Pre Week Notes On Labor Law For 2014 Bar Exams

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LABOR LAW
PRE-WEEK NOTES
FOR THE 2014 BAR EXAMS
By:
Prof. Joselito Guianan Chan
==========================
TOPIC NO. 1
FUNDAMENTAL PRINCIPLES AND POLICIES
A.
CONSTITUTIONAL PROVISIONS
What are the important constitutional principles related to Labor Law?

The following principles should be taken note of:
Under Article II (Declaration of Principles and State Policies):

a.
Promotion of full employment, a rising standard of living, and an improved quali
ty of life for all.
b.
Promotion of social justice in all phases of national development.
c.
Full respect for human rights.
d.
Vital role of the youth in nation-building.
e.
Role of women in nation-building, and fundamental equality before the law of wom
en and men.
f.
Indispensable role of the private sector,
g.
Protection-to-labor clause: Section 18. The State affirms labor as a primary soci
al economic
force. It shall protect the rights of workers and promote their welfare.
NOTE: Article II is merely a statement of principles and state policies. Its pro
visions are not selfexecuting. They do not embody judicially enforceable constitutional rights but g
uidelines for legislation. These
broad constitutional principles need legislative enactments to implement them.
Under Article III (Bill of Rights):

a.
Due process and equal protection of the law.
b.
Freedom of speech, of expression, or of the press, or the right of the people pe
aceably to assemble
and petition the government for redress of grievances.
c.
Right of the people to information on matters of public concern. Access to offic

ial records, and to
documents and papers pertaining to official acts, transactions, or decisions, as
well as to
government research data used as basis for policy development, shall be afforded
the citizen, subject
to such limitations as may be provided by law.
d.
Right of public and private sector employees to form unions, associations, or so
cieties for purposes
not contrary to law shall not be abridged.
e.
Non-impairment of obligations of contracts.
f.
Right to speedy disposition of cases in judicial, quasi-judicial or administrati
ve bodies.
g.
Prohibitions against involuntary servitude.
Under Article XIII (Social Justice and Human Rights):

a.
Protection-to-Labor Clause: VERY IMPORTANT
Section 3. The State shall afford full protection to labor, local and overseas,
organized and
unorganized, and promote full employment and equality of employment opportunitie
s for all.
It shall guarantee the rights of all workers to self-organization, collective ba
rgaining and
negotiations, and peaceful concerted activities, including the right to strike i
n accordance with law.
They shall be entitled to security of tenure, humane conditions of work, and a l
iving wage. They shall
also participate in policy and decision-making processes affecting their rights
and benefits as may be
provided by law.
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PRE-WEEK NOTES ON LABOR LAW
2014 BAR EXAMS
The State shall promote the principle of shared responsibility between workers a
nd employers and
the preferential use of voluntary modes in settling disputes, including concilia
tion, and shall enforce
their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizin
g the right of
labor to its just share in the fruits of production and the right of enterprises
to reasonable returns to
investments, and to expansion and growth.
What kinds of due process may be asserted by the employee against his employer?
While constitutional due process cannot be invoked by the employee when he is un
dergoing
administrative investigation at the company level, he can, however, invoke both
of the following kinds of due
process at the same time:
a.
Statutory due process per Agabon doctrine which refers to the due process provis
ion in the Labor
Code (Article 277[b]); and
b.
Contractual due process per Abbott Laboratories doctrine.
The rule since Agabon is that compliance with the statutorily-prescribed procedu
ral due process under
Article 277(b) would suffice. It is not important whether there is an existing c
ompany policy which also enunciates
the procedural due process in termination cases in determining the validity of t
he termination. However, under the
latest doctrinal en banc ruling in the 2013 case of Abbott Laboratories, Philipp
ines v. Pearlie Ann F. Alcaraz, it
is now required that in addition to compliance with the statutory due process, t
he employer should still comply with
the due process procedure prescribed in its own company rules. The employers fail
ure to observe its own
company-prescribed due process will make it liable to pay an indemnity in the fo
rm of nominal damages, the
amount of which is equivalent to the P30,000.00 awarded under the Agabon doctrin
e.
When can an employee invoke constitutional due process and right to equal protec
tion of the laws?
As distinguished from company-level investigation conducted by the employer, a d
ismissed employee who
files an illegal dismissal case may raise the issue of deprivation of his right
to constitutional due process and right
to equal protection of the laws against the Labor Arbiter who hears and decides
his case or the Commission
(NLRC), Court of Appeals on Rule 65 certiorari petition. The reason is that, at

this stage, the government is now
involved through said labor tribunals.
When can the right to counsel may be invoked by an employee?

The right to counsel cannot be invoked in an administrative proceeding such as t
he company-level
investigation conducted for the purpose of determining whether the respondent em
ployee should be dismissed or
not. Right to counsel may be asserted only in custodial interrogation as this te
rm is understood within the
context of criminal procedure.
What is the effect of failure of employer to inform employee of his right to cou
nsel?
The prevailing rule is the right to counsel is neither indispensable nor mandato
ry, as held in the 2011 case
of Lopez v. Alturas Group of Companies, thus:
Parenthetically, the Court finds that it was error for the NLRC to opine that pet
itioner should
have been afforded counsel or advised of the right to counsel. The right to coun
sel and the assistance of
one in investigations involving termination cases is neither indispensable nor m
andatory, except
when the employee himself requests for one or that he manifests that he wants a
formal hearing on
the charges against him. In petitioners case, there is no showing that he request
ed for a formal
hearing to be conducted or that he be assisted by counsel. Verily, since he was
furnished a second
notice informing him of his dismissal and the grounds therefor, the twin-notice
requirement had been
complied with to call for a deletion of the appellate courts award of nominal dam
ages to petitioner.
B.
NEW CIVIL CODE
What are examples of labor cases where Article 1700 of the Civil Code was applie
d?
Article 1700 of the Civil Code provides:
Art. 1700. The relations between capital and labor are not merely contractual. Th
ey are so impressed with
public interest that labor contracts must yield to the common good. Therefore, s
uch contracts are subject to the
special laws on labor unions, collective bargaining, strikes and lockouts, close
d shop, wages, working conditions,
hours of labor and similar subjects.
How is Article 1702 of the Civil Code correlated with Article 4 of the Labor Cod
e?
Both Article 1702 of the Civil Code and Article 4 of the Labor Code speak of the
rule on interpretation and
construction provisions of law and labor contracts.
Article 1702 of the Civil Code provides:

Article 1702. In case of doubt, all labor legislation and all labor contracts sha
ll be construed in favor of the
safety and decent living for the laborer.
Article 4 of the Labor Code states:
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2014 BAR EXAMS
Article 4. Construction in Favor of Labor. All doubts in the implementation and i
nterpretation of the
provisions of this Code, including its implementing rules and regulations, shall
be resolved in favor of labor.
Both articles above may be applied to doubts and ambiguities in
(1) labor contracts such as an employment contract or
(2) evidence presented in labor cases.
C.
THE LABOR CODE
What are the distinctions between Labor Relations and

Labor standards law is that part of labor law which
nd conditions of
employment which the employer is required to grant to
a CBA;
Labor Standards?
prescribes the minimum terms a
its employees.
Labor relations law is that part of labor law (Book V of the Labor Code) which dea
ls with unionism,
collective bargaining, grievance machinery, voluntary arbitration, strike, picke
ting and lockout.
Labor relations and labor standards laws are not mutually exclusive. They are co
mplementary to, and
closely interlinked with, each other. For instance, the laws on collective barga
ining, strikes and lockouts which are
covered by labor relations law necessarily relate to the laws on working conditi
ons found in Book III.
What is exclusive bargaining representative/agent?

Exclusive bargaining representative or exclusive bargaining agent refers to a legiti
mate labor
organization duly recognized or certified as the sole and exclusive bargaining r
epresentative or agent of all the
employees in a bargaining unit.
Can individual employee or group of employees bring grievable issues directly to

their employer without the
participation of the bargaining union?
Yes. The designation of a bargaining agent does not deprive an individual employ
ee or group of employees
to exercise their right at any time to present grievances to their employer, wit
h or without the intervention of the
bargaining agent.
Can individual employee or group of employees bring grievable issues to voluntar

y arbitration without the
participation of the bargaining union?
No, as held the 2009 case of Tabigue v. International Copra Export Corporation,
where the Supreme
Court clarified that an individual employee or group of employees cannot be allo

wed to submit or refer unsettled
grievances for voluntary arbitration without the participation of the bargaining
union. The reason is that it is the
bargaining union which is a party to the CBA which contains the provision on vol
untary arbitration. Being a party
thereto, it cannot be disregarded when a grievable issue will be submitted for v
oluntary arbitration.
In order to have legal standing, the individual members should be shown to have
been duly
authorized to represent the bargaining union.
What is the principle of co-determination?

The principle of co-determination refers to the right given to the employees to
co-determine or share the
responsibility of formulating certain policies that affect their rights, benefit
s and welfare.
In Philippine Airlines, Inc. (PAL) v. NLRC and Philippine Airlines Employees Ass
ociation (PALEA),
it was held that the formulation of a Code of Discipline among employees is a sh
ared responsibility of the employer
and the employees. It affirmed the decision of the NLRC which ordered that the N
ew Code of Discipline should be
reviewed and discussed with the union, particularly the disputed provisions and
that copies thereof be furnished each
employee.
Does the grant of the right of participation mean co-management of business or i
ntrusion into management
prerogatives?
No. This principle does not mean that workers should approve management policies
or decisions.
What is Labor-Management Council (LMC)?

The establishment of Labor-Management Council (LMC) is mandated under the said c
onstitutional
principle of co-determination.
What is the significance of Article 277 of the Labor Code?

Article 277 of the Labor Code enunciates the so-called statutory due process (as
distinguished from
constitutional due process) as found in its paragraph (b), to wit:
Article 277. Miscellaneous Provisions.
(b) Subject to the constitutional right of workers
ir right to be protected
against dismissal except for a just and authorized
o the requirement of notice
under Article 283 of this Code, the employer shall
oyment is sought to be
terminated a written notice containing a statement
and shall afford the
3
to security of tenure and the

cause and without prejudice t
furnish the worker whose empl
of the causes for termination

2014 BAR EXAMS
latter ample opportunity to be heard and to defend himself with the assistance o
f his representative, if he so
desires, in accordance with company rules and regulations promulgated pursuant t
o guidelines set by the
Department of Labor and Employment. Any decision taken by the employer shall be
without prejudice to
the right of the worker to contest the validity or legality of his dismissal by
filing a complaint with the
regional branch of the National Labor Relations Commission. The burden of provin
g that the termination
was for a valid or authorized cause shall rest on the employer. The Secretary of
the Department of Labor
and Employment may suspend the effects of the termination pending resolution of
the dispute in the event
of a prima facie finding by the appropriate official of the Department of Labor
and Employment before
whom such dispute is pending that the termination may cause a serious labor disp
ute or is in
implementation of a mass lay-off.
Additionally, Article 277 likewise recognizes the right of any employee, whether
employed for a
definite period or not, to join and be a member of a labor union beginning on hi
s first day of
service.
------------oOo-----------4

TOPIC NO. 2
RECRUITMENT AND PLACEMENT
A.
RECRUITMENT OF
LOCAL AND MIGRANT WORKERS
I.
FOR LOCAL EMPLOYMENT
What is a Private Recruitment and Placement Agency (PRPA)?

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

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

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

No license shall be transferred, conveyed or assigned to any other person or ent
ity.
II.
FOR OVERSEAS EMPLOYMENT
What are the laws relevant to overseas employment?

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

1.
Overseas Filipinos refer to migrant workers, other Filipino nationals and their de
pendents abroad.
2.
Overseas Filipino Worker or Migrant Worker refers to a person who is to be engaged
, is engaged, or
has been engaged in a remunerated activity in a state of which he or she is not
a citizen or on board a
vessel navigating the foreign seas other than a government ship used for militar
y or non-commercial
purposes, or on an installation located offshore or on the high seas. A person to
be engaged in a
remunerated activity refers to an applicant worker who has been promised or assur
ed employment
overseas.
What are the entities authorized to engage in recruitment and placement of worke
rs?
The following are authorized to engage in recruitment and placement of workers:
a. Public employment offices;
b. Philippine Overseas Employment Administration (POEA);
c. Private recruitment entities;
d. Private employment agencies;
e. Shipping or manning agents or representatives;
f. Such other persons or entities as may be authorized by the DOLE Secretary; an
d
g. Construction contractors.
LICENSING AND REGULATION
FOR OVERSEAS RECRUITMENT AND PLACEMENT
What are the qualifications of a recruiter for overseas employment?

Only those who possess the following qualifications may be permitted to engage i
n the business of
recruitment and placement of overseas Filipino workers:
1.
Filipino citizens, partnerships or corporations at least seventy five percent (7
5%) of the authorized
capital stock of which is owned and controlled by Filipino citizens;
2.
A minimum capitalization of Two Million Pesos (P2,000,000.00) in case of a singl
e proprietorship or
partnership and a minimum paid-up capital of Two Million Pesos (P2,000,000.00) i
n case of a
corporation; Provided, that those with existing licenses shall, within four (4)
years from effectivity

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hereof, increase their capitalization or paid up capital, as the case may be, to
Two Million Pesos
(P2,000,000.00) at the rate of Two Hundred Fifty Thousand Pesos (P250,000.00) ev
ery year; and
3.
Those not otherwise disqualified by law or other government regulations to engag
e in the recruitment
and placement of workers for overseas employment.
What are the disqualifications?

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

f. Persons or partners, officers and directors of corporations whose licenses ha
ve been previously
cancelled or revoked for violation of recruitment laws.
What is the period of validity of license?

Every license shall be valid for four (4) years from the date of issuance unless
sooner cancelled, revoked
or suspended for violation of applicable Philippine law, the Rules and other per
tinent issuances. Such license shall
be valid only at the place/s stated therein and when used by the licensed person
, partnership or corporation.
Can a license be transferred?

No. The license shall not be transferred, conveyed or assigned to any person, pa
rtnership or corporation. It
shall not be used directly or indirectly by any person, partnership or corporati
on other than the one in whose favor it
was issued.
ILLEGAL RECRUITMENT
(Section 5, R.A. No. 10022)
What is the concept of illegal recruitment?

The scope of the term illegal recruitment, has been broadened under R.A. No. 8042,
otherwise known as
the Migrant Workers and Overseas Filipinos Act of 1995, as amended, and its Implem
enting Rules.
Consequently, the acts described in the following provision of this law that may
be committed by any person,
constitute illegal recruitment, regardless of whether such person is a non-licen
see, non-holder, licensee or
holder of authority:
SEC. 6. Definition. -For purposes of this Act, illegal recruitment shall mean any
act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procurin
g workers and
includes referring, contract services, promising or advertising for employment a
broad, whether
for profit or not, when undertaken by non-licensee or non-holder of authority co
ntemplated under
Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the
Labor Code of the
Philippines: Provided, That any such non-licensee or non-holder who, in any mann
er, offers or
promises for a fee employment abroad to two or more persons shall be deemed so e
ngaged. It shall
likewise include the following acts, whether committed by any person, whether a
non-licensee,
non-holder, licensee or holder of authority:
(a)
To charge or accept, directly or indirectly, any amount greater than that specif
ied in the schedule
of allowable fees prescribed by the Secretary of Labor and Employment, or to mak
e a worker pay
or acknowledge any amount
r advance;
(b)
To furnish or publish any
recruitment or
employment;
(c)
To give any false notice,
f
misrepresentation for the
abor Code, or for
6
greater than that actually received by him as a loan o

false notice or information or document in relation to
testimony, information or document or commit any act o

purpose of securing a license or authority under the L

2014 BAR EXAMS
the purpose of documenting hired workers with the POEA, which include the act of
reprocessing
workers through a job order that pertains to non-existent work, work different f
rom the actual
overseas work, or work with a different employer whether registered or not with
the POEA;
(d) To induce or attempt to induce a worker already employed to quit his employm
ent in order to offer
him another unless the transfer is designed to liberate a worker from oppressive
terms and
conditions of employment;
(e)
To influence or attempt to influence any person or entity not to employ any work
er who has not
applied for employment through his agency or who has formed, joined or supported
, or has
contacted or is supported by any union or workers organization;
(f)
To engage in the recruitment or placement of workers in jobs harmful to public h
ealth or morality
or to the dignity of the Republic of the Philippines;
(g) To fail to submit reports on the status of employment, placement vacancies,
remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or in
formation as may
be required by the Secretary of Labor and Employment;
(h) To substitute or alter to the prejudice of the worker, employment contracts
approved and verified
by the Department of Labor and Employment from the time of actual signing thereo
f by the parties
up to and including the period of the expiration of the same without the approva
l of the
Department of Labor and Employment;
(i)
For an officer or agent of a recruitment or placement agency to become an office
r or member of
the Board of any corporation engaged in travel agency or to be engaged directly
or indirectly in
the management of travel agency;
(j)
To withhold or deny travel documents from applicant workers before departure for
monetary or
financial considerations, or for any other reasons, other than those authorized
under the Labor
Code and its implementing rules and regulations;
(k) Failure to actually deploy
a contracted worker without valid reason as determined by the
Department of Labor and Employment;
(l)
Failure to reimburse expenses incurred by the worker in connection with his docu
mentation and
processing for purposes of deployment, in cases where the deployment does not ac
tually take
place without the worker s fault. Illegal recruitment when committed by a syndic
ate or in large
scale shall be considered an offense involving economic sabotage; and
(m) To allow a non-Filipino citizen to head or manage a licensed recruitment/man
ning agency.
LICENSE VS. AUTHORITY
What is a license for overseas recruitment?
License refers to the document issued by the DOLE Secretary authorizing a person,
partnership or
corporation to operate a private recruitment/manning agency.
What is an authority for overseas employment?
Authority refers to the document issued by the DOLE Secretary authorizing the off
icers, personnel,
agents or representatives of a licensed recruitment/manning agency to conduct re
cruitment and placement
activities in a place stated in the license or in a specified place.
ELEMENTS OF ILLEGAL RECRUITMENT
What are the elements of illegal recruitment?
The essential elements of illegal recruitment vary in accordance with the follow
ing classifications:
(1) Simple illegal recruitment;
(2) When committed by a syndicate; or
(3) When committed in large scale.
When illegal recruitment is committed under either Nos. 2 or 3 above or both, it
is considered an offense
involving economic sabotage.
SIMPLE ILLEGAL RECRUITMENT
What are the 2 elements of simple illegal recruitment?

According to the 2011 case of Delia D. Romero v. People, the two (2) elements of
the crime of simple
illegal recruitment are:
(1) The offender has no valid license or authority required
to lawfully engage in
recruitment and placement of workers; and
(2) He undertakes either any activity within the meaning of
ment defined under
Article 13(b), or any prohibited practices enumerated under
bor Code.
Any person, whether a non-licensee, non-holder, licensee or

may be held liable
for illegal recruitment. Under R.A. No, 8042, as amended by
nse or authority of
the illegal recruiter is immaterial.
Can a recruiter be a natural or juridical person?

7
by law to enable one

recruitment and place
Article 34 of the La
holder of authority,
R.A. No. 10022, lice

2014 BAR EXAMS
Yes.
What are some relevant principles on illegal recruitment?

1. Mere impression that a person could deploy workers overseas is sufficient to
constitute illegal recruitment. But
if no such impression is given, the accused should not be convicted for illegal
recruitment.
2. Mere promise or offer of employment abroad amounts to recruitment.
3. There is no need to show that accused represented himself as a licensed recru
iter.
4. Referrals may constitute illegal recruitment.
5. It is illegal recruitment to induce applicants to part with their money upon
false misrepresentations and
promises in assuring them that after they paid the placement fee, jobs abroad we
re waiting for them and that
they would be deployed soon.
6. Recruitment whether done for profit or not is immaterial.
7. The act of receiving money far exceeding the amount as required by law is not
considered as recruitment and
placement as this phrase is contemplated under the law.
8. Actual receipt of fee is not an element of the crime of illegal recruitment.
9. Conduct of interviews amounts to illegal recruitment.
10.Absence of receipt is not essential to hold a person guilty of illegal recrui
tment.
11.Conviction for illegal recruitment may be made on the strength of the testimo
nies of the complainants.
12.Absence of documents evidencing the recruitment activities strengthens, not w
eakens, the case for illegal
recruitment.
13.Only one person recruited is sufficient to convict one for illegal recruitmen
t.
14.Non-prosecution of another suspect is immaterial.
15.Execution of affidavit of desistance affects only the civil liability but has
no effect on the criminal liability for
illegal recruitment.
16.Defense of denial cannot prevail over positive identification.
Positive identification where categorical and
consistent and not attended by any showing of ill motive on the part of the eyew
itnesses on the matter prevails
over alibi and denial. Between the categorical statements of the prosecution wit
nesses, on the one hand, and
bare denials of the accused, on the other hand, the former must prevail.
ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC SABOTAGE
When is illegal recruitment considered a crime involving economic sabotage?

Illegal recruitment is considered a crime involving economic sabotage when the c
ommission thereof is
attended by the following qualifying circumstances:
1. when committed by a syndicate; or
2. when committed in large scale.
When is illegal recruitment committed by a syndicate?

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

The essential elements of the crime of illegal recruitment committed by a syndic
ate are as follows:
1. There are at least three (3) persons who, conspiring and/or confederating wit
h one another, carried out
any unlawful or illegal recruitment and placement activities as defined under Ar
ticle 13(b) or committed
any prohibited activities under Article 34 of the Labor Code; and
2.
Said persons are not licensed or authorized to do so, either locally or overseas
.
The law, it must be noted, does not require that the syndicate should recruit mo
re than one (1) person in
order to constitute the crime of illegal recruitment by a syndicate. Recruitment
of one (1) person would suffice to
qualify the illegal recruitment act as having been committed by a syndicate.
When is illegal recruitment considered in large scale?

Illegal recruitment is deemed committed in large scale if committed against thre
e (3) or more persons
individually or as a group.
Elements of illegal recruitment in large scale.

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

As distinguished from illegal recruitment committed by a syndicate, illegal recr
uitment in large scale may
be committed by only one (1) person. What is important as qualifying element is
that there should be at least three
(3) victims of such illegal recruitment, individually or as a group.
What are some relevant principles on illegal recruitment involving economic sabo
tage?
1. The number of persons victimized is determinative of the crime.

A conviction for large scale illegal
recruitment must be based on a finding in each case of illegal recruitment of th
ree (3) or more persons having
been recruited, whether individually or as a group.
2. Failure to prove at least 3 persons recruited makes the crime a case of simpl
e illegal recruitment.
3. There is no illegal recruitment in large scale based on several informations
filed by only one complainant.
8

2014 BAR EXAMS
4. The number of offenders is not material in illegal recruitment in large scale

.
5. Recruitment in large scale or by a syndicate is malum prohibitum and not malu
m in se.
ILLEGAL RECRUITMENT VS. ESTAFA
Can a person be charged and convicted separately for illegal recruitment and est
afa involving one and the
same act of recruitment?
Yes. It is clear that conviction under the Labor Code does not preclude convicti
on for estafa or other crimes
under other laws.
Some relevant principles:
Same evidence to prove illegal recruitment may be used to prove estafa.
Conviction for both illegal recruitment and estafa, not double jeopardy.
NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY
AND FOREIGN EMPLOYER
What is the nature of the liability between local recruiter and its foreign prin
cipal?
The nature of their liability is solidary or joint and several for any and all claim
s arising out of the
implementation of the employment contract involving Filipino workers for oversea
s deployment.
Is the solidary liability of corporate officers with the recruitment agency autom
atic in character?
No. In order to hold the officers of the agency solidarily liable, it is require
d that there must be proof of
their culpability therefor. Thus, in the 2013 case of Gagui v. Dejero. Thus, whi
le it is true that R.A. 8042 and the
Corporation Code provide for solidary liability, this liability must be so state
d in the decision sought to be
implemented. Absent this express statement, a corporate officer may not be imple
aded and made to personally
answer for the liability of the corporation.
What are some relevant principles on the persons liable for illegal recruitment?
1.
Employees of a licensed recruitment agency may be held liable for illegal recrui
tment as principal by direct
participation, together with his employer, if it is shown that he actively and c
onsciously participated in illegal

recruitment.
2. Good faith and merely following orders of superiors are not valid defenses of
an employee.
3.
A manager of a recruitment/manning agency is not a mere employee. As such, he re
ceives job applications,
interviews applicants and informs them of the agencys requirement of payment of p
erformance or cash bond
prior to the applicants deployment. As the crewing manager, he was at the forefro
nt of the companys
recruitment activities.
THEORY OF IMPUTED KNOWLEDGE
What is meant by this theory?

The theory of imputed knowledge is a rule that any information material to the t
ransaction, either possessed
by the agent at the time of the transaction or acquired by him before its comple
tion, is deemed to be the knowledge
of the principal, at least insofar as the transaction is concerned, even though
the knowledge, in fact, is not
communicated to the principal at all.
Imputed knowledge means the knowledge attributed to a party because of his positio
n, or his
relationship with or responsibility for another party. Such knowledge is attribu
ted for the reason that the facts in
issue were open to discovery and it was that person s duty to apprise him of suc
h facts.
Sunace International Management Services, Inc. v. NLRC, where the High Court has
the opportunity to
discuss the application of the theory of imputed knowledge. Here, the OFW (Divin
a), a domestic helper in Taiwan,
has extended her 12-month contract, after its expiration, for two (2) more years
after which she returned to the
Philippines. It was established by evidence that the extension was without the k
nowledge of the local recruitment
agency, petitioner Sunace. The Court of Appeals, however, affirmed the Labor Arb
iters and NLRCs finding that
Sunace knew of and impliedly consented to the extension of Divinas 2-year contrac
t. It went on to state that It is
undisputed that [Sunace] was continually communicating with [Divinas] foreign emp
loyer. It thus concluded that
[a]s agent of the foreign principal, petitioner cannot profess ignorance of such e
xtension as obviously, the act of
the principal extending complainant (sic) employment contract necessarily bound
it.
In finding that the application by the CA of this theory of imputed knowledge wa
s misplaced, the High
Court ruled that this theory ascribes the knowledge of the agent, Sunace, to the
principal, employer Xiong, not the
other way around. The knowledge of the principal-foreign employer cannot, theref
ore, be imputed to its agent,
Sunace. There being no substantial proof that Sunace knew of and consented to be
bound under the 2-year
employment contract extension, it cannot be said to be privy thereto. As such, S
unace and its owner cannot be held
solidarily liable for any of Divinas claims arising from the 2-year employment ex
tension. As the New Civil Code
provides: Contracts take effect only between the parties, their assigns, and heir
s, except in case where the rights and
obligations arising from the contract are not transmissible by their nature, or
by stipulation or by provision of law.
PRE-TERMINATION OF CONTRACT OF MIGRANT WORKER
Can an OFW acquire regularity of employment?

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

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2014 BAR EXAMS
1.
Indefinite period of employment of OFWs is not valid as it contravenes the expli
cit provision of the
POEA Rules and Regulations on fixed-period employment.
2. OFWs do not become regular employees by reason of nature of work, that is, th
at they are made to
perform work that is usually necessary and desirable in the usual business or tr
ade of the employer. The
exigencies of their work necessitate that they be employed on a contractual basi
s. This notwithstanding
the fact that they have rendered more than twenty (20) years of service.
3. Regular employment does not result from the series of re-hiring of OFWs.
4. The fixed-period employment of OFWs is not discriminatory against them nor do
es it favor foreign
employers. It is for the mutual interest of both the seafarer and the employer w
hy the employment status
must be contractual only or for a certain period of time. Seafarers spend most o
f their time at sea and
understandably, they cannot stay for a long and an indefinite period of time at
sea. Limited access to
shore society during the employment will have an adverse impact on the seafarer.
The national, cultural
and lingual diversity among the crew during the contract of employment is a real
ity that necessitates the
limitation of its period.
5. The expiration of the employment contracts of OFWs marks its ending.
What is the effect of hiring a seafarer for overseas employment but assigning hi
m to local vessel?
As held in OSM Shipping Philippines, Inc. v. NLRC, the non-deployment of the shi
p overseas did not
affect the validity of the perfected employment contract. After all, the decisio
n to use the vessel for coastwise
shipping was made by petitioner only and did not bear the written conformity of
private respondent. A contract
cannot be novated by the will of only one party. The claim of petitioner that it
processed the contract of private
respondent with the POEA only after he had started working is also without merit
. Petitioner cannot use its own
misfeasance to defeat his claim.
What is the effect of non-deployment of OFW to overseas employment?

Petitioner-seafarer, in Santiago v. CF Sharp Crew Management, Inc. was not deplo
yed overseas despite
the signing of a POEA-approved employment contract. One of his contentions is th
at such failure to deploy was an
act designed to prevent him from attaining the status of a regular employee. The
Supreme Court, however,
disagreed and ruled that seafarers are considered contractual employees and canno
t be considered as regular
employees under the Labor Code. Their employment is governed by the contracts th
ey sign every time they are
rehired and their employment is terminated when the contract expires. The exigen
cies of their work necessitate that
they be employed on a contractual basis.
What is doctrine of processual presumption?

Presumed-identity approach or processual presumption is an International Law doctrin
e which
dictates that where a foreign law is not pleaded or, even if pleaded, is not pro
ved, the presumption is that foreign law
is the same as Philippine law. Thus, under this situation, Philippine labor laws
should apply in determining the
issues presented in a case.
Is the due process under Philippine law applicable to termination of employment

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

entitled to the full reimbursement of his placement fee and the deductions made
with interest at twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his empl
oyment contract or for
three (3) months for every year of the unexpired term, whichever is less.
What are some principles in regard to monetary awards to OFWs?

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2014 BAR EXAMS
1. Monetary award to OFW is not in the nature of separation pay or backwages but
a form of indemnity.
2.
Only salaries are to be included in the computation of the amount due for the un
expired portion of the contract.
Overtime, holiday and leave pay and allowances are not included. However, this r
ule on exclusion of
allowance does not apply in case it is encapsulated in the basic salary clause.
3.
Entitlement to overtime pay of OFWs. -As far as entitlement to overtime pay is c
oncerned, the correct
criterion in determining whether or not sailors are entitled to overtime pay is
not whether they were on board
and cannot leave ship beyond the regular eight (8) working hours a day, but whet
her they actually rendered
service in excess of said number of hours. An OFW is not entitled to overtime pa
y, even if guaranteed, if he
failed to present any evidence to prove that he rendered service in excess of th
e regular eight (8) working hours
a day.
4.
In case of unauthorized deductions from OFWs salary, he shall be entitled to the
full reimbursement of the
deductions made with interest at twelve percent (12%) per annum. This is in addi
tion to the full reimbursement
of his placement fee with the same interest of twelve percent (12%) per annum pl
us his salaries for the
unexpired portion of his employment contract if he is terminated without just, v
alid or authorized cause as
defined by law or contract.
CLAIMS FOR DISABILITY AND DEATH BENEFITS OF OFWs
Which office has jurisdiction over an OFWs claims for disability and death benefi
ts?
a. Labor Arbiters have jurisdiction over claims for disability, death and other
benefits of OFWs.
b. Labor Arbiters have jurisdiction even if the case is filed by the heirs of th
e deceased OFW.
Are claims of OFWs for disability, death and burial benefits similar to claims u
nder the Labor Code?
No. The claims under the Labor Code are cognizable by the Employees Compensation
Commission (ECC).
Is the Labor Codes concept of permanent total disability similar to that of of OF

Ws?
Yes. The concept of this kind of disability under Article 192 of the Labor Code
is applicable to them as
reiterated lately in the 2013 case of Kestrel Shipping Co., Inc. v. Munar.

What are the requisites for compensability of injury or illness of seafarers?
1. It should be work-related; and
2.
The injury or illness existed during the term of the seafarers employment contrac
t.
DIRECT HIRING
What is direct hiring?

Direct Hiring refers to the process of directly hiring workers by employers for ov
erseas employment as
authorized by the DOLE Secretary and processed by the POEA, including:
1.
Those hired by international organizations;
2.
Those hired by members of the diplomatic corps;
3.
Name hires or workers who are able to secure overseas employment opportunity wit
h an employer
without the assistance or participation of any agency.
Does the POEA Administrator or the DOLE Secretary or DOLE Regional Director have
the power to issue
closure order?
Yes. If upon preliminary examination or surveillance, the DOLE Secretary, the PO
EA Administrator or
DOLE Regional Director is satisfied that such danger or exploitation exists, a w
ritten order may be issued for the
closure of the establishment being used for illegal recruitment activity.
Does the DOLE Secretary have the power to issue arrest and search and seizure or
ders?
No. It was declared in Salazar v. Achacoso, that the exercise by the DOLE Secret
ary of his twin powers to
issue arrest and search and seizure orders provided under Article 38[c] of the L
abor Code is unconstitutional. Only
regular courts can issue such orders.
REMITTANCE OF FOREIGN EXCHANGE EARNINGS
Is remittance of foreign exchange earnings by OFWs mandatory?

Yes. It shall be mandatory for all Filipino workers abroad to remit a portion of
their foreign exchange
earnings to their families, dependents, and/or beneficiaries in the country in a
ccordance with rules and regulations
prescribed by the DOLE Secretary. It should be made through the Philippine banki
ng system.
What is the reason why obligation to remit is mandatory?

It is necessary to protect the welfare of their families, dependents and benefic
iaries and to ensure that their
foreign exchange earnings are remitted through authorized financial institutions
of the Philippine government in line
with the countrys economic development program.
PROHIBITED ACTIVITIES
IN RELATION TO ILLEGAL RECRUITMENT
What are the prohibited activities in connection with recruitment for overseas e
mployment?
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2014 BAR EXAMS
Besides illegal recruitment, the law additionally provides that it shall also be
unlawful for any person or
entity to commit the following prohibited acts:
(1) Grant a loan to an overseas Filipino worker with interest exceeding eight pe
rcent (8%) per annum, which will
be used for payment of legal and allowable placement fees and make the migrant w
orker issue, either personally or
through a guarantor or accommodation party, post-dated checks in relation to the
said loan;
(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino w
orker is required to avail of a
loan only from specifically designated institutions, entities or persons;
(3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino wor
ker after the latter s employment
contract has been prematurely terminated through no fault of his or her own;
orker is required to undergo
health examinations only from specifically designated medical clinics, instituti
ons, entities or persons, except
in the case of a seafarer whose medical examination cost is shouldered by the pr
incipal/shipowner;
orker is required to undergo
training, seminar, instruction or schooling of any kind only from specifically d
esignated institutions, entities
or persons, except for recommendatory trainings mandated by principals/shipowner
s where the latter
shoulder the cost of such trainings;
(6) For a suspended recruitment/manning agency to engage in any kind of recruitm
ent activity including the
processing of pending workers applications; and
(7) For a recruitment/manning agency or a foreign principal/employer to pass on
the overseas Filipino worker or
deduct from his or her salary the payment of the cost of insurance fees, premium
or other insurance related
charges, as provided under the compulsory worker s insurance coverage.
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2014 BAR EXAMS
TOPIC NO. 3
LABOR STANDARDS
A.
HOURS OF WORK
1.
COVERAGE/EXCLUSIONS
(Article 82, Labor Code)
Who are covered by the labor standards provisions of the Labor Code?
Employees in all establishments, whether operated for profit or not, are covered
by the law on labor
standards.
Who are excluded?

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

Eight (8) hours daily.
What is overtime work?

Any work in excess of eight (8) hours is considered overtime work.
May normal working hours be reduced?

Yes, provided that no corresponding reduction is made on the employees wage or sa
lary equivalent to an
8-hour work day. In instances where the number of hours required by the nature o
f work is less than 8 hours, such
number of hours should be regarded as the employees full working day.
What are flexible working hours?

Flexible work arrangements refer to alternative arrangements or schedules other th
an the traditional or
standard work hours, workdays and workweek. The effectivity and implementation o
f any of the flexible work
arrangements should be temporary in nature.
Under R.A. No. 8972, otherwise known as The Solo Parents Welfare Act of 2000, solo
parents are
allowed to work on a flexible schedule. The phrase flexible work schedule is defin
ed in the same law as the right
granted to a solo parent employee to vary his/her arrival and departure time wit
hout affecting the core work hours as
defined by the employer.
COMPRESSED WORK WEEK
What is compressed work week?
Compressed Workweek or CWW refers to a situation where the normal workweek is reduce
d to less
than six (6) days but the total number of work-hours of 48 hours per week remain
s. The normal workday is
increased to more than eight (8) hours but not to exceed twelve (12) hours, with
out corresponding overtime
premium. This concept can be adjusted accordingly in cases where the normal work
week of the firm is five (5) days.
What are the conditions for its validity?
The CWW scheme is undertaken as a result of an express and voluntary agreement o
f majority of the
covered employees or their duly authorized representatives.
How should compensation be made under a valid CWW?
Unless there is a more favorable practice existing in the firm, work beyond eigh
t (8) hours will not be
compensable by overtime premium provided the total number of hours worked per da
y shall not exceed
twelve (12) hours. In any case, any work performed beyond twelve (12) hours a da
y or forty-eight (48) hours a
week shall be subject to overtime pay.
MEAL BREAK
What is the rule on time-off for regular meal?
Every employer is required to give his employees, regardless of sex, not less th
an one (1) hour (or 60
minutes) time-off for regular meals.
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2014 BAR EXAMS
Is meal break compensable?
Being time-off, it is not compensable hours worked. In this case, the employee i
s free to do anything he
wants, except to work. If he is required, however, to work while eating, he shou
ld be compensated therefor.
WAITING TIME
What is covered by compensable working hours?
The following shall be considered as compensable hours worked:
a.
All time during
oyers premises
at a prescribed
b.
All time during
When is waiting
which an employee is required to be on duty or to be at the empl

or to be
workplace; and
which an employee is suffered or permitted to work.
time compensable?
Waiting time spent by an employee shall be considered as working time if waiting

is an integral part of his
work or the employee is required or engaged by the employer to wait. Time spent
waiting for work is compensable
if it is spent primarily for the benefit of the employer and [its] business.
OVERTIME WORK, OVERTIME PAY
What are some basic principles on overtime work?
1.
Work rendered after normal eight (8) hours of work is called overtime work.
2.
In computing overtime work, "regular wage" or "basic salary" means "cash" wage o
nly without
deduction for facilities provided by the employer.
3.
"Premium pay" means the additional compensation required by law for work perform
ed within eight (8)
hours on non-working days, such as regular holidays, special holidays and rest d
ays.
4.
"Overtime pay" means the additional compensation for work performed beyond eight
(8) hours.
5.
Illustrations on how overtime is computed:
a.
For overtime work performed on an ordinary day, the overtime pay is plus 25% of
the basic
hourly rate.
b.
For overtime work performed on a rest day or on a special day, the overtime pay
is plus
30% of the basic hourly rate which includes 30% additional compensation as provi
ded in
Article 93 [a] of the Labor Code.
c.
For overtime work performed on a rest day which falls on a special day, the over
time pay is
plus 30% of the basic hourly rate which includes 50% additional compensation as
provided in
Article 93 [c] of the Labor Code.
d.
For overtime work performed on a regular holiday, the overtime pay is plus 30% o
f the
basic hourly rate which includes 100% additional compensation as provided in Art
icle 94 [b] of
the Labor Code.
e.
For overtime work performed on a rest day which falls on a regular holiday, the
overtime
pay is plus 30% of the basic hourly rate which includes 160% additional compensa
tion.
What is the distinction between PREMIUM PAY and OVERTIME PAY?
Premium pay refers to the additional compensation required by law for work perform
ed within eight (8)
hours on non-working days, such as rest days and regular and special holidays.
Overtime pay refers to the additional compensation for work performed beyond eight
(8) hours a day.
Every employee who is entitled to premium pay is likewise entitled to the benefi
t of overtime pay.
What is built-in overtime pay?
In case the employment contract stipulates that the compensation includes builtin overtime pay and the
same is duly approved by the DOLE, the non-payment by the employer of any overti
me pay for overtime work is
justified and valid.
What is emergency overtime work? (ARTICLE 89, LABOR CODE).
a. General rule.
The general rule remains that no employee may be compelled to render overtime wo
rk against his will.
b. Exceptions when employee may be compelled to render overtime work:
1. When the country is at war or when any other national or local emergency has
been declared by the
National Assembly or the Chief Executive;
2.
When overtime work is necessary to prevent loss of life or property or in case o
f imminent danger to
public safety due to actual or impending emergency in the locality caused by ser
ious accident, fire,
floods, typhoons, earthquake, epidemic or other disasters or calamities;
3. When there is urgent work to be performed on machines, installations or equip

ment, or in order to
avoid serious loss or damage to the employer or some other causes of similar nat
ure;
4.
When the work is necessary to prevent loss or damage to perishable goods;
5. When the completion or continuation of work started before the 8th hour is ne
cessary to prevent serious
obstruction or prejudice to the business or operations of the employer; and
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2014 BAR EXAMS
6.
When overtime work is necessary to avail of favorable weather or environmental c
onditions where
performance or quality of work is dependent thereon.
May an employee validly refuse to render overtime work under any of the afore-sa
id circumstances?
No, When an employee refuses to render emergency overtime work under any of the
foregoing conditions,
he may be dismissed on the ground of insubordination or willful disobedience of
the lawful order of the
employer.
Can overtime pay be waived?
NO. The right to claim overtime pay is not subject to a waiver. Such right is go
verned by law and not
merely by the agreement of the parties.
NIGHT WORK (R.A. NO. 10151),
NIGHT SHIFT DIFFERENTIAL (ARTICLE 86, LABOR CODE)
What is the new law on night work?
R.A. No. 10151 [JUNE 21, 2011].
(NOTE: Because this is a new law, full discussion thereof shall be made hereunde
r).
a. Significance of the law.
R.A. No. 10151 has repealed Article 130 [Nightwork Prohibition] and Article 131
[Exceptions] of the
Labor Code and accordingly renumbered the same articles. Additionally, it has in
serted a new Chapter V of Title III
of Book III of the Labor Code entitled Employment of Night Workers which addresses
the issue on nightwork of
all employees, including women workers. Chapter V covers newly renumbered Articl
es 154 up to 161 of the Labor
Code.
b. Coverage of the law.
The law on nightwork applies not only to women but to all persons, who shall be
employed or permitted
or suffered to work at night, except those employed in agriculture, stock raisin
g, fishing, maritime transport and
inland navigation, during a period of not less than seven (7) consecutive hours,
including the interval from
midnight to five o clock in the morning, to be determined by the DOLE Secretary,
after consulting the workers
representatives/labor organizations and employers.
c. Night worker, meaning.
"Night worker" means any employed person whose work covers the period from 10 o
clock in the
evening to 6 o clock the following morning provided that the worker performs no
less than seven (7) consecutive
hours of work.
NIGHT SHIFT DIFFERENTIAL PAY
How is it reckoned and computed?
Night shift differential is equivalent to 10% of employee s regular wage for eac
h hour of work performed
between 10:00 p.m. and 6:00 a.m. of the following day.
What is the distinction between night shift differential pay and overtime pay?
When the work of an employee falls at night time, the receipt of overtime pay sh
all not preclude the right to
receive night differential pay. The reason is the payment of the night different
ial pay is for the work done during the
night; while the payment of the overtime pay is for work in excess of the regula
r eight (8) working hours.
How is Night Shift Differential Pay computed?
1.
Where night shift (10 p.m. to 6 a.m.) work is regular work.
a.
On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of the
basic hourly rate.
b.
On a rest day, special day or regular holiday: Plus 10% of the regular hourly ra
te on a rest day,
special day or regular holiday or a total of 110% of the regular hourly rate.
2.
Where night shift (10 p.m. to 6 a.m.) work is overtime work.
a.
On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a
total of 110%
of the overtime hourly rate on an ordinary day.
b.
On a rest day or special day or regular holiday: Plus 10% of the overtime hourly
rate on a rest
day or special day or regular holiday.
3. For overtime work in the night shift. Since overtime work is not usually eigh
t (8) hours, the
compensation for overtime night shift work is also computed on the basis of the
hourly rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of 110%
of 125% of basic
hourly rate.
b. On a rest day or special day or regular holiday. Plus 10% of 130% of regular
hourly rate on said
days or a total of 110% of 130% of the applicable regular hourly rate.
PART-TIME WORK
What is part-time work?
Part-time work is a single, regular or voluntary form of employment with hours of w
ork substantially
shorter than those considered as normal in the establishment. A part-time worker is
an employed person whose
normal hours of work are less than those of comparable full-time workers.
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2014 BAR EXAMS
Part-time work may take different forms depending on the agreed hours of work in
a day, the days of work
in a week or other reference periods. In the Philippines, however, the two most
common and acceptable forms
are four (4) hours work per day and weekend work or two (2) full days per week.
CONTRACT FOR PIECE WORK
(SEE CIVIL CODE)
What is contract for piece work under the Civil Code?
By the contract for a piece of work, the contractor binds himself to execute a p
iece of work for the
employer, in consideration of a certain price or compensation. The contractor ma
y either employ only his labor or
skill, or also furnish the material.
B.
WAGES
WAGE VS. SALARY
What is the basic distinction between wage and salary?
The term wage is used to characterize the compensation paid for manual skilled or
unskilled labor.
Salary, on the other hand, is used to describe the compensation for higher or supe
rior level of employment.
What is the distinction in respect to execution, attachment or garnishment?
In cases of execution, attachment or garnishment of the compensation of an emplo
yee received from
work issued by the court to satisfy a judicially-determined obligation, a distin
ction should be made whether such
compensation is considered wage or salary. Under Article 1708 of the Civil Code, if
considered a wage, the
employees compensation shall not be subject to execution or attachment or garnish
ment, except for debts incurred
for food, shelter, clothing and medical attendance. If deemed a salary, such compe
nsation is not exempt from
execution or attachment or garnishment. Thus, the salary, commission and other r
emuneration received by a
managerial employee (as distinguished from an ordinary worker or laborer) cannot
be considered wages. Salary is
understood to relate to a position or office, or the compensation given for offi
cial or other service; while wage is the
compensation for labor.
MINIMUM WAGE DEFINED
What are the attributes of wage?
Wage paid to any employee has the following attributes:

1.
It is the remuneration or earnings, however designated, for work done or to be d
one or for services rendered
or to be rendered;
2.
It is capable of being expressed in terms of money, whether fixed or ascertained
on a time, task, piece or
commission basis, or other method of calculating the same;
3.
It is payable by an employer to an employee under a written or unwritten contrac
t of employment for work
done or to be done or for services rendered or to be rendered; and
4.
It includes the fair and reasonable value, as determined by the DOLE Secretary,
of board, lodging, or other
facilities customarily furnished by the employer to the employee. Fair and reason
able value shall not
include any profit to the employer or to any person affiliated with the employer
.
What is basic wage?
Basic wage means all the remuneration or earnings paid by an employer to a worker
for services
rendered on normal working days and hours but does not include cost-of-living al
lowances, profit-sharing
payments, premium payments, 13th month pay or other monetary benefits which are
not considered as part of or
integrated into the regular salary of the workers.
Further, as held in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Hond
a, the following
should be excluded from the computation of basic salary, to wit: payments for sick
, vacation and maternity
leaves, night differentials, regular holiday pay and premiums for work done on r
est days and special holidays.
What is minimum wage?
The minimum wage rates prescribed by law shall be the basic cash wages without d
eduction therefrom of
whatever benefits, supplements or allowances which the employees enjoy free of c
harge aside from the basic pay.
What is statutory minimum wage?
The term statutory minimum wage refers simply to the lowest basic wage rate fixed
by law that an
employer can pay his workers.
What is regional minimum wage rate?
The term regional minimum wage rates refers to the lowest basic wage rates that an
employer can pay
his workers, as fixed by the Regional Tripartite Wages and Productivity Boards (
RTWPBs), and which shall
not be lower than the applicable statutory minimum wage rates.
What are included/excluded in the term wage rate?
The term "wage rates" includes cost-of-living allowances as fixed by the RTWPB,
but excludes other
wage-related benefits such as overtime pay, bonuses, night shift differential pa
y, holiday pay, premium pay, 13th
month pay, premium pay, leave benefits, among others.
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2014 BAR EXAMS
Can COLA be integrated into the minimum wage?
Yes. The cost-of-living allowance (COLA) may be ordered integrated into the mini
mum wage by the
Regional Tripartite Wages and Productivity Board (RTWPB or Regional Board).
What is COLA?
COLA is not in the nature of an allowance intended to reimburse expenses incurre
d by employees in the
performance of their official functions. It is not payment in consideration of t
he fulfillment of official duty. As
defined, cost of living refers to the level of prices relating to a range of everyd
ay items or the cost of
purchasing the goods and services which are included in an accepted standard lev
el of consumption. Based on this
premise, COLA is a benefit intended to cover increases in the cost of living.
What is the NO WORK, NO PAY principle?
The no work, no pay or fair days wage for fair days labor means that if the worker do
s not work,
he is generally not entitled to any wage or pay. The exception is when it was th
e employer who unduly prevented
him from working despite his ableness, willingness and readiness to work; or in
cases where he is illegally locked
out or illegally suspended or illegally dismissed, or otherwise illegally preven
ted from working, in which event, he
should be entitled to his wage.
MINIMUM WAGE SETTING
What is a Wage Order?
The term Wage Order refers to the order promulgated by the Regional Board pursuant
to its wage fixing
authority.
When is it proper to issue a Wage Order?
Whenever conditions in the region so warrant, the Regional Board shall investiga
te and study all pertinent
facts and based on the prescribed standards and criteria, shall proceed to deter
mine whether a Wage Order should be
issued. Any such Wage Order shall take effect after fifteen (15) days from its c
omplete publication in at least one
(1) newspaper of general circulation in the region.
What are the standards/criteria for minimum wage fixing?
In the determination of regional minimum wages, the Regional Board shall, among
other relevant factors,
consider the following:
(1) Needs of workers and their families

1) Demand for living wages;
2) Wage adjustment vis--vis the consumer price index;
3) Cost of living and changes therein;
4) Needs of workers and their families;
5) Improvements in standards of living.
(2) Capacity to pay
1) Fair return on capital invested and capacity to pay of employers;
2) Productivity.
(3) Comparable wages and incomes
1) Prevailing wage levels.
(4) Requirements of economic and social development
1)
Need to induce industries to invest in the countryside;
2)
Effects on employment generation and family income;
3)
Equitable distribution of income and wealth along the imperatives of economic an
d social
development.
What are the methods of fixing the minimum wage rates?
There are two (2) methods, to wit:
1.
Floor-Wage method which involves the fixing of a determinate amount to be added to
the prevailing
statutory minimum wage rates. This was applied in earlier wage orders; and
2.
Salary-Cap or Salary-Ceiling method where the wage adjustment is to be applied to em
ployees
receiving a certain denominated salary ceiling. In other words, workers already
being paid more than
the existing minimum wage (up to a certain amount stated in the Wage Order) are
also to be given a
wage increase.
The Salary-Cap or Salary-Ceiling method is the preferred mode.
The distinction between the two (2) methods is best shown by way of an illustrat
ion. Under the Floor
Wage Method, it would be sufficient if the Wage Order simply set P15.00 as the am
ount to be added to the
prevailing statutory minimum wage rates; while in the Salary-Ceiling Method, it wo
uld be sufficient if the Wage
Order states a specific salary, such as P250.00, and only those earning below it
shall be entitled to the wage increase.
MINIMUM WAGE OF WORKERS PAID BY RESULTS
What are the minimum wage rates of workers paid by results?
According to Article 124 of the Labor Code:
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2014 BAR EXAMS
All workers paid by results, including those who are paid on piecework, takay, pa
kyaw or task
basis, shall receive not less than the prescribed wage rates per eight (8) hours
of work a day, or a
proportion thereof for working less than eight (8) hours.
Who are workers paid by results?
They are workers who are engaged on pakyao, piecework, task and other non-time w
ork. They are so
called because they are paid not on the basis of the time spent on their work bu
t according to the quantity, quality or
kind of job and the consequent results thereof.
What are the categories of workers paid by results?
Workers paid by results may be classified into:
a. Supervised workers; and
b. Unsupervised workers.
As the term clearly connotes, supervised workers are those whose manner of work
is under the control of
the employer; while unsupervised workers are those whose work is controlled more
in the results than in the
manner or method of performing it.
The law does not make any categorical differentiation among the workers paid by
results. Thus, the
workers may be on pakyao (sometimes spelled pakyaw), takay or piece-rate or output
basis. All of them are
similar in character in that they are all paid on the basis of the results of th
eir work. When the law does not
distinguish, we should not distinguish.
WAGE RATE OF APPRENTICES AND LEARNERS
What is the wage rate of apprentices and learners?
The wage rate of a learner or an apprentice is set at seventy-five percent (75%)
of the statutory
minimum wage.
WAGE RATE OF PERSONS WITH DISABILITY (PWD)
What is the wage rate of PWD?
Under R.A. No. 7277, the wage rate of PWDs had been increased to and fixed at 10
0% of the applicable
minimum wage.
COMMISSIONS
What is commission?
Commission is the recompense, compensation or reward of an employee, agent, salesm

an, executor,
trustee, receiver, factor, broker or bailee, when the same is calculated as a pe
rcentage on the amount of his
transactions or on the profit of the principal.
Is commission part of wage?
Commission may or may not be considered part of wage/salary depending on the pec
uliar circumstances of
a case and on the purpose for which the determination is being made. For instanc
e, the rule on the inclusion of
commissions for purposes of computing the separation pay may essentially differ
from the inclusionary rule thereof
for purposes of computing the 13th month pay.
Is there a law which mandates the payment of commission?
None. According to Lagatic v. NLRC, there is no law which requires employers to
pay commissions.
Is there a standard formula to compute commission?
None. There is no law which prescribes a method for computing commission. The de
termination of the
amount of commissions is the result of collective bargaining negotiations, indiv
idual employment contracts or
established employer practice.
DEDUCTIONS FROM WAGES
May employer deduct from wage of employees?
The general rule is that an employer, by himself or through his representative,
is prohibited from making
any deductions from the wages of his employees. The employer is not allowed to m
ake unnecessary deductions
without the knowledge or authorization of the employees.
Are there exceptions to this rule?
Yes.
(a)
In cases where the worker is insured with his consent by the employer, and the d
eduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b)
For union dues, in cases where the right of the worker or his union to check-off
has been recognized
by the employer or authorized in writing by the individual worker concerned; and
(c)
In cases where the employer is authorized by law or regulations issued by the DO
LE Secretary.
(d) Deductions for loss or damage under Article 114 of the Labor Code;
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(e)
Deductions made for agency fees from non-union members who accept the benefits u
nder the CBA
negotiated by the bargaining union. This form of deduction does not require the
written authorization
of the non-bargaining union member concerned;
(f) Deductions for value of meal and other facilities;
(g)
Deductions for premiums for SSS, PhilHealth, employees compensation and Pag-IBIG;
(h)
Withholding tax mandated under the National Internal Revenue Code (NIRC);
(i)
Withholding of wages because of the employees debt to the employer which is alrea
dy due;
(j)
Deductions made pursuant to a court judgment against the worker under circumstan
ces where the
wages may be the subject of attachment or execution but only for debts incurred
for food, clothing,
shelter and medical attendance;
(k) When deductions from wages are ordered by the court;
NON-DIMINUTION OF BENEFITS
What is the applicability of the non-diminution rule in Article 100 of the Labor
Code?
Albeit Article 100 is clear that the principle of non-elimination and non-diminu
tion of benefits apply only
to the benefits being enjoyed at the time of the promulgation of the Labor Code, t
he Supreme Court has
consistently cited Article 100 as being applicable even to benefits granted afte
r said promulgation. It has, in fact,
been treated as the legal anchor for the declaration of the invalidity of so man
y acts of employers deemed to have
eliminated or diminished the benefits of employees.
The 2014 case of Wesleyan University-Philippines v. Wesleyan University-Philippi
nes Faculty and
Staff Association, succinctly pointed out that the Non-Diminution Rule found in
Article 100 of the Labor Code
explicitly prohibits employers from eliminating or reducing the benefits receive
d by their employees. This rule,
however, applies only if the benefit is based on any of the following:
(1) An express policy;
(2) A written contract; or
(3) A company practice.
COMPANY PRACTICE
What is company practice?
Company practice is a custom or habit shown by an employers repeated, habitual cu
stomary or succession
of acts of similar kind by reason of which, it gains the status of a company pol
icy that can no longer be disturbed or
withdrawn.
To ripen into a company practice that is demandable as a matter of right, the gi
ving of the benefit should
not be by reason of a strict legal or contractual obligation but by reason of an
act of liberality on the part of
the employer.
What are the criteria that may be used to determine existence of company practic
e?
Since there is no hard and fast rule which may be used and applied in determinin
g whether a certain act of
the employer may be considered as having ripened into a practice, the following
criteria may be used to determine
whether an act has ripened into a company practice:
(1) The act of the employer has been done for a considerable period of time;
(2) The act should be done consistently and intentionally; and
(3) The act should not be a product of erroneous interpretation or construction
of a doubtful or difficult
question of law or provision in the CBA.
1. The act of the employer has been done for a considerable period of time.
If done only once as in the case of Philippine Appliance Corporation (Philacor)
v. CA, where the CBA
signing bonus was granted only once during the 1997 CBA negotiation, the same ca
nnot be considered as having
ripened into a company practice.
In the following cases, the act of the employer was declared company practice be
cause of the considerable
period of time it has been practiced:
(a)
Davao Fruits Corporation v. Associated Labor Unions. -The act of the company of
freely and
continuously including in the computation of the 13th month pay, items that were
expressly excluded
by law has lasted for six (6) years, hence, was considered indicative of company
practice.
(b)
Sevilla Trading Company v. A. V. A. Semana, -The act of including non-basic benef
its such as
paid leaves for unused sick leave and vacation leave in the computation of the e
mployees 13th month
pay for at least two (2) years was considered a company practice.
(c)
The 2010 case of Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labo
r UnionNLU, also ruled as company practice the act of petitioner of granting for thirty
(30) years, its workers
the mandatory 13th month pay computed in accordance with the following formula:
Total Basic
Annual Salary divided by twelve (12) and Including in the computation of the Tot
al Basic Annual
Salary the following: basic monthly salary; first eight (8) hours overtime pay o
n Sunday and
legal/special holiday; night premium pay; and vacation and sick leaves for each
year.
2. The act should be done consistently and intentionally.
The following cases may be cited to illustrate this principle:
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(a)
Tiangco v. Leogardo, Jr., where the employer has consistently been granting fixe
d monthly
emergency allowance to the employees from November, 1976 but discontinued this p
ractice effective
February, 1980 insofar as non-working days are concerned based on the principle
of no work, no
pay. The Supreme Court ruled that the discontinuance of said benefit contravened
Article 100 of the
Labor Code which prohibits the diminution of existing benefits.
3. The act should not be a product of erroneous interpretation or construction o
f a doubtful or
difficult question of law or provision in the CBA.
The general rule is that if it is a past error that is being corrected, no veste
d right may be said to have arisen
therefrom nor any diminution of benefit may have resulted by virtue of the corre
ction thereof. The error, however,
must be corrected immediately after its discovery; otherwise, the rule on non-di
minution of benefits would still
apply.
The following cases would illuminate this principle:
(a)
Globe Mackay Cable and Radio Corporation v. NLRC, where the Supreme Court ruled
on the
proper computation of the cost-of-living allowance (COLA) for monthly-paid emplo
yees. Petitioner
corporation, pursuant to Wage Order No. 6 (effective October 30, 1984), increase
d the COLA of its
monthly-paid employees by multiplying the P3.00 daily COLA by 22 days which is t
he number of
working days in the company. The union disagreed with the computation, claiming
that the daily
COLA rate of P3.00 should be multiplied by 30 days which has been the practice o
f the company for
several years. The Supreme Court, however, upheld the contention of the petition
er corporation. It
held that the grant by the employer of benefits through an erroneous application
of the law due to
absence of clear administrative guidelines is not considered a voluntary act whi
ch cannot be
unilaterally discontinued.
(b)
TSPIC Corp. v. TSPIC Employees Union [FFW], where the Supreme Court reiterated t
he rule
enunciated in Globe-Mackay, that an erroneously granted benefit may be withdrawn
without violating
the prohibition against non-diminution of benefits. No vested right accrued to i
ndividual respondents
when TSPIC corrected its error by crediting the salary increase for the year 200
1 against the salary
increase granted under Wage Order No. 8, all in accordance with the CBA. Hence,
any amount given
to the employees in excess of what they were entitled to, as computed above, may
be legally deducted
by TSPIC from the employees salaries.
But if the error does not proceed from the interpretation or construction of a l
aw or a provision in the CBA,
the same may ripen into a company practice.
Example:
(a)
Hinatuan Mining Corporation and/or the Manager v. NLRC, where the act of the emp
loyer in
granting separation pay to resigning employees, despite the fact that the Labor
Code does not grant it,
was considered an established employer practice.
BONUS
What is the rule on its demandability and enforceability?
Bonus, as a general rule, is an amount granted and paid ex gratia to the employe
e.
It cannot be forced upon the employer who may not be obliged to assume the onero
us burden of granting
bonuses or other benefits aside from the employees basic salaries or wages. If th
ere is no profit, there should be no
bonus. If profit is reduced, bonus should likewise be reduced, absent any agreem
ent making such bonus part of the
compensation of the employees.
When is bonus demandable and enforceable?
It becomes demandable and enforceable:
(1) If it has ripened into a company practice;
(2) If it is granted as an additional compensation which the employer agreed to
give without any condition
such as success of business or more efficient or more productive operation, henc
e, it is deemed part of
wage or salary.
(3) When considered as part of the compensation and therefore demandable and enf
orceable, the amount is
usually fixed. If the amount thereof is dependent upon the realization of profit
s, the bonus is not
demandable and enforceable.
FACILITIES VS. SUPPLEMENTS
What are facilities?
The term facilities includes articles or services for the benefit of the employee
or his family but does
not include tools of the trade or articles or services primarily for the benefit
of the employer or necessary to the
conduct of the employers business. They are items of expense necessary for the la
borers and his familys existence
and subsistence which form part of the wage and when furnished by the employer,
are deductible therefrom, since if
they are not so furnished, the laborer would spend and pay for them just the sam
e.
What are supplements?

The term supplements means extra remuneration or special privileges or benefits gi
ven to or received
by the laborers over and above their ordinary earnings or wages.
What are the distinctions between facilities and supplements?
The benefit or privilege given to the employee which constitutes an extra remune
ration over and above his
basic or ordinary earning or wage is supplement; and when said benefit or privil
ege is made part of the laborers
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2014 BAR EXAMS
basic wage, it is a facility. The criterion is not so much with the kind of the
benefit or item (food, lodging, bonus or
sick leave) given but its purpose. Thus, free meals supplied by the ship operato
r to crew members, out of necessity,
cannot be considered as facilities but supplements which could not be reduced ha
ving been given not as part of
wages but as a necessary matter in the maintenance of the health and efficiency
of the crew during the voyage.
What is the rule on deductibility of facilities and supplements?
Facilities are deductible from wage but not supplements.
WAGE DISTORTION/RECTIFICATION
What is wage distortion?
Wage distortion contemplates a situation where an increase in prescribed wage rate
s results in either of
the following:
1.
Elimination of the quantitative differences in the rates of wages or salaries; o
r
2.
Severe contraction of intentional quantitative differences in wage or salary rat
es between and among
employee groups in an establishment as to effectively obliterate the distinction
s embodied in such wage
structure based on the following criteria:
a.
Skills;
b. Length of service; or
c.
Other logical bases of differentiation.
Wage distortion presupposes a classification of positions and ranking of these p
ositions at various
levels. One visualizes a hierarchy of positions with corresponding ranks basical
ly in terms of wages and other
emoluments. Where a significant change occurs at the lowest level of positions i
n terms of basic wage without a
corresponding change in the other level in the hierarchy of positions, negating
as a result thereof the distinction
between one level of position from the next higher level, and resulting in a par
ity between the lowest level and the
next higher level or rank, between new entrants and old hires, there exists a wa
ge distortion. xxx. The concept of
wage distortion assumes an existing grouping or classification of employees whic
h establishes distinctions among
such employees on some relevant or legitimate basis. This classification is refl
ected in a differing wage rate for
each of the existing classes of employees.
What are the elements of wage distortion?

The four (4) elements of wage distortion are as follows:
(1) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a conco
mitant increase in the salary
rate of a higher one;
(3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the country.
Normally, a company has a wage structure or method of determining the wages of i
ts employees. In a
problem dealing with wage distortion, the basic assumption is that there exists a
grouping or classification of
employees that establishes distinctions among them on some relevant or legitimat
e bases.
Involved in the classification of employees are various factors such as the degr
ees of responsibility, the
skills and knowledge required, the complexity of the job, or other logical basis
of differentiation. The differing
wage rate for each of the existing classes of employees reflects this classifica
tion.
What is the formula for rectifying or resolving wage distortion?
Following is the formula for the correction of wage distortion in the pay scale
structures:
Minimum Wage = % x Prescribed Increase = Distortion Adjustment
Actual Salary
The above formula was held to be just and equitable.
DIVISOR TO DETERMINE DAILY RATE
Who is a monthly-paid employee?
A monthly-paid employee is one who is paid his wage or salary for every day of the
month, including
unworked rest days, special days or regular holidays.
Who is a daily-paid employee?
A daily-paid employee is one who is paid his wage or salary only on the days he ac
tually worked, except
in cases of regular holidays wherein he is paid his wage or salary even if he do
es not work during those days,
provided that he is present or on leave of absence with pay on the working day i
mmediately preceding the regular
holidays.
What are the factors/divisors in computing benefits and wage deductions?
Equivalent daily rate (EDR), the basis for deductions for absences and for compu
ting overtime pay
and other benefits.
Monthly Rate x 12
No. of Days Considered = Equivalent Daily Rate (EDR)
Paid in a Year
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2014 BAR EXAMS
REST PERIODS
1.
WEEKLY REST DAY
What is the duration of weekly rest period?
It shall be the duty of every employer, whether operating for profit or not, to
provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours afte
r every six (6) consecutive
normal work days.
Is the employers prerogative to determine the rest period of its employees subjec
t to limitations?
Yes. The employer shall determine and schedule the weekly rest day of his employ
ees subject to CBA and
to such rules and regulations as the DOLE Secretary may provide. However, the em
ployer shall respect the
preference of employees as to their weekly rest day when such preference is base
d on religious grounds.
2.
EMERGENCY REST DAY WORK
When can an employer require work on a rest day?
The employer may require any of its employees to work on their scheduled rest da
y for the duration of the
following emergency and exceptional conditions:
a.
In case of actual or impending emergencies caused by serious accident, fire, flo
od, typhoon, earthquake,
epidemic or other disaster or calamity, to prevent loss of life and property, or
in case of force majeure or
imminent danger to public safety;
b. In case of urgent work to be performed on machineries, equipment, or installa
tions, to avoid serious loss
which the employer would otherwise suffer;
c.
In the event of abnormal pressure of work due to special circumstances, where th
e employer cannot
ordinarily be expected to resort to other measures;
d.
To prevent serious loss of perishable goods;
e.
Where the nature of the work is such that the employees have to work continuousl
y for seven (7) days
in a week or more, as in the case of the crew members of a vessel to complete a
voyage and in other
similar cases; and
f.
When the work is necessary to avail of favorable weather or environmental condit
ions where
performance or quality of work is dependent thereon.
HOLIDAY PAY/PREMIUM PAY
1.
COVERAGE, EXCLUSIONS
Who are covered by the law on holiday pay?
Generally, all employees are entitled to and covered by the law on holiday pay.
Who are excluded from its coverage?
The following are excluded:
a.
Those of the government and any of the political subdivisions, including governm
ent-owned and
controlled corporations;
b. Those of retail and service establishments regularly employing less than ten
(10) workers;
c.
Domestic workers or Kasambahays;
d. Persons in the personal service of another;
e.
Managerial employees as defined in Book III of the Labor Code;
f.
Field personnel and other employees whose time and performance is unsupervised b
y the employer;
g.
Those who are engaged on task or contract basis or purely commission basis;
h. Those who are paid a fixed amount for performing work irrespective of the tim
e consumed in the
performance thereof;
i.
Other officers and members of the managerial staff;
j.
Members of the family of the employer who are dependent on him for support.
What are the holidays listed for 2014?
Proclamation No. 655, Series of 2013, declared the following regular holidays, s
pecial (non-working) days
and special holidays (for all schools) for the year 2014:
A. Regular Holidays
New Years Day -1 January (Wednesday)
Araw ng Kagitingan -9 April (Wednesday)
Maundy Thursday -17 April
Good Friday -18 April
Labor Day -1 May (Thursday)
Independence Day -12 June (Thursday)
National Heroes Day -25 August (Last Monday of
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2014 BAR EXAMS
August)
Bonifacio Day -30 November (Sunday)
Christmas Day -25 December (Thursday)
Rizal Day -30 December (Tuesday)
B. Special (Non-Working) Days
Chinese New Year -31 January (Friday)
Black Saturday -19 April
Ninoy Aquino Day -21 August (Thursday)
All Saints Day -1 November (Saturday)
Additional special
(non-working) days -24 December (Wednesday)
-26 December (Friday)
Last Day of the Year -31 December (Wednesday)
C. Special Holiday (for all schools)
EDSA Revolution
Anniversary 25 February (Tuesday)
Not included in the enumeration above on regular holidays are (1) Eidl Fitr and (
2)
Eidul Adha. The reason is that proclamations declaring the observance of these n
ational holidays
shall hereafter be issued after the approximate dates of the Islamic holidays ha
ve been determined
in accordance with the Islamic calendar (Hijra) or the lunar calendar, or upon I
slamic astronomical
calculations, whichever is possible or convenient. To this end, the National Com
mission on
Muslim Filipinos (NCMF) shall inform the Office of the President on which days t
he holidays
shall respectively fall.
What is the total number of regular holidays?
It is important to note that the total number of regular holidays is twelve (12)
days per year. This is
important for purposes of reckoning certain divisors and computation of employee
benefits.
What is premium pay for holidays and rest days?
Premium pay refers to the additional compensation required by law to be paid for w
ork performed
within the regular eight (8) hours on non-working days, such as rest days, regul
ar and special holidays.
How is premium pay for holidays computed?

Labor Advisory No. 06, Series of 2013, on the Payment of Wages for the Regular H
olidays, Special (Nonworking)
Days, and Special Holiday (For all Schools) for the Year 2014, specifically prom
ulgated the following
rules that shall apply:
a. Regular Holidays
If the employee did not work, he/she shall be paid 100 percent of his/her salary
for that day.
Computation: (Daily rate + Cost of Living Allowance) x 100%. The COLA is include
d in the
computation of holiday pay.
If the employee worked, he/she shall be paid 200 percent of his/her regular sala
ry for that day for the
first eight hours. Computation: (Daily rate + COLA) x 200%. The COLA is also inc
luded in
computation of holiday pay.
If the employee worked in excess of eight hours (overtime work), he/she shall be
paid an additional 30
percent of his/her hourly rate on said day. Computation: Hourly rate of the basi
c daily wage x 200% x
130% x number of hours worked.
If the employee worked during a regular holiday that also falls on his/her rest
day, he/she shall be paid
an additional 30 percent of his/her daily rate of 200 percent. Computation: (Dai
ly rate + COLA) x
200%] + (30% [Daily rate x 200%)].
If the employee worked in excess of eight hours (overtime work) during a regular
holiday that also
falls on his/her rest day, he/she shall be paid an additional 30 percent of his/
her hourly rate on said
day. Computation: (Hourly rate of the basic daily wage x 200% x 130% x 130% x nu
mber of hours
worked);
b. Special (Non-Working) Days
If the employee did not work, the no work, no pay principle shall apply, unless th
ere is a favorable
company policy, practice, or CBA granting payment on a special day.
If the employee worked, he/she shall be paid an additional 30 percent of his/her
daily rate on the first
eight hours of work. Computation: [(Daily rate x 130%) + COLA).
If the employee worked in excess of eight hours (overtime work), he/she shall be
paid an additional 30
percent of his/her hourly rate on said day. Computation: (Hourly rate of the bas
ic daily wage x 130% x
130% x number of hours worked).
If the employee worked during a special day that also falls on his/her rest day,
he/she shall be paid an
additional fifty percent of his/her daily rate on the first eight hours of work.
Computation: [(Daily rate
x 150%) + COLA].
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2014 BAR EXAMS
If the employee worked in excess of eight hours (overtime work) during a special
day that also falls on
his/her rest day, he/she shall be paid an additional 30 percent of his/her hourl
y rate on said day.
Computation: (Hourly rate of the basic daily wage x 150% x 130% x number of hour
s worked).
c. Special Holiday for all schools
For private establishments, 25 February 2014 is an ordinary workday and no premi

um is required to be
paid for work on said day.
On the other hand, employees in private schools, whether academic or administrat

ive personnel, shall
be paid in accordance with the rules for pay on special (non-working) days as st
ated above.
What are the effects of absences on the computation of holiday pay?
1.
Employees on leave of absence with pay - entitled to holiday pay when they are o
n leave of absence
with pay.
2.
Employees on leave of absence without pay on the day immediately preceding the r
egular holiday may not be paid the required holiday pay if they have not worked on such regular
holiday.
3.
Employees on leave while on SSS or employees compensation benefits - Employers sh
ould grant
the same percentage of the holiday pay as the benefit granted by competent autho
rity in the form of
employees compensation or social security payment, whichever is higher, if they a
re not reporting
for work while on such benefits.
4.
When day preceding regular holiday is a non-working day or scheduled rest day -s
hould not be
deemed to be on leave of absence on that day, in which case, employees are entit
led to the regular
holiday pay if they worked on the day immediately preceding the non-working day
or rest day.
2.
HOLIDAY PAY/PREMIUM PAY OF
TEACHERS, PIECE WORKERS, TAKAY,
SEASONAL WORKERS, SEAFARERS
Are private school teachers entitled to holiday pay during semestral vacations?
What about Christmas vacation
No, as far as regular holidays during semestral vacations are concerned.
Yes, as far as regular holidays during Christmas vacation are concerned.
Are hourly-paid teachers entitled to holiday pay?
A school is exempted from paying hourly-paid faculty members their pay for regul
ar holidays, whether
the same be during the regular semesters of the school year or during semestral,
Christmas, or Holy Week vacations.
However, it is liable to pay the faculty members their regular hourly rate on da
ys declared as special holidays or if,
for some reason, classes are called off or shortened for the hours they are supp
osed to have taught, whether
extensions of class days be ordered or not; and in case of extensions, said facu
lty members shall likewise be paid
their hourly rates should they teach during said extensions.
Are piece-workers, takay and others paid by results entitled to holiday pay?
Yes. Where a covered employee is paid by results or output such as payment on pi
ece-work, his holiday
pay should not be less than his average daily earnings for the last seven (7) ac
tual working days preceding the
regular holiday. In no case, however, should the holiday pay be less than the ap
plicable statutory minimum wage
rate.
What are the distinctions between supervised and unsupervised workers paid by result
s to determine their
entitlement to holiday pay?
The principal test to determine entitlement to holiday pay is whether the employ
ees time and performance
of the work are supervised or unsupervised by their employer. If supervised, the emp
loyee is entitled to
holiday pay. If unsupervised, he is not.
The distinctions between supervised and unsupervised workers paid by results are
as follows:
(1) Those whose time and performance are supervised by the employer. Here, there
is an element of
control and supervision over the manner as to how the work is to be performed. A
piece-rate worker
belongs to this category especially if he performs his work in the company premi
ses; and
(2) Those whose time and performance are unsupervised. Here, the employers contro
l is over the result
of the work. Workers on pakyao and takay basis belong to this group. Both classe
s of workers are
paid per unit accomplished. Piece-rate payment is generally practiced in garment
factories where work
is done in the company premises, while payment on pakyao and takay basis is comm
only observed in
the agricultural industry, such as in sugar plantations where the work is perfor
med in bulk or in
volumes, hence, difficult to quantify.
Are seasonal workers entitled to holiday pay?
Yes. Seasonal workers are entitled to holiday pay while working during the seaso
n. They may not be paid
the required regular holiday pay during off-season where they are not at work.
Are seafarers entitled to holiday pay?

Yes. Any hours of work or duty including hours of watchkeeping performed by the
seafarer on designated
rest days and holidays shall be paid rest day or holiday pay.
What are important principles on holiday pay?
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2014 BAR EXAMS
In case of two (2) regular holidays falling on the same day, the worker should b
e compensated as follows:
o
If unworked 200% for the two regular holidays;
o
If worked 200% for the two regular holidays plus premium of 100% for work on tha
t day.
Monthly-paid employees are not excluded from the coverage of holiday pay.
LEAVES
1.
SERVICE INCENTIVE LEAVE
What is service incentive leave?
Every covered employee who has rendered at least one (1) year of service is enti
tled to a yearly service
incentive leave of five (5) days with pay.
The term at least one year of service should mean service within twelve (12) month
s, whether
continuous or broken, reckoned from the date the employee started working, inclu
ding authorized absences and paid
regular holidays, unless the number of working days in the establishment as a ma
tter of practice or policy, or that
provided in the employment contract, is less than twelve (12) months, in which c
ase, said period should be
considered as one (1) year for the purpose of determining entitlement to the ser
vice incentive leave benefit.
All employees are covered by the rule on service incentive leave except:
a.
Those of the government and any of its political subdivisions, including governm
ent-owned and
controlled corporations;
b. Domestic workers or kasambahays;
c.
Persons in the personal service of another;
d. Managerial employees as defined in Book III of the Labor Code;
e.
Field personnel and other employees whose performance is unsupervised by the emp
loyer;
f.
Those who are engaged on task or contract basis, purely commission basis, or tho
se who are paid in a
fixed amount for performing work irrespective of the time consumed in the perfor
mance thereof;
g.
Those who are already enjoying the benefit provided in the law;
h.
Those enjoying vacation leave with pay of at least five (5) days;
i.
Those employed in establishments regularly employing less than ten (10) employee
s;
j.
Other officers and members of the managerial staff; and
k. Members of the family of the employer who are dependent on him for support.
Are unavailed service incentive leaves commutable to cash?
Yes. The service incentive leave is commutable to its money equivalent if not us
ed or exhausted at the end
of the year.
2.
MATERNITY LEAVE
What is maternity leave?
Maternity leave is the period of time which may be availed of by a woman employee,
married or
unmarried, to undergo and recuperate from childbirth, miscarriage or complete ab
ortion during which she is
permitted to retain her rights and benefits flowing from her employment.
What is the period of leave?
60 days for normal delivery
78 days for caesarian delivery
What is the amount granted?
Daily maternity benefit equivalent to one hundred percent (100%) of her average
daily salary credit for
sixty (60) days or seventy-eight (78) days in case of caesarian delivery/
What is the number of delivery or miscarriage covered?
The maternity benefits shall be paid only for the first four (4) deliveries or m
iscarriages/
Is an unmarried woman entitled to maternity leave benefit?
Yes. For as long as a woman is pregnant, she is entitled to maternity leave bene
fit regardless of whether she
is married or unmarried.
PATERNITY LEAVE
What is paternity leave benefit?
Paternity leave covers a married male
for seven (7)
calendar days but continues to earn the
that his spouse has delivered a child
or suffered miscarriage for purposes of
to his wife in her period of recovery
and/or in the nursing of the newly-born
employee allowing him not to report for work

compensation therefor, on the condition
enabling him to effectively lend support
child.
Delivery includes childbirth or any miscarriage.

25

2014 BAR EXAMS
Spouse refers to the lawful wife. For this purpose, lawful wife refers to a woman wh
o is legally
married to the male employee concerned.
Cohabiting refers to the obligation of the husband and wife to live together.
What is the covered total number of deliveries?
Every married employee in the private and public sectors is entitled to a patern
ity leave of seven (7)
calendar days with full pay for the first four (4) deliveries of the legitimate
spouse with whom he is cohabiting.
Paternity leave benefits are granted to the qualified employee after the deliver
y by his wife, without
prejudice to an employer allowing an employee to avail of the benefit before or
during the delivery, provided that
the total number of days should not exceed seven (7) calendar days for each deli
very.
Is an unavailed paternity leave benefit convertible to cash?
No. In the event that the paternity leave benefit is not availed of, said leave
shall not be convertible to cash.
PARENTAL LEAVE
(R.A. No. 8972)
What is parental leave?
Parental leave is the leave benefit granted to a male or female solo parent to ena
ble him/her to perform
parental duties and responsibilities where physical presence is required.
How many days may be availed of as parental leave?
The parental leave shall not
solo parent who has
rendered service of at least
duties and responsibilities
his/her physical presence is
be more than seven (7) working days every year to a

one (1) year, to enable him/her to perform parental
where
required. This leave shall be non-cumulative.
It bears noting that this leave privilege is an additional leave benefit which i
s separate and distinct from any
other leave benefits provided under existing laws or agreements.
Who is a solo parent?
The term "solo parent" refers to any individual who falls under any of the follo
wing categories:
(1) A woman who gives birth as a result of rape and other crimes against chastit
y even without a final
conviction of the offender: Provided, That the mother keeps and raises the child
;
(2) Parent left solo or alone with the responsibility of parenthood due to death
of spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the sp
ouse is detained or is serving
sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due to physi
cal and/or mental incapacity
of spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of parenthood due to legal
separation or de facto
separation from spouse for at least one (1) year, as long as he/she is entrusted
with the custody of the
children;
(6) Parent left solo or alone
with the responsibility of parenthood due to declaration of nullity or
annulment of marriage as decreed by a court or by a church as long as he/she is
entrusted with the
custody of the children;
(7) Parent left solo or alone with the responsibility of parenthood due to aband
onment of spouse for at
least one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his child/chi
ldren instead of having
others care for them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and support to a child or
children;
(10) Any family member who assumes the responsibility of head of family as a res
ult of the death,
abandonment, disappearance or prolonged absence of the parents or solo parent.
What is the effect of change of status of the solo parent?
A change in the status or circumstance of the parent claiming benefits under thi
s Act, such that he/she is no
longer left alone with the responsibility of parenthood, shall terminate his/her
eligibility for these benefits.
Who are considered children under this law?
"Children" refer to those living with and dependent upon the solo parent for sup
port who are unmarried,
unemployed and not more than eighteen (18) years of age, or even over eighteen (
18) years but are incapable of selfsupport because of mental and/or physical defect/disability.
Is an unavailed parental leave convertible to cash?
No. In the event that the parental leave is not availed of, said leave shall not
be convertible to cash unless
specifically agreed upon previously.
LEAVE FOR VICTIMS OF VIOLENCE
AGAINST WOMEN AND CHILDREN
(R.A. No. 9262)
What is this kind of leave?
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2014 BAR EXAMS
This special leave is granted to a woman employee who is a victim under this law
. It is for a total of ten
(10) days of paid leave of absence, in addition to other paid leaves under the l
aw. It is extendible when the
necessity arises as specified in the protection order. Its purpose is to enable
the woman employee to attend to the
medical and legal concerns relative to said law. This leave is not convertible t
o cash.
What is the requirement for its entitlement?
At any time during the application of any protection order, investigation, prose
cution and/or trial of the
criminal case, a victim of Violence Against Women and their Children (VAWC) who
is employed shall be entitled
to said paid leave of up to ten (10) days. The Punong Barangay/kagawad or prosec
utor or the Clerk of Court, as the
case may be, shall issue a certification at no cost to the woman that such an ac
tion is pending, and this is all that is
required for the employer to comply with the 10-day paid leave.
SPECIAL LEAVE BENEFIT FOR WOMEN
What is this special leave benefit [GYNECOLOGICAL SURGERY LEAVE]?
A special leave benefit for women was granted under R.A. No.
wn as The Magna
Carta of Women [August 14, 2009]. Thus, any female employee
vate sector regardless of age
and civil status shall be entitled to a special leave of two
l pay based on her gross monthly
compensation subject to existing laws, rules and regulations
ed by gynecological disorders
under the following terms and conditions:
9710, otherwise kno

in the public and pri
(2) months with ful
due to surgery caus
1. She has rendered at least six (6) months continuous aggregate employment serv
ice for the last twelve
(12) months prior to surgery;
2. In the event that an extended leave is necessary, the female employee may use
her earned leave credits;
and
3. This special leave shall be non-cumulative and non-convertible to cash.
Gynecological disorders refer to disorders that would require surgical procedures
such as, but not
limited to, dilatation and curettage and those involving female reproductive org
ans such as the vagina, cervix,
uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified
by a competent physician. Gynecological
surgeries shall also include hysterectomy, ovariectomy, and mastectomy.
Is this leave similar to maternity leave?
No. This leave should be distinguished from maternity leave benefit, a separate
and distinct benefit, which
may be availed of in case of childbirth, miscarriage or complete abortion.
A woman, therefore, may avail of this special leave benefit in case she undergoe
s surgery caused by
gynecological disorder and at the same time maternity benefit as these two leave
s are not mutually exclusive.
SERVICE CHARGE
What are the kinds of establishment covered by the law on service charge?
The rules on service charge apply only to establishments collecting service char
ges, such as hotels,
restaurants, lodging houses, night clubs, cocktail lounges, massage clinics, bar
s, casinos and gambling houses, and
similar enterprises, including those entities operating primarily as private sub
sidiaries of the government.
Who are the employees covered by this law?
The same rules on service charges apply to all employees of covered employers, r
egardless of their
positions, designations or employment status, and irrespective of the method by
which their wages are paid except
those receiving more than P2,000.00 a month.
Who are not covered?
Specifically excluded from coverage are employees who are receiving wages of mor
e than P2,000.00 a
month. However, it must be pointed out that the P2,000.00 ceiling is no longer r
ealistic considering the applicable
minimum wages prevailing in the country. Hence, it must be disregarded.
How is the service charge distributed?
a. Percentage of sharing.
All service charges collected by covered employers are required to be distribute
d at the following rates:
1.
85% to be distributed equally among the covered employees; and
2.
15% to management to answer for losses and breakages and distribution to employe
es receiving more
than P2,000.00 a month, at the discretion of the management.
b.Frequency of distribution.
The share of the employees referred to above should be distributed and paid to t
hem not less often than
once every two (2) weeks or twice a month at intervals not exceeding sixteen (16
) days.
Can the service charge be integrated into the wages of covered employees?
Yes. In case the service charge is abolished, the share of covered employees sho
uld be considered
integrated in their wages, in accordance with Article 96 of the Labor Code. The
basis of the amount to be integrated

is the average monthly share of each employee for the past twelve (12) months im
mediately preceding the abolition
or withdrawal of such charges.
What are some principles on service charge?
27

2014 BAR EXAMS
Tips and services charges are two different things. Tips are given by
voluntarily to waiters and other
people who serve them out of recognition of satisfactory or excellent
here is no compulsion to give
tips under the law. The same may not be said of service charges which
ered integral part of the cost of
the food, goods or services ordered by the customers.
Service charges are not in the nature of profit share and, therefore,
deducted from wage.
THIRTEENTH MONTH PAY
customers
service. T
are consid
cannot be
Who are covered by the 13th month pay law?

Only rank-and-file employees, regardless of their designation or employment sta
tus and irrespective of the
method by which their wages are paid, are entitled to the 13th month pay benefit
. Managerial employees are not
entitled to 13th month pay.
When should 13th month pay be paid?
It must be paid not later than December 24 of every year.
The following employers are not covered by the 13th month pay law:
1.
The government and any of its political subdivisions, including government-owned
and controlled
corporations, except those corporations operating essentially as private subsidi
aries of the government.
2.
Employers already paying their employees 13th month pay or more in a calendar ye
ar or its equivalent
at the time of the issuance of the Revised Guidelines.
3.
Employers of those who are paid on purely commission, boundary, or task basis, a
nd those who are
paid a fixed amount for performing a specific work, irrespective of the time con
sumed in the
performance thereof, except where the workers are paid on piece-rate basis, in w
hich case, the
employer shall be covered by the Revised Guidelines insofar as such workers are
concerned. Workers
paid on piece-rate basis shall refer to those who are paid a standard amount for
every piece or unit of
work produced that is more or less regularly replicated without regard to the ti
me spent in producing
the same.
Are domestic workers or Kasambahays covered?
Yes. They are now covered under the Kasambahay Law.

Are extras, casuals and seasonal employees entitled to 13th month pay?
Yes, they are entitled thereto.
Is 13th month pay part of wage?
13th month pay which is in the nature of additional income, is based on wage but
not part of wage.
What is the minimum amount of the 13th month pay?
The minimum 13th month pay should not be less than one-twelfth (1/12) of the tot
al basic salary earned
by an employee within a calendar year.
What is meant by basic salary or basic wage?
Basic salary or basic wage contemplates work within the normal eight (8) working hou
rs in a day. This
means that the basic salary of an employee for purposes of computing the 13th mo
nth pay should include all
remunerations or earnings paid by the employer for services rendered during norm
al working hours.
For purposes of computing the 13th month pay, basic salary should be interpreted t
o mean not the amount
actually received by an employee, but 1/12 of their standard monthly wage multip
lied by their length of service
within a given calendar year.
What is the minimum period of service required in a calendar year to be entitled
to 13th month pay?
To be entitled to the 13th month pay benefit, it is imposed as a minimum service
requirement that the
employee should have worked for at least one (1) month during a calendar year.
SEPARATION PAY
What are the separation pays expressly provided under the Labor Code?
The Labor Code prescribes the payment of separation pay only in the following fo
ur (4) situations:
(1) When termination is due to authorized causes:
(1) installation of labor-saving devices;
(2) redundancy;
(3) retrenchment; or
(4) closing or cessation of business operations; and
(5) disease
What are separation pays provided in jurisprudence?
In accordance with jurisprudence, the following separation pay may be cited:
(1) Separation pay in lieu of reinstatement; and
28

2014 BAR EXAMS
(2) Separation pay as financial assistance in cases where the dismissal was held
valid and legal but the
employee is given financial assistance by reason of long years of service, unble
mished record, substantial
justice, etc.
What is the prevailing doctrine regarding grant of financial assistance?
The Toyota doctrine.

Under this doctrine, all grounds in Article 282 of the Labor Code, except analog
ous causes, would not
merit payment of financial assistance.
In the following cases, the Toyota doctrine was applied; hence, no financial ass
istance was awarded
because the grounds invoked are in accordance with Article 282:
Reno Foods v. Nagkakaisang Lakas ng Manggagawa (NLM), where it was maintained th
at labor
adjudicatory officials and the Court of Appeals must demur the award of separati
on pay based on social justice when
an employees dismissal is based on serious misconduct or willful disobedience; gr
oss and habitual neglect of duty;
fraud or willful breach of trust; or commission of a crime against the person of
the employer or his immediate family
grounds under Article 282 of the Labor Code that sanction dismissals of employee
s.
Equitable PCI Bank v. Dompor, Moya v. First Solid Rubber Industries, Inc., and U
nilever
Philippines, Inc. v. Rivera, where the infractions committed by the respondent c
onstituted serious misconduct or
willful disobedience resulting to loss of trust and confidence.
Central Philippines Bandag Retreaders, Inc. v. Diasnes, and Quiambao v. Manila E
lectric Company,
involving gross and habitual neglect of duties due to respondents repeated and co
ntinuous absences without prior
leave and frequent tardiness.
Exception to Toyota doctrine: When termination is based on analogous causes.

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

Under this 2010 doctrine, as distinguished from just cause termination, employee
s terminated due to
authorized cause are not entitled to be paid additional separation pay by way of
financial assistance.
The reason is that the employer is only required under the law to pay his employ
ees separation pay in
accordance with Article 283 of the Labor Code. That is all that the law requires
. The Court should refrain from
adding more than what the law requires, as the same is within the realm of the l
egislature.
RETIREMENT PAY
a.
ELIGIBILITY
Who are covered under the retirement pay law?
The following employees are eligible to avail of retirement benefits under Artic
le 287 of the Labor Code:
1. All employees in the private sector, regardless of their position, designatio
n or status and irrespective of
the method by which their wages are paid;
2.
Part-time employees;
3. Employees of service and other job contractors;
4.
Domestic helpers or persons in the personal service of another;
3. Underground mine workers;
4. Employees of government-owned and/or controlled corporations organized under
the Corporation Code
(without original charters).
Who are excluded?
Article 287, as amended, does not apply to the following employees:
1. Employees of the national government and its political subdivisions, includin
g government-owned
and/or controlled corporations, if they are covered by the Civil Service Law and
its regulations.
2. Employees of retail, service and agricultural establishments or operations re
gularly employing not
more than ten (10) employees. These terms are defined as follows:
a.
Retail establishment is one principally engaged in the sale of goods to end-users
for personal or
household use. It shall lose its retail character qualified for exemption if it
is engaged in both retail
and wholesale of goods.
b.
Service establishment is one principally engaged in the sale of service to individ
uals for their
own or household use and is generally recognized as such.
29

2014 BAR EXAMS
c.
Agricultural establishment/operation refers to an employer which is engaged in agr
iculture.
This term refers to all farming activities in all branches and includes, among o
thers, the cultivation
and tillage of soil, production, cultivation, growing and harvesting of any agri
cultural or
horticultural commodities, dairying, raising of livestock or poultry, the cultur
e of fish and other
aquatic products in farms or ponds, and any activities performed by a farmer or
on a farm as an
incident to, or in conjunction with, such farming operations, but does not inclu
de the manufacture
and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other
farm products.
What is the optional and compulsory retirement age?
a. Under Article 287.
This article provides for two (2) types of retirement:
(1)
Optional retirement upon reaching the age of sixty (60) years.
(2) Compulsory retirement upon reaching the age of sixty-five (65) years.
It is the employee who exercises the option under No. 1 above.
b. Under retirement plan.
The optional and compulsory retirement schemes provided under Article 287 come i
nto play only in the
absence of a retirement plan or agreement setting forth other forms of optional
or compulsory retirement schemes.
Thus, if there is a retirement plan or agreement in an establishment providing f
or an earlier or older age of retirement
(but not beyond 65 which has been declared the compulsory retirement age), the s
ame shall be controlling.
c. Retirement at an earlier age or after rendering certain period of service.
Based on Article 287 the employers and employees are free to agree and stipulate
on the retirement age,
either in a CBA or employment contract. It is only in the absence of such agreem
ent that the retirement age shall be
fixed by law, that is, in accordance with the optional and compulsory retirement
age prescribed under Article 287.
d. By mutual agreement, employers may be granted the sole and exclusive prerogat
ive to retire
employees at an earlier age or after rendering a certain period of service.
Cainta Catholic School v. Cainta Catholic School Employees Union [CCSEU], where
the Supreme
Court upheld the exercise by the school of its option to retire employees pursua
nt to the existing CBA where it is
provided that the school has the option to retire an employee upon reaching the
age limit of sixty (60) or after
having rendered at least twenty (20) years of service to the school, the last th
ree (3) years of which must be

continuous. Hence, the termination of employment of the employees, arising as it
did from an exercise of a
management prerogative granted by the mutually-negotiated CBA between the school
and the union is valid.
e. To be valid, retirement at an earlier age must be voluntarily consented to by
the employee.
In Jaculbe v. Silliman University, the Supreme Court ruled that in order for ret
irement at an earlier age to
be valid, it must be shown that the employees participation in the plan is volunt
ary. An employer is free to impose a
retirement age of less than 65 for as long as it has the employees consent. State
d conversely, employees are free to
accept the employers offer to lower the retirement age if they feel they can get
a better deal with the retirement plan
presented by the employer.
What is the minimum years of service required for entitlement under the law?
Five (5) years is the minimum years of service that must be rendered by the empl
oyee before he can avail
of the retirement benefits upon reaching optional or compulsory retirement age u
nder Article 287.
What is the retirement age of underground mine workers?
The optional retirement age of underground mine workers is 50 years of age; whil
e the compulsory
retirement age is 60 years old.
What is the minimum number of years of service required of underground mine work
ers?
Minimum years of service is also 5 years.
Are the retirement benefits of underground mine workers similar to ordinary reti
rees?
Yes. In fact, other than the retirement age, all other requirements as well as b
enefits provided in the law are
applicable to underground mine workers.
AMOUNT OF RETIREMENT PAY
What is retirement pay under the law?
a. One-half () month salary.
In the absence of a retirement plan or agreement providing for retirement benefi
ts of employees in the
establishment, an employee, upon reaching the optional or compulsory retirement
age specified in Article 287, shall
be entitled to retirement pay equivalent to at least one-half () month salary for
every year of service, a fraction of
at least six (6) months being considered as one (1) whole year.
b. Components of one-half () month salary.
For purposes of determining the minimum retirement pay due an employee under Art
icle 287, the term
one-half month salary shall include all of the following:
(1)
Fifteen (15) days salary of the employee based on his latest salary rate.
(2)
The cash equivalent of five (5) days of service incentive leave;
(3)
One-twelfth (1/12) of the 13th month pay due the employee; and
(4)
All other benefits that the employer and employee may agree upon that should be
included in the
computation of the employees retirement pay.
c. One-half () month salary means 22.5 days.
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2014 BAR EXAMS
One-half [] month salary is equivalent to 22.5 days arrived at after adding 15 days p
lus 2.5 days
representing one-twelfth [1/12] of the 13th month pay plus 5 days of service inc
entive leave.
What are some principles on retirement benefits?
1/12 of 13th month pay and 5 days of service incentive leave (SIL) should not be
included if the employee
was not entitled to 13th month pay and SIL during his employment.
Example: R & E Transport, Inc. v. Latag, where it was held that employees who ar
e not entitled to 13th
month pay and SIL pay while still working should not be paid the entire 22.5 days
but only the fifteen (15) days
salary. In other words, the additional 2.5 days representing one-twelfth [1/12]
of the 13th month pay and the five (5)
days of SIL should not be included as part of the retirement benefits.
The employee in this case was a taxi driver who was being paid on the boundary sys
tem basis. It was
undisputed that he was entitled to retirement benefits after working for fourtee
n (14) years with R & E Transport,
Inc. However, he was not entitled to the 13th month pay since Section 3 of the R
ules and Regulations Implementing
P.D. No. 851 exempts from its coverage employers of those who are paid on purely
boundary basis. He was also not
entitled to the 5-day service incentive leave pay pursuant to the Rules to Imple
ment the Labor Code which expressly
excepts field personnel and other employees whose performance is unsupervised by
the employer.
But in the 2010 case of Serrano v. Severino Santos Transit, which involves a bus
conductor (petitioner)
who worked for 14 years for respondent bus company which did not adopt any retir
ement scheme. It was held
herein that even if petitioner as bus conductor was paid on commission basis, he
falls within the coverage of R.A.
7641 (Retirement Pay Law, now Article 287 of Labor Code). This means that his re
tirement pay should include the
cash equivalent of the 5-day SIL and 1/12 of the 13th month pay for a total of 2
2.5 days. The affirmance by the Court
of Appeals of the reliance by the NLRC on R & E Transport case was held erroneou
s. For purposes of applying the
law on SIL as well as on retirement, there is a difference between drivers paid
under the boundary system and
conductors paid on commission basis. This is so because in practice, taxi driver
s do not receive fixed wages. They
retain only those sums in excess of the boundary or fee they pay to the owners or
operators of the
vehicles. Conductors, on the other hand, are paid a certain percentage of the bu
s earnings for the day. It bears
emphasis that under P.D. No. 851 and the SIL Law, the exclusion from its coverag
e of workers who are paid on a
purely commission basis is only with respect to field personnel.
RETIREMENT BENEFITS OF
WORKERS PAID BY RESULTS
What are the retirement benefits of workers paid by results?
For covered workers who are paid by results and do not have a fixed monthly rate
, the basis for the
determination of the salary for fifteen (15) days shall be their average daily s
alary (ADS). The ADS is the average
salary for the last twelve (12) months reckoned from the date of their retiremen
t, divided by the number of actual
working days in that particular period.
RETIREMENT BENEFITS OF PART-TIME WORKERS
What is the retirement benefit of part-time workers?
Applying the principles under Article 287, as amended, the components of retirem
ent benefits of part-time
workers may also be computed at least in proportion to the salary and related be
nefits due them.
TAXABILITY OF RETIREMENT BENEFITS
What are the conditions for exemption from tax of retirement benefits?
The retirement benefits of employees of private firms shall not be subject to an
y tax provided the following
conditions set forth therein are fully complied with:
(1) The retirement benefits received by officials and employees of private firms
, whether individual or
corporate, is in accordance with a reasonable private benefit plan maintained by
the employer;
(2) The retiring official or employee has been in the service of the same employ
er for at least ten (10)
years;
(3)
He/she is not less than fifty (50) years of age at the time of his/her retiremen
t; and
(4) The benefits shall be availed of by an official or employee only once.
J.
WOMEN WORKERS
a.
PROVISIONS AGAINST DISCRIMINATION
What are acts of discrimination under the Labor Code?
(a) Payment of a lesser compensation, including wage, salary or other form of re
muneration and fringe
benefits, to a female employee as against a male employee, for work of equal val
ue; and
(b) Favoring a male employee over a female employee with respect to promotion, t
raining opportunities,
study and scholarship grants solely on account of their sexes.
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2014 BAR EXAMS
What are acts of discrimination under the Magna Carta of Women?
R.A. No. 9710, otherwise known as The Magna Carta of Women, is a comprehensive wom
ens human
rights law that seeks to eliminate discrimination against women by recognizing,
protecting, fulfilling and promoting
the rights of Filipino women, especially those in marginalized sector.
Based on the definition of the term Discrimination Against Women in R.A. No. 9710,
the following are
considered discriminatory acts:
1. Any gender-based distinction, exclusion, or restriction which has the effect
or purpose of impairing or
nullifying the recognition, enjoyment, or exercise by women, irrespective of the
ir marital status, on a
basis of equality of men and women, of human rights and fundamental freedoms in
the political,
economic, social, cultural, civil or any other field;
2. Any act or omission, including by law, policy, administrative measure, or pra
ctice, that directly or
indirectly excludes or restricts women in the recognition and promotion of their
rights and their access
to and enjoyment of opportunities, benefits or privileges;
3.
A measure or practice of general application that fails to provide for mechanism
s to offset or address
sex or gender-based disadvantages or limitations of women, as a result of which
women are denied or
restricted in the recognition and protection of their rights and in their access
to and enjoyment of
opportunities, benefits, or privileges; or women, more than men, are shown to ha
ve suffered the greater
adverse effects of those measures or practices; and
4. Discrimination compounded by
or intersecting with other grounds, status, or condition, such as
ethnicity, age, poverty or religion.
Additionally, women are guaranteed their right to decent work. The State shall p
rogressively realize and
ensure decent work standards for women that involve the creation of jobs of acce
ptable quality in conditions of
freedom, equity, security and human dignity.
b.
STIPULATION AGAINST MARRIAGE
Is the prohibition against marriage valid?
Article 136 of the Labor Code considers as an unlawful act of the employer to re
quire as a condition for or
continuation of employment that a woman employee shall not get married or to sti
pulate expressly or tacitly that
upon getting married, a woman employee shall be deemed resigned or separated.
It is likewise an unlawful act of the employer, to actually dismiss, discharge,

discriminate or otherwise
prejudice a woman employee merely by reason of her marriage.
What are the relevant pieces of jurisprudence on marriage?
1.
Philippine Telegraph and Telephone Company v. NLRC. -It was declared here that t
he company
policy of not accepting or considering as disqualified from work any woman worke
r who contracts
marriage runs afoul of the test of, and the right against, discrimination afford
ed all women workers by
our labor laws and by no less than the Constitution.
2.
Star Paper Corp. v. Simbol, Comia and Estrella. - The following policies were st
ruck down as
invalid for violating the standard of reasonableness which is being followed in
our jurisdiction,
otherwise called the Reasonable Business Necessity Rule:
1. New applicants will not be allowed to be hired if in case he/she has [a] relat
ive, up to [the] 3rd degree
of relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one male and another fema
le) developed a
friendly relationship during the course of their employment and then decided to
get married, one of them
should resign to preserve the policy stated above.
3.
Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc. In this
case, the
prohibition against marriage embodied in the following stipulation in the employ
ment contract was held
as valid:
10. You agree to disclose to management any existing or future relationship you m
ay have, either by
consanguinity or affinity with co-employees or employees of competing drug compa
nies. Should it pose
a possible conflict of interest in management discretion, you agree to resign vo
luntarily from the
Company as a matter of Company policy.
The Supreme Court ruled that the dismissal based on this stipulation in the empl
oyment contract is a valid
exercise of management prerogative. The prohibition against personal or marital
relationships with employees of
competitor companies upon its employees was held reasonable under the circumstan
ces because relationships of that
nature might compromise the interests of the company. In laying down the assaile
d company policy, the employer
only aims to protect its interests against the possibility that a competitor com
pany will gain access to its secrets and
procedures.
c.
PROHIBITED ACTS
What are the prohibited acts against women under the Labor Code?
Article 137 of the Labor Code and its implementing rule consider unlawful the fo
llowings acts of the
employer:
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2014 BAR EXAMS
1. To discharge any woman employed by him for the purpose of preventing such wom
an from enjoying
maternity leave, facilities and other benefits provided under the Labor Code;
2. To discharge such woman on account of her pregnancy, or while on leave or in
confinement due to her
pregnancy;
3.
To discharge or refuse the admission of such woman upon returning to her work fo
r fear that she may
again be pregnant;
4. To discharge any woman or any other employee for having filed a complaint or
having testified or
being about to testify under the Labor Code; or
5. To require as a condition for or continuation of employment that a woman empl
oyee shall not get
married or to stipulate expressly or tacitly that upon getting married, a woman
employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise
prejudice a woman employee merely by reason of marriage.
d.
ANTI-SEXUAL HARASSMENT ACT
(R.A. No. 7877)
What are the 3 situations contemplated under this law?
R.A. No. 7877 declares sexual harassment unlawful only in three (3) situations,
namely:
(1) employment;
(2) education; and
(3) training environment.
Can sexual harassment be committed also against a man?
Yes. Sexual harassment is not the sole domain of women as men may also be subjec
ted to the same
despicable act. Said law does not limit the victim of sexual harassment to women
.
Who are the persons who may be held liable for sexual harassment?
Work, education or training-related sexual harassment is committed by any employ
er, employee, manager,
supervisor, agent of the employer, teacher, instructor, professor, coach, traino
r, or any other person who, having
authority, influence or moral ascendancy over another in a work or training or e
ducation environment, demands,
requests or otherwise requires any sexual favor from another, regardless of whet
her the demand, request or
requirement for submission is accepted by the object of said act.
Further, any person who directs or induces another to commit any act of sexual h
arassment as defined in
the law, or who cooperates in the commission thereof by another without which it
would not have been committed,

shall also be held liable under the law.
How is sexual harassment committed in a work-related or employment environment?
In a work-related or employment environment, sexual harassment is committed when
:
1. The sexual favor is made a condition in the hiring or in the employment, re-e
mployment or continued
employment of said individual or in granting said individual favorable compensat
ion, terms, conditions,
promotions, or privileges; or the refusal to grant the sexual favor results in l
imiting, segregating or
classifying the employee which in any way would discriminate, deprive or diminis
h employment
opportunities or otherwise adversely affect said employee;
2. The above acts would impair the employees rights or privileges under existing
labor laws; or
3.
The above acts would result in an intimidating, hostile, or offensive environmen
t for the employee.
What are duties of the employer in regard to sexual harassment complaints?
It is the duty of the employer to prevent or deter the commission of acts of sex
ual harassment and to
provide the procedures for the resolution or prosecution of acts of sexual haras
sment.
The employer or head of office is required to:
1. promulgate
appropriate rules and regulations, in consultation with and jointly approved by
the
employees or students or trainees, through their duly designated representatives
, prescribing the
procedure for the investigation of sexual harassment cases and the administrativ
e sanctions therefor.
The said rules and regulations issued shall include, among others, guidelines on
proper decorum in the
workplace and educational or training institutions.
2. create a committee on decorum and investigation of cases on sexual harassment
. The committee shall
conduct meetings, as the case may be, with officers and employees, teachers, ins
tructors, professors,
coaches, trainors and students or trainees to increase understanding and prevent
incidents of sexual
harassment. It shall also conduct the investigation of alleged cases constitutin
g sexual harassment.
K.
EMPLOYMENT OF MINORS
(Labor Code and R.A. No. 7678, R.A. No. 9231)
Who is a child or working child?
For legal purposes, the term child refers to any person less than eighteen (18) ye
ars of age.
A working child refers to any child engaged as follows:
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2014 BAR EXAMS
i. when the child is below eighteen (18) years of age, in work or economic activ
ity that is not child
labor; and
ii.when the child below fifteen (15) years of age:
(a)
in work where he/she is directly under the responsibility of his/her parents or
legal guardian and
where only members of the childs family are employed; or
(b)
in public entertainment or information which refers to artistic, literary, and cul
tural performances
for television show, radio program, cinema or film, theater, commercial advertis
ement, public
relations activities or campaigns, print materials, internet, and other media.
What are the working hours of a child?
The term hours of work includes (1) all time during which a child is required to b
e at a prescribed
workplace, and (2) all time during which a child is suffered or permitted to wor
k. Rest periods of short duration
during working hours shall be counted as hours worked.
The following hours of work shall be observed for any child allowed to work unde
r R.A. No. 9231 and its
Implementing Rules:
(a)
For a child below 15 years of age, the hours of work shall not be more than twen
ty (20) hours per
week, provided that the work shall not be more than four (4) hours at any given
day;
(b) For a child 15 years of age but below 18, the hours of work shall not be mor
e than eight (8) hours a
day, and in no case beyond forty (40) hours a week; and
(c)
No child below 15 years of age shall be allowed to work between eight (8) oclock
in the evening and
six (6) oclock in the morning of the following day and no child 15 years of age b
ut below 18 shall be
allowed to work between ten (10) oclock in the evening and six (6) oclock in the m
orning of the
following day.
What is the prohibition of employing minors in certain undertakings and advertis
ements?
No child below 18 years of age is allowed to be employed as a model in any adver
tisement directly or
indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its b
y-products, gambling or any form of
violence or pornography.
L.
HOUSEHELPERS
(Labor Code as amended by R.A. No. 7655,
An Act Increasing the Minimum Wage of Househelpers;
See also Household Service under the Civil Code)
(NOTE: The above provisions of the Labor Code on Househelpers
cited in the 2014 Syllabus have already been repealed by R.A. No.
10361, otherwise known as Domestic Workers Act or Batas
Kasambahay approved by President Benigno S. Aquino III on
January 18, 2013).
What is the coverage of the Kasambahay Law?
R.A. No. 10361 applies to all domestic workers employed and working within the c
ountry. It shall cover
all parties to an employment contract for the services of the following Kasambah
ay, whether on a live-in or live-out
arrangement, such as, but not limited to:
(a)
General househelp;
(b)
Yaya;
(c)
Cook;
(d)
Gardener;
(e)
Laundry person; or
(f) Any person who regularly performs domestic work in one household on an occup
ational basis.
The following are not covered:
(a)
Service providers;
(b)
Family drivers;
(c)
Children under foster family arrangement; and
(d) Any other person who performs work occasionally or sporadically and not on a
n occupational basis.
Who is a domestic worker or kasambahay?
Domestic worker or kasambahay refers to any person engaged in domestic work within a
n
employment relationship, whether on a live-in or live-out arrangement, such as,
but not limited to, general
househelp, "yaya", cook, gardener, or laundry person, but shall exclude service
providers, family drivers, children
who are under foster family arrangement, or any person who performs domestic wor
k only occasionally or
sporadically and not on an occupational basis.
This term shall not include children who are under foster family arrangement whi
ch refers to children
who are living with a family or household of relative/s and are provided access
to education and given an allowance
incidental to education, I.e., "baon", transportation, school projects, and scho
ol activities.
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2014 BAR EXAMS
Because of these new terminologies prescribed in the law, the use of the term hou
sehelper may no longer
be legally correct.
Is the employment contract required to be in writing?
Yes. The employment contract must be in writing and should contain the condition
s set by law.
What are the rights and privileges of a kasambahay?
The rights and privileges of the Kasambahay are as follows:
(a)
Minimum wage;
(b) Other mandatory benefits, such as the daily and weekly rest periods, service
incentive leave, and 13th
month pay;
(c)
Freedom from employers interference in the disposal of wages;
(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
(e)
Standard of treatment;
(f)
Board, lodging and medical attendance;
(g) Right to privacy;
(h)
Access to outside communication;
(i)
Access to education and training;
(j)
Right to form, join, or assist labor organization;
(k) Right to be provided a copy of the employment contract;
(I)
Right to certificate of employment;
(m) Right to terminate the employment; and
(n) Right to exercise their own religious beliefs and cultural practices.
The foregoing rights and privileges are discussed below.
What is the minimum wage of kasambahay?
Under the Kasambahay Law, the following are the minimum wages of kasambahays:
(a) Two thousand five hundred pesos (P2,500.00) a month for those employed in th
e National Capital
Region (NCR);
(b) Two thousand pesos (P2,000.00) a month for those employed in chartered citie
s and first class
municipalities; and
(c) One thousand five hundred pesos (P1,500.00) a month for those employed in ot
her municipalities.
Are the minimum wages subject to review by the RTWPBs or Regional Boards?
Yes. After one (1) year from the effectivity of the Kasambahay Law, and periodic
ally thereafter, the
Regional Tripartite and Productivity Wage Boards (RTPWBs) shall review, and if p
roper, determine and adjust
the minimum wage rates of domestic workers.
What are some important principles on wage of kasambahay?
Frequency of payment of wages. - The wages of the Kasambahay shall be paid at le

ast once a
month. This is so because the minimum wage rates are on a monthly basis.
The equivalent minimum daily wage rate of the Kasambahay shall be determined by
dividing the
applicable minimum monthly rate by thirty (30) days.
The amount of the minimum wage depends on the geographical area where the Kasamb
ahay works.
Payment of wages:
1.
To whom paid. - It should be made on time directly to the Kasambahay to whom the
y are due in
cash at least once a month.
2.
Deductions, prohibition; when allowed. - The employer, unless allowed by the Kas
ambahay
through a written consent, shall make no deductions from the wages other than th
at which is
mandated by law such as for SSS, Philhealth or Pag-IBIG contributions.
3.
Mode of payment. - It should be paid in cash and not by means of promissory note
s, vouchers,
coupons, tokens, tickets, chits, or any object other than the cash wage as provi
ded for under this
Act.
4.
Pay slip. The employer shall at all times provide the Kasambahay with a copy of
the pay slip
containing the amount paid in cash every pay day, and indicating all deductions
made, if any. The
copies of the pay slip shall be kept by the employer for a period of three (3) y
ears.
5.
Prohibition on Interference in the disposal of wages. It shall be unlawful for t
he employer to
interfere with the freedom of the Kasambahay in the disposition of his/her wages
, such as:
(a)
Forcing, compelling, or obliging the Kasambahay to purchase merchandise, commodi
ties or
other properties from the employer or from any other person; or
(b)
Making use of any store or services of such employer or any other person.
6.
Prohibition against withholding of wages. It shall be unlawful for an employer,
directly or
indirectly, to withhold the wages of the Kasambahay. If the Kasambahay leaves wi
thout any
justifiable reason, any unpaid salary for a period not exceeding fifteen (15) da
ys shall be forfeited.
Likewise, the employer shall not induce the Kasambahay to give up any part of th
e wages by
force, stealth, intimidation, threat or by any other means whatsoever.
What are important terms and conditions of employment of kasambahay?
The following is a rundown of the basic terms and conditions that should be obse
rved in the employment of
a Kasambahay:
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2014 BAR EXAMS
a.
Employable age. - Children whose age is below 15 years are absolutely prohibited
to work as
Kasambahay.
b. Normal daily hours of work. Because R.A. No. 10361 does not contain any provi
sion on the number
of normal hours of work that a Kasambahay should render in a day but merely pres
cribes said daily rest
period of eight (8) hours per day, it may be concluded that the Kasambahay shoul
d work for at least a
total of sixteen (16) hours per day as normal hours of work. However, it must be
noted that the Labor
Code does not contain any provision on the normal hours of work of househelpers.
Article 1695 of the
Civil Code, however, specifically provides that househelpers shall not be requir
ed to work for more
than ten (10) hours a day. Since R.A. No. 10361, a special law, is the most rece
nt piece of legislation,
it should prevail over the general provision of the Civil Code.
c.
Normal daily hours of work for working child-kasambahay is eight (8) hours per d
ay.
d. 13th month pay. - The Kasambahay who has rendered at least one (1) month of s
ervice is entitled to a
13th month pay which shall not be less than one-twelfth (1/12) of his/her total
basic salary earned in a
calendar year. The 13th month pay shall be paid not later than December 24 of ev
ery year or upon
separation from employment.
e.
Daily rest period. The Kasambahay shall be entitled to an aggregate daily rest p
eriod of eight (8)
hours.
f.
Weekly rest period. - The Kasambahay shall be entitled to at least twenty-four (
24) consecutive
hours of rest in a week. The employer and the Kasambahay shall agree in writing
on the schedule of the
weekly rest day but the preference of the Kasambahay, when based on religious gr
ounds, shall be
respected.
g. Service incentive leave. -A Kasambahay who has rendered at least one (1) year
of service shall be
entitled to an annual service incentive leave of at least five (5) days with pay
. Any unused portion of
said annual leave shall not be cumulative or carried over to the succeeding year
s. Unused leaves shall
not be convertible to cash.
h. Social security benefits. - A Kasambahay who has rendered at least one (1) mo
nth of service shall be
covered by the Social Security System (SSS), Employees Compensation Commission (
ECC), Philippine
Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund or P
ag-IBIG, and
shall be entitled to all the benefits in accordance with their respective polici
es, laws, rules and
regulations.
i.
Obligation of employer to register and enrol with SSS, PhilHealth, and Pag-IBIG.
- As employer
of the Kasambahay, he/she shall register himself/herself with, and enroll the la
tter as his/her employee
to the SSS, PhilHealth, and Pag-IBIG.
j. Deposits for loss or damage. - It shall be unlawful for the employer or any o
ther person to require a
Kasambahay to make deposits from which deductions shall be made for the reimburs
ement of loss or
damage to tools, materials, furniture and equipment in the household.
k. Standard of treatment.
- The Kasambahay shall be treated with respect by the employer or any
member of the household. He/she shall not be subjected to any kind of abuse, inc
luding repeated verbal
or psychological, nor be inflicted with any form of physical violence or harassm
ent or any act tending to
degrade his/her dignity, as defined under the Revised Penal Code, Violence Again
st Women and their
Children Law (R.A. No. 9262), Special Protection of Children Against Child Abuse
, Exploitation and
Discrimination Act (R.A. No. 7610) as amended by R.A. No. 9231, Anti-Trafficking
in Persons Act of
2003 (R.A. No. 9208), and other applicable laws.
l.
Board, lodging and medical attendance. - The employer shall provide for the basi
c necessities of the
Kasambahay, to include the following:
(1) At least three (3) adequate meals a day, taking into consideration the Kasam
bahay s religious
beliefs and cultural practices;
(2) Humane sleeping condition that respects the person s privacy for live-in arr
angement; and
(3) Appropriate rest and medical assistance in the form of first-aid medicines,
in case of illnesses and
injuries sustained during service without loss of benefits.
m. Opportunities for education and training. - The Kasambahay shall be afforded
the opportunity to
finish basic education, which shall consist of elementary and secondary educatio
n. He/she may be allowed access to
alternative learning systems and, as far as practicable, higher education or tec
hnical vocational education and
training.
n. Membership in labor organization. - The Kasambahay shall have the right to jo
in a labor organization
of his/her own choosing for purposes of mutual aid and collective negotiation.
r. Health and safety. - The employer shall safeguard the safety and health of th
e Kasambahay in
accordance with the standards which the DOLE shall develop through the Bureau of
Working Conditions (BWC)
and the Occupational Safety and Health Center (OSHC) within six (6) months from
the promulgation of this IRR.
The said standards shall take into account the peculiar nature of domestic work.
s. Prohibition on debt bondage. - It shall be unlawful for the employer or any p

erson acting on his/her
behalf to place the Kasambahay under debt bondage. Debt bondage refers to the rend
ering of service by the
Kasambahay as security or payment for a debt where the length and nature of serv
ice is not clearly defined or when
the value of the service is not reasonably applied in the payment of the debt.
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2014 BAR EXAMS
t. Assignment to non-household work. - The employer shall not assign the Kasamba
hay to work, whether
in full or part-time, in a commercial, industrial or agricultural enterprise at
a wage rate lower than that provided for
agricultural or non-agricultural workers.
If so assigned, the Kasambahay will no longer be treated as such but as a regula
r employee of the
establishment.
What are the rules on termination of Kasambahay?
a. Pre-termination of employment. The following rules shall be observed:
(1) In case the duration of employment is specified in the contract, the Kasamba
hay and the employer may
mutually agree upon notice to terminate the contract of employment before the ex
piration of its term.
(2) In case the duration is not determined by stipulation or by nature of servic
e, the employer or the
Kasambahay may give notice to end the employment relationship five (5) days befo
re the intended
termination of employment.
b. Termination of employment initiated by the Kasambahay. -The Kasambahay may te
rminate the
employment relationship at any time before the expiration of the contract for an
y of the following causes:
(1) Verbal or emotional abuse of the Kasambahay by the employer or any member of
the household;
(2) Inhuman treatment including physical abuse of the Kasambahay by the employer
or any member of the
household;
(3) Commission of a crime or offense against the Kasambahay by the employer or a
ny member of the
household;
(4) Violation by the employer of the terms and conditions of the employment cont
ract and other standards
set forth in the law;
(5) Any disease prejudicial to the health of the Kasambahay, the employer, or me
mbers of the household;
and
(6) Other causes analogous to the foregoing.
If the Kasambahay leaves without cause, any unpaid salary due, not exceeding the
equivalent of 15 days
work, shall be forfeited. In addition, the employer may recover from the Kasamba
hay deployment expenses, if any,
if the services have been terminated within six (6) months from employment.
c. Termination of employment initiated by the employer. - An employer may termin
ate the employment
of the Kasambahay at any time before the expiration of the contract for any of t
he following causes:
(1) Misconduct or
willful disobedience by the Kasambahay of the lawful order of the employer in
connection with the former s work;
(2) Gross or habitual neglect or inefficiency by the Kasambahay in the performan

ce of duties;
(3) Fraud or willful breach of the trust reposed by the employer on the Kasambah
ay;
(4) Commission of a crime or offense by the Kasambahay against the person of the
employer or any
immediate member of the employer s family;
(5) Violation by the Kasambahay of the terms and conditions of the employment co
ntract and other
standards set forth under the law;
(6) Any disease prejudicial to the health of the Kasambahay, the employer, or me
mbers of the household;
and
(7) Other causes analogous to the foregoing.
If the employer dismissed the Kasambahay for reasons other than the above, he/sh
e shall pay the
Kasambahay the earned compensation plus indemnity in the amount equivalent to fi
fteen (15) days work.
d. Invalid ground for termination. -Pregnancy and marriage of the Kasambahay are
not valid grounds
for termination of employment.
e. Employment Certification. -Upon the termination of employment, the employer s
hall issue the
Kasambahay, within five (5) days from request, a certificate of employment indic
ating the nature, duration of the
service and work description.
M.
EMPLOYMENT OF HOMEWORKERS
IMPORTANT TERMS:
a. Industrial homeworker. It refers to a worker who is engaged in industrial homew
ork.
b. Industrial homework. It refers to a system of production under which work for a
n employer or
contractor is carried out by a homeworker at his/her home. Materials may or may
not be furnished by the employer
or contractor. It differs from regular factory production principally in that, i
t is a decentralized form of production
where there is ordinarily very little supervision or regulation of methods of wo
rk.
c. Home. -It means any nook, house, apartment or other premises used regularly, in
whole or in part, as
a dwelling place, except those situated within the premises or compound of an em
ployer, contractor/subcontractor
and the work performed therein is under the active or personal supervision by or
for the latter.
d. Field personnel. It refers to a non-agricultural employee who regularly perform
s his duties away
from the principal place of business or branch office of the employer and whose
actual hours of work in the field
cannot be determined with reasonable certainty.
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2014 BAR EXAMS
e. Employer. It refers to any natural or artificial person who, for his own accoun
t or benefit, or on
behalf of any person residing outside the Philippines, directly or indirectly, o
r through any employee, agent,
contractor, subcontractor or any other person:
1.
delivers or causes to be delivered any goods, articles or materials to be proces
sed or fabricated in or
about a home and thereafter to be returned or to be disposed of or distributed i
n accordance with his
direction; or
2. sells any goods, articles or materials for the purpose of having such goods o
r articles processed in or
about a home and then repurchases them himself or through another after such pro
cessing.
f. Contractor or subcontractor. -It refers to any person who, for the account or ben
efit of an
employer, delivers or causes to be delivered to a homeworker, goods or articles
to be processed in or about his home
and thereafter to be returned, disposed of or distributed in accordance with the
direction of the employer.
g. Processing. - It refers to manufacturing, fabricating, finishing, repairing, al
tering, packing, wrapping
or handling in any way connected with the production or preparation of an articl
e or material.
How is homework paid?
Immediately upon receipt of the finished goods or articles, the employer is requ
ired to pay the homeworker
or the contractor or subcontractor, as the case may be, for the work performed l
ess the corresponding homeworkers
share of SSS, PhilHealth and ECC premium contributions which should be remitted
by the contractor or
subcontractor or employer to the SSS with the employers share. However, where pay
ment is made to a contractor
or subcontractor, the homeworker should likewise be paid immediately after the g
oods or articles have been
collected from the workers.
What are prohibited homeworks?
No homework shall be performed on the following:
1. Explosives, fireworks and articles of like character;
2. Drugs and poisons; and
3. Other articles, the processing of which requires exposure to toxic substances
.
N.
APPRENTICES AND LEARNERS
What are the distinctions between learnership and apprenticeship?
The following are the distinctions:
1.
Practical training. Both learnership and apprenticeship involve practical traini
ng on-the-job.
2.
Training agreement. Learnership is governed by a learnership agreement; while ap
prenticeship is
governed by an apprenticeship agreement.
2.
Occupation. Learnership involves learnable occupations consisting of semi-skille
d and other industrial
occupations which are non-apprenticeable; while apprenticeship concerns apprenti
ceable occupations
or any trade, form of employment or occupation approved for apprenticeship by th
e DOLE Secretary.
3.
Theoretical instructions. Learnership may or may not be supplemented by related
theoretical
instructions; while apprenticeship should always be supplemented by related theo
retical instructions.
4.
Ratio of theoretical instructions and on-the-job training. For both learnership
and apprenticeship, the
normal ratio is one hundred (100) hours of theoretical instructions for every tw
o thousand (2,000) hours
of practical or on-the-job training. Theoretical instruction time for occupation
s requiring less than two
thousand (2,000) hours for proficiency should be computed on the basis of such r
atio.
5.
Competency-based system. Unlike in apprenticeship, it is required in learnership
that it be implemented
based on the TESDA-approved competency-based system.
6.
Duration of training. Learnership involves practical training on the job for a p
eriod not exceeding
three (3) months; while apprenticeship requires for proficiency, more than three
(3) months but not
over six (6) months of practical training on the job.
7.
Qualifications. The law does not expressly mention any qualifications for learne
rs; while the following
qualifications are required to be met by apprentices under Article 59 of the Lab
or Code:
(a) Be at least fourteen (14) years of age;
(b) Possess vocational aptitude and capacity for appropriate tests; and
(c) Possess the ability to comprehend and follow oral and written instructions.
8.
Circumstances justifying hiring of trainees. Unlike in apprenticeship, in learne
rship, the law, Article
74 of the Labor Code, expressly prescribes the pre-requisites before learners ma
y be validly employed,
to wit:
(a) When no experienced workers are available;
(b) The employment of learners is necessary to prevent curtailment of employment
opportunities; and
(c) The employment does not create unfair competition in terms of labor costs or
impair or lower
working standards.
9.
Limitation on the number of trainees. In learnership, a participating enterprise

is allowed to take in
learners only up to a maximum of twenty percent (20%) of its total regular workf
orce. No similar cap is
imposed in the case of apprenticeship.
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2014 BAR EXAMS
10.
Option to employ. In learnership, the enterprise is obliged to hire the learner
after the lapse of the
learnership period; while in apprenticeship, the enterprise is given only an opti
on to hire the
apprentice as an employee.
11.
Wage rate. The wage rate of a learner or an apprentice is set at seventy-five pe
rcent (75%) of the
statutory minimum wage.
O.
PERSONS WITH DISABILITY
(R.A. No. 7277, as Amended by R.A. No. 9442)
Who are persons with disability (PWDs)?
Persons with Disability are those suffering from restriction or different abilitie
s, as a result of a mental,
physical or sensory impairment, to perform an activity in the manner or within t
he range considered normal for a
human being.
What is impairment?
Impairment refers to any loss, diminution or aberration of psychological, physiol
ogical, or anatomical
structure or function.
What is disability?
Disability means (1) a physical or mental impairment that substantially limits one
or more psychological,
physiological or anatomical functions of an individual or activities of such ind
ividual; (2) a record of such an
impairment; or (3) being regarded as having such an impairment.
What is handicap?
Handicap refers to a disadvantage for a given individual, resulting from an impair
ment or a disability
that limits or prevents the function or activity that is considered normal given
the age and sex of the individual.
b.
RIGHTS OF PERSONS WITH DISABILITY
What are the rights of PWDs?
Under the law, PWDs are entitled to equal opportunity for employment. Consequent
ly, no PWD shall be
denied access to opportunities for suitable employment. A qualified employee wit
h disability shall be subject to
the same terms and conditions of employment and the same compensation, privilege
s, benefits, fringe
benefits, incentives or allowances as a qualified able-bodied person.
What is the wage rate of PWDs?

The wage rate of PWDs is 100% of the applicable minimum wage.
What is the wage rate of PWD if hired as apprentice or learner?
A PWD hired as an apprentice or learner shall be paid not less than seventy-five
percent (75%) of the
applicable minimum wage.
c.
PROHIBITION ON DISCRIMINATION
AGAINST PERSONS WITH DISABILITY
What is the rule on discrimination against employment of PWDs?
No entity, whether public or private, shall discriminate against a qualified PWD
by reason of disability in
regard to job application procedures, the hiring, promotion, or discharge of emp
loyees, employee compensation, job
training, and other terms, conditions and privileges of employment. The followin
g constitute acts of discrimination:
(a)
Limiting, segregating or classifying a job applicant with disability in such a m
anner that adversely
affects his work opportunities;
(b) Using qualification standards, employment tests or other selection criteria
that screen out or tend to
screen out a PWD unless such standards, tests or other selection criteria are sh
own to be job-related for
the position in question and are consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration that:
(1) have the effect of discrimination on the basis of disability; or
(2) perpetuate the discrimination of others who are subject to common administra
tive control.
(d) Providing less compensation, such as salary, wage or other forms of remunera
tion and fringe benefits,
to a qualified employee with disability, by reason of his disability, than the a
mount to which a nondisabled person performing the same work is entitled;
(e)
Favoring a non-disabled employee over a qualified employee with disability with
respect to promotion,
training opportunities, study and scholarship grants, solely on account of the l
atters disability;
(f)
Re-assigning or transferring an employee with a disability to a job or position
he cannot perform by
reason of his disability;
(g) Dismissing or terminating the services of an employee with disability by rea
son of his disability unless
the employer can prove that he impairs the satisfactory performance of the work
involved to the
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2014 BAR EXAMS
prejudice of the business entity; provided, however, that the employer first sou
ght to provide
reasonable accommodations for persons with disability;
(h) Failing to select or administer in the most effective manner employment test
s which accurately reflect
the skills, aptitude or other factor of the applicant or employee with disabilit
y that such tests purports
to measure, rather than the impaired sensory, manual or speaking skills of such
applicant or employee,
if any; and
(i) Excluding PWD from membership in labor unions or similar organizations.
------------oOo-----------40

2014 BAR EXAMS
TOPIC NO. 4
TERMINATION OF EMPLOYMENT
A.
EMPLOYER-EMPLOYEE RELATIONSHIP
1.
Four-Fold Test
What is the 4-fold test of existence of employer-employee relationship?
1. Selection and engagement of the employee;
2. Payment of wages or salaries;
3. Exercise of the power of dismissal; or
4. Exercise of the power to control the employees conduct.
These tests, however, are not fool-proof as they admit of exceptions.
The control test is the controlling test which means that the employer controls
or has reserved the right
to control the employee not only as to the result of the work to be done but als
o as to the means and methods by
which the same is to be accomplished.
Is it necessary to have a written contract of employment in order to establish e
mployer-employee relationship?
No. It may be an oral or written contract. A written contract is not necessary f
or the creation and validity of
the relationship.
The only exception is in the case of Kasambahay where it is required that the co
ntract of employment
should be in writing.
2.
KINDS OF EMPLOYMENT
What are the general classifications of employment?
There are five (5) classifications of employment:
(a) Regular employees referring to those who have been engaged to perform activit
ies which are usually
necessary or desirable in the usual business or trade of the employer;
(b)
Project employees referring to those whose employment has been fixed for a specif
ic project or
undertaking, the completion or termination of which has been determined at the t
ime of the engagement
of the employee;
(c) Seasonal employees referring to those who work or perform services which are
seasonal in nature, and
the employment is for the duration of the season;
(d) Casual employees referring to those who are not regular, project, or seasona
l employees;
(e) Fixed-term employees whose term is freely and voluntarily determined by the
employer and the
employee.
a.
PROBATIONARY EMPLOYMENT
How is probationary period, say, of 6 months computed?
The 6-month probationary period should be reckoned from the date of appointment u
p to the same
calendar date of the 6th month following.
May probationary period be extended?
Yes, but only upon the mutual agreement by the employer and the probationary emp
loyee.
What is the effect of allowing a probationary employee to work beyond the probat
ionary period?
He is considered a regular employee.
What is the effect if there is no written contract providing for probationary em
ployment?
If there is no written contract, the employee is considered a regular employee f
rom day one of his
employment. And even if there is one, he is deemed regular if there is no stipul
ation on probationary period.
What are the grounds to terminate probationary employment?
Under Article 281, a probationary employee may be terminated only on three (3) g
rounds, to wit:
1. For a just cause; or
2.
For authorized cause; or
3.
When the probationary employee fails to qualify as a regular employee in accorda
nce with
reasonable standards made known by the employer to the employee at the start of
the
employment.
Is procedural due process required in termination of probationary employment?
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2014 BAR EXAMS
Yes, but only in the case of Numbers 1 and 2 above.
No, in the case of No. 3 above.
When should termination of probationary employment be made?
Termination to be valid must be done prior to lapse of probationary period. Term
ination a few days after
lapse of probationary period cannot be done without due process as he has alread
y become a regular employee by
that time.
b.
REGULAR EMPLOYMENT
How does one become a regular employee?
Under the Labor Code, regular employment may be attained in either of three (3)
ways, namely:
1.
By nature of work. - The employment is deemed regular when the employee has been
engaged to
perform activities which are usually necessary or desirable in the usual busines
s or trade of the
employer.
2.
By period of service. - The employment is reckoned as regular when the employee
has rendered at least
one (1) year of service, whether such service is continuous or broken, with resp
ect to the activity in
which he is employed and his employment shall continue while such activity exist
s.
3.
By probationary employment. - The employment is considered regular when the empl
oyee is allowed
to work after a probationary period.
Is the manner or method of paying wage material in determining regularity of emp
loyment?
No. The manner and method of payment of wage or salary is immaterial to the issu
e of whether the
employee is regular or not.
c.
PROJECT EMPLOYMENT
What is the litmus test of project employment?
The litmus test of project employment, as distinguished from regular employment,
is whether or not the
project employees were assigned to carry out a specific project or undertaking,
the duration and scope of which
were specified at the time the employees were engaged for that project.
A true project employee should be assigned to a project which begins and ends at
determined or
determinable times and be informed thereof at the time of hiring.
What are the indicators of project employment?
Either one or more of the following circumstances, among others, may be consider
ed as indicator/s that an
employee is a project employee:
1. The duration of the specific/identified undertaking for which the worker is e
ngaged is reasonably
determinable.
2.
Such duration, as well as the specific work/service to be performed, are defined
in an employment
agreement and is made clear to the employee at the time of hiring.
3. The
work/service performed by the employee is in connection with the particular proj
ect or
undertaking for which he is engaged.
4. The employee, while not employed and awaiting engagement, is free to offer hi
s services to any
other employer.
5. A report of the termination of employment in the particular project/undertaki
ng is submitted to the
DOLE Regional Office having jurisdiction over the workplace, within thirty (30)
days following the
date of his separation from work.
6. An undertaking in the employment contract by the employer to pay completion b
onus to the project
employee as practiced by most construction companies.
Is length of service material in determining validity of project employment?
No. Length of service is not a controlling determinant of employment tenure.
What are some principles on project employment?
1. Project employees should be informed of their status as such at inception of
the employment
relationship.
2.
There must be a written contract of project employment stating the duration of t
he project employment
as well as the particular work or service to be performed. A written project emp
loyment contract is an
indispensable requirement.
3.
Intervals in employment contracts indicate project employment.
4. Continuous, as opposed to intermittent, rehiring shows that employee is regul
ar.
5.
Project-to-project basis of employment is valid.
On termination of project employment.
1. Project employees enjoy security of tenure only during the term of their proj
ect employment.
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2014 BAR EXAMS
2. Project employees have presumably become regular employees if they are allowe
d to work beyond the
completion of the project or any phase thereof to which they were assigned or af
ter the day certain
which they and their employer have mutually agreed for its completion. Having be
come regular
employees, they can no longer be terminated on the basis of the completion of th
e project or any phase
thereof to which they were deployed.
d.
SEASONAL EMPLOYMENT
Can a seasonal employee become a regular seasonal employee?
Yes, provided the following requisites are complied with:
1. The seasonal employee should perform work or services that are seasonal in na
ture; and
2. They must have also been employed for more than one (1) season.
Can a regular seasonal worker file an illegal dismissal case in the event he is
not hired for the next season?
Yes. The reason is, being a regular seasonal employee, the employer should re-hi
re him in the next season.
During off-season, his employment is deemed suspended and he is considered as be
ing on leave of absence without
pay.
e.
CASUAL EMPLOYMENT
What is the most important distinguishing feature of casual employment?
The most important distinction is that the work or job for which he was hired is
merely incidental to the
principal business of the employer and such work or job is for a definite period
made known to the employee at the
time of engagement.
When does a casual employee become regular?
Casual employee becomes regular after one year of service by operation of law. T
he one (1) year period should
be reckoned from the hiring date. Repeated rehiring of a casual employee makes h
im a regular employee.
f.
FIXED-TERM EMPLOYMENT
What are the requisites in order for fixed-term employment to be valid?
The two (2) requisites or criteria for the validity of a fixed-term contract of
employment are as follows:
1. The
fixed period of employment was knowingly and voluntarily agreed upon by the part
ies,
without any force, duress or improper pressure being brought to bear upon the em
ployee and absent
any other circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and employee dealt with each othe
r on more or less equal
terms with no moral dominance whatever being exercised by the former on the latt
er.
Is fixed-term employment valid if the job is directly related to the principal b
usiness of the employer?
Yes. Fixed-term employment is the only exception to the rule that one becomes re
gular if he is made to perform
activities directly related to the principal business of the employer (Regularit
y by virtue of nature of work)
When does a fixed-term employee become regular?
When he is allowed to work beyond the agreed fixed term.
When there are successive renewals of fixed-period contracts.

NOTE: The practice of hiring of employees on a uniformly fixed 5-month basis and
replacing them upon the
expiration of their contracts with other workers with the same employment status
circumvents their right to
security of tenure.
3.
JOB CONTRACTING
Is job contracting valid if the contractor-supplied employees are engaged to per
form not merely peripheral but
core jobs with the principal?
Yes, per the 2012 case of Digital Telecommunications Philippines, Inc. v. Digite
l Employees Union
(DEU), where the Court recognized the management prerogative to farm out any of
its activities, regardless of
whether such activity is peripheral or core in nature.
b.
DEPARTMENT ORDER NO. 18-A (Series of 2011)
What is this issuance?
This is the prevailing implementing rules on job contracting.
c.
DEPARTMENT CIRCULAR NO. 01-12
What is this issuance?
43

2014 BAR EXAMS
This was issued by the DOLE Secretary to clarify that Department Order No. 18-A,
Series of 2011, is not
applicable to Business Processing Outsourcing (BPO)/Knowledge Process Outsourcin
g (KPO) and the
Construction Industry because:
(1) BPOs and KPOs since these companies may hire employees in accordance with ap
plicable laws, and
maintain these employees based on business requirements, which may or may not be
for different clients of the
BPOs at different periods of the employees employment.
(2) the Construction Industry because the licensing and the exercise of regulato
ry powers over the
construction industry are lodged with the Philippine Contractors Accreditation B
oard (PCAB), which is under the
Construction Industry Authority of the Philippines (ClAP), and not with the DOLE
. Thus, the DOLE, through its
regional offices, shall not require contractors licensed by PCAB in the Construc
tion Industry to register under D.O.
18-A, Series of 2011. Moreover, findings of violation/s on labor standards and o
ccupational health and safety
standards shall be coordinated with PCAB for its appropriate action, including t
he possible cancellation/suspension
of the contractors license.
d.
TRILATERAL RELATIONSHIP IN JOB CONTRACTING
What is meant by trilateral relationship?
As distinguished from employment contract which is bilateral in nature, involving
as it does only two (2)
parties, namely: (1) the employer, and (2) the employee, in legitimate job contr
acting, there are three (3) parties
involved, to wit:
1.
The principal who decides to farm out a job, work or service to a contractor;
2.
The contractor who has the capacity to independently undertake the performance o
f the job, work or
service; and
3.
The contractual workers engaged by the contractor to accomplish the job, work or
service.
e.
EFFECTS OF LABOR-ONLY CONTRACTING
What are the requisites of legitimate job contracting?
(1) The contractor must be duly registered with the DOLE. If not registered, the
contractor is presumed a
labor-only contractor.
(2) The contractor carries a distinct and independent business and undertakes to
perform the job, work
or service on its own responsibility, according to its own manner and method, an
d free from
control and direction of the principal in all matters connected with the perform
ance of the work
except as to the results thereof;
(3) The contractor has
substantial capital and/or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the condu
ct of the business;
and
(4) The
Service Agreement between principal and contractor should ensure compliance with
all the
rights and benefits of workers under Labor Laws such as labor and occupational s
afety and health
standards, free exercise of the right to self-organization, security of tenure,
and social and welfare
benefits.
Absence of any of the foregoing requisites makes it a labor-only contracting arr
angement.
What is the amount of substantial capital under the new Rules?
1. In the case of corporations, partnerships or cooperatives paid-up capital sto
cks/shares of at least
P3 Million; or
2. In the case of single proprietorship - a net worth of at least P3 Million.
Substantial capital and investment in tools, etc. are two separate requirements.
Substantial capital and investment in tools, equipment, implements, machineries and
work premises
should be treated as two (2) distinct and separate requirements in determining w
hether there is legitimate
job contracting arrangement.
When is there labor-only contracting?
(a) The contractor does
not have substantial capital or investments in the form of tools, equipment,
machineries, work premises, among others, and the employees recruited and placed
are performing
activities which are usually necessary or desirable to the operation of the comp
any, or directly
related to the main business of the principal within a definite or predetermined
period, regardless
of whether such job, work or service is to be performed or completed within or o
utside the premises of
the principal; OR
(b) The
contractor does not exercise the right of control over the performance of the wo
rk of the
employee.
NOTE: Even if only one of the two (2) elements above is present, there is laboronly contracting.
What are the effects of labor-only contracting?
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2014 BAR EXAMS
1. The labor-only contractor will be treated as the agent or intermediary of the
principal. Since the act of
an agent is the act of the principal, representations made by the labor-only con
tractor to the employees
will bind the principal.
2.
The principal will become the employer as if it directly employed the workers su
pplied by the laboronly contractor to undertake the subcontracted job or service. It will be respon
sible to them for all their
entitlements and benefits under labor laws.
3.
The principal and the labor-only contractor will be solidarily treated as the di
rect employer.
4.
The employees will become employees of the principal, subject to the classificat
ions of employees
under Article 280 of the Labor Code.
What are the distinctions between legitimate job contracting and labor-only cont
racting?
The chief distinctions between legitimate job contracting, on the one hand, and
the prohibited labor-only
contracting, on the other, may be summed up as follows:
1.
In the former, no employer-employee relationship exists between the contractual
employees of the job
contractor and the principal; while in the latter, an employer-employee relation
ship is created by law
between the principal and the contractual employees supplied by the labor-only c
ontractor.
2. In the former, the principal is considered only an indirect employer, as this t
erm is understood under
Article 107 of the Labor Code; while in the latter, the principal is considered
the direct employer of
the contractual employees in accordance with the last paragraph of Article 106 o
f the Labor Code.
3.
In the former, the joint and several obligation of the principal and the legitim
ate job contractor is only
for a limited purpose, that is, to ensure that the employees are paid their wage
s. Other than this
obligation of paying the wages, the principal is not responsible for any claim m
ade by the contractual
employees; while in the latter, the principal becomes jointly and severally or s
olidarily liable with the
labor-only contractor to the latters employees in the same manner and extent that
the principal is liable
to employees directly hired by him/her, as provided in Article 106 of the Labor
Code, as amended.
4. In the former, the legitimate job contractor undertakes to perform a specific
job for the principal; while
in the latter, the labor-only contractor merely provides, supplies, recruits and
places the personnel to
work for the principal.
What are the prohibitions other than labor-only contracting?
Contracting out of jobs, works or services when not done in good faith and not j
ustified by the
exigencies of the business such as the following:
(1) Contracting out of jobs, works or services when the same results in the term
ination or reduction of
regular employees and reduction of work hours or reduction or splitting of the b
argaining unit.
(2) Contracting out of work with a "Cabo." "Cabo" refers to a person or group of
persons or to a
labor group which, in the guise of a labor organization, cooperative or any enti
ty, supplies workers
to an employer, with or without any monetary or other consideration, whether in
the capacity of an
agent of the employer or as an ostensible independent contractor.
(3) Taking undue advantage of the economic situation or lack of bargaining stren
gth of the contractor s
employees, or undermining their security of tenure or basic rights, or circumven
ting the provisions
of regular employment, in any of the following instances:
(i)
Requiring them to perform functions which are currently being performed by the r
egular
employees of the principal; and
(ii) Requiring them to sign,
as a precondition to employment or continued employment, an
antedated resignation letter; a blank payroll; a waiver of labor standards inclu
ding minimum
wages and social or welfare benefits; or a quitclaim releasing the principal, co
ntractor or from
any liability as to payment of future claims.
(4) Contracting out of a job, work or service through an in-house agency.
(5) Contracting out of a job, work or service that is necessary or desirable or
directly related to the
business or operation of the principal by reason of a strike or lockout whether
actual or imminent.
(6) Contracting out of a job, work or service being performed by union members w
hen such will
interfere with, restrain or coerce employees in the exercise of their rights to
self-organization as
provided in Art. 248 (c) of the Labor Code, as amended.
(7) Repeated hiring of employees under an employment contract of short duration
or under a Service
Agreement of short duration with the same or different contractors, which circum
vents the Labor
Code provisions on Security of Tenure.
(8) Requiring employees under a subcontracting arrangement to sign a contract fi
xing the period of
employment to a term shorter than the term of the Service Agreement, unless the
contract is
divisible into phases for which substantially different skills are required and
this is made known to
the employee at the time of engagement.
(9) Refusal to provide a copy of the Service Agreement and the employment contra
cts between the

contractor and the employees deployed to work in the bargaining unit of the prin
cipal s certified
bargaining agent to the sole and exclusive bargaining agent (SEBA).
(10) Engaging or maintaining by the principal of subcontracted employees in exce
ss of those provided
for in the applicable Collective Bargaining Agreement (CBA) or as set by the Ind
ustry Tripartite
Council (ITC).
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2014 BAR EXAMS
B.
DISMISSAL FROM EMPLOYMENT
What is meant by two-fold due process requirement?
Dismissal of employees requires the observance of the two-fold due process requi
sites, namely:
1.
Substantive aspect which means that the dismissal must be for any of the (1) jus
t causes provided
under Article 282 of the Labor Code or the company rules and regulations promulg
ated by the
employer; or (2) authorized causes under Articles 283 and 284 thereof; and
2.
Procedural aspect which means that the employee must be accorded due process, th
e elements of which
are notice and the opportunity to be heard and to defend himself.
What is the distinction between JUST CAUSES and AUTHORIZED CAUSES?
A dismissal based on a just cause means that the employee has committed a wrongf
ul act or omission;
while a dismissal based on an authorized cause means that there exists a ground
which the law itself allows or
authorizes to be invoked to justify the termination of an employee even if he ha
s not committed any wrongful act or
omission such as installation of labor-saving devices, redundancy, retrenchment,
closure or cessation of business
operations or disease.
1.
JUST CAUSES
What are the just causes under the Labor Code?
The just causes in the Labor Code are found in the following provisions thereof:
(1) Article 282 -(Termination by the Employer) which provides for the following
grounds:
(a) Serious misconduct or willful disobedience by the employee of the lawful ord
ers of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his e
mployer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his e
mployer or any
immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
(2) Article 264(a) - (Prohibited Activities) which provides for the termination
of the following:
(a) Union officers who knowingly participate in an illegal strike and therefore
deemed to have lost their
employment status.
(b) Any employee, union officer or ordinary member who knowingly participates in
the commission of
illegal acts during a strike (irrespective of whether the strike is legal or ill
egal), is also deemed to
have lost his employment status.
(3) Article 263(g) -(National Interest Cases) where strikers who violate orders,
prohibitions and/or
injunctions as are issued by the DOLE Secretary or the NLRC, may be imposed imme
diate disciplinary
action, including dismissal or loss of employment status.
(4) Article 248(e) - (Union Security Clause) where violation of the union securi
ty agreement in the CBA
may result in termination of employment. Under this clause, the bargaining union
can demand from the
employer the dismissal of an employee who commits a breach of union security arr
angement, such as
failure to join the union or to maintain his membership in good standing therein
. The same union can
also demand the dismissal of a member who commits an act of disloyalty against i
t, such as when the
member organizes a rival union.
What are just causes under jurisprudence?
In addition to the just causes mentioned in the Labor Code, just causes are also
found in prevailing
jurisprudence. The following may be cited as just causes in accordance with prev
ailing jurisprudence:
1.
Violation of company rules and regulations.
2.
Theft of property owned by a co-employee as distinguished from company-owned pro
perty which is
considered serious misconduct.
3.
Incompetence, inefficiency or ineptitude.
4.
Failure to attain work quota.
5. Failure to comply with weight standards of employer.
6.
Attitude problem.
Is dismissal based on company Code of Discipline or Company Rules and Regulation
s illegal?
No.
In the 2013 case of Sampaguita Auto Transport Corporation v. NLRC, the Supreme C
ourt pronounced
that the Court of Appeals erred in ruling that the dismissal of private responde
nt, a bus driver of petitioner, was
illegal because the grounds upon which petitioners based respondents termination f
rom employment, viz.: hindi
lahat ng schedule nailalabas, []mababa ang revenue ng bus, laging kasama an[g] asa
wa sa byahe and
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2014 BAR EXAMS
maraming naririnig na kwento tungkol sa kanya, nag-uutos ng conductor para kumita
sa hindi magandang
paraan[,] xxx are not among those enumerated under Article 282 of the Labor Code
as just causes for termination
of employment. The irregularities or infractions committed by private respondent
in connection with his work as a
bus driver constitute serious misconduct or, at the very least, conduct analogou
s to serious misconduct, under the
above-cited Article 282 of the Labor Code. The requirement in the company rules
that: 3. to obey traffic rules and
regulations as well as the company policies. 4. to ensure the safety of the ridi
ng public as well as the other
vehicles and motorist (sic) is so fundamental and so universal that any bus drive
r is expected to satisfy the
requirement whether or not he has been so informed.
I.
SERIOUS MISCONDUCT
1. REQUISITES.
For misconduct or improper behavior to be a just cause for dismissal, the follow
ing requisites must concur:
1. It must be serious; and
2. It must relate to the performance of the employees duties; and
3. It must show that he has become unfit to continue working for the employer.
All the above three (3) requisites must concur.
2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.
Serious misconduct implies that it must be of such grave and aggravated characte
r and not merely trivial
or unimportant.
Simple or minor misconduct would not justify the termination of the services of
an employee.
Possession or use of shabu or other drugs is a valid ground to terminate employm

ent.
Immorality, as a general rule, is not a just ground to terminate employment. The

exception is when such
immoral conduct is prejudicial or detrimental to the interest of the employer.
Immoral act committed beyond office hours is a valid ground to terminate employm
ent.
Sexual intercourse inside company premises constitutes serious misconduct.
The act of a 30-year old lady teacher in falling in love with a 16-year old stud
ent is not immoral.
Fighting is a ground for termination but only the instigator or aggressor and no
t the victim who was
constrained to defend himself should be dismissed.

Challenging superiors to a fight is a just cause for termination.
Assaulting another employee is a just cause for termination.
Utterance of obscene, insulting or offensive words constitutes serious misconduc

t.
Gambling within company premises is a serious misconduct.
Rendering service to business rival is a just cause to terminate employment.
Selling products of a competitor is a just cause for termination.
Organizing a credit union by employees in a bank is a serious misconduct.
Deceiving a customer for personal gain is a just cause for termination.
Contracting work in competition with employer constitutes serious misconduct.
Intoxication which interferes with the employees work constitutes serious miscond
uct.
The act of a teacher in pressuring a colleague to change the failing grade of a

student is serious
misconduct.
Sexual harassment is a just ground to dismiss.
Sleeping while on duty is a ground for termination.
Dismissal is too harsh a penalty for eating while at work.
Pilferage or theft of company-owned property is a just cause to terminate.
Theft of funds or property not owned by employer is not a ground to terminate.
Act of falsification is a valid ground to terminate employment.
Punching-in of time cards of other employees is a just cause for termination.

II.
INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS
1. REQUISITES.
One of the fundamental duties of an employee is to obey all reasonable rules, or
ders and instructions of the
employer. In order to validly invoke this ground, the following requisites must
be complied with, to wit:
1.
The employees assailed conduct must have been willful or intentional, the willful
ness being
characterized by a wrongful and perverse attitude; and
2. The order violated must be based on a reasonable and lawful company rule, reg
ulation or policy and
made known to the employee and must pertain to the duties for which he has been
engaged to discharge.
2. SOME PRINCIPLES ON INSUBORDINATION.
Making false allegations in complaint does not constitute insubordination.

Failure to answer memo to explain constitutes willful disobedience.
Another notice is required in case of termination on the ground of failure to an

swer memo to explain.
Refusal to undergo random drug testing constitutes both serious misconduct and i
nsubordination.
Refusal to render overtime to meet production deadline constitutes insubordinati

on.
Refusal to comply with a lawful transfer constitutes insubordination.

III.
GROSS AND HABITUAL NEGLECT OF DUTIES
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2014 BAR EXAMS
1. REQUISITES.
The following are the requisites:
(1) There must be negligence which is gross and/or habitual in character; and
(2) It must be work-related as would make him unfit to work for his employer.
2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF DUTIES.
Simple negligence is not sufficient to terminate employment.
The negligence must be gross in character which means absence of that diligence
that an ordinarily prudent man
would use in his own affairs.
As a general rule, negligence must be both gross and habitual to be a valid grou
nd to dismiss.
Habituality may be disregarded if negligence is gross or the damage or loss is s

ubstantial. Habitual
negligence implies repeated failure to perform ones duties for a period of time, d
epending upon the
circumstances.
Actual damage, loss or injury is not an essential requisite.
Gross negligence may result to loss of trust and confidence.
Absences, if authorized, cannot be cited as a ground to terminate employment.
Tardiness or absenteeism, if not habitual, cannot be cited as a ground to termin

ate employment.
Tardiness or absenteeism, if habitual, may be cited as a ground to terminate emp

loyment.
Tardiness or absenteeism, if habitual, may be tantamount to serious misconduct.
Absences or tardiness due to emergency, ailment or fortuitous event are justifie

d and may not be cited as just
cause to terminate employment.
Unsatisfactory or poor performance, inefficiency and incompetence are considered

just causes for dismissal
only if they amount to gross and habitual neglect of duties.
IV.
ABANDONMENT OF WORK
1. CONCEPT.
Abandonment is a form of neglect of duty; hence, a just cause for termination of
employment under Article
282 [b] of the Labor Code.
2. REQUISITES.
To constitute abandonment, two (2) elements must concur, namely:
1. The employee must have failed to report for work or must have been absent wit
hout valid or justifiable
reason; and
2. There must have been a clear intention on the part of the employee to sever t
he employer-employee
relationship manifested by some overt act.
3. SOME PRINCIPLES ON ABANDONMENT.
Mere absence is not enough to constitute abandonment.
Clear intention to sever employment relationship is necessary.
Due process in abandonment cases consists only of the service of 2 notices to th

e employee, viz.:
a. First notice directing the employee to explain why he should not be declared
as having abandoned his job;
and
b. Second notice to inform him of the employers decision to dismiss him on the gr
ound of abandonment.
No hearing is required to validly dismiss an employee for abandonment.
Notices in abandonment cases must be sent to employees last known address per rec
ord of the company.
The employer need not look for the employees current whereabouts.
Immediate filing of a complaint for illegal dismissal praying for reinstatement

negates abandonment.
Lapse of time between dismissal and filing of a case is not a material indicatio
n of abandonment. Hence, lapse
of 2 years and 5 months or 20 months or 9 months or 8 months before filing the c
omplaint for illegal dismissal
is not an indication of abandonment. Under the law, the employee has a 4-year pr
escriptive period within which
to institute his action for illegal dismissal.
Filing of a case to pre-empt investigation of the administrative case is tantamo

unt to abandonment.
When what is prayed for in the complaint is separation pay and not reinstatement
, the filing of complaint
does not negate abandonment.
It is abandonment when what is prayed for in the complaint is separation pay and
it was only in the position
paper that reinstatement was prayed for.
Employment in another firm coinciding with the filing of complaint does not indi
cate abandonment.
Offer of reinstatement by employer during proceedings before Labor Arbiter and r

efusal by employee does not
indicate abandonment but more of a symptom of strained relations between the par
ties.
An employee may be absolved from the charge of abandonment of work but adjudged
guilty of AWOL. These
two grounds are separate and distinct from each other.

An employee who failed to report for work after the expiration of the duly appro
ved leave of absence is
considered to have abandoned his job.
An employee who failed to comply with the order for his reinstatement is deemed
to have abandoned his work.
An employee who, after being transferred to a new assignment, did not report for
work anymore is deemed to
have abandoned his job.
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2014 BAR EXAMS
An employee who deliberately absented from work without leave or permission from
his employer for the
purpose of looking for a job elsewhere is deemed to have abandoned his work.
Imprisonment or detention by military does not constitute abandonment.
Absence to evade arrest is not a valid justification. To do so would be to place

an imprimatur on the employees
attempt to derail the normal course of the administration of justice.
V.
FRAUD
1. REQUISITES.
The following are the requisites of this ground:
1. The employee has committed an intentional deception and used dishonest method
s for personal gain or
to damage the employer; and
2. The fraud is work-related and rendered him unfit to work for his employer.
2. SOME PRINCIPLES ON FRAUD.
Failure to deposit collection constitutes fraud.
Lack of damage or losses is not necessary in fraud cases. The fact that the empl
oyer did not suffer losses from
the dishonesty of the dismissed employee because of its timely discovery does no
t excuse the latter from any
culpability.
Lack of misappropriation or shortage is immaterial in case of unauthorized encas

hment of personal checks by
teller and cashier.
Restitution does not have absolutory effect.

VI.
WILLFUL BREACH OF TRUST AND CONFIDENCE
1. REQUISITES.
For the doctrine of loss of trust and confidence to apply, the following requisi
tes must be satisfied:
(1) The employee holds a position of trust and confidence;
(2) There exists an act justifying the loss of trust and confidence, which means
that the act that betrays the
employers trust must be real, i.e., founded on clearly established facts;
(3) The employees breach of the trust must be willful, i.e., it was done intentio
nally, knowingly and
purposely, without justifiable excuse; and
(4) The act must be in relation to his work which would render him unfit to perf
orm it.
2. GUIDELINES.
As a safeguard against employers who indiscriminately use loss of trust and confi
dence to justify
arbitrary dismissal of employees, the Supreme Court, in addition to the above el
ements, came up with the following

guidelines for the application of the doctrine:
(1) The loss of confidence must not be simulated;
(2) It should not be used as a subterfuge for causes which are illegal, improper
or unjustified;
(3) It may not be arbitrarily asserted in the face of overwhelming evidence to t
he contrary; and
(4) It must be genuine, not a mere afterthought, to justify earlier action taken
in bad faith.
The foregoing guidelines have been prescribed by the Supreme Court due to the su
bjective nature of this
ground which makes termination based on loss of trust and confidence prone to ab
use.
3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST AND CONFIDENCE.
Employees position must be reposed with trust and confidence.
Position of trust and confidence is one where a person is entrusted with confidenc
e on delicate matters, or
with the custody, handling, or care and protection of the employers property.
Two (2) classes of positions of trust. The first class consists of managerial em
ployees or those who, by the
nature of their position, are entrusted with confidential and delicate matters a
nd from whom greater fidelity to
duty is correspondingly expected. They refer to those vested with the powers or
prerogatives to lay down and
execute management policies and/or to hire, transfer suspend, lay-off, recall, d
ischarge, assign or discipline
employees or to effectively recommend such managerial actions. Their primary dut
y consists of the
management of the establishment in which they are employed or of a department or
a subdivision thereof.
The second class includes cashiers, auditors, property custodians, or those who,
in the normal and routine
exercise of their functions, regularly handle significant amounts of [the employ
ers] money or property. They
are fiduciary rank-and-file employees who, though rank-and-file, are routinely c
harged with the custody,
handling or care and protection of the employer s money or property, or entruste
d with confidence on delicate
matters, and are thus classified as occupying positions of trust and confidence.
Rules on termination of managerial and supervisory employees different from thos

e applicable to rankandfile employees. Thus, with respect to rank-and-file personnel, loss of trust and
confidence as a ground for
valid dismissal requires proof of involvement in the alleged events in question
and that mere uncorroborated
assertions and accusations by the employer will not be sufficient. But as regard
s a managerial employee, the
mere existence of a basis for believing that he has breached the trust of his em
ployer would suffice for his
dismissal.
There must be some basis for the loss of trust and confidence which means that the
re is reasonable ground to
believe, if not to entertain the moral conviction, that the concerned employee i
s responsible for the misconduct
and that the nature of his participation therein rendered him absolutely unworth
y of trust and confidence
demanded by his position.
Dismissal due to feng shui mismatch is not a valid ground to lose trust and conf
idence.
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2014 BAR EXAMS
Command responsibility of managerial employees is a ground to dismiss.
Confidential employee may be dismissed for loss of trust and confidence.
Grant of promotions and bonuses negates loss of trust and confidence.
Long years of service, absence of derogatory record and small amount involved ar
e deemed inconsequential
insofar as loss of trust and confidence is concerned.
Dropping of criminal charges or acquittal in a criminal case arising from the sa

me act does not affect the
validity of dismissal based on loss of trust and confidence.
Full restitution does not absolve employee of offense which resulted in the loss
of trust and confidence.
VII.
COMMISSION OF CRIME OR OFFENSE
1. REQUISITES.
The following are the requisites for the valid invocation of this ground:
1. A crime or offense was committed by the employee;
2. It was committed against any of the following persons:
(a) His employer;
(b) Any immediate member of his employers family; or
(c) His employers duly authorized representative.
2. SOME PRINCIPLES ON THE COMMISSION OF CRIME OR OFFENSE.
Because of its gravity, work-relation is not necessary. Neither is it necessary

to show that the commission of the
criminal act would render the employee unfit to perform his work for the employe
r.
VIII.
OTHER ANALOGOUS CAUSES
1. ANALOGOUS CAUSES UNDER ESTABLISHED JURISPRUDENCE.
The following may be cited as analogous causes:
1) Violation of company rules and regulations.
2) Theft of property owned by a co-employee, as distinguished from theft of prop
erty owned by the
employer.
3) Incompetence, inefficiency or ineptitude.
4) Failure to attain work quota.
5) Failure to comply with weight standards of employer.
6)
Attitude problem is analogous to loss of trust and confidence.

IX.
TERMINATION DUE TO ENFORCEMENT OF
UNION SECURITY CLAUSE
What is a union security clause?
The union security clause is a stipulation in a CBA which allows the parties there
to to enter into an
agreement requiring membership in the exclusive collective bargaining agent whic
h successfully negotiated said
CBA as a condition for continued employment with the exception of employees who
are already members of
another union at the time of the signing of the CBA.
What are the effects of application of this clause?
The following are the effects:
a.
On members of the bargaining union/agent. They are not allowed to resign or term
inate their
membership therefrom. Any member of the bargaining agent who resigns or is expel
led therefrom may
be recommended to the employer by the bargaining agent for termination of his em
ployment.
b.
On non-members of the bargaining union/agent but members of the minority union/s
. They are not
bound by the union security clause if they are members of the minority or other
unions at the time of the
signing of the CBA. Hence, they cannot be compelled to resign from their union/s
in order to join the
bargaining agent.
c.
On non-members of the bargaining union/agent or of any minority union/s. If not
a member of the
bargaining agent or any other unions in the bargaining unit at the time of the s
igning of the CBA by
reason of the fact that he is excepted from the coverage of the bargaining unit,
the employee cannot be
compelled to join the bargaining agent.
d.
On new employees hired after the signing of the CBA containing the union securit
y clause. They can
be compelled to join the bargaining agent. If they refuse, they can be recommend
ed for termination.
Is there an exception to this rule?
Yes. An employee cannot be compelled to join a union based on religious ground.
For example: members
of the Iglesia ni Kristo (INK) cannot be compelled to join a union; hence, they
are not bound by the union security
doctrine.
What are the requisites in order to validly terminate employees based on this cl
ause?
(1) The union security clause is applicable;
(2) The bargaining union is requesting for the termination of employment due to
enforcement of the union
security provision in the CBA; and

(3) There is sufficient evidence to support the unions decision to expel the empl
oyee from the union.
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2014 BAR EXAMS
All the foregoing requisites should be complied with to justify the termination
of employment.
2.
AUTHORIZED CAUSES
1. TWO (2) CLASSES.
Under the Labor Code, authorized causes are classified into two (2) classes, nam
ely:
(1) Business-related causes. Referring to the grounds specifically mentioned in
Article 283, to wit:
a.
Installation of labor-saving device;
b. Redundancy;
c. Retrenchment;
d. Closure or cessation of business operations NOT due to serious business losse
s or financial reverses;
and
e.
Closure or cessation of business operations due to serious business losses and f
inancial reverses.
(2) Health-related causes. Referring to disease covered by Article 284 of the La
bor Code.
What are the common requisites applicable to the authorized causes under Article
283?
The following are the five (5) common requisites applicable to the grounds under
Article 283:
1. There is good faith in effecting the termination;
2.
The termination is a matter of last resort, there being no other option availabl
e to the employer after
resorting to cost-cutting measures;
3. Two (2) separate written notices are served on both the affected employees an
d the DOLE at least one
(1) month prior to the intended date of termination;
4.
Separation pay is paid to the affected employees, to wit:
(a)
If based on (1) installation of labor-saving device, or (2) redundancy. - One (1
) month pay or at
least one (1) month pay for every year of service, whichever is higher, a fracti
on of at least six (6)
months shall be considered as one (1) whole year.
(b) If based on
(1) retrenchment, or (2) closure NOT due serious business losses or financial
reverses. - One (1) month pay or at least one-half () month pay for every year of
service,
whichever is higher, a fraction of at least six (6) months shall be considered a
s one (1) whole year.
(c) If closure is due to serious business losses or financial reverses, NO separ
ation pay is required to be
paid.
(d) In case the CBA or company policy provides for a higher separation pay, the
same must be followed
instead of the one provided in Article 283.
5.
Fair and reasonable criteria in ascertaining what positions are to be affected b
y the termination, such
as, but not limited to: nature of work; status of employment (whether casual, te
mporary or regular);
experience; efficiency; seniority; dependability; adaptability; flexibility; tra
inability; job performance;
discipline; and attitude towards work. Failure to follow fair and reasonable cri
teria in selecting who to
terminate would render the termination invalid.
I.
INSTALLATION OF LABOR-SAVING DEVICE
What is the additional requisite unique to this ground?
In addition to the five (5) common requisites above, the unique requisite for th
is ground is that the purpose
for such installation must be valid, such as to save on cost, enhance efficiency
and other justifiable economic
reasons.
II.
REDUNDANCY
The additional requisite is the existence of redundant position.
III.
RETRENCHMENT
There must be proof of losses or possible imminent losses. This is the only stat
utory ground in Article
283 which requires this kind of proof. The other grounds of closure or cessation
of business operations may be
resorted to with or without losses.
What are some relevant principles on retrenchment?
The fact that there has been economic or other crisis besetting a particular sec
tor or the country as a whole is not
sufficient justification for retrenchment.
The phrase retrenchment to prevent losses means that retrenchment must be undertak
en by the employer
before the losses anticipated are actually sustained or realized. The employer n
eed not keep all his employees
until after his losses shall have materialized. Otherwise, the law could be vuln
erable to attack as undue taking
of property for the benefit of another.
Best evidence of losses - financial statements audited by independent auditors (

not by internal auditors).
Best evidence of losses in a government-controlled corporation - financial state

ments audited by COA.

Income tax returns, not valid since they are self-serving documents.
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2014 BAR EXAMS
Mere affidavit on alleged losses is not sufficient.
Retrenchment effected long after the business losses is not valid.
Profitable operations in the past do not affect the validity of retrenchment.
Retrenchment due to liquidity problem is not valid.
Sharp drop in income is not a ground to justify retrenchment. A mere decline in

gross income cannot in any
manner be considered as serious business losses. It should be substantial, susta
ined and real.
Litany of woes, in the absence of any solid evidence that they translated into s
pecific and substantial losses that
would necessitate retrenchment, will not suffice to justify retrenchment.
Rehiring of retrenched employees does not necessarily indicate illegality of ret

renchment.
In an enterprise which has several branches nationwide, profitable operations in

some of them will not
affect the validity of the retrenchment if overall, the financial condition ther
eof reflects losses.
IV.
CLOSURE OR CESSATION OF BUSINESS OPERATIONS
Can an employer close its business even if it is not suffering from business los
ses?
Yes. In fact, closure involves two (2) situations:
(a) When NOT due to serious business losses or financial reverses; or
(b) When due to serious business losses or financial reverses
It is only in the first that payment of separation pay is required. No such requ
irement is imposed in the
second.
What are some relevant principles on closure?
Principle of closure under Article 283 applies in cases of both total and partia
l closure or cessation of business
operations. Management may choose to close only a branch, a department, a plant,
or a shop.
Closure of department or section and hiring of workers supplied by independent c

ontractor as replacements is
valid.
Relocation of business may amount to cessation of operations.
Closure of business to merge or consolidate with another or to sell or dispose a

ll of its assets, held valid.
Audited financial statements necessary only in closure due to losses.

V.
DISEASE
1. REQUISITES.
Disease is one of the authorized causes to terminate employment. The following r
equisites must be
complied with before termination of employment due to disease may be justified:
1. The employee is suffering from a disease;
2. His continued employment is either:
a) prohibited by law; or
b) prejudicial to his health; or
c) prejudicial to the health of his co-employees;
3. There is a certification by a competent public health authority that the dise
ase is of such nature or at
such stage that it cannot be cured within a period of six (6) months even with p
roper medical treatment;
4. Notice of termination based on this ground should be separately served both t
o the employee and the
Department of Labor and Employment at least one (1) month prior to the effectivi
ty of the termination;
and
5. Separation pay should be paid to the employee in an amount equivalent to at l
east one (1) month salary
or to one-half () month salary for every year of service, whichever is greater, a
fraction of at least six
(6) months being considered as one (1) whole year.
What are some salient points to consider under this ground?
If the disease or ailment can be cured within the period of six (6) months with
proper medical treatment, the
employer should not terminate the employee but merely ask him to take a leave of
absence. The employer
should reinstate him to his former position immediately upon the restoration of
his normal health.
In case the employee unreasonably refuses to submit to medical examination or tr

eatment upon being
requested to do so, the employer may terminate his services on the ground of ins
ubordination or willful
disobedience of lawful order.
A medical certificate issued by a companys own physician is not an acceptable cer

tificate for purposes of
terminating an employment based on Article 284, it having been issued not by a co
mpetent public health
authority, the person referred to in the law.
A competent public health authority refers to a government doctor whose medical sp

ecialization
pertains to the disease being suffered by the employee. For instance, if the emp
loyee suffers from
tuberculosis, the medical certificate should be issued by a government-employed
pulmonologist who is
competent to make an opinion thereon. If the employee has cardiac symptoms, the
competent physician in
this case would be a cardiologist.
The medical certificate should be procured by the employer and not by the employ
ee.
3.
DUE PROCESS
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2014 BAR EXAMS
(a) Twin-Notice Requirement
(b) Hearing; Meaning of Opportunity to be Heard
What is the latest rule on due process?
Due process means compliance with both STATUTORY due process and CONTRACTUAL due
process. CONSTITUTIONAL due process is not applicable (Per Agabon doctrine).
Statutory due process refers to the one prescribed in the Labor Code (Article 27
7[b]); while contractual
due process refers to the one prescribed in the Company Rules and Regulations (P
er Abbott Laboratories doctrine).
Contractual due process was enunciated in the 2013 en banc ruling in Abbott Labo
ratories, Philippines
v. Pearlie Ann F. Alcaraz. Thus, it is now required that in addition to complian
ce with the statutory due process,
the employer should still comply with the due process procedure prescribed in it
s own company rules. The
employers failure to observe its own company-prescribed due process will make it
liable to pay an indemnity in the
form of nominal damages, the amount of which is equivalent to the P30,000.00 awa
rded under the Agabon doctrine.
Are the twin-notice requirement and hearing required in all cases of termination
?
No. The two-notice requirement and hearing are required only in case of just cau
se termination in the
following order:
1. Service of first written notice;
2. Conduct of hearing; and
3. Service of second written notice.
What is the King of Kings Transport doctrine?
Based on this doctrine which was enunciated in King of Kings Transport, Inc. v.
Mamac, the following
requirements should be complied with in just cause termination:
(1) First written notice.
The first written notice to be served on the employee should:
a) Contain the specific causes or grounds for termination against him;
b) Contain a directive that the employee is given the opportunity to submit his
written explanation
within the reasonable period of FIVE (5) CALENDAR DAYS from receipt of the notic
e:
1) to enable him to prepare adequately for his defense;
2) to study the accusation against him;
3) to consult a union official or lawyer;

4) to gather data and evidence; and
5) to decide on the defenses he will raise against the complaint.
c) Contain a detailed narration of the facts and circumstances that will serve a
s basis for the charge
against the employee. This is required in order to enable him to intelligently p
repare his explanation
and defenses. A general description of the charge will not suffice.
d) Specifically mention which company rules, if any, are violated and/or which a
mong the grounds
under Article 282 is being charged against the employee.
(2) Hearing required,
After serving the first notice, the employer should schedule and conduct a heari
ng or conference wherein
the employee will be given the opportunity to:
1) explain and clarify his defenses to the charge/s against him;
2) present evidence in support of his defenses; and
3) rebut the evidence presented against him by the management.
During the hearing or conference, the employee is given the chance to defend him
self personally, with the
assistance of a representative or counsel of his choice. Moreover, this conferen
ce or hearing could be used by the
parties as an opportunity to come to an amicable settlement.
(3) Second written notice.
After determining that termination of employment is justified, the employer shal
l serve the employees a
written notice of termination indicating that:
1) all circumstances involving the charge/s against the employee have been consi
dered; and
2) grounds have been established to justify the severance of his employment.
What is the Perez doctrine?
The Perez doctrine enunciates the new guiding principle on the hearing requireme
nt. It has interpreted the
term ample opportunity to be heard as follows:
(a)
Ample opportunity to be heard means any meaningful opportunity (verbal or written)
given to the
employee to answer the charges against him and submit evidence in support of his
defense, whether in
a hearing, conference or some other fair, just and reasonable way.
(b) A formal hearing or conference is no longer mandatory. It becomes mandatory
only under any of
the following circumstances:
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2014 BAR EXAMS
(1)
When requested by the employee in writing; or
(2) When substantial evidentiary disputes exist; or
(3) When a company rule or practice requires it; or
(4) When similar circumstances justify it.
(c)
the ample opportunity to be heard standard in the Labor Code prevails over the hear
ing or
conference requirement in its Implementing Rules and Regulations. This is how the
Supreme Court
resolved the conflict in the following provisions of the Labor Code and its impl
ementing rules:
The Perez doctrine is now the prevailing rule as shown by a catena of cases whic
h cited it after its
promulgation.
Are the twin-notice requirement and hearing applicable to authorized cause termi
nation?
No. Due process in authorized cause termination is deemed complied with upon the
separate and
simultaneous service of a written notice of the intended termination to both:
(1)
the employee to be terminated; and
(2)
the appropriate DOLE Regional Office, at least one (1) month before the intended
date of the
termination specifying the ground/s therefor and the undertaking to pay the sepa
ration pay required
For obvious reason, hearing is not required.
Are the twin-notice requirement and hearing applicable to an abandonment case wh
ich is a just cause to
terminate employment?
No. Although considered as a just cause to terminate employment, the due process
requirement is different.
No hearing is required (since the employee has already abandoned his job) but th
e following notices should be
complied with:
1)
First notice asking the employee to explain why he should not be declared as hav
ing abandoned his job;
and
2)
Second notice informing him of the employers decision to dismiss him on the groun
d of abandonment.
What are some notable principles on the hearing requirement?
If employee does not answer, hearing should still proceed.
Outright termination violates due process.
Investigation still required even if incident was witnessed by many.
Meeting, dialogue, consultation or interview is not the hearing required by law.

It may not be a substitute for
the actual holding of a hearing.
Prior consultation with union is not part of the due process requirement.
Cross-examination or confrontation of witnesses is not necessary in company inve

stigations.
Co-conspirators confession is not sufficient to merit dismissal.

What are the instances where hearing is not required?
Hearing is not required in the following cases:
1.
Termination of project, seasonal, casual or fixed-term employment.
2.
Termination of probationary employment on the ground of failure of the probation
ary employee to
qualify as a regular employee in accordance with reasonable standards made known
to him at the
start of the employment.
3.
Termination due to abandonment of work.
4.
Termination due to authorized causes under Article 283 (installation of labor-sa
ving device,
redundancy, retrenchment or closure of business or cessation of operations). In
such cases, there are no
allegations which the employees should refute and defend themselves from.
5.
Termination due to disease under Article 284.
6. Termination by the employee (resignation) under Article 285.
7. Termination after 6 months of bona-fide suspension of operation under Article
286. For purposes of
satisfying due process, what is required is simply that the notices provided und
er Article 283 be served
to both the affected employees and the DOLE at least one (1) month before the te
rmination becomes
effective.
8.
Termination due to retirement under Article 287.
9.
Termination due to closure or stoppage of work by government authorities when no
n-compliance
with the law or implementing rules and regulations poses grave and imminent dang
er to the health and
safety of workers in the workplace.
10. Termination of employee who has admitted his guilt for the offense charged.
What are the seven (7) standard situations in termination cases?
The rules on termination of employment in the Labor Code and pertinent jurisprud
ence are applicable to
seven (7) different situations, namely:
1. The dismissal was for a just cause under Article 282, for an authorized cause
under Article 283, or for
health reasons under Article 284, and due process was observed This termination
is LEGAL.
2. The dismissal was without a just or authorized cause but due process was obse
rved This termination is
ILLEGAL.
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2014 BAR EXAMS
3. The dismissal was without a just or authorized cause and due process was not
observed This termination
is ILLEGAL.
4. The dismissal was for a just or authorized cause but due process was not obse
rved This termination is
LEGAL.
5. The dismissal was for a non-existent cause This termination is ILLEGAL.
6. The dismissal was not supported by any evidence of termination This terminati
on is NEITHER LEGAL
NOR ILLEGAL as there is no dismissal to speak of. Reinstatement is ordered not a
s a relief for illegal
dismissal but on equitable ground.
7. The dismissal was brought about by the implementation of a law This terminati
on is LEGAL.
C.
RELIEFS FOR ILLEGAL DISMISSAL
1. RELIEFS UNDER ARTICLE 279 OF THE LABOR CODE.
Under this article, an illegally dismissed employee is entitled to the following
reliefs:
(1) Reinstatement without loss of seniority rights and other privileges;
(2) Full backwages, inclusive of allowances; and
(3) Other benefits or their monetary equivalent.
2. OTHER RELIEFS NOT FOUND IN ARTICLE 279 BUT AWARDED IN ILLEGAL DISMISSAL CASES
.
The following reliefs that are awarded in illegal dismissal cases are missing in
Article 279:
(1) Award of separation pay in lieu of reinstatement.
(2) Award of penalty in the form of nominal damages in case of termination due t
o just or authorized
cause but without observance of procedural due process.
(3) Reliefs to illegally dismissed employee whose employment is for a fixed peri
od. The proper relief is
only the payment of the employees salaries corresponding to the unexpired portion
of the employment
contract.
(4) Award of damages and attorneys fees.
(5) Award of financial assistance in cases where the employees dismissal is decla
red legal but because
of long years of service, and other considerations, financial assistance is awar
ded.
(6) Imposition of legal interest on separation pay, backwages and other monetary
awards.
1.
REINSTATEMENT
a.
REINSTATEMENT PENDING APPEAL
Is reinstatement pending appeal solely applicable to reinstatement ordered by th
e Labor Arbiter?
Yes. Reinstatement is self-executory or immediately executory only if it is orde

red by the Labor Arbiter.
This means that the employee ordered reinstated need not file any motion for the
issuance of writ of execution to
enforce reinstatement. The employer, in fact, is required to manifest within 10
days from his receipt of the order
of reinstatement which of the two (2) options he is taking:
(1) To reinstate the employee to his former position or to a substantially equiv
alent position; or
(2) To reinstate him in the payroll, which means the employee need not report fo
r work but only for the
purpose of getting his wage.
There is no way the employer can disregard the reinstatement order. Posting of a
bond does not stay the
execution of immediate reinstatement.
In contrast, if ordered by the NLRC, on appeal, or the Court of Appeals, under a
Rule 65 certiorari
petition, or even by the Supreme Court, reinstatement is not immediately executo
ry. This means that the employee
reinstated should still file a motion for issuance of writ of execution to enfor
ce the reinstatement.
Are there instances where writ of execution of Labor Arbiters reinstatement order
is still required?
Yes, under the 2011 NLRC Rules of Procedure, there are two (2) instances when a
writ of execution should
still be issued immediately by the Labor Arbiter to implement his order of reins
tatement, even pending appeal, viz.:
(1) When the employer disobeys the Rules-prescribed directive to submit a report
of compliance within ten
(10) calendar days from receipt of the decision; or
(2) When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy the r
einstatement wages as they
accrue until actual reinstatement or reversal of the order of reinstatement.
The employee need not file a motion for the issuance of the writ of execution si
nce the Labor Arbiter shall
thereafter motu proprio issue the writ. Employer may be cited for contempt for h
is refusal to comply with the order
of reinstatement.
Employer is liable to pay the salaries for the period that the employee was orde
red reinstated pending
appeal even if his dismissal is later finally found to be legal on appeal.
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2014 BAR EXAMS
What are some relevant principles on reinstatement pending appeal?
The Labor Arbiter cannot exercise option of employer by choosing payroll reinsta
tement pending appeal.
If the former position is already filled up, the employee ordered reinstated und
er Article 223 should be
admitted back to work in a substantially equivalent position.
Reinstatement to a position lower in rank is not proper.
Reinstatement cannot be refused on the basis of the employment elsewhere of the

employee ordered reinstated.
The failure of the illegally dismissed employee who was ordered reinstated to re
port back to work does not
give the employer the right to remove him, especially when there is a reasonable
explanation for his failure.
No reinstatement pending appeal should be made when antipathy and antagonism exi
st.
If reinstatement is not stated in the Labor Arbiters decision (neither in the dis
positive portion nor in the text
thereof), reinstatement is not warranted.
b.
SEPARATION PAY IN LIEU OF REINSTATEMENT
Is separation pay applicable only to reinstatement as an alternative remedy?
Yes. Separation pay, as a substitute remedy, is only proper for reinstatement bu
t not for backwages.
This remedy is not found in the Labor Code but is granted in case reinstatement
is no longer possible or
feasible, such as when any of the following circumstances exists:
(1) Where the continued relationship between the employer and the employee is no
longer viable due to the
strained relations and antagonism between them (Doctrine of Strained Relations).
(2) When reinstatement proves impossible, impracticable, not feasible or unwarra
nted for varied reasons
and thus hardly in the best interest of the parties such as:
(a) Where the employee has already been replaced permanently as when his positio
n has already been
taken over by a regular employee and there is no substantially equivalent positi
on to which he may
be reinstated.
(b) Where the dismissed employees position is no longer available at the time of
reinstatement for
reasons not attributable to the fault of the employer.
(c) When there has been long lapse or passage of time that the employee was out
of employers employ
from the date of the dismissal to the final resolution of the case or because of
the realities of the
situation.
(d) By reason of the injury suffered by the employee.
(e) The employee has already reached retirement age under a Retirement Plan.
(f) When the illegally dismissed employees are over-age or beyond the compulsory
retirement age and
their reinstatement would unjustly prejudice their employer.
(3) Where the employee decides not to be reinstated as when he does not pray for
reinstatement in his
complaint or position paper but asked for separation pay instead.
(4) When reinstatement is rendered moot and academic due to supervening events,
such as:
(a) Death of the illegally dismissed employee.
(b) Declaration of insolvency of the employer by the court.
(c) Fire which gutted the employers establishment and resulted in its total destr
uction.
(d) In case the establishment where the employee is to be reinstated has closed
or ceased operations.
(5) To prevent further delay in the execution of the decision to the prejudice o
f private respondent.
(6) Other circumstances such as (a) when
reinstatement is inimical to the employers interest; (b)
reinstatement does not serve the best interests of the parties involved; (c) the
employer is prejudiced by
the workers continued employment; or (d) that it will not serve any prudent purpo
se as when
supervening facts transpired which made execution unjust or inequitable.
What is the amount of separation pay in lieu of reinstatement?
Per prevailing jurisprudence, the following are the components of separation pay
in lieu of reinstatement>
(1) The amount equivalent to at least one (1) month salary or to one (1) month s
alary for every year of
service, whichever is higher, a fraction of at least six (6) months being consid
ered as one (1) whole
year.
(2) Allowances that the employee has been receiving on a regular basis.
What is the period covered?
From start of employment up to the date of finality of decision except when the
employer has ceased its
operation earlier, in which case, the same should be computed up to the date of
closure.
What is the salary rate to be used in computing it?
The salary rate prevailing at the end of the period of putative service should b
e the basis for computation
which refers to the period of imputed service for which the employee is entitled
to backwages.
What are some important principles on separation pay in lieu of reinstatement?
Award of separation pay and backwages are not inconsistent with each other. Henc
e, both may be awarded to an
illegally dismissed employee. The payment of separation pay is in addition to pa
yment of backwages.
Reinstatement cannot be granted when what is prayed for by employee is separatio

n pay in lieu thereof.
BACKWAGES
What is the Bustamante doctrine?
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2014 BAR EXAMS
In 1996, the Supreme Court changed the rule on the reckoning of backwages. It an
nounced a new doctrine
in the case of Bustamante v. NLRC, which is now known as the Bustamante doctrine
. Under this rule, the term
full backwages should mean exactly that, i.e., without deducting from backwages th
e earnings derived elsewhere
by the concerned employee during the period of his illegal dismissal.
What are the components of backwages?
The components of backwages are as follows:
1.
Salaries or wages computed on the basis of the wage rate level at the time of th
e illegal dismissal and
not in accordance with the latest, current wage level of the employees position.
2.
Allowances and other benefits regularly granted to and received by the employee
should be made part
of backwages.
What are some principles on backwages?
Salary increases during period of unemployment are not included as component in

the computation of
backwages.
Dismissed employees ability to earn is irrelevant in the award of backwages.
In case reinstatement is ordered, full backwages should be reckoned from the tim
e the compensation was
withheld (which, as a rule, is from the time of illegal dismissal) up to the tim
e of reinstatement, whether actual
or in the payroll.
If separation pay is ordered in lieu of reinstatement, full backwages should be

computed from the time of
illegal dismissal until the finality of the decision. The justification is that
along with the finality of the Supreme
Courts decision, the issue on the illegality of the dismissal is finally laid to
rest.
If the illegally dismissed employee has reached the optional retirement age of 6
0 years, his backwages should
only cover the time when he was illegally dismissed up to the time when he reach
ed 60 years. Under Article
287, 60 years is the optional retirement age.
If the employee has reached 65 years of age or beyond, his full backwages should
be computed only up to said
age. The contention of the employer that backwages should be reckoned only up to
age 60 cannot be sustained.

If employer has already ceased operations, full backwages should be computed onl
y up to the date of the
closure. To allow the computation of the backwages to be based on a period beyon
d that would be an injustice
to the employer.
Any amount received during payroll reinstatement is deductible from backwages.

LIMITED BACKWAGES
When is the award of backwages limited?
(1)
When the dismissal is deemed too harsh a penalty;
(2)
When the employer acted in good faith; or
(3)
Where there is no evidence that the employer dismissed the employee.
Thus, the backwages will not be granted in full but limited to 1 year, 2 years o
r 5 years.
PREVENTIVE SUSPENSION
When is preventive suspension proper to be imposed?
Preventive suspension may be legally imposed against an errant employee only whi
le he is undergoing an
investigation for certain serious offenses. Consequently, its purpose is to prev
ent him from causing harm or injury to
the company as well as to his fellow employees. It is justified only in cases wh
ere the employees continued
presence in the company premises during the investigation poses a serious and im
minent threat to the life or
property of the employer or of the employees co-workers. Without this threat, pre
ventive suspension is not
proper.
What are some relevant principles in preventive suspension?
Preventive suspension is not a penalty. Preventive suspension, by itself, does n

ot signify that the company has
already adjudged the employee guilty of the charges for which she was asked to a
nswer and explain.
Preventive suspension is neither equivalent nor tantamount to dismissal.
If the basis of the preventive suspension is the employees absences and tardiness
, the imposition of preventive
suspension on him is not justified as his presence in the company premises does
not pose any such serious or
imminent threat to the life or property of the employer or of the employees co-wo
rkers simply by incurring
repeated absences and tardiness.
Preventive suspension does not mean that due process may be disregarded.
Preventive suspension should only be for a maximum period of thirty (30) days. A
fter the lapse of the 30-day
period, the employer is required to reinstate the worker to his former position
or to a substantially equivalent
position.
During the 30-day preventive suspension, the worker is not entitled to his wages
and other benefits. However, if
the employer decides, for a justifiable reason, to extend the period of preventi
ve suspension beyond said 30-day
period, he is obligated to pay the wages and other benefits due the worker durin
g said period of extension. In
such a case, the worker is not bound to reimburse the amount paid to him during
the extension if the employer
decides to dismiss him after the completion of the investigation.
Extension of period must be justified. During the 30-day period of preventive su

spension, the employer is
expected to conduct and finish the investigation of the employees administrative
case. The period of thirty (30)
days may only be extended if the employer failed to complete the hearing or inve
stigation within said period
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2014 BAR EXAMS
due to justifiable grounds. No extension thereof can be made based on whimsical,
capricious or unreasonable
grounds.
Preventive suspension lasting longer than 30 days, without the benefit of valid
extension, amounts to
constructive dismissal.
Indefinite preventive suspension amounts to constructive dismissal.

CONSTRUCTIVE DISMISSAL
When is there constructive dismissal?
Constructive dismissal contemplates any of the following situations:
1) An involuntary resignation resorted to when continued employment is rendered
impossible,
unreasonable or unlikely;
2) A demotion in rank and/or a diminution in pay; or
3) A clear discrimination, insensibility or disdain by an employer which becomes
unbearable to the
employee that it could foreclose any choice by him except to forego his continue
d employment.
What is the test of constructive dismissal?
The test of constructive dismissal is whether a reasonable person in the employe
es position would have
felt compelled to give up his position under the circumstances. It is an act amo
unting to dismissal but made to
appear as if it were not. In fact, the employee who is constructively dismissed
may be allowed to keep on coming to
work. Constructive dismissal is, therefore, a dismissal in disguise. The law rec
ognizes and resolves this situation
in favor of the employees in order to protect their rights and interests from th
e coercive acts of the employer.
What are examples of constructive dismissal or forced resignation?
Denying to the workers entry to their work area and placing them on shifts not by
weeks but almost by month
by reducing their workweek to three days.
Barring the employees from entering the premises whenever they would report for
work in the morning without
any justifiable reason, and they were made to wait for a certain employee who wo
uld arrive in the office at
around noon, after they had waited for a long time and had left.
Sending to an employee a notice of indefinite suspension which is tantamount to

dismissal.
Imposing indefinite preventive suspension without actually conducting any invest

igation.
Changing the employees status from regular to casual constitutes constructive dis
missal.
Preventing the employee from reporting for work by ordering the guards not to le
t her in. This is clear notice of
dismissal.
------------oOo-----------58

2014 BAR EXAMS
TOPIC NO. 5
MANAGEMENT PREROGATIVES
What are management prerogatives?
Management prerogatives are granted to the employer to regulate every aspect of
their business, generally
without restraint in accordance with their own discretion and judgment. This pri
vilege is inherent in the right of
employers to control and manage their enterprise effectively. Such aspects of em
ployment include hiring, work
assignments, working methods, time, place and manner of work, tools to be used,
processes to be followed,
supervision of workers, working regulations, transfer of employees, lay-off of w
orkers and the discipline, dismissal
and recall of workers.
What are the limitations to the exercise of these prerogatives?
1. Limitations imposed by:
a) law;
b) CBA;
c) employment contract;
d) employer policy;
e) employer practice; and
f) general principles of fair play and justice.
2. It is subject to police power.
3. Its exercise should be without abuse of discretion.
4. It should be done in good faith and with due regard to the rights of labor.
A.
DISCIPLINE
What are the components of the right to discipline?
The right or prerogative to discipline covers the following:
1) Right to discipline;
2) Right to dismiss;
3) Right to determine who to punish;
4) Right to promulgate rules and regulations;
5) Right to impose penalty; proportionality rule;
6) Right to choose which penalty to impose; and
7) Right to impose heavier penalty than what the company rules prescribe.
B.
TRANSFER OF EMPLOYEES
What are the kinds of transfer?
a. Two (2) kinds of transfer. -A transfer means a movement:
1. From one position to another of equivalent rank, level or salary, without a b
reak in the service; or
2. From one office to another within the same business establishment.
What are salient points to consider in transfer?
The exercise of the prerogative to transfer or assign employees from one office
or area of operation to another is
valid provided there is no demotion in rank or diminution of salary, benefits an
d other privileges. The
transfer should not be motivated by discrimination or made in bad faith or effec
ted as a form of punishment or
demotion without sufficient cause.
Commitment made by the employee like a salesman in the employment contract to be

re-assigned
anywhere in the Philippines is binding on him.
Even if the employee is performing well in his present assignment, management ma

y reassign him to a
new post.
The transfer of an employee may constitute constructive dismissal when

1) When the transfer is unreasonable, inconvenient or prejudicial to the employe
e;
2) When the transfer involves a demotion in rank or diminution of salaries, bene
fits and other privileges; and
3) When the employer performs a clear act of discrimination, insensibility, or d
isdain towards the employee,
which forecloses any choice by the latter except to forego his continued employm
ent.
The refusal of an employee to be transferred may be held justified if there is a

showing that the transfer was
directed by the employer under questionable circumstances. For instance, the tra
nsfer of employees during
the height of their unions concerted activities in the company where they were ac
tive participants is
illegal.
An employee who refuses to be transferred, when such transfer is valid, is guilt

y of insubordination or
willful disobedience of a lawful order of an employer under Article 282 of the L
abor Code.
Refusal to transfer due to parental obligations, additional expenses, inconvenie

nce, hardship and anguish
is not valid. An employee could not validly refuse lawful orders to transfer bas
ed on these grounds.
Refusal to transfer to overseas assignment is valid.
Refusal to transfer consequent to promotion is valid.

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2014 BAR EXAMS
Transfer to avoid conflict of interest is valid.
A transfer from one position to another occasioned by the abolition of the posit
ion is valid.
C.
PRODUCTIVITY STANDARD
How may productivity standards be imposed?
The employer has the prerogative to prescribe the standards of productivity whic
h the employees should
comply. The productivity standards may be used by the employer as:
1. an incentive scheme; and/or
2. a disciplinary scheme.
As an incentive scheme, employees who surpass the productivity standards or quot
a are usually given
additional benefits.
As a disciplinary scheme, employees may be sanctioned or dismissed for failure t
o meet the productivity
standards or quota.
Illustrative cases:
In the 2014 case of International School Manila v. International School Alliance
of Educators (ISAE),
the teacher was held guilty of gross inefficiency meriting her dismissal on the
basis of the Courts finding that she
failed to measure up to the standards set by the school in teaching Filipino cla
sses.
In the 2012 case of Reyes-Rayel v. Philippine Luen Thai Holdings Corp., the vali
dity of the dismissal of
petitioner who was the Corporate Human Resources (CHR) Director for Manufacturin
g of respondent company, on
the ground of inefficiency and ineptitude, was affirmed on the basis of the Cour
ts finding that petitioner, on two
occasions, gave wrong information regarding issues on leave and holiday pay whic
h generated confusion among
employees in the computation of salaries and wages.
D.
GRANT OF BONUS
See discussion on this under Topic III (Labor Standards) above.
E.
CHANGE OF WORKING HOURS
What is the extent of the exercise of this prerogative?
Employers have the freedom and prerogative, according to their discretion and be
st judgment, to regulate
and control the time when workers should report for work and perform their respe
ctive functions.
Manila Jockey Club Employees Labor Union PTGWO, v. Manila Jockey Club, Inc. - Th
e validity of
the exercise of the same prerogative to change the working hours was affirmed in
this case. It was found that while
Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a
.m. to 12:00 noon and from 1:00
p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI thereof expre
ssly reserves to respondent the
prerogative to change existing methods or facilities and to change the schedules
of work. Consequently, the hours
of work of regular monthly-paid employees were changed from the original 9:00 a.
m. to 5:00 p.m. schedule to 1:00
p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday
. The 9:00 a.m. to 5:00 p.m.
schedule for non-race days was, however, retained. Respondent, as employer, cite
d the change in the program of
horse races as reason for the adjustment of the work schedule. It rationalized t
hat when the CBA was signed, the
horse races started at 10:00 a.m. When the races were moved to 2:00 p.m., there
was no other choice for
management but to change the work schedule as there was no work to be done in th
e morning. Evidently, the
adjustment in the work schedule is justified.
F.
RULES ON MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR-EMPLOYERS
What is the best illustrative case of this prerogative?
Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc. The con
tract of
employment in this case expressly prohibited an employee from having a relations
hip with an employee of a
competitor company. It provides:
10. You agree to disclose to management any existing or future relationship you m
ay have, either by
consanguinity or affinity with co-employees or employees of competing drug compa
nies. Should it pose a possible
conflict of interest in management discretion, you agree to resign voluntarily f
rom the Company as a matter of
Company policy.
The Supreme Court ruled that this stipulation is a valid exercise of management
prerogative. The prohibition
against personal or marital relationships with employees of competitor-companies
upon its employees is reasonable
under the circumstances because relationships of that nature might compromise th
e interests of the company. In
laying down the assailed company policy, the employer only aims to protect its i
nterests against the possibility that a
competitor company will gain access to its trade secrets, manufacturing formulas
, marketing strategies and other
confidential programs and information.
G.
POST-EMPLOYMENT BAN
Is a non-compete clause valid?
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2014 BAR EXAMS
Yes. The employer and the employee are free to stipulate in an employment contra
ct prohibiting the
employee within a certain period from and after the termination of his employmen
t, from:
(1) starting a similar business, profession or trade; or
(2) working in an entity that is engaged in a similar business that might compet
e with the employer.
The non-compete clause is agreed upon to prevent the possibility that upon an em
ployees termination or
resignation, he might start a business or work for a competitor with the full co
mpetitive advantage of knowing and
exploiting confidential and sensitive information, trade secrets, marketing plan
s, customer/client lists, business
practices, upcoming products, etc., which he acquired and gained from his employ
ment with the former employer.
Contracts which prohibit an employee from engaging in business in competition wi
th the employer are not
necessarily void for being in restraint of trade.
What are the requisites in order for a non-compete clause to be valid?
A non-compete clause is not necessarily void for being in restraint of trade as
long as there are
reasonable limitations as to time, trade, and place.
Example:
The non-compete clause (called Non-Involvement Provision) in the 2007 case of Dais
y B. Tiu v.
Platinum Plans Philippines, Inc., provides as follows:
8. NON-INVOLVEMENT PROVISION The EMPLOYEE further undertakes that during his/her
engagement with EMPLOYER and in case of separation from the Company, whether vol
untary or for cause,
he/she shall not, for the next TWO (2) years thereafter, engage in or be involve
d with any corporation, association
or entity, whether directly or indirectly, engaged in the same business or belon
ging to the same pre-need industry
as the EMPLOYER. Any breach of the foregoing provision shall render the EMPLOYEE
liable to the
EMPLOYER in the amount of One Hundred Thousand Pesos (P100,000.00) for and as li
quidated damages.
Starting on January 1, 1993, petitioner worked for respondent as Senior Assistan
t Vice-President and
Territorial Operations Head in charge of its Hongkong and Asean operations under
a 5-year contract of employment
containing the afore-quoted clause. On September 16, 1995, petitioner stopped re
porting for work. In November
1995, she became the Vice-President for Sales of Professional Pension Plans, Inc
., a corporation engaged also in the
pre-need industry. Consequently, respondent sued petitioner for damages before t

he RTC of Pasig City. Respondent
alleged, among others, that petitioners employment with Professional Pension Plan
s, Inc. violated the above-quoted
non-involvement clause in her contract of employment. Respondent thus prayed for
P100,000 as compensatory
damages; P200,000 as moral damages; P100,000 as exemplary damages; and 25% of th
e total amount due plus
P1,000 per counsels court appearance, as attorneys fees.
Petitioner countered that the non-involvement clause was unenforceable for being
against public order or
public policy: First, the restraint imposed was much greater than what was neces
sary to afford respondent a fair and
reasonable protection. Petitioner contended that the transfer to a rival company
was an accepted practice in the preneed industry. Since the products sold by the companies were more or less the sa
me, there was nothing peculiar or
unique to protect. Second, respondent did not invest in petitioners training or i
mprovement. At the time petitioner
was recruited, she already possessed the knowledge and expertise required in the
pre-need industry and respondent
benefited tremendously from it. Third, a strict application of the non-involveme
nt clause would amount to a
deprivation of petitioners right to engage in the only work she knew.
In upholding the validity of the non-involvement clause, the trial court ruled t
hat a contract in
restraint of trade is valid provided that there is a limitation upon either time
or place. In the case of the preneed industry, the trial court found the two-year restriction to be valid and re
asonable.
On appeal, the Court of Appeals affirmed the trial courts ruling. It reasoned tha
t petitioner entered into
the contract on her own will and volition. Thus, she bound herself to fulfill no
t only what was expressly stipulated
in the contract, but also all its consequences that were not against good faith,
usage, and law. The appellate court
also ruled that the stipulation prohibiting non-employment for two years was val
id and enforceable considering the
nature of respondents business.
In affirming the validity of the Non-Involvement Clause, the Supreme Court ratio
cinated as follows:
xxx a non-involvement clause is not necessarily void for being in restraint of tr
ade as long as there are
reasonable limitations as to time, trade, and place.
In this case, the non-involvement clause has a time limit: two years from the tim
e petitioners
employment with respondent ends. It is also limited as to trade, since it only p
rohibits petitioner from
engaging in any pre-need business akin to respondents.
More significantly, since petitioner was the Senior Assistant Vice-President and
Territorial Operations Head in
charge of respondents Hongkong and Asean operations, she had been privy to confid
ential and highly sensitive
marketing strategies of respondents business. To allow her to engage in a rival b
usiness soon after she leaves would
make respondents trade secrets vulnerable especially in a highly competitive mark

eting environment. In sum, we
find the non-involvement clause not contrary to public welfare and not greater t
han is necessary to afford a
fair and reasonable protection to respondent.
In any event, Article 1306 of the Civil Code provides that parties to a contract
may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good
customs, public order, or public policy.
Article 1159 of the same Code also provides that obligations arising from contrac
ts have the force of law
between the contracting parties and should be complied with in good faith. Court
s cannot stipulate for the parties
nor amend their agreement where the same does not contravene law, morals, good c
ustoms, public order or public
policy, for to do so would be to alter the real intent of the parties, and would
run contrary to the function of the
courts to give force and effect thereto. Not being contrary to public policy, th
e non-involvement clause, which
petitioner and respondent freely agreed upon, has the force of law between them,
and thus, should be complied with
in good faith.
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2014 BAR EXAMS
Thus, as held by the trial court and the Court of Appeals, petitioner is bound to
pay respondent P100,000 as
liquidated damages. While we have equitably reduced liquidated damages in certai
n cases, we cannot do so in this
case, since it appears that even from the start, petitioner had not shown the le
ast intention to fulfill the noninvolvement
clause in good faith.
------------oOo----------TOPIC NO. 6
SOCIAL WELFARE LEGISLATION
A.
SSS LAW
(R.A. No. 8282)
Who are covered employers?
a.
An employer or any person who uses the services of another person in business, t
rade, industry or any
undertaking.
b.
A social, civic, professional, charitable and other non-profit organizations whi
ch hire the services of
employees are considered employers.
c.
A foreign government, international organization or its wholly-owned instrumenta
lity such as an
embassy in the Philippines, may enter into an administrative agreement with the
SSS for the coverage of
its Filipino employees.
Who are compulsorily covered employees?
a.
A private employee, whether permanent, temporary or provisional, who is not over
60 years old.
b. A domestic worker or kasambahay who has rendered at least one (1) month of se
rvice.
c.
A Filipino seafarer upon the signing of the standard contract of employment betw
een the seafarer and
the manning agency which, together with the foreign ship owner, act as employers
.
d.
An employee of a foreign government, international organization or their whollyowned instrumentality
based in the Philippines, which entered into an administrative agreement with th
e SSS for the coverage
of its Filipino workers.
e.
The parent, spouse or child below 21 years old of the owner of a single propriet
orship business.
Are self-employed persons covered?
Yes. A self-employed person, regardless of trade, business or occupation, with a
n income of at least P1,000
a month and not over 60 years old, should register with the SSS. Included, but n
ot limited to, are the following selfemployed persons:
a. Self-employed professionals;
b.
Business partners, single proprietors and board directors;
c.
Actors, actresses, directors, scriptwriters and news reporters who are not under
an employer-employee
relationship;
d. Professional athletes, coaches, trainers and jockeys;
e.
Farmers and fisherfolks; and
f.
Workers in the informal sector such as cigarette vendors, watch-your-car boys, h
ospitality girls, among
others.
Unless otherwise specified, all provisions of the law, R.A. No. 8282, applicable
to covered employees shall
also be applicable to the covered self-employed persons.
A self-employed person shall be both employee and employer at the same time.
Who may be covered voluntarily?
1.
Separated Members
A member who is separated from employment or ceased to be self-employed/OFW/nonworking spouse
and would like to continue contributing.
2.
Overseas Filipino Workers (OFWs)
A Filipino recruited in the Philippines by a foreign-based employer for employme
nt abroad or one who
legitimately entered a foreign country (i.e., tourist, student) and is eventuall
y employed.
3.
Non-working spouses of SSS members
A person legally married to a currently employed and actively paying SSS member
who devotes full
time in the management of household and family affairs may be covered on a volun
tary basis, provided
there is the approval of the working spouse. The person should never have been a
member of the SSS.
The contributions will be based on 50 percent (50%) of the working spouses last p
osted monthly salary
credit but in no case shall it be lower than P1,000.
What is the effective date of coverage?
For compulsory coverage:

1. For employer - Compulsory coverage of the employer shall take effect on the f
irst day of his operation
or on the first day he hires employee/s. The employer is given only 30 days from
the date of
employment of employee to report the person for coverage to the SSS.
2.
For employee - Compulsory coverage of the employee shall take effect on the firs
t day of his
employment.
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2014 BAR EXAMS
3. For self-employed - The compulsory coverage of the self-employed person shall
take effect upon his
registration with the SSS or upon payment of the first valid contribution, in ca
se of initial coverage.
For voluntary coverage:
1. For an OFW upon first payment of contribution, in case of initial coverage.
2. Fora non-working spouse upon first payment of contribution.
3. Fora separated member on the month he/she resumed payment of contribution.
Who are excluded employers?
Government and any of its political subdivisions, branches or instrumentalities,
including corporations
owned or controlled by the Government with original charters.
Who are excluded employees?
Workers whose employment or service falls under any of the following circumstanc
es are not covered:
(1) Employment purely casual and not for the purpose of occupation or business o
f the employer;
(2) Service performed on or in connection with an alien vessel by an employee if
he is employed when
such vessel is outside the Philippines;
(3) Service performed in the employ of the Philippine Government or instrumental
ity or agency thereof;
(4) Service performed in the employ of a foreign government or international org
anization, or their whollyowned instrumentality: Provided, however, That this exemption notwithstanding, a
ny foreign
government, international organization or their wholly-owned instrumentality emp
loying workers in the
Philippines or employing Filipinos outside of the Philippines, may enter into an
agreement with the
Philippine Government for the inclusion of such employees in the SSS except thos
e already covered by
their respective civil service retirement systems: Provided, further, That the t
erms of such agreement
shall conform with the provisions of R.A. No. 8282 on coverage and amount of pay
ment of
contributions and benefits: Provided, finally, That the provisions of this Act s
hall be supplementary to
any such agreement; and
(5) Such other services performed by temporary and other employees which may be
excluded by regulation
of the Social Security Commission. Employees of bona-fide independent contractor
s shall not be
deemed employees of the employer engaging the service of said contractors.
What are the classifications of benefits?
The SSS benefits may be classified into two (2) as follows:
(a)
Social security benefits:
1) Sickness
2) Maternity
3) Retirement
4) Disability
5) Death and funeral.
(b)
Employees compensation benefits.
Who are primary beneficiaries?
The following are primary beneficiaries:
1. The dependent spouse until he or she remarries;
2. The dependent legitimate, legitimated or legally adopted, and illegitimate ch
ildren who are not yet
21 years of age.
The dependent illegitimate children shall be entitled to 50% of the share of the
legitimate, legitimated
or legally adopted children. However, in the absence of the dependent legitimate
, legitimated children
of the member, his/her dependent illegitimate children shall be entitled to 100%
of the benefits
Who are secondary beneficiaries?
The following are secondary beneficiaries:
1. The dependent parents, in the absence of the primary beneficiaries.
2.
Any other person designated by the member as his/her secondary beneficiary, in t
he absence of all the
foregoing primary beneficiaries and dependent parents.
B.
GSIS LAW
(R.A. No. 8291)
Who are compulsorily required to become members of the GSIS?
1. All government personnel, whether elective or appointive, irrespective of sta
tus of appointment,
provided they are receiving fixed monthly compensation and have not reached the
mandatory retirement age of 65
years, are compulsorily covered as members of the GSIS and shall be required to
pay contributions.
2. However, employees who have reached the retirement age of 65 or more shall al
so be covered, subject to
the following rules:
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2014 BAR EXAMS
An employee who is already beyond the mandatory retirement age of 65 shall be co
mpulsorily covered and
be required to pay both the life and retirement premiums under the following sit
uations:
a.
An elective official who at the time of election to public office is below 65 ye
ars of age and will be 65
years or more at the end of his term of office, including the period/s of his re
-election to public office
thereafter without interruption.
b.
Appointive officials who, before reaching the mandatory age of 65, are appointed
to government
position by the President of the Republic of the Philippines and shall remain in
government service at
age beyond 65.
c.
Contractual employees including casuals and other employees with an employee-gov
ernment agency
relationship are also compulsorily covered, provided they are receiving fixed mo
nthly compensation and
rendering the required number of working hours for the month.
What are the classes of membership in the GSIS?
Membership in the GSIS is classified either by type or status of membership.
As to type of members, there are regular and special members:

(a) Regular Members are those employed by the government of the Republic of the
Philippines,
national or local, legislative bodies, government-owned and controlled corporati
ons (GOCC) with
original charters, government financial institutions (GFIs), except uniformed pe
rsonnel of the Armed
Forces of the Philippines, the Philippine National Police, Bureau of Jail Manage
ment and Penology
(BJMP) and Bureau of Fire Protection (BFP), who are required by law to remit reg
ular monthly
contributions to the GSIS.
(b) Special Members are constitutional commissioners, members of the judiciary,
including those with
equivalent ranks, who are required by law to remit regular monthly contributions
for life insurance
policies to the GSIS in order to answer for their life insurance benefits define
d under RA 8291.
As to status of membership, there are active and inactive members.

(a)
Active member refers to a member of the GSIS, whether regular or special, who is
still in the
government service and together with the government agency to which he belongs,
is required to pay
the monthly contribution.

(b)
Inactive member a member who is separated from the service either by resignation
, retirement,
disability, dismissal from the service, retrenchment or, who is deemed retired f
rom the service under
this Act.
When does membership become effective?
The effective date of membership shall be the date of the members assumption to d
uty on his original
appointment or election to public office.
What is the effect of separation from the service?
A member separated from the service shall continue to be a member, and shall be
entitled to whatever
benefits he has qualified to in the event of any contingency compensable under t
he GSIS Law.
Who are excluded from the compulsory coverage of the GSIS Law?
The following employees are excluded from compulsory coverage:
(a)
Uniformed personnel of the Armed Forces of the Philippines (AFP), Philippine Nat
ional Police
(PNP), Bureau of Fire Protection (BFP) and Bureau of Jail Management and Penolog
y (BJMP);
(b)
Barangay and Sanggunian Officials who are not receiving fixed monthly compensati
on;
(c)
Contractual Employees who are not receiving fixed monthly compensation; and
(d)
Employees who do not have monthly regular hours of work and are not receiving fi
xed monthly
compensation.
What are the kinds of benefits under the GSIS Law?
The following are the benefits under the GSIS Law:
(a)
Compulsory Life Insurance Benefits under the Life Endowment Policy (LEP)
(b) Compulsory Life Insurance Benefits under the Enhanced Life Policy (ELP)
(c)
Retirement Benefits
(d) Separation Benefit
(e)
Unemployment Benefit
(f)
Disability Benefits
(g) Survivorship Benefits
(h) Funeral Benefits
Who are beneficiaries under the GSIS Law?
There are two (2) kinds of beneficiaries under the GSIS Law as follows:
1.
Primary beneficiaries The legal dependent spouse until he/she remarries and the
dependent children.
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2014 BAR EXAMS
2.
Secondary beneficiaries The dependent parents and, subject to the restrictions o
n dependent
children, the legitimate descendants.
Who are dependents under the GSIS Law?
Dependents shall be the following:
(a) the legitimate spouse dependent for support upon the member or pensioner;
(b) the legitimate, legitimated, legally adopted child, including the illegitima
te child, who is unmarried,
not gainfully employed, not over the age of majority, or is over the age of majo
rity but incapacitated
and incapable of self-support due to a mental or physical defect acquired prior
to age of majority; and
(c) the parents dependent upon the member for support.
Gainful Occupation Any productive activity that provided the member with income
at least equal to the
minimum compensation of government employees.
C.
LIMITED PORTABILITY LAW
(R.A. No. 7699)
What is limited portability scheme?
R.A. No. 7699 was enacted to enable those from the private sector who transfer t
o the government service
or from the government sector to the private sector to combine their years of se
rvice and contributions which have
been credited with the SSS or GSIS, as the case may be, to satisfy the required
number of years of service for
entitlement to the benefits under the applicable laws.
What is totalization?
The term totalization refers to the process of adding up the periods of creditable
services or contributions
under each of the Systems, SSS or GSIS, for the purpose of eligibility and compu
tation of benefits.
What is portability?
On the other hand, the term portability refers to the transfer of funds for the ac
count and benefit of a
worker who transfers from one system to the other.
How are benefits computed?
All services rendered or contributions paid by a member personally and those tha
t were paid by the
employers to either System shall be considered in the computation of benefits wh
ich may be claimed from either or
both Systems. However, the amount of benefits to be paid by one System shall be
in proportion to the services
rendered or periods of contributions made to that System.

Benefits refer to the following:
1.
Old-age benefit;
2.
Disability benefit;
3.
Survivorship benefit;
4.
Sickness benefit;
5. Medicare benefit, provided that the member shall claim said benefit from the
System where he was last
a member; and
6.
Such other benefits common to both Systems that may be availed of through totali
zation.
When does totalization apply?
a.
if a worker is not qualified for any benefits from both Systems; or
b. if a worker in the public sector is not qualified for any benefits from the G
SIS; or
c.
if a worker in the private sector is not qualified for any benefits from the SSS
.
For purposes of computation of benefits, totalization applies in all cases so th
at the contributions made by
the worker-member in both Systems shall provide maximum benefits which otherwise
will not be available. In no
case shall the contribution be lost or forfeited.
What is the effect if worker is not qualified after totalization?
If after totalization, the worker-member still does not qualify for any benefit
as listed in the law, the
member will then get whatever benefits correspond to his/her contributions in ei
ther or both Systems.
What is the effect if worker qualifies for benefits in both Systems?
If a worker qualifies for benefits in both Systems, totalization shall not apply
.
D.
EMPLOYEES COMPENSATION
COVERAGE AND WHEN COMPENSABLE
What is the State Insurance Fund [SIF]?
The State Insurance Fund (SIF) is built up by the contributions of employers bas
ed on the salaries of their
employees as provided under the Labor Code.
There are two (2) separate and distinct State Insurance Funds: one established u
nder the SSS for private
sector employees; and the other, under the GSIS for public sector employees. The
management and investment of
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2014 BAR EXAMS
the Funds are done separately and distinctly by the SSS and the GSIS. It is used
exclusively for payment of the
employees compensation benefits and no amount thereof is authorized to be used fo
r any other purpose.
What are the agencies involved in the implementation of the Employees Compensati
on Program (ECP)?
There are three (3) agencies involved in the implementation of the Employees Comp
ensation Program
(ECP). These are: (1) The Employees Compensation Commission (ECC) which is mandat
ed to initiate,
rationalize and coordinate policies of the ECP and to review appealed cases from
(2) the Government Service
Insurance System (GSIS) and (3) the Social Security System (SSS), the administer
ing agencies of the ECP.
Who are covered by the ECP?
a. General coverage. The following shall be covered by the Employees Compensation
Program (ECP):
1. All employers;
2. Every employee not over sixty (60) years of age;
3. An employee over 60 years of age who had been paying contributions to the Sys
tem (GSIS/SSS) prior
to age sixty (60) and has not been compulsorily retired; and
4. Any employee who is coverable by both the GSIS and SSS and should be compulso
rily covered by both
Systems.
b. Sectors of employees covered by the ECP. - The following sectors are covered
under the ECP:
1.
All public sector employees including those of government-owned and/or controlle
d corporations and
local government units covered by the GSIS;
2.
All private sector employees covered by the SSS; and
3.
Overseas Filipino workers (OFWs), namely:
a. Filipino seafarers compulsorily covered under the SSS.
b. Land-based contract workers provided that their employer, natural or juridica
l, is engaged in any
trade, industry or business undertaking in the Philippines; otherwise, they shal
l not be covered by
the ECP.
When is the start of coverage of employees under the ECP?
The coverage under the ECP of employees in the private and public sectors starts
on the first day of their
employment.
What are the benefits under the ECP?
The following are the benefits provided under the Labor Code:
a. Medical Benefits
b. Disability Benefits
1. Temporary total disability
2. Permanent total disability
3. Permanent partial disability
c. Death Benefit
d. Funeral Benefit
------------oOo-----------66

2014 BAR EXAMS
TOPIC NO. 7
LABOR RELATIONS LAW
A.
RIGHT TO SELF-ORGANIZATION
1.
WHO MAY UNIONIZE
FOR PURPOSES OF COLLECTIVE BARGAINING
Who are eligible to join, form or assist a labor organization for purposes of co
llective bargaining?
In the private sector:

1. All persons employed in commercial, industrial and agricultural enterprises;
2. Employees of government-owned and/or controlled corporations without original
charters established
under the Corporation Code;
3.
Employees of religious, charitable, medical or educational institutions, whether
operating for profit or
not;
4. Front-line managers, commonly known as supervisory employees [See discussion
below];
5.
Alien employees [See discussion below];
6.
Working children [See discussion below];
7.
Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
9. Employees of legitimate contractors not with the principals but with the cont
ractors
In the public sector:

All rank-and-file employees of all branches, subdivisions, instrumentalities, an
d agencies of
government, including government-owned and/or controlled corporations with origi
nal charters, can
form, join or assist employees organizations of their own choosing.
Are front-line managers or supervisors eligible to join, form or assist a labor
organization?
Yes, but only among themselves. They cannot join a rank-and-file union.
Is mixed membership of supervisors and rank-and-file union in one union a ground
to cancel its registration?
No. In case there is mixed membership of supervisors and rank-and-file employees
in one union, the new
rule enunciated in Article 245-A of the Labor Code, unlike in the old law, is th
at it cannot be invoked as a ground

for the cancellation of the registration of the union. The employees so improper
ly included are automatically deemed
removed from the list of members of said union. In other words, their removal fr
om the said list is by operation of
law.
Do alien employees have the right to join a labor organization?
No, except if the following requisites are complied with:
(1) He should have a valid working permit issued by the
(2) He is a national of a country which grants the same
ipino workers or which has
ratified either ILO Convention No. 87 or ILO Convention
the Philippine
Department of Foreign Affairs (DFA).
Do members of cooperatives have the right to join, form
zation?
DOLE; and
or similar rights to Fil
No. 98, as certified by
or assist a labor organi
No, because they are co-owners co-owners of the cooperative.

What about employees of a cooperative?
Yes, because they have employer-employee relationship with the cooperative.
What about members who are at the same time employees of the cooperative?
No, because the prohibition covers employees of the cooperative who are at the s
ame time members
thereof.
But employee-members of a cooperative may withdraw as members of the cooperative
for purposes of
joining a labor union.
Can employees of job contractors join, form or assist a labor organization?
Yes, but not for the purpose of collective bargaining with the principal but wit
h their direct employer the
job contractor.
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2014 BAR EXAMS
Are self-employed persons allowed to join, form or assist a labor organization?
Yes, for their mutual aid and protection but not for collective bargaining purpo
ses since they have no
employers but themselves.
This rule applies as well to ambulant, intermittent and other workers, rural wor
kers and those without any
definite employers. The reason for this rule is that these persons have no emplo
yers with whom they can collectively
bargain.
(a)
WHO CANNOT FORM, JOIN OR ASSIST
LABOR ORGANIZATIONS
1. PERSONS NOT ALLOWED TO FORM, JOIN OR ASSIST LABOR ORGANIZATIONS.
a. In the private sector.
1. Top and middle level managerial employees; and
2. Confidential employees.
b. In the public sector.
The following are not eligible to form employees organizations:
1. High-level employees whose functions are normally considered as policy-making
or managerial or
whose duties are of a highly confidential nature;
2. Members of the Armed Forces of the Philippines;
3. Police officers;
4. Policemen;
5. Firemen; and
6. Jail guards.
Are managerial employees allowed unionize?
There are 3 types of managerial employees:
1. Top Management
2. Middle Management
3. First-Line Management (also called supervisory level)
The first two above are absolutely prohibited; but the third are allowed but onl
y among themselves.
Are confidential employees allowed to join, form or assist a labor organization?
No, under the confidential employee rule.
Confidential employees are those who meet the following criteria:
(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate, determine, and effectuate management p
olicies specifically in
the field of labor relations.
The two (2) criteria are cumulative and both must be met if an employee is to be
considered a
confidential employee that would deprive him of his right to form, join or assist
a labor organization.
What are some principles on the right to self-organization?
a. Some principles on the right to self-organization.
Any employee, whether employed for a definite period or not, shall, beginning on
the first day of his
service, be eligible for membership in any labor organization.
Right to join a union cannot be made subject of a CBA stipulation.

2.
BARGAINING UNIT
What is a bargaining unit?
A bargaining unit refers to a group of employees sharing mutual interests within a
given employer unit,
comprised of all or less than all of the entire body of employees in the employe
r unit or any specific occupational or
geographical grouping within such employer unit. It may also refer to the group
or cluster of jobs or positions within
the employers establishment that supports the labor organization which is applyin
g for registration.
(a)
TEST TO DETERMINE THE CONSTITUENCY
OF AN APPROPRIATE BARGAINING UNIT
What are the four tests to determine appropriate bargaining unit?
Based on jurisprudence, there are certain tests which may be used in determining
the appropriate collective
bargaining unit, to wit:
(1) Community or mutuality of interest doctrine;
(2) Globe doctrine or will of the members;
(3) Collective bargaining history doctrine; and
(4) Employment status doctrine.
1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.
Under this doctrine, the employees sought to be represented by the collective ba
rgaining agent must have
community or mutuality of interest in terms of employment and working conditions
as evinced by the type of work
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2014 BAR EXAMS
they perform. It is characterized by similarity of employment status, same dutie

s and responsibilities and
substantially similar compensation and working conditions.
St. James School of Quezon City v. Samahang Manggagawa sa St. James School of Qu
ezon City. Respondent union sought to represent the rank-and-file employees (consisting of
the motor pool, construction and
transportation employees) of petitioner-schools Tandang Sora campus. Petitioner-s
chool opposed it by contending
that the bargaining unit should not only be composed of said employees but must
include administrative, teaching
and office personnel in its five (5) campuses. The Supreme Court disagreed with
said contention. The motor pool,
construction and transportation employees of the Tandang Sora campus had 149 qua
lified voters at the time of the
certification election, hence, it was ruled that the 149 qualified voters should
be used to determine the existence of a
quorum during the election. Since a majority or 84 out of the 149 qualified vote
rs cast their votes, a quorum existed
during the certification election. The computation of the quorum should be based
on the rank-and-file motor pool,
construction and transportation employees of the Tandang Sora campus and not on
all the employees in petitioners
five (5) campuses. Moreover, the administrative, teaching and office personnel a
re not members of the union. They
do not belong to the bargaining unit that the union seeks to represent.
2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe doctrin
e because this principle was
first enunciated in the United States case of Globe Machine and Stamping Co., wh
ere it was ruled, in defining the
appropriate bargaining unit, that in a case where the companys production workers
can be considered either as a
single bargaining unit appropriate for purposes of collective bargaining or as t
hree (3) separate and distinct
bargaining units, the determining factor is the desire of the workers themselves
. Consequently, a certification
election should be held separately to choose which representative union will be
chosen by the workers.
International School Alliance of Educators [ISAE] v. Quisumbing. - The Supreme C
ourt ruled here that
foreign-hired teachers do not belong to the bargaining unit of the local-hires b
ecause the former have not indicated
their intention to be grouped with the latter for purposes of collective bargain
ing. Moreover, the collective
bargaining history of the school also shows that these groups were always treate
d separately.
3. COLLECTIVE BARGAINING HISTORY DOCTRINE.
This principle puts premium to the prior collective bargaining history and affin
ity of the employees in
determining the appropriate bargaining unit. However, the existence of a prior c
ollective bargaining history has been
held as neither decisive nor conclusive in the determination of what constitutes
an appropriate bargaining unit.
National Association of Free Trade Unions v. Mainit Lumber Development Company W
orkers
Union. - It was ruled here that there is mutuality of interest among the workers
in the sawmill division and logging
division as to justify their formation of a single bargaining unit. This holds t
rue despite the history of said two
divisions being treated as separate units and notwithstanding their geographical
distance from each other.
4. EMPLOYMENT STATUS DOCTRINE.
The determination of the appropriate bargaining unit based on the employment sta
tus of the employees is
considered an acceptable mode. For instance, casual employees and those employed
on a day-to-day basis,
according to the Supreme Court in Philippine Land-Air-Sea Labor Union v. CIR, do
not have the mutuality or
community of interest with regular and permanent employees. Hence, their inclusi
on in the bargaining unit
composed of the latter is not justified. Confidential employees, by the very nat
ure of their functions, assist and act in
a confidential capacity to, or have access to confidential matters of, persons w
ho exercise managerial functions in
the field of labor relations. As such, the rationale behind the ineligibility of
managerial employees to form, assist or
join a labor union equally applies to them. Hence, they cannot be allowed to be
included in the rank-and-file
employees bargaining unit. The rationale for this inhibition is that if these man
agerial employees would belong to
or be affiliated with a union, the latter might not be assured of their loyalty
to the union in view of evident conflict
of interest. The union can also become company-dominated with the presence of ma
nagerial employees in its
membership.
3.
BARGAINING AGENT
What is an exclusive bargaining agent?
The term exclusive bargaining representative or exclusive bargaining agent refers to
a legitimate
labor union duly recognized or certified as the sole and exclusive bargaining re
presentative or agent of all the
employees in a bargaining unit.
What are the modes of determining the sole and exclusive bargaining agent?
The following are the modes:
1.
2.
3.
4.
5.
Voluntary recognition;
Certification election;
Consent election;
Run-off election;
Re-run election.
(a)
VOLUNTARY RECOGNITION
What is voluntary recognition?
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2014 BAR EXAMS
Voluntary recognition refers to the process by which a legitimate labor union is v

oluntarily recognized
by the employer as the exclusive bargaining representative or agent in a bargain
ing unit and reported as such with
the Regional Office in accordance with the Rules to Implement the Labor Code.
When is voluntary recognition proper?
Voluntary recognition is proper only in cases where there is only one legitimate
labor organization existing
and operating in a bargaining unit. It cannot be done in case there are two or m
ore unions in contention.
CERTIFICATION ELECTION
What is certification election?
Certification election refers to the process of determining through secret ballot
the sole and exclusive
bargaining agent of the employees in an appropriate bargaining unit for purposes
of collective bargaining or
negotiations.
Who may file a petition for certification election?
The petition may be filed by:
1. A legitimate labor organization which may be:
(a)
an independent union; or
(b)
a national union or federation which has already issued a charter certificate to
its local chapter
participating in the certification election; or
(c)
a local chapter which has been issued a charter certificate by the national unio
n or federation.
2. An employer, when requested by a labor organization to bargain collectively a
nd its majority status is
in doubt.
What are the rules prohibiting the filing of petition for certification election
(bar rules)?
a. General rule.
The general rule is that in the absence of a CBA duly registered in accordance w
ith Article 231 of the
Labor Code, a petition for certification election may be filed at any time.
b. Bar rules.
No certification election may be held under the following rules:
1. Certification year bar rule;
2. Negotiations bar rule;

3. Bargaining deadlock bar rule; or
4. Contract bar rule.
1. CERTIFICATION YEAR BAR RULE.
Under this rule, a petition for certification election may not be filed within o
ne (1) year:
1. from the date the fact of voluntary recognition has been entered; or
2. from the date a valid certification, consent, run-off or re-run election has
been conducted within the
bargaining unit.
2. NEGOTIATIONS BAR RULE.
Under this rule, no petition for certification election should be entertained wh
ile the sole and exclusive
bargaining agent and the employer have commenced and sustained negotiations in g
ood faith within the period of
one (1) year from the date of a valid certification, consent, run-off or re-run
election or from the date of voluntary
recognition.
Once the CBA negotiations have commenced and while the parties are in the proces
s of negotiating the
terms and conditions of the CBA, no challenging union is allowed to file a petit
ion for certification election that
would disturb the process and unduly forestall the early conclusion of the agree
ment.
3. BARGAINING DEADLOCK BAR RULE.
Under this rule, a petition for certification election may not be entertained wh
en a bargaining deadlock to
which an incumbent or certified bargaining agent is a party has been submitted t
o conciliation or arbitration or has
become the subject of a valid notice of strike or lockout.
Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] v. Trajano. - The bargainin
g
deadlock-bar rule was not applied here because for more than four (4) years afte
r it was certified as the exclusive
bargaining agent of all the rank-and-file employees, it did not take any action
to legally compel the employer to
comply with its duty to bargain collectively, hence, no CBA was executed. Neithe
r did it file any unfair labor
practice suit against the employer nor did it initiate a strike against the latt
er. Under the circumstances, a
certification election may be validly ordered and held.
4. CONTRACT BAR RULE.
Under this rule, a petition for certification election may not be filed when a C
BA between the employer and
a duly recognized or certified bargaining agent has been registered with the Bur
eau of Labor Relations (BLR) in
accordance with the Labor Code. Where the CBA is duly registered, a petition for
certification election may be filed
only within the 60-day freedom period prior to its expiry. The purpose of this r
ule is to ensure stability in the
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relationship of the workers and the employer by preventing frequent modification

s of any CBA earlier entered into
by them in good faith and for the stipulated original period.
When contract bar rule does not apply.
The contract-bar rule does not apply in the following cases:
1.
Where there is an automatic renewal provision in the CBA but prior to the date w
hen such automatic
renewal became effective, the employer seasonably filed a manifestation with the
Bureau of Labor
Relations of its intention to terminate the said agreement if and when it is est
ablished that the bargaining
agent does not represent anymore the majority of the workers in the bargaining u
nit.
2. Where the CBA, despite its due registration, is found in appropriate proceedi
ngs that: (a) it contains
provisions lower than the standards fixed by law; or (b) the documents supportin
g its registration are
falsified, fraudulent or tainted with misrepresentation.
3.
Where the CBA does not foster industrial stability, such as contracts where the
identity of the
representative is in doubt since the employer extended direct recognition to the
union and concluded a
CBA therewith less than one (1) year from the time a certification election was
conducted where the no
union vote won. This situation obtains in a case where the company entered into a
CBA with the union
when its status as exclusive bargaining agent of the employees has not been esta
blished yet.
4. Where the CBA was registered before or during the last sixty (60) days of a s
ubsisting agreement or
during the pendency of a representation case. It is well-settled that the 60-day
freedom period based on
the original CBA should not be affected by any amendment, extension or renewal o
f the CBA for
purposes of certification election.
What are the requisites for the validity of the petition for certification elect
ion?
The following requisites should concur:
1. The union should be legitimate which means that it is duly registered and lis
ted in the registry of
legitimate labor unions of the BLR or that its legal personality has not been re
voked or cancelled with
finality.
2. In case of organized establishments, the petition for certification election
is filed during (and not
before or after) the 60-day freedom period of a duly registered CBA.

3. In case of
organized establishments, the petition complied with the 25% written support of
the
members of the bargaining unit.
4.
The petition is filed not in violation of any of the four (4) bar rules [See abo
ve discussion thereof].
What are the two (2) kinds of majorities?
The process of certification election requires two (2) kinds of majority votes,
viz.:
1.
Number of votes required for the validity of the process of certification electi
on itself. In order to
have a valid certification election, at least a majority of all eligible voters
in the appropriate bargaining
unit must have cast their votes.
2.
Number of votes required to be certified as the collective bargaining agent. To
be certified as the
sole and exclusive bargaining agent, the union should obtain a majority of the v
alid votes cast.
What are some pertinent principles on certification election?
The pendency of a petition to cancel the certificate of registration of a union

participating in a certification
election does not stay the conduct thereof.
The pendency of an unfair labor practice case filed against a labor organization
participating in the certification
election does not stay the holding thereof.
Direct certification as a method of selecting the exclusive bargaining agent of

the employees is not allowed.
This is because the conduct of a certification election is still necessary in or
der to arrive in a manner definitive
and certain concerning the choice of the labor organization to represent the wor
kers in a collective bargaining
unit.
The No Union vote is always one of the choices in a certification election. Where
majority of the valid votes
cast results in No Union obtaining the majority, the Med-Arbiter shall declare suc
h fact in the order.
Only persons who have direct employment relationship with the employer may vote
in the certification
election, regardless of their period of employment.
IN AN UNORGANIZED ESTABLISHMENT
What is meant by unorganized establishment?
As distinguished from organized establishment, an unorganized establishment is an em
ployer entity
where there is no recognized or certified collective bargaining union or agent.
A company or an employer-entity, however, may still be considered an unorganized

establishment even if
there are unions in existence therein for as long as not one of them is duly cer
tified as the sole and exclusive
bargaining representative of the employees in the particular bargaining unit it
seeks to operate and represent.
Further, a company remains unorganized even if there is a duly recognized or cer
tified bargaining agent for
rank-and-file employees, for purposes of the petition for certification election
filed by supervisors. The reason is that
the bargaining unit composed of supervisors is separate and distinct from the un
ionized bargaining unit of rank-and
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2014 BAR EXAMS
file employees. Hence, being unorganized, the 25% required minimum support of em
ployees within the bargaining
unit of the supervisors need not be complied with.
How should certification election be conducted in an unorganized establishment?
In case of a petition filed by a legitimate organization involving an unorganize
d establishment, the MedArbiter is required to immediately order the conduct of a certification election
upon filing of a petition for
certification election by a legitimate labor organization.
IN AN ORGANIZED ESTABLISHMENT
What are the requisites for the conduct of a certification election in an organi
zed establishment?
The Med-Arbiter is required to automatically order the conduct of a certificatio
n election by secret ballot in
an organized establishment as soon as the following requisites are fully met:
1.
That a petition questioning the majority status of the incumbent bargaining agen
t is filed before the
DOLE within the 60-day freedom period;
2. That such petition is verified; and
3.
That the petition is supported by the written consent of at least twenty-five pe
rcent (25%) of all the
employees in the bargaining unit.
RUN-OFF ELECTION
What is run-off election?
A run-off election refers to an election between the labor unions receiving the tw
o (2) highest number of
votes in a certification election or consent election with three (3) or more cho
ices, where such a certification election
or consent election results in none of the three (3) or more choices receiving t
he majority of the valid votes cast,
provided that the total number of votes for all contending unions is at least fi
fty percent (50%) of the number of
votes cast.
RE-RUN ELECTION
When should a re-run election be conducted?
A re-run election may be justified if certain irregularities have been committed
during the conduct of the
certification election such as, inter alia, disenfranchisement of the voters, la

ck of secrecy in the voting, fraud or
bribery, in which case, the certification election should be invalidated. Such i
nvalidation would necessitate the
conduct of a re-run election among the contending unions to determine the true w
ill and desire of the employeeelectorates.
CONSENT ELECTION
What is consent election?
A consent election refers to the process of determining through secret ballot the
sole and exclusive
representative of the employees in an appropriate bargaining unit for purposes o
f collective bargaining and
negotiation. It is voluntarily agreed upon by the parties, with or without the i
ntervention of the DOLE.
What is the distinction between consent election and certification election?
A consent election is one mutually agreed upon by the parties, with or without t
he intervention of the
DOLE, its purpose being merely to determine the issue of majority representation
of all the workers in an
appropriate collective bargaining unit; while a certification election is one wh
ich is ordered by the DOLE. The
purpose for both electoral exercise is the same, i.e., to determine the sole and
exclusive bargaining agent of all the
employees in an appropriate bargaining unit for the purpose of collective bargai
ning. From the very nature of
consent election, it is a separate and distinct process from certification elect
ion and has nothing to do with the import
and effect of the latter.
Can the parties agree to the conduct of consent election even during the pendenc
y of certification election?
Yes. In fact, the Med-Arbiter is required to determine if the contending labor u
nions are willing to submit
themselves to a consent election. And if they do, the Med-Arbiter should conduct
consent election instead of
certification election.
AFFILIATION AND DISAFFILIATION OF THE
LOCAL UNION FROM THE MOTHER UNION
1. AFFILIATION.
a. Mother union.
In relation to an affiliate, the federation or national union is commonly known
as the mother union. This
term is not found in law but oftentimes, the Supreme Court uses this term to des
cribe a federation or a national
union.
b. Affiliate.
An affiliate refers to:
(1)
An independent union affiliated with a federation or a national union; or

(2)
A local chapter which has been subsequently granted independent registration but
did not disaffiliate
from the federation or national union which created it.
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c. A chartered local/local chapter, not an affiliate.
Based on the above definition and description, technically, a local chapter crea
ted through the mode of
chartering by a mother union under Article 234-A of the Labor Code, cannot be pr
operly called an affiliate if it
has not acquired any independent registration of its own.
d. Purpose of affiliation.
The purpose is to further strengthen the collective bargaining leverage of the a
ffiliate. No doubt, the
purpose of affiliation by a local union with a mother union (federation or natio
nal union) is to increase by collective
action its bargaining power in respect of the terms and conditions of labor.
e. Contract of agency.
The mother union, acting for and in behalf of its affiliate, has the status of a
n agent while the local union
remains the principal the basic unit of the association free to serve the common
interest of all its members subject
only to the restraints imposed by the constitution and by-laws of the associatio
n.
f. Some principles on affiliation.
Independent legal personality of an affiliate union is not affected by affiliati

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

freedom of association guaranteed in the Constitution.
b. Disaffiliation of independently-registered union and local chapter, distingui
shed.
The disaffiliation of an independently-registered union does not affect its legi
timate status as a labor
organization. However, the same thing may not be said of a local chapter which h
as no independent registration
since its creation was effected pursuant to the charter certificate issued to it
by the federation or national union. Once
a local chapter disaffiliates from the federation or national union which create
d it, it ceases to be entitled to the rights
and privileges granted to a legitimate labor organization. Hence, it cannot, by
itself, file a petition for certification
election.
c. Some principles on disaffiliation.
Disaffiliation does not divest an affiliate union of its legal personality.
Disaffiliation of an affiliate union is not an act of disloyalty.
Disaffiliation for purposes of forming a new union does not terminate the status
of the members
thereof as employees of the company. By said act of disaffiliation, the employee
s who are members of
the local union did not form a new union but merely exercised their right to reg
ister their local union.
The local union is free to disaffiliate from its mother union.
Disaffiliation should be approved by the majority of the union members.
Disaffiliation terminates the right to check-off federation dues. The obligation

to check-off federation
dues is terminated with the valid disaffiliation of the affiliate union from the
federation with which it
was previously affiliated.
Disaffiliation does not affect the CBA. It does not operate to amend it or chang
e the administration of
the contract.
Disaffiliating from the federation and entering into a CBA with the employer doe
s not constitute an
unfair labor practice.
Disaffiliation is not a violation of the union security clause.

(i)
SUBSTITUTIONARY DOCTRINE
1. CHANGE OF BARGAINING REPRESENTATIVE DURING THE LIFE OF A CBA.
It simply refers to the substitution of the bargaining agent by a newly certifie
d agent which defeated in in
the certification election. As new bargaining agent, it is duty-bound to respect
the existing CBA but it can
renegotiate for new terms and conditions therein.
2. EFFECT OF SUBSTITUTIONARY DOCTRINE ON THE DEPOSED UNIONS PERSONAL
UNDERTAKINGS.
In case of change of bargaining agent under the substitutionary doctrine, the ne
w bargaining agent is not

bound by the personal undertakings of the deposed union like the no strike, no lo
ckout clause in a CBA which is
the personal undertaking of the bargaining agent which negotiated it.
3. SOME PRINCIPLES ON SUBSTITUTIONARY DOCTRINE.
The substitutionary doctrine cannot be invoked to subvert an existing CBA, in de

rogation of the principle of
freedom of contract. The substitution of a bargaining agent cannot be allowed if
the purpose is to subvert an
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existing CBA freely entered into by the parties. Such act cannot be sanctioned i
n law or in equity as it is in
derogation of the principle underlying the freedom of contract and good faith in
contractual relations.
The substitutionary doctrine is applicable also to a situation where the local u

nion, which was created through
the process of chartering by the mother union, disaffiliates from the latter aft
er it secured an independent
registration. The local union will thus be substituted to that of the federation
which negotiated the CBA as in
Elisco-Elirol Labor Union [NAFLU] v. Noriel, where petitioner union was created
through the mode of
chartering by the National Federation of Labor Unions (NAFLU) and later, it secu
red its independent
registration with the BLR and disaffiliated with NAFLU by virtue of a resolution
by its general membership.
(b)
UNION DUES AND SPECIAL ASSESSMENTS
1. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL ASSESSMENTS.
The following requisites must concur in order for union dues and special assessm
ents for the unions
incidental expenses, attorneys fees and representation expenses to be valid, name
ly:
(a)
Authorization by a written resolution of the majority of all the members at a ge
neral membership
meeting duly called for the purpose;
(b)
Secretarys record of the minutes of said meeting; and
(c)
Individual written authorizations for check-off duly signed by the employees con
cerned.
3. ASSESSMENT FOR ATTORNEYS FEES, NEGOTIATION FEES AND SIMILAR CHARGES.
The rule is that no such attorneys fees, negotiation fees or similar charges of a
ny kind arising from the
negotiation or conclusion of the CBA shall be imposed on any individual member o
f the contracting union. Such
fees may be charged only against the union funds in an amount to be agreed upon
by the parties. Any
contract, agreement or arrangement of any sort to the contrary is deemed null an
d void. Clearly, what is prohibited
is the payment of attorneys fees when it is effected through forced contributions
from the workers from their
own funds as distinguished from the union funds.
4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.
Check-off means a method of deducting from the employees pay at prescribed periods,
any amount due
for fees, fines or assessments. It is a process or device whereby the employer,
on agreement with the union
recognized as the proper bargaining representative, or on prior authorization fr

om its employees, deducts union dues
and assessments from the latters wages and remits them directly to the union.
5. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN REQUIRED.
The law strictly prohibits the check-off from any amount due an employee who is
a member of the union,
of any union dues, special assessment, attorneys fees, negotiation fees or any ot
her extraordinary fees other than for
mandatory activities under the Labor Code, without the individual written author
ization duly signed by the
employee. Such authorization must specifically state the amount, purpose and ben
eficiary of the deduction. The
purpose of the individual written authorization is to protect the employees from
unwarranted practices that diminish
their compensation without their knowledge or consent.
6. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN NOT REQUIRED.
In the following cases, individual written authorization is not required:
a.
Assessment from non-members of the bargaining agent of agency fees which should be
equivalent to
the dues and other fees paid by members of the recognized bargaining agent, if s
uch non-members
accept the benefits under the CBA.
b. Deductions for fees for mandatory activities such as labor relations seminars
and labor education
activities.
c. Deductions for withholding tax mandated under the National Internal Revenue C
ode.
e. Deductions for withholding of wages because of employees debt to the employer
which is already
due.
f.
Deductions made pursuant to a judgment against the worker under circumstances wh
ere the wages
may be the subject of attachment or execution but only for debts incurred for fo
od, clothing,
shelter and medical attendance.
g. Deductions from wages ordered by the court.
h. Deductions authorized by law such as for premiums for PhilHealth, SSS, Pag-IB
IG, employees
compensation and the like.
(c)
AGENCY FEES
(i)
REQUISITES FOR ASSESSMENT
1. NATURE OF AGENCY FEE - NEITHER CONTRACTUAL NOR STATUTORY BUT QUASICONTRACTUAL
.
The bargaining agent which successfully negotiated the CBA with the employer is
given the right to collect
a reasonable fee, called agency fee from its non-members - who are employees cover
ed by the bargaining unit
being represented by the bargaining agent - in case they accept the benefits und
er the CBA. It is called agency
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fees because by availing of the benefits of the CBA, they, in effect, recognize a
nd accept the bargaining union as
their agent as well.
2. A NON-BARGAINING UNION MEMBER HAS THE RIGHT TO ACCEPT OR NOT THE BENEFITS
OF THE CBA.
There is no law that compels a non-bargaining union member to accept the benefit
s provided in the CBA.
He has the freedom to choose between accepting and rejecting the CBA itself by n
ot accepting any of the benefits
flowing therefrom. Consequently, if a non-bargaining union member does not accep
t or refuses to avail of the CBAbased benefits, he is not under any obligation to pay the agency fees since, in ef
fect, he does not give recognition
to the status of the bargaining union as his agent.
3. LIMITATION ON THE AMOUNT OF AGENCY FEE.
The bargaining union cannot capriciously fix the amount of agency fees it may co
llect from its nonmembers.
Article 248(e) of the Labor Code expressly sets forth the limitation in fixing t
he amount of the agency
fees, thus:
(1) It should be reasonable in amount; and
(2) It should be
equivalent to the dues and other fees paid by members of the recognized collecti
ve
bargaining agent.
Thus, any agency fee collected in excess of this limitation is a nullity.
4. NON-MEMBERS OF THE CERTIFIED BARGAINING AGENT NEED NOT BECOME MEMBERS
THEREOF.
The employees who are not members of the certified bargaining agent which succes
sfully concluded the
CBA are not required to become members of the latter. Their acceptance of the be
nefits flowing from the CBA and
their act of paying the agency fees do not make them members thereof.
5. CHECK-OFF OF AGENCY FEES.
Check-off of agency fees is a process or device whereby the employer, upon agreeme
nt with the
bargaining union, deducts agency fees from the wages of non-bargaining union mem
bers who avail of the benefits
from the CBA and remits them directly to the bargaining union.
6. ACCRUAL OF RIGHT OF BARGAINING UNION TO DEMAND CHECK-OFF OF AGENCY FEES.
The right of the bargaining union to demand check-off of agency fees accrues fro
m the moment the nonbargaining union member accepts and receives the benefits from the CBA. This is
the operative fact that would
trigger such liability.
7. NO INDIVIDUAL WRITTEN AUTHORIZATION BY NON-BARGAINING UNION

MEMBERS
REQUIRED.
To effect the check-off of agency fees, no individual written authorization from
the non-bargaining union
members who accept the benefits resulting from the CBA is necessary.
8. EMPLOYERS DUTY TO CHECK-OFF AGENCY FEES.
It is the duty of the employer to deduct or check-off the sum equivalent to the am
ount of agency fees
from the non-bargaining union members wages for direct remittance to the bargai
ning union.
10. MINORITY UNION CANNOT DEMAND FROM THE EMPLOYER TO GRANT IT THE RIGHT TO
CHECK-OFF OF UNION DUES AND ASSESSMENTS FROM THEIR MEMBERS.
The obligation on the part of the employer to undertake the duty to check-off un
ion dues and special
assessments holds and applies only to the bargaining agent and not to any other
union/s (called Minority Union/s).
B.
RIGHT TO COLLECTIVE BARGAINING
DUTY TO BARGAIN COLLECTIVELY
1. MEANING OF DUTY TO BARGAIN COLLECTIVELY.
The duty to bargain collectively means the performance of a mutual obligation to m
eet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agree
ment with respect to wages,
hours of work and all other terms and conditions of employment, including propos
als for adjusting any
grievances or questions arising under such agreement and executing a contract in
corporating such agreements if
requested by either party but such duty does not compel any party to agree to a
proposal or to make any concession.
The duty does not compel any party to agree blindly to a proposal nor to make co
ncession. While the
law imposes on both the employer and the bargaining union the mutual duty to bar
gain collectively, the employer is
not under any legal obligation to initiate collective bargaining negotiations.
2. TWO (2) SITUATIONS CONTEMPLATED.
The duty to bargain collectively involves two (2) situations, namely:
1.
Duty to bargain collectively in the absence of a CBA under Article 251 of the La
bor Code.
2.
Duty to bargain collectively when there is an existing CBA under Article 253 of
the Labor Code.
WHEN THERE IS ABSENCE OF A CBA
1. HOW DUTY SHOULD BE DISCHARGED WHEN THERE IS NO CBA YET.
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2014 BAR EXAMS
The duty to bargain collectively when there has yet been no CBA in the bargainin
g unit where the
bargaining agent seeks to operate should be complied with in the following order
:
First, in accordance with any agreement or voluntary arrangement between the emp
loyer and the
bargaining agent providing for a more expeditious manner of collective bargainin
g; and
Secondly, in its absence, in accordance with the provisions of the Labor Code, r
eferring to Article 250
thereof which lays down the procedure in collective bargaining.
WHEN THERE IS A CBA
1. CONCEPT.
When there is a CBA, the duty to bargain collectively shall mean that neither pa
rty shall terminate nor
modify such agreement during its lifetime. However, either party can serve a wri
tten notice to terminate or modify
the agreement at least sixty (60) days prior to its expiration date. It shall be
the duty of both parties to keep the
status quo and to continue in full force and effect the terms and conditions of
the existing agreement during the 60day
period and/or until a new agreement is reached by the parties.
2. FREEDOM PERIOD.
The last sixty (60) days of the 5-year lifetime of a CBA immediately prior to it
s expiration is called the
freedom period. It is denominated as such because it is the only time when the law
allows the parties to freely
serve a notice to terminate, alter or modify the existing CBA. It is also the ti
me when the majority status of the
bargaining agent may be challenged by another union by filing the appropriate pe
tition for certification election.
3. AUTOMATIC RENEWAL CLAUSE.
a. Automatic renewal clause deemed incorporated in all CBAs.
Pending the renewal of the CBA, the parties are bound to keep the status quo
to treat the terms and
conditions embodied therein still in full force and effect during the 60-day
edom period and/or until a new
agreement is negotiated and ultimately concluded and reached by the parties.
s principle is otherwise known as
the automatic renewal clause which is mandated by law and therefore deemed
rated in all CBAs.
and
fre
Thi
incorpo
For its part, the employer cannot discontinue the grant of the benefits embodied
in the CBA which just
expired as it is duty-bound to maintain the status quo by continuing to give the

same benefits until a renewal thereof
is reached by the parties. On the part of the union, it has to observe and conti
nue to abide by its undertakings and
commitments under the expired CBA until the same is renewed.
4. KIOK LOY DOCTRINE.
This doctrine is based on the ruling In Kiok Loy v. NLRC, where the petitioner,
Sweden Ice Cream Plant,
refused to submit any counter-proposal to the CBA proposed by its employees certi
fied bargaining agent. The High
Court ruled that the employer had thereby lost its right to bargain the terms an
d conditions of the CBA. Thus, the
CBA proposed by the union was imposed lock, stock and barrel on the erring compa
ny.
The Kiok Loy case epitomizes the classic case of negotiating a CBA in bad faith
consisting of the
employers refusal to bargain with the collective bargaining agent by ignoring all
notices for negotiations and
requests for counter-proposals. Such refusal to send a counter-proposal to the u
nion and to bargain on the economic
terms of the CBA constitutes an unfair labor practice under Article 248(g) of th
e Labor Code.
2.
COLLECTIVE BARGAINING AGREEMENT (CBA)
1. CBA.
A Collective Bargaining Agreement or CBA for short, refers to the negotiated contrac
t between a duly
recognized or certified exclusive bargaining agent of workers and their employer
, concerning wages, hours of work
and all other terms and conditions of employment in the appropriate bargaining u
nit, including mandatory provisions
for grievances and arbitration machineries. It is executed not only upon the req
uest of the exclusive bargaining
representative but also by the employer.
2. ESSENTIAL REQUISITES OF COLLECTIVE BARGAINING.
Prior to any collective bargaining negotiations between the employer and the bar
gaining union, the
following requisites must first be satisfied:
1.
Employer-employee relationship must exist between the employer and the members o
f the bargaining
unit being represented by the bargaining agent;
2.
The bargaining agent must have the majority support of the members of the bargai
ning unit
established through the modes sanctioned by law; and
3.
A lawful demand to bargain is made in accordance with law.
3. SOME PRINCIPLES ON CBA.
CBA is the law between the parties during its lifetime and thus must be complied
with in good faith.
Being the law between the parties, any violation thereof can be subject of redre
ss in court.

Non-impairment of obligations of contract. A contract is the law between the par
ties and courts have no choice
but to enforce such contract so long as it is not contrary to law, morals, good
customs or public policy.
Otherwise, courts would be interfering with the freedom of contract of the parti
es.
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2014 BAR EXAMS
CBA is not an ordinary contract as it is impressed with public interest.
Automatic Incorporation Clause law is presumed part of the CBA.
The benefits derived from the CBA and the law are separate and distinct from eac
h other.
Workers are allowed to negotiate wage increases separately and distinctly from l
egislated wage increases.
The parties may validly agree in the CBA to reduce wages and benefits of employe
es provided such
reduction does not go below the minimum standards.
Ratification of the CBA by majority of all the workers in the bargaining unit ma
kes the same binding on all
employees therein.
Employees entitled to CBA benefits. The following are entitled to the benefits o
f the CBA:
(1) Members of the bargaining union;
(2) Non-members of the bargaining union but are members of the bargaining unit;
(3) Members of the minority union/s who paid agency fees to the bargaining union
; and
(4) Employees hired after the expiration of the CBA.
Pendency of a petition for cancellation of union registration is not a prejudici

al question before CBA
negotiation may proceed.
CBA should be construed liberally. If the terms of a CBA are clear and there is
no doubt as to the intention of
the contracting parties, the literal meaning of its stipulation shall prevail.
(a)
MANDATORY PROVISIONS OF CBA
1. MANDATORY STIPULATIONS OF THE CBA.
The Syllabus mentions 4 provisions that are mandatorily required to be stated in
the CBA, to wit:
1. Grievance Procedure;
2. Voluntary Arbitration;
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC).
If these provisions are not reflected in the CBA, its registration will be denie
d by the BLR.
(i)
GRIEVANCE PROCEDURE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A grievance or grievable issue is any question raised by either the employer or the
union regarding
any of the following issues or controversies:
1. The interpretation or implementation of the CBA;

2. The interpretation or enforcement of company personnel policies; or
3. Any claim by either party that the other party is violating any provisions of
the CBA or company
personnel policies.
In order to be grievable, the violations of the CBA should be ordinary and not g
ross in character;
otherwise, they shall be considered as unfair labor practice (ULP).
Gross violation of the CBA is defined as flagrant and/or malicious refusal by a
party thereto to
comply with the economic provisions thereof. If what is violated, therefore, is
a non-economic or a political
provision of the CBA, the same shall not be considered as unfair labor practice
and may thus be processed as a
grievable issue in accordance with and following the grievance machinery laid do
wn in the CBA.
2. GRIEVANCE MACHINERY.
Grievance machinery refers to the mechanism for the adjustment and resolution of g
rievances arising
from the interpretation or implementation of a CBA and those arising from the in
terpretation or enforcement of
company personnel policies.
3. GRIEVANCE PROCEDURE.
Grievance procedure refers to the internal rules of procedure established by the p
arties in their CBA
with voluntary arbitration as the terminal step, which are intended to resolve a
ll issues arising from the
implementation and interpretation of their collective agreement. It is that part
of the CBA which provides for a
peaceful way of settling differences and misunderstanding between the parties.
The terms grievance procedure and grievance machinery may be used interchangeably.
(ii)
VOLUNTARY ARBITRATION
1. VOLUNTARY ARBITRATION.
Voluntary arbitration refers to the mode of settling labor-management disputes in
which the parties
select a competent, trained and impartial third person who is tasked to decide o
n the merits of the case and whose
decision is final and executory.
2. VOLUNTARY ARBITRATOR.
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2014 BAR EXAMS
A Voluntary Arbitrator refers to any person who has been mutually named or designa
ted by the parties
to the CBA the employer and the bargaining agent - to hear and decide the issues
between them.
A Voluntary Arbitrator is not an employee, functionary or part of the government
or of the Department of
Labor and Employment, but he is authorized to render arbitration services provid
ed under labor laws.
(iii)
NO STRIKE, NO LOCKOUT CLAUSE
1. SIGNIFICANCE OF THE CLAUSE.
A No Strike, No Lockout clause in the CBA is an expression of the firm commitment
of the parties
thereto that, on the part of the union, it will not mount a strike during the ef
fectivity of the CBA, and on the part of
the employer, that it will not stage a lockout during the lifetime thereof.
This clause may be invoked by an employer only when the strike is economic in na
ture or one which is
conducted to force wage or other concessions from the employer that are not mand
ated to be granted by the law
itself. It does not bar strikes grounded on unfair labor practices. This is so b
ecause it is presumed that all
economic issues between the employer and the bargaining agent are deemed resolve
d with the signing of the CBA.
The same rule also applies in case of lockout. The said clause may only be invok
ed by the union in case the
ground for the lockout is economic in nature but it may not be so cited if the g
round is unfair labor practice
committed by the union.
2. EFFECT OF VIOLATION OF THE CLAUSE.
A strike conducted in violation of this clause is illegal.
(iv)
LABOR-MANAGEMENT COUNCIL
1. CREATION OF LMC, CONSTITUTIONALLY AND LEGALLY JUSTIFIED.
The Labor-Management Council (LMC) whose creation is mandated under the Labor Co
de, is meant to
implement the constitutionally mandated right of workers to participate in polic
y and decision-making
processes of the establishment where they are employed insofar as said processes
will directly affect their rights,
benefits and welfare. This is the body that implements the policy of co-determin
ation in the Constitution.
The LMC is mandated to be created in both organized and unorganized establishmen
ts.
2. SELECTION OF REPRESENTATIVES TO LMC.

In organized establishments, the workers representatives to the committee or coun
cil should be
nominated by the exclusive bargaining representative.
In establishments where no legitimate labor organization exists, the workers repr
esentative should be
elected directly by the employees at large.
3. LABOR-MANAGEMENT COUNCIL (LMC) VS. GRIEVANCE MACHINERY (GM).
To avoid confusion and possible major legal complication, a clear distinction li
ne should be drawn between
LMC and GM. The following may be cited:
1. Constitutional origin. The creation of the LMC is based on the constitutional
grant to workers of the
right to participate in policy and decision-making processes under the 1st parag
raph, Section 3, Article XIII of the
1987 Constitution, thus:
It shall guarantee the rights of all workers to self-organization, collective bar
gaining and
negotiations, and peaceful concerted activities, including the right to strike i
n accordance with law. They
shall be entitled to security of tenure, humane conditions of work, and a living
wage. They shall also
participate in policy and decision-making processes affecting their rights and b
enefits as may be
provided by law.
The creation of a GM, on the other hand, is based on a different constitutional
provision, the 2nd
paragraph, Section 3, Article XIII of the 1987 Constitution, which provides as f
ollows:
The State shall promote the principle of shared responsibility between workers an
d employers and
the preferential use of voluntary modes in settling disputes, including concilia
tion, and shall enforce their
mutual compliance therewith to foster industrial peace.
2. Legal anchor. -The creation of LMC is provided under Article 255 of the Labor
Code; while the
formation of a GM is mandated under Article 260 of the same Code.
3. Compulsory provision in the CBA. -Both LMC and GM are compulsorily required t
o be embodied in
the CBA in order for it to be considered a valid agreement.
4. Purpose for creation. - The LMC is created for the purpose of affording worke
rs the right to participate
in policy and decision-making processes in matters affecting their rights, benef
its and welfare; while that of the GM
is to resolve disputes and grievances arising from such policies or decisions or
more specifically, to adjust and
resolve grievances arising from (1) the interpretation or implementation of the
CBA or (2) the interpretation or
enforcement of company personnel policies.
5. Nature of functions. - The LMC is in the nature of a preventive mechanism mea
nt to prevent and avoid
disputes or grievances by co-determining the proper policies that should be impl
emented by the employer in respect
of the workers rights, benefits and welfare; while a GM is an adjudicatory mechan
ism which is set into motion only

when a dispute or grievance occurs.
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2014 BAR EXAMS
6. Nature of cognizable issues. The LMC performs non-adversarial and non-adjudic

atory tasks as it
concerns itself only with policy formulations and decisions affecting the worker
s rights, benefits and welfare and
not violations or transgressions of any policy, rule or regulation; while that o
f the GM is adversarial and
adjudicatory in character since its jurisdiction is confined to resolving and de
ciding disputes and grievances between
management and the workers arising from violations or transgressions of existing
policies, rules or regulations. In
other words, the LMC does not resolve grievable or contentious issues; the GM do
es.
A case illustrative of this principle is the 2011 case of Cirtek Employees Labor
Union-Federation of
Free Workers v. Cirtek Electronics, Inc. The CBA negotiation between petitioner
union and respondent company
was deadlocked resulting in the staging of a strike by the former. The DOLE Secr
etary assumed jurisdiction over the
labor dispute but before he could rule on the controversy, respondent created a
Labor-Management Council (LMC)
through which it concluded with the remaining officers of petitioner a Memorandu
m of Agreement (MOA)
providing for daily wage increases of P6.00 per day effective January 1, 2004 an
d P9.00 per day effective January 1,
2005. Petitioner submitted the MOA to the DOLE Secretary, alleging that the rema
ining officers signed the MOA
under respondents assurance that should the Secretary order a higher award of wag
e increase, respondent would
comply.
Respecting the MOA, petitioner posits that it was surreptitiously entered into [i
n] bad faith, it having
been forged without the assistance of the Federation of Free Workers or counsel,
adding that respondent could have
waited for the Secretarys resolution of the pending CBA deadlock or that the MOA
could have been concluded
before representatives of the DOLE Secretary. As found by the DOLE Secretary, th
e MOA came about as a result of
the constitution, at respondent s behest, of the LMC which, he reminded the part
ies, should not be used as an avenue
for bargaining but for the purpose of affording workers to participate in policy
and decision-making. Hence, the
agreements embodied in the MOA were not the proper subject of the LMC deliberati
on or procedure but of CBA
negotiations and, therefore, deserving little weight.
7. Composition. -The representatives of the workers to the LMC may or may not be
nominated by the
recognized or certified bargaining agent, depending on whether the establishment
is organized or unorganized. Thus,
in organized establishments, the workers representatives to the LMC should be nom
inated by the exclusive
bargaining agent. In establishments where no legitimate labor organization exist

s, the workers representatives
should be elected directly by the employees of the establishment at large; while
those in the GM are nominated
solely by the bargaining agent.
(b)
DURATION OF CBA
(i)
FOR ECONOMIC PROVISIONS
(ii)
FOR NON-ECONOMIC PROVISIONS
1. TERMS OF A CBA.
The terms of a CBA are classified into two (2), viz.:
(a) Representation aspect 5 years which is the lifetime of a CBA;
(b) All other provisions Subject to renegotiation after first 3 years of the 5-y
ear lifetime of CBA.
2. REPRESENTATION ASPECT.
The phrase representation aspect in Article 253-A of the Labor Code refers to the
identity and majority
status of the bargaining agent that successfully negotiated the CBA as the exclu
sive bargaining representative of the
employees in the appropriate bargaining unit concerned.
The 5-year representation status of the incumbent exclusive bargaining agent sho
uld be reckoned from the
effectivity of the CBA. This means that no petition for certification election q
uestioning its majority status may be
entertained during the lifetime of the CBA except within the 60-day freedom peri
od immediately preceding the
expiry date of the 5-year term.
Suspension of CBA for a period longer than 5 years, held valid.

The case of Rivera v. Espiritu, is in point. It was held here that the suspensio
n of the CBA between PAL
and PALEA for ten (10) years in order to resolve the strike is not violative of
the Constitution or the law. This is so
because the right to free collective bargaining includes the right to suspend it
. There is nothing in Article 253-A
which prohibits the parties from waiving or suspending the mandatory timetables
and agreeing on the remedies to
enforce the same.
Article 253-A has a two-fold purpose. One is to promote industrial stability and
predictability. Inasmuch as
the agreement sought to promote industrial peace at PAL during its rehabilitatio
n, said agreement satisfies the first
purpose of Article 253-A. The other is to assign specific timetables wherein neg
otiations become a matter of right
and requirement. Nothing in Article 253-A prohibits the parties from waiving or
suspending the mandatory
timetables and agreeing on the remedies to enforce the same. The suspension agre
ement is a valid exercise of the
freedom to contract. Under the principle of inviolability of contracts guarantee
d by the Constitution, the contract
must be upheld. The agreement afforded full protection to labor; promoted the sh
ared responsibility between
workers and employers; and exercised the voluntary modes in settling disputes, i
ncluding conciliation to foster
industrial peace.
3. RE-NEGOTIATION OF ALL PROVISIONS OTHER THAN THE REPRESENTATION ASPECT OF

THE CBA SHOULD BE MADE AFTER FIRST 3 YEARS FROM EFFECTIVITY.
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2014 BAR EXAMS
Considering that the five (5) year period is quite long during which the economi
c situations of the parties
may have already changed, Article 253-A recognizes the need for the parties to r
e-assess and re-negotiate all the
provisions of the CBA, except its representation aspect, after the lapse of the
first three (3) years of its 5-year
lifetime. Such re-negotiation, however, should only pertain to the terms and con
ditions of the parties relationship
for the last remaining two (2) years of the CBAs 5-year term. This re-negotiation
process may be invoked by any of
the parties as a matter of right.
4. ALL OTHER PROVISIONS, REFER TO BOTH ECONOMIC AND NON-ECONOMIC PROVISIONS.
The phrase all other provisions mentioned in Article 253-A simply refers to all th
e provisions of the
CBA irrespective of whether they are economic or non-economic in nature. The onl
y item excepted therefrom is
the representation status of the incumbent exclusive bargaining agent which may
only be questioned during the 60day
freedom period.
5. RETROACTIVITY OF THE CBA.
The application of the rules on retroactivity depends on any of the following tw
o (2) situations:
(a)
When the CBA is voluntarily concluded by the parties; or
(b) When the CBA is concluded through arbitral award.
6. RULE WHEN VOLUNTARILY CONCLUDED BY THE PARTIES IN THE NEGOTIATING TABLE.
(a) The effectivity of the CBA shall retroact to the day immediately after the d
ate of expiry of the old CBA
in case the new CBA is concluded and entered into within six (6) months from the
said expiry date.
(b) If the new CBA is entered into beyond six (6) months from the expiry date of
the old CBA, the parties
are given the right to negotiate the duration of the retroactivity thereof.
7. RULE ON RETROACTIVITY IN CASE OF CONCLUSION OF CBA THROUGH ARBITRAL AWARD.
a. No law on retroactivity in case of CBA arbitral awards.
The law is silent as to the retroactivity of a CBA secured through arbitral awar
d or that granted not by
virtue of the mutual agreement of the parties but by intervention of the governm
ent.
b. Variations in the application of the retroactivity rule.
The rule laid down by the Supreme Court in cases involving this particular issue
of retroactivity varies from
case to case. Basically, the rule, based on jurisprudence, may be restated in th
e following manner:
(1) Prospectivity rule;
(2) Retroactivity rule which makes the CBA retroactively effective to:
(a)
the date of the expiration of the previous CBA; and

(b)
the first day after the six-month period following the expiration of the last da
y of the CBA.
(iii)
FREEDOM PERIOD
1. 60-DAY FREEDOM PERIOD.
When there is an existing CBA, the parties thereto are bound to observe the term
s and conditions therein set
forth until its expiration. Neither party is allowed to terminate nor modify suc
h agreement during its lifetime. The
only time the parties are allowed to terminate or modify the agreement is within
the so-called freedom period of at
least sixty (60) days prior to its expiration date by serving a notice to that e
ffect.
2. REASON IT IS CALLED FREEDOM PERIOD.
The last 60 days of the 5-year lifetime of a CBA immediately prior to its expira
tion is called the freedom
period because:
(a)
it is the only time when the law allows the parties to freely serve a notice to
terminate, alter or modify
the existing CBA; and
(b) it is also the time when the majority status of the bargaining agent may be
challenged by another union
by filing the appropriate petition for certification election.
3. RULE ON FILING OF CERTIFICATION ELECTION VIS--VIS FREEDOM PERIOD.
In a petition involving an organized establishment or enterprise where the major
ity status of the incumbent
collective bargaining union is questioned by a legitimate labor organization, th
e Med-Arbiter shall immediately
order the conduct of a certification election if the petition is filed during th
e last sixty (60) days of the CBA. Any
petition filed before or after the 60-day freedom period shall be dismissed outr
ight.
The 60-day freedom period based on the original collective bargaining agreement
shall not be
affected by any amendment, extension or renewal of the CBA for purposes of certi
fication election.
4. AUTOMATIC RENEWAL CLAUSE.
A petition for certification election challenging the majority status of the exi
sting bargaining agent should be
filed within and not before or after - said 60-day freedom period. Upon the expi
ration of the said period and no
petition for certification election is filed by a challenging union, the employe
r is duty-bound to continue to recognize
the majority status of the incumbent bargaining agent. Negotiation for a new CBA
may even validly commence
between the incumbent bargaining agent and the employer during the 60-day freedo
m period if no challenge
to the bargaining agents majority status is posed by another union.
3.
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UNION SECURITY
1. NATURE AND PURPOSE OF UNION SECURITY CLAUSE.
The union security clause allows the parties thereto to enter into an agreement re
quiring compulsory
membership in the bargaining agent which successfully negotiated said CBA as a c
ondition for continued
employment with the exception of employees who are already members of another un
ion at the time of the signing
of the CBA.
Union security is a generic term which is applied to and comprehends closed shop, uni
on shop,
maintenance of membership or any other form of agreement which imposes upon the em
ployees the obligation to
acquire or retain union membership as a condition to their continued employment.
In other words, the purpose of a
union security arrangement is to guarantee the continued existence of the union
through enforced
membership for the benefit of the workers.
Without this clause, the existence of the union is always subject to uncertainty
as its members may resign
anytime resulting in the decimation of its ranks. The union becomes gradually we
akened and increasingly vulnerable
to company machinations. In this security clause lies the strength of the union
during the enforcement of the CBA. It
is this clause that provides labor with substantial power in collective bargaini
ng.
2. THE RIGHT NOT TO JOIN A UNION IS NOT ABSOLUTE SINCE IT MAY BE RESTRICTED.
The right of an employee not to join a union is not absolute and must give way t
o the collective good of all
members of the bargaining unit. When certain employees are obliged to join a par
ticular union as a requisite for
continued employment, as in the case of a union security clause, this condition
is a valid restriction on the freedom
or right not to join any labor organization because it is in favor of unionism.
3. UNION SECURITY CLAUSE DOES NOT VIOLATE CONSTITUTIONAL RIGHT TO FREEDOM OF
ASSOCIATION.
A union security clause in a CBA is not a violation or a restriction of the empl
oyees right to freedom of
association guaranteed by the Constitution. Labor, being the weaker in economic
power and resources than capital,
deserves protection that is actually substantial and material.
4. EMPLOYEES EXEMPTED FROM COVERAGE OF UNION SECURITY CLAUSE.
All employees in the bargaining unit covered by a Union Security Clause in their
CBA with the employer
are subject to its terms. However, under law and established jurisprudence, the
following kinds of employees are
exempted from its coverage, namely:
1. Employees who, at the time the union security agreement takes effect, are bon
a-fide members of a
religious organization which prohibits its members from joining labor unions on
religious
grounds;
2. Employees who are already members of a union other than the bargaining agent
at the time the
union security agreement took effect;
3. Confidential employees who are excluded from the rank-and-file or supervisory
bargaining unit;
4. Supervisory employees who are excluded from becoming members of the rank-andfile union and viceversa; and
5. Employees excluded from the union security clause by express terms of the agr
eement.
(a)
UNION SECURITY CLAUSES:
CLOSED SHOP, UNION SHOP, MAINTENANCE OF MEMBERSHIP SHOP, ETC.
1. CLASSIFICATION OF UNION SECURITY ARRANGEMENTS.
Generally, a union security clause may take the form of:
1. Closed-shop agreement;
2. Maintenance of membership agreement;
3. Union shop agreement;
4. Modified union shop agreement;
5. Exclusive bargaining agreement;
6. Bargaining for members only agreement;
7. Agency shop agreement; or
8. Preferential hiring agreement.
Modification of arrangements.
The above classification admits of certain modified types which the parties may
agree upon in the CBA
depending on the peculiar requirements of the situation.
2. CLOSED-SHOP AGREEMENT.
A closed-shop may be defined as a scheme in which, by agreement between the employ
er and its
employees through their bargaining union/agent, no person may be employed unless
he or she is, becomes, and, for
the duration of the agreement, remains a member in good standing of the bargaini
ng union. Basically, this kind of
agreement stipulates the undertaking by the employer not to hire or employ any p
erson who is not a member of the
bargaining union. Once employed, it is required that the said person should rema
in a member of the bargaining
union in good standing as a condition for continued employment, at least during
the whole duration of the CBA.
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3. MAINTENANCE OF MEMBERSHIP AGREEMENT.
There is maintenance of membership agreement when employees, who are union members
as of the
effective date of the agreement, or who thereafter become members, must maintain
union membership as a condition
for continued employment until they are promoted or transferred out of the barga
ining unit, or the agreement is
terminated. Its role is to protect the unions current membership. By its express
terms, it covers and renders
continued union membership compulsory for: (1) those who were already union memb
ers at the time the CBA was
signed; and (2) the new employees who will become regular during the life of the
CBA.
4. UNION SHOP AGREEMENT.
There is union shop when all new regular employees are required to join the union
within a certain
period as a condition for their continued employment. Its role is to compel the
membership of those who are not yet
union members. Under this scheme, the employer is given the freedom to hire and
employ any person who is not a
member of the bargaining agent. Once such person becomes an employee, he is requ
ired to become a member of
the bargaining agent and to remain as such member in good standing for the whole
period of the effectivity of the
CBA as a condition for his continued employment.
5. MODIFIED UNION SHOP AGREEMENT.
Employees under this arrangement who are not union members at the time of the si
gning or execution of
the CBA are not required to join the bargaining union. However, any and all work
ers hired or employed after the
signing or execution of the CBA are required to join the bargaining union.
6. EXCLUSIVE BARGAINING AGENT AGREEMENT.
The union which negotiated and concluded the CBA with management is considered a
nd recognized as the
sole and exclusive bargaining agent of all the covered employees in the bargaini
ng unit, whether they be members or
not of the said agent.
7. BARGAINING FOR MEMBERS ONLY AGREEMENT.
Under this arrangement, the union which negotiated and concluded the CBA with ma
nagement is
recognized as the bargaining agent only for its own members.
8. AGENCY SHOP AGREEMENT.
Under this scheme, there is no requirement for non-members of the bargaining age
nt to become its
members. However, it is required that such non-union members should pay to the b
argaining agent an agency fee as
a condition for their continued employment.
9. PREFERENTIAL HIRING AGREEMENT.

It is the principal feature of this arrangement that the employer gives preferen
ce in hiring to the members of
the bargaining agent under equal circumstances and qualifications. Once hired or
employed, they are required to
maintain their membership in good standing in the bargaining agent for the durat
ion of the CBA as a condition for
their continued employment.
10. DISMISSAL DUE TO VIOLATION OF UNION SECURITY CLAUSE.
a. Requisites for valid termination based on union security clause.
The following are the requisites that the employer should comply prior to termin
ating the employment of
an employee by virtue of the enforcement of the union security clause:
(1) The union security clause is applicable;
(2) The union is requesting for the enforcement of the union security provision
in the CBA; and
(3) There is sufficient evidence to support the unions decision to expel the empl
oyee from the union.
The foregoing requisites constitute a just cause for terminating an employee bas
ed on the CBAs union
security provision.
b. The due process afforded by the union prior to expulsion is different from th
e due process
required prior to termination of employment.
The distinction is not hard to comprehend. The due process afforded by the union
is meant solely and
exclusively to address the issue of validity of the termination of the membershi
p of the employee in the union; while
that required of the employer is aimed at addressing the issue of validity of th
e employees termination of
employment. Hence, it is complete error on the part of the employer to adopt as
its own due process what has been
earlier afforded by the union to the erring employee without conducting its own
independent and separate due
process.
Thus, in declaring the illegality of the dismissal of petitioner in Cario v. NLRC
, the Supreme Court noted
in regard to the involvement of the company in his dismissal, that the company,
upon being formally advised in
writing of the expulsion of petitioner Cario from the union, in turn simply issue
d a termination letter to Cario, the
termination being made effective the very next day. The Company should have give
n petitioner Cario an
opportunity to explain his side of the controversy with the union. Notwithstandi
ng the union security clause in the
CBA, the company should have reasonably satisfied itself by its own inquiry that
the union had not been merely
acting arbitrarily and capriciously in impeaching and expelling petitioner Cario.
Had the company taken the trouble
to investigate the acts and proceedings of the union, it could have very easily
determined that the union had acted
arbitrarily in impeaching and expelling from its ranks petitioner Cario.
11.SOME PRINCIPLES ON TERMINATION DUE TO VIOLATION OF UNION SECURITY CLAUSE.
Employer is obligated to act upon being demanded by the union to terminate the e
mployment of its errant
members.
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Members of the minority union cannot be compelled to join the bargaining union.
The union security
clause therefore does not cover employees who are members of the union/s other t
han the bargaining union.
Not being so covered, they cannot be dismissed for violation of said clause.
The employer has the right to be reimbursed for payment of any claims arising ou
t of dismissals demanded by
the union under the union security clause. Such right of reimbursement may be in
voked:
(1) By express provision in the CBA to that effect; or
(2) By securing it through judicial directive.
(b)
CHECK-OFF; UNION DUES, AGENCY FEES
1. CHECK-OFF OF AGENCY FEE, DIFFERENT FROM CHECK-OFF OF UNION DUES AND
ASSESSMENTS.
Check-off of agency fee does not require the execution by the non-bargaining uni
on members of
individual written authorizations; while such is an indispensable requisite for
check-off of union dues and
special assessments from members of the bargaining union.
4.
UNFAIR LABOR PRACTICE
IN COLLECTIVE BARGAINING
(a)
BARGAINING IN BAD FAITH
1. BASIC PRINCIPLES.
It is essential that the employer and the employees should both act in good fait
h.
Where an employer did not even bother to submit an answer to the bargaining prop
osals of the union, there
is a clear evasion of the duty to bargain collectively.
2. MAKING A PROMISE DURING THE CBA NEGOTIATIONS, NOT AN INDICATION OF BAD
FAITH.
Promises made by management during the CBA negotiations may not be considered an
indication of bad
faith or a scheme of feigning to undertake the negotiation proceedings through e
mpty promises.
3. ADAMANT STANCE RESULTING IN AN IMPASSE, NOT AN INDICIUM OF BAD FAITH.
The adamant insistence on a bargaining position to the point where the negotiati
ons reach an impasse does
not establish bad faith. Neither can bad faith be inferred from a partys insisten
ce on the inclusion of a particular
substantive provision unless it concerns trivial matters or is obviously intoler
able.
4. PARTIES HAVE NO OBLIGATION TO PRECIPITATELY AGREE TO THE PROPOSALS OF EACH
OTHER.
While the law makes it an obligation for the employer and the employees to barga
in collectively with each
other, such compulsion does not include the commitment to precipitately accept o
r agree to the proposals of the
other. All it contemplates is that both parties should approach the negotiation
with an open mind and make
reasonable effort to reach a common ground of agreement.
5. ALLEGATIONS OF BAD FAITH WIPED OUT WITH THE SIGNING OF THE CBA.
With the execution of the CBA, bad faith bargaining can no longer be imputed upo
n any of the parties
thereto. All provisions in the CBA are supposed to have been jointly and volunta
rily incorporated therein by the
parties. The CBA is proof enough that the company exerted reasonable effort at g
ood faith bargaining.
(b)
REFUSAL TO BARGAIN
1. FAILURE OR REFUSAL OF MANAGEMENT TO GIVE COUNTER-PROPOSALS TO THE UNIONS
DEMANDS.
The failure of the employer to submit its counter-proposals to the demands of th
e bargaining union does
not, by itself, constitute refusal to bargain. However, it is different if the e
mployer refuses to submit an answer or
reply to the written bargaining proposals of the certified bargaining union. In
this case, unfair labor practice is
committed.
In General Milling Corporation v. CA, the Supreme Court found the petitioner gui
lty of unfair labor
practice for refusing to send a counter-proposal to the union and to bargain ane
w on the economic terms of the CBA.
Similarly, in the earlier case of Colegio de San Juan de Letran v. Association o
f Employees and Faculty
of Letran, the petitioner school was declared guilty of unfair labor practice wh
en it failed to make a timely reply
to the proposals of the certified bargaining union more than a month after the s
ame were submitted to it. In
explaining its failure to reply, the school merely offered the feeble excuse tha
t its Board of Trustees had not yet
convened to discuss the matter. Clearly, its actuation showed a lack of sincere
desire to negotiate the CBA thereby
rendering it guilty of unfair labor practice.
2. REFUSAL OF A PARTY TO SIGN THE CBA.
A party to a fully-concluded CBA may be compelled to sign it, especially if said
refusal to sign is the only
remaining hitch to its being implemented. Such refusal is considered an unfair l
abor practice.
(c)
INDIVIDUAL BARGAINING
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1. EMPLOYERS ACT OF NEGOTIATING WITH UNION MEMBERS INDIVIDUALLY, A ULP.

To negotiate or attempt to negotiate with individual workers rather than with th
e certified bargaining agent
is an unfair labor practice.
In Insular Life Assurance Co., Ltd., Employees Association-NATU v. Insular Life
Assurance Co.,
Ltd., respondent company, through its president, sent two (2) sets of letters to
the individual strikers during the
strike. The first contained promises of benefits to the employees in order to en
tice them to return to work; while the
second contained threats to obtain replacements for the striking employees in th
e event they did not report for work
on June 2, 1958. The respondents contend that the sending of the letters constit
uted a legitimate exercise of their
freedom of speech. The Supreme Court, however, disagreed. The said letters were
directed to the striking employees
individually -by registered special delivery mail at that - without being course
d through the unions which were
representing the employees in collective bargaining. Moreover, the sending of th
ese letters is not protected by the
free speech provision of the Constitution. The free speech protection under the
Constitution is inapplicable where
the expression of opinion by the employer or his agent contains a promise of ben
efit or threats or reprisal.
2. UNION CANNOT VALIDLY BARGAIN IN BEHALF OF ITS MEMBERS ONLY.
Respondent union in Philippine Diamond Hotel and Resort, Inc. [Manila Diamond Ho
tel] v. Manila
Diamond Hotel Employees Union, insists that it could validly bargain in behalf o
f its members only. The
Supreme Court, however, ruled that the same would only fragment the employees of p
etitioner. What
respondent union will be achieving is to divide the employees, more particularly
, the rank-and-file employees of
petitioner hotel. The other workers who are not members are at a serious disadva
ntage, because if the same shall be
allowed, employees who are non-union members will be economically impaired and w
ill not be able to negotiate
their terms and conditions of work, thus defeating the very essence and reason o
f collective bargaining which is an
effective safeguard against the evil schemes of employers in terms and condition
s of work. Petitioners refusal to
bargain then with respondent cannot be considered an unfair labor practice to ju
stify the staging of the
strike.
(d)
BLUE-SKY BARGAINING
1. CONCEPT.
Blue-sky bargaining means making exaggerated or unreasonable proposals. This kind
of unfair labor
practice act may only be committed by the bargaining union.

(e)
SURFACE BARGAINING
1. CONCEPT.
Surface bargaining is defined as going through the motions of negotiating without an
y legal intent to
reach an agreement. This kind of unfair labor practice may only be committed by
the employer.
5.
UNFAIR LABOR PRACTICE
(ULP)
(a)
NATURE OF ULP
1. WHEN AN ACT CONSTITUTES ULP.
At the outset, it must be clarified that not all unfair acts constitute ULPs. Wh
ile an act or decision of an
employer or a union may be unfair, certainly not every unfair act or decision th
ereof may constitute ULP as defined
and enumerated under the law.
The act complained of as ULP must have a proximate and causal connection with an
y of the following 3
rights:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the technical significa
tion of the term unfair labor
practice.
2. THE ONLY ULP WHICH MAY OR MAY NOT BE RELATED TO THE EXERCISE OF THE RIGHT
TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING.
The only ULP which is the exception as it may or may not relate to the exercise
of the right to selforganization and collective bargaining is the act described under Article 248 [f
], i.e., to dismiss, discharge or
otherwise prejudice or discriminate against an employee for having given or bein
g about to give testimony
under the Labor Code.
3. LABOR CODE PROVISIONS ON ULP.
Under the Labor Code, there are only five (5) provisions related to ULP, to wit:
1. Article 247 which describes the concept of ULPs and prescribes the procedure
for their prosecution;
2. Article 248 which enumerates the ULPs that may be committed by employers;
3. Article 249 which enumerates the ULPs that may be committed by labor organiza
tions;
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4.
Article 261 which considers violations of the CBA as no longer ULPs unless the s
ame are gross in
character which means flagrant and/or malicious refusal to comply with the econo
mic provisions
thereof.
5.
Article 263 [c] which refers to union-busting, a form of ULP, involving the dism
issal from employment
of union officers duly elected in accordance with the union constitution and bylaws, where the
existence of the union is threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP.
A ULP may be committed by an employer or by a labor organization. Article 248 de
scribes the ULPs that
may be committed by an employer; while Article 249 enumerates those which may be
committed by a labor
organization.
On the part of the employer, only the officers and agents of corporations, assoc
iations or partnerships who
have actually participated in or authorized or ratified ULPs are criminally liab
le.
On the part of the union, only the officers, members of governing boards, repres
entatives or agents or
members of labor associations or organizations who have actually participated in
or authorized or ratified the ULPs
are criminally liable.
5. ELEMENTS OF ULP.
Before an employer or labor organization may be said to have committed ULP, the
following elements
must concur:
1.
There should exist an employer-employee relationship between the offended party
and the offender;
and
2. The act complained of must be expressly mentioned and defined in the Labor Co
de as an unfair
labor practice.
Absent one of the elements aforementioned will not make the act an unfair labor
practice.
6. ASPECTS OF ULP.
Under Article 247, a ULP has two (2) aspects, namely:
1. Civil aspect; and
2. Criminal aspect.
The civil aspect of an unfair labor practice includes claims for actual, moral a
nd exemplary damages,
attorneys fees and other affirmative reliefs. Generally, these civil claims shoul
d be asserted in the labor case before
the Labor Arbiters who have original and exclusive jurisdiction over unfair labo
r practices. The criminal aspect,
on the other hand, can only be asserted before the regular court.
(b)
ULP OF EMPLOYERS
I.
INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. TEST OF INTERFERENCE, RESTRAINT OR COERCION.
The terms interfere,restrain and coerce are very broad that any act of management tha
may
reasonably tend to have an influence or effect on the exercise by the employees
of their right to self-organize may
fall within their meaning and coverage. According to the Supreme Court in Insula
r Life Assurance Co., Ltd.,
Employees Association-NATU v. Insular Life Assurance Co., Ltd., the test of whet
her an employer has
interfered with or restrained or coerced employees within the meaning of the law
is whether the employer has
engaged in conduct which may reasonably tend to interfere with the free exercise
of the employees rights. It is not
necessary that there be direct evidence that any employee was in fact intimidate
d or coerced by the statements or
threats of the employer if there is a reasonable inference that the anti-union c
onduct of the employer does have an
adverse effect on the exercise of the right to self-organization and collective
bargaining.
2. TOTALITY OF CONDUCT DOCTRINE.
In ascertaining whether the act of the employer constitutes interference with, r
estraint or coercion of the
employees exercise of their right to self-organization and collective bargaining,
the totality of conduct doctrine
may be applied.
The totality of conduct doctrine means that expressions of opinion by an employe
r, though innocent in
themselves, may be held to constitute an unfair labor practice because of the ci
rcumstances under which they were
uttered, the history of the particular employers labor relations or anti-union bi
as or because of their connection with
an established collateral plan of coercion or interference. An expression which
may be permissibly uttered by one
employer, might, in the mouth of a more hostile employer, be deemed improper and
consequently actionable as an
unfair labor practice. The past conduct of the employer and like considerations,
coupled with an intimate connection
between the employers action and the union affiliation or activities of the parti
cular employee or employees taken
as a whole, may raise a suspicion as to the motivation for the employers conduct.
The failure of the employer to
ascribe a valid reason therefor may justify an inference that his unexplained co
nduct in respect of the particular
employee or employees was inspired by the latters union membership and activities
.
3. INTERFERENCE IN THE EMPLOYEES RIGHT TO SELF-ORGANIZATION.
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a. Interference is always ULP.
The judicial dictum is that any act of interference by the employer in the exerc
ise by employees of their
right to self-organization constitutes an unfair labor practice. This is the ver
y core of ULP.
In Hacienda Fatima v. National Federation of Sugarcane Workers Food and General
Trade, the
Supreme Court upheld the factual findings of the NLRC and the Court of Appeals t
hat from the employers refusal
to bargain to its acts of economic inducements resulting in the promotion of tho
se who withdrew from the union, the
use of armed guards to prevent the organizers to come in, and the dismissal of u
nion officials and members, one
cannot but conclude that the employer did not want a union in its hacienda - a c
lear interference in the right of the
workers to self-organization. Hence, the employer was held guilty of unfair labo
r practice.
b. Formation of a union is never a valid ground to dismiss.
c. It is ULP to dismiss a union officer or an employee for his union activities.
II.
YELLOW DOG CONTRACT
1. WHAT IS A YELLOW DOG CONTRACT?
It is one which exacts from workers as a condition of employment that they shall
not join or belong to a
labor organization, or attempt to organize one during their period of employment
or that they shall withdraw
therefrom in case they are already members of a labor organization.
2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.
A typical yellow dog contract embodies the following stipulations:
(1) A representation by the employee that he is not a member of a labor organiza
tion;
(2) A promise by the employee that he will not join a union; and
(3) A promise by the employee that upon joining a labor organization, he will qu
it his employment.
The act of the employer in imposing such a condition constitutes unfair labor pr
actice under Article 248(b)
of the Labor Code. Such stipulation in the contract is null and void.
III.
CONTRACTING OUT OF SERVICES AND FUNCTIONS
1. GENERAL RULE.
As a general rule, the act of an employer in having work or certain services or
functions being performed
by union members contracted out is not per se an unfair labor practice. This is
so because contracting-out of a job,
work or service is clearly an exercise by the employer of its business judgment
and its inherent management rights
and prerogatives. Hiring of workers is within the employers inherent freedom to r
egulate its business and is a valid

exercise of its management prerogative subject only to special laws and agreemen
ts on the matter and the fair
standards of justice. The employer cannot be denied the faculty of promoting eff
iciency and attaining economy by a
study of what units are essential for its operation. It has the ultimate right t
o determine whether services should be
performed by its personnel or contracted to outside agencies.
2. WHEN CONTRACTING-OUT BECOMES ULP.
It is only when the contracting out of a job, work or service being performed by
union members will
interfere with, restrain or coerce employees in the exercise of their right to s
elf-organization that it shall constitute an
unfair labor practice. Thus, it is not unfair labor practice to contract out wor
k for reasons of business decline,
inadequacy of facilities and equipment, reduction of cost and similar reasonable
grounds.
IV.
COMPANY UNION
1. COMPANY INITIATED, DOMINATED OR ASSISTED UNION.
Paragraph [d] of Article 248 considers it an unfair labor practice to initiate,
dominate, assist or otherwise
interfere with the formation or administration of any labor organization, includ
ing the giving of financial or other
support to it or its organizers or supporters. Such union is called company union
as its formation, function or
administration has been assisted by any act defined as unfair labor practice und
er the Labor Code.
V.
DISCRIMINATION
1. COVERAGE OF PROHIBITION.
What is prohibited as unfair labor practice under the law is to discriminate in
regard to wages, hours of
work, and other terms and conditions of employment in order to encourage or disc
ourage membership in any labor
organization.
4. MATERIALITY OF PURPOSE OF ALLEGED DISCRIMINATORY ACT.
In Manila Pencil Co., Inc. v. CIR, it was ruled that even assuming that business
conditions justify the
dismissal of employees, it is an unfair labor practice of employer to dismiss pe
rmanently only union members
and not non-unionists.
In Manila Railroad Co. v. Kapisanan ng mga Manggagawa sa Manila Railroad Co., th
e nonregularization of long-time employees because of their affiliation with the unio
n while new employees were
immediately regularized was declared an act of discrimination.
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VI.
FILING OF CHARGES OR GIVING OF TESTIMONY
1. CONCEPT.
Under paragraph [f] of Article 248 of the Labor Code, it is an unfair labor prac
tice for an employer to
dismiss, discharge or otherwise prejudice or discriminate against an employee fo
r having given or being about to
give testimony under the Labor Code.
2. THE ONLY ULP NOT REQUIRED TO BE RELATED TO EMPLOYEES EXERCISE OF THE RIGHT
TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING.
It must be underscored that Article 248(f) is the only unfair labor practice tha
t need not be related to the
exercise by the employees of their right to self-organization and collective bar
gaining.
In Itogon-Suyoc Mines, Inc. v. Baldo, it was declared that an unfair labor pract
ice was committed by the
employer when it dismissed the worker who had testified in the hearing of a cert
ification election case despite its
prior request for the employee not to testify in the said proceeding accompanied
with a promise of being reinstated if
he followed said request.
VII.
CBA-RELATED ULPs
1. THREE (3) CBA-RELATED ULPs.
Article 248 enunciates three (3) CBA-related unfair labor practices, to wit:
1. To violate the duty to bargain collectively as prescribed in the Labor Code.
2. To pay negotiation or attorneys fees to the union or its officers or agents as
part of the settlement
of any issue in collective bargaining or any other dispute.
3. To violate a collective bargaining agreement.
VII-A.
PAYMENT OF NEGOTIATION AND ATTORNEYS FEES
1. WHEN PAYMENT CONSIDERED ULP.
Article 248(h) of the Labor Code considers as an unfair labor practice the act o
f the employer in paying
negotiation fees or attorneys fees to the union or its officers or agents as part
of the settlement of any issue in
collective bargaining or any other dispute.
VII-B.
VIOLATION OF THE CBA
1. CORRELATION.
Article 248(i) of the Labor Code should be read in relation to Article 261 there
of. Under Article 261, as
amended, violations of a CBA, except those which are gross in character, shall n
o longer be treated as an unfair

labor practice and shall be resolved as grievances under the CBA. Gross violatio
ns of CBA shall mean flagrant
and/or malicious refusal to comply with the economic provisions of such agreemen
t.
2. CASE LAW.
The act of the employer in refusing to implement the negotiated wage increase st
ipulated in the CBA,
which increase is intended to be distinct and separate from any other benefits o
r privileges that may be forthcoming
to the employees, is an unfair labor practice.
Refusal for a considerable number of years to give salary adjustments according
to the improved salary
scales in the CBA is an unfair labor practice.
ULP OF LABOR ORGANIZATIONS
I.
RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR COERCE EMPLOYEES IN THE EXERCISE
OF THEIR RIGHT TO SELF-ORGANIZE.
Under Article 249(a), it is ULP for a labor organization, its officers, agents o
r representatives to restrain or
coerce employees in the exercise of their right to self-organization. Compared t
o similar provision of Article 248(a)
of the Labor Code, notably lacking is the use of the word interfere in the exercis
e of the employees right to selforganize. The significance in the omission of this term lies in the grant of unr
estricted license to the labor
organization, its officers, agents or representatives to interfere with the exer
cise by the employees of their right to
self-organization. Such interference is not unlawful since without it, no labor
organization can be formed as the act
of recruiting and convincing the employees is definitely an act of interference.
II.
DISCRIMINATION
1. CONCEPT.
Under Article 249(b), it is ULP for a labor organization, its officers, agents o
r representatives to cause or
attempt to cause an employer to discriminate against an employee, including disc
rimination against an employee
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2014 BAR EXAMS
with respect to whom membership in such organization has been denied, or to term
inate an employee on any ground
other than the usual terms and conditions under which membership or continuation
of membership is made available
to other members.
III.
DUTY OF UNION TO BARGAIN COLLECTIVELY
1. CONCEPT.
Under Article 249(c), it is ULP for a duly certified sole and exclusive bargaini
ng union, its officers, agents
or representatives to refuse or violate the duty to bargain collectively with th
e employer. This is the counterpart
provision of Article 248(g) respecting the violation by the employer of its duty
to bargain collectively.
2. PURPOSE.
The obvious purpose of the law is to ensure that the union will negotiate with m
anagement in good faith
and for the purpose of concluding a mutually beneficial agreement regarding the
terms and conditions of their
employment relationship.
IV.
ANTI-FEATHERBEDDING DOCTRINE
1. CONCEPT.
Under Article 249(d), it is ULP for a labor organization, its officers, agents o
r representatives to cause or
attempt to cause an employer to pay or deliver or agree to pay or deliver any mo
ney or other things of value, in the
nature of an exaction, for services which are not performed or not to be perform
ed, including the demand for fee for
union negotiations.
This practice of the union is commonly known as featherbedding as it unduly and un
necessarily
maintains or increases the number of employees used or the amount of time consum
ed to work on a specific job.
This is done by the employees to unduly secure their jobs in the face of technol
ogical advances or as required by
minimum health and safety standards, among other justifications. These featherbe
dding practices have been found to
be wasteful and without legitimate justifications.
2. DEMAND FOR PAYMENT OF STANDBY SERVICES.
A union commits an unfair labor practice under this provision by causing or atte
mpting to cause an
employer to pay or agree to pay for standby services. Payments for standing-by, or
for the substantial equivalent
of standing-by, are not payments for services performed within the meaning of the la
w. When an employer
received a bona-fide offer of competent performance of relevant services, it rem
ains for the employer, through free

and fair negotiation, to determine whether such offer should be accepted and wha
t compensation should be paid for
the work done.
V.
DEMAND OR ACCEPTANCE
OF NEGOTIATION FEES OR ATTORNEYS FEES
1. CONCEPT.
Under Article 249(e), it is ULP for a labor organization, its officers, agents o
r representatives to ask for or
accept negotiation fees or attorneys fees from employers as part of the settlemen
t of any issue in collective
bargaining or any other dispute.
VI.
VIOLATION OF THE CBA
1. CONCEPT.
Under Article 249(f), it is ULP for a labor organization, its officers, agents o
r representatives to violate a
CBA.
2. COUNTERPART PROVISION.
This is the counterpart provision of Article 248(i) regarding the employers act o
f violating a CBA. But it
must be noted that under Article 261 of the Labor Code, violation of the CBA is
generally considered merely a
grievable issue. It becomes an unfair labor practice only if the violation is gr
oss in character which means that there
is flagrant and/or malicious refusal to comply with the economic (as distinguish
ed from non-economic) stipulations
in the CBA. This principle applies not only to the employer but to the labor org
anization as well.
VII.
CRIMINAL LIABILITY FOR ULPs OF LABOR ORGANIZATION
1. PERSONS LIABLE.
Article 249 is explicit in its provision on who should be held liable for ULPs c
ommitted by labor
organizations. It states that only the officers, members of governing boards, re
presentatives or agents or members of
labor associations or organizations who have actually participated in, authorize
d or ratified unfair labor practices
shall be held criminally liable.
C.
RIGHT TO PEACEFUL CONCERTED ACTIVITIES
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2014 BAR EXAMS
1.
FORMS OF CONCERTED ACTIVITIES
1. FORMS OF CONCERTED ACTIVITIES.
There are three (3) forms of concerted activities, namely:
1. Strike;
2. Lockout; and
3. Picketing.
2. STRIKE.
Strike means any temporary stoppage of work by the concerted action of the employe
es as a result of an
industrial or labor dispute.
b. Forms and classification of strikes.
A strike may be classified:
1. As to nature:
a.
Legal strike - one called for a valid purpose and conducted through means allowe
d by law.
b.
Illegal strike - one staged for a purpose not recognized by law or, if for a val
id purpose, it is
conducted through means not sanctioned by law.
c.
Economic strike - one declared to demand higher wages, overtime pay, holiday pay
, vacation pay, etc.
It is one which is declared for the purpose of forcing wage or other concessions
from the employer for
which he is not required by law to grant.
d.
Unfair labor practice (ULP) or political strike - one called to protest against
the employers unfair
labor practices enumerated in Article 248 of the Labor Code, including gross vio
lation of the CBA
under Article 261 and union-busting under Article 263(c) of the Labor Code.
e.
Slowdown strike - one staged without the workers quitting their work but by mere
ly slackening or
reducing their normal work output. It is also called a strike on the installment
plan.
f.
Mass leaves -One where the employees simultaneously filed leaves of absence base
d on various
reasons such as, inter alia, vacation and sick leaves.
g.
Wildcat strike - one declared and staged without the majority approval of the re
cognized bargaining
agent.
h.
Sitdown strike - one where the workers stop working but do not leave their place
of work.
i.
Overtime boycott one involving the act of the workers in refusing to render over
time work in
violation of the CBA, resorted to as a means to coerce the employer to yield to
their demands.
j.
Boycott of products one which involves the concerted refusal to patronize an emp
loyer s goods or
services and to persuade others to a like refusal.
k.
Attempts to damage, destroy or sabotage plant equipment and facilities and simil
ar activities;
l.
The sporting by the workers of closely cropped hair or cleanly shaven heads afte
r their union
filed a notice of strike as a result of a CBA deadlock is a form of illegal stri
ke.
2. As to coverage:
a.
General strike one which covers and extends over a whole province or country. In
this kind of
strike, the employees of various companies and industries cease to work in sympa
thy with striking
workers of another company. It is also resorted to for the purpose of putting pr
essure on the
government to enact certain labor-related measures such as mandated wage increas
es or to cease from
implementing a law which workers consider inimical to their interest. It is also
mounted for purposes
of paralyzing or crippling the entire economic dispensation.
b.
Particular strike one which covers a particular establishment or employer or one
industry involving
one union or federation.
3.
As to purpose:
a.
Economic strike.
b.
Unfair labor practice strike or political strike.
4.
As to the nature of the strikers action:
a.
Partial strike one which consists of unannounced work stoppages such as slowdown
s, walkouts or
unauthorized extension of rest periods.
b.
Sit-down strike.
c.
Slowdown strike.
5.
As to the extent of the interest of strikers:
a.
Primary strike refers to a strike conducted by the workers against their employe
r, involving a labor
dispute directly affecting them.
b.
Secondary strike - refers to a strike staged by the workers of an employer invol
ving an issue which
does not directly concern or affect their relationship but rather, by some circu
mstances affecting the
workers such as when the employer persists to deal with a third person against w
hom the workers
have an existing grievance. Workers stage this kind of strike to secure the econ
omic assistance of
their employer to force the third person to yield to the union on the issues inv
olving it and said third
person.
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2014 BAR EXAMS
c.
Sympathy strike - refers to a strike where the strikers have no demands or griev
ances or labor dispute
of their own against their employer but nonetheless stage the strike for the pur
pose of aiding, directly
or indirectly, other strikers in other establishments or companies, without nece
ssarily having any
direct relation to the advancement of the strikers interest. This is patently an
illegal strike. An
example of a sympathy strike is the welga ng bayan where workers refuse to render
work to join a
general strike which does not involve a labor or industrial dispute between the
strikers and the
employer struck against but it is staged in pursuit of certain ends such as redu
ction in the electric
power rates, increase in the legislated wages, etc.
3. LOCKOUT.
Lockout means the temporary refusal by an employer to furnish work as a result of
an industrial or labor
dispute.
It consists of the following:
1.
Shutdowns;
2.
Mass retrenchment and dismissals initiated by the employer.
3. The employers act of excluding employees who are union members.
4. PICKETING.
Picketing is the act of workers in peacefully marching to and fro before an establ
ishment involved in a
labor dispute generally accompanied by the carrying and display of signs, placar
ds and banners intended to inform
the public about the dispute.
2.
WHO MAY DECLARE A STRIKE OR LOCKOUT?
1. WHO MAY DECLARE A STRIKE?
a. Proper party.
Only a legitimate labor organization may declare a strike. For obvious reason, t
he employer cannot.
b. Basic requirements.
As to the personality of the union, the following requirements should be shown b
efore a strike may be
validly declared and staged:
a. The union should be legitimate. A strike conducted by a union which has not b
een shown to be a
legitimate labor organization is illegal.
b.
In organized establishment where there is a certified bargaining agent, only the
recognized or
certified collective bargaining union can validly stage a strike. A minority uni
on cannot stage a strike.
A strike conducted by a minority union is patently illegal because no labor disp
ute which will
justify the conduct of a strike may exist between the employer and a minority un
ion. To permit the
unions picketing activities would be to flaunt at the will of the majority.
c.
In unorganized establishment where there is no certified bargaining agent, any l
egitimate labor
organization in the establishment may declare a strike but only on the ground of
unfair labor
practice. The only other ground of bargaining deadlock cannot be invoked in supp
ort of a strike in an
unorganized establishment for the simple reason that no CBA can be negotiated an
d concluded absent
such recognized or certified collective bargaining agent. In this situation, the
existence of a bargaining
deadlock is an impossibility.
2. WHO MAY DECLARE A LOCKOUT?
a. Proper party.
Only the employer can declare and stage a lockout. For obvious reason, no union
can.
b. Grounds.
The employer may declare a lockout based on any of the two (2) grounds that may
similarly be invoked by
the union in staging a strike, i.e., (1) bargaining deadlock; and/or (2) unfair
labor practice.
3. WHO MAY STAGE A PICKET?
Although not mentioned in the syllabus, it is important to discuss this point. D
istinctively, in case of
picketing, the absence of employment relationship between the employer and the p
icketers or some of them
does not affect its validity. Picketing, if peacefully carried out, cannot be pr
ohibited even in the absence of
employer-employee relationship. Example: A picket conducted by the employees wit
h the participation of militant
groups like Bayan, Gabriela, etc. will not make the picket illegal.
3.
REQUISITES FOR A VALID STRIKE
1. REQUISITES FOR A VALID STRIKE.
a. Procedural but mandatory requisites.
In accordance with Article 263 and pertinent prevailing jurisprudence, a strike,
in order to be valid and
legal, must conform to the following procedural requisites:
1st requisite -It must be based on a valid and factual ground;
2nd requisite -A notice of strike must be filed with the NCMB-DOLE;
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2014 BAR EXAMS
3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (2

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

II.
SECOND REQUISITE:
FILING OF A NOTICE OF STRIKE
1. NOTICE OF STRIKE.
No labor organization shall declare a strike without first having filed a notice
of strike.
III.
THIRD REQUISITE:
SERVICE OF A 24-HOUR PRIOR NOTICE
In the 2005 case of Capitol Medical Center, Inc. v. NLRC, it was imposed as addi
tional requisite that a
24-hour notice must be served to the NCMB-DOLE prior to the taking of the strike
vote by secret balloting,
informing it of the unions decision to conduct a strike vote as well as the date,
place, and time thereof.
IV.
FOURTH REQUISITE:
CONDUCT OF A STRIKE VOTE
1. MAJORITY APPROVAL OF THE STRIKE.
No labor organization shall declare a strike without the necessary strike vote f
irst having been obtained and
reported to the NCMB-DOLE.
A decision to declare a strike must be approved by a majority of the total union
membership in the
bargaining unit concerned, obtained by secret ballot in meetings or referenda ca
lled for that purpose. This process is
called strike vote balloting.
2. PURPOSE.
The purpose of a strike vote is to ensure that the decision to strike broadly re
sts with the majority of the
union members in general and not with a mere minority.
3. DURATION OF THE VALIDITY OF THE MAJORITY APPROVAL OF A STRIKE.
The majority decision to stage a strike is valid for the duration of the dispute
based on substantially the
same grounds considered when the strike vote was taken.
V.
FIFTH REQUISITE:
SUBMISSION OF THE STRIKE VOTE TO NCMB-DOLE
1. PURPOSE FOR REQUIRING A STRIKE VOTE REPORT.
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2014 BAR EXAMS
The evident intention of the law in mandatorily requiring the submission of the
strike vote report is to
afford the NCMB of opportunity to verify the truth and veracity of the majority
vote by the union members in
support of the intended strike.
2. WHEN TO SUBMIT THE STRIKE VOTE REPORT.
The strike vote report should be submitted to the NCMB-DOLE at least seven (7) d
ays before the actual
staging of the intended strike, subject to the observance of the cooling-off per
iods provided under the law.
VI.
SIXTH REQUISITE:
OBSERVANCE OF THE COOLING-OFF PERIOD
1. GENERAL RULE.
The cooling-off periods provided under the law before the intended date of the a
ctual mounting of the strike
are as follows:
1. In case of bargaining deadlock, the cooling-off period is thirty (30) days fr
om the filing of the notice
of strike; or
2. In case of unfair labor practice, the cooling-off period is fifteen (15) days
from the filing of the notice
of strike.
2. EXCEPTION: IN CASE OF UNION-BUSTING.
In case of dismissal from employment of union officers (not ordinary members) du
ly elected in
accordance with the union constitution and by-laws which may constitute union-bu
sting because the existence of
the union is threatened by reason of such dismissal, the 15-day cooling-off peri
od does not apply and the union
may take action immediately after the strike vote is conducted and the results t
hereof duly submitted to the regional
branch of the NCMB.
In cases of union-busting, only the 15-day cooling-off period need not be observ
ed; all the other requisites
must be fully complied with.
3. RECKONING OF THE COOLING-OFF PERIODS.
The start of the cooling-off periods should be reckoned from the time the notice
of strike is filed with the
NCMB-DOLE, a copy thereof having been served on the other party concerned.
4. PURPOSE OF THE COOLING-OFF PERIODS.
The purpose of the cooling-off periods is to provide an opportunity for mediatio
n and conciliation of the
dispute by the NCMB-DOLE with the end in view of amicably settling it.
VII.
SEVENTH REQUISITE:
7-DAY WAITING PERIOD OR STRIKE BAN
1. PURPOSE OF THE 7-DAY WAITING PERIOD OR STRIKE BAN.
The seven (7) day waiting period is intended to give the NCMB-DOLE an opportunit
y to verify whether
the projected strike really carries the approval of the majority of the union me
mbers.
2. WAITING PERIOD/STRIKE BAN VS. COOLING-OFF PERIOD.
The 7-day waiting period or strike ban is a distinct and separate requirement fr
om the cooling-off period
prescribed by law. The latter cannot be substituted for the former and vice-vers
a.
The cooling-off period is counted from the time of the filing of the notice of s
trike. The 7-day waiting
period/strike ban, on the other hand, is reckoned from the time the strike vote
report is submitted to the NCMBDOLE.
Consequently, a strike is illegal for failure to comply with the prescribed mand
atory cooling-off period and
the 7-day waiting period/strike ban after the submission of the report on the st
rike vote.
3. BOTH MUST BE COMPLIED WITH SEPARATELY AND DISTINCTLY FROM EACH OTHER.
The requirements of cooling-off period and 7-day waiting period/strike ban must
both be complied with.
The labor union may take the strike vote and report the same to the NCMB-DOLE wi
thin the statutory cooling-off
period. In this case, the 7-day waiting period/strike ban should be counted from
the day following the expiration of
the cooling-off period. A contrary view would certainly defeat and render nugato
ry the salutary purposes behind the
distinct requirements of cooling-off period and the waiting period/strike ban.
Example: In a case where the notice of strike grounded on ULP is filed on Octobe
r 1, 2014, and the strike
vote is taken within the cooling-off period, say, on October 5, 2014 and the str
ike vote report showing majority
support for the intended strike is submitted to the NCMB-DOLE the following day,
October 6, 2014, the question is
when can the union legally stage the strike?
Following the above principle, the answer obviously is on October 24, 2014 or an
y day thereafter. This is
so because the 15-day cooling-off period for ULP expires on October 16 and addin
g the 7-day strike ban which
should be counted from the day following the expiration of the cooling-off period
, the 7th day would be on
October 23, 2014. Obviously, the strike cannot be conducted on the 7th day but r
ather after the lapse thereof; hence,
it is only on October 24, 2014 and onwards that the union may lawfully conduct t
he strike.
4. SOME PRINCIPLES ON COOLING-OFF PERIOD AND 7-DAY WAITING PERIOD.

Deficiency of even one (1) day of the cooling-off period and 7-day strike ban is
fatal.
One-day strike without complying with the 7-day strike ban is illegal.
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2014 BAR EXAMS
4.
REQUISITES FOR A VALID LOCKOUT
1. SUBSTANTIALLY SIMILAR REQUISITES AS IN STRIKE.
With a slight, insignificant variation, the procedural but mandatory requisites
for a valid strike discussed
above are substantially similar to those applicable for valid lockout. For purpo
ses of ease and clarity, the same are
presented as follows:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of lockout must be filed with the NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (2

4) hours prior to the
taking of the lockout vote by secret balloting, informing said office of the dec
ision to conduct a lockout
vote, and the date, place, and time thereof;
4th requisite - A lockout vote must be taken where a majority of the members of
the Board of Directors
of the corporation or association or of the partners in a partnership obtained b
y secret ballot in a meeting
called for the purpose, must approve it;
5th requisite - A lockout vote report should be submitted to the NCMB-DOLE at le

ast seven (7) days
before the intended date of the lockout;
6th
requisite - The cooling-off period of 15 days, in case of unfair labor practices
of the labor
organization, or 30 days, in case of collective bargaining deadlock, should be f
ully observed; and
7th requisite - The 7-day waiting period/lockout ban reckoned after the submissi
on of the lockout vote
report to the NCMB-DOLE should also be fully observed in all cases.
5.
REQUISITES FOR LAWFUL PICKETING
1. THE REQUISITES FOR A VALID STRIKE ARE NOT APPLICABLE TO PICKETING.
The seven (7) requisites for a valid strike discussed above do not apply to pick
eting.
2. REQUISITES FOR LAWFUL PICKETING.
The most singular requirement to make picketing valid and legal is that it shoul
d be peacefully conducted.
Based on the foregoing provision, the requisites may be summed up as follows:
1. The picket should be peacefully carried out;
2. There should be no act of violence, coercion or intimidation attendant theret
o;
3. The ingress to (entrance) or egress from (exit) the company premises should n
ot be obstructed; and
4. Public thoroughfares should not be impeded.
3. RIGHT TO PICKET IS PROTECTED BY THE CONSTITUTION AND THE LAW.
Unlike a strike which is guaranteed under the Constitutional provision on the ri
ght of workers to conduct
peaceful concerted activities under Section 3, Article XIII thereof, the right t
o picket is guaranteed under the
freedom of speech and of expression and to peaceably assemble to air grievances
under Section 4, Article III
(Bill of Rights) thereof.
4. EFFECT OF THE USE OF FOUL LANGUAGE DURING THE CONDUCT OF THE PICKET.
In the event the picketers employ discourteous and impolite language in their pi
cket, such may not result in,
or give rise to, libel or action for damages.
5. PICKETING VS. STRIKE.
(a) To strike is to withhold or to stop work by the concerted action of employee
s as a result of an industrial
or labor dispute. The work stoppage may be accompanied by picketing by the strik
ing employees outside of the
company compound.
(b) While a strike focuses on stoppage of work, picketing focuses on publicizing
the labor dispute and its
incidents to inform the public of what is happening in the company being pickete
d.
(c) A picket simply means to march to and fro in front of the employers premises,
usually accompanied by
the display of placards and other signs making known the facts involved in a lab
or dispute. It is but one strike
activity separate and different from the actual stoppage of work.
Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA). -While th
e right of employees
to publicize their dispute falls within the protection of freedom of expression
and the right to peaceably assemble to
air grievances, these rights are by no means absolute. Protected picketing does
not extend to blocking ingress to
and egress from the company premises. That the picket was moving, was peaceful a
nd was not attended by
actual violence may not free it from taints of illegality if the picket effectiv
ely blocked entry to and exit from
the company premises.
6.
In
es
be
WHEN PICKET CONSIDERED A STRIKE.

distinguishing between a picket and a strike, the totality of the circumstanc
obtaining in a case should
taken into account.
Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils., Inc. Petitioners contend
that what they conducted was a mere picketing and not a strike. In disagreeing t
o this contention, the High Court
emphasized that it is not an issue in this case that there was a labor dispute b
etween the parties as petitioners had
notified the respondent of their intention to stage a strike, and not merely to
picket. Petitioners insistence to stage a
strike is evident in the fact that an amended notice of strike was filed even as
respondent moved to dismiss the first
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2014 BAR EXAMS
notice. The basic elements of a strike are present in this case: 106 members of
petitioner Union, whose respective
applications for leave of absence on September 21, 1999 were disapproved, opted
not to report for work on said
date, and gathered in front of the company premises to hold a mass protest actio
n. Petitioners deliberately absented
themselves and instead wore red ribbons and carried placards with slogans such a
s: YES KAMI SA STRIKE,
PROTESTA KAMI, SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN, CBA-WAG BABOYIN,
STOP UNION BUSTING. They marched to and fro in front of the companys premises durin
g working
hours. Thus, petitioners engaged in a concerted activity which already affected
the companys operations. The mass
concerted activity obviously constitutes a strike. Moreover, the bare fact that
petitioners were given a Mayors
permit is not conclusive evidence that their action/activity did not amount to a
strike. The Mayors description of
what activities petitioners were allowed to conduct is inconsequential. To repea
t, what is definitive of whether the
action staged by petitioners is a strike and not merely a picket is the totality
of the circumstances surrounding the
situation.
6.
ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR CERTIFICATION OF
THE LABOR DISPUTE TO THE NLRC FOR COMPULSORY ARBITRATION
1. WHEN DOLE SECRETARY MAY ASSUME OR CERTIFY A LABOR DISPUTE.
Article 263(g) of the Labor Code provides that when in the opinion of the DOLE S
ecretary, the labor
dispute causes or will likely to cause a strike or lockout in an industry indisp
ensable to the national interest,
he is empowered to do either of 2 things:
1. He may assume jurisdiction over the labor dispute and decide it himself; or
2. He may certify it to the NLRC for compulsory arbitration, in which case, it w
ill be the NLRC which
shall hear and decide it.
This power may be exercised by the DOLE Secretary even before the actual staging
of a strike or
lockout since Article 263(g) does not require the existence of a strike or locko
ut but only of a labor dispute
involving national interest.
2. WHAT CONSTITUTES A NATIONAL INTEREST CASE?
The Labor Code vests in the DOLE Secretary the discretion to determine what indu
stries are indispensable
to the national interest. Accordingly, upon the determination by the DOLE Secret
ary that such industry is
indispensable to the national interest, he has authority to assume jurisdiction
over the labor dispute in the said
industry or certify it to the NLRC for compulsory arbitration.
Past issuances of the DOLE Secretary have not made nor attempted to mention spec
ifically what the
industries indispensable to the national interest are. It was only in Department
Order No. 40-H-13, Series of 2013,
that certain industries were specifically named, thus:
Section 16. Industries Indispensable to the National Interest. For the guidance o
f the
workers and employers in the filing of petition for assumption of jurisdiction,
the following
industries/services are hereby recognized as deemed indispensable to the nationa
l interest:
a.
Hospital sector;
b. Electric power industry;
c.
Water supply services, to exclude small water supply services such as bottling a
nd
refilling stations;
d.
Air traffic control; and
e.
Such other industries as may be recommended by the National Tripartite Industria
l
Peace Council (TIPC).
Obviously, the above enumerated industries are not exclusive as other industries
may be considered
indispensable to the national interest based on the appreciation and discretion
of the DOLE Secretary or as may be
recommended by TIPC.
3. DIFFERENT RULE ON STRIKES AND LOCKOUTS IN HOSPITALS, CLINICS AND MEDICAL
INSTITUTIONS.
As a general rule, strikes and lockouts in hospitals, clinics and similar medica
l institutions should be
avoided.
In case a strike or lockout is staged, it shall be the duty of the striking unio
n or locking-out employer to
provide and maintain an effective skeletal workforce of medical and other health
personnel whose movement and
services shall be unhampered and unrestricted as are necessary to insure the pro
per and adequate protection of the
life and health of its patients, most especially emergency cases, for the durati
on of the strike or lockout.
The DOLE Secretary may immediately assume, within twenty four (24) hours from kn
owledge of the
occurrence of such a strike or lockout, jurisdiction over the same or certify it
to the NLRC for compulsory
arbitration.
4. SOME PRINCIPLES ON ASSUMPTION/CERTIFICATION POWER OF THE DOLE SECRETARY.
Prior notice and hearing are not required in the issuance of the assumption or c
ertification order.
The DOLE Secretary may seek the assistance of law enforcement agencies like the
Philippine National Police to

ensure compliance with the provision thereof as well as with such orders as he m
ay issue to enforce the same.
5. RETURN-TO-WORK ORDER.
a. It is always part of assumption/certification order even if not expressly sta
ted therein.
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2014 BAR EXAMS
The moment the DOLE Secretary assumes jurisdiction over a labor dispute involvin
g national interest or
certifies it to the NLRC for compulsory arbitration, such assumption or certific
ation has the effect of automatically
enjoining the intended or impending strike or, if one has already been commenced
, of automatically prohibiting its
continuation. The mere issuance of an assumption or certification order automati
cally carries with it a return-towork
order, even if the directive to return to work is not expressly stated therein.
It is thus not necessary for the
DOLE Secretary to issue another order directing the strikers to return to work.
It is error therefore for striking workers to continue with their strike allegin
g absence of a return-to-work
order since Article 263(g) is clear that once an assumption/certification order
is issued, strikes are enjoined or, if one
has already taken place, all strikers should immediately return to work.
b. Nature of return-to-work order.
Return-to-work order is compulsory and immediately executory in character. It sh
ould be strictly
complied with by the parties even during the pendency of any petition questionin
g its validity in order to maintain
the status quo while the determination is being made. Filing of a motion for rec
onsideration does not affect the
enforcement of a return-to-work order which is immediately executory.
c. Some principles on return-to-work order.
The issue of legality of strike is immaterial in enforcing the return-to-work or

der.
Upon assumption or certification, the parties should revert to the status quo an
te litem which refers to
the state of things as it was before the labor dispute or the state of affairs e
xisting at the time of the filing
of the case. It is the last actual, peaceful and uncontested status that precede
d the actual controversy.
To implement the return-to-work order, the norm is actual reinstatement. However

, payroll
reinstatement in lieu of actual reinstatement may properly be resorted to when s
pecial circumstances
exist that render actual reinstatement impracticable or otherwise not conducive
to attaining the purposes
of the law.
Example:
University of Sto. Tomas v. NLRC, where the teachers ordered to return to work c
ould not be given
back their academic assignments since the return-to-work order of the DOLE Secre
tary was issued in the
middle of the first semester of the academic year. The Supreme Court affirmed th
e validity of the payroll
reinstatement order of the NLRC and ruled that the NLRC did not commit grave abu
se of discretion in
providing for the alternative remedy of payroll reinstatement. It observed that
the NLRC was only trying
its best to work out a satisfactory ad hoc solution to a festering and serious p
roblem.
7.
NATURE OF ASSUMPTION ORDER
OR CERTIFICATION ORDER
1. A POLICE POWER MEASURE.
The power to issue assumption or certification orders is an extraordinary author
ity granted to the
President and to his alter ego, the DOLE Secretary, the exercise of which should
be strictly limited to national
interest cases. It is in the nature of a police power measure. This is done for
the promotion of the common good
considering that a prolonged strike or lockout can be inimical to the national e
conomy.
8.
EFFECT OF DEFIANCE OF
ASSUMPTION OR CERTIFICATION ORDERS
1. DEFIANCE OF THE ORDER, A VALID GROUND TO DISMISS.
The defiance by the union, its officers and members of the Labor Secretary s ass
umption of jurisdiction or
certification order constitutes a valid ground for dismissal.
The following are the justifications:
1. A strike that is undertaken after the issuance by the DOLE Secretary of an as
sumption or certification
order becomes a prohibited activity and thus illegal. The defiant striking union
officers and
members, as a result, are deemed to have lost their employment status for having
knowingly
participated in an illegal strike.
2. From the moment a worker defies a return-to-work order, he is deemed to have
abandoned his job.
3. By so defying, the workers have forfeited their right to be readmitted to wor
k.
2. ALL DEFIANT STRIKERS, REGARDLESS OF WHETHER THEY ARE OFFICERS OR ORDINARY
MEMBERS, ARE DEEMED DISMISSED.
Once the DOLE Secretary assumes jurisdiction over a labor dispute or certifies i
t to the NLRC for
compulsory arbitration, such jurisdiction should not be interfered with by the a
pplication of the coercive processes
of a strike or lockout. Any defiance thereof is a valid ground for the loss of e
mployment status.
3. PERIOD OF DEFIANCE OF THE RETURN-TO-WORK ORDER, NOT MATERIAL.
The length of time within which the return-to-work order was defied by the strik
ers is not significant in
determining their liability for the legal consequences thereof. The following ca
ses are illustrative of this rule:
a. University of San Agustin Employees Union-FFW v. The CA. - The period of defia
nce was less than
nine (9) hours from 8:45 a.m. to 5:25 p.m. on September 19, 2003.
b. Federation of Free Workers v. Inciong. - The period of defiance was only nine
(9) days.
4. SOME PRINCIPLES ON DEFIANCE OF THE ASSUMPTION/CERTIFICATION ORDER.
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2014 BAR EXAMS
The assumption/certification order may be served at any time of the day or night
.
No practice of giving 24 hours to strikers within which to return to work. There

is no law or jurisprudence
recognizing this practice.
The defiant strikers could be validly replaced.
The refusal to acknowledge receipt of the assumption/certification orders and ot

her processes is an apparent
attempt to frustrate the ends of justice, hence, invalid. The union cannot be al
lowed to thwart the efficacy of the
said orders issued in the national interest through the simple expediency of ref
using to acknowledge receipt
thereof.
9.
ILLEGAL STRIKE
1. WHEN IS A STRIKE CONSIDERED ILLEGAL?
A strike is illegal if it is declared and staged:
1) Without complying with the procedural but mandatory requisites (See 7 requisi
tes above).
2) For unlawful purpose such as to compel the dismissal of an employee or to for
ce recognition of the
union or for trivial and puerile purpose or to circumvent contracts and judicial
orders.
3) Based on non-strikeable or invalid grounds such as:
a) Inter-union or intra-union disputes.
b) Simple violation of CBA in contrast to gross violation thereof which is deeme
d ULP.
c) Violation of labor standards.
d) Legislated wage orders (wage distortion).
4) Without first having bargained collectively.
5) In violation of the no strike, no lockout clause in the CBA.
6) Without submitting the issues to the grievance machinery or voluntary arbitra
tion or failing to exhaust
the steps provided therein.
7) While conciliation and mediation proceeding is on-going at the NCMB.
8) Based on issues already brought to voluntary or compulsory arbitration.
9) During the pendency of a case involving the same ground/s cited in the notice
of strike.
10) In defiance of an assumption or certification or return-to-work order.
11) In violation of a temporary restraining order or an injunction order.
12) After the conversion of the notice of strike into a preventive mediation cas
e.
13) Against the prohibition by law.
14) By a minority union.

15) By an illegitimate union.
16) By dismissed employees.
17) In violation of the company code of conduct which prohibits inciting or parti
cipating in riots,
disorders, alleged strikes or concerted actions detrimental to [Toyotas] interest
, The penalty for
which is dismissal.
18) As protest rallies in front of government offices such as in the following c
ases:
Toyota Motor Phils. Corp. Workers Association [TMPCWA] v. NLRC, where the Suprem
e Court
ruled that the protest rallies staged by the employees from February 21 to 23, 2
001 in front of the
offices of the Bureau of Labor Relations (BLR) and the DOLE Secretary constitute
illegal strike and
not legitimate exercise of their right to peaceably assemble and petition the go
vernment for redress of
grievances. It was illegal for having been undertaken without satisfying the man
datory pre-requisites
for a valid strike under Article 263 of the Labor Code.
The ruling in Toyota was cited in Solidbank Corporation v. Gamier, as basis in d
eclaring the
protest action of the employees of petitioner Solidbank which was staged in fron
t of the Office of the
DOLE Secretary in Intramuros, Manila, as constitutive of illegal strike since it
paralyzed the
operations of the bank. The protest action in this case was conducted because of
the CBA deadlock.
19) As welga ng bayan which is in the nature of a general strike as well as an e
xtended sympathy strike.
(a)
LIABILITY OF UNION OFFICERS
(b)
LIABILITY OF ORDINARY WORKERS
These two topics will be discussed jointly because of their close interrelation.
1. PARTICIPATION IN LAWFUL STRIKE.
An employee who participates in a lawful strike is not deemed to have abandoned
his employment. Such
participation should not constitute sufficient ground for the termination of his
employment even if a replacement has
already been hired by the employer during such lawful strike.
2. PARTICIPATION IN ILLEGAL STRIKE.
a. Distinction in the liability between union officers and ordinary union member
s.
1. Union officers.
The mere finding or declaration of illegality of the strike will result in the t
ermination of all union
officers who knowingly participated in the illegal strike. Unlike ordinary membe
rs, it is not required, for purposes
of termination, that the officers should commit an illegal act during the strike
.
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2014 BAR EXAMS
However, absent any showing that the employees are union officers, they cannot b
e dismissed based
solely on the illegality of the strike.
To illustrate how the knowing participation of union officers may be ascertained a
nd established, the
following factors were taken into account in another 2011 case, Abaria v. NLRC,
which led to the declaration that
they knowingly participated in the illegal strike:
(1) Their persistence in holding picketing activities despite the declaration by
the NCMB that their union
was not duly registered as a legitimate labor organization and notwithstanding t
he letter from the federations legal
counsel informing them that their acts constituted disloyalty to the national fe
deration; and
(2) Their filing of the notice of strike and conducting a strike vote despite th
e fact that their union has no
legal personality to negotiate with their employer for collective bargaining pur
poses.
2. Ordinary union members.
The mere finding or declaration of illegality of a strike will not result in ter
mination of ordinary union
members. For an ordinary union member to suffer termination, it must be shown by
clear evidence that he has
committed illegal acts during the strike.
b. Reason for the distinction.
The reason for this distinction is that the union officers have the duty to guid
e their members to respect the
law. If instead of doing so, the officers urged the members to violate the law a
nd defy the duly constituted
authorities, their dismissal from the service is a just penalty or sanction for
their unlawful act. Their responsibility as
main players in an illegal strike is greater than that of the ordinary union mem
bers and, therefore, limiting the
penalty of dismissal only to the former for their participation in an illegal st
rike is in order.
c. Some principles on illegality of a strike.
The fact that the employees are signatories to the CBA does not in itself suffic
iently establish their
status as union officers during the illegal strike. Neither were their active ro
les during the bargaining
negotiations be considered as evidence of their being union officers.
Only the union officers during the period of illegal strike are liable. If the e
mployees acted as
union officers after the strike, they may not be held liable and, therefore, cou
ld not be terminated in
their capacity as such.
Shop stewards are union officers. Hence, they should be terminated upon the decl
aration of the
illegality of the strike.
Union officers may be dismissed despite the fact that the illegal strike was sta
ged only for 1 day
or even for less than 10 hours. This holds true in cases of defiance of the assu
mption/ certification
order issued in national interest cases.
If the dispositive portion of the decision failed to mention the names of union
officers, resort
should be made to the text of the decision.
No wholesale dismissal of strikers allowed. The employer cannot just unceremonio

usly dismiss a
hundred of its employees in the absence of clear and convincing proof that these
people were indeed
guilty of the acts charged and then, afterwards, go to court to seek validation
of the dismissal it
whimsically executed. That certainly cannot be allowed.
3. PARTICIPATION IN THE COMMISSION OF ILLEGAL ACTS DURING A STRIKE.
a. Legality or illegality of strike, immaterial.
As far as liability for commission of illegal acts during the strike is concerne
d, the issue of legality or
illegality of the strike is irrelevant. As long as the union officer or member c
ommits an illegal act in the course
of the strike, be it legal or illegal, his employment can be validly terminated.
b. Meaning of illegal acts.
The term illegal acts under Article 264(a) may encompass a number of acts that vio
late existing labor or
criminal laws, such as the following:
(1) Violation of Article 264(e) of the Labor Code which provides that [n]o person
engaged in picketing
shall commit any act of violence, coercion or intimidation or obstruct the free
ingress to or egress from
the employers premises for lawful purposes, or obstruct public thoroughfares.
(2)
Commission of crimes and other unlawful acts in carrying out the strike.
(3) Violation
of any order, prohibition, or injunction issued by the DOLE Secretary or NLRC in
connection with the assumption of jurisdiction or certification order under Arti
cle 263(g) of the Labor
Code.
This enumeration is not exclusive as jurisprudence abounds where the term illegal
acts has been
interpreted and construed to cover other breaches of existing laws.
Liability for illegal acts should be determined on an individual basis. For this
purpose, the individual
identity of the union members who participated in the commission of illegal acts
may be proved thru affidavits and
photographs. Simply referring to them as strikers, or complainants in this case is n
ot enough to justify
their dismissal.
d.Some principles on commission of illegal acts in the course of the strike.
Only members who are identified as having participated in the commission of ille
gal acts are liable.
Those who did not participate should not be blamed therefor.
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2014 BAR EXAMS
To effectively hold ordinary union members liable, those who participated in the
commission of illegal
acts must not only be identified but the specific illegal acts they each committ
ed should be
described with particularity.
If violence was committed by both employer and employees, the same cannot be cit
ed as a ground to
declare the strike illegal.
(c)
LIABILITY OF EMPLOYER
I.
LIABILITY OF EMPLOYER IN CASE OF STRIKE
1. LIABILITY FOR REINSTATEMENT OF STRIKERS.
a. Reinstatement, when proper.
Reinstatement (without backwages) of ordinary rank-and-file union members who di
d not participate in
the commission of illegal acts during the conduct of the illegal strike may be o
rdered.
b. No reinstatement for strikers who committed illegal acts.
The strikers who committed illegal acts during and in the course of a strike may
be terminated. They are
not entitled to be reinstated. Additionally, they may be held criminally liable
therefor.
c. Strikers who failed to return to work forfeit reinstatement.
Strikers who failed to report for work without proper justification and despite
the order reinstating them to
their job are deemed to have forfeited their right to reinstatement.
d.Employer who fails to reinstate strikers who were ordered reinstated by the La
bor Arbiter is liable
to pay them backwages reckoned from Labor Arbiters issuance of the reinstatement
order up to
its reversal by the NLRC.
2. SEPARATION PAY IN LIEU OF REINSTATEMENT IN STRIKE CASES.
a. Separation pay in lieu of reinstatement, when proper.
In strike cases, the award of separation pay in lieu of reinstatement is proper
only when the strikers did not
participate in the commission of illegal acts in the course thereof.
3. BACKWAGES IN STRIKE CASES.
a. If the strike is illegal, no backwages should be paid.
Thus, in the case of Arellano University Employees and Workers Union v. CA, wher
e the strike was
declared illegal, petitioner-union members who were found not to have participat
ed in the commission of illegal acts
during the strike were ordered reinstated to their former positions but without
backwages. If reinstatement is no
longer possible, they should receive separation pay of one (1) month for every y
ear of service in accordance with
existing jurisprudence. With respect to the union officers, their mere participa
tion in the illegal strike warrants their
dismissal.
(d)
WAIVER OF ILLEGALITY OF STRIKE
1.
VOLUNTARY REINSTATEMENT CONSTITUTES A WAIVER OF THE ILLEGALITY OF THE
STRIKE.
In Citizens Labor Union v. Standard Vacuum Oil Co., the act of the employer in i
nviting the workers to
return to their posts without making any reference to the pending case involving
the issue of the illegality of the
strike or imposing any condition or alteration of the terms of their employment
was deemed a waiver of its right to
consider the strikers as wrongdoers. More so in this case when such invitation w
as accepted by the strikers. By said
act, the parties may be said to have both abandoned their original positions and
come to a virtual compromise to
resume unconditionally their former relations.
10.
INJUNCTIONS
I.
INJUNCTION IN PICKETING, STRIKE OR LOCKOUT CASES
1. PROHIBITION ON INJUNCTION AGAINST THE CONDUCT OF STRIKES AND LOCKOUTS.
As a general rule, strikes and lockouts that are validly declared enjoy the prot
ection of the law and cannot
be enjoined unless illegal acts are committed or threatened to be committed in t
he course thereof. In the case of
strikes, this policy applies even if the strike appears to be illegal in nature.
The rationale for this policy is the
protection extended to the right to strike under the Constitution and the law. I
t is basically treated as a weapon that
the law guarantees to employees for the advancement of their interest and for th
eir protection.
2. EXCEPTIONS WHEN THE STRIKE ITSELF MAY BE ENJOINED.
However, in some cases, injunctions issued to enjoin the conduct of the strike i
tself and not only the
commission of illegal or prohibited acts in the course thereof, were held to be
valid.
For instance, in San Miguel Corporation v. NLRC, the Supreme Court ruled that in
junction may be
issued not only against the commission of illegal acts in the course of the stri
ke but against the strike itself because
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2014 BAR EXAMS
the notice of strike filed by the union has been converted into a preventive med
iation case. Having been so
converted, a strike can no longer be staged based on said notice. Upon such conv
ersion, the legal effect is that there
is no more notice of strike to speak of.
In the earlier case of San Miguel Corporation v. NLRC, the Supreme Court ruled t
hat the NLRC
committed grave abuse of discretion when it denied the petition for injunction t
o restrain the union from declaring a
strike based on non-strikeable grounds.
3. REGULAR COURTS ARE PROHIBITED FROM ISSUING INJUNCTION AGAINST STRIKES OR
LOCKOUT.
The cases cited above involve the issuance of restraining order or injunction by
the NLRC pursuant to the
exercise of its injunctive power. In contrast, regular courts are absolutely pro
hibited to grant any injunctive relief in
cases of strikes or lockouts.
II.
INJUNCTION IN PICKETING CASES
1. PROHIBITION ON INJUNCTION AGAINST PEACEFUL PICKETING.
As a general rule, injunction cannot be issued against the conduct of picketing
by the workers. Under our
constitutional set up, picketing is considered part of the freedom of speech dul
y guaranteed by the Constitution.
However, excepted from this legal proscription are the situations mentioned belo
w.
2. EXCEPTIONS.
Under the following circumstances, picketing may be enjoined by the NLRC:
(1) Where picketing is carried out through the use of illegal means;
(2) Where picketing involves the use of violence and other illegal acts;
(3) Where picketing affects the rights of third parties and injunction becomes n
ecessary to protect such
rights.
(b)
INNOCENT BYSTANDER RULE
1. WHEN INJUNCTION ON PICKETING IS ALLOWED THROUGH THE REGULAR COURTS AND
NOT THROUGH THE NLRC.
In situations where the picket affects not only the employer but also the busine
ss operations of other
establishments owned by third parties, an injunction may be secured by the latte
r from the regular courts to enjoin
the picket under the Innocent Bystander Rule. Under this rule, the third-party emp
loyers or innocent
bystanders who have no employer-employee relationship with the picketing strikers
, may apply for injunction with
the regular courts (not with the NLRC) to enjoin the conduct of the picket.
Because of the absence of such employer-employee relationship, the NLRC cannot e
ntertain such
application for injunction from innocent bystanders. Only the employer of the pick
eters can apply for injunctive
relief from the NLRC.
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2014 BAR EXAMS
TOPIC NO. 8
PROCEDURE AND JURISDICTION
PRELIMINARY CONSIDERATIONS
ON PROCEDURE AND JURISDICTION
1. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
The existence of employer-employee relationship between the parties-litigants, o
r a reasonable causal
connection to such relationship is a jurisdictional pre-requisite for the exerci
se of jurisdiction over a labor dispute
by the Labor Arbiters or any other labor tribunals.
2. THE CAUSE OF ACTION MUST ARISE FROM THE EMPLOYER-EMPLOYEE RELATIONSHIP.
Even if there is employer-employee relationship, if the cause of action did not
arise out of or was not
incurred in connection with the employer-employee relationship, Labor Arbiters a
nd other labor tribunals have no
jurisdiction thereover.
Actions between employers and employees where the employer-employee relationship
is merely incidental
are within the exclusive original jurisdiction of the regular courts.
3. REASONABLE CAUSAL CONNECTION RULE THE RULE IN CASE OF CONFLICT OF
JURISDICTION BETWEEN LABOR COURT AND REGULAR COURT.
Under this rule, if there is a reasonable causal connection between the claim as
serted and the employeremployee relations, then the case is within the jurisdiction of labor courts.
In the absence of such nexus, it is the regular courts that have jurisdiction.
4. THE POWER TO DETERMINE EXISTENCE OF EMPLOYMENT RELATIONSHIP.
Under labor laws, it is not only the Labor Arbiters and the NLRC who/which are v
ested with the power to
determine the existence of employer-employee relationship.
The following have also the power to make similar determination:
(1) The DOLE Secretary and the DOLE Regional Directors, to the exclusion of the
Labor Arbiter and
the NLRC;
(2) The Med-Arbiter;
(3) The Social Security Commission (SSC).
5. IN CASES FILED BY OFWs, LABOR ARBITERS MAY EXERCISE JURISDICTION EVEN ABSENT
THE EMPLOYMENT RELATIONSHIP.
In Santiago v. CF Sharp Crew Management, Inc., it was held that a seafarer who h
as already signed a
POEA-approved employment contract but was not deployed overseas and, therefore,
there is no employer-employee
relationship, may file his monetary claims case with the Labor Arbiter. This is
because the jurisdiction of Labor
Arbiters is not limited to claims arising from employer-employee relationships.

Under Section 10 of R. A. No. 8042
(Migrant Workers and Overseas Filipinos Act of 1995), as amended, the Labor Arbi
ter may exercise jurisdiction
over the claims of OFWs arising out of an employer-employee relationship or by v
irtue of any law or contract
involving Filipino workers for overseas deployment, including claims for actual,
moral, exemplary and other
forms of damage. (See also the 2012 case of Bright Maritime Corporation v. Fanto
nial).
6. LABOR ARBITERS HAVE JURISDICTION EVEN IF THE CASE IS FILED BY THE HEIRS OF TH
E
OFW.
This was the ruling in Medline Management, Inc. v. Roslinda. As heirs, the wife
and son of Juliano
Roslinda, the deceased OFW, have the personality to file the claim for death com
pensation, reimbursement of
medical expenses, damages and attorney s fees before the Labor Arbiter of the NL
RC.
7. LABOR DISPUTES, NOT SUBJECT TO BARANGAY CONCILIATION.
Labor cases are not subject to the conciliation proceedings prescribed under P.D
. No. 1508 requiring the
submission of disputes before the Barangay Lupong Tagapayapa prior to their fili
ng with the court or other
government offices. Instead of simplifying labor proceedings designed at expedit
ious settlement or referral to the
proper courts or offices to decide them finally, the conciliation of the issues
before the Barangay Lupong
Tagapayapa would only duplicate the conciliation proceedings and unduly delay th
e disposition of labor cases.
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2014 BAR EXAMS
A.
LABOR ARBITER
1. THE LABOR ARBITER.
The Labor Arbiter is an official in the Arbitration Branch of the National Labor
Relations Commission
(NLRC) who hears and decides cases falling under his original and exclusive juri
sdiction as provided by law.
2. LABOR ARBITERS HAVE NO INJUNCTIVE POWER; ONLY THE COMMISSION (NLRC) HAS
THIS POWER.
Previously, Labor Arbiters are possessed of injunctive power. This grant of inju
nctive power, however, was
deleted in recent NLRC Rules. The Labor Arbiter thus has no more injunctive powe
r. Only the Commission (NLRC)
has that power.
1.
JURISDICTION
1. NATURE OF JURISDICTION OF LABOR ARBITERS - ORIGINAL AND EXCLUSIVE.
The jurisdiction conferred by Article 217 upon the Labor Arbiters is both origin
al and exclusive, meaning,
no other officers or tribunals can take cognizance of, or hear and decide, any o
f the cases therein enumerated.
2. EXCEPTIONS TO THE ORIGINAL AND EXCLUSIVE JURISDICTION OF LABOR ARBITERS.
The following cases are the exceptions when the Labor Arbiters may not exercise
their original and
exclusive jurisdiction:
1.
In assumed cases. When the DOLE Secretary or the President exercises his power u
nder Article 263(g)
of the Labor Code to assume jurisdiction over national interest cases and decide
them himself.
2.
In certified cases. When the NLRC exercises its power of compulsory arbitration
over similar national
interest cases that are certified to it by the DOLE Secretary pursuant to the ex
ercise by the latter of his
certification power under the same Article 263(g).
3.
In cases arising from CBA. - When cases arise from the interpretation or impleme
ntation of collective
bargaining agreements and from the interpretation or enforcement of company pers
onnel policies which
shall be disposed of by the Labor Arbiter by referring the same to the grievance
machinery and
voluntary arbitration, as may be provided in said agreements.
4.
In cases submitted for voluntary arbitration. - When the parties agree to submit
the case to voluntary
arbitration before a Voluntary Arbitrator or panel of Voluntary Arbitrators who,
under Articles 261 and
262 of the Labor Code, are also possessed of original and exclusive jurisdiction
to hear and decide cases
mutually submitted to them by the parties for arbitration and adjudication.
3. RUNDOWN OF ALL CASES FALLING UNDER THE JURISDICTION OF THE LABOR ARBITERS.
More particularly, Labor Arbiters shall have original and exclusive jurisdiction
to hear and decide the
following cases involving all workers, whether agricultural or non-agricultural:
1. Under Article 217 of the Labor Code:
(a) Unfair labor practice cases;
(b) Termination disputes (Illegal dismissal cases);
(c) Money claims exceeding P5,000.00.
(d) Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee
relations; and
(e) Cases involving the legality of strikes and lockouts.
NOTE: Claims for employees compensation, SSS, Philhealth (Medicare) and maternit
y benefits do not fall
under the jurisdiction of the Labor Arbiter because these fall under the jurisdi
ction of other government agencies.
2. Under Article 124 of the Labor Code, as amended by R.A. No. 6727:
Disputes involving legislated wage increases and wage distortion in unorganized
establishments not
voluntarily settled by the parties pursuant to R.A. No. 6727.
3. Under Article 128(b) of the Labor Code, as amended by R.A. No. 7730:
Contested cases under the exception clause in Article 128(b) of the Labor Code.
4. Under Article 227 of the Labor Code:
Enforcement of compromise agreements when there is non-compliance by any of the

parties thereto,
pursuant to Article 227 of the Labor Code.
5. Under Article 262-A of the Labor Code:
Issuance of writ of execution to enforce decisions of Voluntary Arbitrators or p

anel of Voluntary
Arbitrators, in case of their absence or incapacity, for any reason.
6. Under Section 10 of R.A. No. 8042, as amended by R.A. No. 10022:
Money claims of OFWs arising out of employer-employee relationship or by virtue

of any law or
contract, including claims death and disability benefits and for actual, moral,
exemplary and other
forms of damages.
7. Other cases as may be provided by law.
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2014 BAR EXAMS
I.
JURISDICTION OVER UNFAIR LABOR PRACTICE CASES
1. SOME PRINCIPLES ON JURISDICTION OVER ULPs.
The Labor Arbiter has jurisdiction over all ULPs whether committed by the employ
ers or the labor
organizations.
The Labor Arbiter has jurisdiction only over the civil aspect of ULP, the crimin
al aspect being lodged with the
regular courts.
II.
JURISDICTION OVER ILLEGAL DISMISSAL CASES
1. SOME PRINCIPLES ON JURISDICTION OVER TERMINATION CASES.
The validity of the exercise of jurisdiction by Labor Arbiters over illegal dism
issal cases is not
dependent on the kind or nature of the ground cited in support of the dismissal;
hence, whether the
dismissal is for just cause or authorized cause, it is of no consequence.
In case of conflict of jurisdiction between Labor Arbiter and the Voluntary Arbi
trator over
termination cases, the formers jurisdiction shall prevail for the following reaso
ns:
(1) Termination of
employment is not a grievable issue that must be submitted to the grievance
machinery or voluntary arbitration for adjudication. The jurisdiction thereover
remains within the
original and exclusive ambit of the Labor Arbiter and not of the Voluntary Arbit
rator.
(2) Even if the CBA provides that termination disputes are grievable, the same i
s merely discretionary
on the part of the parties thereto.
(3) Once there is actual termination, jurisdiction is conferred upon Labor Arbit
ers by operation of law.
(4) Interpretation of CBA and enforcement of company personnel policies are mere
ly corollary to an
illegal dismissal case.
(5) Article 217 is deemed written into the CBA being an intrinsic part thereof.
In other words, the Voluntary Arbitrator will only have jurisdiction over illega
l dismissal cases when
there is express agreement of the parties to the CBA, i.e., the employer and the
bargaining agent, to
submit the termination case to voluntary arbitration. Absent the mutual express
agreement of the parties,
Voluntary Arbitrator cannot acquire jurisdiction over termination cases.
The express agreement must be stated in the CBA or there must be enough evidence
on record
unmistakably showing that the parties have agreed to resort to voluntary arbitra
tion.
III.
JURISDICTION OVER MONEY CLAIMS CASES
1. CLASSIFICATION OF MONEY CLAIMS.
Money claims falling within the original and exclusive jurisdiction of the Labor
Arbiters may be classified
as follows:
1. Any
money claim, regardless of amount, when asserted in an illegal dismissal case (h
ence,
accompanied with a claim for reinstatement). Here, the money claim is but an acc
ompanying remedy
subordinated to the principal cause of action, i.e., illegal dismissal; or
2. Any money claim exceeding the amount of P5,000.00 per claimant.
If the amount does not exceed P5,000.00, it is, under Article 129, the DOLE Regi
onal Director has
jurisdiction to take cognizance thereof.
3. SOME PRINCIPLES ON JURISDICTION OVER MONEY CLAIMS.
Award of statutory benefits even if not prayed for is valid.
Claim for notarial fees by a lawyer employed by a company is within the jurisdic
tion of the Labor Arbiter.
(a)
VERSUS REGIONAL DIRECTOR
1. LABOR ARBITERS HAVE NO JURISDICTION OVER SMALL MONEY CLAIMS LODGED UNDER
ARTICLE 129.
As earlier emphasized, under Article 129 of the Labor Code, DOLE Regional Direct
ors have jurisdiction
over claims amounting to P5,000 or below, provided the following requisites conc
ur:
1. The claim must arise from employer-employee relationship;
2. The claimant does not seek reinstatement; and
3. The aggregate money claim of each employee does not exceed P5,000.00.
2. IN INSPECTION OF ESTABLISHMENT CASES UNDER ARTICLE 128, DOLE REGIONAL
DIRECTORS HAVE JURISDICTION REGARDLESS OF WHETHER OR NOT THE TOTAL AMOUNT
OF CLAIMS PER EMPLOYEE EXCEEDS P5,000.00.
a. Requisites.
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2014 BAR EXAMS
For the valid exercise by the DOLE Secretary or any of his duly authorized repre
sentatives (DOLE
Regional Directors) of the visitorial and enforcement powers provided under Arti
cle 128(b), the following requisites
should concur:
(1) The employer-employee relationship should still exist;
(2) The findings in question were made in the course of inspection by labor insp
ectors; and
(3) The employees have not yet initiated any claim or complaint with the DOLE Re
gional Director under
Article 129, or the Labor Arbiter under Article 217.
3. HOWEVER, JURISDICTION OVER CONTESTED CASES UNDER THE EXCEPTION CLAUSE IN
ARTICLE 128(b) OF THE LABOR CODE INVOLVING INSPECTION OF ESTABLISHMENTS
BELONGS TO THE LABOR ARBITERS AND NOT TO DOLE REGIONAL DIRECTORS.
a. Relation of paragraph (b) of Article 128 to the jurisdiction of Labor Arbiter
s.
The Labor Arbiters have jurisdiction over contested cases under the exception cl
ause in Article 128(b).
which states: xxx. The Secretary or his duly authorized representatives shall iss
ue writs of execution to the
appropriate authority for the enforcement of their orders, except in cases where
the employer contests the findings
of the labor employment and enforcement officer and raises issues supported by d
ocumentary proofs which were not
considered in the course of inspection.
In interpreting the afore-quoted provision of the exception clause, three (3) el
ements must concur to divest
the Regional Directors or their representatives of jurisdiction thereunder, to w
it:
(a) That the employer contests the findings of the labor regulations officer and
raises issues thereon;
(b) That in order to resolve such issues, there is a need to examine evidentiary
matters; and
(c) That such matters are not verifiable in the normal course of inspection.
The 2009 case of Meteoro v. Creative Creatures, Inc., best illustrates the appli
cation of the exception
clause. Here, it was held that the Court of Appeals aptly applied the exception c
lause because at the earliest
opportunity, respondent company registered its objection to the findings of the
labor inspector on the ground that
there was no employer-employee relationship between petitioners and respondent c
ompany. The labor inspector, in
fact, noted in his report that respondent alleged that petitioners were contractu
al workers and/or independent and
talent workers without control or supervision and also supplied with tools and a
pparatus pertaining to their job. In
its position paper, respondent again insisted that petitioners were not its empl
oyees. It then questioned the Regional
Directors jurisdiction to entertain the matter before it, primarily because of th
e absence of an employer-employee
relationship. Finally, it raised the same arguments before the Secretary of Labo
r and the appellate court. It is,
therefore, clear that respondent contested and continues to contest the findings
and conclusions of the labor
inspector. To resolve the issue raised by respondent, that is, the existence of
an employer-employee relationship,
there is a need to examine evidentiary matters.
IV.
JURISDICTION OVER CLAIMS FOR DAMAGES
1. LABOR ARBITERS HAVE JURISDICTION OVER CLAIMS FOR DAMAGES.
It is now a well-settled rule, according to Primero v. Intermediate Appellate Co
urt, that claims for
damages as well as attorneys fees in labor cases are cognizable by the Labor Arbi
ters, to the exclusion of all other
courts. Rulings to the contrary are deemed abandoned or modified accordingly.
2. CLAIMS FOR DAMAGES OF OVERSEAS FILIPINO WORKERS (OFWs).
Claims for actual, moral, exemplary and other forms of damages that may be lodge
d by overseas Filipino
workers are cognizable by the Labor Arbiters.
V.
JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS
JURISDICTIONAL INTERPLAY IN STRIKE OR LOCKOUT CASES
1. A STRIKE OR LOCKOUT IS CROSS-JURISDICTIONAL IN NATURE.
Based on the pertinent provisions of the Labor Code, below is an outline of the
interplay in jurisdiction
among them.
1. Filing of a notice of strike or lockout with NCMB. - A union which intends to
stage a strike or an
employer which desires to mount a lockout should file a notice of strike or noti
ce of lockout, as the case may be,
with the NCMB and not with any other office. It must be noted, however, that the
NCMB, per Tabigue v.
International Copra Export Corporation, is not a quasi-judicial body; hence, the
Conciliators-Mediators of
the NCMB do not have any decision-making power. They cannot issue decisions to r
esolve the issues raised in
the notice of strike or lockout. Their role is confined solely to the conciliati
on and mediation of the said issues,
although they can suggest to the parties that they submit their dispute to volun
tary arbitration through the Voluntary
Arbitrators accredited by the NCMB.
2. Filing of a complaint to declare the illegality of the strike or lockout with
the Labor Arbiter or
Voluntary Arbitrator or panel of Voluntary Arbitrator. -In case a party wants to
have the strike or lockout
declared illegal, a complaint should be filed either with the Labor Arbiter unde
r Article 217(a)(5) of the Labor Code
or, upon mutual agreement of the parties, with the Voluntary Arbitrator or panel
of Voluntary Arbitrators under
Article 262 of the same Code. The issue of illegality of the strike or lockout c
annot be resolved by the ConciliatorsMediators of the NCMB as earlier pointed out and discussed.
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3. Filing of an injunction petition with the Commission (NLRC). - In case illega

l acts violative of
Article 264 are committed in the course of the strike or lockout, a party may fi
le a petition for injunction directly
with the Commission (NLRC) under Article 218(e) of the Labor Code for purposes o
f securing a temporary
restraining order (TRO) and injunction. The Labor Arbiters or Voluntary Arbitrat
ors are not possessed of any
injunctive power under the Labor Code. In other words, the aggrieved party, desp
ite the pendency of the case for the
declaration of the illegality of the strike or lockout with the Labor Arbiter or
Voluntary Arbitrator, as the case may
be, may directly go to the Commission to secure the injunctive relief.
4. Assumption of jurisdiction by the DOLE Secretary. Under Article 263(g) of the
Labor Code, the
DOLE Secretary has the power to assume jurisdiction over labor disputes which, i
n his opinion, may cause or likely
to cause a strike or lockout in industries indispensable to the national interes
t (so-called national interest cases).
Once he makes the assumption, he shall decide all the issues related to the labo
r dispute himself, to the exclusion of
all other labor authorities.
5. Certification of the labor dispute to the NLRC. - Under the same provision of
Article 263(g) of the
Labor Code, the DOLE Secretary has the option of not assuming jurisdiction over
the labor dispute in national
interest cases. Instead, he may certify it to the NLRC for compulsory arbitratio
n, in which case, it will be the NLRC
which shall hear and decide all the issues subject of the certification order.
In case at the time of the said assumption or certification, there is a pending
case before the Labor Arbiter
or Voluntary Arbitrator on the issue of illegality of the strike or lockout, the
same shall be deemed subsumed in the
assumed or certified case. Resultantly, it is no longer the Labor Arbiter or the
Voluntary Arbitrator who should
decide the said case but the DOLE Secretary, in the case of assumed cases, or th
e NLRC, in the case of certified
cases.
6. Assumption of jurisdiction over a national interest case by the President. -T
he President of the
Philippines is not precluded from intervening in a national interest case by exe
rcising himself the powers of his alter
ego, the DOLE Secretary, granted under Article 263(g) by assuming jurisdiction o
ver the same for purposes of
settling or terminating it.
7. Submission of a national interest case to voluntary arbitration. -Despite the
pendency of the
assumed or certified national interest case, the parties are allowed to submit a
ny issues raised therein to voluntary
arbitration at any stage of the proceeding, by virtue of Article 263(h) which pr
ovides that (b)efore or at any stage
of the compulsory arbitration process, the parties may opt to submit their dispu
te to voluntary arbitration.
The foregoing interplay explains why Article 263(i) makes specific reference to
the President of the
Philippines, the Secretary of Labor and Employment, the Commission (NLRC) or the
Voluntary Arbitrator in
connection with the law on strike, lockout and picketing embodied in Article 263
. The only labor official not so
mentioned therein but who has a significant role to play in the interaction of l
abor officials and tribunals in strike or
lockout cases, is the Labor Arbiter. This is understandable in the light of the
separate express grant of jurisdiction to
the Labor Arbiters under Article 217(a)(5) as above discussed.
VI.
JURISDICTION OVER CASES INVOLVING
LEGISLATED WAGE INCREASES AND WAGE DISTORTION
1. CASES IN ORGANIZED ESTABLISHMENTS.
Jurisdiction is with the Voluntary Arbitrator.
2. CASES IN UNORGANIZED ESTABLISHMENTS.
Jurisdiction is with Labor Arbiter.
VII.
JURISDICTION OVER ENFORCEMENT OR ANNULMENT
OF COMPROMISE AGREEMENTS
1. LEGAL BASIS.
Article 227 clearly embodies the following provisions on compromise agreements:
Article 227. Compromise Agreements. - Any compromise settlement, including those
involving
labor standard laws, voluntarily agreed upon by the parties with the assistance
of the Bureau or the regional
office of the Department of Labor, shall be final and binding upon the parties.
The National Labor
Relations Commission or any court shall not assume jurisdiction over issues invo
lved therein except in
case of non-compliance thereof or if there is prima facie evidence that the sett
lement was obtained
through fraud, misrepresentation, or coercion.
Clear from the foregoing provision that, although the compromise agreement may h
ave been entered into by
the parties before the Bureau of Labor Relations (BLR) or the DOLE Regional Offi
ce, it is the Labor Arbiter who
has jurisdiction to take cognizance of the following issues related thereto, to
the exclusion of the BLR and the
DOLE Regional Directors:
(1) To enforce the compromise agreement in case of non-compliance therewith by a
ny of the parties thereto;
or
(2) To
nullify it if there is prima facie evidence that the settlement was obtained thr
ough fraud,
misrepresentation, or coercion.
VIII.
JURISDICTION OVER EXECUTION AND ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS
1. DECISIONS OF VOLUNTARY ARBITRATORS.
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Article 262-A of the Labor Code prescribes the procedures that Voluntary Arbitra
tors or panel of Voluntary
Arbitrators should follow in adjudicating cases filed before them. Once a decisi
on has been rendered in a case and
subsequently becomes final and executory, it may be enforced through the writ of
execution issued by the same
Voluntary Arbitrator or panel of Voluntary Arbitrators who rendered it, addresse
d to and requiring certain public
officers to execute the final decision, order or award.
2. LABOR ARBITERS MAY ISSUE THE WRIT OF EXECUTION.
In situations, however, where the Voluntary Arbitrator or the panel of Voluntary
Arbitrators who rendered
the decision is absent or incapacitated for any reason, Article 262-A grants jur
isdiction to any Labor Arbiter in the
region where the winning party resides, to take cognizance of a motion for the i
ssuance of the writ of execution filed
by such party and accordingly issue such writ addressed to and requiring the pub
lic officers mentioned above to
execute the final decision, order or award of the Voluntary Arbitrator or panel
of Voluntary Arbitrators.
IX.
JURISDICTION OVER CASES OF OVERSEAS FILIPINO WORKERS (OFWs)
1. LABOR ARBITERS HAVE JURISDICTION OVER ALL MONEY CLAIMS OF OFWs.
All claims of OFWs with a sign of peso are cognizable by the Labor Arbiters, inc
luding claims for
disability and death benefits.
2. EXCEPTION: VOLUNTARY ARBITRATORS HAVE JURISDICTION OVER MONEY CLAIMS IF
THERE EXISTS A CBA.
If there is a CBA between the foreign employer and the bargaining union of the O
FWs, the jurisdiction
over monetary claims of OFWs belongs to the Voluntary Arbitrator and not to the
Labor Arbiter.
3. OFW-RELATED CASES OVER WHICH THE POEA, AND NOT THE LABOR ARBITERS, HAS
JURISDICTION.
The Philippine Overseas Employment Administration (POEA) has original and exclus
ive jurisdiction to
hear and decide:
(a)
All cases which are administrative in character, involving or arising out of vio
lation of rules and
regulations relating to licensing and registration of recruitment and employment
agencies or entities,
including refund of fees collected from workers and violation of the conditions
for the issuance of
license to recruit workers.
(b) Disciplinary action cases and other special cases which are administrative i
n character, involving
employers, principals, contracting partners and Filipino migrant workers.

No. 1 above covers recruitment violations or violations of conditions of license
; while No. 2 above involves
(a) disciplinary action cases against foreign principals or employers, and (a) d
isciplinary action cases against landbased OFWs and seafarers.
X.
OTHER ISSUES OVER WHICH LABOR ARBITERS HAVE JURISDICTION
1. JURISDICTION OVER CERTAIN ISSUES AS PROVIDED IN JURISPRUDENCE.
In accordance with well-entrenched jurisprudence, the issues, claims or cases of
the following fall under the
jurisdiction of the Labor Arbiters:
(a)
Employees in government-owned and/or controlled corporations without original ch
arters;
(b) Domestic workers or kasambahay;
(c) Employees of cooperatives;
(d) Counter-claims of employers against employees.
JURISDICTION OVER CASES OF
DOMESTIC WORKERS OR KASAMBAHAY
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdiction if the amount of the claim exceeds P5,000.00;
otherwise, the jurisdiction
is vested with the DOLE Regional Director under Article 129 of the Labor Code.
Incidentally, it is no longer legally correct to use the term domestic servant or h
ousehelper in
reference to a person who performs domestic work. Under R.A. No. 10361, domestic
servant or househelper
should now be referred to as domestic worker or kasambahay.
JURISDICTION OVER CASES OF
EMPLOYEES OF COOPERATIVES
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdiction only over monetary claims and illegal dismiss
al cases involving
employees of cooperatives but not the claims or termination of membership of mem
bers thereof. Cooperatives
organized under R.A. No. 6938, are composed of members; hence, issues on the ter
mination of their membership
with the cooperative do not fall within the jurisdiction of the Labor Arbiters.
Perpetual Help Credit Cooperative, Inc. v. Faburada. -Petitioner in this case co
ntends that the Labor
Arbiter has no jurisdiction to take cognizance of the complaint of private respo
ndents who are not members but
employees of the cooperative. The Supreme Court ruled that there is no evidence
that private respondents are
members of petitioner cooperative and even if they are, the dispute is about pay
ment of wages, overtime pay, rest
day and termination of employment. Under Article 217 of the Labor Code, these di
sputes are within the original and
exclusive jurisdiction of the Labor Arbiters.
In the 2010 case of San Miguel Corp. v. Semillano, petitioner asserts that the p
resent case is outside the
jurisdiction of the labor tribunals because respondent Vicente Semillano is a me
mber of the Alilgilan Multi-Purpose
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2014 BAR EXAMS
Coop (AMPCO), not an employee of petitioner SMC. Petitioner is of the position t

hat the instant dispute is intracooperative
in nature falling within the jurisdiction of the Arbitration Committee of the Co
operative Development
Authority. AMPCO was contracted by petitioner to supply it with workers to perfo
rm the task of segregating bottles,
removing dirt therefrom, filing them in designated places, loading and unloading
the bottles to and from the delivery
trucks, and to perform other tasks as may be ordered by SMCs officers. Semillano,
together with the other
respondents, filed the complaint for regularization with petitioner SMC, contend
ing that AMPCO was a mere laboronly contractor. The High Court declared in this case that AMPCO was a labor-onl
y contractor and consequently
pronounced that all the respondents, including Semillano, were regular employees
of petitioner. On this issue of
jurisdiction, the High Court held that the Labor Arbiter has jurisdiction becaus
e precisely, Semillano has joined the
others in filing this complaint because it is his position that petitioner SMC i
s his true employer and liable for all his
claims under the Labor Code.
JURISDICTION OVER COUNTER-CLAIMS OF EMPLOYERS
1. EMPLOYERS MAY ASSERT COUNTER-CLAIMS AGAINST EMPLOYEES FILED BY THE LATTER
BEFORE THE LABOR ARBITERS.
Almost all labor cases decided by labor courts involve claims asserted by the wo
rkers. The question that
may be propounded is whether the employers can assert counter-claims against the
ir employees before the Labor
Arbiters. The Supreme Court answered this poser in the affirmative.
Baez v. Hon. Valdevilla. - The jurisdiction of Labor Arbiters and the NLRC is com
prehensive enough to
include claims for all forms of damages arising from the employer-employee relati
ons. By this clause, Article 217
should apply with equal force to the claim of an employer for actual damages aga
inst its dismissed employee, where
the basis for the claim arises from or is necessarily connected with the fact of
termination, and should be entered as a
counter-claim in the illegal dismissal case. This is in accord with paragraph 6
of Article 217(a), which covers all
other claims, arising from employer-employee relations.
But such counter-claim, being a factual issue, must be asserted before the Labor
Arbiter; otherwise, it can
no longer be passed upon by a reviewing court.
XI.
ISSUES AND CASES OVER WHICH
LABOR ARBITERS HAVE NO JURISDICTION
1. LABOR ARBITERS HAVE NO JURISDICTION OVER CERTAIN ISSUES AND CASES.

The following issues or cases do not fall under the jurisdiction of Labor Arbite
rs:
(a)
Claims for damages arising from breach of a non-compete clause and other post-em
ployment
prohibitions;
(b) Claims for payment of cash advances, car, appliance and other loans of emplo
yees;
(c) Dismissal of corporate officers and their monetary claims;
(d) Cases involving entities immune from suit;
(e)
Cases falling under the doctrine of forum non conveniens;
(f)
Constitutionality of CBA provisions.
XI-A.
CLAIMS FOR DAMAGES ARISING FROM BREACH OF NON-COMPETE CLAUSE AND OTHER
POST-EMPLOYMENT PROHIBITIONS
1. JURISDICTION IS LODGED WITH THE REGULAR COURTS.
In case of violation of the non-compete clause and similar post-employment bans
or prohibitions, the
employer can assert his claim for damages against the erring employee with the r
egular courts and not with the labor
courts.
XI-B.
EMPLOYERS CLAIMS FOR CASH ADVANCES, CAR, APPLIANCE
AND OTHER PERSONAL LOANS OF EMPLOYEES
1. LABOR ARBITERS HAVE NO JURISDICTION.
With respect to resolving issues involving loans availed of by employees from th
eir employers, it has been
the consistent ruling of the Supreme Court that the Labor Arbiters have no juris
diction thereover but the regular
courts.
Where the claim to the principal relief sought is to be resolved not by referenc
e to the Labor Code or
other labor relations statute or a collective bargaining agreement but by the ge
neral civil law, the jurisdiction over
the dispute belongs to the regular courts of justice and not to the Labor Arbite
r and the NLRC. In such situations,
resolutions of the dispute requires expertise, not in labor management relations
nor in wage structures and other
terms and conditions of employment, but rather in the application of the general
civil law. Clearly, such claims fall
outside the area of competence or expertise ordinarily ascribed to Labor Arbiter
s and the NLRC and the rationale for
granting jurisdiction over such claims to these agencies disappears.
The following loans may be cited:
a.
Cash loans/advances are in the nature of simple collection of a sum of money bro
ught by the employer,
as creditor, against the employee, as debtor. The fact that they were employer a
nd employee at the time

of the transaction does not negate the civil jurisdiction of the trial court. Th
e case does not involve
adjudication of a labor dispute but recovery of a sum of money based on our civi
l laws on obligation
and contract.
b.
Car loans such as those granted to sales or medical representatives by reason of
the nature of their
work. The employers demand for payment of the employees amortizations on their car
loans, or, in the
alternative, the return of the cars to the company, is not a labor, but a civil,
dispute. It involves debtorcreditor relations, rather than employee-employer relations.
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2014 BAR EXAMS
c.
Appliance loans concern the enforcement of a loan agreement involving debtor-cre
ditor relations
founded on contract and do not in any way concern employee relations. As such it
should be
enforced through a separate civil action in the regular courts and not before th
e Labor Arbiter.
d.
Loans from retirement fund also involve the same principle as above; hence, coll
ection therefor may
only be made through the regular courts and not through the Labor Arbiter or any
labor tribunal.
XI-C.
DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS
1. LABOR ARBITERS HAVE NO JURISDICTION.
The dismissal of a director or corporate officer is an intra-corporate dispute c
ognizable by the Regional
Trial Court and not by the Labor Arbiter.
2. MATLING DOCTRINE.
Under this doctrine, the following rules should be observed:
(1) The dismissal of
regular employees falls under the jurisdiction of Labor Arbiters; while that of
corporate officers falls within the jurisdiction of the regular courts.
(2) The term corporate officers refers only to those expressly mentioned in the Co
rporation Code and
By-Laws; all other officers not so mentioned therein are deemed employees.
(3)
Corporate officers are elected or appointed by the directors or stockholders, an
d those who are given
that character either by the Corporation Code or by the corporations by-laws.
(4) The Corporation Code specifically mentions only the following corporate offi
cers, to wit: president,
secretary and treasurer and such other officers as may be provided for in the by
-laws.
(5)
The Board of Directors can no longer create corporate offices because the power
of the Board of
Directors to create a corporate office cannot be delegated. Therefore, the term c
orporate
officers should only refer to the above and to no other. A different interpretati
on can easily leave the
way open for the Board of Directors to circumvent the constitutionally guarantee
d security of tenure of
the employee by the expedient inclusion in the By-Laws of an enabling clause on
the creation of just
any corporate officer position.
(6)
Distinction between a corporate officer and an employee. - An office is created by
the charter of
the corporation and the corporate officer is elected by the directors or stockhold
ers. On the other
hand, an employee occupies no office and generally is employed not by the action o
f the directors or
stockholders but by the managing officer of the corporation who also determines
the compensation to
be paid to such employee.
(7) Because of the Matling doctrine, the rulings in Tabang and Nacpil, are no lo
nger controlling because
they are too sweeping and do not accord with reason, justice, and fair play.
(8)
The status of an employee as director and stockholder does not automatically con
vert his
dismissal into an intra-corporate dispute.
(9)
Two (2) elements to determine whether a dispute is intra-corporate or not.
(a) The status or relationship of the parties; and
(b) The nature of the question that is the subject of their controversy. (Nature
of controversy test).
In the absence of any one of these factors, the RTC will not have jurisdiction.
(10) The criteria do not depend on the services performed but on the manner of c
reation of the office.
In Matling, respondent Corros was supposedly at once an employee, a stockholder,
and a Director of
Matling. The circumstances surrounding his appointment to office must be fully c
onsidered to
determine whether the dismissal constituted an intra-corporate controversy or a
labor termination
dispute. It must also be considered whether his status as Director and stockhold
er had any relation at
all to his appointment and subsequent dismissal as Vice President for Finance an
d Administration.
Obviously enough, the respondent was not appointed as Vice President for Finance
and Administration
because of his being a stockholder or Director of Matling. He had started workin
g for Matling on
September 8, 1966, and had been employed continuously for 33 years until his ter
mination on April
17, 2000. His first work as a bookkeeper and his climb in 1987 to his last posit
ion as Vice President for
Finance and Administration had been gradual but steady. Even though he might hav
e become a
stockholder of Matling in 1992, his promotion to the position of Vice President
for Finance and
Administration in 1987 was by virtue of the length of quality service he had ren
dered as an employee
of Matling. His subsequent acquisition of the status of Director/stockholder had
no relation to his
promotion. Besides, his status of Director/stockholder was unaffected by his dis
missal from
employment as Vice President for Finance and Administration.
3. SIGNIFICANT CASES DECIDED BASED ON THE MATLING DOCTRINE.
a. Cosare v. Broadcom Asia, Inc.,
In this 2014 case, the Supreme Court ruled that the Labor Arbiter, not the regul
ar courts, has original
jurisdiction over the illegal dismissal case filed by petitioner Cosare who was
an incorporator of respondent
Broadcom and was holding the position of Assistant Vice President for Sales (AVP
for Sales) and Head of the

Technical Coordination at the time of his termination. The following justificati
ons were cited in support of this
ruling:
(1) The mere fact that a person was a stockholder and an officer of the company
at the time the subject
controversy developed does not necessarily make the case an intra-corporate disp
ute.
(2) A person, although an officer of the company, is not necessarily a corporate
officer thereof.
(3) General Information Sheet (GIS) submitted to SEC neither governs nor establi
shes the nature of office.
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2014 BAR EXAMS
(4) The Nature of the Controversy Test: The mere fact that a person was a stockh
older at the time of the
filing of the illegal dismissal case does not make the action an intra-corporate
dispute.
b. Other cases:
(1) Barba v. Liceo de Cagayan University (2012);
(2) Marc II Marketing, Inc. and Lucila V. Joson v. Alfredo M. Joson (2011);
(3) Real v. Sangu Philippines, Inc. (2011).
XI-D.
LABOR CASES INVOLVING ENTITIES IMMUNE FROM SUIT
1. IMMUNE ENTITIES CANNOT BE SUED FOR LABOR LAW VIOLATIONS.
In this jurisdiction, the generally accepted principles of international law are
recognized and adopted as part
of the law of the land. Immunity of a State and international organizations from
suit is one of these universally
recognized principles. It is on this basis that Labor Arbiters or other labor tr
ibunals have no jurisdiction over
immune entities.
2. ILLUSTRATIVE CASE.
In Department of Foreign Affairs v. NLRC, involving an illegal dismissal case fi
led against the Asian
Development Bank (ADB), it was ruled that said entity enjoys immunity from legal
process of every form and
therefore the suit against it cannot prosper. And this immunity extends to its o
fficers who also enjoy immunity in
respect of all acts performed by them in their official capacity. The Charter an
d the Headquarters Agreement
granting these immunities and privileges to the ADB are treaty covenants and com
mitments voluntarily assumed by
the Philippine government which must be respected.
3. EXCEPTION TO THE RULE.
There is an exception to the immunity rule as exemplified by the case of United
States v. Hon. Rodrigo,
where it was held that when the function of the foreign entity otherwise immune
from suit partakes of the nature of a
proprietary activity, such as the restaurant services offered at John Hay Air St
ation undertaken by the United States
Government as a commercial activity for profit and not in its governmental capac
ity, the case for illegal dismissal
filed by a Filipino cook working therein is well within the jurisdiction of Phil
ippine courts. The reason is that by
entering into the employment contract with the cook in the discharge of its prop
rietary functions, it impliedly
divested itself of its sovereign immunity from suit.
4. ESTOPPEL DOES NOT CONFER JURISDICTION OVER AN IMMUNE ENTITY.
An entity immune from suit cannot be estopped from claiming such diplomatic immu
nity since estoppel
does not operate to confer jurisdiction to a tribunal that has none over a cause
of action.
XI-E.
DOCTRINE OF FORUM NON CONVENIENS
1. REQUISITES.
This doctrine is an international law principle which has been applied to labor
cases. The following are the
requisites for its applicability:
(1) That the Philippine court is one to which the parties may conveniently resor
t;
(2) That the Philippine court is in a position to make an intelligent decision a
s to the law and the facts; and
(3) That the Philippine court has or is likely to have power to enforce its deci
sion.
2. APPLICATION TO LABOR CASES.
a. Case where doctrine was rejected.
Petitioners invocation of this principle was rejected in Pacific Consultants Inte
rnational Asia, Inc. v.
Schonfeld. Petitioners insistence was based on the fact that respondent is a Cana
dian citizen and was a repatriate.
In so rejecting petitioners contention, the Supreme Court cited the following rea
sons that do not warrant the
application of the said principle: (1) the Labor Code does not include forum non
conveniens as a ground for the
dismissal of the complaint; and (2) the propriety of dismissing a case based on
this principle requires a factual
determination; hence, it is properly considered as a defense.
b. Case where doctrine was applied.
This doctrine was applied in the case of The Manila Hotel Corp. and Manila Hotel
International
Limited v. NLRC, where private respondent Marcelo Santos was an overseas worker
employed as a printer in a
printing press in the Sultanate of Oman when he was directly hired by the Palace
Hotel, Beijing, Peoples Republic
of China to work in its print shop. This hotel was being managed by the Manila H
otel International Ltd., a foreign
entity registered under the laws of Hong Kong. Later, he was terminated due to r
etrenchment occasioned by business
reverses brought about by the political upheaval in China (referring to the Tian
anmen Square incident) which
severely affected the hotels operations.
In holding that the NLRC was a seriously inconvenient forum, the Supreme Court n
oted that the main
aspects of the case transpired in two foreign jurisdictions and the case involve
s purely foreign elements. The only
link that the Philippines has with the case is that the private respondent emplo
yee (Marcelo Santos) is a Filipino
citizen. The Palace Hotel and MHICL are foreign corporations. Consequently, not
all cases involving Filipino
citizens can be tried here. Respondent employee was hired directly by the Beijin
g Palace Hotel, a foreign employer,
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2014 BAR EXAMS
through correspondence sent to him while he was working at the Sultanate of Oman
. He was hired without the
intervention of the POEA or any authorized recruitment agency of the government.
Hence, the NLRC is an
inconvenient forum given that all the incidents of the case - from the time of r
ecruitment, to employment to
dismissal - occurred outside the Philippines. The inconvenience is compounded by
the fact that the proper
defendants, the Palace Hotel and MHICL, are not nationals of the Philippines. Ne
ither are they doing business in
the Philippines. Likewise, the main witnesses, Mr. Shmidt (General Manager of the
Palace Hotel) and Mr. Henk
(Palace Hotels Manager) are non-residents of the Philippines.
Neither can an intelligent decision be made as to the law governing the employme
nt contract as such was
perfected in foreign soil. This calls to fore the application of the principle o
f lex loci contractus (the law of the place
where the contract was made). It must be noted that the employment contract was
not perfected in the Philippines.
Private respondent employee signified his acceptance thereof by writing a letter
while he was in the Sultanate of
Oman. This letter was sent to the Palace Hotel in the Peoples Republic of China.
Neither can the NLRC determine
the facts surrounding the alleged illegal dismissal as all acts complained of to
ok place in Beijing, Peoples Republic
of China. The NLRC was not in a position to determine whether the Tiananmen Squa
re incident truly adversely
affected the operations of the Palace Hotel as to justify respondent employees re
trenchment.
Even assuming that a proper decision could be reached by the NLRC, such would no
t have any binding
effect against the employer, the Palace Hotel, which is a corporation incorporat
ed under the laws of China and was
not even served with summons. Jurisdiction over its person was not acquired. Thi
s is not to say that Philippine
courts and agencies have no power to solve controversies involving foreign emplo
yers. Neither could it be said that
the Supreme Court does not have power over an employment contract executed in a
foreign country. If the
respondent employee were an overseas contract worker, a Philippine forum, specific
ally the POEA, not the
NLRC, would protect him. He is not an overseas contract worker, a fact which he ad
mits with conviction.
XI-F.
CONSTITUTIONALITY OF LABOR CONTRACT STIPULATIONS
1. THE HALAGUEA DOCTRINE.
In Halaguea v. Philippine Airlines, Inc., it was pronounced that it is not the La
bor Arbiter but the regular
court which has jurisdiction to rule on the constitutionality of labor contracts

such as a CBA. Petitioners were female
flight attendants of respondent Philippine Airlines (PAL) and are members of the
Flight Attendants and Stewards
Association of the Philippines (FASAP), the sole and exclusive bargaining repres
entative of the flight attendants,
flight stewards and pursers of respondent. The July 11, 2001 CBA between PAL and
FASAP provides that the
compulsory retirement for female flight attendants is fifty-five (55) and sixty
(60) for their male counterpart.
Claiming that said CBA provision is discriminatory against them, petitioners fil
ed against respondent a
Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temp
orary Restraining Order and Writ of
Preliminary Injunction with the Regional Trial Court (RTC) of Makati City.
In ruling that the RTC has jurisdiction, the Supreme Court cited the following r
easons:
(1) The case is an ordinary civil action, hence, beyond the jurisdiction of labo
r tribunals.
(2) The said issue cannot be resolved solely by applying the Labor Code. Rather,
it requires the
application of the Constitution, labor statutes, law on contracts and the Conven
tion on the Elimination
of All Forms of Discrimination Against Women (CEDAW). The power to apply and int
erpret the
constitution and CEDAW is within the jurisdiction of trial courts, a court of ge
neral jurisdiction.
(3) Not every controversy or money claim by an employee against the employer or
vice-versa is within
the exclusive jurisdiction of the Labor Arbiter. Actions between employees and e
mployer where the
employer-employee relationship is merely incidental and the cause of action proc
eeds from a different
source of obligation are within the exclusive jurisdiction of the regular courts
. Here, the employeremployee relationship between the parties is merely incidental and the cause of
action ultimately arose
from different sources of obligation, i.e., the Constitution and CEDAW.
2.
REINSTATEMENT PENDING APPEAL
1. PIONEER TEXTURIZING DOCTRINE: REINSTATEMENT ASPECT OF LABOR ARBITERS
DECISION, IMMEDIATELY EXECUTORY EVEN PENDING APPEAL; NO WRIT OF EXECUTION
REQUIRED.
According to the Pioneer Texturizing doctrine, an order of reinstatement issued
by the Labor Arbiter under
Article 223 of the Labor Code is self-executory or immediately executory even pe
nding appeal. This means that the
perfection of an appeal shall stay the execution of the decision of the Labor Ar
biter except execution of the
reinstatement pending appeal.
2. REINSTATEMENT PENDING APPEAL, APPLICABLE ONLY TO THE REINSTATEMENT ORDER
ISSUED BY THE LABOR ARBITER; WRIT OF EXECUTION REQUIRED WHEN REINSTATEMENT
IS ORDERED BY NLRC ON APPEAL, OR SUBSEQUENTLY BY THE COURT OF APPEALS OR
SUPREME COURT, AS THE CASE MAY BE.
By way of distinction, the rule on reinstatement pending appeal applies only to
the order of reinstatement
issued by the Labor Arbiter and to no other. This means that if the reinstatemen
t order is issued by the NLRC on
appeal, or by the Court of Appeals or by the Supreme Court, there is a need to s

ecure a writ of execution from the
Labor Arbiter of origin to enforce the reinstatement of the employee whose dismi
ssal is declared illegal.
3. TWO (2) OPTIONS OF EMPLOYER.
To implement the reinstatement aspect of a Labor Arbiters decision, there are onl
y two (2) options
available to the employer, to wit:
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2014 BAR EXAMS
1. Actual reinstatement. - The employee should be reinstated to his position whi

ch he occupies prior to his
illegal dismissal under the same terms and conditions prevailing prior to his di
smissal or separation or, if
no longer available, to a substantially-equivalent position; or
2. Payroll reinstatement. The employee should be reinstated in the payroll of th
e company without
requiring him to report back to his work.
4. DUTY OF EMPLOYER TO NOTIFY EMPLOYEE ORDERED REINSTATED.
It is required that in case the decision of the Labor Arbiter includes an order
of reinstatement, it should
contain:
(a)
A statement that the reinstatement aspect is immediately executory; and
(b) A directive for the employer to submit a report of compliance within ten (10
) calendar days from
receipt of the said decision.
Disobedience of this directive clearly denotes a refusal to reinstate. The emplo
yee need not file a motion
for the issuance of the writ of execution since the Labor Arbiter is mandated th
ereafter to motu proprio issue the
writ. With the new rules in place, there is hardly any difficulty in determining
the employers intransigence in
immediately complying with the order.
5. INSTANCES WHEN WRIT OF EXECUTION OF LABOR ARBITERS REINSTATEMENT ORDER
STILL REQUIRED.
Under the 2011 NLRC Rules of Procedure, there are two (2) instances when a writ
of execution should still
be issued immediately by the Labor Arbiter to implement his order of reinstateme
nt, even pending appeal, viz.:
(1) When the employer disobeys the prescribed directive to submit a report of co
mpliance within ten (10)
calendar days from receipt of the decision; or
(2) When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy the r
einstatement wages as they
accrue until actual reinstatement or reversal of the order of reinstatement.
6. SOME PRINCIPLES ON REINSTATEMENT PENDING
Employer has no way of staying execution of

ost bond to prevent its
execution.
Reinstatement pending appeal applies to all

gardless of the grounds
thereof.
Reinstatement pending appeal does not apply
APPEAL.
immediate reinstatement. He cannot p
kinds of illegal dismissal cases, re
when the dismissal is legal but rein
statement is ordered for

some reasons like equity and compassionate justice.
The failure of employee ordered reinstated pending appeal to report back to work
as directed by the employer
does not give the employer the right to remove him, especially when there is a r
easonable explanation for his
failure.
When former position is already filled up, the employee ordered reinstated pendi
ng appeal should be reinstated
to a substantially equivalent position.
Reinstatement to a position lower in rank is not proper.
In case of two successive dismissals, the order of reinstatement pending appeal

under Article 223 issued
in the first case shall apply only to the first case and should not affect the s
econd dismissal. According to
Sevilla v. NLRC, the Labor Arbiter was correct in denying the third motion for r
einstatement filed by the
petitioner because what she should have filed was a new complaint based on the s
econd dismissal. The
second dismissal gave rise to a new cause of action. Inasmuch as no new complain
t was filed, the Labor
Arbiter could not have ruled on the legality of the second dismissal.
Reinstatement pending appeal is not affected by the reinstated employees employme

nt elsewhere.
Effect of grant of achievement award during reinstatement pending appeal.

In the 2014 case of Garza v. Coca-Cola Bottlers Philippines, Inc., it was pronou
nced that the act of
respondent CCBPI in giving an award of a Certificate of Achievement to petitione
r for his exemplary sales
performance during his reinstatement ordered by the Labor Arbiter, while respond
ents appeal with the NLRC
was still pending, constitutes recognition of petitioners abilities and accomplis
hments. It indicates that he is a
responsible, trustworthy and hardworking employee of CCBPI. It constitutes adequ
ate proof weighing in his
favor.
3.
REQUIREMENTS TO PERFECT APPEAL TO NLRC
I.
APPEAL IN GENERAL
1. APPEAL, MEANING AND NATURE.
The term appeal refers to the elevation by an aggrieved party to an agency vested
with appellate
authority of any decision, resolution or order disposing the principal issues of
a case rendered by an agency vested
with original jurisdiction, undertaken by filing a memorandum of appeal.
2. SOME PRINCIPLES ON APPEAL.
Appeals under Article 223 apply only to appeals from the Labor Arbiters decisions
, awards or orders to the
Commission (NLRC).
There is no appeal from the decisions, orders or awards of the NLRC. Clearly, th
erefore, Article 223 of the

Labor Code is not the proper basis for elevating the case to the Court of Appeal
s or to the Supreme Court. The
proper remedy from the decisions, awards or orders of the NLRC to the Court of A
ppeals is a Rule 65 petition
for certiorari and from the Court of Appeals to the Supreme Court, a Rule 45 pet
ition for review on certiorari.
Appeal from the NLRC to the DOLE Secretary and to the President had long been ab
olished.
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2014 BAR EXAMS
Appeal is not a constitutional right but a mere statutory privilege. Hence, part
ies who seek to avail of it must
comply with the statutes or rules allowing it.
A motion for reconsideration is unavailing as a remedy against a decision of the

Labor Arbiter. The Labor
Arbiter should treat the said motion as an appeal to the NLRC.
A Petition for Relief should be treated as appeal.
Affirmative relief is not available to a party who failed to appeal. A party who
does not appeal from a
decision of a court cannot obtain affirmative relief other than the ones granted
in the appealed decision.
3. GROUNDS FOR APPEAL TO THE COMMISSION (NLRC).
The appeal to the NLRC may be entertained only on any of the following grounds:
a. If there is a prima facie evidence of abuse of discretion on the part of the
Labor Arbiter;
b. If the decision, order or award was secured through fraud or coercion, includ
ing graft and corruption;
c. If made purely on questions of law; and/or
d. If serious errors in the findings of fact are raised which, if not corrected,
would cause grave or irreparable
damage or injury to the appellant.
NLRC has certiorari power.

The first ground above regarding prima facie evidence of abuse of discretion on
the part of the Labor
Arbiter is actually an exercise of certiorari power by the NLRC. The case of Tri
ad Security & Allied Services, Inc.
v. Ortega, expressly recognized this certiorari power of the NLRC. Clearly, acco
rding to the 2012 case of Auza, Jr.
v. MOL Philippines, Inc., the NLRC is possessed of the power to rectify any abus
e of discretion committed by the
Labor Arbiter.
II.
PERFECTION OF APPEAL
1. EFFECT OF PERFECTION OF APPEAL ON EXECUTION.
To reiterate, the perfection of an appeal shall stay the execution of the decisi
on of the Labor Arbiter except
execution for reinstatement pending appeal.
2. PERFECTION OF APPEAL, MANDATORY AND JURISDICTIONAL.
The perfection of appeal within the period and in the manner prescribed by law i
s jurisdictional and noncompliance
with the legal requirements is fatal and has the effect of rendering the judgmen
t final and executory,
hence, unappealable.
3. REQUISITES.
The requisites for perfection of appeal to the NLRC are as follows:
(1)
(2)
(3)
(4)
(5)
The
Observance of the reglementary period;

Payment of appeal and legal research fee;
Filing of a Memorandum of Appeal;
Proof of service to the other party; and
Posting of cash, property or surety bond, in case of monetary awards.
foregoing are discussed below.
III.
REGLEMENTARY PERIOD
1. TWO (2) KINDS OF REGLEMENTARY PERIOD.
The reglementary period depends on where the appeal comes from, viz.:
1. Ten (10) calendar days in the case of appeals from decisions of the Labor Arb
iters under Article 223
of the Labor Code; and
2. Five (5) calendar days in the case of appeals from decisions of the DOLE Regi
onal Director under
Article 129 of the Labor Code.
Calendar days and not working days.
The shortened period of ten (10) days fixed by Article 223 contemplates calendar
days and not working
days. The same holds true in the case of the 5-day reglementary period under Art
icle 129 of the Labor Code.
Consequently, Saturdays, Sundays and legal holidays are included in reckoning an
d computing the reglementary
period.
2. EXCEPTIONS TO THE 10-CALENDAR DAY OR 5-CALENDAR DAY REGLEMENTARY PERIOD
RULE.
The following are the specific instances where the rules on the reckoning of the
reglementary period have
not been strictly observed:
1) 10th day (or 5th day) falling on a Saturday, Sunday or holiday, in which case
, the appeal may be filed in
the next working day.
2) Reliance on erroneous notice of decision as when the notice expressly states w
orking days and not
calendar days.
3) Appeal from decisions of Labor Arbiters in direct contempt cases five (5) cal
endar days.
4) Filing of petition for extraordinary remedies from orders or resolutions of L
abor Arbiters or on third
party claims ten (10) calendar days.
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2014 BAR EXAMS
5) When NLRC exercises its power to correct, amend, or waive any error, defect or
irregularity whether
in substance or form in the exercise of its appellate jurisdiction, as provided u
nder Article 218(c) of the
Labor Code, in which case, the late filing of the appeal is excused.
6) When technical rules are disregarded under Article 221.
7) When there are some compelling reasons that justify the allowance of the appe
al despite its late filing
such as when it is granted in the interest of substantial justice.
3. SOME PRINCIPLES ON REGLEMENTARY PERIOD.
The reglementary period is mandatory and not a mere technicality.
The failure to appeal within the reglementary period renders the judgment appeal
ed from final and
executory by operation of law. Consequently, the prevailing party is entitled, a
s a matter of right, to a writ of
execution and the issuance thereof becomes a ministerial duty which may be compe
lled through the remedy of
mandamus.
The date of receipt of decisions, resolutions or orders by the parties is of no

moment. For purposes of appeal,
the reglementary period shall be counted from receipt of such decisions, resolut
ions, or orders by the counsel
or representative of record.
Miscomputation of the reglementary period will not forestall the finality of the
judgment. It is in the interest of
everyone that the date when judgments become final and executory should remain f
ixed and ascertainable.
Date of mailing by registered mail of the appeal memorandum is the date of its f
iling.
Motion for extension of time to perfect an appeal is not allowed. This kind of m
otion is a prohibited pleading.
Motion for extension of time to file the memorandum of appeal is not allowed.
Motion for extension of time to file appeal bond is not allowed.

IV.
APPEAL FEE AND LEGAL RESEARCH FEE
1. PAYMENT OF APPEAL FEE AND LEGAL RESEARCH FEE, MANDATORY AND
JURISDICTIONAL.
The payment by the appellant of the prevailing appeal fee and legal research fee
is both mandatory and
jurisdictional. An appeal is perfected only when there is proof of payment of th
e appeal fee. It is by no means a
mere technicality. If not paid, the running of the reglementary period for perfe
cting an appeal will not be tolled.
V.
MEMORANDUM OF APPEAL
1. REQUISITES.
The requisites for a valid Memorandum of Appeal are as follows:
1. The Memorandum of Appeal should be verified by the appellant himself in accor
dance with the Rules of
Court, as amended;
2.
It should be presented in three (3) legibly typewritten or printed copies;
3.
It shall state the grounds relied upon and the arguments in support thereof, inc
luding the relief prayed
for;
4. It shall contain a statement of the date the appellant received the appealed
decision, award or order; and
5. It shall be accompanied by:
(i) proof of payment of the required appeal fee and legal research fee;
(ii) posting of a cash or surety bond (in case of monetary awards); and
(iii) proof of service upon the other party.
2. REQUIREMENTS NOT JURISDICTIONAL.
The aforesaid requirements that should be complied with in a Memorandum of Appea
l are merely a
rundown of the contents of the required appeal memorandum to be submitted by the
appellant. They are not
jurisdictional requirements.
3. SOME PRINCIPLES ON MEMORANDUM OF APPEAL.
Mere notice of appeal without complying with the other requisites aforestated sh
all not stop the running
of the period for perfecting an appeal.
Memorandum of appeal is not similar to motion for reconsideration.
Lack of verification in a memorandum of appeal is not a fatal defect. It may eas

ily be corrected by
requiring an oath.
An appeal will be dismissed if signed only by an unauthorized representative.
Only complainants who signed the memorandum of appeal are deemed to have appeale
d the Labor
Arbiters decision. The prevailing doctrine in labor cases is that a party who has
not appealed cannot obtain
from the appellate court any affirmative relief other than those granted, if any
, in the decision of the lower
tribunal.
VI.
PROOF OF SERVICE TO ADVERSE PARTY
1. FAILURE TO SERVE COPY TO ADVERSE PARTY, NOT FATAL.
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2014 BAR EXAMS
While it is required that in all cases, the appellant shall furnish a copy of th
e Memorandum of Appeal to
the other party (appellee), non-compliance therewith, however, will not be an ob
stacle to the perfection of the
appeal; nor will it amount to a jurisdictional defect on the NLRCs taking cogniza
nce thereof.
VII.
POSTING OF BOND
1. WHEN POSTING OF BOND REQUIRED.
Only in case the decision of the Labor Arbiter or the DOLE Regional Director (un
der Article 129 of the
Labor Code) involves a monetary award, that an appeal by the employer may be per
fected only upon the posting of
a bond, which shall either be in the form of (1) cash deposit, (2) surety bond o
r (3) property bond, equivalent in
amount to the monetary award, but excluding the amount of damages (moral and exe
mplary) and attorneys
fees. In other words, only monetary awards (such as unpaid wages, backwages, sep
aration pay, 13th month
pay, etc.) are required to be covered by the bond. Moral and exemplary damages a
nd attorneys fees are
excluded.
2. SOME PRINCIPLES ON POSTING OF BOND.
Posting of bond is mandatory and jurisdictional.
The cash or surety bond required for the perfection of appeal should be posted w
ithin the reglementary
period. If a party failed to perfect his appeal by the non-payment of the appeal
bond within the 10-calendar day
period provided by law, the decision of the Labor Arbiter becomes final and exec
utory upon the expiration of
the said period.
In case the employer failed to post a bond to perfect its appeal, the remedy of
the employee is to file a
motion to dismiss the appeal and not a petition for mandamus for the issuance of
a writ of execution.
Surety bond must be issued by a reputable bonding company duly accredited by the
Commission (NLRC) or the
Supreme Court.
The bond shall be valid and effective from the date of deposit or posting, until
the case is finally decided,
resolved or terminated, or the award satisfied.
Posting of a bank guarantee or bank certification is not sufficient compliance w

ith the bond requirement.
It is not equivalent to nor can be considered compliance with the cash, surety o
r property bond.

Cooperatives are not exempted from posting bond.
Government is exempt from posting of bond; government-owned and/or controlled co

rporations, however,
are not exempt therefrom.
Bond is not required for the NLRC to entertain a motion for reconsideration. An
appeal bond is required
only for the perfection of an appeal of a Labor Arbiters decision involving a mon
etary award.
Bond is not required to file a Rule 65 petition for certiorari.

3. JUSTIFICATIONS FOR NON-POSTING OF BOND.
No monetary award, no bond required. The rule is clear that when the judgment of
the Labor Arbiter does
not involve any monetary award, no appeal bond is necessary.
There is no duty to post a bond if the monetary award is not specified in the de
cision. The Labor Arbiters
decision or order should state the amount awarded. If the amount of the monetary
award is not contained or
fixed in the judgment, the appeal bond is not required to be posted.
In case of conflict between the body and the fallo of the decision, the latter s
hould prevail.
VII-A.
RULE ON REDUCTION OF APPEAL BOND
1. REQUISITES WHEN THE AMOUNT OF APPEAL BOND MAY BE REDUCED.
(1) The motion should be filed within the reglementary period;
(2) The motion to reduce bond should be based on meritorious grounds; and
(3) The motion should be accompanied by a partial bond, the amount of which shou
ld be reasonable in
relation to the monetary awards.
2. SOME PRINCIPLES ON REDUCTION OF BOND.
Bond may be reduced when decision failed to specify the exact amount of monetary
award from which the
amount of the appeal bond is to be based.
Conversely, the reduction of the bond will not be warranted not only when no mer
itorious ground is shown to
justify the same but when the appellant absolutely failed to comply with the req
uirement of posting a bond,
even if partial; or when circumstances show the employers unwillingness to ensure
the satisfaction of its
workers valid claims.
Monetary award running into millions is not justification to reduce bond.
Financial difficulties or financial incapacity is not sufficient grounds to redu

ce bond. What appellant has
to pay is a moderate and reasonable sum for the premium for such bond.
The full amount of the monetary award should still be posted within the reglemen
tary period even if the
appellant has filed a motion to reduce bond.
Alternative remedy is to pay partial appeal bond while motion to reduce bond is
pending with the NLRC.
Examples:
(1)
Rosewood Processing, Inc. v. NLRC. - The petitioner was declared to have substan
tially complied with
the rules by posting a partial surety bond of P50,000.00 while its motion to red
uce the appeal bond in the
amount of P789,154.39 was pending before the NLRC.
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2014 BAR EXAMS
(2) Following Rosewood, the filing by petitioners of a motion to reduce appeal b
ond to P100,000, enclosing a
bond in that amount, from the total monetary award of P3,132,335.57 was given im
primatur in the 2010
case of Pasig Cylinder Mfg., Corp. v. Rollo.
The partial bond must be posted during the reglementary period. The late filing
of the bond divests the NLRC
of its jurisdiction to entertain the appeal since the decision of the Labor Arbi
ter has already become final and
executory with the lapse of the reglementary period.
Partial bond posted must not be inadequate. In Sapitan v. JB Line Bicol Express,
Inc., the partial bond of
P200,000 was found to be inadequate for the liability in the sum of P9,097,624.0
0.
B.
NATIONAL LABOR RELATIONS COMMISSION (NLRC)
1. NATURE.
The NLRC is an administrative quasi-judicial body. It is an agency attached to t
he DOLE solely for
program and policy coordination only. It is in charge of deciding labor cases th
rough compulsory arbitration.
2. COMPOSITION OF THE NLRC.
The NLRC is composed of a Chairman and twenty-three (23) members called Commissio
ners.
The NLRC has tripartite composition. Eight (8) members thereof should be chosen
only from among the
nominees of the workers sector and another eight (8) from the employers sector.
The Chairman and the seven (7)
remaining members shall come from the public sector, with the latter to be chose
n preferably from among the
incumbent Labor Arbiters. The validity of the tripartite composition of the NLRC
was recognized by the Supreme
Court in the case of Mayor v. Hon. C. Macaraig.
3. COMMISSION EN BANC.
The Commission sits en banc only for the following purposes:
(1) To promulgate rules and regulations governing the hearing and disposition of
cases before any of its
divisions and regional branches; and
(2) To formulate policies affecting its administration and operations.
The NLRC does not sit en banc to hear and decide cases. The banc has no adjudica
tory power. The
Commission exercises its adjudicatory and all other powers, functions, and dutie
s through its eight (8)
Divisions.
4. NLRCS EIGHT (8) DIVISIONS.
The NLRC is divided into eight (8) divisions, each one is comprised of three (3)
members. Each Division
shall consist of one (1) member from the public sector who shall act as its Pres
iding Commissioner and one (1)
member each from the workers and employers sectors, respectively.
The various Divisions of the Commission have exclusive appellate jurisdiction ov
er cases within their
respective territorial jurisdictions.
1.
JURISDICTION
1. TWO (2) KINDS OF JURISDICTION.
The NLRC exercises two (2) kinds of jurisdiction:
1.
Exclusive original jurisdiction; and
2.
Exclusive appellate jurisdiction.
2. EXCLUSIVE ORIGINAL JURISDICTION.
The NLRC exercises exclusive and original jurisdiction over the following cases:
a.
Petition for injunction in ordinary labor disputes to enjoin or restrain any act
ual or threatened
commission of any or all prohibited or unlawful acts or to require the performan
ce of a particular act in
any labor dispute which, if not restrained or performed forthwith, may cause gra
ve or irreparable
damage to any party.
b.
Petition for injunction in strikes or lockouts under Article 264 of the Labor Co
de.
c.
Certified cases which refer to labor disputes causing or likely to cause a strik
e or lockout in an industry
indispensable to the national interest, certified to it by the Secretary of Labo
r and Employment for
compulsory arbitration by virtue of Article 263(g) of the Labor Code.
d.
Petition to annul or modify the order or resolution (including those issued duri
ng execution
proceedings) of the Labor Arbiter.
3. EXCLUSIVE APPELLATE JURISDICTION.
The NLRC exercises exclusive appellate jurisdiction over the following:
a.
All cases decided by the Labor Arbiters.
b. Cases decided by the DOLE Regional Directors or hearing officers involving sm
all money claims under
Article 129 of the Labor Code.
c.
Contempt cases decided by the Labor Arbiters.
2.
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2014 BAR EXAMS
EFFECT OF NLRC REVERSAL OF
LABOR ARBITERS ORDER OF REINSTATEMENT
1. ENTITLEMENT TO REINSTATEMENT WAGES.
From the moment an employee is ordered reinstated by the Labor Arbiter on the ba
sis of the finding that his
dismissal is illegal, up to the time that an appellate tribunal like the NLRC, C
ourt of Appeals and Supreme Court, as
the case may be, reverses the said finding, the employee is generally entitled t
o his so-called reinstatement
wages. The issue of entitlement to this benefit has been the subject of several d
octrinal rulings now known as
follows:
(1) Roquero doctrine;
(2) Genuino doctrine; and
(3) Garcia doctrine.
1.1. ROQUERO DOCTRINE.
The Roquero doctrine, enunciates the rule that in cases where an employee is ord
ered reinstated by the
Labor Arbiter and the employer fails or refuses to obey the reinstatement order
but initiates an appeal, the
employers success in having the decision of the Labor Arbiters decision reversed o
n appeal will not exculpate him
from the liability to pay the reinstatement wages of the employee reckoned and c
omputed from the time the
employee was ordered reinstated by the Labor Arbiter until the date of its rever
sal on appeal.
In this case of Roquero, the dismissal of petitioners Roquero and Pabayo was hel
d valid by the Labor
Arbiter. On appeal to the NLRC, the Labor Arbiters decision was reversed and cons
equently, petitioners were
ordered reinstated. They did not appeal from that decision of the NLRC but filed
a motion for the issuance of a writ
of execution of the order of reinstatement. The Labor Arbiter granted the motion
but respondent PAL refused to
comply with the said order on the ground that it has filed a Petition for Review
before the Supreme Court.
Subsequently, the CA reversed the decision of the NLRC and ruled that the dismis
sal of petitioners was valid. The
Supreme Court later affirmed the CAs decision but it held that the unjustified re
fusal by PAL to reinstate Roquero
who, unlike Pabayo, has not amicably settled his case, entitles him to the payme
nt of his reinstatement wages
effective from the time PAL failed to reinstate him despite the issuance of the
writ of execution. Thus, it was
mandatory for PAL to actually reinstate Roquero or reinstate him in the payroll.
Having failed to do so, the former
must pay the latter the salaries he is entitled to, as if he was reinstated, fro
m the time of the decision of the NLRC
until the finality of the decision of the Supreme Court.
Following Roquero, it is now the norm that even if the order of reinstatement of
the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to reinstate an
d pay the wages of the dismissed
employee during the period of appeal until its reversal by the NLRC, or the Cour
t of Appeals or the Supreme Court,
as the case may be. If the employee has been reinstated during the appeal period
and such reinstatement order is
subsequently reversed on appeal with finality, the employee is not required to r
eimburse whatever salaries he has
received for he is entitled to such, more so if he actually rendered services du
ring the said period.
1.2. GENUINO DOCTRINE.
The essence of the Genuino doctrine is that the employee who is reinstated in th
e payroll, as distinguished
from actual reinstatement, should refund the salaries he received if his dismiss
al is finally found legal on appeal.
This doctrine, however, does not apply if the employee was actually reinstated t
o his former position or not
reinstated at all pending appeal.
In effect, the Genuino ruling qualified the earlier Roquero doctrine on the issu
e of whether the dismissed
employee who is reinstated in the payroll and not actually to his former positio
n has the obligation to refund what he
has received as and by way of salaries during his payroll reinstatement if and w
hen his dismissal is held valid and
legal on appeal. In this case, the Supreme Court had taken the view that (i)f the
decision of the Labor Arbiter is
later reversed on appeal upon the finding that the ground for dismissal is valid
, then the employer has the right to
require the dismissed employee on payroll reinstatement to refund the salaries h
e/she received while the case was
pending appeal, or it can be deducted from the accrued benefits that the dismiss
ed employee was entitled to receive
from his/her employer under existing laws, collective bargaining agreement provi
sions, and company
practices. However, if the employee was reinstated to work during the pendency o
f the appeal, then the employee is
entitled to the compensation received for actual services rendered without need
of refund.
1.3. GARCIA DOCTRINE.
a. Modification of the Roquero and Genuino doctrines.
The Roquero and Genuino doctrines have been modified by the Garcia doctrine. In
this case, while
respondent Philippine Airlines (PAL) was undergoing rehabilitation receivership,
an illegal dismissal case was filed
by petitioners against respondent PAL which was decided by the Labor Arbiter in
their favor thus ordering PAL to,
inter alia, immediately comply with the reinstatement aspect of the decision. On
appeal, the NLRC reversed the
ruling of the Labor Arbiter and held that their dismissal was valid. The issue o
f whether petitioners may collect their
reinstatement wages during the period between the Labor Arbiters order of reinsta
tement pending appeal and the
NLRC decision overturning that of the Labor Arbiter, now that respondent PAL has
terminated and exited from

rehabilitation proceedings, was resolved in the negative by the Supreme Court. T
he following ratiocinations were
cited:
(1) Re: modification of the Genuino doctrine. - The refund doctrine in Genuino sho
uld no longer be
observed because it easily demonstrates how a favorable decision by the Labor Ar
biter could harm, more than help,
a dismissed employee. The employee, to make both ends meet, would necessarily ha
ve to use up the salaries
received during the pendency of the appeal, only to end up having to refund the
sum in case of a final unfavorable
decision. It is mirage of a stop-gap leading the employee to a risky cliff of in
solvency. Further, the Genuino ruling
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2014 BAR EXAMS
not only disregards the social justice principles behind the rule, but also inst
itutes a scheme unduly favorable to
management. Under such scheme, the salaries dispensed pendente lite merely serve
as a bond posted in installment
by the employer. For in the event of a reversal of the Labor Arbiters decision or
dering reinstatement, the employer
gets back the same amount without having to spend ordinarily for bond premiums.
This circumvents, if not directly
contradicts, the proscription that the posting of a bond [even a cash bond] by th
e employer shall not stay the
execution for reinstatement.
(2) Re: modification of the Roquero doctrine. The Roquero doctrine was reaffirme
d but with the
modification that [a]fter the Labor Arbiters decision is reversed by a higher trib
unal, the employee may be barred
from collecting the accrued wages, if it is shown that the delay in enforcing th
e reinstatement pending appeal was
without fault on the part of the employer.
b. Two-fold test under the Garcia doctrine.
Under Garcia, the test to determine the liability of the employer (who did not r
einstate the employee
pending appeal) to pay the wages of the dismissed employee covering the period f
rom the time he was ordered
reinstated by the Labor Arbiter to the reversal of the Labor Arbiters decision ei
ther by the NLRC, the Court of
Appeals or the High Court, is two-fold, to wit:
(1) There must be actual delay or the fact that the order of reinstatement pendi
ng appeal was not executed
prior to its reversal; and
(2) The delay must not be due to the employers unjustified act or omission.
If the delay is due to the
employers unjustified refusal, the employer may still be required to pay the sala
ries notwithstanding
the reversal of the Labor Arbiters decision.
In Garcia, there was actual delay in reinstating petitioners but respondent PAL
was justified in not
complying with the reinstatement order of the Labor Arbiter because during the p
endency of the illegal dismissal
case, the SEC placed respondent PAL under an Interim Rehabilitation Receiver who
, after the Labor Arbiter
rendered his decision, was replaced with a Permanent Rehabilitation Receiver. It
is settled that upon appointment
by the SEC of a rehabilitation receiver, all actions for claims before any court
, tribunal or board against the
corporation shall ipso jure be suspended. Resultantly, respondent PALs failure to
exercise the alternative options
of actual reinstatement and payroll reinstatement was thus justified. Such being
the case, respondents obligation to
pay the salaries pending appeal, as the normal effect of the non-exercise of the
options, did not attach.
c. Cases decided after the promulgation of the Garcia doctrine.

Subsequent to Garcia, some of the cases decided in accordance with this doctrine
are as follows:
(1)
College of the Immaculate Conception v. NLRC;
(2)
Islriz Trading v. Capada;
(3)
Pfizer, Inc. v. Velasco; and
(4)
C. Alcantara & Sons, Inc. v. CA.
2. RECKONING OF THE PERIOD COVERED BY ACCRUED REINSTATEMENT WAGES.
To clarify, employees ordered reinstated by the Labor Arbiter are entitled to ac
crued reinstatement wages
only from the time the employer received a copy of the Labor Arbiters decision de
claring the employees
termination illegal and ordering their reinstatement up to the date of the decis
ion of the appellate tribunal
overturning that of the Labor Arbiter. It is not accurate therefore to state tha
t such entitlement commences from
the moment the reinstatement order was issued up to the date when the same was r
eversed by a higher court without
fear of refunding what he had received.
4. SOME PRINCIPLES ON REINSTATEMENT WAGES.
Employer is not liable to pay any reinstatement backwages if reinstatement is or

dered not by the Labor Arbiter
but by the NLRC on appeal and it was not executed by writ and its finding of ill
egal dismissal is later reversed
by the Court of Appeals and/or Supreme Court.
Payroll-reinstated employee is entitled not only to reinstatement wages but also

to other benefits during the
period of payroll reinstatement until the illegal dismissal case is reversed by
a higher tribunal.
Award of additional backwages and other benefits from the time the Labor Arbiter
ordered reinstatement until
actual or payroll reinstatement is proper and valid.
3.
REMEDIES
1. EXTRAORDINARY REMEDIES.
a. Nature.
The power of the Commission (NLRC) to grant extraordinary remedies mentioned in
No. 3 above is not
provided in the Labor Code or in any other laws. It is a newly created remedy wh
ich saw light for the first time
under Rule XII of the 2011 NLRC Rules of Procedure. Past NLRC Rules did not prov
ide therefor.
Since this is a recent newly minted remedy, there has yet been no decision by th
e Supreme Court dwelling
on its validity.
What is clear though is that this remedy is not equivalent to nor a substitute f
or appeal. It is directed against
orders or resolutions issued by the Labor Arbiter in the course of the proceedings b
efore him where the remedy

of appeal is not available. Notably, the remedy of appeal is available only agai
nst the main decision of a case. But
orders or resolutions issued prior to the rendition of the decision in the main
as well as orders or resolutions issued
thereafter, specifically during the execution stage, are subject of this rule on
extraordinary remedies.
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b. Grounds.
The petition filed under this Rule may be entertained only on any of the followi
ng grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the L
abor Arbiter;
(b) If serious errors in the findings of facts are raised which, if not correcte
d, would cause grave or
irreparable damage or injury to the petitioner;
(c) If a party by fraud, accident, mistake or excusable negligence has been prev
ented from taking an
appeal;
(d) If made purely on questions of law; or
(e) If the order or resolution will cause injustice if not rectified.
c. Initiation through verified petition.
To secure these extraordinary remedies, a party aggrieved by any order or resolu
tion of the Labor Arbiter
including those issued during execution proceedings may file a verified petition
to annul or modify such order or
resolution. The petition may be accompanied by an application for the issuance o
f a temporary restraining order
and/or writ of preliminary or permanent injunction to enjoin the Labor Arbiter,
or any person acting under his/her
authority, to desist from enforcing said resolution or order.
4.
CERTIFIED CASES
1. CERTIFIED LABOR DISPUTES.
Certified labor disputes are national interest cases certified by the DOLE Secreta
ry to the Commission
(NLRC) for compulsory arbitration under Article 263(g) of the Labor Code.
2. EFFECTS OF CERTIFICATION OF LABOR DISPUTES.
The certification of a labor dispute to the NLRC has the following effects:
(1) On intended or impending strike or lockout. -Upon certification, the intende
d or impending strike or
lockout is automatically enjoined, notwithstanding the filing of any motion for
reconsideration of the certification
order or the non-resolution of any such motion which may have been duly submitte
d to the DOLE Secretary.
(2) On actual strike or lockout. - If a work stoppage has already taken place at
the time of the
certification, all striking or locked out employees shall immediately return to
work and the employer shall
immediately resume operations and readmit all workers under the same terms and c
onditions prevailing before the
strike or lockout.
(3) On cases already filed or may be filed. -All cases between the same parties,
except where the
certification order specifies otherwise the issues submitted for arbitration whi
ch are already filed or may be filed,
and are relevant to or are proper incidents of the certified case, shall be cons
idered subsumed or absorbed by the
certified case, and shall be decided by the appropriate Division of the Commissi
on.
(4) On other pending cases. -The parties to a certified case, under pain of cont
empt, shall inform their
counsels and the Division concerned of all cases pending with the Regional Arbit
ration Branches and the Voluntary
Arbitrators relative or incident to the certified case before it.
(5) On which Division should take cognizance of the certified case in case entit
y has several
workplaces in different regions. -Whenever a certified labor dispute involves a
business entity with several
workplaces located in different regions, the Division having territorial jurisdi
ction over the principal office of the
company shall acquire jurisdiction to decide such labor dispute; unless the cert
ification order provides otherwise.
Same effect of certification to the NLRC as in cases assumed directly by DOLE Se

cretary.
The effects described above are also applicable when the DOLE Secretary directly
assumes jurisdiction
over a labor dispute affecting industries imbued with national interest and deci
des it himself.
C.
BUREAU OF LABOR RELATIONS
MED-ARBITERS
1. MED-ARBITER OR MEDIATOR-ARBITER.
Med-Arbiter or Mediator-Arbiter refers to an officer in the Regional Office or in th
e BLR authorized
to hear and decide representation cases, inter-union or intra-union disputes and
other related labor relations disputes,
except cancellation of union registration cases.
Some principles on Med-Arbiter.
Injunctive power. The Med-Arbiter is possessed of the power to issue temporary r

estraining order and
the writ of injunction in appropriate cases.
Contempt power. The Med-Arbiter has contempt power.
Factual findings of Med-Arbiters are accorded great respect. They are binding if
they are supported by
substantial evidence and there exists no capricious exercise of judgment warrant
ing reversal by
certiorari.
Execution of decisions, orders or awards of Med-Arbiters. The Med-Arbiter may, u

pon his own
initiative or on motion of any interested party, issue a writ of execution on a
judgment within five (5)
years from the date it becomes final and executory, requiring the Sheriff or a d
uly deputized officer to
execute or enforce the same.
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1.
JURISDICTION
(ORIGINAL AND APPELLATE)
I.
CASES FALLING UNDER THE JURISDICTION OF THE MED-ARBITERS,
DOLE DIRECTORS AND BLR DIRECTOR, IN GENERAL
1. INTRODUCTION.
For purposes of clarity in the otherwise labyrinthine issue of jurisdiction and
procedure in the BLR, there is
a need to cite first the cases over which the following officials have their res
pective jurisdictions:
(1) Mediator-Arbiter (Med-Arbiter);
(2) DOLE Regional Director; and
(3) BLR Director.
The Mediator-Arbiter and the DOLE Regional Director exercise original and exclus
ive jurisdiction over
specified cases mentioned below. For his part, the BLR Director exercises not on
ly appellate but original
jurisdiction over some particular cases.
2. CASES COVERED.
There are three (3) general classifications of the cases covered by the jurisdic
tion of said officials, to
wit:
(a) Inter-union disputes;
(b) Intra-union disputes; and
(c)
Other related labor relations disputes.
I-A.
INTER-UNION OR INTRA-UNION DISPUTES
1. INTER-UNION OR REPRESENTATION DISPUTES.
An inter-union dispute or representation dispute is one occurring or carried on betw
een or among
unions. It refers to a case involving a petition for certification election file
d by a duly registered labor organization
which is seeking to be recognized as the sole and exclusive bargaining agent of
the rank-and-file employees or
supervisory employees, as the case may be, in the appropriate bargaining unit of
a company, firm or establishment.
Broadly, an inter-union dispute refers to any conflict between and among legitimat
e labor unions
involving representation questions for purposes of collective bargaining or to a
ny other conflict or dispute between
legitimate labor unions.
2. INTRA-UNION OR INTERNAL UNION DISPUTES.
An intra-union dispute or internal union dispute refers to a conflict within or insi
de a labor union. It is
any conflict between and among union members, including grievances arising from
any violation of the rights and
conditions of membership, violation of or disagreement over any provision of the
unions constitution and by-laws
or disputes arising from chartering or affiliation of a union. It refers to a ca
se involving the control, supervision and
management of the internal affairs of a duly registered labor union such as thos
e relating to specific violations of the
unions constitution and by-laws.
A complaint for any violation of the constitution and by-laws and the rights and
conditions of union
membership under Article 241 of the Labor Code, may be filed in the Regional Off
ice where the union is domiciled.
3. RUNDOWN OF INTER-UNION/INTRA-UNION CASES.
The following is a rundown of all possible inter-union/intra-union disputes:
1) Inter-union disputes:
(a)
Validity/invalidity of voluntary recognition, certification election, consent el
ection, run-off election
or re-run election;
(b) Such other disputes or conflicts involving the rights to self-organization,
union membership and
collective bargaining between and among legitimate labor organizations.
2) Intra-union disputes:
(a)
Conduct or nullification of election of officers of unions and workers associat
ion;
(b)
Audit or accounts examination of union or workers association funds;
(c)
Deregistration of collective bargaining agreements;
(d) Validity/invalidity of union affiliation or disaffiliation;
(e) Validity/invalidity of acceptance/non-acceptance for union membership;
(f)
Opposition to application for union or CBA registration;
(g) Violations of or disagreements over any provision of the Constitution and By
-Laws of a union or
workers association;
(h) Disagreements over chartering or registration of labor organizations or the
registration of collective
bargaining agreements;
(i)
Violations of the rights and conditions of membership in a union or workers ass
ociation;
(j)
Violations of the rights of legitimate labor organizations, except interpretatio
n of CBAs;
(k) Validity/Invalidity of impeachment/expulsion/suspension or any disciplinary
action meted against
any officer and member, including those arising from non-compliance with the rep
ortorial
requirement;
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2014 BAR EXAMS
(l)
Such other disputes or conflicts involving the rights to self-organization, unio
n membership and
collective bargaining between and among members of a union or workers association
.
1-B.
OTHER RELATED LABOR RELATIONS DISPUTES
1. MEANING OF RELATED LABOR RELATIONS DISPUTES.
Related labor relations dispute refers to any conflict between a labor union and t
he employer or any
individual, entity or group that is not a labor union or workers association.
2. COVERAGE OF RELATED LABOR RELATIONS DISPUTES NOT OTHERWISE COVERED BY
ARTICLE 217.
(a)
Any conflict between:
(1) a labor union and the employer, or
(2) a labor union and a group that is not a labor organization; or
(3) a labor union and an individual who is not a member of such union;
(b) Cancellation of registration of unions and workers associations filed by ind
ividuals other than its
members, or group that is not a labor organization; and
(c) A petition for interpleader involving labor relations.
Interpleader refers to a proceeding brought by a party against two or more parties
with conflicting
claims, compelling the claimants to litigate between and among themselves their
respective rights to the claim,
thereby relieving the party so filing from suits they may otherwise bring agains
t it.
II.
ORIGINAL AND EXCLUSIVE JURISDICTION OF MED-ARBITERS,
DOLE DIRECTORS AND BLR DIRECTOR
Having known the various cases afore-described, a discussion of the respective j
urisdictions of the MedArbiters, DOLE Directors and BLR Director over these cases may now be made with
greater clarity.
1. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE MED-ARBITERS.
The cases falling under the original and exclusive jurisdiction of the Med-Arbit
ers are as follows:
(a)
Inter-union disputes, also known as representation/certification election confli
cts;
(b) Intra-union disputes;
(c)
Other related labor relations disputes; and
(d)
Contempt cases.
Excepted from their jurisdiction is cancellation of union registration cases whi
ch are cognizable by the

DOLE Regional Directors.
2. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DOLE REGIONAL DIRECTORS.
The cases falling under the original and exclusive jurisdiction of the DOLE Regi
onal Directors are as
follows:
(1) Petitions
for cancellation of registration of independent unions, local chapters and worke
rs
associations;
(2) Petitions for deregistration of CBAs;
(3)
Request for examination of books of accounts of said labor organizations under A
rticle 274 of the
Labor Code.
On No. 3 [Examination of Books of Accounts] above, there is a need to point out
that although by nature,
this is an intra-union dispute, the rules treat this separately from those appli
cable to intra-union disputes and vest
jurisdiction thereover in the DOLE Regional Directors and not in the Med-Arbiter
s.
The case in point is La Tondena Workers Union vs. Secretary of Labor. Intra-unio
n conflicts such as
examinations of accounts are under the jurisdiction of the BLR. However, the Rul
es of Procedure on MediationArbitration purposely and expressly separated or distinguished examinations of u
nion accounts from the genus of
intra-union conflicts and provided a different procedure for the resolution of t
he same. Original jurisdiction over
complaints for examinations of union accounts is vested in the Regional Director
and appellate jurisdiction over
decisions of the former is lodged with the BLR. This is apparent from Sections 3
and 4, Rule II of the MedArbitration Rules. Contrast these two sections from Section 2 and Section 5 of t
he same Rules. Section 2 expressly
vests upon Med-Arbiters original and exclusive jurisdiction to hear and decide,
inter alia, all other inter-union or
internal union disputes. Section 5 states that the decisions of the Med-Arbiter
shall be appealable to the DOLE
Secretary. These are the provisions consistent with Section 5 of Rule VIII of th
e Implementing Rules of the Labor
Code.
3. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE BLR DIRECTOR.
At the outset, it must be stressed that reference in the law and pertinent rules
to BLR, as far as the issue
of jurisdiction is concerned, should rightfully mean BLR Director.
The BLR Director, therefore, as head of the agency, has the original and exclusi
ve jurisdiction over the
following:
(1) Complaints and petitions involving the registration or cancellation of regis
tration of
federations,
national unions, industry unions, trade union centers and their local chapters,
affiliates and member
organizations;
(2) Request for examination of books of accounts of said labor organizations (fe
derations, national
unions, industry unions and trade union centers) under Article 274 of the Labor
Code;
(3)
Intra-union disputes involving said labor organizations (federations, national u
nions, industry
unions and trade union centers); and
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2014 BAR EXAMS
(4) Contempt cases.
As far as No. 3 [Intra-Union Disputes] above is concerned, the 2010 case of Atty
. Montao v. Atty.
Verceles, is relevant. Petitioner here claimed that under the Implementing Rules
, it is the Regional Director of the
DOLE and not the BLR who has jurisdiction over intra-union disputes involving fe
derations which, in this case,
pertains to the election protests in connection with the election of officers of
the federation (Federation of Free
Workers [FFW]). In finding no merit in petitioners contention, the High Court poi
nted out that Article 226 of the
Labor Code clearly provides that the BLR and the Regional Directors of DOLE have
concurrent jurisdiction over
inter-union and intra-union disputes. Such disputes include the conduct or nulli
fication of election of union and
workers association officers. There is, thus, no doubt as to the BLRs jurisdiction
over the instant dispute involving
member-unions of a federation arising from disagreement over the provisions of t
he federations constitution and
by-laws. It agreed with the following observation of the BLR:
Rule XVI lays down the decentralized intra-union dispute settlement mechanism. Se
ction 1 states that any
complaint in this regard shall be filed in the Regional Office where the union is
domiciled. The concept of
domicile in labor relations regulation is equivalent to the place where the unio
n seeks to operate or has established
a geographical presence for purposes of collective bargaining or for dealing wit
h employers concerning terms and
conditions of employment.
The matter of venue becomes problematic when the intra-union dispute involves a f
ederation, because the
geographical presence of a federation may encompass more than one administrative
region. Pursuant to its
authority under Article 226, this Bureau exercises original jurisdiction over in
tra-union disputes involving
federations. It is well-settled that FFW, having local unions all over the count
ry, operates in more than one
administrative region. Therefore, this Bureau maintains original and exclusive j
urisdiction over disputes arising
from any violation of or disagreement over any provision of its constitution and
by-laws.
II.
APPELLATE JURISDICTION OF THE BLR DIRECTOR
1. CASES FALLING UNDER THE APPELLATE JURISDICTION OF THE BLR DIRECTOR.
The BLR Director exercises exclusive appellate jurisdiction over the following c
ases:
(a)
All decisions of the Med-Arbiters in (1) intra-union disputes, and (2) other rel
ated labor relations
disputes.
NOTE: Decisions in inter-union disputes or representation/certification election
conflicts,
are NOT appealable to the BLR Director but directly to the DOLE Secretary. [See
discussion
below].
(b) All decisions originating from the DOLE Regional Directors in the cases fall
ing under their original
jurisdiction as enumerated above.
2. APPELLATE JURISDICTION OVER MED-ARBITERS DECISIONS IN INTER-UNION DISPUTES
OR CERTIFICATION ELECTION CASES IS LODGED WITH THE DOLE SECRETARY AND NOT
WITH THE BLR DIRECTOR.
To reiterate, decisions of Med-Arbiters in certification election cases or inter
-union disputes are
appealable not to the BLR Director but directly to the DOLE Secretary by virtue
of Article 259 of the Labor Code.
It must be noted that the rule on appeal in certification election cases in unor
ganized establishments is
different from that of organized establishments.
(a) Rule on appeal in unorganized establishments. - The order granting the condu
ct of a certification
election in an unorganized establishment is not subject to appeal. Any issue ari
sing from its conduct or
from its results is proper subject of a protest. Appeal may only be made to the
DOLE Secretary in case
of denial of the petition within ten (10) days from receipt of the decision of d
enial.
(b) Rule on appeal in organized establishments. - The order granting the conduct
of a certification
election in an organized establishment and the decision dismissing or denying th
e petition may be
appealed to the DOLE Secretary within ten (10) days from receipt thereof.
3. APPEALS AND REMEDIES FROM DECISIONS OF THE BLR DIRECTOR.
a. Jurisdictional distinctions.
The distinctions pointed out above between the respective jurisdictions of the D
OLE Regional Directors,
Med-Arbiters and the BLR Director find significance in determining which of the
cases may be appealed to the BLR
Director and those that may be appealed to the DOLE Secretary. Thus, the rule ma
y be stated as follows:
(1) Decisions in cases cognizable by the BLR Director in the exercise of his ori
ginal and exclusive
jurisdiction are appealable to the DOLE Secretary;
(2) Decisions in cases cognizable by the Med-Arbiters in their original and excl
usive jurisdiction are
appealable to the BLR Director with the single exception of decisions in certifi
cation election or
inter-union disputes which, as earlier emphasized, are directly appealable to th
e DOLE Secretary as
mandated under Article 259 of the Labor Code; and
(3) Decisions in cases cognizable by the
DOLE Regional Directors in their original and exclusive
jurisdiction are appealable to the BLR Director.
b. Remedies.
(1) On No. 1 above. The decision rendered by the DOLE Secretary in his appellate
jurisdiction may be
elevated to the Court of Appeals by way of Rule 65 petition for certiorari.
(2) On Nos. 2 and 3 above. -The decisions rendered by the BLR Director in his ap
pellate jurisdiction
may be elevated directly to the Court of Appeals by way of Rule 65 petition for
certiorari. It cannot be
appealed to the DOLE Secretary because they were rendered by the BLR Director in
the exercise of
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his appellate jurisdiction. Simply stated, another appeal to the DOLE Secretary
is not allowed under the
situations contemplated in Nos. 2 and 3 above, the decisions being final and exe
cutory.
4. EXAMPLES OF SPECIFIC CASES.
a.
APPEALS FROM DENIAL OF APPLICATION FOR REGISTRATION AND
CANCELLATION OF REGISTRATION OF LABOR ORGANIZATIONS.
For purposes of appeal, the issue of union registration involves two (2) situati
ons, to wit:
(1)
Denial of application for union registration; and
(2)
Revocation or cancellation of union registration.
On denial of application for union registration.

(1) If the denial is made by the
Regional Office in cases involving application for registration of
independent unions, local chapters and workers associations, the same may be appe
aled to the
BLR Director; or
(2) If the denial is made by the
BLR Director in cases involving federations, national unions,
industry unions and trade union centers, the same is appealable to the DOLE Secr
etary.
On revocation or cancellation of union registration.

(1)
If decision is rendered by the Regional Director. - The decision of the Regional
Director in the
cases over which he has original jurisdiction, may be appealed to the BLR Direct
or by any of the
parties within ten (10) days from receipt thereof, copy furnished the opposing p
arty.
(2)
If decision is rendered by the BLR Director. -The decision of the BLR Director,
in the exercise
of his original jurisdiction, may be appealed to the DOLE Secretary by any party
within the same
period of ten (10) days, copy furnished the opposing party.
5. EXCEPTION WHEN DOLE SECRETARY MAY ENTERTAIN APPEAL DIRECTLY FROM THE
DOLE REGIONAL DIRECTORS DECISION WITHOUT PASSING THROUGH THE BLR
DIRECTOR.
The Heritage Hotel Manila v. National Union of Workers in the Hotel, Restaurant
and Allied
Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC). In this 2
011 case, the
Supreme Court allowed a deviation from the standing rule on the appellate jurisd
iction of the BLR Director over a
decision of the DOLE Regional Director when the BLR Director inhibited himself f
rom taking cognizance of the

appeal from the decision of the DOLE Regional Director because he was a former c
ounsel of respondent. The
DOLE Secretary may thus legally assume jurisdiction over an appeal from the deci
sion of the DOLE Regional
Director in the event that the BLR Director inhibits himself from the case. In t
he absence of the BLR Director,
there is no person more competent to resolve the appeal than the DOLE Secretary.
Thus, jurisdiction remained
with the BLR despite the BLR Directors inhibition. When the DOLE Secretary resolv
ed the appeal, she merely
stepped into the shoes of the BLR Director and performed a function that the lat
ter could not himself perform. She
did so pursuant to her power of supervision and control over the BLR.
III.
ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs
In addition to the afore-mentioned controversies over which they have concurrent
original and exclusive
jurisdiction, the BLR and the Labor Relations Divisions (LRDs) in the DOLE Regio
nal Offices likewise have
concurrent jurisdiction over the following administrative functions:
1.
Registration of labor unions;
2.
Keeping of registry of labor unions;
3. Maintenance and custody of the files of Collective Bargaining Agreements (CBA
s) and other related
agreements.
4.
Records of settlement of labor disputes; and
5.
Copies of orders and decisions of Voluntary Arbitrators.
It must be noted that it is the registration of the labor organization with the
BLR and not with the
Securities and Exchange Commission (SEC) which makes it a legitimate labor organ
ization with rights and
privileges granted under the Labor Code.
D.
NATIONAL CONCILIATION AND MEDIATION BOARD
(NCMB)
1.
NATURE OF PROCEEDINGS
1. NCMB IS NOT A QUASI-JUDICIAL AGENCY.
NCMB is not a quasi-judicial agency, according to the 2009 case of Tabigue v. In
ternational
Copra Export Corporation.
Quasi-judicial function is a term which applies to the action, discretion, etc. of
public administrative
officers or bodies, who are required to investigate facts or ascertain the exist
ence of facts, hold hearings, and draw
conclusions from them as a basis for their official action and to exercise discr
etion of a judicial nature.
2. NOT BEING A QUASI-JUDICIAL AGENCY, NCMBS RULINGS CANNOT BE ELEVATED TO, AND
COGNIZABLE BY, THE COURT OF APPEALS.
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Rule 43 of the Rules of Court applies only to awards, judgments, final orders or
resolutions of or authorized
by any quasi-judicial agency in the exercise of its quasi-judicial functions. He
nce, NCMBs decision, not having
been rendered by a quasi-judicial body, cannot be elevated to the Court of Appea
ls under said rule.
2.
CONCILIATION VS. MEDIATION
1. CONCILIATION AND MEDIATION, MEANING.
Both the terms conciliation and mediation refer to a process whereby a third person
usually called
Conciliator (in case of conciliation) or Mediator (in case of mediation), interv
enes in a dispute involving two or
more conflicting parties for the purpose of reconciling their differences or per
suading them into adjusting or settling
their dispute. The Conciliator or Mediator normally does not make or render any
decision, his role being confined to
the functions afore-described.
3. DISTINCTION BETWEEN CONCILIATION AND MEDIATION.
Generally, there are no marked distinctions between conciliation and mediation.
The reason is that In both
cases, a neutral third party (called Conciliator or Mediator) is tasked to assis
t two or more opposing parties in
finding appropriate resolution to a dispute.
In the NCMB, the hearing officer is called Conciliator-Mediator. There is no sep
arate classification
between conciliators and mediators. When the Conciliator-Mediator performs his t
ask, he does not make any
distinction when he is acting as Conciliator or as Mediator.
In other jurisdictions, the principal distinction between conciliation and media
tion lies on the extent
of the power and authority granted to the neutral third party.
In mediation, the Mediator normally facilitates a deliberation or discussion of
the issues between the
parties. He may or may not offer any opinions on the strength and weaknesses of
each party s positions and
arguments. Thus, mediation may be classified into two, namely:
1. Facilitative Mediation where the Mediator does not make or offer any opinion;
or
2. Evaluative Mediation where the Mediator offers an opinion which is not bindin
g on the parties.
It bears stressing, however, that regardless of which of the 2 methods above is
chosen, the Mediator is not
empowered to impose his will on the parties.
In conciliation, the Conciliator is given more power and authority in that he ma
y not only offer an opinion

on the issues at hand but may actually make a binding opinion thereon provided t
he parties stipulate in advance to
this effect. His opinion is based on the facts and the law involved in the contr
oversy before him.
It may thus be observed that conciliation is more formal than mediation in the s
ense that the Conciliators
opinion, unlike the Mediators, may be binding on the parties, although it may be
merely temporary in character.
3.
PREVENTIVE MEDIATION
1. PREVENTIVE MEDIATION AS A REMEDY.
Preventive mediation, as a remedy, is not found in the Labor Code. But under the l
aw which created the
NCMB, it is expressly stated that one of its functions is to provide preventive
mediation to disputing parties.
The term preventive mediation case refers to the potential or brewing labor disput
e which is the subject
of a formal or informal request for conciliation and mediation assistance sought
by either or both parties in order to
remedy, contain or prevent its degeneration into a full blown dispute through am
icable settlement.
2. HOW TO INITIATE PREVENTIVE MEDIATION.
Preventive mediation proceeding may be initiated in two (2) ways:
(1) By filing
a notice or request of preventive mediation, as distinguished from a notice of
strike/lockout; or
(2) By conversion of the notice of strike/lockout into a preventive mediation ca
se.
3. AUTHORITY TO CONVERT A NOTICE OF STRIKE/LOCKOUT INTO A PREVENTIVE
MEDIATION CASE.
The NCMB has the authority to convert a notice of strike/lockout filed by the un
ion/employer into a
preventive mediation case under any of the following circumstances:
1. When the issues raised in the notice of strike/lockout are not strikeable in
character.
2. When the party which filed the notice of strike/lockout voluntarily asks for
the conversion.
3. When both parties to a labor dispute mutually agree to have it subjected to p
reventive mediation
proceeding.
Such authority is in pursuance of the NCMBs duty to exert all efforts at mediatio
n and conciliation to
enable the parties to settle their dispute amicably and in line with the State p
olicy of favoring voluntary modes of
settling labor disputes.
4. CONVERSION OF A NOTICE OF STRIKE OR NOTICE OF LOCKOUT INTO A PREVENTIVE
MEDIATION CASE RESULTS IN ITS DISMISSAL.
Once the notice of strike is converted into a preventive mediation case, the not
ice is deemed dropped from
the dockets as if no notice of strike has been filed. Since there is no more not
ice of strike to speak about, any strike
subsequently staged by the union after the conversion is deemed not to have comp
lied with the requirements of a

valid strike and therefore illegal.
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The same rule applies in the case of lockout by an employer.
5. RELEVANT CASES.
A case in point is Philippine Airlines, Inc. v. Secretary of Labor and Employmen
t, where the strike was
declared illegal for lack of a valid notice of strike in view of the NCMBs conver
sion of said notice into a preventive
mediation case.
It is clear, according to San Miguel Corporation v. NLRC, that the moment the NC
MB orders the
preventive mediation in a strike case, the union thereupon loses the notice of s
trike it had filed. Consequently, if it
still defiantly proceeds with the strike while mediation is on-going, the strike
is illegal.
E.
DOLE REGIONAL DIRECTORS
1.
JURISDICTION
1. JURISDICTION OF THE DOLE REGIONAL DIRECTORS.
The DOLE Regional Directors have original and exclusive jurisdiction over the fo
llowing cases:
(a)
Labor standards enforcement cases under Article 128;
(b) Small
money claims cases arising from labor standards violations in the amount not exc
eeding
P5,000.00 and not accompanied with a claim for reinstatement under Article 129;
(c) Occupational safety and health violations;
(d) Registration of unions and cancellation thereof, cases filed against unions
and other labor relations
related cases;
(e)
Complaints against private recruitment and placement agencies (PRPAs) for local
employment; and
(f)
Cases submitted to them for voluntary arbitration in their capacity as Ex-Offici
o Voluntary
Arbitrators (EVAs) under Department Order No. 83-07, Series of 2007.
I.
LABOR STANDARDS ENFORCEMENT CASES
1. SUBJECT OF THE VISITORIAL AND ENFORCEMENT POWERS: THE ESTABLISHMENT AND
NOT THE EMPLOYEES THEREIN.
The subject of the visitorial and enforcement powers granted to the DOLE Secreta
ry or his duly authorized
representatives under Article 128 is the establishment which is under inspection
and not the employees thereof.
Consequently, any awards granted are not confined to employees who signed the co
mplaint inspection but
are equally applicable to all those who were employed by the establishment conce
rned at the time the

complaint was filed, even if they were not signatories thereto. The reason is th
at the visitorial and
enforcement powers are relevant to, and may be exercised over, establishments, n
ot over individual
employees thereof, to determine compliance by such establishments with labor sta
ndards laws. Necessarily, in
case of an award from such violation by the establishment, all its existing empl
oyees should be benefited
thereby. It must be stressed, however, that such award should not apply to those
who resigned, retired or ceased to
be employees at the time the complaint was filed.
2. ORIGINAL JURISDICTION.
The DOLE Regional Directors exercise original jurisdiction over the following:
(a)
Cases involving inspection of establishments to determine compliance with labor
standards (Visitorial
Power); and
(b) Cases involving issuance of compliance orders and writs of execution (Enforc
ement Power).
3. VISITORIAL POWER OF REGIONAL DIRECTORS UNDER ARTICLE 128(a).
Pursuant to their visitorial power under Article 128(a), the DOLE Regional Direc
tors shall have:
(a)
access to employers records and premises at any time of the day or night, wheneve
r work is being
undertaken therein; and
(b)
the right:
(1)
to copy from said records;
(2) to question any employee and investigate any fact, condition or matter which
may be necessary to
determine violations or which may aid in the enforcement of the Labor Code and o
f any labor law,
wage order, or rules and regulations issued pursuant thereto.
4. ENFORCEMENT POWER OF REGIONAL DIRECTORS UNDER ARTICLE 128(b).
The statutory basis of the authority of the DOLE Regional Directors to administe
r and enforce labor
standards is found in Article 128(b) of the Labor Code, as amended.
Pursuant thereto, the DOLE Regional Director, in cases where the employer-employ
ee relationship still
exists, shall have the power:
a.
to issue compliance orders to give effect to the labor standards provisions of t
he Labor Code and
other labor legislations based on the findings of labor employment and enforceme
nt officers or
industrial safety engineers made in the course of inspection.
b.
to issue writs of execution to the appropriate authority for the enforcement of
their orders, except in
cases where the employer contests the findings of the labor employment and enfor
cement officer and
raises issues supported by documentary proofs which were not considered in the c
ourse of inspection,
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in which case, the contested case shall fall under the jurisdiction of the Labor
Arbiter to whom it
should be endorsed by the Regional Director.
c.
to order stoppage of work or suspension of operations of any unit or department
of an establishment
when non-compliance with the law or implementing rules and regulations poses gra
ve and imminent
danger to the health and safety of workers in the workplace. Within 24 hours, a
hearing shall be
conducted to determine whether an order for the stoppage of work or suspension o
f operations shall be
lifted or not. In case the violation is attributable to the fault of the employe
r, he shall pay the
employees concerned their salaries or wages during the period of such stoppage o
f work or suspension
of operation.
d.
to require employers, by appropriate regulations, to keep and maintain such empl
oyment records as
may be necessary in aid of his visitorial and enforcement powers under the Labor
Code.
II.
SMALL MONEY CLAIMS CASES
1. JURISDICTION OVER CLAIMS NOT EXCEEDING P5,000.
The DOLE Regional Director has original jurisdiction over small money claims cas
es arising from labor
standards violations in the amount not exceeding P5,000.00 and not accompanied w
ith a claim for reinstatement
Article 129 contemplates the recovery of wages and other monetary claims and ben
efits, including legal
interest, owing to an employee or domestic worker or kasambahay, arising from em
ployer-employee relations
provided the claim does not exceed P5,000.00.
2. REQUISITES FOR THE VALID EXERCISE OF JURISDICTION BY DOLE REGIONAL DIRECTORS
UNDER ARTICLE 129.
The following requisites must all concur, to wit:
(1) The claim is presented by an employee or domestic worker or kasambahay;
(2) The claimant, no longer being employed, does not seek reinstatement; and
(3) The aggregate money claim of the employee or domestic worker or kasambahay d
oes not exceed
P5,000.00.
In the absence of any of the aforesaid three (3) requisites, the Labor Arbiters
have original and exclusive
jurisdiction over all claims arising from employer-employee relations, other tha
n claims for employees
compensation, social security, PhilHealth and maternity benefits.
III.
CASES SUBMITTED TO REGIONAL DIRECTORS AND ASSISTANT REGIONAL
DIRECTORS FOR VOLUNTARY ARBITRATION IN THEIR CAPACITY AS EX-OFFICIO
VOLUNTARY ARBITRATORS (EVAs)
1. JURISDICTION.
As EVAs, the DOLE Regional Directors and their Assistants have jurisdiction over
the following cases:
(a) All grievances arising from the interpretation or implementation of the CBA;
(b) All grievances arising from the interpretation or enforcement of company per
sonnel policies which
remain unresolved after exhaustion of the grievance procedure;
(c)
Cases referred to them by the DOLE Secretary under the DOLEs Administrative Inter
vention for
Dispute Avoidance (AIDA) initiative (provided under DOLE Circular No. 1, Series
of 2006); and
(d) Upon agreement of the parties, any other labor dispute may be submitted to t
he EVAs for voluntary
arbitration.
F.
DOLE SECRETARY
1. POWERS OF THE DOLE SECRETARY.
The DOLE Secretary, being the head of the Department of Labor and Employment, is
possessed of a
number of powers, some of which are mentioned in the syllabus, to wit:
1. Visitorial and enforcement powers;
2. Power to suspend/effects of termination;
3. Assumption of jurisdiction;
4. Appellate jurisdiction; and
5. Voluntary arbitration powers.
1.
VISITORIAL AND ENFORCEMENT POWERS
1. THREE (3) KINDS OF POWER UNDER ARTICLE 128.
Article 128 of the Labor Code, as amended, basically enunciates the three (3) ki
nds of power which the
DOLE Secretary and/or the Regional Directors, his duly authorized representative
s, may exercise in connection with
the administration and enforcement of the labor standards provisions of the Labo
r Code and of any labor law, wage
order or rules and regulations issued pursuant thereto.
The three (3) kinds of power are as follows:
1) Visitorial power:
2) Enforcement power: and
3) Appellate power or power of review.
2. WHO EXERCISE THE POWERS.
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Nos. 1 and 2 above are exercised under the original jurisdiction of the DOLE Reg
ional Directors.
This has been earlier discussed under the separate topic of VII. PROCEDURE AND JU
RISDICTION, E.
DOLE Regional Directors, 1. Jurisdiction, supra. Hence, the same will no longer b
e touched under the instant topical
discussion.
The appellate power in No. 3 above may only be exercised by the DOLE Secretary i
n respect to any
decision, order or award issued by the DOLE Regional Directors.
3. NATURE OF THE VISITORIAL AND ENFORCEMENT POWERS.
The visitorial and enforcement powers granted to the DOLE Secretary and the DOLE
Regional Directors
who are his duly authorized representatives, are quasi-judicial in nature.
4. IT IS THE REGIONAL DIRECTORS WHO HAVE ORIGINAL JURISDICTION TO EXERCISE THE
VISITORIAL AND ENFORCEMENT POWERS UNDER ARTICLES 37, 128 AND 274.
In the instances contemplated under Articles 37, 128 and 274, it is the DOLE Reg
ional Directors, the
DOLE Secretarys duly authorized representatives commonly referred to in these thr
ee (3) articles, who have the
original jurisdiction to exercise the visitorial power granted therein.
8. THE ROLE OF THE DOLE SECRETARY IN THE EXERCISE OF VISITORIAL AND
ENFORCEMENT POWERS IS APPELLATE IN NATURE.
It is clear from the above disquisition that the original jurisdiction over the
exercise of the visitorial and
enforcement powers belongs to the DOLE Regional Directors, as the duly authorize
d representatives of the DOLE
Secretary.
The role of the DOLE Secretary is confined to the exercise of his appellate juri
sdiction over the decisions,
orders and awards of the DOLE Regional Directors in cases brought before them fo
r adjudication under Articles 128
and 274.
2.
POWER TO SUSPEND EFFECTS OF TERMINATION
1. GROUNDS.
The DOLE Secretary may suspend the effects of termination pending resolution of
the dispute in the event
of a prima facie finding by the appropriate official of the DOLE before whom the
dispute is pending that:
1. the termination may cause a serious labor dispute; and/or
2. the termination is in implementation of a mass lay-off.
2. RATIONALE FOR SUSPENDING THE EFFECTS OF TERMINATION.
The obvious purpose behind this rule is to bring the parties back to the status
quo ante litem, that is, their
state of relationship prior to the termination. In this way, the workers will be
litigating the issue of the validity or
legality of their termination on more or less equal footing with the employer si
nce they will be immediately
reinstated and accordingly not be deprived of their wages while the litigation i
s on-going.
3. REINSTATEMENT PENDING RESOLUTION OF THE TERMINATION DISPUTE.
Suspension of the effects of termination will necessarily result in the immediat
e reinstatement of the
terminated employees. An order of reinstatement pending resolution of the case m
ay thus be issued by the DOLE
Secretary pursuant to this power.
4. DISTINGUISHED FROM DOLE SECRETARYS POWER OF ASSUMPTION OR CERTIFICATION
IN NATIONAL INTEREST CASES.
a. Different power of the DOLE Secretary.
This power of the DOLE Secretary granted under Article 277(b) should be distingu
ished from his power to
assume or certify labor disputes involving industries indispensable to the natio
nal interest under Article 263(g). The
following distinctions may be cited:
First, the exercise of the power to suspend the effects of termination involves
only the issue of termination
of employment which may cause a serious labor dispute or is in implementation of
a mass lay-off; while the power
to assume or certify labor disputes is applicable to all labor disputes, irrespe
ctive of the grounds therefor, provided
such labor disputes will cause or likely to cause strikes or lockouts in industr
ies indispensable to the national
interest.
Second, the former requires the conduct of preliminary determination of the exis
tence of prima facie
evidence that the termination may cause a serious labor dispute or is in impleme
ntation of a mass lay-off to be
conducted by the appropriate official of the DOLE before whom the termination di
spute is pending; while the latter
does not require such preliminary prima facie determination. In fact, prior noti
ce and hearing are not required before
the DOLE Secretary may issue an assumption or certification order as held in Cap
itol Medical Center, Inc. v.
Trajano.
Third, the serious labor dispute contemplated under the former may or may not invo
lve a strike or
lockout; while the labor dispute referred to in the latter will cause or likely
to cause a strike or lockout.
Fourth, the former may be exercised in cases of termination of employment for as
long as any of the two
(2) grounds mentioned in Article 277(b) exists, irrespective of the nature of th
e business of the employer; while the
latter may only be exercised in industries indispensable to the national interes
t.
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Fifth, the remedy under the former is immediate reinstatement pending resolution
of the termination case;
while in the latter, the remedy is the automatic return to work of the strikers
or locked-out employees, if the strike or
lock-out is on-going at the time of the issuance of the assumption/certification
order or the enjoining of the strike or
lockout, if one has not taken place, pending the resolution of the issues raised
in the notice of strike or lockout.
3.
ASSUMPTION OF JURISDICTION
The DOLE Secretary is granted under Article 263(g) of the Labor Code, the extrao
rdinary police power of
assuming jurisdiction over a labor dispute which, in his opinion, will cause or
likely to cause a strike or lockout in an
industry indispensable to the national interest, or the so-called national intere
st cases. Alternatively, he may
certify the labor dispute to the NLRC for compulsory arbitration.
4.
APPELLATE JURISDICTION
I.
VARIOUS APPEALS TO THE DOLE SECRETARY
UNDER THE LABOR CODE AND APPLICABLE RULES
1. OFFICES FROM WHICH APPEALS MAY ORIGINATE.
Appeals to the DOLE Secretary may originate from any of the following offices:
(1) DOLE Regional Directors;
(2) Med-Arbiters;
(3) Director of the Bureau of Labor Relations (BLR); and
(4) Philippine Overseas Employment Administration (POEA).
2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.
The following decisions, awards or orders are not appealable to the Office of th
e DOLE Secretary:
(1) Those rendered by Labor Arbiters that are appealable to the Commission (NLRC
) which has exclusive
appellate jurisdiction thereover;
(2) Those rendered by the Commission (NLRC) since they can be elevated directly
to the CA by way of a
Rule 65 certiorari petition;
(3) Those rendered by the BLR Director in the exercise of his appellate jurisdic
tion since they can be
brought directly to the CA under Rule 65 certiorari petition;
(4) Those rendered by DOLE Regional Directors under Article 129 of the Labor Cod
e since they are
appealable to the NLRC;
(5) Those issued by DOLE Regional Directors in their capacity as Ex-Officio Volu
ntary Arbitrators (EVAs)
since they can be brought directly to the CA under Rule 43 of the Rules of Court
; and
(6) Those rendered by Voluntary Arbitrators which are appealable directly to the
CA under Rule 43 of the
Rules of Court.
II.
APPEALS FROM DOLE REGIONAL DIRECTORS
1. CASES APPEALABLE TO DOLE SECRETARY.
Not all decisions, awards or orders rendered by the DOLE Regional Directors are
appealable to the DOLE
Secretary. Only those issued in the following cases are so appealable:
(a)
Labor standards enforcement cases under Article 128;
(b) Occupational safety and health violations; and
(c)
Complaints against private recruitment and placement agencies (PRPAs) for local
employment.
2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.
As earlier pointed out, the following cases decided by the DOLE Regional Directo
rs are not appealable to
the DOLE Secretary but to some other agencies/tribunals indicated below:
(a)
Decisions in small money claims cases arising from labor standards violations in
the amount not
exceeding P5,000.00 and not accompanied with a claim for reinstatement under Art
icle 129 are
appealable to the NLRC;
(b) Decisions in cases submitted to DOLE Regional Directors for voluntary arbitr
ation in their capacity as
Ex-Officio Voluntary Arbitrators (EVAs) under Department Order No. 83-07, Series
of 2007 may be
elevated directly to the Court of Appeals by way of a Rule 43 petition. This is
so because the DOLE
Regional Directors, in so deciding, are acting as Voluntary Arbitrators; hence,
what should apply are
the rules on appeal applicable to voluntary arbitration.
III.
APPEALS FROM DECISIONS OF
MEDIATORS-ARBITERS (MED-ARBITERS) AND BLR DIRECTOR
(NOTE: The discussion of this sub-topic is presented alongside the comments on t
he topic of VIII.
PROCEDURE AND JURISDICTION, C. Bureau of Labor Relations Med-Arbiters, 1. Jurisd
iction
(Original and Appellate), supra)
V.
APPEALS FROM DECISIONS OF POEA
1. CASES APPEALABLE TO THE DOLE SECRETARY.
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The decisions in the following cases rendered by the Philippine Overseas Employm
ent Administration
(POEA) in its original jurisdiction are appealable to the DOLE Secretary:
(a)
Recruitment violations and other related cases. - All cases which are administra
tive in character,
involving or arising out of violation of rules and regulations relating to licen
sing and registration of
recruitment and employment agencies or entities, including refund of fees collec
ted from workers and
violation of the conditions for the issuance of license to recruit workers.
(b) Disciplinary action cases and other special cases which are administrative i
n character, involving
employers, principals, contracting partners and Filipino migrant workers.
It must be noted that the POEA ceased to have any jurisdiction over money claims
of OFWs, or those
arising out of an employer-employee relationship or by virtue of any law or cont
ract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other form
s of damages. The jurisdiction
over these claims was transferred to the Labor Arbiters of the NLRC by virtue of
Section 10 of R.A. No. 8042, as
amended. Hence, appeals therefrom may be instituted to the Commission (NLRC).
5.
VOLUNTARY ARBITRATION POWERS
1. AIDA.
a. New rule on voluntary arbitration by the DOLE Secretary.
A new form of dispute settlement by the DOLE Secretary was introduced by DOLE Ci
rcular No. 1, Series
of 2006. Called Administrative Intervention for Dispute Avoidance (AIDA), this i
s a new administrative
procedure for the voluntary settlement of labor disputes in line with the object
ives of R.A. No. 9285, Executive
Order No. 523 and the mandate of the DOLE to promote industrial peace.
b. Nature of administrative intervention by DOLE Secretary.
This recourse is separate from the established dispute resolution modes of media
tion, conciliation and
arbitration under the Labor Code, and is an alternative to other voluntary modes
of dispute resolution such as the
voluntary submission of a dispute to the Regional Director for mediation, to the
NCMB for preventive mediation, or
to the intervention of a regional or local tripartite peace council for the same
purpose.
c. Parties who may request for DOLE Secretarys intervention.
Either or both the employer and the certified collective bargaining agent (or th
e representative of the
employees where there is no certified bargaining agent) may voluntarily bring to
the Office of the DOLE Secretary,
through a Request for Intervention, any potential or ongoing dispute defined bel
ow.
d. Potential or on-going dispute.
A potential or on-going dispute refers to:
(a) a live and active dispute;
(b) that may lead to a strike or lockout or to massive labor unrest; and
(c) is not the subject of any complaint or notice of strike or lockout at the ti
me a Request for Intervention
is made.
2. VOLUNTARY ARBITRATION BY DOLE SECRETARY.
If the intervention through AIDA fails, either or both parties may avail themsel
ves of the remedies provided
under the Labor Code. Alternatively, the parties may submit their dispute to the
Office of the DOLE Secretary for
voluntary arbitration. Such voluntary arbitration should be limited to the issue
s defined in the parties submission to
voluntary arbitration agreement and should be decided on the basis of the partie
s position papers and submitted
evidence. The Office of the DOLE Secretary is mandated to resolve the dispute wi
thin sixty (60) days from the
parties submission of the dispute for resolution.
3. DOES THE DOLE SECRETARY ASSUME THE ROLE OF VOLUNTARY ARBITRATOR ONCE HE
ASSUMES JURISDICTION OVER A LABOR DISPUTE?
In the 2014 case of Philtranco Service Enterprises, Inc. v. Philtranco Workers U
nion-Association of
Genuine Labor Organizations (PWU-AGLO), this poser was answered in the negative.
A notice of strike was
filed by respondent union which, after failure of conciliation and mediation by
the NCMB, was referred by the
Conciliator-Mediator to the Office of the DOLE Secretary who thereby assumed jur
isdiction over the labor dispute.
The case was resolved by the Acting DOLE Secretary in favor of respondent union.
A motion for reconsideration
was filed by petitioner company. The DOLE Secretary, however, declined to rule o
n the motion citing a DOLE
regulation, applicable to voluntary arbitration, which provided that the Volunta
ry Arbitrators decisions, orders,
resolutions or awards shall not be the subject of motions for reconsideration. T
he DOLE Secretary took the position
that when he assumed jurisdiction over the labor dispute, he was acting as a Vol
untary Arbitrator. Petitioner
subsequently filed a Rule 65 certiorari petition with the CA. The CA, however, d
ismissed petitioner companys
Rule 65 certiorari petition on the ground, among others, that the decision of th
e DOLE Secretary, having been
rendered by him in his capacity as Voluntary Arbitrator, is not subject to a Rul
e 65 certiorari petition but to a Rule
43 petition for review which properly covers decisions of Voluntary Arbitrators.
Before the Supreme Court, petitioner asserted that, contrary to the CAs ruling, t
he case is not a simple
voluntary arbitration case. The character of the case, which involves an impendi
ng strike by petitioners employees;
the nature of petitioners business as a public transportation company, which is i
mbued with public interest; the
merits of its case; and the assumption of jurisdiction by the DOLE Secretary all
these circumstances removed the
case from the coverage of Article 262, and instead placed it under Article 263,
of the Labor Code. For its part,
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2014 BAR EXAMS
respondent union argued that the DOLE Secretary decided the assumed case in his
capacity as Voluntary Arbitrator;
thus, his decision, being that of a Voluntary Arbitrator, is only assailable via
a petition for review under Rule 43.
The Supreme Court, however, pronounced that:
It cannot be said that in taking cognizance of NCMB-NCR CASE No. NS-02-028-07, th
e Secretary of Labor
did so in a limited capacity, i.e., as a voluntary arbitrator. The fact is unden
iable that by referring the case to the
Secretary of Labor, Conciliator-Mediator Aglibut conceded that the case fell wit
hin the coverage of Article 263 of
the Labor Code; the impending strike in Philtranco, a public transportation comp
any whose business is imbued
with public interest, required that the Secretary of Labor assume jurisdiction o
ver the case, which he in fact did.
By assuming jurisdiction over the case, the provisions of Article 263 became app
licable, any representation to the
contrary or that he is deciding the case in his capacity as a voluntary arbitrat
or notwithstanding.
Consequently, the Supreme Court reversed and set aside the CA ruling and reinsta
ted the case and directed
the CA to resolve the same with deliberate dispatch.
G.
GRIEVANCE MACHINERY
AND VOLUNTARY ARBITRATION
1.
SUBJECT MATTER OF GRIEVANCE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A grievance or grievable issue is any question raised by either the employer or the
union regarding
any of the following issues or controversies:
1. The interpretation or application of the CBA;
2. The interpretation or enforcement of company personnel policies; or
3. Violation of any provisions of the CBA or company personnel policies.
2. VALIDITY AND BINDING EFFECT OF DECISIONS OF GRIEVANCE COMMITTEE.
A member of the bargaining union who brought his grievable issue for resolution
by the Grievance
Committee is bound by whatever disposition the latter may render thereon.
ELEVATION OF GRIEVANCE TO VOLUNTARY ARBITRATION
1. UNRESOLVED GRIEVANCES.
All grievances submitted to the grievance machinery which are not settled within
seven (7) calendar days
from the date of their submission for resolution should automatically be referre
d to voluntary arbitration prescribed
in the CBA.
The various internal procedural steps or stages of resolving grievances under th

e grievance machinery in a
CBA should be fully exhausted before resort to voluntary arbitration may be made
. The 7-calendar day period is
usually reckoned from the date of their submission for resolution to the last st
ep of the internal grievance machinery.
Simply stated, only after exhausting all the internal procedures and only after
the lapse of this period that unsettled
or unadjusted grievances should automatically be referred to voluntary arbitrati
on enunciated in the CBA.
2. A PARTY IS NOT ALLOWED TO GO DIRECTLY TO COURT IN DISREGARD OF VOLUNTARY
ARBITRATION AFTER DECISION IS RENDERED BY GRIEVANCE COMMITTEE.
Before a party is allowed to seek the intervention of the court, it is a precond
ition that he should have
availed of all the means of administrative processes afforded him. Hence, if a r
emedy within the administrative
machinery can still be resorted to by giving the administrative officer concerne
d every opportunity to decide on a
matter that comes within his jurisdiction, then such remedy should be exhausted
first before the courts judicial
power can be sought. The premature invocation of the courts judicial intervention
is fatal to ones cause of action.
Indeed, the underlying principle of the rule on exhaustion of administrative rem
edies rests on the presumption
that when the administrative body, or grievance machinery, is afforded a chance
to pass upon the matter, it will
decide the same correctly.
2.
VOLUNTARY ARBITRATOR
1. VOLUNTARY ARBITRATION.
Voluntary arbitration refers to the mode of settling labor-management disputes in
which the parties
select a competent, trained and impartial third person who is tasked to decide o
n the merits of the case and whose
decision is final and executory. It is a third-party settlement of a labor dispu
te involving the mutual consent by the
representatives of the employer and the labor union involved in a labor dispute
to submit their case for arbitration.
2. VOLUNTARY ARBITRATOR.
a. Who is a Voluntary Arbitrator?
A Voluntary Arbitrator refers to:
(1)
any person who has been accredited by the National Conciliation and Mediation Bo
ard (NCMB or
Board) as such; or
(2)
any person named or designated in the CBA by the parties as their Voluntary Arbi
trator; or
(3)
one chosen by the parties with or without the assistance of the NCMB, pursuant t
o a selection
procedure agreed upon in the CBA; or
(4)
one appointed by the NCMB in case either of the parties to the CBA refuses to su
bmit to voluntary
arbitration.
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2014 BAR EXAMS
This term includes a panel of Voluntary Arbitrators.
3. VOLUNTARY ARBITRATOR ACTS IN QUASI-JUDICIAL CAPACITY.
Although not a part of a government unit or a personnel of the Department of Lab
or and Employment, a
Voluntary Arbitrator, by the nature of his functions, acts in a quasi-judicial c
apacity. He is a means by which
government acts, or by which a certain government act or function is performed.
He performs a state function
pursuant to a governmental power delegated to him under the Labor Code. The land
mark case of Luzon
Development Bank v. Association of Luzon Development Bank Employees, clearly dec
lared that a Voluntary
Arbitrator, whether acting solely or in a panel, enjoys in law the status of a q
uasi-judicial agency.
(a)
JURISDICTION
1. ORIGINAL AND EXCLUSIVE JURISDICTION.
a. In general.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have exclusive
and original jurisdiction
over the following cases:
(1)
Unresolved grievances arising from the interpretation or implementation of the c
ollective bargaining
agreement (CBA).
(2)
Unresolved grievances arising from the interpretation or enforcement of company
personnel policies.
(3) Violations of the CBA which are not gross in character.
(4) Other labor disputes, including unfair labor practices and bargaining deadlo
cks, upon agreement of the
parties.
(5) National interest cases.
(6) Wage distortion issues arising from the application of any wage orders in or
ganized establishments.
(7) Unresolved grievances arising from the interpretation and implementation of
the Productivity Incentive
Programs under R.A. No. 6971.
b. Rights disputes.
Nos. 1, 2 and 3 above, which are provided for under Article 261 of the Labor Cod
e, are commonly known
as rights disputes. This kind of disputes contemplates the existence of a CBA alre
ady concluded or, at any rate, a
situation in which no effort is made to bring about a formal change in its terms
or to create a new one. The dispute
relates either to the meaning or proper application of a particular provision th
erein with reference to a specific
situation or to an omitted case. In the latter event, the claim is founded upon
some incident of the employment
relation or asserted one, independent of those covered by the collective agreeme
nt. In either case, the claim is to

rights accrued and not merely to new ones created for the future.
c. Interest disputes.
Bargaining deadlocks are often referred to as interest disputes. This kind of disp
utes relates to disputes
over the formation of collective agreements or efforts to secure them. They aris
e where there is no such agreement
or where it is sought to change the terms of one and therefore the issue is not
whether an existing agreement controls
the controversy. They look to the acquisition of rights for the future, not to a
ssertion of rights claimed to have
vested in the past.
I.
III.
JURISDICTION OVER OTHER LABOR DISPUTES
Under Article 262 of the Labor Code, upon agreement of the parties, the Voluntar
y Arbitrator or panel of
Voluntary Arbitrators may also hear and decide all other labor disputes, includi
ng unfair labor practices and
bargaining deadlocks. For this purpose, before or at any stage of the compulsory
arbitration process, parties to a
labor dispute may agree to submit their case to voluntary arbitration.
IV.
JURISDICTION OVER NATIONAL INTEREST CASES
Article 263(g) of the Labor Code which involves the DOLE Secretarys power of assu
mption of
jurisdiction or certification to the NLRC of labor disputes affecting industries
indispensable to the national interest,
also provides that [b]efore or at any stage of the compulsory arbitration process
, the parties may opt to
submit their dispute to voluntary arbitration.
This means that even if the case has already been assumed by the DOLE Secretary
or certified to the NLRC
for compulsory arbitration, or even during its pendency therewith, the parties t
hereto may still withdraw the case
from the DOLE Secretary or NLRC, as the case may be, and submit it to a Voluntar
y Arbitrator for voluntary
arbitration purposes.
V.
JURISDICTION OVER WAGE DISTORTION CASES
Jurisdiction over wage distortion cases depends on whether the establishment is

organized or unorganized.
In organized establishments, the employer and the union are required to negotiat
e to correct the wage
distortion. Any dispute arising from such wage distortion should be resolved thr
ough the grievance procedure under
the CBA and if it remains unresolved, through voluntary arbitration.
In unorganized establishments, where there are no CBAs or recognized or certifie
d collective bargaining
unions, the jurisdiction is with the Labor Arbiter.
VI.
EXERCISE OF JURISDICTION
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2014 BAR EXAMS
1. HOW VOLUNTARY ARBITRATOR ACQUIRES JURISDICTION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall exercise jurisd
iction over a specific case
only under the following:
(1) Upon receipt of a Submission Agreement duly signed by both parties;
(2) Upon receipt of a Notice to Arbitrate when there is refusal to arbitrate by
one party;
(3) Upon receipt of an appointment or designation as Voluntary Arbitrator by the
NCMB (Board) in
either of the following circumstances:
(3.1.) In the event that the parties failed to select a Voluntary Arbitrator; or
(3.2.) In the absence of a named Voluntary Arbitrator in the CBA and the party u
pon whom the Notice
to Arbitrate is served does not favorably reply within seven (7) days from recei
pt of such notice.
2. HOW INITIATED.
Based on the foregoing discussion, an arbitration may be initiated either by way
of:
(1) A Submission Agreement; or
(2) A Demand or Notice to Arbitrate invoking the arbitration clause in the CBA;
or
(3) An Appointment from the NCMB.
A Submission Agreement refers to a written agreement by the parties submitting the
ir case for arbitration,
containing a statement of the issues, the name of their chosen Voluntary Arbitra
tor and a stipulation and an
undertaking to abide by and comply with the resolution that may be rendered ther
ein, including the cost of
arbitration.
A Notice to Arbitrate refers to a formal demand made by one party to the other for
the arbitration of a
particular dispute in the event of refusal by one party in a CBA to submit the s
ame to arbitration
3. SOME PRINCIPLES.
1) Cases cognizable by Voluntary Arbitrators in their original jurisdiction but
filed with Labor
Arbiters, DOLE Regional Offices or NCMB should be disposed of by referring them
to the Voluntary
Arbitrators or panel of Voluntary Arbitrators mutually chosen by the parties.
2) Cases cognizable by Voluntary Arbitrators but filed with regular courts shoul
d be dismissed.
3) THE WELL-ENTRENCHED RULE IS THAT WHEN A CASE DOES NOT INVOLVE THE
PARTIES TO A CBA THE EMPLOYER AND THE BARGAINING UNION - IT IS NOT
SUBJECT TO VOLUNTARY ARBITRATION. While individual or group of employees, withou
t the
participation of the union, are granted the right to bring grievance directly to
the employer, they
cannot submit the same grievance, if unresolved by the employer, for voluntary a
rbitration without
the unions approval and participation. The reason is that it is the union which i
s the party to the
CBA, and not the individual or group of employees. -This rule was lately affirme
d in the 2009 case of
Tabigue v. International Copra Export Corporation. Pursuant to Article 260 of th
e Labor Code, the
parties to a CBA shall name or designate their respective representatives to the
grievance machinery and if
the grievance is unsettled in that level, it shall automatically be referred to
the voluntary arbitrators
designated in advance by parties to a CBA. Consequently only disputes involving
the union and the
company shall be referred to the grievance machinery or voluntary arbitrators.
(b)
PROCEDURE
EXECUTION PROCEEDINGS
IN VOLUNTARY ARBITRATION CASES
1. PROCEDURAL RULES IN THE ENFORCEMENT OF WRIT OF EXECUTION.
In the enforcement of a writ of execution, the Sheriff or other authorized offic
er should be guided by the
Procedural Guidelines in the Execution of Voluntary Arbitration Awards/Decisions
. These Guidelines should be
followed in the execution of the awards or decision of Voluntary Arbitrators or
panel of Voluntary Arbitrators.
Other rules that may be pertinently observed and followed are the following:
(1) 2012 NLRC Sheriffs Manual on Execution of Judgment;
(2) Memorandum of Agreement between the NLRC and the NCMB dated July 26, 1996; a
nd
(3) Revised Rules of Court, as amended, in the absence of applicable rules.
2. EXECUTION
MOTU PROPRIO OR UPON MERE MOTION WITHIN FIVE (5) YEARS FROM
FINALITY OF DECISION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators may, motu proprio or
on motion of any
interested party, issue a writ of execution on a judgment within five (5) years
from the date it becomes final and
executory.
3. WHEN LABOR ARBITER MAY ISSUE THE WRIT OF EXECUTION.
In case the Voluntary Arbitrator or panel of Voluntary Arbitrators who rendered
and issued the decision,
order or award is, for any reason, absent or incapacitated, the Labor Arbiter in
the region where the movant
resides, may issue the writ of execution. But unlike the Voluntary Arbitrator or
panel of Voluntary Arbitrators who
issued the decision, order or award, the Labor Arbiter cannot issue such writ mo
tu proprio but only upon motion of
any interested party.
4. PERSONS WHO MAY ENFORCE THE WRIT OF EXECUTION.
Any of the following persons may be required to enforce the writ of execution:
(1) The Sheriff of the Commission (NLRC);
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2014 BAR EXAMS
(2) A duly deputized officer;
(3) A Special Sheriff;
(4) The Sheriff of the regular courts; or
(5) Any public official whom the parties may designate in the submission agreeme
nt to execute the final
decision, order or award.
(c)
REMEDIES
1. RELIEFS AND REMEDIES THAT MAY BE GRANTED BY VOLUNTARY ARBITRATORS.
Besides the procedural remedies discussed above, the Voluntary Arbitrator or pan
el of Voluntary
Arbitrators may grant the same reliefs and remedies granted by Labor Arbiters un
der Article 279 of the Labor Code,
such as:
(1)
In illegal dismissal cases:
(a)
Actual reinstatement;
(b) Separation pay in lieu of reinstatement, in case reinstatement becomes impos
sible, non-feasible or
impractical;
(c)
Full backwages;
(d) Moral and exemplary damages; and
(e) Attorneys fees.
(2)
Monetary awards in monetary claims cases in which case, the decision should spec
ify the amount
granted and the formula used in the computation thereof.
H.
COURT OF APPEALS
1.
RULE 65, RULES OF COURT
1. RULE 65 PETITION FOR CERTIORARI, THE ONLY MODE OF ELEVATING A LABOR CASE TO
THE COURT OF APPEALS.
The only mode by which a labor case decided by any of the following labor author
ities/tribunals may reach
the Court of Appeals is through a Rule 65 petition for certiorari.
(a)
the DOLE Secretary;
(b) the Commission (NLRC); and
(c)
the Director of the Bureau of Labor Relations (BLR) in cases decided by him in h
is appellate
jurisdiction (as distinguished from those he decides in his original jurisdictio
n which are appealable to
the DOLE Secretary).
The remedy of ordinary appeal to the Court of Appeals is not available from thei
r decisions, orders or
awards. The reason for this rule is that their decisions, orders or awards are f
inal and executory and therefore
inappealable.
2. THE ONLY EXCEPTION.
The only exception to the foregoing rule is in the case of decisions, orders or
awards issued by the
Voluntary Arbitrator or panel of Voluntary Arbitrators which may be elevated to
the Court of Appeals by way
of an ordinary appeal under a Rule 43 petition for review.
3. FILING OF MOTION FOR RECONSIDERATION OF THE DECISION OF THE DOLE SECRETARY,
THE COMMISSION (NLRC) OR THE BLR DIRECTOR, A PRE-REQUISITE TO FILING OF RULE 65
PETITION FOR CERTIORARI.
The rule on the filing of a Motion for Reconsideration of the decision of the DO
LE Secretary, the NLRC
and the BLR Director is mandatory and jurisdictional. Failure to comply therewit
h would result in the dismissal of
the Rule 65 certiorari petition. Jurisprudence abounds enunciating the rule that
a motion for reconsideration is a prerequisite
for the filing of a special civil action for certiorari.
The reason for this rule is that in labor cases, a motion for reconsideration is
the plain and adequate
remedy from an adverse decision of the DOLE Secretary, the NLRC and the BLR Dire
ctor.
THE PHILTRANCO DOCTRINE: a motion for reconsideration should be filed even thoug
h it is not
required or even prohibited by the concerned government office. This was the rul
e enunciated in the
2014 case of Philtranco Service Enterprises, Inc. v. Philtranco Workers Union-As
sociation of
Genuine Labor Organizations (PWU-AGLO). Thus, while a government office may proh
ibit altogether
the filing of a motion for reconsideration with respect to its decisions or orde
rs, the fact remains that
certiorari inherently requires the filing of a motion for reconsideration which
is the tangible representation
of the opportunity given to the office to correct itself. Unless it is filed, th
ere could be no occasion to
rectify. Worse, the remedy of certiorari would be unavailing. Simply put, regard
less of the proscription
against the filing of a motion for reconsideration, the same may be filed on the
assumption that rectification
of the decision or order must be obtained and before a petition for certiorari m
ay be instituted.
4.
CERTIORARI PETITION MAY BE FILED EVEN IF THE DECISION OF THE DOLE SECRETARY,
THE COMMISSION (NLRC), OR THE BLR DIRECTOR HAS ALREADY BECOME FINAL AND
EXECUTORY.
This rule applies to the decisions rendered by the DOLE Secretary, the NLRC or t
he BLR Director (in
cases which he decided in his appellate jurisdiction).
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2014 BAR EXAMS
If the CA grants the petition and nullifies their decisions on the ground of gra
ve abuse of discretion
amounting to excess or lack of jurisdiction, such decisions are, in contemplatio
n of law, null and void ab initio;
hence, they never became final and executory.
JUDICIAL REVIEW OF DECISIONS
OF VOLUNTARY ARBITRATORS
1. DECISIONS, FINAL AND EXECUTORY.
As a general rule, decisions or awards of Voluntary Arbitrators are final, inapp
ealable and executory after
ten (10) calendar days from receipt of a copy thereof by the parties.
2. ORDINARY APPEAL UNDER RULE 43 OF THE 1997 RULES OF CIVIL PROCEDURE
VOLUNTARY ARBITRATORS ARE OF THE SAME LEVEL AS RTC JUDGES.
Being a quasi-judicial agency, the decisions and awards of a Voluntary Arbitrato
r are appealable by way of
a petition for review to the Court of Appeals under Revised Administrative Circu
lar No. 1-95 which provides for a
uniform procedure for appellate review of all adjudications of quasi-judicial en
tities and which is now embodied in
Section 1, Rule 43 of the 1997 Rules of Civil Procedure.
The ruling in Luzon Development Bank v. v. Association of Luzon Development Bank
Employees, in
effect, equates the decisions or awards of the Voluntary Arbitrator to those of
the Regional Trial Court (RTC).
Hence, in a petition for certiorari from the awards or decisions of the Voluntar
y Arbitrator, the Court of Appeals has
concurrent jurisdiction with the Supreme Court.
In Alcantara, Jr. v. CA, it was held that Luzon Development Bank is still a good
law.
3. PERIOD OF APPEAL 15 DAYS.
Rule 43 of the Rules of Court requires that the petition for review to be taken
to the Court of Appeals
should be filed within fifteen (15) days from notice of the award, judgment or f
inal order or resolution of the
Voluntary Arbitrator.
I.
SUPREME COURT
1.
RULE 45, RULES OF COURT
1. RULE 45 PETITION FOR REVIEW ON CERTIORARI, THE ONLY MODE BY WHICH A LABOR
CASE MAY REACH THE SUPREME COURT.
Since the Court of Appeals has jurisdiction over the petition for certiorari und
er Rule 65 that may be filed
before it from the decisions of the NLRC or the DOLE Secretary or the BLR Direct
or (in cases decided by him in
his appellate jurisdiction), any alleged errors committed by it in the exercise

of its jurisdiction would be errors of
judgment which are reviewable by means of a timely appeal to the Supreme Court a
nd not by a special civil action
of certiorari.
If the aggrieved party fails to do so within the reglementary period and the dec
ision accordingly becomes
final and executory, he cannot avail himself of the writ of certiorari, his pred
icament being the effect of his
deliberate inaction. A petition for certiorari under Rule 65 cannot be a substit
ute for a lost appeal under Rule
45; hence, it should be dismissed.
2. MAY RULE 65 CERTIORARI PETITION BE AVAILED OF FROM CA DECISION TO THE
SUPREME COURT?
This poser has been answered both in the affirmative and in the negative.
In answering this poser in the affirmative, it was held in Tomas Claudio Memoria
l College, Inc. v. CA,
that a Rule 65 certiorari petition may be filed if in issuing the assailed decis
ion and resolution, the CA acted with
grave abuse of discretion, amounting to excess or lack of jurisdiction and there
is no plain, speedy and adequate
remedy in the ordinary course of law. A remedy is considered plain, speedy and a
dequate if it will promptly relieve
the petitioner from the injurious effect of the judgment and the acts of the low
er court.
The aggrieved party is proscribed from filing a petition for certiorari if appea
l is available, for the remedies
of appeal and certiorari are mutually exclusive and not alternative or successiv
e. The aggrieved party is likewise
barred from filing a petition for certiorari if the remedy of appeal is lost thr
ough his negligence. A petition for
certiorari is an original action and does not interrupt the course of the princi
pal case unless a temporary restraining
order or a writ of preliminary injunction has been issued against the public res
pondent from further proceeding.
In the 2011 case of in Cirtek Employees Labor Union-Federation of Free Workers v
. Cirtek
Electronics, Inc., it was conceded that respondent indeed availed of the wrong r
emedy of certiorari under Rule 65.
Due, however, to the nature of the case, involving workers wages and benefits,
and the fact that whether the petition
was filed under Rule 65 or appeal by certiorari under Rule 45, it was filed with
in 15 days (the reglementary period
under Rule 45) from petitioner s receipt of the resolution of the Court of Appea
ls Resolution denying its motion for
reconsideration, the Court resolved to give it due course. As Almelor v. RTC of
Las Pias, restates: Generally,
on appeal taken either to the Supreme Court or the CA by the wrong or inappropri
ate mode shall be
dismissed. This is to prevent the party from benefiting from one s neglect and m
istakes. However, like most rules,
it carries certain exceptions. After all, the ultimate purpose of all rules of p
rocedures is to achieve substantial
justice as expeditiously as possible.
But in New Ever Marketing, Inc. v. CA, and in the earlier case of San Miguel Cor
poration v. The Hon.
CA, the Supreme Court answered the same poser in the negative because the Rule 6
5 petition was not proper since
an appeal was not only available but also a speedy and adequate remedy. Hence, f
or failure of petitioner to file a
timely appeal, the questioned decision of the Court of Appeals had already becom
e final and executory.
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2014 BAR EXAMS
It is thus clear, according to Tirazona v. CA, that in case what is filed is a p

etition under Rule 65 instead of
Rule 45, before the Supreme Court may treat the petition erroneously filed under
Rule 65 as having been filed under
Rule 45, the same must comply with the reglementary period for filing an appeal.
This requirement is not only
mandatory but also jurisdictional such that failure to do so renders the assaile
d decision final and executory and
deprives the Supreme Court of jurisdiction to alter the final judgment, much les
s to entertain the appeal.
In the 2013 case of Malayang Manggagawa ng Stayfast Phils, Inc. v. NLRC, petitio
ner, instead of filing
a Rule 45 petition for review on certiorari from the decision of the CA, it file
d a Rule 65 petition for certiorari to
the Supreme Court after 52 days from its receipt of the CA decision. Contrary to
petitioners claim that there was no
appeal or any other plain, speedy and adequate remedy in the ordinary course of
law other than this petition for
certiorari, the right recourse was to appeal to the Court in the form of a Rule
45 petition for review on certiorari.
For purposes of appeal, the decision of the CA was a final judgment as it denied
due course to, and dismissed, the
petition. Thus, the decision disposed of the petition of petitioner in a manner
that left nothing more to be done by the
CA in respect to the said case. Thus, petitioner should have filed an appeal by
petition for review on certiorari under
Rule 45, not a petition for certiorari under Rule 65, in this Court. Where the r
ules prescribe a particular remedy for
the vindication of rights, such remedy should be availed of.
3. THE NEYPES DOCTRINE (FRESH PERIOD RULE) - FRESH PERIOD FROM DENIAL OF MOTION
FOR RECONSIDERATION.
In the 2013 case of Elizabeth Gagui v. Dejero, petitioner successively filed two
Motions for
Reconsideration of the CAs decision but both were denied. Petitioner elevated the
case to the Supreme Court under
Rule 45. In their comment, respondents alleged that the instant petition had bee
n filed 15 days after the prescriptive
period of appeal under Section 2, Rule 45 of the Rules of Court. In her reply, p
etitioner countered that she has a
fresh period of 15 days from the date she received the Resolution of the CA to f
ile the instant Rule 45 petition. In
affirming the contention of petitioner, the Supreme Court cited the en banc ruli
ng in the case of Neypes v. CA
which standardized the appeal periods, thus:
To standardize the appeal periods provided in the Rules and to afford litigants f
air opportunity to appeal
their cases, the Court deems it practical to allow a fresh period of 15 days wit
hin which to file the notice of appeal
in the Regional Trial Court, counted from receipt of the order dismissing a moti
on for a new trial or motion for

reconsideration.
Henceforth, this fresh period rule shall also apply to Rule 40 governing appeals fr
om the Municipal Trial
Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Re
gional Trial Courts to the Court of
Appeals; Rule 43 on appeals from quasi-judicial agencies to the Court of Appeals
and Rule 45 governing
appeals by certiorari to the Supreme Court. The new rule aims to regiment or mak
e the appeal period uniform,
to be counted from receipt of the order denying the motion for new trial, motion
for reconsideration (whether full
or partial) or any final order or resolution.
Consequently, since petitioner in Gagui received the CA Resolution denying her t
wo Motions for
Reconsideration only on 16 March 2011, she had another 15 days within which to f
ile her Petition, or until 31 March
2011. This Petition, filed on 30 March 2011, fell within the prescribed 15-day p
eriod.
J.
PRESCRIPTION OF ACTIONS
1. MONEY CLAIMS CASES.
a. Prescriptive period is three (3) years under Article 291 of the Labor Code. The prescriptive period
of all money claims and benefits arising from employer-employee relations is 3 y
ears from the time the
cause of action accrued; otherwise, they shall be forever barred.
b. All other money claims of workers prescribe in 3 years. - Article 291 contemp
lates all money claims
arising from employer-employee relationship, including:
1. Money claims arising from the CBA.
2. Incremental proceeds from tuition increases.
3. Money claims of Overseas Filipino Workers (OFWs).
Note must be made that in the 2010 case of Southeastern Shipping v. Navarra, Jr.
, the 1-year prescriptive
period in Section 28 of POEA-SEC was declared null and void. The reason is that
Article 291 of the Labor Code
is the law governing the prescription of money claims of seafarers, a class of o
verseas contract workers. This law
prevails over said Section 28.
2. ILLEGAL DISMISSAL CASES.
a. Legal basis is not Article 291 of the Labor Code but Article 1146 of the Civi
l Code. - The 3-year
prescriptive period in Article 291 solely applies to money claims but not to ill
egal dismissal cases which
are not in the nature of money claims. The prescriptive period of illegal dismis
sal cases is 4 years under
Article 1146 of the Civil Code.
3. UNFAIR LABOR PRACTICE (ULP) CASES.
a. Prescriptive period of ULP cases is 1 year (Article 290, Labor Code). -The pr
escriptive period for all
complaints involving unfair labor practices is one (1) year from the time the ac
ts complained of were
committed; otherwise, they shall be forever barred.
b. Pre-requisite for prosecution of criminal cases. - Before a criminal action f
or ULP may be filed, it is
a condition sine qua non that a final judgment finding that an unfair labor prac
tice act was committed
by the respondent should first be secured or obtained in the labor case initiate
d before the Labor Arbiter
or the Voluntary Arbitrator, as the case may be. Final judgment is one that fina
lly disposes of the action
or proceeding. For instance, if the remedy of appeal is available but no appeal
is made, then, the
133

2014 BAR EXAMS
judgment is deemed final and executory. If an appeal is made, then the final jud
gment rendered by the
last tribunal, say the Supreme Court, to which the case was elevated should be t
he reckoning factor.
c.
Interruption of prescriptive period of offenses. - As far as ULP cases are conce
rned, the running of
the one (1) year prescriptive period is interrupted during the pendency of the l
abor proceeding.
d. Evidentiary value of the final judgment in the labor case. - In ULP cases, th
e final judgment in the
labor case cannot be presented as evidence of the facts proven therein or as evi
dence of the guilt of the
respondent therein. Its evidentiary or probative value is confined merely in pro
ving the fact of
compliance with the condition sine qua non prescribed by law, i.e., that a final
judgment has been
secured in the labor proceeding finding that an unfair labor practice act was in
fact committed by the
respondent.
4. OFFENSES PENALIZED UNDER THE LABOR CODE AND ITS IMPLEMENTING RULES AND
REGULATIONS (IRR).
a. Prescriptive period is 3 years (Article 290, Labor Code). - The prescriptive
period of all criminal
offenses penalized under the Labor Code and the Rules to Implement the Labor Cod
e is three (3) years
from the time of commission thereof.
b.Consequence of non-compliance with prescriptive period under Article 290. -Fai
lure to initiate or
file the criminal action or complaint within the prescriptive period shall forev
er bar such action.
c. Illegal dismissal is not an offense under Article 290. -The act of the employer
in dismissing an
employee without cause, although a violation of the Labor Code and its implement
ing rules, does not
amount to an offense as this term is understood and contemplated under Article 290
.
5. ILLEGAL RECRUITMENT CASES.
a. Simple illegal recruitment cases. The prescriptive period is five (5) years.
b. Illegal recruitment cases involving economic sabotage. The prescriptive perio
d is twenty (20) years.
6. ACTIONS INVOLVING UNION FUNDS.
A complaint or petition for audit or examination of funds and books of accounts
prescribes within three (3)
years:
(a) from the date of submission of the annual financial report to the DOLE; or
(b) from the date the same should have been submitted as required by law, whiche
ver comes earlier.
It should be noted, however, that this provision on the prescriptive period appl
ies only to a legitimate labor
organization which has submitted the financial report required under the Labor C
ode.
7. CLAIMS FOR SSS BENEFITS.
a. Action against employer.
The right to institute the necessary action against the employer for non-remitta
nce of contributions may be
commenced within twenty (20) years:
(1)
from the time the delinquency is known; or
(2)
from the time the assessment is made by the SSS; or
(3)
from the time the benefit accrues, as the case may be.
b. Action for disability claims.
The prescriptive period in the filing of disability benefit claim is ten (10) ye
ars from the date of occurrence
of disability.
8. CLAIMS FOR GSIS BENEFITS.
Claims for benefits, except for life and retirement, prescribe after four (4) ye
ars from the date of
contingency.
134

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What are the important constitutional principles related to Labor Law?

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

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to security of tenure and the

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by law to enable one

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