Rule 1, Sec. 8, LC) (2004 Bar Question)

Q: FACTS: International Motors Corporation (IMC) undertook a reorganization of

the company and right-sizing of its personnel complement due to the current
financial crisis. The affected EEs were given the option to resign with corresponding
generous benefits attending such option. The said EEs opted for resignation on
account of this negotiated benefits; and after receipt of which, they executed
quitclaims in favor of IMC. Immediately thereafter, the EEs voluntarily resigned for
valuable consideration and that, in any case, they have executed quitclaims in favor
and that, in any case, they have executed quitclaims in favor of the company. The
EEs, however, claimed that they were forced to resign, and that they executed the
quitclaims only because of dire necessity.

1. Is company guilty of illegal dismissal? Why?

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Suggested Answer:
No. The company is not guilty of illegal dismissal since the facts clearly indicate
that the “EEs were given the option to resign with corresponding generous benefits
attending such option” and that these EEs “opted for resignation on account of
these negotiated benefits.” Nothing in the facts indicate that their consent to the
waiver of benefits under the Labor Code was vitiated by fraud, violence, undue
influence or any other vice or defect.

Alternative Answer:
The company is not guilty of illegal dismissal.
According to the facts of the case, the EEs opted to resin voluntarily,
considering the generous benefits given to them in connection with such
resignation.
Voluntary resignation cannot be considered as illegal dismissal. (Samaniego v.
NLRC, 198 SCRA 111) (1999 Bar Question)

Separation Pay (Authorized Causes/Disease)

1 month pay or 1 month
(1) Installation of labor-saving
pay for every year of
devices
service, whichever is
(2) Redundancy
higher

(3) Retrenchment to prevent losses

1 month pay or at least ½
(4) Closure or cessation of
month pay for every year
operations or undertaking NOT
of service, whichever is
due to serious business losses or
higher
financial reverses
(5) Disease
*in every case, a fraction of at least 6 months shall be considered as 1 whole year

Procedural Due Process

For just causes
- there must be observance of the requirements of the two-notice rule:
(i) a written notice containing a statement of the cause for
termination and to afford him opportunity to be heard and to
defend himself; and
(ii) to notify the worker in writing of the decision to dismiss him,
stating clearly the reasons therefore

For authorized causes

- written notice to EE and DOLE Secretary at least 1 month before
intended date

Q: Assuming the existence of valid grounds for dismissal, what are the requirements
before an employer can terminate the services of an employee?

Page 98 of 195
Suggested answer:
The employee being terminated should be given due process by the employer.
For termination of employment based on any of the just causes for termination,
the requirements of due process that the employer must comply with are:
A written notice should be served on the employee specifying the ground or
grounds for termination and giving to said employee reasonable opportunity within
which to explain his side.
A hearing or conference should e held during which the employee concerned,
with the assistance of counsel if the employee so desires, is given the opportunity
to respond to the charge, present his evidence and present the evidence presented
against him.
A written notice of termination, if termination is the decision of the employer,
should be served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.
For termination of employment based on authorized causes, the requirements
of due process shall be deemed complied with upon service of written notice to the
employee and the appropriate Regional Office of the DOLE at least 30 days before
the effectivity of the termination specifying the ground or grounds for termination.

Another suggested answer:

Assuming that there is a valid ground to terminate employment, the employer
must comply with the requirement of procedural due process- written notice of
intent to terminate stating the cause for termination; Hearing; and Notice of
Termination.

Notice and Hearing: (Art 277(b))

The Supreme Court ruled in Salaw v. NLRC (1991)
“Xxx Not only must the dismissal be for a valid or unauthorized cause as
provided by law xxx but the rudimentary requirements of due process- notice and
hearing- must also be observed before an employee must be dismissed.”

Two Notice Requirement

The Supreme Court in Tanala v. NLRC (1996) ruled:
“xxx This Court has repeatedly held that to meet the requirements of due process,
the law requires that an employer must furnish the workers sought to be dismissed
with 2 written notices before termination of employment can be legally effected,
that is (1) a notice which apprises the employee of the particular acts or omissions
for which his dismissal is sought; and (2) subsequent notice, after due hearing,
which informs the employee of the employer’s decision to dismiss him.” (1998 Bar
Question; similar to 2006 Bar Question)

Q: FACTS: Joseph Vitriolo (JV), a cashier of Seaside Sunshine Supermart (SSS),

was found after an audit, to have cash shortages on his monetary accountability
covering a period of about 5 months in the total amount of P48,000. SSS served
upon JV the written charge against him via a memorandum order of preventive
suspension, giving JV 24 hours to submit his explanation within the given period.
As soon as JV submitted his written explanation within the given period, the same

Page 99 of 195
was deemed unsatisfactory by the company and JV was peremptorily dismissed
without any hearing.
The day following his termination from employment, JV filed a case of illegal
dismissal against SSS. During the hearing before the Labor Arbiter, SSS proved by
substantial evidence JV’s misappropriation of company funds and various infractions
detrimental to the business of the company. JV, however, contended that his
dismissal was illegal because the company did not comply with the requirements of
due process.

1. Did SSS comply with the requirements of procedural due process in the
dismissal from employment of JV? Explain briefly.

Suggested Answer:
In connection with the right to due process in the termination of an EE, the
Labor Code [in Art. 277 (b)] requires that the ER furnish the worker whose
employment is sought to be terminated a written notice containing a statement of
the causes for termination and shall afford ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires.
SSS did not comply with the above described requirements for due process.
The memorandum order was for the preventive suspension of JV, not a notice for
his termination and the causes of his termination. (1999 Bar Question)

2. If you were the Labor Arbiter, how would you decide the case? Explain
briefly.

Suggested Answer:
I will decide that the termination of JV was legal. It was for just cause. JV’s
misappropriation of funds and various infractions detrimental to the business of the
company duly proven by substantial evidence constitute a willful breach by JV of
the trust reposed in him by his ER which is a just cause for termination. (See Art.
282)
But I will award him indemnity of, say P1,000, for the failure of the ER to give
him due process. (1999 Bar Question)

Q: FACTS: On Sept. 3, 1998, the National Bureau of Investigation extracted from

Joko Diaz – without the assistance of counsel – a sworn statement which made it
appear that Joko, in cahoots with another EE, Reuben Padilla, sold 10 cash registers
which had been foreclosed by North-South Bank for P50,000 and divided the
proceeds therefrom in equal shares between the two of them.
On Sept. 10, 1998, Joko was requested by Rolando Bato, the bank manager,
to appear before the Disciplinary Board for an investigation in the following tenor:
‘You are requested to come on Thursday, Sept. 14, 1998, at 11:00am the Board
Room, without counsel or representative, in connection with the investigation of
the foreclosed cash registers which you sold without authority.”
Mr. Bato himself conducted the investigation, and two days thereafter, de
dismissed Joko. The Bank premised its action in dismissing Joko solely on the
latter’s admission of the offense imputed to him by the NBI in its interrogation on
Sept. 3, 1998. Aside from this sworn statement, no other evidence was presented

Page 100 of 195

by the bank to establish the culpability of Joko in the fraudulent sale of the bank’s
foreclosed properties.

1. Is the dismissal of Joko Diaz by North-South Bank legally justified? Explain

briefly.

Suggested Answer:
The dismissal of Joko Diaz by the Bank is not legally justified.
Diaz was not given the required due process by the Bank. He should have been
given a written notice that he was being terminated and a statement of the causes
for his termination.
He was instead given a just notice about an investigation relative to the
incident.
It was also contrary to law for the Bank to tell Diaz that he should attend the
investigation “without counsel or representative.” Instead, he should have been
afforded as provided in the Labor Code [in Art. 277(b)] ample opportunity to be
heard and to defend himself with the assistance of his representative if he so
desires.
If the evidence that was the basis for the termination of Joko Diaz was only
his own statement “extracted” from him by the NBI when Joko was without
assistance of counsel, then the statement cannot be substantial evidence for Joko’s
termination.

Alternative Answer:
No. Under Sec. 12 of Art. III of the 1987 Constitution any “confession or
admission obtained in violation of Sec. 12 and 17 shall be inadmissible in evidence
against him.” Since the sole basis for his dismissal was the confession procured by
the NBI in violation of his right to counsel which is inadmissible for any purpose and
any proceeding including an administrative case, his dismissal is illegal. Diaz’s
termination is likewise illegal because he was deprived of his right to due process
since during the investigation he was required to attend without counsel or
representative.

2. Can Reuben Padilla’s participation in the fraudulent sale of the bank’s

foreclosed properties be made to rest solely on the unilateral declaration of Joko
Diaz? Why?

Suggested Answer:
No. The unilateral declaration of Joko, where Joko has not been subjected to
cross-examination cannot be considered as substantial evidence; it is just hearsay.

Alternative Answer:
No. The unilateral declaration of Joko is not enough. Such declaration must be
corroborated by other competent and convincing evidence. At the very least, what
the Bank should do should be to confront Reuben Padilla with the declaration of
Joko. (Century Textile Mills, Inc. vs. NLRC, 161 SCRA 628) (1999 Bar Question)

Page 101 of 195

Effect of dismissal without procedural due process but with cause
(substantive process)
Serrano Doctrine
› Termination due to authorized cause without giving the notice required
under the Labor Code is not a violation of due process.
› It is valid although declared irregular/ ineffectual.
› He shall however be entitled to SEPARATION PAY AND BACKWAGES
subject to the ff. rules:
1. When the dismissal is for a cause (just or authorized), without
prior notice the EE is entitled to full backwages from the time he
was terminated until the decision finding cause becomes final.
2. When the dismissal is without just or authorized cause,
backwages shall be computed from the time of his dismissal until
his actual reinstatement. (Serrano v. NLRC, 2000)

Agabon doctrine (modifying Serrano)

› Dismissal for an authorized or just cause, without procedural due
process, is not an illegal dismissal which warrants backwages; employee
is entitled only to nominal damages.
› Here, the Court interpreted Art. 279 to the effect that termination is
illegal only if it is not for any of the just or authorized causes provided
by law.
› Payment of backwages and other benefits, including reinstatement, is
justified only if the employee was unjustly dismissed.
› The Court decided to follow the Wenphil doctrine that where the
dismissal is for a just cause, the lack of statutory due process should
not nullify the dismissal or render it illegal.
› However, the ER should indemnify the EE for violation of his rights.
› The indemnity should be in the form of nominal damages, which is
stiffer than that provided in Wenphil to discourage the abhorrent
practice of “dismiss now, pay later”.
* in Wenphil, the ER is only required to indemnify the EE P1,000 for failure
to give a formal notice. (Agabon v. NLRC, 2004)

Q: The general manager of Junk Food Manufacturing Corporation dismissed Andrew

Tan, a rank-and-file EE, on the ground of insubordination. The general manager
served on Andrew Tan the letter of termination effective upon receipt which was
on 8 March 1992. Shocked by his unexpected dismissal, Andrew Tan confronted
the general manager and hit the latter on the head with a leap pipe.
Junk Food Manufacturing filed a complaint in court against Andrew Tan for less
serious physical injuries. Somehow, Andrew Tan was acquitted by the court
assigned to hear the criminal case. A few days following his acquittal, or on 1 March
1996, Andrew Tan filed a complaint against the company for illegal dismissal,
reinstatement and the payment of backwages and damages.
(a) Was the complaint filed by Andrew Tan for illegal dismissal within the
reglementary period granted by law?

Page 102 of 195

 (b) What reliefs may Andrew Tan be entitled to if the Labor Arbiter finds just
cause for termination but that the requirements of notice and hearing are not
complied with.

Answer:
(a) Yes. The complaint was filed within 4 years from the date Andrew was
dismissed by his ER. Illegal dismissal, as a cause of action, prescribes after 4 years
from the time the cause of action, namely, illegal dismissal took place. This is
pursuant to the Civil Code which provides that actions upon an injury to the rights
of a person should be initiated within 4 years from the time the right of action
accrues. [Art. 1146, CC]

(b) Andrew would be entitled to an indemnity of P1,000 to P10,000 from his

ER for the latter’s non-compliance of the requirements of notice and hearing in
cases of termination of employment. [Wenphil Philippines v. NLRC, 176 SCRA 66]
(1997 Bar Question)

Q: FACTS: The Labor Arbiter dismissed the complaint for illegal dismissal filed by
Genevieve Cruz against Bulag Optical Inc. (BOI) which denied her prayer for
reinstatement but awarded financial assistance in her favor. BOI appealed the
decision of the Labor Arbiter to the NLRC within the reglementary period. Genevieve
fled an opposition to the appeal. The NLRC affirmed in toto the decision of the
Labor Arbiter. Both the BOI and Genevieve are not satisfied with the decision of the
NLRC.

1. What is the remedy, if any, of BOI and before what forum? Explain briefly.

Suggested Answer:
BOI can file a Motion for Reconsideration with the NLRC after 10 days from
receipt of the decision.
If the NLRC denies the Motion for Reconsideration, BOI can file a petition for
certiorari with the Court of Appeals under Rule 65 of the Rules of Court since the
decision of the NLRC is final and executory. (1999 Bar Question)

2. Can Genevieve Cruz avail herself of the same remedy as that of BOI? Why?

Suggested Answer:
Genevieve Cruz can avail herself of the same remedy as that of the BOI. The
remedies described for the BOI are also the same remedies available to Genevieve
Cruz as a party to the case, pursuant to the Labor Code (Art. 233) and the Rules of
Court (Rule 65).
Panel: But the facts of the case indicate that Genevieve did not appeal. She
therefore cannot avail of the remedy. (1999 Bar Question)

Effect of illegal dismissal (i.e., without cause)

(1) Entitled to REINSTATEMENT without loss of seniority rights and other
privileges
- or payment of SEPARATION PAY, if reinstatement is not possible

Page 103 of 195

 When is reinstatement not possible?
(1) Strained relations doctrine
- happens because of EE’s and ER’s bad faith imputations
against each other but this applies only if EE occupies a
position where he enjoys the trust and confidence of his ER
(Globe-Mackay v. NLRC, 1992)

(2) Position has been abolished

- applies to both managerial and rank-and-file EEs

 ER is granted the option to merely reinstate the EE in the payroll

but not actually admit him back to work pending the appeal of the
dismissal case
 NB: per Art. 223, a reinstatement order is immediately executory

(2) Entitled to FULL BACKWAGES, inclusive of allowances and other

benefits or their monetary equivalent
- Backwages are punitive in relation to the ER. Hence, they must be
paid in full from the time of illegal dismissal. It must be paid
regardless of WON the EE has since found work elsewhere.
(Bustamante v. NLRC, 1996)

› NOTE: Reinstatement and backwages are 2 reliefs given to an illegally

dismissed EE. They are separate and distinct from each other.
› In other words, an illegally dismissed EE is entitled to either (1)
reinstatement, if viable, or separation pay if reinstatement is no longer
viable; and (2) backwages (Torillo v Leogardo, 1991)

Q: FACTS: In the illegal dismissal case filed by Sharon Cometa against Up & Down
Company, the Labor Arbiter rendered a decision directing her immediate
reinstatement and payment of full backwages. The Company appealed to the NLRC.
Following her lawyer’s advice that the reinstatement aspect of the decision is
immediately executory, Sharon went to the HRD Office of the Company and
demanded immediate reinstatement. When the Company refused, her lawyer, Atty.
Maximiano Anunciacion, filed a motion to cite the ER in contempt. Acting on the
motion, NLRC ordered payroll reinstatement of Sharon Cometa.
1. Can the company or any of its officials be cited for contempt for refusing to
reinstate Sharon Cometa? Why?

Suggested Answer:
Yes. The Company or any of its officials can be cited for contempt. It is noted
that in his decision the Labor Arbiter specifically directed the immediate
reinstatement of Sharon Cometa. This directive under the Labor Code (Art. 223) is
immediately executory, even pending appeal. (Pioneer Texturizing Corp. v. NLRC,
280 SCRA 806)

Alternative Answer:

Page 104 of 195

 Yes. Under Art. 223, LC, an ER has two options in order for him to comply with
an order for reinstatement which is immediately executory, even pending appeal.
Firstly, he can admit the dismissed EE back to work under the same terms and
conditions prevailing prior to his dismissal or separation or to a substantially
equivalent position if the former is already filled up. Secondly, the EE can be
reinstated in the payroll. Failing to exercise any of the above options, the ER can
be compelled under PAIN or CONTEMPT, to pay instead the salary of the EE
effective from the date the ER failed to reinstate despite an executory writ of
execution served upon him. Under Art. 218, LC the NLRC has the power to cite
persons for direct and indirect contempt.

Another Alternative Answer:

In a case (Maranaw Hotel Corp. v. NLRC, 238 SCRA 191), the Supreme Court
said that although the reinstatement aspect of a Labor Arbiter’s decision was
immediately executory, it does not follow that it is self-explanatory. There must still
be a writ of execution issued motu propio or upon motion of the interested party.
(See Art. 224)

2. May the NLRC order the payroll reinstatement of Sharon Cometa? Why?

Suggested Answer:
The NLRC may NOT order the payroll reinstatement of Sharon. The Labor Code
(Art. 223) provides that in the immediate reinstatement of a dismissed EE, the EE
shall be admitted back to work under the same terms and conditions prevailing
prior to the EE’s dismissal or, at the option of the ER, merely reinstated in the
payroll. Thus, the reinstatement of the EE in the payroll is at the option of the ER
and not of the NLRC or the Labor Arbiter who have the power only to direct
reinstatement. (1999 Bar Question)

Q: What is meant by “payroll reinstatement” and when does it apply?

Suggested Answer:
Payroll reinstatement is a form of reinstatement which an ER may opt to
exercise in lieu of an actual reinstatement. Here, the illegally dismissed EE is to
receive his basic pay without the obligation of rendering any service to the ER. This
occurs when a Labor Arbiter decides that an EE was illegally dismissed and as a
consequence awards reinstatement, pursuant to Art. 279, LC. Such award of
reinstatement, according to Art. 223, LC, is immediately executory even pending
appeal. (2005 Bar Question)

Q: A, an employee of Company B, was found to have been illegally dismissed and

was ordered to be reinstated and paid backwages from the time of dismissal until
actual reinstatement. The case was elevated all the way to the Supreme Court. By
the time the Supreme Court’s decision became final and executory, B had closed
down and was in the process of winding up. Nonetheless, B paid A his backwages
and separation pay. A complained that B’s computation was erroneous in that A’s
allowance was not included. Is A correct in his claim? For what reason/s?

Suggested answer:
Page 105 of 195
 A is correct. After its amendment by RA 6715, the backwages that an
employees who has been unjustly dismissed is entitled to receive is not limited to
his full backwages but also includes his allowances and the other benefits or their
monetary equivalent.

Another suggested answer:

In the case of Consolidated Rural Bank v. NLRC (19999), the Supreme Court
ruled that the allowances of the employee should be included in the computation
of backwages. (2001 Bar Question with similar 1997 Bar Question)

Q: An EE was ordered reinstated with backwages. Is he entitled to the benefits and

increases granted during the period of his lay-off? Explain briefly.

Suggested Answer:
Yes. An EE who is ordered reinstated with backwages is entitled to the benefits
and increases granted during the period of his lay-off. the Supreme Court has ruled:
“ Backwages are granted for earnings a worker lost due to his illegal dismissal and
an ER is obliged to pay an illegally dismissed EE the whole amount of salaries plus
all other benefits and bonuses and general increases to which the latter should have
been normally entitled had he not been dismissed. [Sigma Personnel Services v.
NLRC (1993)] (2002 Bar Question)

Q: What economic components constitute backwages for a rank and file employee?
Are these components equally applicable to a managerial employee?

Suggested answer:
The Labor Code (Art 279) provides that an employee who is unjustly dismissed
form work is entitled to reinstatement and also to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to his actual reinstatement.
An employee is entitled to all the above benefit regardless of whither he is a
rank and file employee or a managerial employee.
However, backwages may also include the 13 th month pay which are paid to
rank and file employee, as well as benefits arising form a CBA given only to
employees in the bargaining unit. Managerial employees cannot be given the same
since they are ineligible to join a labor organization.

Q: “A” was hired by company “B” in January 1980 until A was illegally dismissed on
April 30, 1990 as found by a Labor Arbiter who ordered reinstatement and full
backwages from April 30, 1990 until A’s reinstatement. The Arbiter’s decision was
promulgated on April 29, 1995. B appealed claiming, among others, that the award
for backwages was excessive in that it went beyond the three-year rule set forth in
Mercury Drug v. CIR. Is B’s contention tenable? Why?

Suggested answer:
No, the contention of “B” is not tenable.
RA 6715, which was enacted in 1989, in effect set aside the three-year rule
set forth in Mercury Drug v. CIR when it provided that the full backwages that an

Page 106 of 195

unjustly dismissed employee shall be computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.
The word “Actual” was inserted in the law by RA6715. thus, in accordance with
the aforesaid law, an unjustly dismissed employee shall receive his full backwages
computed form the time his compensation was withheld from him up to the time of
his actual reinstatement even if this period is more than three years.

Another suggested answer:

No, the contention of “B” is not tenable. The Supreme Court in Ferrer v. NLRC
abandoned the Mercury Drug rule and in 1996 Bustamante v. NLRC, the Supreme
Court said:
(Quoting Art 279, LC) Under the above quoted provision, it became mandatory
to award backwages to illegally dismissed regular employees. The law specifically
declared that the award of backwages was to be computed from time the
compensation was withheld from the employee up to the time of his reinstatement.
xxx
The clear legislative intent of the amendment in RA 6715 is to give more benefits
to the workers than what was previously given them under the Mercury Drug Rule.
In other words, the provision calling for ”Full backwages” to illegally dismissed EEs
is clear, plain and free from ambiguity, and, therefore, must be applied without
attempted or strained interpretation. (2001 Bar Question)

(3) Damages
a. Moral damages— if the dismissal is in bad faith, attended by fraud,
is against public policy, good customs, morals, or oppressive to
labor (based on Art. 2220 of the NCC, not on the LC, per Cruz v.
NLRC, 2000)
b. Exemplary damages— if the dismissal is wanton, oppressive or
malevolent. (based on Arts. 2229 and 2232 of the NCC, per Nueva
Ecija Electric Cooperative, Inc. v. NLRC, 2000)

Q: What damages can an illegally dismissed employee collect from his employer?

Suggested answer:
An illegally dismissed may collect from his employer actual or compensatory
damages, moral damages and exemplary damages, as well as attorney’s fees as
damages.

Another suggested answer:

Moral and exemplary damages are only proper where the employee has been
harassed ad arbitrarily terminated by the employer. Nueva Ecija v. Electric
Cooperative Employees Association (2000) (2001 Bar Question)

(4) Separation pay as financial assistance

- As a general rule, for termination based on just cause, no
separation pay need be paid (Book VI, Rule I, Sec. 7) but the SC
ruled that separation pay (or financial assistance) may be required

Page 107 of 195

 in instances where the EE is validly dismissed for causes other than
serious misconduct or those reflecting in the EE’s moral character.
- Due consideration can be given to EE’s long years of service or age,
if the reason for termination does not relate to the EE’s moral
character (PLDT v. NLRC, 1988).
- Note: this separation pay as financial assistance is different from
separation pay under authorized causes (Arts. 283-284) and
separation pay in lieu of reinstatement of an EE who was illegally
dismissed

Q: Daisy, the branch manager of Tropical Footwear Inc., was dismissed for serious
misconduct. She filed a complaint for illegal dismissal and damages. The Labor
Arbiter sustained Daisy’s dismissal but awarded her separation pay based on social
justice and as an act of compassion considering her 10-year service with he
company.
Was the award of separation pay proper? Explain.

Suggested Answer:
No, the award of separation pay is not proper because the employee was
terminated for serious misconduct and payment of separation pay will be to reward
an employee for a wrongdoing. (PLDT v. NLRC)
We hold that henceforth separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting his moral character.
The policy of social justice is not intended to countenance wrongdoing.
Compassion for the poor is an imperative of every human society but only when
the recipient is not a rascal claiming an undeserved privilege those who invoke
social justice may do so only if their ands are clean and their motives blameless.
A contrary rule would have the effect of rewarding rather than punishing the
erring employee for his offense.

Alternative Answer:
The award of separation pay was not proper.
According to the Labor Code, separation pay s to be paid to an employee
whose employment is to be terminated due to the installation of labor saving
devices redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking. When an employer terminates the
services of an employee who has been found to be suffering from any disease, the
employee is also to be paid separation pay.
But on the basis of equity, the Supreme Court has ruled that an employee
whose employment has been terminated for just cause may nevertheless, for
humanitarian reasons, be granted financial assistance in the form of separation pay.
But also according to the Supreme Court, a terminated employee is not deserving
of said financial assistance if her termination is due to serious misconduct.
In the case, Daisy was dismissed because of serious misconduct. Thus, she
should no be paid separation pay. (1996 Bar Question)

Corporate liability

Page 108 of 195

 Rule: Company officials cannot be held personally liable for damages for
an illegal dismissal
Unless it is shown that they deliberately or maliciously designed to evade
financial obligations of the corp. to its EEs (piercing the corporate veil).
(Reahs Corp. v. NLRC, 1997)

Q: FACTS: Teofilo Lacson was one of more than 100 EEs who were terminated from
employment due to the closure of LBM Construction Corporation (LBM).
LBM was a sister company of Lastimoso Construction, Inc. and RL Realty &
Development Corporation. All 3 entities formed what came to be known as the
Lastimoso Group pf Companies. The 3 corporations were owned ad controlled by
members of the Lastimoso Family; their incorporators and directors all belonged to
the Lastimoso family. The 3 corporations were engaged in the same line of
business, under one management, and used the same equipment including
manpower services.
Teofilo Lacson and his co-EEs filed a complaint with the Labor Arbiter against
LBM, RL Realty and Lastimoso Construction to hold them jointly and severally pay.
Lastimoso Construction, Inc. and RL Realty & Development Corp. interposed a
Motion to Dismiss contending that they are juridical entities with distinct and
separate personalities from LBM Construction Corp. and therefore, they cannot be
held jointly and severally liable for the money claims of workers who are not their
EEs.
Rule on the Motion to Dismiss. Should it be granted?

Suggested Answer:
It is very clear that even if LBM Construction company, Lastimoso Construction
Co., Inc. and RL Realty & Dev’t Corp. all belong to the Lastimoso family and are
engaged in the same line of business under one management and used the same
equipment including manpower services, these corporations were separate juridical
entities.
Thus, only the LBM Const. Corp. is the ER of Teofilo Lacson. The other
corporations do not have any ER-EE relations with Lacson.
The case in question does not include any fact that would justify piercing the
veil of corporate fiction of the other corporations in order to protect the rights of
workers.
In a case (Concept Builders, Inc. v. NLRC, 257 SCRA 149), the Supreme Court
ruled that it is a fundamental principle of corporation law that a corporation is an
entity separate and distinct from its stockholders and from other corporations to
which it may be connected. But this separate and distinct personality of a
corporation is merely a fiction created by law for convenience and to promote
justice. So, when the notion of separate juridical personality is used to defeat public
convenience, justify wrong, protect fraud or defend crime, or is used as a device to
defeat the labor laws, this separate personality of the corporation may be
disregarded or the veil of corporate fiction pierced.

Alternative Answer:
Motion to Dismiss should be denied. In the case at bar, the Labor Arbiter would
be justified in piercing the corporate veil and considering the 3 corporations as one
and the same entity as the ER of Teofilo Lacson because based on the facts “the
Page 109 of 195
three corporations were owned and controlled by members of the Lastimoso family;
their incorporators and directors all belonged to the Lastimoso family. The 3
corporations were engaged in the same line of business, under one management
and used the same equipment including manpower services.” The facts show that
“the notion of legal entity is used to defeat public convenience, justify wrong,
protect fraud, or defend crime, the law will regard the corporation as an association
of persons, or in the case of two corporations, will merge them into one.” (1999
Bar Question)

Q: Are the principal officers of a corporation liable in their personal capacity for
non-payment of unpaid wages and other monetary benefits due its EEs?

Answer:
As a general rule, the obligations incurred by the principal officers and EEs of
a corporation are not theirs but the direct accountabilities of the corporation they
represent. However, solidary liabilities may at times be incurred but only when
exceptional circumstances warrant such as, generally, in the following cases: when
directors and trustees or, in appropriate cases, the officers of a corporation: (a) a
vote for or assent to patently unlawful acts of the corporation; (b) act in bad faith
or with gross negligence in directing the corporate affairs; (c) are guilty of conflict
of interest to the prejudice of the corporation , its stockholder or members, and
other persons.
In labor cases, the Supreme Court has held corporate directors and officers
solidarily liable with the corporation for the termination of employment of EEs done
with malice or bad faith. (Sunio v. NLRC, 127 SCRA 390; General Bank and Trust
Co. v. CA, 135 SCRA 659).

Alternative Answer:
No. Unless they are guilty of malice or bad faith in connection with the non-
payment of unpaid wages and other monetary benefits due to EEs. (1997 Bar
Question)

Q: May the general manager of a company be held jointly and severally liable for
backwages of an illegally dismissed EE?

Suggested Answer:
Yes. If it shown that he acted in bad faith, or without or in excess of authority,
or was motivated by personal ill-will in dismissing the EE, the general manager may
be held jointly and severally liable for the backwages of an illegally dismissed EE.
[ARB Construction v. Court of Appeals (2000), Lim v. NLRC (1999)]

Another Suggested Answer:

Yes. The General Manager may be held jointly and severally liable for
backwages of an illegally dismissed EE if he or she actually authorized or ratified
the wrongful dismissal of the EE under the rule of respondeat superior. In case of
illegal dismissal, corporate directors and officers are solidarily liable with the
corporation where termination of employment is done with malice or bad faith.
[Bogo-Medellin Sugar Planters Assoc., Inc. v. NLRC (1998)] (2002 Bar Question)

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Preventive Suspension (Book V, Rule XXIII, Sec. 9)
 The ER’s authority to put an EE under preventive suspension is not in the
LC but in the IRR.
 Maximum period = 30 days. Beyond that, EE becomes entitled to his pay
and benefits.
 Preventive suspension is incident to investigation. It is not itself the
penalty for the offense. This is justified where the EE’s continued
employment poses a serious and imminent threat to the life or property
of the ER or his co-workers. Without this threat, preventive suspension is
improper.

Instances of Constructive Dismissal

Constructive dismissal
- involuntary resignation to when continued employment becomes
impossible, unreasonable or unlikely
- Unwarranted transfer or demotion
- Status is changed from regular to casual
- Floating status beyond 6 months (Art. 286)

EMPLOYMENT NOT DEEMED TERMINATED (Art. 286)

(1) Bona fide suspension of the operation of a business for a period not
exceeding 6 months (temporary lay-off).
 if this exceeds 6 months, this would be tantamount to constructive
dismissal hence the EE is entitled to benefits for their separation
(2) Fulfillment by the EE of a military or civic duty
 In these instances, the ER shall reinstate the EE to his former
position without loss of seniority rights if he indicates his desire to
resume his work not later than 1 month from resumption of
operations or from relief from military or civic duty.

Q: Mansueto was hired by the Philippine Packing Company (PPC) sometime in 1960
as an hourly paid research field worker at its pineapple plantation in Bukidnon. In
1970, he was transferred to the general crops plantation in Misamis Oriental.
Mansueto was promoted to the position of a monthly paid regular supervisor four
years after.
Subsequently, research activity in Misamis Oriental was phased out in March
of 1982 for having become unnecessary. Mansueto thereafter received a written
memorandum from he PPC reassigning him to the Bukidnon plantation effective
April 1, 1982, with assurance that is position of supervisor as still there for him to
hold.
Mansueto tried to persuade the PPC management to reconsider his transfer
and if this was not possible, to at least consider s position as redundant so that he
could be entitled to severance pay. PPC did not accept Mansueto’s proposal.
Mansueto claims that his reassignment is tantamount to an illegal constructive
dismissal.
Do you agree with Mansueto? Explain.

Suggested Answer:
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 There is no constructive dismissal by the mere act of transferring an employee.
The employee’s contention cannot be sustained simply because a transfer causes
inconvenience. There is no constructive dismissal where, as in Philippine Japan
Active Carbon Corp., vs. NLRC, constructive dismissal means:
A quitting because continued employment is rendered impossible,
unreasonable or unlikeable; as, an offer involving a diminution in pay.
The transfer will not substantially alter the terms and conditions of employment
of the supervisor. The right to transfer an employee is part of the employer’s
managerial function.
Furthermore, the Court ruled that an employee has no vested right to a
position, and in justifiable cases employment may be terminated.
An employer’s right to security of tenure does not give him such a vested right
to the position as would deprive the company its prerogative to change his
assignment or transfer him where he will be most useful. When his transfer is not
unreasonable, not inconvenient, nor prejudicial to him and it does not involve a
demotion in rank or diminution of his salaries, benefit, and other privileges the
employee may not complain that it amounts to a constructive dismissal. (1996 Bar
Question)

Q: RS, a security guard, filed a complaint for illegal dismissal against Star Security
Agency. He alleged he was constructively dismissed after 10 years of service to the
Agency. Having been placed on “off-detail” and “floating status” for 6 months
already, he claimed the agency just really wanted to get rid of him because it
required him to take a neuro-psychiatric evaluation test by Mahusay Medical Center.
RS said he already submitted the result of his evaluation test by Brent Medical Clinic
as precondition to his new assignment, but the report was rejected by the Agency.
RS added that Mahusay Medical had close ties with Star’s president. It could
manipulate tests to favor only those guards whom the agency wanted to retain.
Star defended its policy of reliance on Mahusay Medical Center because it has been
duly accredited by the Philippine National Police. It is not one of those dubious
testing centers issuing ready-made reports. Star cited its sad experience last year
when a guard ran amuck and shot an employee of a client-bank. Star claimed
management prerogative in assigning its guards, and prayed that RS’ complaint be
dismissed.
What are the issues? Identify and resolve them.

Suggested Answer:
The facts in the question raise these issues:
1. When RS was placed on “off-detail” or “floating” status for more than six
months, can RS claim that he was terminated?
2. Is there a valid reason for the termination of RS?

On the first issue, based on prevailing jurisprudence, RS can be considered as

terminated because he has been placed “off-detail” or “floating status” for a period
which is more than six (6) months.
On the second issue, it is true that disease is a ground for termination. But
the neuro-pyschiatric evaluation test by Mahusay Medical Center is not the
certification required for disease to be a ground for termination. T Rules and
Regulations implementing the Labor Code require a certification by a public health
Page 112 of 195
authority 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.

Another Suggested Answer:

The issues involved are as follows:
1. Is there constructive dismissal?
2. Is there a valid exercise of management prerogative?

On the first issue, there is constructive dismissal. RS cannot be placed on “off-

detail” and “floating status” indefinitely. If it lasts for more than 6 months, RS shall
be deemed to have been constructively dismissed thus entitling him to separation
benefits. (Superstar Security Agency v. NLRC)
On the second issue, there is no valid exercise of management prerogative.
Star’s claim of management prerogative in assigning its guards cannot be exercised
to defeat or circumvent RS’ right to security of tenure. (2004 Bar Question)

PART 13
RETIREMENT

RETIREMENT [Art. 287, implementing RA 7641 (Retirement Pay Law)]

With CBA If without retirement
plan or agreement
Retirement Age established in the CBA Rule: 60-65 y/o (65:
age or employment contract compulsory retirement age)
and has served at least 5 yrs
in the establishment
EXCEPT:
Underground mining EEs—
50-60 years old (60:
compulsory retirement age)
and has served at least 5 yrs
in the establishment (RA
8558, 1998)

Retirement Retirement benefits he is ½ month

pay/ entitled under existing laws salary for every year of
benefits or CBA or other service
agreements, provided (1/2 mo. salary= 15 days +
these are not less than 1/12 of the 13th-mo.pay +
those provided in Art. 287 cash equivalent of not more
than 5 days SIL)

*fraction of at least 6 mos.

= 1yr

Not covered

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 (1) Retail, service and agricultural establishments
(2) Operations employing not more than 10 EEs

 The retirement pay under Art. 287 is apart from the retirement benefit
claimed by the qualified EE under the social security law
 Sec. 2, RA 7641 states: “Nothing in this Act shall deprive any EE of
benefits to which he may be entitled under existing law or company
policies or practices”

Q: B. Ukol was compulsorily retired by his employer, Kurot Bottling Corp., upon the
former’s reaching 65 years of age, having rendered 30 years of service. Since there
was no CBA, B. Ukol was paid his retirement benefits computed 15 days pay for
every year of service, based on his highest salary during his year of employment.
Not satisfied, B. Ukol filed action with the Arbitration Branch of the NLC claiming
that his retirement benefits were not computed properly. Is B. Ukol’s claim
meritorious? What are the components of his retirement benefits?

Suggested answer:
Ukol’s claim is meritorious. His retirement benefit is to be computed in
accordance with Art 287, which reads: “In the absence of a retirement plan or
agreements providing for retirement benefits of employees in the establishment,
an employee may retire… and shall be entitled to retirement pay equivalent to at
least ½ month salary for every year of service, a fraction of at least 6 months being
considered as one whole year. The same article then explains that the term one-
half ½ month salary means 15 days plus 1/12 of the 13 th month pay and the cash
equivalent of not more than 5 days of service incentive leaves.
The components of retirement pay are:
1. 15 days pay
2. 1/12 of the 13th month pay, and
3. cash equivalent of not more than 5 days of service incentive leave.

Q: What exception(s) do(es) the law on retirement benefits provide(s) if any?

Suggested answer:
Retail, service and agricultural establishments or operations employing not
more than 10 employees or workers are exempted from the coverage of the
provision on retirement benefits in the Labor Code.
Also, where there is a retirement plan of the employer that grants more than
what the Labor Code grants. (2001 Bar Question)

o0o0o0o
Q: Ricky Marvin had worked for more than 10 years in IGB Corp. under the terms
of the personnel policy on retirement, any EE who had reached the age of 65 and
completed at least 10 years of service would be compulsorily retired and paid 30
days’ pay for every year of service.
Ricky Marvin, whose immigrant visa to the USA had just been approved,
celebrated his 60th birthday recently. He decided to retire and move to California
where the son who petitioned him had settled. The company refused to grant him

Page 114 of 195

any retirement benefits on the ground that he had not yet attained the compulsory
retirement age of 65 years as required by its personnel policy; moreover, it did not
have a policy on optional or early retirement.
Taking up the cudgels for Ricky Marvin, the union raised the issue in the
grievance machinery as stipulated in the CBA. No settlement was arrived at, and
the matter was referred to voluntary arbitration.
If you were the Voluntary Arbitrator, how would you decide? Briefly explain
the reasons for your award.

Suggested Answer:
I will grant Ricky Marvin the retirement benefits under Art. 287, LC.
Art. 287, LC as the minimum standard in law, allows an EE an optional
retirement upon reaching the age of 60 years provided he rendered at last 5 years
of service – requirements that Ricky Marvin met under the facts of the case. (2005
Bar Question)

LABOR RELATIONS

PART 1
RIGHT TO SELF-ORGANIZATION

7 CARDINAL RIGHTS OF WORKERS (1987 Const., Art. 13, Sec. 3)

(1) self-organization
(2) collective bargaining and negotiations
(3) peaceful concerted activities, including the right to strike in accordance
with law
(4) security of tenure
(5) humane conditions of work
(6) a living wage
(7) participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law

COVERAGE OF RIGHT TO SELF-ORGANIZATION [Art. 243-245, 269; DO

40-03 (Rules Implementing Book V)]

 All persons may organize for a lawful purpose but not all may form labor
unions (i.e., forming or joining labor organizations for the purpose of
collective bargaining)

 The right to self-organization includes the right not to exercise it. An

employee may, as he pleases, join or refrain from joining an association.
(Reyes v. Trajano, 1992)

Q: Do workers have a right not to join a labor organization?

Suggested answer:

Page 115 of 195

 Yes, when workers decide whether they will or will not become members of a
labor organization. That is why a union’s constitution and by-laws need the
members’ adoption and ratification. Moreover, if they are members of religious
group whose doctrine forbids union membership, their right not to be compelled to
become union members has been upheld. However, if the worker is not a “religious
objector” and there is a union security clause, he may be required to join the union
if he belongs to the bargaining unit. (Reyes v. Trajano) (2000 Bar Question)

Q: Mang Bally, owner of a shoe repair shop with only 9 workers in his establishment,
received proposals for collective bargaining from the Bally Shoe Union. Mang Bally
refused to bargain with the workers for several reasons. First, his shoe business is
just a service establishment. Second, his workers are paid on a piecework basis (ie
per shoe repaired) and not on a time basis. Third, he has less than 10 EEs in the
establishment. Which reason or reason/s is/are tenable? Explain briefly.
None. First, Mang Bally’s shoe business is a commercial enterprise, albeit a service
establishment. Second, the mere fact that the workers are paid on a piece-rate
basis does not negate their status as regular EEs. Payment by piece is just a method
of compensation and does not define the essence of the relation. [Lambo v. NLRC,
317 SCRA 420 (1999)]. Third, the EEs’ right to self organization is not delimited by
their number.
The right to self-organization covers all persons employed in commercial,
industrial and agricultural enterprises and in religious, charitable, medical, or
educational institutions whether operating for profit or not. [Art. 243, LC] (2002
Bar Question)

General Rule (To whom the right is available)

Right Purpose
All persons employed in commercial, form, join, or Collective
industrial and agricultural enterprises assist labor bargaining
and in religious, charitable, medical, orgs of their
or educational institutions, whether own
operating for profit choosing
Ambulant, intermittent and itinerant form Mutual aid and
workers, self-employed people, rural labor orgs protection and
workers and those without any other legitimate
definite employers purposes other
than collective
Ambulant— moving about, “palipat- bargaining
lipat”
Intermittent— temporary
Itinerant— travels from place to place

Specific EEs With Right to Self-Organization for purposes of collective

bargaining

(1) Government EEs

Page 116 of 195

 (a) For govt EEs of govt corps established under the Corp. Code (LC
governs them)— right to organize and bargain collectively
(b) For EEs of all branches ,subdivisions, instrumentalities of govt,
including GOCCs with original charters from Congress—EO 180
governs them

EXECTUIVE ORDER 180

(June 1, 1987)

Applies to all EEs of all branches, subdivisions, instrumentalities and

agencies of the government including EEs of GOCCs with original
charters

Rights
(1) can form, join or assist EEs’ organizations for furtherance and
protection of interest
(2) can engage in concerted activities, including the right to strike
(3) may negotiate collective negotiation agreements (CNA) or
memorandum of agreement (MOA) with their ERs

Limitations
(1) the concerted activities must be exercised in accordance with
law, i.e., subject to Civil Service Law and rules and any legislation
that may be enacted by Congress
(2) negotiations should only involve terms and conditions of
employment that are not fixed by law
(3) the resolution of complaints, grievances, and cases involving
government EEs is not ordinarily left to collective bargaining or
other related concerted activities but to Civil Service Law and
labor laws and procedures whenever applicable
(4) in case any dispute remains unresolved after exhausting all
available remedies under existing laws and procedures, the
parties may jointly refer the dispute to the Public Sector Labor-
Management Council (the EO provided for the composition of
this) for appropriate action

Employees’ Org
 The appropriate organizational unit is the unit consisting of rank-
and-file EEs unless circumstances otherwise require
 Govt EEs organizations shall register with the CSC and the BLR
 The duly registered EEs’ organization having the majority support of
the EEs in the appropriate organizational unit shall be designated as
the sole and exclusive representative of the EEs

Not Covered

Page 117 of 195

 (1) High-level EEs (those whose functions are policy-making or
managerial or highly-confidential cannot join the org of rank-
and-file EEs)
(2) AFP
(3) Police officers
(4) Policemen
(5) Firemen
(6) Jailguards

 BUT Memorandum Circular No. 6 of CSC, dated April 21, 1987, enjoins
strikes by government officials and EEs (Arizala v CA, 1990)

Thus, to sum up the government EEs covered by EO 180:

(1) may organize and unionize
(2) they can negotiate, but not bargain (negotiate only on matters
not fixed by law)
(3) they cannot strike

Q: How does the government employees’ right to self-organization differ from that
of the employees in the private sector?

Suggested Answer:
There is no substantial difference of the right of self-organization between
workers in the private sector and those in the public sector. In the public sector,
Executive Order No. 180, the purpose of self-organization is stated as “for the
furtherance and protection of their interest.” In the private sector, Art 243 o the
Labor Code states “for the purpose of collective bargaining”, and “for the purpose
of enhancing and defending their interests and for their mutual aid and protection.”

Alternative Answer:
In government, managerial employees shall no be eligible to join the
organization of rank and file employees per EO 180 but said law does not provide
that they are not eligible to join, assist, or form any labor organization, meaning
they could join, assist of form any labor organization of their own. In the private
sector, managerial employees are not eligible to join, assist, or form any labor
organization. (See At. 243, LC and Sec. 3, EO 10) (1996) (1996 Bar Question)

(2) Supervisory EEs [Art. 245; Art. 212 (m)]— those who, in the interest of
the employer
(a) Effectively recommends such managerial actions
(b) If the exercise of such authority is not merely routinary or clerical
in nature
(c) But requires the use of independent judgment.

 What determines the nature of employment is not the employee's title,

but his job description.
Page 118 of 195
  Supervisory employees shall—NOT be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form
SEPARATE labor organizations of their own.
 To maintain the segregation, a supervisor’s union is not allowed to
affiliate with the same federation as that of the rank-and-file union
under these conditions:
(1) The rank-and-file EEs are directly under the authority of the
supervisory EEs
(2) The national federation is actively involved in union activities
in the company (Atlas Lithographic v. Laguesma, 1992; De la
Salle University Medical Center v. Laguesma, 1998)

(3) Aliens (Art. 269)—Aliens, generally, have no right to self organize for
purpose of collective bargaining unless (the following must concur):
(a) They have valid permits issued by DOLE; and
(b) That said aliens are nationals of a country which grants the same or
similar rights to Filipino workers (reciprocity

(4) Security Guards

 EO 111 has eliminated the disqualification of security guards from
forming labor unions.
 They may now join a rank-and-file organization or that of the
supervisory union, depending on their rank. (Manila Electric v. Sec.
of Labor, 1997)

Q: Do the following workers have the right to self-organization? Reasons/ basis

1. employees of non-stock, non-profit organizations?
2. alien employees?

Suggested Answer:
1. Even EEs of non-stock, non-profit organizations have the right to self-
organization. This is explicitly provided for in Art 243 of the Labor Code.
A possible exception, however, are EE members of non-stock, non-profit
cooperatives.

2. Alien EEs with valid work permits in RP may exercise the right to self-
organization on the basis of parity or reciprocity, that is, if Filipino workers in the
alien’s country are given the same right. (Art 269, LC) (2000 Bar Question)
Workers Without Right to Self-Organization For purposes of
collective bargaining

(1) Managerial Employees [Art. 245; Art. 212 (m)]

- one who is vested with powers or prerogatives
a. To lay down and execute management policies and/ or
b. To hire , transfer, suspend, layoff, recall, discharge, assign, or
discipline employees

Page 119 of 195

 - NOT eligible to join, assist or form any labor organization
 “labor organization” is a technical term
 it is formed for the purpose of collective bargaining concerning
terms and conditions or dealing with employment concerning
terms and condition of employment
 Hence, managerial EEs are not prohibited from forming an
association
- The prohibition of unionization of managerial EEs does not violate the
Phil. Consti. (UPSU v. Laguesma, 1998)
- National Sugar Refineries Corp v NLRC (1993)
› the definition of a managerial employee in Labor relations [Art.
212 (m)] is not exactly the same as the definition under labor
standards (Art. 82).
› Art. 82 is much broader in scope than Art. 212 (m).
› It was held that for purposes of forming and joining unions,
certification elections, collective bargaining, supervisory EEs are
considered not managerial EEs hence they can unionize.
› However, in terms of working conditions and rest periods and
entitlement to the questioned benefits, they are officers or
members of the managerial staff (which are managerial EEs per
Art. 82,) hence they are not entitled thereto.

- Who are rank-and-file EEs? EEs who are not managerial nor
supervisory EEs.

Q: A, B, C and D (treasurer, accountant, elementary department Principal, and

secretary of the Director, respectively), regular employees of a private educational
institution, were administratively charged for their participation in a picket held in
front of the campus after office hours. Several faculty members, non-academic
staff and students joined the peaceful prayer rally organized by the disgruntled
employees to protest certain alleged abuses of the incumbent school director.
Subsequently, the rank and file employees succeeded in forming the first and only
union of the School.
During the investigation, the administration discovered that two (2) days prior
to the rally, A, B, C and D attended the meeting of the School’s employees’
association which planned the protest activity. Two well-known organizers/leaders
of a national federation were also present.
A, B, C and D were dismissed by the School on the ground of violating the
Labor Code which prohibits managerial employees to “join, assist, or form any labor
organization.”
Is the contention of the School tenable? Is the dismissal of A, B, C and D valid?
Explain.

Suggested Answer:
The dismissal of A, B, C and D on the ground that they violated the Labor Code
provision which states that managerial employees “are not eligible to join, assist or
form any labor organization” is not valid. The Labor Code doe not provide for any

Page 120 of 195

sanction for the aforesaid acts. These acts could not be considered as just cause
for the termination of employment, either.

Another Suggested Answer:

The dismissal of the management employees because of union activities, no
matter how erroneous or tenuous may be the basis for the exercise, is a violation
of the constitutional and statutory guaranteed rights of self-organization and an act
of unfair labor practice. (Sec. 3, Art. XIII, Constitution; Art. 243, LC. See also Art.
248(a), LC). (2004 Bar Question)

(2) Confidential EEs--those who:

(a) Assist or act in a fiduciary capacity
(b) To persons who formulate, determine, and effectuate management
policies in the field of labor relations.

 The two criteria are cumulative, and both must be met if an employee
is to be considered a confidential employee — that is, the confidential
relationship must exist between the employee and his superior officer
and that the superior officer must handle the prescribed
responsibilities relating to labor relations (if not labor relations, then
not confidential EE).
Sugbuanon Rural Bank vs. Laguesma, (2000)
› Art. 245 of the Labor Code does not directly prohibit confidential
employees from engaging in union activities.
› However, under the doctrine of necessary implication, the
disqualification of managerial employees equally applies to
confidential employees.
› The confidential-employee rule justifies exclusion of confidential
employees because in the normal course of their duties they
become aware of management policies relating to labor relations.

Note: An EE may not be excluded from appropriate bargaining unit

merely because he has access to confidential information concerning
employer’s internal business operations and which is NOT RELATED
to the field of labor relations. If access is merely incidental, you
cannot classify them as confidential employees. Thus a phone
operator or driver cannot be classified as a confidential employee for
the purpose of excluding them from joining a union. It is the policy
of the law to encourage self-organization, thus if you have to limit it,
the limitation must strictly be construed and well justified.

Q: Malou is the Executive Secretary of the Senior Vice-President of a bank while

Ana is the Legal Secretary of the bank’s lawyer. They and other executive
secretaries would like to join the union of rank and file EEs of the bank. Are they
eligible to join the union? Why? Explain briefly.

Suggested Answer:

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 The following rules will govern the right of self-organization of Malou, Ana, and
the other Executive Secretaries:
1. No right to self-organization – confidential EE who act in a confidential
capacity to persons who formulate, determine, and effectuate management policies
in the field of labor-management relation. The two criteria are cumulative and both
must be met. [San Miguel Corporation Union v. Laguesma, 277 SCRA 370 (1997)]
2. With right to self-organization – when the EE does not have access to
confidential labor relations information, there is no legal prohibition against
confidential EEs from forming, assisting, or joining a labor organization.
[Sugbuanon Rural Bank, Inc. v Laguesma, 324 SCRA 425 (2000)]

No right of self-organization for Legal Secretaries – Legal Secretaries fall under

the category of confidential EEs with no right to self-organization. [Pier & Arrastre
Stevedoring Services, Inc. v. Confessor, 241 SCRA 294 (1995)]
(2002 Bar Question)

(3) Workers-Members of a Cooperative

Cooperative— is an organization composed of small producers and of
consumers who voluntarily join together to form business enterprises
which they themselves, own, control and patronize. (PD 175)
(a) An employee of such a cooperative who is a member and co-owner—
no right to collective bargaining because an owner cannot bargain
with himself or co-owners. (BENECO v. Ferrer-Calleja, 1989)
(b) Employees who are NOT members or co-owners— such employees
are entitled to exercise the rights of all workers to organization,
collective bargaining negotiations, and others. (San Jose Electric
Service Coop. v. Min. of Labor, 1989)

Q: Do EEs of a cooperative have a right to form a union? Explain briefly.

Suggested Answer:
EEs who are members of a cooperative cannot form a union because, as
members, they are owners and owners cannot bargain with themselves. However,
EEs who are not members of a cooperative can form a union. [San Jose Electric
Service Cooperatiev v. Ministry of Labor (1989)] (2002 Bar Question)

(4) Employees of International Organizations

Certain international organizations, such as the Intl Rice Research Institute
(IRRI) and the Intl Catholic Migration Commission (ICMC), are by their
charters given a grant of immunity from legal processes and thus are
beyond the jurisdiction of the DOLE. A certification election cannot be
conducted in these international orgs.

(5) Non-Employees
- If there is no ER-EE relationship, then there is no right to collective
bargaining

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 - but they still have the right to organize since this right is constitutionally
protected, only that they cannot organize for the purpose of collective
bargaining.

Q: FACTS: Solar Plexus Bar and Night Club allowed by tolerance 50 Guest Relations
Officers (GROs) to work without compensation in its establishment under the direct
supervision of its Manager from 8:00pm to 4:00am everyday, including Sundays
and Holidays. The GROs, however, are free to ply their trade elsewhere anytime
but once they enter the premises of the night club, they are required to stay up to
closing time. The GROs earned their keep exclusively from commissions for food
and drinks, and tips from generous customers. In time, the GROs formed the Solar
Ugnayan ng mga Kababaihang Inaapi (SUKI), a labor union duly registered with
the DOLE. Subsequently, SUKI filed a petition for certification election in order to
be recognized as the exclusive bargaining agent of its members. Solar Plexus
opposed the petition for certification election on the singular ground of absence of
ER-EE relationship between th GROs on the one hand and the night club on the
other hand.
May the GROs form SUKI as a labor organization for purposes of collective
bargaining? Explain briefly.

Suggested Answer:
The GROs may form SUKI as a labor organization for purposes of collective
bargaining. There is an ER-EE relationship between the GROs and the night club.
The Labor Code (in Art 138) provides that any woman who is permitted or
suffered to work, with or without compensation, in any night club, cocktail lounge,
massage clinic, bar, or similar establishment, under the effective control or
supervision of the ER for a substantial period of time as determined by the Secretary
of Labor, shall be considered as an EE of such establishment for purposes of labor
and social legislation.
In the case at bar, it is clearly stated that the women once they enter the
premises of the night club would be under the direct supervision of the manager
from 8:00pm to 4:00am everyday including Sundays and holidays. Such is indicative
of an ER-EE relationship since the manager would be exercising the right of control.
(1999 Bar Question)

PART 2
LABOR ORGANIZATION

LABOR ORGANIZATION—any union or association of EEs in the private

sector which exists for collective bargaining purposes or of dealing with
ERs concerning terms and conditions of employment [Art. 212 (g)]

Q: What is the importance of labor organizations?

Suggested Answer:

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 A labor organization exists in whole or in art for the purpose of collective
bargaining agreement or of dealing with employers concerning terms and
conditions of employment. Employees may form labor organizations for their
mutual aid and protection. (See Arts. 212 (a) and 243 of the Labor Code)

Alternative Answers:
The importance of labor unions are:
A. The enhancement of democracy and the promotion of social justice and
development.
B. As instrumentalities trough which worker welfare may be promoted and
fostered. (Mactan Workers Union v. Aboitiz)
C. It is the instrumentality through which an individual laborer who is helpless as
against a powerful ER may, through concerted effort and activity, achieve legal
goal of economic well-being. (Gullano v. CIR) (1996 Bar Question)

Legitimate Labor Organization— any labor organization in the private

sector registered or reported with the DOLE [Book V, Rule 1, Sec. 1 (ee)]
(if not registered, does not posses the rights of a LLO)

Union—any labor organization in the private sector organized for collective

bargaining and for other legitimate purpose [Book V, Rule 1, Sec. 1 (zz)]
 Independent Union— labor organization operating at the enterprise
level that acquired legal personality from independent registration

 Chartered Local— labor organization at the enterprise level that

acquired legal personality acquired through issuance of charter
certificate by a duly registered federation or national union

 National Union / Federation— labor organization with at least 10

locals/ chapters or affiliated unions, each of which must be a duly
certified or recognized collective bargaining agent.

 Company union— any labor organization whose formation, function

or administration has been assisted by any act defined as unfair
labor practice

 Affiliate— refers to an independent union affiliated with a federation,

national union or a chartered local which was subsequently granted
independent registration but did not disaffiliate from its federation,
reported to the Regional Office and the Bureau

Affiliation/ Disaffiliation
 Affiliation by a duly registered union with a national federation does
not cause the local union to lose its legal personality.
 The local union remains the basic unit that serves the common
interest of its members.

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  The union also has the right to disaffiliate from its mother union and
join a new federation (exercise of right to self-organization), in the
absence of enforceable provisions in the federation’s constitution
preventing disaffiliation.
 But when the union is not independently registered and it disaffiliates
from a federation, it is not granted the rights and privileges granted
to a LLO. It cannot file a petition for CE or bargain with the ER or
stage a strike (Villar v. Inciong, 1983)
 Affiliation/ disaffiliation is an affair between the parent and the
daughter union. The ER is not involved and should not be adversely
affected. The CBA continues to bind the members of the disaffiliated
union up to the CBA’s expiration date (Associated Workers Union
PTWGO v. NLRC, 1990)

WORKER’S ASSOCIATION — an association of workers organized for the

mutual aid and protection or for any legitimate purpose other than
collective bargaining of its members. [Book V, Rule 1, Sec. 1 (ccc)]

 Legitimate Worker’s Association— an association of workers

organized for the mutual aid and protection or for any legitimate
purpose other than collective bargaining of its members
registered with the DOLE. [Book V, Rule 1, Sec. 1 (ff)]

LABOR ORGANIZATION V. WORKER’S ASSN

LABOR ORGANIZATION WORKER’S ASSN
Composition Employees Workers
Purpose collective bargaining or mutual aid and protection
of dealing with employers of its members or for any
concerning terms and other legitimate purpose
conditions of employment. other than collective
bargaining

REQUIREMENTS OF REGISTRATION
Independent Labor Org
1. Registration fee
2. Name of the applicant union, its principal address, names and
addresses of its officers, approx. number of EEs in the BU where it
seeks to operate, with a statement that it is not reported as a
chartered local of any federation or national union;
3. Minutes of the organizational meeting; list of workers who
participated in the meetings;
4. Names of all its members comprising at least 20% of all EEs in the
BU;
5. Annual financial report if the applicant has been in existence for one
or more years, unless it has not collected any amount from the
members, in which case a statement to this effect shall be included;
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 6. Constitution and by-laws (CBL), minutes of its adoption and
ratification, and the list of the members who participated
- list of the ratifying members may be dispensed with where the
CBL was ratified or adopted during the organizational
meeting— factual circumstance of the ratification shall be
recorded in the meeting

 All required documents shall be certified under oath by the Sec. or

Treas. and attested to by the Pres.
 1 original copy and 2 duplicate copies of all documents accompanying
the application or notice shall be submitted to the Regl Office or the
Bureau.

Federation/ National Union

In addition to 1,2,3,5 and 6 above:
- Resolution of affiliation of at least 10 LLOs, whether independent
union or chartered locals (all duly recognized as collective bargaining
agents)
- Names and addresses of the companies where the affiliates operate
plus list all members in each company involved.

 LOs operating within an identified industry may also apply for

registration as a federation or national union within the specified
industry by submitting to the Bureau the same set of documents

Worker’s Association
1. Registration fee
2. Name of the applicant association, its principal address, the name of
its officers and their respective addresses
3. Minutes of the organizational meeting(s) and the names of individual
members who attended such meetings
4. The financial reports of the applicant association if it has been in
existence for one or more years, unless it has not collected any
amount from the members, in which case a statement to this effect
shall be included in the application;
5. Constitution and by-laws (CBL) to which must be attached the names
of the ratifying members, the minutes of adoption or ratification of
the CBL, and the date when the ratification was made, unless
ratification was done in the organizational meeting(s), in which case
such fact shall be reflected in the minutes of the organizational
meeting(s)

 Application for registration of a workers’ association operating in more

than one region shall be accompanied, in addition to the above
requirements, by a resolution of membership of each member
association, duly approved by its BOD.

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Legal personality: cannot be attacked collaterally
 The labor union or worker’s association shall be deemed registered and
vested with legal personality on the date of the issuance of its certificate
of registration or certificate of creation of chartered local.
 such legal personality may be questioned only through an independent
petition for cancellation of union registration, and not by collateral
attack (Book V, Rule IV, Sec. 8)

Q: At what particular point does a labor organization acquire a legal personality?

(a) On the date of the agreement to organize the union is signed by the
majority of all its members; or
(b) On the date the application for registration is duly filed with the Department
of Labor; or
(c) On the date appearing on the Certificate of Registration; or
(d) On the date the Certificate of Registration is actually issued; or
(e) None of the above.

Choose the correct answer.

Suggested Answer:
On the date the Certificate of Registration is actually issued. Any applicant
labor organization, association or group of unions or workers shall acquire legal
personality and shall be entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the certificate of registration.

Another Suggested Answer:

(c) “On the date appearing on the Certificate of Registration.”
When the law provides that a “labor organization xxx shall acquire legal
personality xxx upon issuance of the certificate of registration”, the date appearing
therein is legally presumed – under the rule on presumption or regularity – to be
its date of issuance. Actual issuance is a contentious evidentiary issue that can
hardly be resolved, not mention that the law does not speak of the actual issuance.
(2003 Bar Question)

GROUNDS FOR CANCELLATION OF UNION REGISTRATION

A. Failure to comply with the requirements of registration (see above)

B. Violation of any of the provisions of Art. 239. These are:
(1) Misrepresentation, false statement or fraud in connection with
a. the adoption or ratification of the CBL or amendments thereto,
the minutes of ratification and the list of members who took
part in the ratification;
b. the election of officers, minutes of the election of officers, the
list of voters
c. in the preparation of financial reports

(2) Failure to submit

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 a. the CBL or amendments thereto, the minutes of ratification and
the list of members who took part in the ratification within 30
days from adoption/ ratification
b. minutes of the election of officers, the list of voters within 30
days from election
c. annual financial report within 30 days after the closing of every
fiscal year
d. list of individual members to the Bureau once a year or
whenever required

(3) Acting as a labor contractor or engaging in the "cabo" system, or

otherwise engaging in any activity prohibited by law

C. Entering into CBA which provide terms and conditions of employment

below minimum standards established by law

D. Asking for or accepting attorney’s fees or negotiation fees from

employers

E. Checking off special assessments or any other fees without duly signed
individual written authorizations of the members (Other than for
mandatory activities under the Labor Code)

F. Failure to comply with requirements under Articles 237 and 238

(requirements for unions and federations)

 Commission of any of the acts in Art. 241 (Rights and conditions of

membership in a labor org)

Rule: Any party-in-interest may commence a petition for cancellation of

registration except in actions involving violations of Art. 241, which can
only be commenced by members of the labor organization concerned.
- and if it involves the entire membership of the union, the complaint should
be supported by at least 30% of the union members

RIGHTS AND CONDITIONS OF MEMBERSHIP IN A LO (Art. 241)

- violations of these shall be a ground for cancellation of union registration
or expulsion of officer from office, whichever is appropriate.

 Any EE, whether employed for a definite period or not, shall be eligible for
membership in any labor organization beginning the 1st day of service.
(Book V, Rule ii, Sec. 2)
 Union is an agent of its members.

Q: A labor union lawyer opined that a labor organization is a private and voluntary
organization; hence, a union can deny membership to any and all applicants.
Is the opinion of counsel in accord with law?
Page 128 of 195
Suggested answer:
No, the opinion of counsel is not in accord with law.
The Labor Code (in Art 249 (a),(b)) provides that a labor organization has the
right to prescribe its own rules for the acquisition or retention of membership, but
it is an unfair labor practice for a labor organization to restrain or coerce employees
in the exercise of their right to self-organization. Thus, a labor organization cannot
discriminate against any employee by denying such employee membership in the
labor organization on any ground other than the usual terms and conditions under
which membership or continuation of union membership is made available to other
members.

Another suggested answer:

Yes, the legal opinion of counsel, on the nature of a labor union and its
admission policy is in accord with law, but must be qualified.
The Supreme Court ruled in Salunga v. CIR (1967) as follows:
“Generally, a state may not compel ordinary voluntary association to admit
thereto any given individual, because membership therein may be accorded or
withheld as a matter of privilege.”
The same case further ruled that the law can compel a labor union to admit
an applicant for membership when the union is-
“The rule is qualified in respect of labor unions holding a monopoly in the
supply of labor, either in a given locality or as regards a particular employer with
which it has a closed-shop agreement. The reason is that (union security provisions)
cause the admission requirements of trade union to be affected with public
interest.” (1998 Bar Question)

Q: On what ground or grounds may a union member be expelled from the

organization?

Suggested Answer:
Union members may be expelled from the labor organization only on valid
grounds provided for in the Union Constitution, By-Laws, or conditions for union
membership.

Another Suggested Answer:

Whenever appropriate for any violation of the rights as:
1. refusal to pay union dues and special assessments;
2. disloyalty to the union; and
3. violation of the constitution and by-laws of the union (2002 Bar Question)

Political Rights
 Officers directly elected by secret ballot at intervals of 5 years
 No qualification requirement for candidacy to any position other than
membership in good standing
 No person convicted of crime involving moral turpitude shall be eligible
to be an officer of union

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  Officers shall not be paid any compensation other than salaries and
expenses due to their positions as authorized by CBL or written
resolution of majority

Deliberative and decision-making rights

 Determination by secret ballot any question of major policy
 No admission of individuals who are members of subversive
organizations

Right to be informed
 Full and detailed report of financial transactions
 All income and revenue evidenced by a record and every expenditure
evidenced by a receipt
 Treasurer and officers render a true and correct account of all moneys
received and paid since assuming office or since last accounting:
- At least once a year within 30 days from close of fiscal year
- Other times as required by written resolution of majority
- Upon vacating his office
 Books of account and financial records open to inspection by officer/
member during office hours
 Members should be informed about the provisions of its constitution and
by-laws, CBA, prevailing labor relations system and their rights and
obligations under existing labor laws (LLO may assess reasonable dues
to finance labor relations seminars/ labor education activities)

Rights over money matter

 No arbitrary, excessive, oppressive initiation fees, fines and forfeiture
 No collection of fees, dues nor disbursements unless duly authorized
pursuant to CBL
 All payment of fees, dues, contributions evidenced by receipt and
entered into records
 Funds shall not be applied for any purpose other than expressly
provided in CBL or authorized by majority of members at general
meeting
 No special assessment or other extraordinary fees may be levied unless
authorized by written resolution of majority (levy)
 Other than mandatory activities under the Code, no special assessment,
atty’s fees, negotiation fees or any other extraordinary fees may be
checked off from any amount due to an EE without any individual
written authorization (check-off) (cf. Art. 113)

Requisites for a valid levy (i.e., imposition of a certain amount)

 Authorization by a written resolution of majority of all members at
the general membership meeting called for the purpose

Requisites for a valid check-off (i.e., collecting an amount through salary

deduction)
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  Authorization by a written resolution of majority of all members
 at the general membership meeting called for the purpose
 individual written authorization of the EE, specifying the amount,
purposes, and beneficiary of the deduction
› EEs’ check-off authorization is only valid as long as they remain
members of the union. When a local union disaffiliates from a national
union/ federation, the latter ceases to be entitled to check-off dues. The
local union, which has validly disaffiliates will be the one entitled to
check off dues (Volkschel Labor Union v. BLR, 1985)

Q: What requisites must a Union comply with before it can validly impose special
assessments against its members for incidental expenses, attorney’s fees,
representation expenses and the like?

Suggested answer:
The Labor Code (in Art 241 (n)) provides that “no special assessments or
extraordinary fees may be levied upon the members of a labor organization unless
authorized by a written resolution of a majority of all the members at a general
membership meeting duly called for the purpose.”

Another suggested answer:

In the ABS-CBN Employees Supervisors Union v. ABS-CBN Broadcasting Corp.,
and Union Officers (1999), the Supreme Court ruled that the following are the
requisites:
1. authorization by a written resolution of the majority of all the members at the
general membership meeting duly called for the purpose;
2. secretary’s record of the minutes of the meeting; and
3. individual written authorization for check-off duly signed by the employee
concerned. (2001 and 2002 Bar Questions)

Q: Atty. Facundo Velasco was retained by Welga Labor union to represent it in the
Collective Bargaining Negotiations. It was agreed that Atty. Velasco would be paid
in the sum of P20,000 as attorney’s fees for his assistance in the CBA negotiations.
After the conclusion of the negotiations, Welga Labor Union collected from its
individual members the sum of P100 each to pay for Atty. Velasco’s fees and
another sum of P100 each for services rendered by the union officers. Several
members of the Welga Labor Union approached you to seek advice on the ff.
matters.
(a) Whether or not the collection of the amount assessed on the individual
members to answer for the Attorney’s fees was valid.
(b) Whether or not the assessment of P100 from the individual members of the
Welga Labor Union for services rendered by the union officers in the CBA
negotiations was valid.

Answer:
(a)The assessment of P100 from each union member as attorney’s fees – for
union negotiation, is not valid. Art. 222(b), LC, reads:

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 “No attorneys fees, negotiation fees or similar charges of any kind arising from
any collective bargaining negotiations or conclusion of the collective agreement
shall be imposed on any individual member of the contracting union; Provided,
however, that attorneys fees may be charged against union funds in an amount to
e agreed upon by the parties. Any contract, agreement or arrangement of any sort
to the contrary shall be null and void.”

(b) The assessment of P100as negotiation fees charged to each individual

union member and payable to union officers is also not valid, for the same reason
as stated above. The assessment is an act violative of Art. 222(b).

Alternative Answers:
(a) The collection of the amount assessed on the on individual members to
members to answer for the attorney’s fees would be valid if it was authorized by a
written resolution of a majority of all the members in general membership meeting
duly called for the purpose.

(b) The assessment of P100 from the individual members of the Welga Labor
Union for services rendered by the Union officers in the CBA negotiations would be
valid if it was authorized by a written resolution of a majority of all the members in
a general membership meeting duly called for the purpose. [Art. 241(N)] (1997
Bar Question)

RIGHTS OF LEGITIMATE LABOR ORGS (Art. 242)

 To act as the representative of its members for the purpose of CB; (per
Azucena: erroneous because only the LLO who has majority status can
represent the BU; minority LLO does not have this right)
 To be certified as the exclusive representative of all EEs in an
appropriate collective bargaining unit for purposes of CB; (per Azucena,
this is only true if the union won the certification election or consent
election)
 To be furnished by the ER with the annual audited financial statements
after the union has been duly recognized by the ER or certified as the
sole and exclusive bargaining representatives of the EEs in the BU, or
within 60 calendar days before the expiration of the existing CBA, or
during the CB negotiation;
 To own property, real or personal, for the use and benefit of the labor
org and its members;
 To sue and be sued in its registered name; and
 To undertake all other activities designed to benefit the organization
and its members
 The income and the properties, etc. of LLOs used actually, directly and
exclusively for lawful purposes shall be free from taxes

PART 3
THE APPROPRIATE BARGAINING UNIT

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APPROPRIATE BARGAINING UNIT (ABU)— group of EEs sharing mutual
interest within a given ER unit, comprised of all or less than all of the entire
body of EEs in the ER unit or any specific occupational or geographical
grouping within such ER unit.

Factors to be considered in determining the ABU

(1) Will of the EEs
(2) Affinity and unity of EEs’ interest, such as substantial similarity of works
and duties or similarity of compensation & working conditions,
(3) Prior collective bargaining history
(4) Employment status, i.e., temporary, seasonal, and probationary EEs

 Test of grouping: community or mutuality of interests because the basic

test of an asserted bargaining unit’s acceptability is whether it is
fundamentally the combination w/c will best assure to all EEs the exercise
of their collective bargaining rights.

 Globe Doctrine— determinative factor is the express will of the EEs.

(The practice of the courts to hold a series of elections not for the purpose
of granting the right of representation to the group garnering the majority
vote but to let employees select on several units to represent them)

Q: What is an appropriate bargaining unit for purposes of collective bargaining?

Suggested answer:
An appropriate bargaining unit is a group of employees of a given employer
comprised of all or less than all of the entire body of employees, which the collective
interest of all the employees, consistent with the interest of the employer, indicate
to be best suited to serve reciprocal rights and duties of the parties under the
collective bargaining provisions of the law. [See UP v. Ferrer-Calleja (1992)] (1998
Bar Question)

Q: Can the 2 Managers be part of the bargaining unit?

Suggested Answer:
No, the 2 Managers cannot be part of the bargaining unit composed of
supervisory EEs.
A bargaining unit must effect a grouping of EEs who have substantial, mutual
interests in wages, hours, working conditions and other subjects of collective
bargaining. (San Miguel Corp. Supervisors and Exempt EEs Union v. Laguesma, 227
SCRA 370)
The Labor Code (in Art. 245) provides that managerial EEs are not eligible to
join, assist or form any labor organization.
The above provision shows that managerial EEs do not have the same interests
as the supervisory EEs which compose the bargaining unit where SMCT wishes to
be the exclusive bargaining representative. (1999 Bar Question)

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 PART 4
UNION REPRESENTATION:
ESTABLISHING MAJORITY STATUS

EXCLUSIVE BARGAINING AGENT [Art. 255; Book V, Rule 1, Sec. 1(t)] —

the legitimate labor union duly recognized or certified as the sole and
exclusive bargaining agent (SEBA) of the EEs in a BU.
 Despite having a SEBA, an individual EE or group of EEs shall have the
right at anytime to present grievances to their ERs. (Art. 255)

Q: The modes of determining an exclusive bargaining agreement (agent) are:

a. voluntary recognition
b. certification election
c. consent election
Explain briefly how they differ from one another.

Suggested Answer
a. There is voluntary recognition when in an unorganized establishment with
only one legitimate labor organization, the employer voluntarily recognizes the
representation status of such a union. Within thirty (30) days from such
recognition, the employer and union shall submit a notice of voluntary recognition
with the Regional Office of the Department of Labor and Employment which issued
the recognized labor union’s certificate of registration or certificate of creation of a
chartered local.

b. Certificate 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 or negotiation. A certification
election is ordered by the Department of Labor and Employment, while a consent
election is voluntarily agreed upon by the parties, with or without the intervention
by the Department. (Art 256, 257, 258, LC)

c. When the process of determining through secret ballot the sole and
exclusive representative of the employees in an appropriate bargaining unit is not
ordered by the DOLE, but has been voluntarily agreed upon by the parties with or
without the intervention of the DOLE, then the process is consent election. [Warren
Manufacturing Workers Union v. BLR(1988)]

Q: When does a run-off election occur?

Suggested answer:
A “run-off” or second election occurs when an election which provides for three
(3) or more choices result in no choice receiving a majority if the valid votes cast,
and no objections or challenges have been presented which, if sustained, can
materially change the results; the election officer shall motu propio conduct a run-
off election within ten (10) calendar days from the close of election proceedings
between the labor unions receiving the (2) highest number of votes; Provided that,
the total number of votes for all contending unions is at least fifty per cent (50%)

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of the number of votes cast. (Art 256; LC Rule X, Dept Order 40-03) (2006 and
2000 Bar Questions)

PRE-CONDITION: ER-EE RELATIONSHIP

 An employer-employee relationship is a pre-condition before the conduct
of a certification election since without such relationship, there will be no
duty to bargain on the part of either the employer or employee. Thus, it
will be senseless to go on with a certification election to choose their
bargaining representative when there is no duty to collectively bargain
anyway. (Allied Free Workers Union v. Cia Maritima, 1967)

Q: Is it required that an employer-employee relationship exists between an

employer and the employees in the appropriate bargaining unit before a
certification election can be ordered? If so, why?

Suggested answer:
Yes, it is required that an employer-employee relationship is existing between
the employer and the employees in the appropriate bargaining unit before a
certification election can be ordered for the simple reason that a certification
election is held for the purpose of determining which labor organization shall be the
exclusive collective bargaining representative of the employees in an appropriate
bargaining unit. There could be no collective bargaining between persons who do
not have employer-employee relationship.

Another suggested answer:

Yes, the Supreme Court has ruled that the existence of an employer-employee
relationship is required before a certification election can be held.
The Supreme Court in Allied Force Waters Union v. Compania Maritima (1967),
ruled:
“xxx there being no employer-employee relationship between the parties
disputants, there is neither a “duty to bargain collectively” to speak of. And there
being no such duty, to hold certification elections would be pointless. There is no
reason to select a representative to negotiate when there can be no negotiations
in the first place. Where there is no duty to bargain collectively, it is not proper to
hold certification elections in connection therewith.” (1998 Bar Question)

SELECTION OF SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA)

(1) Voluntary Recognition by ER—allowed only

a. in an enterprise being unionized for the first time (unorganized
establishment—if there exists no duly recognized or certified
bargaining agent of the concerned bargaining unit); and
b. where there is only one legitimate labor organization seeking
recognition (Book V, Rule, VII, Sec. 1)

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 Note: If a union asks the ER to voluntarily recognize it as the
bargaining agent of the EEs, it in effect asks the ER to certify it
as the SEBA—a certification which the ER has no authority to
give. It is the EEs’ prerogative, not the ER’s, to determine
whether they want a union to represent them, and if so, which
one it should be. (Samahan ng Manggagawa sa Permex v. Sec.
of Labor, 1998)

In Colgate Palmolive Phils v. Ople (1988), it was held that the Sec. of
Labor cannot directly certify a union as the SEBA.

(2) Certification Election (CE)(Art. 256)—(see below)

(3) Consent Election— process of determining through secret ballot,

voluntarily agreed upon by the parties, the SEBA of the EEs in an ABU
for purposes of CB or negotiation.

(4) Run-off Election (Art. 256)— election between the labor unions
receiving the 2 highest number of votes provided:
(1) There are 3 or more choices in the CE;
(2) results of the CE: none of these choices received majority of the
valid votes cast; and
(3) total number of votes for all contending unions: at least 50% of
the total votes cast

 Presumption: there is a valid election, i.e., majority of the eligible

voters voted
 “No Union” shall not be a choice in the run-off election

CERTIFICATION ELECTION— process of determining through secret

balloting the sole and exclusive representative of the EEs in an ABU for
purposes CB or negotiation (this is different from union election which
selects the officers of the union)

Q: There are instances when a certification election is mandatory. What is the

rationale for such legal mandate?

Suggested Answer:
According to the Labor Code, in any establishment where there is no certified
bargaining agent, a certification election shall automatically be conducted by the
Med-Arbiter upon the filing of a petition by a legitimate labor organization.
In the above-described situation, a certification election is made mandatory
because if there is no certified bargaining agent as determined by a certification
election, there could be no collective bargaining in the said unorganized
establishment. (2003 Bar Question)

Q: Are probationary EEs entitled to vote in a certification election? Why?

Page 136 of 195
Suggested Answer:
In a certification election, all rank-and-file EEs in the appropriate bargaining
unit are entitled to vote. This principle is clearly stated in Art. 255, LC which states
that the “labor organization designated or selected by the majority of the EEs in
such unit shall be the exclusive representative of the EEs in such unit for the
purpose of collective bargaining.” Collective bargaining covers all aspects of the
employment relation and the resultant CBA negotiated by the certified union binds
all EEs in the bargaining unit. Hence, all rank-and-file EEs, probationary or
permanent, have substantial interest in the selection of the bargaining
representative. The Code makes no distinction as to their employment status as
basis for eligibility to vote in the petition for certification election. The law refers to
“all” the EEs in the bargaining unit. All they need to be eligible to vote is to belong
to the “bargaining unit.” (Airtime Specialists, Inc. v. Ferrer-Calleja, 180 SCRA 749)

Alternative Answer:
Probationary EEs may not be entitled to vote in a certification election where
only regular EEs belong t a bargaining unit and probationary EEs do not belong to
such bargaining unit. It is the belonging to a bargaining unit that entitles an EE to
vote in a certification election.

Another Alternative Answer:

Yes. An EE, whether employed for a definite period or not, shall, beginning on
his first day of service be considered an EE for purposes of membership in any labor
union. [Art. 277(c)] (1999 Bar Question)

Nature of CE proceedings
(1) Non-adversarial
(2) Non-litigious
(3) Administrative proceeding to determine the worker’s choice

“Organized Establishment”— an enterprise where there is a

recognized or certified SEBA. The determination of “organized
establishment” status should be at the bargaining unit level. (Hence
an establishment may be considered as organized insofar as the rank-
and-file BU is concerned but not organized insofar as the supervisor
BU is concerned.)

Freedom Period—last 60 days of the 5th year of the CBA

Valid Election— at least majority of the eligible voters voted (base:

eligible voters in the BU)

Exclusive Bargaining Agent— labor union receiving the majority of the

valid votes cast [base: valid votes (not the number of voters); exclude
the invalid votes first]

Petition for Certification Election (Arts. 256-258)

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 Organized Establishment Unorganized
Establishment
What Verified petition— supported Verified petition—
by a written consent of at least No 25% requirement
25% of all EEs in the BU
Who LLO or the ER (when requested LLO or the ER (when requested
files to bargain collectively) to bargain collectively)
When With CBA— within the 60-day Anytime except within 1 yr
filed freedom period from a valid CE

Without CBA— anytime except

when barred (cf. bars to
petition for CE)
Where Regl Office which issued the
filed petitioning union’s cert. of reg/
cert. of creation of chartered
local (with the Med-Arbiter)
Regl Office which issued the
petitioning union’s cert. of reg/
cert. of creation of chartered
local (with the Med-Arbiter)

2 positive requisites:
1. filed within the freedom period
2. with written consent of at least 25% of all EEs in the BU

25% signature requirement

› Submission of the 25% consent signature need not be
simultaneous with the filing of the petition. The SC held that
the mere filing of a petition for CE within the freedom period
is sufficient basis for the holding of a CE, subject to the
submission of the consent signatures within a reasonable
period from such filing. (Port Worker’s Union of the
Philippines v. Laguesma, 1992)
› Even if 25% is not achieved, if Med-Arb feels there is a
representation achievement, Med-Arb may still order CE.
(California Mfg. v. Laguesma, 1992)
› Labor Code: mandatory requirement (it becomes the
ministerial duty of the Med-Arb to conduct the CE)
› IRR: absence of such ground is a ground for the dismissal
of the petition for CE.
Procedure

Page 138 of 195

 Petition for CE is filed with Med-Arbiter

decides within 20 days

(if no appeal, order of Med-Arb is final;
order granting conduct of CE in an unorganized establishment is
unappealable)

Appeal to Sec. of Labor

within 10 days from receipt of order
(but appeal is filed with the Regl Office, who later transmits
the records to the Sec.; reply to the appeal may be
filed with the Sec. within 10 days; appeal stays the conduct of the CE)

Sec. decides within 15 days

Decision of Sec. becomes final and executory in 10 days;

no MR is allowed from this decision; (but may be questioned before the
CA
in a pet. for certiorari under Rule 65)

Records remanded to the Regionall Office of origin

for implementation within 48 hrs from finality;
(implementation shall not be stayed unless restrained by appropriate
court)
 The incumbent bargaining agent shall automatically be one of the
choices in the CE as forced intervenor. (Book V, Rule VIII, Sec. 7)

Q: Can a “no-union” win in a certificate election?

Suggested Answer:
Yes, because the objective in a certification election is to ascertain the majority
representation of the bargaining representative, if the employees desire to be
represented at all by anyone. Hence, “no union” is one of the choices in a
certification election.
Page 139 of 195
Another Suggested Answer:
No, a “no-union” cannot win in a certification election. The purpose of a
certification election is to elect an exclusive bargaining agent and a “no-union vote
would precisely mean that the voter is not choosing any of the contending unions.
If the “no union” votes constitute a majority of the valid votes cast, this fact will all
the more mean that no union won in the certification election. A one-year bay will
consequently stop the holding of another certification election to allow the employer
to enjoy industrial peace for at least one year.

Q: As Human Resources Department (HRD) manager of EZ Components, an

unorganized manufacturer of electric and electronic components for household
appliances, you are suddenly confronted with demands for recognition and
collective bargaining negotiations from two competing labor unions. They both
claim to represent all the rank-and-file EEs. Union A is led by a moderate faction,
while Union B is affiliated with a militant federation identified with leftist ideology.
Which of the following courses of action should you take to best protect the
interests of your company and EEs?
(a) Recognize Union A as the rightful bargaining representative because it will
be more reasonable to deal with;
(b) Recognize Union B because you do not want to antagonize its leftist
connections and foment inter-union conflicts;
(c) Ignore the demands of either union since you cannot be compelled legally
to deal with them at this stage; or
(d) Petition the Bureau of Labor Relations to conduct a certification election to
determine which union really represents the majority of the EEs in the
bargaining unit.

Suggested answer:
(d) Petition the BLR to conduct a certification election to determine which union
really represents the majority of the EEs in the appropriate bargaining unit.
Cite Art. 258.

Another Suggested Answer:

(c) Ignore the demands of either union since you cannot be compelled legally
to deal with them at this stage. The reason why I am opting for (c) instead of (d)
is because option (d) calls for the EZ Component’s filing of a petition for certification
election with “the Bureau of Labor Relations”. Book V, Rule VIII, Sec. 2 of the
Omnibus Rules Implementing the Labor Code (amended by DO 40-03, Series of
2003), which implements Arts. 257 and 258 of the Labor Code, is explicit that “a
petition for certification election shall be filed with the Regional Office which issued
the petitioning union’s certificate of registration / certificate of creation of chartered
local. The petition shall be heard and resolved by the MED-Arbiter”. Filing it with
the Bureau of Labor Relations rendered (d) a wrong answer.
Art. 258 of the Code, which empowers the “Bureau” to entertain the petition
for certification election of an ER, must be read alongside Art. 212(b) of the Labor
Code which defines “Bureau” to mean as the BLR and/or the Labor Relations
Division in the regional offices … in the Department of Labor, as well as Art. 259 of
the Code which tells us that it is the MED-Arbiter of the Labor Relations Division in
Page 140 of 195
the regional offices who hears and decides certification election and that appeal
therefrom is not even to BLR but to the DOLE Secretary. (2005 Bar Question)

Q: PT&T Supervisory EEs Union filed a petition for the holding of a certification
election among the supervisory EEs of the PT&T Company. The company moved to
dismiss the petition on the ground that union members were performing managerial
functions and were not merely supervisory EEs. The company also alleged that a
certified bargaining unit existed among its rank and file EEs which barred the filing
of the petition.
1) Does the company have the standing to file the motion to dismiss? Explain.
2) If you were the Med-Arbiter, how would you resolve the petition?
3) What is the proper remedy of an employer to ensure that the EEs are
qualified to hold a certification election?

Suggested Answer:
1) No, the company has no standing to file a Motion to Dismiss as the ER has
no right to interfere in a purely union matter or concern. [Philippine Fruits and
Vegetable Industries, Inc. v. Torres, 211 SCRA 95 (1992)]
The Court would wish to stress once more the rule which has consistently
pronounced in many earlier cases that a certification election is the sole concern of
the workers and the ER is regarded as nothing more than a by-stander with no right
to interfere at all in the election.

2) As the Med-Arbiter I will:

a. Deny, for lack of merit, the ER’s Motion to Dismiss the Union’s Petition
for Certification Election.
b. Proceed to hear the merits of the petition, especially:
1. the appropriation of the claimed bargaining unit;
2. inclusion and exclusion of voters, or he proposed voter list; and
3. if the petition is in order, to set the date, time and place of the
election.

3) The ER has no remedy. The petition for certification election was initiated
by the Union; hence, the ER is a total stranger or a bystander in the election
process. (Philippine Fruits and vegetable Industries, Inc. v. Torres). To allow an ER
to assert a remedy is an act of interference in a mater which is purely a concern of
the Union.

Alternative Answer:
1) The company does not have the standing to file a motion to dismiss the
petition for certification election, but it could move for the exclusion of the EEs it
alleged to be managerial EEs from the bargaining unit for which a petition for
certification election has been filed.
As a general rule, an employer has no standing in a petition for certification
election because the purpose of a certification election is to determine who should
be he collective bargaining representative of the EEs. Thus, a certification is the
concern of the EEs and not the ER.
But in the case at bar, the ER may have a standing because the petition for
certification election involves personnel which the ER alleges to be managerial EEs.
Page 141 of 195
And managerial EEs under the LC are not eligible to form, assist or join labor
organizations, implying that they cannot be part of the bargaining unit for which a
petition for certification election has been filed.

2) As the Med-Arbiter, I will order the holding of the certification election. The
fact that there is already a certified collective bargaining representative of the rank
and file EEs of the Company is not a bar to the holding of a certification election for
the determination of the collective bargaining representative of the supervisory EEs.
But I will exclude those EEs found to be managerial from participating in the
certification election.

3) The proper remedy of an ER to ensure that only the EEs are qualified to
hold a certification election is to move for the exclusion of those whom he alleges
to be managerial personnel. (1996 and 1999 Bar Questions)

Q: Can the Bureau of Labor Relations certify a union as the exclusive bargaining
representative after showing proof of majority representation thru union
membership cards without conducting an election?

Suggested answer:
The Bureau of Labor Relations cannot certify a union as the exclusive collective
bargaining representative after showing of proof of majority representation thru
union membership cards without conducting a certification election.
The Labor Code (in Arts 256, 257, 258) provides only for a certification election
as the mode for determining the exclusive collective bargaining representative if
there is a question of representation in an appropriate bargaining unit.

Another suggested answer:

No, the Bureau of Labor Relations cannot certify a union as the exclusive
bargaining representative without conducting a certification election.
The Supreme Court, in Colgate Palmolive Phils., Inc. v. Ople (1988), ruled:
“The procedure for a representation case is outlined (in the) Labor Code… the
main purpose of which is to aid in ascertaining majority representation. The
requirements under the law… are all calculated to ensure that the certified
bargaining representative is the true choice of the employees against all
contenders. xxx When an… official bypasses the law on the pretext of retaining a
laudable objective, the meaning or purpose of the law will lose its meaning as the
law itself is disregarded. When the (BLR) directly (certifies) a union, he in fact
disregarded this procedure and its legal requirements. There was therefore failure
to determine with legal certainty whether the union indeed enjoyed majority
representation.” (1998 Bar Question)

Bars To A Petition For CE(negative requisites)

1. Certification year— no CE may be held within 12 months from a
previous CE, or consent election, or a run-off election, or voluntary
recognition by ER

2. Negotiation/ Deadlock bar— no CE if a duly certified union has

commenced and sustained negotiations with the ER within 1 year
Page 142 of 195
 from its certification or there is a pending bargaining deadlock
which has been submitted to conciliation or arbitration or has
become the subject of a valid notice of strike or lockout

3. Contract bar— no CE when there is an existing CBA which has been

duly registered (a petition for CE may only be filed within the last
60 days of the 5th year of the CBA— freedom period)

* If the legitimacy of the petitioner union is under question in a proceeding

seeking to cancel its registration, such question must first be filed before
its petition for CE may be granted.

Q: Distinguish between “contract bar rule” and “deadlock bar rule”.

Suggested Answer:
Under the “contract bar rule,” a certification election cannot be held if there is
in force and in effect a CBA that has been duly registered with the DOLE except
during the freedom period of such CBA which is the 60-day period prior to the expiry
date of said CBA. (See Articles 231, 253-A and 256)
Under the “deadlock bar rule” a certification election can not be held if a
bargaining deadlock to which an incumbent or certified bargaining agent is a party
had been submitted to conciliation or mediation or had become a subject of a valid
notice of strike or lockout. (See Sec. 3, Rule XI, Book V of the IRR of the LC)

Q: in what instance may a petition for a certification election be filed outside the
freedom period of a current CBA?

Suggested Answer:
As a general rule, in an establishment where there is in force and effect a CBA,
a petition for certification election may be filed only during the freedom period of
such CBA.
But to have the above-mentioned effect, the CBA should have been filed and
registered with the DOLE. (See Art 231, 253-A and 256)
Thus, a CBA that has not been filed and registered with the DOLE cannot be a
bar to a certification election and such election an be held outside of the freedom
period of such CBA.

Alternative Answer:
A petition for certification election may be filed outside the freedom period of
a current CBA if such CBA is a new CBA that has been prematurely entered into,
meaning, it was entered into before the expiry date of the old CBA. The filing of the
petition for certification election shall be within the freedom period of the old CBA
which is outside the period of the new CBA that has been prematurely entered into.
(1999 Bar Questions)

Grounds for denial of petition for CE

 Petitioning union is not a LLO (not registered as a LLO or legal
personality has been revoked or cancelled)
Page 143 of 195
  Petition violates any of the bars to CE
 Petitioning union in an organized establishment fails to submit the 25%
support requirement for the filing of the petition for CE

Note: Any question pertaining to the validity of petitioning union’s certificate

of registration or its legal personality as LLO, or validity of registration and
execution of CBA, shall be held and resolved by the Regl Director in an
independent petition for cancellation of its registration (not by the Med-
Arb in the petition for CE), unless the petitioning union is not in the roster
of LLO or the CBA is not registered.

Q: UNIDAD, a labor organization claiming to represent the majority of the rank and
file workers of BAGSAK Toyo Manufacturing Corp. filed a petition for certification
election during the freedom period obtaining in said corporation. Despite the
opposition thereto by SIGAW Federation on the ground that UNIDAD was not
possessed with all the attributes of a duly registered union, the Med-Arbiter issued
an order calling for a certification election on July 25, 2001.
This Order was promulgated and served on the parties on July 12, 2001. On
July 14, 2001, UNIDAD submitted and served the required documents for its
registration as an independent union, which documents were approved by the DOLE
on July 15, 2001.
During the elections, UNIDAD won over SIGAW. SIGAW questioned UNIDAD’s
victory on the ground that UNIDAD was not a duly registered union when it filed a
petition for certification election. Shall SIGAW’s case prosper or not? Why?

Suggested answer:

No, SIGAW’s case will not prosper. The application of technicalities of

procedural requirements in certification election disputes will serve lawful objective
or purpose. It is a statutory policy that no obstacles should be placed on the holding
of a certification election, (Samahan ng Manggagawa sa Pacific Plastic v. Laguesma
(1997)) and that the law is indisputably partial to the holding of a certification
election. (Western Agusan v. Trajano (1991))
At any rate, UNIDAD completed all the requirements for union registration on
July 14, n 2001, and legitimate union status was accorded on July 15, 2000, or at
least 10 days before the scheduled date for holding the certification election. (2001
Bar Question)

-o0o0o0o-
Q: Distinguish clearly but briefly between:
1. Sympathy strike and general strike
2. company union and union shop
3. lock-out and closed shop
4. consent election and certification election.
5. social security and union security

Suggested Answers:

Page 144 of 195

 1. In both sympathy strike and in a general strike, there is stoppage of work
by the concerted action of employees. In both kinds of strike, the strike is not the
result of a labor or industrial dispute.
As the name implies, workers go on sympathy strike to show their
sympathy for certain workers who are on strike. On the other hand, in a general
strike, workers in the country or in a region, province, or city or municipality go on
strike to publicly protest a certain policy or action taken by the government. Thus,
for instance, a general strike may be declared by workers to publicly protest the
stand of President Arroyo that she is against a increase of the minimum wage at
this time.

2. A company union is a union of employees dominated or under the control

of the employer of said employees. A union shop, on the other hand, refers to a
union security clause in a collective bargaining agreement whereby the employer
agrees to terminate the employment of an employee who ahs not become a
member of the union which is the exclusive bargaining unit within a certain period
after the employment of said employee or has ceased to become a union member.

3. Lockout refers to the temporary refusal of an employer to furnish work as

a result of a labor or industrial dispute. Closed shop, on the other hand, refers to
a union security clause in a collective bargaining agreement whereby the employer
agrees not to employ any person who is not a member of the exclusive bargaining
representative of the employees in a bargaining unit.

4. A certification election and a consent election are both elections held to

determine through secret ballot the sole and exclusive representative of the
employees in an appropriate bargaining unit for the purpose of collective bargaining
negotiations. There is this difference, however. A certification election is ordered
by the Department of Labor and Employment while a consent election is voluntarily
agreed upon by the parties, with or without the intervention of the Department of
Labor and Employment.

5. Social Security is the protection given by social insurance programs such

as the program of the SSS, GSIS and PHIC undertaken pursuant to their respective
charters, including the employees’ compensation program provided for in the Labor
Code. The aforesaid programs provide income benefits and/or medical care when
contingencies like sickness, (also maternity in the case of SSS) disability, death, or
retirement, including in the case of GSIS, separation and unemployment benefits.

On the other hand, union security refers to a clause in a collective bargaining

agreement whereby the employer agrees to employ or continue in employment only
workers who are members of the exclusive collective bargaining representative of
the employees of said employer in a bargaining unit. (2004 Bar Question)

PART 5
COLLECTIVE BARGAINING

DUTY TO BARGAIN COLLECTIVELY (Art. 250-253) — performance of a

mutual obligation of ER and EEs (through the SEBA):
Page 145 of 195
When there is no CBA
(1) To meet and convene
a. Promptly and expeditiously
b. In good faith
- parties deal with each other with open and fair mind and
sincerely endeavor to overcome obstacles between them
c. PURPOSE: Executing a contract with respect to (bargainable
issues):
(i) Wages (but parties may not set a wage lower than
minimum wage
(ii) Hours of work
(iii) All other terms and conditions of employment including
proposals for adjusting any grievances or questions arising
under such agreement

(2) Executing a contract incorporating such agreements if requested by

either party
(3) BUT such duty does not compel any party to
a. Agree to a proposal or
b. Make a concession.

When there is a CBA—all the foregoing PLUS

(4) Neither party to the CBA may modify nor terminate the CBA during
its lifetime.

› While it is a mutual obligation of the parties to bargain, the ER is not

under any legal duty to initiate contract negotiation. The mechanics of
collective bargaining are set in motion only when these jurisdictional
preconditions are present:
1. Possession of the status of majority representation of the EEs’
representative;
2. Proof of majority representation; and
3. Demand to bargain under Art. 250 (a) (Kiok Loy v. NLRC, 1986)

› If these jurisdictional preconditions are present, the collective

bargaining should begin within 12 months following the determination
and certification of the EEs’ SEBA. This is the certification year.

› Violation of the duty to bargain collectively = ULP (which is a ground for

holding a strike by the EEs or declaration of a lockout of ER).
› This is committed in these ways:
1. failure or refusal to meet and convene
2. in evading the purposes of bargaining
3. in not observing good faith in bargaining
4. in grossly violating the economic provisions of the CBA

Page 146 of 195

COLLECTIVE BARGAINING PROCEDURE
- Follow CBA procedure for collective bargaining.
- If no CBA or voluntary agreement providing for a more expeditious
manner, follow this procedure (Art. 251, 250):
(a) Party desiring to negotiate shall serve a written notice upon the
other party with a statement of its proposals.
(b) Other party shall reply later than 10 calendar days from receipt.
(c) If there are differences on the basis of notice and reply, either party
may request for a conference which shall begin not later than 10
calendar days from request
(d) If the dispute is not settled, the Board shall intervene and call the
parties to conciliation meetings.
Parties are prohibited from doing any act which may disrupt or
impede the early settlement of the disputes.
(e) The Board shall exert all efforts to settle disputes amicably and
encourage the parties to submit their case to a voluntary arbitrator.

COLLECTIVE BARGAINING AGREEMENT (CBA)— refers to the contract

between legitimate labor organization and the ER concerning wages,
hours of work, and all other terms and conditions of employment in a BU

Terms of the CBA (Arts. 253- 253-A)

Political Aspect (representation)— 5 years
Economic Aspect— renegotiation of provisions other than the
representations aspect shall not be later than 3 years after its execution

 At least 60 days prior to expiration date— either parties may serve a

written notice to terminate or modify
 During the 60-day period or until a new CBA is reached— the parties
shall keep the status quo (automatic renewal)
 Retroaction:
- If new CBA is reached within 6 months from expiration date—
retroact to the day immediately following such date.
- If beyond 6 months— parties shall agree on duration of retroactivity
- If CBA resulting from an arbitration award— Sec. of Labor’s
determination of retroactivity date shall control (MERALCO v.
Quisumbing, 2000)

Contents
(1) Enumeration or reservation of management rights
(2) Union recognition and security
(3) Wage and fringe benefits and their administration
(4) Physical working condition
(5) Selected personnel management and plant operation practices
(6) Grievance and arbitration (Art. 260)
(7) Duration of contract

Page 147 of 195

Q: What matters are considered mandatory subjects of collective bargaining?

Suggested Answer:
Wages, hours of work, and all other terms an conditions o employment
including proposals for adjusting any grievances arising from the collective
bargaining agreement are considered mandatory subjects of collective bargaining.
(Art. 258, LC)

Q: What jurisdictional pre-conditions must be present to set in motion the

mechanics of a collective bargaining?

Suggested Answer:
To set in motion the mechanics of collective bargaining, these jurisdictional
requirements pre-conditions must be present, namely:
1. The employees in a bargaining unit should form a labor organization;
2. Te labor organization should be a legitimate labor organization;
3. As such legitimate labor organization, should be recognized or certified s he
collective bargaining representative of the employees of t bargaining unit; and
4. The labor organization as the collective bargaining representative should
request the employee to bargain collectively. (Arts. 243, 24, 255 and 250, LC)

Alternative Answer:
The mechanics of collective bargaining are set in motion only when the
following jurisdictional preconditions are met: (1) possession of the status of
majority representation of the employees’ representative in accordance with any of
the means of selection or designation proved for by the Labor Code; (2)proof of
majority of representation; and (3) a demand to bargain under Art 251(g), LC. (Kiok
Loy v.NLRC) (1996 Bar Question)

Q: What is the “automatic renewal clause” in a CBA?

Suggested Answer:
The “automatic renewal clause” in a CBA refers to that provision of the Labor
Code (Art. 253) which states that “it shall be the duty of both parties (to a CBA) 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.” (1999 Bar Question)

Q: Company A and union B negotiated the last two years of their five-year CBA on
April 1, 1990 to expire on March 31, 1992 considering the amicable relations
between the parties, neither one moved for the extension or termination of the
agreement.
Sometime in 199, some disgruntled employees filed a compliant demanding
that they be paid annual salary increases and other related annual increases
specified in the CBA of April 1990, citing the provisions in Art 253, LC which requires
the parties to “xxx 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”.

Page 148 of 195

 A, however, maintained that the annual salary increases and related benefits
specifically provided for in the CBA were, pursuant to contract and law, effective
only for the term specified therein, namely, until March 31, 1992 only.
Who is correct? State the reason/s for your answer.

Suggested answer:
The disgruntled employees are correct in their claim that the expired CBA
remains in full force and effect until a new CBA is signed in accordance with Art
253, LC.
The SC ruled in New Pacific Timber and Supply Co., Inc. v. NLRC (2000)
“Art 253 of the Labor Code explicitly provided that until a new Collective Bargaining
Agreement has been executed by band between the parties, they are duty bound
to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement. The law does not provide for any exception
or qualification as to which of the economic provisions of the existing agreement
are to retain force and effect, therefore, it must be understood as encompassing all
the terms and conditions in the agreement.”

Another suggested answer:

With Art 253, LC as basis, the disgruntled employees should be paid the annual
salary increases and other related annual increases provided in the 1990-1992 CBA
even after the expiration of said CBA as long as said CBA did not provide that said
increases were to be paid only for certain specific years. (2001 Bar Question)

Registration of the CBA (Book V, Rule XVII)

When to File Within 30 days from execution of agreement
Who will file Parties to the CBA
Where to File Regional Office which issued the certificate of
registration / certificate of creation of chartered
local
If the certificate was issued by the BLR, CBA shall be
filed with the Regl Office which has jurisdiction
overt he place where it principally operates
Multi-ER bargaining— filed with BLR
What to File 2 duly signed copies of (certified under oath):
(1) The CBA
(2) Statement that the CBA was posted in 2
conspicuous places in the establishment at least 5
days before ratification
(3) Statement that the CBA was ratified by at least
majority of the employees in the bargaining unit
Other Documents must be certified under oath by the
requirements representatives of the employer and labor
organization.
Payment of registration fee
 A registered CBA is a bar to a petition for CE (contract bar)

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Q: The Ang Sarap Kainan Workers Union appointed Juan Javier, a law student, as
bargaining representative. Mr. Javier is neither an employee of the Ang Sarap
Kainan Company nor a member of the union. Is the appointment of Mr. Javier as a
bargaining representative in accord with law? Explain.

Suggested answer:
Yes, the law does not require that the bargaining representative be an
employee of the company nor an officer or member of the union (Art 212 (j), LC)

Q: A CBA was signed between the Ang Sarap Kainan Workers Union and the Ang
Sarap Kainan Workers Union. Should the CBA be registered with the Bureau of
Labor Relations? If so, why?

Suggested answer:
So that the contract bar rule may apply, the CBA should be registered,
assuming it has been validly ratified and contains the mandatory provisions. (Art
232, LC)

Q: The Samahan ng mga Manggagawa sa Pids and Co., Inc. lost its majority status
in the bargaining unit one year after the signing of the CBA. Bickering among all
the three other unions in the bargaining unit was a daily occurrence, with each
union asserting majority status. To resolve this pestering problem, the Company
and the three other unions agreed to hold a consent election under the supervision
of the Bureau of Labor Relations. In the consent election, Pids and Co. Workers
Union won, and was accordingly recognized by the Company as the exclusive
bargaining representative in the bargaining unit. Is the Pids and co. Workers Union
bound by the CBA signed between the Company and the Samahan ng mga
Manggagawa sa Pids and Co., Inc.? Explain.

Suggested answer:
Yes, because the CBA is not invalidated by the change of the bargaining agent
while the CBA is still effective. (Benguet Consolidate Inc v. BC Employees (1968))

Q: Shortly after the consent election, Pids and Co., Inc. sold the Groceries division
to Metro Manila Grocery Inc. the employees of the sold division formed part of the
bargaining unit described in the CBA. And all were absorbed by Metro Manila
Grocery Inc. is M Metro Manila Grocery Inc., as the new employer, bound by the
CBA existing at the time of the sale? Explain.

Suggested answer:
No. There are no indications that the sale is simulated or intended to defeat
the employees’ right to organize. A bona fide sale terminates the employment
relationship between the selling company and its employees. The CBA does not
bind the purchaser in good faith because the CBA is a contract in personam, unless
the buyer agrees to be bound. (Associated Labor Union v. NLRC (1993)) (2000
Bar Question)

Effect of Substandard CBA—ground for cancellation of union registration

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Beneficiaries of CBA—all EEs in the collective
bargaining unit, including those who do not belong to the labor
organization (union).

Q: May a rank-and-file EE, who is not a member of the union representing his
bargaining unit, avail of the wage increases which the union negotiated for its
members?

Suggested Answer:
Yes. The beneficiaries of a CBA include Non-Union members; otherwise, there
will be discrimination which is prohibited by law. [New Pacific Timber v. NLRC, 328
SCRA 424 (2000)]. (2005 Bar Question)

CBA Provision on Grievance Procedure (Art. 260)— machinery established

by the CBA for the adjustment and resolution of grievances arising from
(“grievance” is limited to these only):
(1) the interpretation or implementation of the CBA and
(2) those arising from the interpretation or enforcement of company
personnel policies.

 Grievances submitted to the machinery not settled within 7 calendar days

from submission shall automatically be referred to voluntary arbitration
prescribed in the CBA.

 The CBA must designate in advance a Voluntary Arbitrator (VA) or panel

of VAs, or include in the agreement a procedure for the selection of such.
In case the parties fail to select, the NCMB shall designate the VAs or panel
of VAs.
 A grievance procedure is a “must” provision in any CBA and no CBA can
be registered in the absence of such procedure.

CBA and 3rd Party Liability

 Unless expressly assumed, labor contracts (such as employment contracts
and CBAs) are not enforceable against a transferee of an enterprise; labor
contracts being binding only between the parties.
General rule: There is no law requiring a bona fide purchaser of assets of
an ongoing concern to absorb in its employ the employees of the latter.

However, the parties are liable to the employees if the transaction is colored
or clothed with bad faith. (Associated Labor Unions v NLRC, 1991)

Q: FACTS: Jensen & Jensen (J&J) is a domestic corporation engaged in the

manufacturing of consumer products. Its rank-and-file workers organized the
Jenson EEs Union (JEU), a duly registered local union affiliated with PAFLU, a
national union. After having been certified as the exclusive bargaining agent of the

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appropriate bargaining unit, JEU-PAFLU submitted its proposals for a CBA with the
company.
In the meantime, a power struggle occurred within the national union PAFLU
between its National President, Manny Pakyao, and its National Secretary General,
Gabriel Miro. The representation issue within PAFLU is pending resolution before
the Office of the Secretary of Labor.
By reason of this intra-union dispute within PAFLU, J&J obstinately and
consistently refused to offer any counter-proposal and to bargain collectively wioth
JEU-PAFLU until the representation issue within PAFLU shall have been resolved
with finality. JEU-PAFLU filed a Notice of Strike. The Secretary of Labor
subsequently assumed jurisdiction over he labor dispute.

1. Will the representation issue that has arisen involving the national union
PAFLU, to which the duly registered local union JEU is affiliated, bar collective
bargaining negotiation with J&J? Explain briefly.

Suggested Answer:
The representation issue that has arisen involving the national union PAFLU
should not bar collective bargaining negotiation with J&J. it is the local union that
has the right to bargain with the ER J&J, and not the national union PAFLU.
It is immaterial whether the representation issue within PAFLU has been
resolved with finality or net. Said squabble could not possibly serve as a bar to any
collective bargaining since PAFLU is not the real party-in-interest to the talks;
rather, the negotiations are confined to the corporation and the local union JEU.
Only the collective bargaining agent, the local union JEU, possesses the legal
standing to negotiate with the corporation. A duly registered local union affiliated
with a national union or federation does not lose its legal personality or
independence. [Adamson and Adamson, Inc. v. CIR and Adamson and Adamson
Supervising Union (FFW), 127 SCRA 268 (1984)]

2. Can the Secretary of Labor decide the labor dispute by awarding JEU CBA
Proposals as the CBA of the parties?

Suggested Answer:
Yes. The Secretary of Labor can decide the labor dispute by awarding the JEU
CBA proposals as the CBA of the parties because when the Secretary of Labor
[under Art. 263 (g)] assumes jurisdiction over a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national interest, the
Secretary of Labor exercises the power of compulsory arbitration over the labor
dispute, meaning that as an exception to the general rule, the Secretary of Labor
now has the power to set or fix wages, rates of pay, hours of work or terms and
conditions of employment by determining what should be the CBA of the parties.
(See Divine Word University vs. Secretary of Labor, 213 SCRA 759)

Alternative Answer:
What is involved in the case in the question is a corporation engaged in the
manufacturing of consumer products. If the consumer products that are being
manufactures are not such that a strike against the company cannot be considered
a strike in an industry indispensable for the national interest, ten the assumption of

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jurisdiction by the Secretary of Labor is not proper. Therefore, he cannot legally
exercise the powers of compulsory arbitration in the labor dispute. (1999 Bar
Question)

PART 6
UNFAIR LABOR PRACTICE

UNFAIR LABOR PRACTICES (Arts. 247-249)

- Violate the constitutional right of workers and employees to self-
organization
- Disrupt industrial peace
- Violations of the civil rights of both labor and management and criminal
offenses against the State

Q: Define unfair labor practice.

Suggested Answer:
Unfair labor practice means any unfair labor practice as expressly defined by
the Labor Code (Arts. 248 and 249, LC). Essentially, an unfair labor practice is any
act committed by an employer or a labor organization, its officers, agents or
representatives which has the effect of preventing the full exercise byb employees
of their rights to self-organization and collective bargaining.

Q: Give three examples of ULP on the part of the employer and 3 examples of ULP
on the part of the labor union.

Suggested Answer:
Any three from the enumeration in Art. 248, ULP of employers and Art. 249
ULP of labor organizations. (1996 Bar Question)

Civil aspect
- may include claims for damages
- under Labor Arbiter’s jurisdiction.
- recovery of civil liability in the administrative proceedings shall bar
recovery under the Civil Code.

Criminal prosecution
- needs final judgment (in the civil case) that ULP was committed before
criminal prosecution

Who are criminally liable?

If ULP of ER—only the officers and agents of corps who have actually
participated in, authorized or ratified ULPs shall be held criminally
liable.
If ULP of LOs— only the officers, members of governing boards, reps,
or agents or members of LOs or associations who have actually

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 participated in, authorized or ratified ULPs shall be held criminally
liable.

Q: Is the commission of an unfair labor practice by an ER subject to criminal

prosecution?

Answer:
Yes, the 2nd paragraph of Art. 247, LC expressly so provides. The last
paragraph of Art. 247 provides that no criminal prosecution for unfair labor practice
may be made without a prior final judgment in an unfair labor practice
administrative case (filed before the Labor Arbiter of the NLRC pursuant to Art.
217(a)(1), LC. And even with such final judgment in an administrative case, still,
the final judgment would not be binding in t he criminal case. Neither would such
final judgment be considered as evidence in the criminal case. At best, it would only
serve as proof of compliance of the required prior exhaustion of administrative
complaint. (2005 Bar Question)

Elements of ULP
(1) ER-EE Relationship
(2) Act done must be specifically defined as ULP in the Code (Arts. 248-
249).
* Not every unfair act is ULP. It has a technical meaning. It has to be
related to the right to self-org and to the observance of the CBA

ULP of ERs
Totality of Conduct Doctrine— culpability of an ER’s remarks is to be
evaluated not only on the basis of their implications, but against the
background of collateral circumstances.

(1) Interference, restraint or coercion of EEs in their exercise of right to self-

org— broadest of all the 9 proscriptions

 Subjection by the company of its EEs to questionings regarding their

union memberships or activities, in such a way as to hamper their
exercise of free choice constitutes ULP (Philsteam v. Phil Marine
Officers Guild, 1965)

 Espionage by an ER of union activities, or surveillance thereof

constitutes ULP (Insular Life Assurance Employees Assn v. Insular Life
Assurance, 1971)

 Interference and restraint of demonstrations held purely as an

exercise of freedom of expression and right of assembly constitute
ULP. (Phil Blooming Mills Employees Assn v Phil Blooming Mills, 1973)

Q: Around 100 workers of a mill in a coconut plantation organized themselves for

the purpose of promoting their common interest and welfare. The worker’s

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association prepared a petition for increasing the daily pay of its members in
compliance with minimum wage rates for their sector in the region, and for granting
benefits to which they are entitled under the law.
However, the workers became restless and anxious after the owner-manager
threatened them with mass lay-off if the association would press for their demands.
Most of its members have worked in the mill for 10 to 15 years with no improvement
in working conditions and monetary benefits.
The leaders of the workers’ association approached you and asked: What legal
steps could they take to protect their security of tenure? What advice could you
give them?

Suggested Answer:
I would advise them to register the worker’s association with the Department
of Labor and Employment. Then, have the workers’ association file a ULP case
against the employer.

Another Suggested Answer:

The workers are entitled to the constitutional (Art XIII, Sec. 3, 1987
Constitution) and statutory (Art. 279, LC) guarantees of security of tenure. When
this right to security of tenure is violated, an action for illegal dismissal is an
available remedy.
If they are dismissed because of union activities, an action for unfair labor
practice can be filed (Sec. 3, Art. XIII; Art. 243,LC). If successful, the workers will
be entitled to full backwages, including money value of benefits, and reinstatement
without loss of seniority (Art. 279, LC). (2004 Bar Question)

(2) To require as a condition of employment that a person or an EE shall not

join a labor org or shall withdraw from one which he belongs (yellow dog
contract) – non-union membership or withdrawal from membership as a
condition of employment.

(3) Contracting out services or functions being performed by union members

to discourage unionism (subcontracting)
 It is ULP when it is motivated by a desire to prevent his EEs from
organizing and selecting a collective bargaining representative.
 Not ULP when it is for business reasons

Q: company “A” contracts out its clerical and janitorial services. In the negotiations
of its CBA, the union insisted that, henceforth, the company may no longer engage
in contracting out these types of services, which services the union claims to be
necessary in the company’s business, without prior consultation. Is the union’s
stand valid or not? For what reason/s?

Suggested answer:
The union’s stand is not valid. It is part of management prerogative to contract
out any work, task, job or project that it is an unfair labor practice to contract out
services or functions performed by union members when such will interfere with,

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restrain, or coerce employees in the exercise of their rights to self-organization. Art
248 (c), LC)

Another suggested answer:

The union’s stand that there must be a prior consultation by the employer with
the union before contracting out can be effected is valid. Art XIII, Sec 3 of the
Constitution, and Art 255, LC guarantee the right of workers to participate in policy
and decision-making processes which affect their rights and benefits. Job
contracting will undoubtedly and directly affect their rights, benefits and welfare.
(PAL v. NLRC) (2001 Bar Question)

(4) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor org, including the giving of financial or other
support to it or its organizers or supporters (company-domination of
union)

(5) Discrimination to encourage / discourage membership in any labor org

 If the discrimination is to influence the union activity of EEs, the

discrimination is unlawful. But the discrimination is not the same
as differentiation or classification (e.g., management classifies
jobs and grants them varying levels of pay of benefits)

 Test WoN dismissal is discriminatory: look at the reason. The

fact that a lawful cause for the dismissal is available is not a
defense where the EE is actually discharged because of his union
activities. But if the dismissal was actually motivated by a lawful
reason, the fact that the EE is engaged in union activities will not
prevent the ER from discharging the EE for cause.

Union security clause— any form of agreement which imposes upon

the EEs the obligation to acquire or retain union membership,
otherwise their employment will be terminated.
- It is discrimination favoring unionism. It is a valid kind of
discrimination.
- But this union shop stipulation should be strictly construed.
- To validly dismiss an EE under this, there should be:
 a clear and unequivocal statement that loss of good standing
in the union is a cause for dismissal; and
 ER must observe due process

- All EEs in the BU covered by a closed-shop agreement are subject to

its term except:
(1) An EE who at the time the closed-shop agreement takes effect is
a bona fide member of a religious org which prohibits its
members from joining labor unions based on religious grounds

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 (2) EE already members of a union other than the majority at the
time the closed-shop agreement took effect; and
(3) EEs excluded from the closed-shop agreement by express terms
(also, those who are not members of the BU)

Hiring Continued Ground for

Employment Termination
Union Shop EEs have access After some time, If the EE does not
to labor market; EE must become join the union
Can be hired a member after reasonable
even if not union time, it will be a
member. ground for
termination

After due process

is observed.
Closed Shop EE must become Must be a If not a member
a member at the member all at anytime,
time of hiring through-out ground for
termination

After due process

is observed
Maintenance Already a Must maintain If disaffiliates
shop member at the member-ship, from union,
time of hiring otherwise grounds for
ground for termination
termination
After due process
is observed

Closed Shop/ Agency Shop

Q: Describe a “closed shop agreement”. Does it differ from an “agency shop
agreement”?
Are the above agreements legal?

Answer:
A “closed shop agreement” is that agreement embodied in a collective
bargaining agreement (CBA) whereby the employer binds itself not to hire any
person unless he is first a union member of the collective bargaining representative.
An “agency shop agreement” is different from a closed shop agreement in that
under the former, the employer does not bind itself not to hire a person unless he
is first a union member of the collective bargaining representative. Instead, the
employer binds itself to check off from those who are not union members of the
collecting bargaining representative reasonable fee equivalent to the des and other

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fees paid by union members I the non-union members accept the benefits of the
CBA.
The above agreements are legal or they are expressly allowed by the Labor
Code. (1997 Bar Question)

Q: A group of EEs in XYZ Factory belonging to a religious sect, in conformity with

the teachings and dictates of their religion, refused to join the labor union in the
factory. The labor union was able to negotiate a substantial wage increase in its
collective bargaining agreement with the management. A provision therein stated
that the wage increase would be paid to the members of the union only in view of
a “closed shop” union security clause in the new agreement. The members of the
sect protested and demanded that the wage increase be extended to them. The
officers of the union countered by demanding their termination from the company
pursuant to the “closed shop” provision in the just-concluded CBA.

(a) Is the CBA provision valid?

Suggested Answer:
No, the CBA provision is not valid.
The benefits of a CBA are extendible to all EEs regardless of their membership
in the union, because to withhold the same from non-union members would be to
discriminate against them. [National Brewery & Allied Industries Labor Union of the
Phils. V. San Miguel Brewey, 8 SCRA 805 (1963)].

(b) Should the company comply with the union’s demand of termination the
members of the religious sect?

Suggested Answer:
No, the company should not comply with the union’s demand. In the case of
Victoriano v. Elizalde Rope Workers’ Union, 59 SCRA 54 (1974)], religious freedom
is superior to the freedom to contract. In the hierarchy of values, religious freedom
takes a preferred position and the right to contract must yield; accordingly, the CBA
provision which is contractual in nature must not prevail over the duty to respect
the workers’ constitutional right to religious freedom. (2005 Bar Question)

Q: FACTS: In a certification election conducted by the Department of Labor,

Associated Workers Organization in Laguna (AWOL) headed by Cesar Montayo, won
over Pangkat ng mga Manggagawa sa Laguna (PML), headed by Eddie Garciaa.
Hence, AWOL was certified as the exclusive bargaining agent of the rank-and-file
EEs of the Laguna Transportation Company (LTC).
Shortly, thereafter, a CBA was conducted by LTC and AWOL which provided
for a closed shop. Consequently, AWOL, demanded that Eddie Garciaa and all the
PML members be required to become members of AWOL as a condition for their
continued employment; otherwise, they shall be dismissed pursuant to the closed
shop provision of the CBA.
The union security clause of the CBA also provided for the dismissal of the EEs
who have not maintained their membership in the union. For one reason or another,
Francis Magallona, a member of AWOL, was expelled from the union membership
for acts inimical to the interest of the union. Upon receipt of the notice that Francis
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Magallona failed to maintain his membership in good standing with AWOL, LTC
summarily dismissed him from employment.

1. Can Eddie Garciaa and all the PML members be required to become
members of the AWOL pursuant to the closed shop provision of the CBA? Why?

Suggested Answer:
Eddie Garciaa and all the PML members can not be required to become
members of AWOL pursuant to the closed shop provision of the CBA.
According to the Labor Code [Art. 248 (e)], a closed shop provision cannot be
applied to those EEs who are already members of another union at the time of
signing of the CBA.

2. Is the termination from employment of Francis Magallona by LTC lawful?

Why?

Suggested Answer:
Pursuant to the closed shop provision of the CBA entered into by AWOL with
LTC, membership in AWOL has become a condition of employment in LTC.
As long as the expulsion of Francis Magallona from AWOL was done in
accordance with applicable provisions of law and with the Constitution and By-Laws
of the AWOL, then it was lawful for LTC to terminate Magallona.
Panel: The termination is unlawful (Ferrer v. NLRC) (1999 Bar Question)

Q: MPH Labor Union is the duly certified bargaining representative of the rank and
file employees of MM Park Hotel since the 1970’s. The collective bargaining
agreement contained union shop security provisions. After signing of the 2000-
2005 CBA, the Union demanded the dismissal of 3 employees, XX, YY and ZZ,
pursuant to the union security clause in the CBA.
The Hotel Management replied that it was legally impossible to comply with
the demand of the Union. It might even be construed as unfair labor practice. For
it appeared that XX, YY and ZZ had been recently promoted as supervisors and
resigned from the Union. But according to the Union, the three submitted their
resignations outside the freedom period after the 1996-2000 CBA expired on June
30, 2000. The Union argued that the Hotel Management could not skirt its
obligation to respect and implement the union security clause by promoting the
three employees. That could be viewed as rewarding employees for their disloyalty
to the union, said the union officers.
Does the union security clause sufficiently justify the demand for dismissal of
the three employees or not? May the Hotel Management validly refuse the Union’s
demand?

Suggested Answer:
No. The union security clause does not justify the dismissal of the promoted
supervisors who were formerly members of the rank and file union.
Yes. The Hotel Management may validly refuse to dismiss the supervisors.
As supervisors, they are no longer covered by the CBA of the employer and
the rank and file union. The law does not require a promoted supervisor to resign
upon promotion from their membership in the rank and file union; rather, by
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operation of law, they can no longer continue their membership with the rank and
file union.
Art. 245 of the Labor Code provides that supervisory employees shall not be
eligible for membership in a labor organization of the rank and file employees but
may join, assist, or form separate labor organizations of their own. (2004 Bar
Question)

(6) To dismiss, discharge, or otherwise prejudice or discriminate against and

EE for having given or being about to give testimony under this Code.

(7) To violate the duty to bargain collectively

(8) To pay negotiation or atty’s fees to the union or its officers or agents as
part of the settlement of any issue in collective bargaining or any other
dispute

(9) Violation of the CBA— to constitute ULP, violation must be gross, i.e.,
flagrant and malicious refusal to comply with the economic provisions of
the CBA (cf. Art. 261). If not gross, then it is not ULP.

ULP of Labor Orgs

(1) To restrain or coerce EEs in their exercise of right to self-org. However, a
labor org shall have the right to prescribe its own rules re membership.

(2) To cause ER to discriminate against an EE, including discrimination on the

basis of membership/ non-membership in the org

(3) Violation of duty to bargain collectively

(4) To cause an ER to pay money or other things of value, in the nature of an

exaction, for services which are not performed, including the demand for
fee for union negotiations (featherbedding/ make-work schemes)—
spreading or creating employment by unnecessarily maintaining or
increasing the number of EEs used, or amount of time consumed, to work
on a particular job.

(5) To ask for or accept negotiations or atty’s fees from ERs as part of the
settlement of any issue in CB or other dispute (sweetheart contract)—
here, a CBA does not substantially improve the EEs’ wages and benefits.
It is a juicy deal between the ER and the bargaining agent.

(6) To violate a CBA—to constitute ULP, violation must be gross, i.e., flagrant
and malicious refusal to comply with the economic provisions of the CBA
(cf. Art. 261). If not gross, then it is not ULP.

PART 7
UNION CONCERTED ACTIVITIES
Page 160 of 195
 (Arts. 263-266)

LABOR DISPUTE[(Art. 212 (l)]—— includes any controversy or matter

concerning terms or conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining, changing or
arranging the terms and conditions of employment, regardless of whether
the disputants stand in the proximate relation of ER and EE.

STRIKE/ LOCKOUT
 The law treats strike and lockout similarly because both connote the
temporary stoppage of work in relation to a labor dispute.
 The only difference is in the identity of the doer.

Strike [(Art. 212 (o)]—any temporary stoppage of work by the concerted

action of EEs as a result of an industrial or labor dispute.
* if not based on a labor dispute= illegal strike

Lockout [(Art. 212 (p)]—any temporary refusal of an ER to furnish work as a

result of an industrial or labor dispute.

Q: a division manager of a company taunted a union officer two days after the
union submitted to the DOLE the result of the strike vote. The division manager
said: “Your union threat of an unfair labor practice strike is phony or bluff. Not even
the ten percent (10%) of your members will join the strike.” To prove union
members support for the strike, the union officer immediately instructed its
members to crease working and walkout. Two hours after the walk-out the workers
voluntarily returned to work.
Was the walkout a strike? And if so, was it a valid activity?
Can the union officer who led the short walkout, but who likewise voluntarily
led the workers back to work, be disciplined by the employer?

Suggested answer:

Yes, it was a strike because there was a work stoppage by concerted action
and there is an existing labor dispute. It was not a valid activity because the
requisites for a valid strike were jot observed. (Art 212 (o), (l), LC)
Yes, the employer may discipline the union officer. An illegal strike is a cause
for the union officer to be declared to have lost its employment status. (Art 263
(c)(d)(e)(f); Art 264 (a), LC) (2000 Bar Question)

Q: Eaglestar Company required a 24-hour operation and embodied this requirement

in the employment contracts of its EEs. The EEs agreed to work on Sundays and
Holidays if their work schedule required them to do so for which they would be paid
additional compensation as provided by law. Last March 2000, the union filed a
notice of strike. Upon Eaglestar’s petition, the Secretary of Labor certified the labor
dispute to the NLRC for compulsory arbitrator. On April 20, 2000 (Maundy
Thursday), while conciliation meetings were pending, the union officers and
members who were supposed to be on duty did not report for work. Neither did
Page 161 of 195
they report for work on April 21 (Good Friday) and on April 22 (Black Saturday),
disrupting the factory’s operations and causing it huge losses. The union denied it
had gone on a strike because the days when its officers and members were absent
from work were legal holidays. Is the contention of the union correct? Explain
briefly.

Suggested Answer:
The contention of the union is NOT correct.
In the case, it is clear that the EEs agreed to work on Sundays and Holidays
of their work schedule required them to do so for which they would be paid
additional compensation as provided by law.
The above-mentioned agreement that the EEs voluntarily entered into is valid.
It is not contrary to law. It is provided in the agreement that if they will work
Sundays or Holidays that they will be aid additional compensation as provided by
law. Neither is the agreement contrary to morals, good customs, public order or
public policy.
Thus, when the workers did not report for work when by agreement they were
supposed to be on duty, there was a temporary stoppage of work by the concerted
action of the EEs as a result of an industrial or labor dispute because they were on
strike. [See Interphil Laboratories EEs Union-FFW v. Interphil Laboratories Inc.,
Dec. 19, 2001] (2002 Bar Question)

Valid grounds for strike or lockout (Art. 263)

(1) Bargaining deadlock (economic strike)
(2) ULP
- When ULP is found to have been actually committed; or
- When the union/ ER believed in good faith that ULP was committed,
although found subsequently as not committed (“good faith strike”)

Procedure (Art. 263)

*Note: ER or labor org must have first bargained collectively
(1) filing notice of strike/ lockout (cooling-off period)
 If bargaining deadlock—30 days before intended date
- who files? Only the exclusive bargaining agent

 If ULP— 15 days before intended date except in case of union

busting (i.e., where existence of union is threatened, e.g.,
dismissal from employment of union officers)
- who files? the exclusive bargaining agent; or if none, the
LLO affected by the ULP (remember: only a legitimate labor
org can legally hold a strike)

 In case of union busting, the union may take action immediately

(i.e, they can disregard the 15-day cooling-off period) but only
after the strike-vote is obtained and results submitted to the

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 NCMB at least 7 days before the intended date of strike/ lockout
(this 7-day period cannot be disregarded)

(2) Observance of the cooling-off period

 Duty of NCMB to exert all efforts at mediation and conciliation to
effect a voluntary settlement.
 If still unsettled after cooling-off period, union may strike/ER may
declare lockout.

Decision to declare a strike / lockout

- must be approved by a majority of the total union membership in the
bargaining unit / majority of the board of directors of the corporation
- obtained by secret ballot in meetings for that purpose

› decision is valid for the duration of the dispute based on substantially the
same ground as when the vote was taken.
› The union or ER shall furnish the NCMB the results of the voting (strike-
vote) at least 7 days before the intended strike or lockout, subject to the
cooling-off period (hence strike/ lockout should only be after the
appropriate cooling-off period PLUS 7 days; the cooling-off period and
the 7-day period are counted separately)

Q: Magdalo, a labor union in Oakwood, a furniture manufacturing firm, after failing

in its negotiations with Oakwood, filed with the Department of Labor and
Employment (DOLE) a notice of strike. The DOLE summoned Magdalo and
Oakwood for conciliation hearings to resolve the deadlock. Unable to agree despite
efforts of the DOLE, Magdalo called a strike participated in by its officers and union
members including Cesar Tinio, a rank and file employee, who led the “walk out.”
Oakwood filed a petition to declare illegal the strike which Magdalo staged without
observing the seven-day ban under the Labor Code. Oakwood claimed that the
strike being illegal, all those who participated therein, including Cesar Tinio, could
be dismissed as, in fact, they were so dismissed by Oakwood. Decide the case.

Suggested Answer:
When Oakwood dismissed all the officers and members of the union who
participated in the strike which was declared illegal because it was staged without
observing the seven-day ban under the Labor Code, Oakwood illegally dismissed
the union members, including Cesar Tinio. The Labor Code provides that a union
officer who knowingly participates in an illegal strike loses his employment status.
Thus, the union officers were legally dismissed. But for a union member to lose his
employment status, he should have committed illegal acts during the strike, like
acts of violence, coercion or intimidation or obstruction of ingress to or egress from
the employer’s premises for lawful purposes or obstruction of public thoroughfares.
The union members, including Cesar Tinio, did not commit any of these acts. Thus,
it would be illegal to dismiss them. (2003 Bar Question)

Q: What are the statutory requisites for a valid strike by the workers? Should these
requisites be complied with substantially or strictly?
Page 163 of 195
Suggested Answers:
1.The statutory requisites for a valid strike are the following:
A strike may be declared only in cases of bargaining deadlocks or unfair labor
practices. Violations of collective bargaining agreements, except flagrant and/or
malicious refusal to comply with its economic provisions, shall not be considered
unfair labor practice and shall not be strikeable. No strike or lockout may be
declared on grounds involving inter-union and intra-union disputes.
No strike may be declared without first having filed a notice of strike or without
the necessary strike vote having been obtained and reported to the National
Conciliation and Mediation Board. A strike may actually take place only after a 30-
day waiting period after notice was filed for a strike arising from a bargaining
deadlock or after a 15-day waiting period for an unfair labor practice strike. Notice
about a strike vote should be given seven days before the intended strike.
No strike can be declared after assumption of jurisdiction by the Secretary of
Labor and Employment or after certification or submission of the dispute to
compulsory or voluntary arbitration ar during the pendency of cases involving the
same grounds for the strike or lockout.
The above requisites are to be complied with strictly. Thus, the Supreme Court
has ruled that non-compliance of the requirements of notice or a strike vote or of
the waiting periods makes a strike an illegal strike.

Another Suggested Answer:

1. Statutory Requirements for a Valid Strike
a. Status of Striking Union-
For a ULP strike or bargaining deadlock strike, only duly-certified or
recognized bargaining representative may declare such strike.

b. Procedural Requirements
1. Notice of Intent. Filing of Notice of Intent to Strike with the NCMB
2. Cooling –off Period. Observance of Cooling-off period:
(a) ULP- 15 days before the intended date of strike
(b) Bargaining deadlock-30 days before intended date of strike
3. Strike Vote and Filing of the same with the NCMB and the observance of
seven (7) days strike ban. (Art. 263 (c-f), LC)
4. Cause- The cause of a strike must be a labor or industrial dispute. (Art 212
(o), LC).

Compliance with all legal requirements is meant to be and should be

mandatory. (National Federation of Sugar Workers v. Ovajera) (2004 Bar
Question)

Assumption of Jurisdiction by the Sec. of Labor/ Certification to NLRC

for compulsory arbitration— in cases of labor dispute in an industry
indispensable to national interest (as determined by the Pres. of the Phils)

Effect of AJ or certification:
 automatically enjoins the intended or impending strike or lockout as
specified in the assumption or certification order.
Page 164 of 195
  If one has already taken place at the time of assumption, all striking or
locked out EEs shall immediately return-to-work and the ER shall
immediately resume operations and readmit all workers
 Before or at any stage of the compulsory arbitration, the parties may
opt to submit the dispute to voluntary arbitration (VA); also, the Pres.
of the Phils is not precluded from intervening at anytime and assuming
jurisdiction over the dispute
 Sec., NLRC, or VA shall decide within 30 days. Decision of these or the
Pres shall be final and executory 10 days from receipt of the parties.

 The moment there is Presidential (or by Secretary of Labor)

assumption of jurisdiction, whether a return-to-work order is issued
or not, the return-to-work order is an integral part of the assumption
of jurisdiction. (Sarmiento v. Tuico, 1988)

Q: The Secretary of Labor assumed jurisdiction over a strike in Manila Airlines and
eventually issued a return-to-work order. The Manila Airlines EEs Union defied the
return-to-work order and continued with their strike. The management of Manila
Airlines then declared all the EEs who participated in the strike dismissed from
employment.
(a) Was the act of Manila Airlines’ management in dismissing the participants
in the strike valid?
(b) What are the effects of an assumption of jurisdiction by the Secretary of
Labor upon the striking EEs and Manila Airlines?

Answer:
(a) Yes. The act of Manila Airlines’ management in dismissing the participants
in the strike is valid. In a number of Supreme Court decisions, it has ruled that the
defiance by workers of a return to work order of the Secretary of Labor issued when
he assumes jurisdiction over a labor dispute is an illegal act and could be the basis
of a legal dismissal. The return to work order imposes a duty; it must be discharged
as a duty even against the workers’ will.

(b) When the Secretary of Labor assumes jurisdiction over a strike, all striking
EEs shall immediately return to work and the ER shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing
before the strike. (1997 Bar Question)

Q: The Secretary of Labor and Employment, after assumption of jurisdiction over a

labor dispute in an airline issued a Return to Work Order. The airline filed a Motion
for Reconsideration of the Order and pending resolution of the motion deferred the
implementation of the Order.
Can the airline defer the implementation of the return to work Order pending
the resolution of the motion of reconsideration?

Suggested answer:

Page 165 of 195

 The airline cannot defer the implementation of the Return to Work Order on
the basis of there being a pending Motion for Reconsideration re: the assumption
of jurisdiction by the Secretary of Labor and Employment of a labor dispute.
According to the Supreme Court, the Return to Work Order issued by the
Secretary of Labor upon his assumption of jurisdiction over a labor dispute in an
industry indispensable for the national interest is immediately executory.

Another suggested answer:

No, the airline cannot defer the implementation of a return to work order
pending resolution of a Motion for Reconsideration. (See Art 263 (g), LC)
The Supreme Court, in Baguio Colleges Foundation v. NLRC (1995), ruled:
“xxx assumption and certification orders are executory in character and are to
be strictly complied with by the parties even during the pendency of any petition
questioning their validity.
Being executory in character, there was nothing for the parties to do but
implement the same.” (underscoring supplied) (1998 Bar Question)

Q: In a labor dispute, the Secretary of Labor issued an “Assumption Order.” Give

the legal implications of such an order.

Suggested Answer:
Under Art. 263(g) of the Labor Code, such assumption shall have the effect of
automatically enjoining the intended or impending strike or lockout as specified in
the assumption order. If one had already taken place at the time of assumption,
all striking or lockout employees shall immediately resume operations and re-admit
all workers under the same terms and conditions prevailing before the strike or
lockout. The Secretary of Labor and Employment may seek the assistance of law
enforcement agencies to ensure compliance with this provision as well as with such
orders as he may issue to enforce the same. The mere issuance of an assumption
order by the Secretary of Labor automatically carries with it a return-to-work order,
even if the directive to return to work is not expressly stated in the assumption
order. Those who violate the foregoing shall be subject to disciplinary action or
even criminal prosecution.
Under Art. 264 of the Labor Code, no strike or lockout shall be declared after
the assumption of jurisdiction by the Secretary. (2003 Bar Question)

Q: Which of the following may be considered among industries most vital to national
interest as to be subject of immediate assumption of jurisdiction by the Secretary
of Labor and Employment or certification for compulsory arbitration in case of strike
or work stoppage arising from a labor dispute?
(1) Bulletin daily newspaper publishing company
(2) Local franchise of Jollibee and Starbucks
(3) Shipping and port services in Cebu and Manila
(4) Enchanted Kingdom, Elephant Island and Boracay Resort
(5) LBC, DHL and FedEx centers
Justify your answer or choice.

Page 166 of 195

Suggested Answer:
Certification of labor dispute for immediate assumption of jurisdiction by the
Secretary of Labor and Employment, as indispensable to national interest. (Art. 263
(g), LC).
1. Bulletin Daily Newspsaper. Access to information, e.g. local. Foreign, or
otherwise are requirements for an informed citizenry
2. Shipping and port services in Cebu and Manila. The country needs domestic
sea transport due to our topography and for the smooth flow of business
and government operations.
3. LBC, DHL, FedEx Center. Couriers are essential to foreign and domestic
government operations. (2004 Bar Question)

Not valid grounds for strike/ lockout

[RA 6727; Book V, Rule XXII, Sec. 5]
(1) Inter-union dispute— conflict between and among LLOs involving
representation for purposes of CB or other conflict [Book V, Rule I, Sec.
1 (x)]

(2) Intra-union dispute— conflict between and among union members

(violation of rights and conditions of membership, disagreement over
the union’s consti and by-laws or those arising from chartering or
affiliation of union) [Book V, Rule I, Sec. 1 (bb)]

(3) Wage distortion, per RA 6727 (Wage Rationalization Act) (Ilaw at Buklod
ng Manggagawa v. NLRC, 1991)

PICKETING— walking and patrolling the vicinity of a place of business

involved in a labor dispute (this may happen even if no strike or work
stoppage)

 Peaceful picketing is entitled to protection as an exercise of free

speech but the courts are empowered to confine or localize the sphere
of demonstration to the parties to the labor dispute. Court may
insulate establishments/ persons with no connection to the dispute.
(this is the “innocent by-stander” rule, giving third persons right to
regulate the dispute)

PROHIBITED ACTIVITIES (hence making it an illegal strike/ lockout/

picketing) (Art. 264)
(1) Strike/ lockout without
(a) Bargaining collectively first
(b) Filing the notice required or
(c) Obtaining the necessary strike or lockout vote and reporting it to
the NCMB

(2) Strike/ lockout after AJ by the Pres. or the Sec. or after certification
or submission of the dispute to compulsory or voluntary arbitration or
Page 167 of 195
 during the pendency of cases involving the same grounds for the
strike or lockout.

(3) Obstruct, impede, or interfere with, by force, violence, coercion,

threats or intimidation, any peaceful picketing by employees during
any labor controversy or in the exercise of the right to self-
organization or collective bargaining (strike-beaker), or shall aid or
abet such obstruction or interference

(4) Employment of strike-breaker/ employed as strike-breaker

(5) Public official / employee, AFP or PNP officers / personnel bringing in,
introducing, or escorting in any manner, any individual who seeks to
replace strikers in entering or leaving the premises of a strike area,
or work in place of the strikers.
Rule: Police shall keep out of the picket lines unless
1. actual violence or other criminal acts occur; or
2. taking any measure necessary to maintain peace and order,
protect life and property, and/or enforce the law and legal order.

(6) Acts of violence, coercion or intimidation or obstruct the free ingress

to or egress from the employer’s premises for lawful purposes, or
obstruct public thoroughfares.

CONSEQUENCES OF CONCERTED ACTIONS ON THE EMPLOYMENT

STATUS
(1) Lawful Strike/ Lockout
a. Dismissal in a lawful economic strike— reinstatement (no
backwages because “no work, no pay”)
b. Dismissal in a lawful ULP strike
i. EEs who were discriminatorily dismissed because of union
activities— reinstatement + backwages
ii. EEs who voluntarily went on strike because of such ULP—
reinstatement only
 Court has still the discretion, despite the finding of ULP, WoN
to grant backpay

 Any worker or union officer who knowingly participates in the

commission of illegal acts during a lawful strike—justified dismissal
 Mere participation of a worker in a lawful strike—not a ground for
his dismissal, even if a replacement had been hired by the ER during
the lawful strike [Art. 264 (a)]

Q: As a result of bargaining deadlock between ROSE Corporation and ROSE

Employees Union, its members staged a strike. During the strike several employees
committed illegal acts. The company refused to give in to the union’s demands.
Eventually, its members informed the company of their intention to return to work.
Page 168 of 195
Can ROSE Corporation refuse to admit all the strikers?

Suggested Answer:
Article 264 of the Labor Code provides that “mere participation of the worker
in a lawful strike shall not constitute sufficient ground for termination of
employment even if a replacement had been hired by the employer during such
lawful strike.”
On the other hand, the same Article of the LC also provides: “Any worker or
union officers who knowingly participates in the commission of illegal acts during a
strike may be declared to have lost his employment status.”
Because of the above-quoted provisions of the Labor Code, ROSE Corporation
cannot refuse to admit all the strikers who inform the company of their intention to
return to work, except those workers who may have committed illegal acts during
the strike who can be declared as having lost their employment status.

Q: Assuming the company admits all the strikers, can it later on dismiss those
employees who committed illegal acts?

Suggested Answer:
Even if as its initial response, the company admitted all the strikers, the
company is not estopped from afterwards dismissing those employees who
committed illegal acts during the strike. Article 264 of the Labor Code expressly
states that “any worker xxx who knowingly participates in the commission of illegal
acts during strike may be declared to have lost his employment status.”

Q: If due to the prolonged strike, ROSE Corporation hired replacements, can it

refuse to admit the replaced workers?

Suggested Answer:
ROSE Corporation cannot refuse to admit the strikers if they did not commit
any illegal acts during a lawful strike. The Labor Code is very clear: Workers who
went on strike have not lost their employment status even if the company had hired
their replacements. (2006 Bar Question)

Q: A strike was staged in Mella Corporation because of a deadlock in CBA

negotiations over certain economic provisions. During the strike, Mella Corp. hired
replacements for the workers who went on strike. Thereafter, the strikers decided
to resume their employment.
Can Mella Corp. be obliged to reinstate the returning workers to their previous
positions?

Answer:
Yes. Mella Corp. can be obligated to reinstate the returning workers to their
previous positions. Workers who go on strike do not lose their employment status
except when, while on strike, they knowingly participated in the commission of
illegal acts. The Labor Code expressly provides: Mere participation of a worker in a
lawful strike should not constitute sufficient ground for the termination of his

Page 169 of 195

employment even if a replacement had been hired by the ER during such lawful
strike. (1997 Bar Question)

(2) Unlawful Strike/ Lockout

a. Dismissal of EE in an unlawful lockout— reinstatement + full
backwages [Art. 264 (a)]
b. Dismissal of EE in an unlawful strike
i. Union officer who knowingly participates in an illegal strike—
justified dismissal
ii. Any worker or union officer who knowingly participates in the
commission of illegal acts during an illegal strike—justified
dismissal
iii. Participation of a worker— not ground for dismissal. There
must be proof that he committed illegal acts during the strike.

Note: The penalty imposable to erring strikers does not always have
to be dismissal. It may be scaled down to suspension esp. of there
is a finding that both the ER and EEs contributed to the volatile
atmosphere. (PAL v. Brilliantes, 1997)

WHEN IS A STRIKE ILLEGAL

 Contrary to statutory prohibition
- If EEs do not have the right to strike (e.g., govt EEs)

 Violates a specific requirement of law (procedural requirements)

- If did not observe the procedural requirements in Art. 263

 Validity of grounds
- If not because of bargaining deadlock or ULP

 Employing unlawful means

- If prohibited activities were committed such as:
 Violence, coercion or intimidation
 Obstruct the free ingress to or egress from the ER’s premises
 Obstruct public thoroughfares
 Coercing or threatening non-srtiking EEs (amounts to ULP by
labor org)

 If there is an injunction (in national interest strikes)

 Violation of agreement of the parties

- If there is a no-strike clause in the CBA (applies only to economic
strikes)

Page 170 of 195

Q: The day following the workers voluntary return to work, the Company Production
Manager discovered an unusual and sharp drop in workers’ output. It was evidently
clear that the workers are engaged in a work slowdown activity.
Is the work slowdown a valid form of strike activity?

Suggested answer:
A work slowdown is not a valid form of strike activity. If workers are to strike,
there should be temporary stoppage of work by the concerted action of employees
as a result of an industrial or labor dispute. (See Art 212(o),LC)

Another suggested answer:

No, a slowdown is no a valid form of strike activity. The Supreme Court in Ilaw
at Buklod ng Manggagawa v. NLRC (1991) ruled:
“The Court is in substantial agreement with the petitioner’s concept of a
slowdown as a “strike on the installment plan”, as a willful reduction in the rate of
work by concerted action of workers for the purpose of restricting the output of the
employer, in relation to a labor dispute, as an activity by which workers, without a
complete stoppage of work retard production or their performance of their duties…
The Court also agrees that such slowdown is generally condemned as inherently
illicit and unjustifiable, because while the employees “continue to work and remain
at their positions, and accept wages paid to them”, they at the same time select
what part of their allotted tasks they care to perform of their own volition or refuse
openly, or secretly, to the employers damage, to do other work; in other words,
they work on their own terms.”
Like wise, a slowdown is not a valid form of concerted activity, absent a labor
dispute between the parties. (See Art 212 (o),LC) €

Another suggested answer:

No. It is a prohibited activity. It can be said to be a violation of the duty to
bargain collectively. The union is guilty of bad faith. The workers should resume
operations under the same terms and conditions prevailing prior to the strike.
(1998 Bar Question)

IMPROVED OFFER BALLOTING (Art. 265)— referendum by secret balloting

involving the union members on the improved offer of the ER on or before
30th day of strike.
 If at least majority of the union members/ BOD, trustees, or the partners
holding the controlling interest vote and accept the improved/ reduced
offer, the workers shall immediately return to work and the ER shall
thereupon readmit them upon the signing of the agreement.

Q: The Kilusang Kabisig, a newly-formed labor union claiming to represent a

majority of the workers in the Microchip Corporation, proceeded to present a list of
demands to the management for purposes of collective bargaining. The Microchips
Corporation, a multinational corporation engaged in the production of computer
chips for export, declined to talk to union leaders, alleging that they ha not as yet
presented any proof of majority status.

Page 171 of 195

 The Kilusang Kabisig then charged Microchip Corporation with unfair labor
practice, and declared a “wildcat” strike wherein means of ingress and egress were
blocked and remote and isolated acts of destruction and violence were committed.
Was the strike illegal?

Answer:
Because what was declared is a “wildcat” strike, the strike is illegal. A “wildcat”
strike is one that is one declared by a group of workers without formal union
approval. Thus, it is illegal because the Labor Code requires that for a strike to be
legal, among others, the decision to declare a strike must be approved by majority
of the total union membership in the bargaining unit concerned, obtained by a
secret ballot in meetings or referenda called for that purpose.

Alternative Answers:
1) The strike is illegal. The Labor Code recognizes only one of two (2) grounds for
a strike to be legal: bargaining deadlock or unfair labor practice. A strike to compel
the employer to recognize a union is not allowed by law.

2) The strike is not illegal. For the strike to be illegal because of violence, it should
be characterized by pervasive violence. Here, there were only remote and violated
acts of destruction and violence. But even if the strike is not illegal, those strikers
who committed illegal acts, namely those who blocked the ingress and egress and
who committed acts of destruction and violence, these strikers can be legally
dismissed.

Q: Was the company guilty of unfair labor practice when it refused to negotiate
with the Kilusang Kabisig?

Suggested Answer:
No. It is not an unfair labor practice (ULP) not to bargain wit the union which
has not presented any proof of its majority status. The Labor Code imposes on an
employer the duty to bargain collectively only with a legitimate labor organization
designated or selected by the majority of the employees in an appropriate
bargaining unit. It is not ULP for an employer to ask a union requesting to bargain
collectively that such union first show proof of its being a majority union. (1997
Bar Question)

Q: What is the rationale for the State regulation of strike activity and what are the
interests involved that the State must balance and reconcile?

Q: Cite two examples on how the law regulates the use of strike as a from of
concerted activity

Suggested answer:

1. the first rationale is the constitutional provision that the right to strike is to be
exercised “ in accordance with law”. Another rationale is the Civil Code provision
that the relations between employer and employee are imbued with public interest

Page 172 of 195

and are subject to the provisions of special law. A third rationale is the police power
of the State.

The interests to be balanced are the rights of the workers, as primary socio-
economic force, to protection of the law, to security of tenure, to concerted
activities, etc. these should be balanced with the right of the employer to
reasonable, return on investment and to expansion and growth. General welfare or
the general peace and progress of society should also be considered. This is why
assumption of jurisdiction and certification to NLRC are allowed in “national
interest”: cases. (Art 263, LC; Lapanday Workers Union v. NLRC (1995))

2. Examples: (1) procedural requirements should be observed, namely, filing of

notice of strike, observance of cooling-off period, taking of strike vote, and report
of the strike vote, and report of the strike vote; (2) use of violence, intimidation or
coercion and blockade of ingress-egress are not allowed. (Art 263 (b)(c)(f)(g), LC)
(2000 Bar Question)

LABOR INJUNCTION ON LABOR DISPUTES (Arts.254,218 (e), 264)

Issuing agency—NLRC
Rule: No temporary or permanent injunction or restraining order in any case
involving labor dispute.
Except: Under Arts. 264 and 218 (e)

Procedure for issuance of injunction (not ex parte)

(1) Hearing of the testimony of witnesses,
(2) with opportunity for cross-examination, in support of the allegations
of a complaint made under oath,
(3) and testimony in opposition thereto, if offered, and
(4) only after a finding of fact by the commission, to the effect:
(a) That prohibited or unlawful acts have been threatened and will
be committed and will be continued unless restrained (no
injunction or TRO shall be issued except against those making
the threat or committing the prohibited or unlawful act or actually
authorizing or ratifying the same after actual knowledge thereof);
(b) That substantial and irreparable injury to complainants property
will follow;
(c) That greater injury will be inflicted upon complainant by the
denial of relief than will be inflicted upon defendants by the
granting of relief;
(d) That complainant has no adequate remedy at law; and
(e) That the public officers charged with the duty to protect
complainants’ property are unable or unwilling to furnish
adequate protection.

(5) Personal notice to:

- all known persons against whom relief is sought

Page 173 of 195

 - to the Chief Executive and
- other public officials of the province or city within which the
unlawful have been threatened or committed charged with the
duty to protect complainant's property [Art. 218 (e)]

 With regard to allegations under Art. 264 (prohibited activities), follow

the same procedure. [Art. 264 and 218 (e) differ only in the
allegations]

Conditions for Issuance of TRO ex parte

1. a substantial and irreparable injury to complainant's property will be
unavoidable
2. there is testimony under oath, sufficient, if sustained, to justify the NLRC
in issuing a temporary injunction upon hearing after notice
3. the complainant shall first file an undertaking with adequate security in
an amount to be fixed by the commission sufficient to recompense those
enjoined for any loss, expense or damage caused by the improvident or
erroneous issuance of such order or injunction; and
4. the TRO shall be effective for 20 days only. [Art. 218 (e)]

Q: Professor Juan dela Cruz, an author of the textbook Commentaries on the Labor
Code of the Philippines, citing an American case, wrote: “It is said that the
prohibition against the issuance of a writ of injunction in labor cases creates
substantive and not purely procedural law.” Is there any statutory basis for the
statement/ comment under Philippine law?

Suggested answer:
Yes. The statutory basis is Art 254 of the Labor Code. It prohibits issuance of
injunction, as a matter of policy, to resolve disputes except as otherwise provided
in Arts 218 and 264 of the Labor Code. (Caltex Filipino Managers and Supervisors
Assn. V. CIR (1972)) (2000 Bar Question)

SUMMARY OF JURISDICTION

VOLUNTARY ARBITRATORS (VA) (Arts. 261-262)

 supervised by the National Conciliation and Mediation Board (NCMB)

Original and Exclusive jurisdiction

1. Unresolved grievances from the interpretation or implementation of the
CBA except gross violation of the CBA (which is a ULP, hence under LA’s
jurisdiction)
2. Unresolved grievances arising from the interpretation or enforcement of
company personnel policies
3. Any other labor dispute, upon agreement of the parties

Procedure
Grievances submitted to the
Page 174 of 195
 grievance machinery of the CBA,
if unresolved within 7 days from submission

voluntary arbitration
(to be decided within 20 cal. days)

Decision
(final and executory in 10 cal. daysfrom receipt of the parties)

Q: State the cases when a labor dispute would fall under the jurisdiction of
voluntary arbitrators or panel of voluntary arbitrators.

Answer: A labor dispute falls under the jurisdiction of a voluntary arbitrator or a

panel of voluntary arbitrators if a labor dispute arises from an unresolved grievance
which in turn arises from the interpretation or implementation of a CBA or of
company personnel policies. (Art. 261). Upon agreement of parties, a voluntary
arbitrator or panel of voluntary arbitrators may also hear and decide all other labor
disputes including unfair labor practices and bargaining deadlock. (Art. 262) (1997
Bar Question)

Voluntary Arbitrator
Q: The employer company, in a directive to the union president, ordered the
transfer of some of its employees, including a number of union officials, to its plant
offices. The order was opposed by the union. Ultimately, the union filed an unfair
labor practice against the company alleging that the purported transfer of its union
officials was unjust and in violation of the Collective Bargaining Agreement (CBA).
Pursuant to the terms of the CBA, the dispute was referred to a voluntary arbitrator
who later ruled on the issues raised by the parties. Could it later be validly asserted
that the “decision” of the voluntary arbitrator would have no “compulsory” effect
on the parties? Explain.

Suggested Answer:
No. A voluntary arbitrator chosen under the Grievance Machinery of a CBA can
exercise jurisdiction not only on disputes involving interpretation/implementation of
a CBA and/or company rules, personnel policies (Art. 261, LC) but also, upon
agreement of the parties, “all other labor disputes including unfair labor practice”
(Art. 262, LC). As no objection was raised by any of the parties when “the dispute
referred to a voluntary arbitrator who later ruled on the issues raised by the
parties”, it follows that what we is voluntary arbitration agreed upon by the parties.
His decision is binding upon the parties and may be enforced through any of the
sheriffs, including those of the NLRC, he may deputize.

Page 175 of 195

Another Suggested Answer:
No. The award of voluntary arbitrators acting within the scope of their authority
determines the rights of the parties, and their decisions have the same legal effects
as a judgment of the Court. Such decisions on matter of fact or law are conclusive,
and all matters in the award are thenceforth res judicata on the theory that the
matter has been adjudged by the tribunal which the parties have agreed to make
final as tribunal of last resort. (Volkschel Labor Union v. NLRC, 98 SCRA 314
[1980]). (2003 Bar Question)

Q: Company A and Union B had a 3-year CBA that expired on June 12, 1990.
Negotiations proved futile so the unresolved issues were referred to an Arbiter who
rendered a decision on March 15, 1992 retroactive to December 1, 1990. is the
Arbiter’s decision providing for retroactivity tenable or not? Why?

Suggested answer:
The referral of he unresolved issues of the collective bargaining negotiations
to an Arbiter is not within the jurisdiction of the Arbiter.
But assuming that the unresolved issues in the collective bargaining
negotiations were properly referred to the Arbiter pursuant to the provision of the
Labor Code (art 262) that states that a Voluntary Arbitrator may hear and decide
any labor dispute, including bargaining deadlocks, the Arbiter’s decision providing
for retroactivity is tenable. Exercising his compulsory arbitration power, the Arbiter
could decide the issue of retroactivity in any way which is not contrary to law,
morals, good customs, public order or public policy.
But in a case (Manila Electric Co. v. Quisumbing) the Supreme Court said that
an arbitral award shall retroact to the first day after the six-month period following
the expiration of the last day of the CBA that was being re-negotiated.

Another suggested answer:

The retroactive Order of the Labor Arbiter is void for want of jurisdiction.
Jurisdiction is conferred by law. Nowhere in the Labor Code, more specifically Art
217, is the Labor Arbiter given jurisdiction over unresolved issues in collective
bargaining, including determining the period or duration of a Collective Bargaining
Agreement. (2001 Bar Question)

NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB) [created

by EO 251 (1987)]
 absorbed the conciliation, mediation, and voluntary arbitration
functions of the Bureau of Labor Relations

Functions
(1) formulate policies/ guidelines pertaining to effective mediation and
conciliation of labor disputes
(2) perform preventive mediation and conciliation functions
(3) formulate policies/ guidelines pertaining to the promotion of non-
adversarial schemes, grievance handling, voluntary arbitration, and
other voluntary modes of dispute settlements

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 (4) administer the voluntary arbitration program, maintain/ update a
list of VAs
(5) provide counseling and preventive mediation assistance

NATIONAL LABOR RELATIONS COMMISSION (NLRC) (Arts. 213, 217,

223)— the country’s labor court (principal government agency that hears
and decides labor-mgt disputes). The NLRC has regional arbitration
branches or RABS. The labor arbiters or executive labor arbiters are the
NLRC representatives in the country’s various regions.

Original and exclusive jurisdiction of the Labor Arbiter (LA)-

Compulsory Arbitration
- ULP cases
- Termination disputes
- Cases involving wages, rates of pay, hours of work, and other terms
and conditions of employment, if accompanied with a claim for
reinstatement
- Claims for damages arising from ER-EE relationship
- Cases arising from Art. 264, including questions involving the legality
of strikes and lockouts
- Whether accompanied with claim for reinstatement, all other claims
arising from ER-EE relationship, including those of persons in
domestic or household service involving an amount exceeding P5,000
(if not exceeding P5,000, Regl Dir of DOLE has jurisdiction)

Note: these cases may be under the jurisdiction of the VA based on

the agreement of the parties (without clear agreement, LA has
jurisdiction)

Exclusive appellate jurisdiction of the Commission over all cases

decided by the LA— not any more compulsory arbitration (Note: it is only
in national interest strikes that the Commission conducts compulsory
arbitration)

Powers of the NLRC (Arts. 218-219)

(1) Power to make rules and regulations pertaining to its functions;
(2) Power to administer oath and issue subpoena and summons;
(3) Power to investigate, hear, and decide disputes within its jurisdiction;
(4) The power to hold persons in contempt;
(5) The power to issue restraining orders and injunctions;
(6) Power to conduct ocular inspection;
(7) Power to decide appealed cases

Procedure

Labor Arbiter

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 [Note: a decision of the LA reinstating a dismissed EE, insofar as the
reinstatement
aspect is concerned, shall be immediately executory (readmitted to work or
reinstated in the payroll at the option of the ER), pending appeal]

appeal to the NLRC

(within 10 calendar days
from receipt of the decision)

Commission shall decide

(within 20 calendar days
from receipt of answer
of the other party)

Finality of the decision of the Commission

(after 10 calendar days from
receipt of notice by the parties)

Remedies available to challenge final decision

1. MR within 10 calendar days from receipt of the decision based on
palpable or patent errors; only 1 MR is allowed; or
2. Special civil action for certiorari under Rule 65 not later than 60 days
from receipt of notice of judgment; filed with the CA (St. Martin
Funeral Homes v. NLRC).

BUREAU OF LABOR RELATIONS (BLR) and the Labor Relations

Divisions in the Regl Offices of DOLE (Art. 226-233; DO 40-03)
 Hearing Officer: Med-Arbiter in the BLR or Regl Office
 Jurisdiction is largely confined to union matters, CB registry, and labor
education because of the creation of NCMB (BLR no longer handles
labor-mgt disputes).

Original and exclusive jurisdiction

- Inter-union/ Intra-Union disputes— may be filed only by a LLO
Inter-union conflicts (e.g., representation issue/ cancellation of
registration)
Intra-union conflicts (e.g., election of officers of the union/
compliance with CBL/ violations of rights of union
membership)

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 - Other related labor relations disputes between the union and the ER
or any individual or group that is not a LO or worker’s assn (e.g.,
cancellation of registration of unions/ petition for interpleader) (added
by DO 40-03)— may be filed by any party-in-interest

Procedure

File with DOLE Regl Office where File with the BLR
registered (if independent (if federation/national union)
union/chartered local)

Bureau Dir
(20 days from last hearing
Regl Dir within which to decide)
(if cancellation of registration) or
Med-Arb (other dispute)
(decide within 20 days from last
hearing) Appeal to Sec.

Appeal to Bureau
(10 days from receipt of decision; Finality of decision of the Sec.
Bureau will decide within 20 days after 10 days from receipt of
from receipt of records) parties

Finality of decision of the Bureau after

10 days from receipt of parties
(appeal stays decision of Bureau
(appeal stays decision of Med-Arb/ Dir.)
Regl Dir.)

 Relationships/ rights of the parties prior to the filing of the complaint or

petition shall continue during pendency of the proceedings. (Book V, Rule
XI, Sec. 3)
 Pendency of an intra/ inter-union dispute and other related labor relations
dispute is not a prejudicial question to any petition for CE nor is it a ground
for dismissal of such petition. (Book V, Rule XI, Sec. 3)

Q: The affected members of the rank and file elevated a labor arbiter’s decision to
the NLRC via a petition for review filed after the lapse of the 10-day reglementary

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period for perfecting an appeal. Should the NLRC dismiss the petition outright or
may the NLRC take cognizance thereof?

Suggested answer:
The NLRC should dismiss the appeal outright because the same was filed
beyond the reglementary period of appeal. Art 223, LC reads:
“Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within (10) calendar days
from receipt of such decisions, awards, or orders.”

Another suggested answer:

The NLRC could dismiss outright the appeal for being filed out of time. But if
there are good reasons that may justifiably explain why there was a delay in the
filing of the appeal, substantial justice may be the basis for the NLRC to take
cognizance of the appeal.

Q: Company A within the reglementary period appealed the decision of the Labor
Arbiter directing the reinstatement of an employee and awarding backwages.
However, A’s cash bond was filed beyond the ten day period. Should the NLRC
entertain the appeal? Why?

Suggested answer:
No, the NLRC should not entertain the appeal, as the same ws not perfected
for failure to file a bond. Art 223, LC reads:
“In case of a judgment involving a monetary award, an appeal by the employer
may be perfected only upon the posting of a cash or surety bond… In the amount
equivalent to the monetary award in the judgment appealed from.”
In Aba v. NLRC (1999), the Supreme Court ruled:
“An appeal bond is necessary….the appeal may be perfected only upon the
posting of cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in
the judgment appealed from.”

Another suggested answer:

The NLRC may still entertain the appeal.
It is true that the Labor Code (in Art 223) provides that the appeal is perfected
only upon the posting of a cash or surety bond. But if Company A filed a motion for
the reduction of the bond, and said motion was only acted upon after the
reglementary period, then, the NLRC, in the interest of substantial justice, may still
take cognizance of the appeal. (2001 Bar Question)

ADMINISTRATION AND ENFORCEMENT OF LABOR LAWS (Arts. 128-

129)

Powers
Visitorial and enforcement powers (Art. 128)—no court/ entity can issue
TRO or injunction against enforcement orders issued here
1. Inspection
a. Access to ER’s records and premises
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 b. Right to copy records
c. Right to question any EE
d. Investigate any fact, condition or matter which may be necessary
to determine violations, or which may be necessary to aid
enforcement of the LC or any labor law or order
2. Issue compliance orders to give effect to labor law regulations based on
the findings of inspection and issue writs of execution for enforcement
of the orders
3. To order suspension of operations of an establishment whose non-
compliance with law poses grave danger to workers

Money Claims Adjudication under Art. 129— Summary Proceeding

4 Jurisdictional Requirements:
1. If claimant is an EE or person in domestic or household service;
2. Claim arises from ER-EE relationship
3. No claim for reinstatement;
4. Aggregate claims of each EE or househelper does not exceed
P5,000 (if there is a question of reinstatement or claim exceeds
P5,000, LA has jurisdiction)

Difference between Art. 128 and Art. 129

Art. 128 Art. 129
Nature Inspection of establishments Adjudication of
and issuance of orders to money claims (labor
comply with labor legislation standards only);
in general; proceedings here proceedings are
are offshoots of the initiated by
inspection) complaints
Jurisdictional These do not apply here See above
requirements
Who exercises Sec. of Labor or duly Regl Dir or any
power (officers authorized reps (may or may Hearing Officer of
designated) not be the DOLE Regl Dir.) DOLE
Appeal Appealable to Sec Appealable to NLRC

Q: the national council of X Union, the exclusive bargaining representative of all

daily paid workers of Z Corp., called a general meeting and passed a resolution
which provides that each union member was to be assessed P1,000 to be deducted
from the lump sum of P10,000 which each EE was to receive under the CBA. Sergio,
a Union member, protested and refused to sign the authorization slip for the
deduction. X Union then passed a resolution expelling Sergio from the Union. Sergio
filed a complaint before the Labor Arbiter for illegal deduction and expulsion from
the union.
Will the complaint prosper? Explain.
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Suggested Answer:
The complaint will not prosper before the Labor Arbiter because there is here
an intra-union conflict which is under the jurisdiction of the Med-Arbiter. (See Art.
226 and Rule V of Book V of the Rules and regulations Implementing the Labor
Code). (1996 Bar Question)

Q: Mr. Jonathan Pe, a registered stockholder of New Wave Beauty Shop, Inc. was
elected Vice-President of New Wage at a regular monthly meeting.
At a subsequent meeting of the Board of Directors, it was resolved to dismiss
Jonathan as VP due to loss of trust and confidence. Jonathan Pe filed with the NLRC
a complaint for illegal dismissal with damages against New Wage claiming that he
was dismissed without due process. New Wage filed a Motion to Dismiss based on
lack of jurisdiction.
Resolve the motion.

Suggested Answer:
The Motion to Dismiss should be granted. The election of Jonathan Pe as VP
of New Wave Beauty Shop, Inc., made him a corporate officer.
His subsequent dismissal as such corporate officer is considered an intra-
corporate matter. Thus, the dismissal of Pe is not a case of termination dispute
which is under the jurisdiction of the NLRC. Instead it is under the jurisdiction of
the Securities and Exchange Commission, it having jurisdiction of the SEC, it having
jurisdiction over intra-corporate matters. (1996 and 1997 Bar Questions)

Q: On 01 August 1992, Pro-Knit, a corporation engaged in the manufacture of

textile garments, entered into a collective bargaining agreement with the Kamao
Union in representation of the rank and fie employees of the corporation.
The CBA was effective up to 20 June 1995. The contract had an automatic
renewal clause which would allow the agreement after its expiry date to still apply
until both parties would have been able to execute a new agreement.
On 20 May 1995 Kamao Union submitted to Pro-Knits management their
proposals for the renegotiation of a new CBA. The next day, Pro-Knit suspended
negotiations while Kamao Union sine Pro-Knit had entered into a merger with Eagle
Garments, a corporation also engaged in the manufacture of textile garments.
Eagle Garments assumed al the assets and liabilities of Pro-Knit.
Kamao filed a complaint with the Regional Trial Court for specific performance
and damages with a prayer for preliminary injunction against Pro-Knit and Eagle
Garments.
Pro-Knit and Eagle Garments filed a motion to dismiss based on lack of
jurisdiction. How would you rule on the Motion to Dismiss?

Answer:
I will grant the motion to dismiss. The act of Pro-Knit suspending the
negotiations with Kamao Union could be an unfair labor practice. It could be a
violation of the duty to bargain collectively. As such, the case is under the
jurisdiction of a Labor Arbiter and not of a regular court.

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Alternative Answer:
I will deny the Union’s Motion to Dismiss. There is no labor dispute between
the parties; hence, the Regional Trial Court has jurisdiction over the complaint. Art.
212 of the Labor Code, reads—
“Labor dispute includes any controversy or matter concerning terms and
conditions of employment or the association or representation of persons
negotiating, fixing, maintaining, changing, or arranging the terms and conditions of
employment regardless of whether the disputants stand in the proximate relations
of employer and employee.”
In addition, the Company can claim that labor contracts are contracts in
personam and do not generally bind successors in interest except under special
circumstances. In Sundowner Development Corporation v. Drilon, the Court said:
“The rule s that unless expressly assumed, labor contracts such as xxx
collective bargaining agreements are not enforceable against a transferee of an
enterprise, labor contracts being in personam, thus binding only between the
parties. (1997 Bar Question)

Q: Under a seaman’s contract of employment with a local manning agent of a

foreign shipping company. Capt. TROY embarked on an ocean-going vessel in good
health. One stormy night at sea, he was drenched with rainwater. The following
morning, he contracted fever which lasted for days. He suffered loose bowel
movement, lost his appetite, and eventually died before a scheduled airlift to the
nearest port.
Subsequently, the widow of Capt. TROY complained against the local manning
agent and its foreign principal before the Regional Arbitration Branch of DOLE, for
actual and exemplary damages and attorney’s fees. She invoked the Labor Code
provision which requires the employer to provide all necessary assistance to ensure
the adequate and necessary medical attendance and treatment of the injured or
sick employee in case of emergency.
Respondents moved to dismiss the complaint on the ground that the Labor
Arbiter has no jurisdiction over the complaint for damages arising from illness and
death of Capt. TROY abroad. Resolve the motion with reasons.

Suggested Answer:
In Tolosa v. NLRC, the Supreme Court held that what we have in this case is a claim
arising from tort or quasi-delict. In such a situation, the seaman who died on
November 18, 1992, cannot sue before the Labor Arbiter. But this will not apply
now, as under Sec. 10, RA 8042, (effective June 7, 1995), what we have is a claim
“arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers fro overseas deployment including claims for actual,
moral, exemplary and other forms of damages”, cognizable by the “Labor Arbiters
of the National Labor Relations Commission (NLRC)” who have the original and
exclusive jurisdiction thereon. (2004 Bar Question)

Q: FACTS: Polaris Drug Company had an existing CBA with Polaris Workers Union
(PWU) which was due to expire on May 31, 1999. PWU had a total membership of
100 rank-and-file EEs of the company. Mike Barela, a militant member of the union,
suspected that the union officers were misappropriating union funds as no financial
report was given to the general membership during the union’s general assembly.

Page 183 of 195

Hence, Mike Barela prepared a sworn written complaint and filed the same with the
Office of the Secretary of Labor on May 10, 1999, petitioning for an examination of
the financial records of PWU.
1. Is the Secretary of labor authorized by law to examine the financial records
of the union? If so, what power? If not, why not?

Suggested Answer:
The Secretary of Labor is expressly authorized by the Labor Code (in Art. 274)
to examine the financial records of the unions to determine compliance or non-
compliance with the pertinent provisions of the Labor Code and to prosecute any
violation of the law and the union constitution and by-laws. But this authority may
be exercised only upon the filing of a complaint under oath and duly supported by
the written consent of at least 20% of the total membership of the labor
organization concerned.

Alternative Answer:
Among the rights and conditions of membership in a labor organization is the
right implied by the proviso of the Labor Code [Art. 241(m)] stating that the books
of accounts and other records of the financial activities of any labor organization
shall be open to inspection by any officer or member thereof during office hours.
As a union member, Mike Barela could file an intra-union case that may entail
the act of the Secretary of Labor examining the financial records of the union. (See
La Tondeña Workers Union v. Secretary of Labor and Employment, 239 SCRA 117)

2. Under the facts given above, could an examination or audit of the financial
records of the union be ordered? Why?

Suggested Answer:
Under the facts given in the question, an examination or audit of the financial
records of the union can not be ordered because for such examination or audit to
take place, there should be a complaint under oath and duly supported by written
consent of at least 20% of the total membership of the labor organization
concerned. In this case, the aforementioned requirement was not fulfilled. It was
only a sworn written complaint by one union member that was filed.
Also, the Labor Code provides that an examination of the books of a union
shall not be conducted during the 60-day freedom period nor within 30 days
immediately preceding the date of election of union officials.
In the case, the complaint was filed on May 10, 1999 which is within the
freedom period of the current CBA which was to expire on May 31, 1999. (1999
Bar Question)

NB- Jurisdiction is a favorite bar question.

PRESCRIPTIVE PERIODS
ULP 1 year
Money Claims 3 years
Offenses under LC 3 years
Illegal Dismissal 4 years

Page 184 of 195

Q: A. State your agreement or disagreement with the following statement and
explain your answer briefly: A criminal case filed against an EE does not have the
effect of suspending or interrupting the running of the prescriptive period for the
filing of an action for illegal dismissal.

Suggested Answers:
A. I agree. The 2 cases, namely: the criminal case where the EE is the accused;
and the case for illegal dismissal, where the EE would be the complainant, are 2
separate and independent actions governed by different rules, venues, and
procedures. The criminal case is within the jurisdiction of the regular courts of law
and governed by the rules of procedure in criminal cases. The action for
administrative aspect of illegal dismissal would be fled with the NLRC and governed
by the procedural rules of the Labor Code.

Another Suggested Answer:

I agree. An action for illegal dismissal is an administrative case which is entirely
separate and distinct from a criminal action. Each may proceed independently of
each other.
The right to file an action for illegal dismissal is not dependent upon the
outcome of the criminal case. Guilt or innocence in the criminal case is not
determinative of the existence of a just or authorized cause for dismissal. [Pepsi
Cola Bottling Co. v. Guanzon, 172 SCRA 571 (1989)]. (2002 Bar Question)

B. State your agreement or disagreement with the following statement and explain
your answer briefly: The period of prescription in Art. 291, LC applies only to money
claims so that the period of prescription for other cases of injury to the rights of
EEs is governed by the Civil Code. Thus, an action for reinstatement for injury to
an EE’s rights prescribes in 4 years as provided in Art. 1146, CC.

Suggested Answer:
B. I agree with the statement.
A case of illegal dismissal filed by an EE who has been terminated without a
just or authorized cause is not a money claim covered by Art. 291, LC. An EE who
is unjustly dismissed from work is entitled to reinstatement and backwages. A case
of illegal dismissal is based upon an injury to the right to security of tenure of an
EE. Thus, in accordance with Art. 1146, it must be instituted within 4 years.
[Callanta v. Carnation Phil., 145 SCRA 268 (1986); Baliwag Transit v. Ople, 171
SCRA 250 (1989); International Harvester Macleod, Inc. v. NLRC, 200 SCRA 817
(1991)] (2002 Bar Question)

SOCIAL LEGISLATION

SALIENT FEATURES
Social Security Act of Government Service
1997 Insurance Act of
(RA 8282) 1997 (RA 8291)
EMPLOYER Any person, natural or (1) The national
juridical, domestic or government, its
Page 185 of 195
 foreign, who carries on in political
the Philippines any trade, subdivisions,
business, industry branches,
undertaking or activity of agencies or
any kind and uses the instrumentalities
services of another person (2) GOCCs, and
who is under his orders as financial
regards employment institutions with
original charters
Exempt ERs: (3) The Constitutional
(1) Government and any Commissions and
of its political the Judiciary
subdivisions, branches
and instrumentality,
including GOCCs
(2) Self-employed person
who is both ER and
EE at the same time
EMPLOYEE (1) Any person who (1) Any person
performs services for receiving
an ER in which either compensation
or both physical or while in the
mental efforts are service of an ER
used and who whether by
receives election or
compensation for appointment,
such services, where irrespective of
there is an ER-EE status of
relationship appointment;
(2) Self-employed person (2) Barangay officials;
who is both ER and and
EE at the same time (3) Sanggunian
officials
DEPENDENT (1) Spouse— legal spouse (1) Spouse—
entitled by law to legitimate and
receive support from dependent for
member support upon
member or
(2) Child— pensioner
(a) Legitimate;
legitimated; (2) Child—
legally adopted; (a) Legitimate;
and illegitimate; legitimated;
(b) Not married; legally
(c) Not gainfully adopted; and
employed; and illegitimate;
Page 186 of 195
 (d) Has not reached (b) Not married;
21 years of age, (c) Not gainfully
or if over 21 employed;
years, is and
congenitally (d) Has not age
incapacitated or of majority, or
while still a minor if over the
has been age of
permanently majority but
incapacitated and incapacitated
incapable of self- and incapable
support, of self-
physically or support, due
mentally to mental or
physical
(3) Parent— who is defect
receiving support acquired prior
from the member to age of
majority

(3) Parent— who is

dependent upon
member for
support
BENEFICIARIES
(1) Primary (a) Dependent spouse (a) Legal, dependent
until remarriage; and spouse until
(b) Dependent legitimate remarriage; and
and legitimated or (b) Dependent
(2) Secondary legally adopted and children
illegitimate children

Dependent parents, in the (a) Dependent

(3) Others absence or primary parents; and
beneficiaries (b) Legitimate
descendants
subject to
restrictions on
Absent primary and dependent
secondary beneficiaries, children
any other person
designated by member as
secondary beneficiary

BENEFITS (1) Monthly pension (1) All members

(2) Dependents’ pension (a) Life insurance
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 (3) Retirement (b) Retirement
(4) Death (if no (c) Disability
beneficiary qualifies (d) Survivorship
under the Act, (e) Separation
benefits shall be paid (f) Funeral
to legal heirs in
accordance with the (2) Judiciary and
law of succession) Const.
(5) Permanent disability Commissions— life
(6) Funeral insurance only
(7) Sickness
(8) Maternity (but only All are tax-exempt
for the 1st 4 deliveries
or miscarriages)

All are tax-exempt

COVERAGE
(1) Compulsory (1) All EEs not over 60 Compulsory for all EEs
years of age and their receiving
ERs compensation who
(2) Domestic helpers with have not reached
monthly income not compulsory retirement
less than P1,000 age, irrespective of
(3) Self-employed EEs as employment status
may be determined
by the Commission, Members of Judiciary
including, but not and Constitutional
limited to: Commissions qualify
(a) All self-employed for life-insurance only
professionals
(b) Partners and
single-proprietors
of business
(c) Actors and
actresses,
directors,
scriptwriters and
news
correspondents,
who do not fall
within definition
of EEs
(d) Professional
athletes,
coaches, trainers
and jockeys;
Page 188 of 195
 (e) Individual
farmers and
fishermen

Effectivity:
For EEs—first day of
employment
For ERs—first day of his
operation
For self-employed—upon
their registration with the
SSS

(2) Voluntary
(1) Filipinos recruited by
foreign-based ERs for
employment abroad
(2) EE under compulsory
coverage is separated
from employment
(3) Self-employed—
realizes no income in
any given month
(4) Spouse who devotes
full time managing
household and family
affairs unless
employed subject to
mandatory coverage
(3) By
arrangement Any foreign government,
international organization
or their wholly- owned
instrumentality employing
workers in the Philippines
or employing Filipinos
outside the Philippines
may enter into agreement
with Philippine govt for
inclusion of such EEs in
SSS except those already
covered by their
respective civil service
retirement system.

Page 189 of 195

 EXCEPTIONS (1) Employment purely (1) Members of the
FROM casual and not for AFP
COVERAGE purpose occupation, (2) Members of the
or business of ER PNP
(2) Service performed by
an EE on or in (members of the
connection with alien judiciary and
vessel, if employed constitutional
when such vessel is commissions— life
outside of Phils insurance only)
(3) EEs of Phil govt or
instrumentality or
agency thereof
(4) Service performed in
the employ of a
foreign government,
or international
organizations, or their
wholly-owned
instrumentalities
(5) Services performed by
temporary and other
EEs excluded by SSS
regulation
(6) EEs of bona fide
independent
contractors shall not
be deemed EEs of the
ER engaging the
services of an
independent
contractor
BASIS OF Non-work connected GSIS is exempt from
CLAIM disability, sickness, liability where
maternity, death and old permanent disability
age and other due to his grave
contingencies resulting in misconduct, habitual
loss of income or financial intoxication, or willful
burden intention to kill himself
or another

Q: State the respective coverages of (a) Social Security Law; (b) the Revised
Government Service Insurance Act and (c) the Employees Compensation Acts.

Answer:

Page 190 of 195

 (a) Coverage of SSS (Sec. 9, RA 8282) shall be compulsory upon all EEs not
over 60 years of age and their ERs.
Filipinos recruited in the Philippines by foreign-based ERs for employment
abroad may be covered by the SSS on a voluntary basis.
Coverage in the SSS shall also be compulsory upon all self-employed persons
earning P1,800 or more per annum.

(b) Membership in the GSIS (Art. 3, RA 8291) shall be compulsory for all
permanent EEs below 60 years of age upon appointment to permanent status, and
for all elective officials for the duration of their tenure.
Any person, whether elected or appointed, in the service of an ER is covered
EE if he receives compensation for such service.

(c) Coverage in the State Insurance Fund (Art. 168, LC) shall be compulsory
upon all ERs and their EEs not over 60 years of age; Provided, that an EE who is
over 60 years of age and paying contributions to qualify for the retirement or life
insurance benefit administered by the System shall be subject to compulsory
coverage.
The Employees Compensation Commission shall ensure adequate coverage of
Filipino EEs employed abroad, subject to regulations as it may prescribe. (Art. 170)
Any person compulsorily covered by the GSIS including the members of the
Armed Forces of the Philippines, and any person employed as casual, emergency,
temporary, substitute or contractual, or any person compulsorily covered by the
SSS are covered by the Employees Compensation Program. (1997 Bar Question)

Q: how are the “portability” provisions of RA 7699 beneficial or advantageous to

SSS and GSIS members in terms of their creditable employment services in the
private sector or the government, as the case may be, for purposes of death,
disability or retirement?
Please explain your answers briefly.

A: The “portability” provisions of RA 7699 allow the transfer of funds for the account
and benefit of the worker who transfers from one system to another.
This is advantageous to the SSS and GSIS members for purposes of death,
disability or retirement benefits. In the event the EEs transfer from the private
sector to the public sector, or vice-versa, their creditable employment services and
contributions are carried over and transferred from one system to the other. (2005
Bar Question)

Q: Efrenia Reyes was a classroom teacher assigned by the DECS in Panitan, Capiz.
She has been in the government service since 1951 up to Nov, 1985 when she
retired at 55 due to poor health.
In March, 1982, while she was teaching her Grade 1 pupils the proper way
scrubbing and sweeping the floors, she accidentally slipped. Her back hit the edge
of a desk. She later complained of weak lower extremities and difficult in walking.
After an X-ray examination, she was founds to be suffering from Pott’s disease and
was advised to undergo an operation. In 1985, she filed with the GSIS a claim for
disability benefits under PD 626, as amended. The GSIS granted the claim and
awarded Efrenia permanent partial disability benefits.
Page 191 of 195
 After she underwent a surgical operation on her spine in Nov, 1985, her
condition worsened.
In 1990, Efrenia filed with the GSIS a petition for conversion of her disability
status to permanent total disabilities with corresponding adjustment of benefits.
GSIS denied the claim stating that after Efrenia’s retirement, any progression of her
ailment is no longer compensable.
Is the GSIS correct in denying the claim? Explain.

Suggested Answer:
Considering that the disability of Reyes is work connected, the provisions of
the Labor Code dealing with EEs compensation should determine her right to
benefits.
According to said provisions, if any EE under permanent partial disability
suffers another injury which results in a compensable disability greater than the
previous injury , the State Insurance Fund shall be liable for the income benefit of
the new disability even after her retirement. Was Reyes still an “employee” for the
purpose of applying the above provision of the Labor Code? Liberally construing
said provision, Reyes may be considered still as an EE so that she could receive
additional benefits for the progression of her ailment.

Alternative Answers:
a) No. When an EE is constrained to retire at an early age due to his illness
and the illness persists even after retirement, resulting in his continued
unemployment such condition amounts to total disability which should entitle him
to the maximum benefits of the law. Her disability which should entitle her to the
maximum falls within the definition of permanent disability.

b) No, the GSIS erred in denying the claim. Note, that the original claim and
grant of benefits was based on PD 626, or Book IV, Title II, LC: Employees
Compensation and State Insurance Fund. The same law does not provide for
separation fee from employment as a basis for denial of benefits.
The worsening of the school teacher’s condition I a direct result, or a
continuing result of the first injury which was deemed work-connected by the GSIS
and hence compensable.
In Diopenes vs. GSIS, 205 SCRA 331 (1992), the Supreme Court cautioned
against a too strict interpretation of the law which may be detrimental to the
claimants and advised the GSIS of the constitutional mandate on protection to labor
and the promotion of social justice. Said the Court:
The GSIS and the ECC should be commended for their vigilance against
unjustified claims that will only deplete the funds intended to b disbursed for the
benefit only of deserving disabled EEs. Nevertheless, we should caution against too
strict interpretation of the rules that will result in the withholding of full assistance
from those whose capabilities have been diminished if not completely impaired as
a compensation of their service in the government. A humanitarian impulse dictated
by no less than the Constitution itself under the social justice policy, calls for a
liberal and sympathetic approach to the legitimate appeals of disabled public
servants. Compassion for them is not a dole but a right. (1996 Bar Question)

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Q: The Collective Bargaining Agreement of the Golden Corporation, Inc. and the
Golden Corporation Workers Union provides a package of welfare benefits far
superior in comparison with those provided for in the Social security Acts of 1997.
The welfare plan of the company is funded solely by the employer with no
contributions from the employees. Admittedly, it is the best welfare plan in the
Philippines. The company and the union jointly filed a petition with the Social
security System for exemption from coverage. Will the petition for exemption from
coverage prosper? Reason.

Suggested answer:

No, because coverage under the SSS is compulsory where employer-employee

relations exist however, if the private plan is superior to that of the SSS, the plan
may be integrated with the SSS plan. Still, it is integration and not exemption from
SSS law. (Philippine Blooming Mills Co., Inc. v. SSS; RA 1161, as amended by RA
8282) (2000 Bar Question)

Q: Pablo was a farm-hand in a plantation owned by ABC & Co., working

approximately 6 days a week for a good 15 years. Upon Pablo’s death, his widow
filed a claim for burial grant and pension benefits with the Social Security System
(SSS). The claim was denied on the ground that Pablo had not been a registered
member-employee. Pablo’s widow filed a petition before the SSS asking that ABC
& Co. be directed to pay the premium contributions of Pablo and that his name be
reported for SSS coverage. ABC & Co. countered that Pablo was hired to plow,
harrow and burrow, using his own carabao and other implements and following his
own schedule of work hours, without any supervision from the company. If proven,
would this factual setting advance by ABC & Co. be a valid defense against the
petition?

SUGGESTED ANSWER:
ABC and Co. has a valid defense.

Pablo should be an employee of ABC & Co. to be under the compulsory coverage
of the SSS. To be an employee, Pablo should be under the control of ABC & Co. as
regards his employment. But the facts show that he was not under the control of
ABC & Co. as regards his employment. Among others, he had his own schedule of
work hours without any supervision from the company. Thus, he is an independent
contractor and not an employee. An independent contractor is not under the
compulsory coverage of the SSS. He may be covered as a self-employed person.
But the as such, ABC & Co. has no legal obligation to report Pablo for coverage
under the SSS because ABC & Co. is not Pablo’s employer.

ANOTHER SUGGESTED ANSWER:

It is not a valid defense, for Pablo could be considered an employee of ABC & Co.
The element of hiring, payment of wages, power to dismiss and power to control
are presumed from the fact that Pablo is working six days a week, for fifteen years
now. Pablo’s use of his plow, harrow, burrow, carabao and other implements and
his having his own schedule of work hours without any supervision from the
company do not erase the element of control on the part of ABC & Co. because
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under the “control test”, it is enough that the employer’s right to control exists. It
is not necessary thus the same be exercised by the employer, it is enough that such
right to control exists. (Religious of the Virgin Mary v. NLRC) (2003 Bar Question)

Credits
Prof. Disini’s Outline, LSG BarOps Reviewer 2006,
Everyone’s Labor Code (Azucena), UP Law Center Bar Q&A (1996-2006)

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For there must be courage in wisdom, grace in strength.

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