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PRE-WEEK NOTES

ON THE 2013 BAR EXAMINATION IN LABOR LAW


By: Prof. Joselito Guianan Chan
(These Notes, consisting of 8 parts, are supplementary to the authors book entitled 2012 Bar Reviewer
on Labor Law)
========================================================
PART ONE
FUNDAMENTAL PRINCIPLES AND POLICIES
I. CONSTITUTIONAL PROVISIONS.
Out of the several topics under Fundamental Principles and Policies, the following provisions should be given
primordial importance:
ARTICLE II
DECLARATION OF PRINCIPLES AND STATE POLICIES
STATE POLICIES
Section 9. The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty through
policies that provide adequate social services, promote full employment, a rising standard
of living, and an improved quality of life for all.
Section 10. The State shall promote social justice in all phases of national development.
Section 18. The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.
ARTICLE III
BILL OF RIGHTS
Section 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws. (NOT APPLICABLE TO
LABOR CASES).
Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the
press, or the right of the people peaceably to assemble and petition the government for
redress of grievances. (APPLICABLE TO PICKETING).
Section 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents and papers pertaining to official
acts, transactions, or decisions, as well as to government research data used as basis for
policy development, shall be afforded the citizen, subject to such limitations as may be
provided by law. (VERY IMPORTANT AS THIS IS NEWLY ADDED IN THE 2013 BAR EXAM
SYLLABUS).
Section 8. The right of the people, including those employed in the public and private
sectors, to form unions, associations, or societies for purposes not contrary to law shall not
be abridged.
Section 10.

No law impairing the obligation of contracts shall be passed.

(VERY

IMPORTANT AS THIS IS NEWLY ADDED IN THE 2013 BAR EXAM SYLLABUS).


Section 16. All persons shall have the right to a speedy disposition of their cases before all
judicial, quasi-judicial, or administrative bodies.

(VERY IMPORTANT AS THIS IS NEWLY

ADDED IN THE 2013 BAR EXAM SYLLABUS).


Section 18. (2) No involuntary servitude in any form shall exist except as a punishment for
a crime whereof the party shall have been duly convicted. (VERY IMPORTANT AS THIS IS
NEWLY ADDED IN THE 2013 BAR EXAM SYLLABUS).
ARTICLE XIII
LABOR
(VERY IMPORTANT AS THIS IS THE SO-CALLED PROTECTION-TO-LABOR CLAUSE IN THE CONSTITUTION)
Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for
all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance
with law. They shall be entitled to security of tenure, humane conditions of work, and a
living wage. They shall also participate in policy and decision-making processes affecting
their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the
right of labor to its just share in the fruits of production and the right of enterprises to
reasonable returns to investments, and to expansion and growth.
HEALTH
Section 13.

The State shall establish a special agency for disabled person for their

rehabilitation,

self-development,

and

self-reliance,

and

their

integration

into

the

mainstream of society. (VERY IMPORTANT AS THIS IS NEWLY ADDED IN THE 2013 BAR EXAM
SYLLABUS).
Please take note of the following enabling laws of this constitutional provision:
Republic Act No. 7277 [March 24, 1992], otherwise known as the Magna Carta for Disabled
Persons, providing for the rehabilitation, self-development and self-reliance of disabled persons
and their integration into the mainstream of society and for other purposes. Subsequently,
Section 4 of Republic Act No. 9442 [effective April 30, 2007] changed the title of Republic
Act No. 7277 to read as the Magna Carta for Persons with Disability, and all references in the
said law to disabled persons were likewise amended to read as persons with disability.
WOMEN
Section 14.

The State shall protect working women by providing safe and healthful

working conditions, taking into account their maternal functions, and such facilities and
opportunities that will enhance their welfare and enable them to realize their full potential
in the service of the nation.
Please take note of the following enabling laws of this constitutional provision:
o R. A. No. 9710 - Magna Carta of Women (August 14, 2009)
o CEDAW LAW Convention on the Elimination of All Forms of Discrimination Against Women
II. CONSTITUTIONAL PROVISIONS NOT APPLICABLE TO LABOR CASES.
The following constitutional rights and precepts cannot be invoked in labor cases, particularly in administrative
investigations leading to the termination of employment, because they can only be asserted against the

state/government and not against a private party the employer:


a. Constitutional Due Process since what applies is Statutory Due Process under Article 277(b) of the Labor
Code. [1]
b. Right to Equal Protection of the Laws. [2]
c. Right to Counsel. [3]
d. Right Against Self-Incrimination. [4]
e. Right Against Unreasonable Searches and Seizures. [5]
III. CIVIL CODE PROVISIONS.
Article 19. Every person must, in the exercise of his rights and in the performance of
his duties, act with justice, give everyone his due, and observe honesty and good faith.
(VERY IMPORTANT AS THIS IS NEWLY ADDED IN THE 2013 BAR EXAM SYLLABUS).
Article 1700. The relations between capital and labor are NOT merely contractual. They
are so impressed with public interest that labor contracts must yield to the common
good.

Therefore, such contracts are subject to the special laws on labor unions,

collective bargaining, strikes and lockouts, closed shop, wages, working conditions,
hours of labor and similar subjects.
Article 1702.

In case of doubt, all labor legislation and all labor contracts shall be

construed in favor of the safety and decent living for the laborer. (VERY IMPORTANT AS
THIS IS NEWLY ADDED IN THE 2013 BAR EXAM SYLLABUS; CORRELATE THIS WITH ARTICLE 4
OF THE LABOR CODE [SEE BELOW]).
IV. LABOR CODE PROVISIONS.
Article 3.

Declaration of basic policy.

- The State shall afford protection to labor,

promote full employment, ensure equal work opportunities regardless of sex, race or
creed and regulate the relations between workers and employers.

The State shall

assure the rights of workers to self-organization, collective bargaining, security of


tenure, and just and humane conditions of work.
Article

4.

Construction

in favor of labor.

- All

doubts in

the implementation

and

interpretation of the provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor.

(VERY IMPORTANT AS THIS IS NEWLY

ADDED IN THE 2013 BAR EXAM SYLLABUS).


Article 166.

Policy.

- The State shall promote and develop a tax-exempt employees

compensation program whereby employees and their dependents, in the event of workconnected disability or death, may promptly secure adequate income benefit and medical
related benefits. (VERY IMPORTANT AS THIS IS NEWLY ADDED IN THE 2013 BAR EXAM
SYLLABUS).
In connection with this provision, please take note of the following:
a. The Employees Compensation Program (ECP).
The Employees Compensation Program (ECP) mentioned in Article 166 of the Labor Code is designed to provide
public and private sector employees and their dependents with income and other benefits in the event of a workconnected injury, sickness, disability or death.

It assures workers of total protection through the provision of a

comprehensive benefit package encompassing preventive occupational safety and health aspects, curative or medical
and compensatory grant, and rehabilitation of occupationally disabled workers.
b. Attributes of the ECP.
The Employees Compensation Program (ECP) is characterized as follows:
1. It is not subject to tax;

2. It is designed to ensure promptitude in cases of work-connected disability or death, in the award to


employees and their dependents of adequate income benefits and medical or related benefits;
3. It is funded by monthly contributions of all covered employers;
4. It is compulsory on all employers and their employees whose age is not over sixty (60) years old;
5. It provides for benefits which are exclusive and in place of all other liabilities of the employer to the employee,
his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his
dependents; and
6. It has its own adjudicatory machinery with original and exclusive jurisdiction to settle any dispute with respect
to coverage, entitlement to benefits, collection and payment of contributions and penalties thereon, or any
other matter related thereto, independent of other tribunals, except the Supreme Court (and the Court of
Appeals per Revised Administrative Circular No. 1-95). [6]
c. Advantages and disadvantages.
The following advantages may be cited:
1. The coverage has been expanded to include employers with at least one employee and irrespective of the
type or nature of business or amount of business capitalization.
2. The processing of claims has been simplified with the integration of compensation benefits with those of the
GSIS or SSS, as the case may be.
3. The rates of income benefits and medical, rehabilitation and other services have been significantly increased.
4. The procedure for settlement of claims has been simplified. Tedious and cumbersome proceedings have
been eliminated.
5. Attorneys fees and costs of legal services have been eliminated. (Article 209 [203], Labor Code).
d. Compensable contingencies under the ECP.
The following contingencies are compensable under the ECP:
1. Work-connected injury or accident;
2. Work-connected sickness; and
3. Any disability or death resulting from any work-connected injury or accident or work-connected sickness.
Article 255. Exclusive bargaining representation and workers participation in policy
and decision-making. The labor organization designated or selected by the majority of
the employees in an appropriate collective bargaining unit shall be the exclusive
representative of the employees in such unit for the purpose of collective bargaining.
However, an individual employee or group of employees shall have the right at any time
to present grievances to their employer.
Any provision of law to the contrary notwithstanding, workers shall have the right,
subject to such rules and regulations as the Secretary of Labor and Employment may
promulgate, to participate in policy and decision-making processes of the establishment
where they are employed insofar as said processes will directly affect their rights,
benefits and welfare.

For this purpose, workers and employers may form labor-

management councils: Provided That the representatives of the workers in such labormanagement councils shall be elected by at least the majority of all employees in said
establishment.
Article 277. Miscellaneous Provisions. (VERY IMPORTANT AS THIS IS NEWLY ADDED IN THE
2013 BAR EXAM SYLLABUS; THIS IS THE STATUTORY PROCEDURAL DUE PROCESS WHICH
SHOULD APPLY IN CASE OF DISMISSAL OF EMPLOYEES).
(b) Subject to the constitutional right of workers to security of tenure and their right to
be protected against dismissal except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer

shall furnish the worker whose employment is sought to be terminated a written


notice containing a statement of the causes for termination and shall afford the
latter ample opportunity to be heard and to defend himself with the assistance of
his representative, if he so desires, in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the
right of the worker to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations Commission. The
burden of proving that the termination was for a valid or authorized cause shall rest
on the employer. The Secretary of the Department of Labor and Employment may
suspend the effects of the termination pending resolution of the dispute in the
event of a prima facie finding by the appropriate official of the Department of Labor
and Employment before whom such dispute is pending that the termination may
cause a serious labor dispute or is in implementation of a mass lay-off.
(c) Any employee, whether employed for a definite period or not, shall, beginning on his
first day of service, be considered as an employee for purposes of membership in
any labor union. (THIS ENUNCIATES THE RULE THAT THE RIGHT TO JOIN A UNION
STARTS FROM DAY ONE OF EMPLOYMENT).
(NOTE: The other provisions of Article 277 are omitted for they are unlikely to be given in the bar exams).
oooooooooOoOooooooooo

[1] Agabon v. NLRC, G. R. No. 158693, November 17, 2004.


[2] Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc. , G. R. No. 162994, September 17,
2004;Yrasuegui v. Philippine Airlines, Inc. , G. R. No. 168081, October 17, 2008.
[3] Manuel v. N. C. Construction Supply, [G. R. No. 127553, November 28, 1997, 282 SCRA 326.
[4] Pascual, Jr. v. Board of Medical Examiners, G. R. No. L-25018, May 26, 1969; Cabal v. Kapunan, Jr. , G. R. No. L19052, December 29, 1962.
[5] Waterous Drug Corporation v. NLRC, G. R. No. 113271, October 16, 1997, 280 SCRA 735.
[6] San Miguel Corporation v. NLRC, G. R. No. 57473, Aug. 15, 1988.
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PRE-WEEK NOTES
ON THE 2013 BAR EXAMINATION IN LABOR LAW
By: Prof. JoselitoGuianan Chan
(These Notes, consisting of 8 parts, are supplementary to the authors book entitled 2012 Bar Reviewer
on Labor Law)
========================================================
PART TWO
RECRUITMENT AND PLACEMENT
I. ILLEGAL RECRUITMENT AS DEFINED UNDER R. A. NO. 10022 [MARCH 8, 2010]. [1]
Illegal recruitment means any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether
for profit or not, when undertaken by non-licensee or non-holder of authority contemplated under Article 13(f) of
the Labor Code: Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged.

It shall likewise include the following

acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of
authority:
(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of
allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay or
acknowledge any amount greater than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation to recruitment or
employment;
(c) To

give

any false

notice,

testimony,

information

or

document

or

commit

any

act

of

misrepresentation for the purpose of securing a license or authority under the Labor Code, or for the
purpose of documenting hired workers with the POEA, which include the act of reprocessing workers
through a job order that pertains to non-existent work, work different from the actual overseas
work, or work with a different employer whether registered or not with the POEA;
(d) To include or attempt to induce a worker already employed to quit his employment in order to offer
him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of
employment;
(e) To influence or attempt to influence any person or entity not to employ any worker who has not applied
for employment through his agency or who has formed, joined or supported, or has contacted or is
supported by any union or workers' organization;
(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to
the dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or by his duly
authorized representative;
(h)To fail to submit reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as
may be required by the Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the
DOLE from the time of actual signing thereof by the parties up to and including the period of the expiration
of the same without the approval of the DOLE;
(j) For an officer or agent of a recruitment or placement agency to become an officer or member of
the Board of any corporation engaged in travel agency or to be engaged directly or indirectly
in the management of travel agency;
(k) 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;
(l) Failure to actually deploy a contracted worker without valid reason as determined by the DOLE;
(m)Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place
without the worker's fault. Illegal recruitment when committed by a syndicate or in large
scale shall be considered an offense involving economic sabotage; and
(n)To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.
II. OTHER PROHIBITED ACTS UNDER R. A. NO. 10022. [2]
It shall also be unlawful for any person or entity to commit the following prohibited acts:
(1) Grant a loan to an overseas Filipino worker with interest exceeding eight percent (8%) per annum,
which will be used for payment of legal and allowable placement fees and make the migrant worker
issue, either personally or through a guarantor or accommodation party, post-dated checks in relation to
the said loan;
(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to
avail of a loan only from specifically designated institutions, entities or persons;
(3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker after the latter's
employment contract has been prematurely terminated through no fault of his/her own;
(4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to
undergo health examinations only from specifically designated medical clinics, institutions,
entities or persons, except in the case of a seafarer whose medical examination cost is
shouldered by the principal/ship-owner;
(5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to
undergo training, seminar, instruction or schooling of any kind only from specifically designated
institutions, entities or persons, except for recommendatory trainings mandated by principals/shipowners where the latter shoulder the cost of such trainings;
(6) For a suspended recruitment/manning agency to engage in any kind of recruitment activity
including the processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino worker
or deduct from his/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.
III. ELEMENTS OF SIMPLE ILLEGAL RECRUITMENT.
The essential elements of simple illegal recruitment without the attendant qualifying circumstances, are:
1. The person charged with the crime must have undertaken recruitment and placement activities under Article
13 [b] or any of the activities enumerated in Article 34 of the Labor Code, as amended; and
2. Said person does not have a license or authority to do so or more specifically, that he has not complied with
such guidelines, rules and regulations issued by the Secretary of Labor and Employment, particularly with
respect to the securing of license or authority to recruit and deploy workers, either locally or overseas.
Recruitment and placement activities, defined. - The phrase recruitment and placement refers to the
acts described in paragraph [b] of Article 13 of the Labor Code, viz. :
[b] Recruitment and placement refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or
entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be
deemed engaged in recruitment and placement.
IV. ANY PERSON, WHETHER A NON-LICENSEE, NON-HOLDER, LICENSEE OR HOLDER OF AUTHORITY MAY BE
HELD LIABLE FOR ILLEGAL RECRUITMENT.
Under R. A. No, 8042, license or authority of the illegal recruiter is immaterial. - Under R. A. No.
8042, the crime of illegal recruitment may be committed by any person, whether a non-licensee, non-holder,

licensee or holder of authority. It is clear that under this law, in order to prove illegal recruitment, there is no
need to establish whether the accused is a licensee or holder of authority or not because it is no longer an
element of the crime.
V. ILLEGAL RECRUITMENT, WHEN CONSIDERED ECONOMIC SABOTAGE.
Illegal recruitment is considered a crime involving economic sabotage when the commission thereof is attended by the
following qualifying circumstances:
1. When committed by a syndicate; or
2. When committed in large scale.
VI. ILLEGAL RECRUITMENT COMMITTED BY A SYNDICATE.
When committed by a syndicate. - Illegal recruitment is deemed committed by a syndicate if it is carried
out by a group of three (3) or more persons conspiring or confederating with one another.
Elements of illegal recruitment by a syndicate. - The essential elements of the crime of illegal recruitment
committed by a syndicate are as follows:
1. There are at least three (3) persons who, conspiring and/or confederating with one another, carried out any
unlawful or illegal recruitment and placement activities as defined under Article 13 [b] or in any prohibited
activities under Article 34 of the Labor Code; and
2. Said persons are not licensed or authorized to do so, either locally or overseas.
The law does not require that the syndicate should recruit more than one (1) person in order to constitute the
crime of illegal recruitment by a syndicate. Recruitment of one (1) person would suffice to qualify the illegal recruitment
act as having been committed by a syndicate.
VII. ILLEGAL RECRUITMENT IN LARGE SCALE.
When committed in large scale. - Illegal recruitment is deemed committed in large scale if committed
against three (3) or more persons individually or as a group.
Elements of illegal recruitment in large scale. - The essential elements of illegal recruitment in large scale,
as distinguished from simple illegal recruitment, are as follows:
1. The accused engages in the recruitment and placement of workers as defined under Article 13 [b] or in any
prohibited activities under Article 34 of the Labor Code;
2. The accused has not complied with the guidelines issued by the Secretary of Labor and Employment,
particularly with respect to the securing of license or an authority to recruit and deploy workers, either locally
or overseas; and
3. The accused commits the same against three (3) or more persons, individually or as a group.
Distinguished from illegal recruitment by a syndicate.

- As distinguished from illegal recruitment

committed by a syndicate, illegal recruitment in large scale may be committed by only one (1) person.

What is

important as qualifying element is that there should be at least three (3) victims of such illegal recruitment, individually
or as a group.
The number of persons victimized is determinative of the crime. - A conviction for large scale illegal
recruitment must be based on a finding in each case of illegal recruitment of three (3) or more persons having been
recruited, whether individually or as a group.
Note: Failure to prove at least 3 persons recruited makes the crime a case of simple illegal
recruitment.
VIII. A PERSON, FOR THE SAME ACTS, MAY BE CHARGED AND CONVICTED SEPARATELY FOR THE CRIME OF
ILLEGAL RECRUITMENT AND THE FELONY OF ESTAFA.
In cases where some other crimes or felonies are committed in the process of illegal recruitment, conviction
under the Labor Code does not preclude punishment under other statutes.
IX. NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN PRINCIPAL.
1. Local Agency is solidarily liable with foreign principal.

2. Severance of relations between local agent and foreign principal does not affect liability of local recruiter.
X. THEORY OF IMPUTED KNOWLEDGE.
This theory refers to cognizance of a circumstance or fact attributed to a party because of its position, or
its relationship with or responsibility for another party.
The relationship of the local recruitment/manning agency vis-a-vis its foreign principal is that of agent-principal,
the former being the agent and the latter, the principal. Consequently, the theory of imputed knowledge ascribes
the knowledge of the agent to the principal but not the other way around.
Thus, the violations of the terms and conditions of an extension contract, the execution of which the recruiter did
not know and did not consent to, shall not make said recruiter solidarily liable for the reason that knowledge by his
principal of said contract cannot be imputed to him.
oooooooooOoOooooooooo

[1] Section 6 of R. A. No. 8042 which defined illegal recruitment was amended by Section 5 of R. A. No. 10022 (March
8, 2010).
[2] Section 6 of R. A. No. 8042, as amended by Section 5 of R. A. No. 10022 (March 8, 2010).

PRE-WEEK NOTES
ON THE 2013 BAR EXAMINATION IN LABOR LAW
By: Prof. JoselitoGuianan Chan
(These Notes, consisting of 8 parts, are supplementary to the authors book entitled 2012 Bar Reviewer
on Labor Law)
========================================================
PART THREE
LABOR STANDARDS
A. HOURS OF WORK.
1. Coverage. - All employees in all establishments, whether operated for profit or not, are covered by the law
on labor standards.
2. Excluded employees. - 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.
3. Normal hours of work. - The total number of working hours of a worker or employee shall not exceed
eight (8) hours daily. This eight (8) hour period is called the normal hours of work.
4. Overtime work; Overtime pay. - Any work in excess of eight (8) hours is considered overtime work.
Overtime rate: 25% - for overtime work on ordinary days; 30% - for overtime work on rest day.
5. Compressed work week - It is an alternative arrangement whereby the normal workweek is reduced to
less than six (6) days but the total number of normal work hours per week shall remain at forty-eight (48)
hours. The normal workday is thus increased to more than eight (8) hours without corresponding overtime
premium. This concept can be adjusted accordingly in cases where the normal workweek of the firm is five
(5) days.
6. Meal breaks. - Every employer is required to give his employees, regardless of sex, not less than one (1)
hour (or 60 minutes) time-off for regular meals. Being time-off, it is not compensable hours worked. In this
case, the employee is free to do anything he wants, except to work. If he is required, however, to work while
eating, he should be compensated therefor.
7. Waiting time. 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.
8. Night work. SINCE THIS IS PROVIDED UNDER A NEW LAW, R. A. NO. 10151[1] [JUNE 21,
2011], WE ARE QUOTING THE ENTIRE CHAPTER INSERTED BY IT INTO THE LABOR CODE:
Chapter V
Employment of Night Workers
Article 154.

Coverage.

- This chapter shall apply to all persons, who shall be

employed or permitted or suffered to work at night, except those employed in agriculture,


stock raising, fishing, maritime transport and inland navigation, during a period of not less
than seven (7) consecutive hours, including the interval from midnight to five oclock in the
morning, to be determined by the Secretary of Labor and Employment, after consulting the

workers representatives/labor organizations and employers.


Night worker means any employed person whose work requires performance of a
substantial number of hours of night work which exceeds a specified limit. This limit shall
be fixed by the Secretary of Labor after consulting the workers representatives/labor
organizations and employers.
Article 155. Health Assessment, - At their request, workers shall have the right to
undergo a health assessment without charge and to receive advice on how to reduce or
avoid health problems associated with their work:
(a) Before taking up an assignment as a night worker;
(b) At regular intervals during such an assignment; and
(c) If they experience health problems during such an assignment which are not
caused by factors other than the performance of night work.
With the exception of a finding of unfitness for night work, the findings of such
assessments shall not be transmitted to others without the workers consent and shall not
be used to their detriment.
Article 156.

Mandatory Facilities.

- Suitable first-aid facilities shall be made

available for workers performing night work, including arrangements where such workers,
where necessary, can be taken immediately to a place for appropriate treatment.

The

employers are likewise required to provide safe and healthful working conditions and
adequate

or

reasonable

facilities

such

as sleeping

or

resting

quarters

in

the

establishment and transportation from the work premises to the nearest point of their
residence subject to exceptions and guidelines to be provided by the DOLE.
Article 157. Transfer. - Night workers who are certified as unfit for night work, due
to health reasons, shall be transferred, whenever practicable, to a similar job for which
they are fit to work.
If such transfer to a similar job is not practicable, these workers shall be granted the
same benefits as other workers who are unable to work, or to secure employment during
such period.
A night worker certified as temporarily unfit for night work shall be given the
same protection against dismissal or notice of dismissal as other workers who are
prevented from working for reasons of health.
Article 158.

Women Night Workers. Measures shall be taken to ensure that

an alternative to night work is available to women workers who would otherwise be called
upon to perform such work:
(a) Before and after childbirth, for a period of at least sixteen (16) weeks, which
shall be divided between the time before and after childbirth;
(b) For additional periods, in respect of which a medical certificate is produced
stating that said additional periods are necessary for the health of the mother or
child:
(1) During pregnancy;
(2) During a specified time beyond the period, after childbirth is fixed pursuant
to subparagraph (a) above, the length of which shall be determined by the
DOLE after consulting the labor organizations and employers.
During the periods referred to in this article:
(i) A

woman

worker

shall not be dismissed

or

given

notice

of

dismissal, except for just or authorised causes provided for in this Code that
are not connected with pregnancy, childbirth and childcare responsibilities.
(ii)A woman worker shall not lose the benefits regarding her status, seniority, and

access to promotion which may attach to her regular night work position.
Pregnant women and nursing mothers may he allowed to work at night only if a
competent physician, other than the company physician, shall certify their fitness to render
night work, and specify, in the ease of pregnant employees, the period of the pregnancy
that they can safely work.
The measures referred to in this article may include transfer to day work where this
is possible, the provision of social security benefits or an extension of maternity leave.
The provisions of this article shall not have the effect of reducing the protection and
benefits connected with maternity leave under existing laws.
Article 159.

Compensation. The compensation for night workers in the form

of working time, pay or similar benefits shall recognize the exceptional nature of night
work.
Article 160. Social Services. Appropriate social services shall be provided for night
workers and, where necessary, for workers performing night work.
Article 161. Night Work Schedules. Before introducing work schedules requiring
the

services

of

night

workers,

the

employer

shall consult the workers

representatives/labor organizations concerned on the details of such schedules and the


forms of organization of night work that are best adapted to the establishment and its
personnel, as well as on the occupational health measures and social services which are
required.

In

establishments

employing

night

workers,

consultation shall

take

place regularly. [2]


9. Night Shift Differential. - Every employee shall be paid a night shift differential of not less than ten
percent (10%) of his regular wage for each hour of work performed between ten oclock in the evening and
six oclock in the morning.
10. Part-time work. - On the issue of whether the employer should give the part-time employees concerned
only fifty percent (50%) of the wages and other benefits that the employer may pay the workers who will
work for four (4) hours a day, 6:00 to 10:00 in the evening, the compensation in proportion to the time they
actually rendered work or equivalent to only four (4) hours a day must be given to part-time workers. This is,
however, without prejudice to any individual or collective agreement or company practice or policy that
provides higher basis of computation of wages.
11. Contract for piece work (see Civil Code).

Since the syllabus prescribes the definition to be in

accordance with the Civil Code, Article 1467 provides:


ART. 1467. A contract for the delivery at a certain price of an article which the vendor in the
ordinary course of his business manufactures or procures for the general market, whether the same is
on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially
for the customer and upon his special order, and not for the general market, it is a contract
for a piece of work.
B. WAGES.
1. Wage vs. Salary. - The term wage is used to characterize the compensation paid for manual skilled or
unskilled labor. Salary, on the other hand, is used to describe the compensation for higher or superior
level of employment. In cases of execution, attachment or garnishment of the compensation of an
employee received from work issued by the court to satisfy a judicially-determined obligation, a distinction
should be made whether such compensation is considered wage or salary. Under Article 1708 of the
Civil Code, if considered a wage, the employees compensation shall not be subject to execution or
attachment or garnishment, except for debts incurred for food, shelter, clothing and medical attendance. If
deemed a salary, such compensation is not exempt from execution or attachment or garnishment. Thus,

the salary, commission and other remuneration received by a managerial employee (as distinguished from
an ordinary worker or laborer) cannot be considered wages. Salary is understood to relate to a position or
office, or the compensation given for official or other service; while wage is the compensation for labor.
2. Minimum wage, defined. It refers simply to the lowest basic wage rate fixed by law that an employer
can pay his workers.
3. Minimum wage setting. - With the advent of Republic Act No. 6727, wage fixing and determination are
no longer done through Congress but through the various Regional Tripartite Wages and Productivity Boards
(RTWPBs) constituted in every region of the country, including autonomous regions as may be created by
law.
4. Minimum wage of workers paid by results. - All workers paid by results, including those who are paid
on piecework, takay, pakyaw or task basis, shall receive not less than the prescribed wage rates per eight (8)
hours of work a day, or a proportion thereof for working less than eight (8) hours.
5. Minimum wage of apprentices and learners. It shall in no case be less than seventy-five percent
(75%) of the applicable statutory minimum wage rates.
6. Minimum wage of persons with disability (PWDs). It shall NOT be 75% but the full amount of the
applicable minimum wage rates.
7.

Commissions.

- Commission is the recompense, compensation or reward of an employee, agent,

salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage
on the amount of his transactions or on the profit of the principal. Commission earned may or may not
be considered part of a wage or salary depending on the peculiar circumstances of a case and on the
purpose for which the determination is being made.

There is no law which requires employers to pay

commissions. [3]Once commission is granted, "there is no law which prescribes a method for computing
commissions.

The determination of the amount of commissions is the result of collective bargaining

negotiations, individual employment contracts or established employer practice. "[4]


8. Deductions from wages. Permissible deductions may be divided into two:
a. Deductions allowed under Article 113.
(1) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(2)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
(3) In cases where the employer is authorized by law or regulations issued by the DOLE Secretary.
b. Deductions allowed under other provisions of the Labor Code and other laws.
1. Deductions for loss or damage under Article 114 of the Labor Code;
2. Deductions made for agency fee from non-union members who accept the benefits under the CBA
negotiated by the recognized or certified bargaining union. This form of deduction does not require the
written authorization of the non-union member concerned;
3. Union service fee;
4. When the deductions are with the written authorization of the employee for payment to a third person
and the employer agrees to do so, provided that the latter does not receive any pecuniary benefit,
directly or indirectly, from the transaction;
5. Deductions for value of meal and other facilities;
6. Deductions for premiums for SSS, PhilHealth, employees compensation and Pag-IBIG;
7. Withholding tax mandated under the National Internal Revenue Code (NIRC);
8. Withholding of wages because of the employees debt to the employer which is already due;
9. Deductions made pursuant to a court judgment against the worker under circumstances where the

wages may be the subject of attachment or execution but only for debts incurred for food, clothing,
shelter and medical attendance;
10. When deductions from wages are ordered by the court;
11. Salary deductions of a member of a legally established cooperative.
9. Non-diminution of benefits. According to Justice Arturo D. Brion, currently the Chairman of the
2013 Bar Examination Committee, Article 100 is not the proper basis for the invocation of the nondiminution/non-elimination of benefits principle in his separate concurring opinion in the case of Arco Metal
Products, Inc.

v.

Samahang ng mga Manggagawa sa Arco Metal-NAFLU (SAMARM-NAFLU), [G. R.

No.

170734, May 14, 2008]. He emphasized therein that Article 100 refers solely to the non-diminution of
benefits enjoyed at the time of the promulgation of the Labor Code. He thus posited that the correct bases
of this principle are the following:
a. Express terms of an employment agreement;
b. Company practice which refers to the implied terms of an employment agreement which the employer
has freely, voluntarily and consistently extended to its employees and thus cannot be withdrawn except
by mutual consent or agreement of the contracting parties;
c. The Constitution (Section 18 of Article II and Section 3 of Article XIII); and
d. Article 4 of the Labor Code.
10. Facilities vs. Supplements. The term facilities includes articles or services for the benefit of the
employee or his family but does not include tools of the trade or articles or services primarily for the benefit
of the employer or necessary to the conduct of the employers business.

They are items of expense

necessary for the laborers and his familys existence and subsistence which form part of the wage and
when furnished by the employer, are deductible therefrom, since if they are not so furnished, the laborer
would spend and pay for them just the same.
The term supplements means extra remuneration or special privileges or benefits given to or received by
the laborers over and above their ordinary earnings or wages.
Facilities

and

supplements,

distinguished.

- The

benefit

or

privilege

given

to

the

employee which constitutes an extra remuneration over and above his basic or ordinary earning or wage,
is supplement; and when said benefit or privilege is part of the laborers basic wage, it is a facility. As
earlier pointed out, the criterion is not so much with the kind of the benefit or item (food, lodging, bonus or
sick leave) given but its purpose. Thus, free meals supplied by the ship operator to crew members, out of
necessity, cannot be considered as facilities but supplements which could not be reduced having been given
not as part of wages but as a necessary matter in the maintenance of the health and efficiency of the crew
personnel during the voyage. Moreover, facilities are deductible from wage but not supplements.
11. Wage distortion. - As defined by law and implementing rules, wage distortion contemplates a situation
where an increase in prescribed wage rates results in either of the following:
1. Elimination of the quantitative differences in the rates of wages or salaries; or
2. Severe contraction of intentional quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage
structure based on the following criteria:
a. skills;
b. length of service; or
C. other logical bases of differentiation.
4 elements of wage distortion. - The four (4) elements of wage distortion are as follows:
(1) An existing hierarchy of positions with corresponding salary rates;
(2)A significant change in the salary rate of a lower pay class without a concomitant increase in the

salary rate of a higher one;


(3)The elimination of the distinction between the two levels; and
(4)The existence of the distortion in the same region of the country.
Formula to rectify wage distortion. In the case of Metropolitan Bank and Trust Company Employees
Union-ALU-TUCP v.

NLRC,[G. R.

No.

102636, September 10, 1993], the Supreme Court has given

its imprimatur to the following 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.
12. Rectification of wage distortion. Wage distortion may be rectified as follows
1. In organized establishments.
distortions.

- The employer and the union should negotiate to correct the

Any dispute arising from wage distortions should be resolved through the grievance

procedure under their CBA and, if it remains unresolved, through voluntary arbitration.
2. In unorganized establishments. - The employers and workers should endeavor to correct such
distortions.

Any dispute arising therefrom should be settled through the NCMB and, if it remains

unresolved after ten (10) days of conciliation, should be referred to any of the Labor Arbiters of the
appropriate branch of the NLRC.
13. Divisor to Determine Daily Rate. Given a fixed monthly rate, the daily rate is determined through the
following formula:
Monthly Ratex12
No. of Days Considered=Equivalent Daily Rate (EDR)
Paid in a Year
Choice of factors/divisors is a prerogative of the employer.

- There is no law which requires

employers to use specific factors in the computation of employees benefits and wage deductions due to
absences. The choice of factors/divisors is a prerogative of the employer, the exercise of which should not
be contrary to law, public policy or order. What wage legislations specifically require is that the employees
be paid on all their actual working days and on the twelve (12) regular holidays even if unworked. The
principles of no work, no pay and equal pay for equal work are also generally accepted. It likewise
follows that an employer may deduct a proportionate amount from the employees wages on account of
their unworked hours/days.
C. REST PERIODS.
1. Weekly rest day. - Every employer is required to give his employees a rest period of not less than twentyfour (24) consecutive hours after every six (6) consecutive normal work days. Where the weekly rest is given
to all employees simultaneously, the employer should make known such rest period by means of a written
notice posted conspicuously in the workplace at least one (1) week before it becomes effective. Where the
rest period is not granted to all employees simultaneously and collectively, the employer shall make known
to the employees their respective schedules of weekly rest day through written notices posted conspicuously
in the workplace at least one (1) week before they become effective.
Employees preference of rest day based on religious grounds. - The employer is duty-bound to
respect the preference of the employee if based on religious grounds.
2. Emergency rest day work. The general rule is that no employee shall be required against his will to
work on his scheduled rest day except under the circumstances provided under Article 92 of the Labor Code
where work on such day may be compelled. An employer may, however, require any of his employees to

work on his scheduled rest day for the duration of the following emergency and exceptional conditions:
a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity, to prevent loss of life and property, or in case
of force majeure or imminent danger to public safety;
b. In case of urgent work to be performed on machineries, equipment, or installations, to avoid
serious loss which the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances, where the employer
cannot ordinarily be expected to resort to other measures;
d. To prevent serious loss of perishable goods;
e. Where the nature of the work is such that the employees have to work continuously for seven (7)
days in a week or more, as in the case of the crew members of a vessel to complete a voyage and
in other similar cases; and
f. When the work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon.
D. HOLIDAY PAY/PREMIUM PAY.
a.

Regular holiday.

- Holiday pay refers to the payment of compensation to an employee

during regular holidays as follows:


1.

For unworked regular holiday 100% of an employees regular daily wage; and

2.

For worked regular holiday 200% thereof.

b. Special holiday. - The rule for special holiday is as follows:


1.

For unworked special holiday No Work, No Pay applies; and

2.

For worked special holiday Additional compensation of 30% of the daily rate on top of the basic pay
or a total of one hundred thirty percent (130%).

c.

Premium

pay refers to the additional compensation

required by law to be paid for work

performed within the regular eight (8) hours on non-working days, such as rest days, regular and special
holidays.
d. Coverage; exceptions. - Generally, all employees are entitled to covered by Article 94 of the Labor Code,
as amended, and its implementing rules, except:
1. Those of the government and any of the political subdivisions, including government-owned and
controlled corporations;
2. Those of retail and service establishments regularly employing less than ten (10) workers;
3. Domestic helpers;
4. Persons in the personal service of another;
5. Managerial employees as defined in Book III of the Labor Code;
6. Field personnel and other employees whose time and performance is unsupervised by the employer;
7. Those who are engaged on task or contract basis or purely commission basis;
8. Those who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof;
9. Other officers and members of the managerial staff;
10. Members of the family of the employer who are dependent on him for support.
E. LEAVES.
1. Service incentive leave. - Every covered employee who has rendered at least one (1) year of service is
entitled to a yearly service incentive leave of five (5) days with pay. The term at least one year of
service should mean service within twelve (12) months, whether continuous or broken, reckoned from the

date the employee started working, including authorized absences and paid regular holidays, unless
the number of working days in the establishment as a matter of practice or policy, or that provided in the
employment contract, is less than twelve (12) months, in which case, said period should be considered as
one (1) year for the purpose of determining entitlement to the service incentive leave benefit.
2. Maternity leave. - It is the period of time which may be availed of by a woman employee, married or
unmarried, to undergo and recuperate from childbirth, miscarriage or complete abortion during which she is
permitted to retain her rights and benefits flowing from her employment. A female member who has paid at
least three (3) monthly contributions in the 12-month period immediately preceding the semester of her
childbirth or miscarriage shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of
her average daily salary credit for:
(a) 60 days for normal delivery; or
(b) 78 days in case of caesarean delivery.
3. Paternity leave. [5] It covers a married male employee allowing him not to report for work for seven (7)
calendar days but continues to earn the compensation therefor, on the condition that his spouse has
delivered a child or suffered miscarriage for purposes of enabling him to effectively lend support to his wife in
her period of recovery and/or in the nursing of the newly-born child.
4.

Parental leave. [6] It is the leave benefit of not be more than seven (7) working days every
year granted to a male or female solo parent to enable him/her to perform parental duties and
responsibilities where physical presence is required.
The term "solo parent" refers to any individual who falls under any of the following categories:
(1) A woman who gives birth as a result of rape and other crimes against chastity even without a final
conviction of the offender: Provided, That the mother keeps and raises the child;
(2) Parent left solo or alone with the responsibility of parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is serving
sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due to physical and/or mental incapacity of
spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de
facto separation from spouse for at least one (1) year, as long as he/she is entrusted with the custody of
the children;
(6) Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or annulment
of marriage as decreed by a court or by a church as long as he/she is entrusted with the custody of the
children;
(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least
one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of having
others care for them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and support to a child or children;
(10) Any family member who assumes the responsibility of head of family as a result of the death,
abandonment, disappearance or prolonged absence of the parents or solo parent.

5. Leave for victims of violence against women and children. [7] - A victim is entitled to a total of ten
(10) days of paid leave of absence, in addition to other paid leaves under the Labor Code and Civil Service
Rules and Regulations. It is extendible when the necessity arises as specified in the protection order. This is
afforded to the woman employee to enable her to attend to the medical and legal concerns relative to said
law. This leave is not convertible to cash.

6. Special leave benefit for women. This is granted under R. A. No. 9710 [August 14, 2009]. A woman
employee having rendered continuous aggregate employment service of at least six (6) months for the last
twelve (12) months shall be entitled to a special leave benefit of two (2) months with full pay based on
her gross monthly compensation following surgery caused by gynaecological disorders.
F. SERVICE CHARGES.
The rules on service charges apply only to establishments collecting service charges, such as hotels,
restaurants, lodging houses, night clubs, cocktail lounges, massage clinics, bars, casinos and gambling
houses, and similar enterprises, including those entities operating primarily as private subsidiaries of the
government. All employees of covered employers, regardless of their positions, designations or employment status, and
irrespective of the method by which their wages are paid.
1. Percentage of sharing.

- All service charges collected by covered employers are required to be

distributed at the following rates:


a. 85% to be distributed equally among the covered employees; and
b. 15% to management to answer for losses and breakages and distribution to employees receiving more
than P2,000. 00 a month, at the discretion of the management.
2. Frequency of distribution. - The share of the employees referred to above should be distributed and paid
to them not less often than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16)
days.
G. 13TH MONTH PAY.
Under the law, all rank-and-file employees are entitled. Managerial employees are not entitled thereto. However,
there is nothing in the law which prohibits the grant of 13th month pay to managerial employees.
a. Exclusions/Exemptions from coverage. - The following employers are not covered by P. D. No. 851, as
amended:
1. The government and any of its political subdivisions, including government-owned and controlled
corporations, except those corporations operating essentially as private subsidiaries of the government.
2. Employers already paying their employees 13th-month pay or more in a calendar year or its equivalent at
the time of the issuance of the Revised Guidelines.
3. Employers of household helpers and persons in the personal service of another in relation to such
workers.
4. Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a
fixed amount for performing a specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis, in which case, the employer shall be
covered by the Revised Guidelines insofar as such workers are concerned. Workers paid on piece-rate
basis shall refer to those who are paid a standard amount for every piece or unit of work produced that is
more or less regularly replicated without regard to the time spent in producing the same.
b. Amount of 13th month pay - Should not be less than one-twelfth (1/12) of the total basic salary earned by
an employee within a calendar year. It is based on wage but not part of the wage. s
c. Minimum period of service. To be entitled to 13th month pay, the employee should have served at least
1 month in the calendar year.
H. SEPARATION PAY.
Separation pay under the law and jurisprudence:
1. Separation pay in lieu of reinstatement (in case reinstatement is not possible or feasible);
2. When termination is due to (a) installation of labor-saving devices, (b) redundancy, (c) retrenchment, or (d)

closing or cessation of business operations under Article 283;


3. When termination is due to the disease of an employee and his continued employment is prejudicial to
himself or his co-employees under Article 284;
4. When resignation pay or separation pay (or sometimes called financial assistance) is required under a
unilaterally promulgated voluntary policy or practice of the employer or under an agreement such as a CBA;
5. When employment is deemed terminated after the lapse of six (6) months in cases involving bonafide suspension of the operation of business or undertaking under Article 286;
I. RETIREMENT PAY.
1. Eligibility. - Retirement applies to:
a. All employees in the private sector, regardless of their position, designation or status and irrespective of
the method by which their wages are paid ;
b. Part-time employees;
c. Employees of service and other job contractors;
d. Domestic workers or persons in the personal service of another;
e. Underground mine workers;
f. Employees of government-owned and/or controlled corporations organized under the Corporation Code
(without original charters).
2. Retirement age. - Optional retirement age 60; Compulsory retirement age 65
3. Amount. Should be equivalent to one-half () month salary for every year of service, a fraction of
at least six (6) months being considered as one (1) whole year. One-half () month salary means 22.
5 days comprised of the following:
(a) 15 days salary of the employee based on his latest salary rate. PLUS
(b) The cash equivalent of five (5) days of service incentive leave; PLUS
(c) One-twelfth (1/12) of the 13th month pay due the employee (or 2. 5 days);PLUS
(d) All other benefits that the employer and employee may agree upon that should be included in the
computation of the employees retirement pay.
4. Retirement benefits of workers paid by results. The 15 days shall be their average daily salary
(ADS) for the last 12 months reckoned from the date of their retirement, divided by the number of actual
working days in that particular period.
5. Retirement benefits of part-time workers. Entitled to 1/2 month salary for every year of service,
computed at least in proportion to the salary and related benefits due them.
6. Taxability. Retirement benefits are exempted from attachment, levy, execution or any tax whatsoever. To
be exempted from withholding tax, the taxpayer should prove the following: (1) a reasonable private benefit
plan is maintained by the employer; (2) the retiring official or employee has been in the service of the same
employer for at least ten [10] years; (3) the retiring official or employee is not less than fifty [50] years
of age at the time of his retirement; and (4) the benefit has been availed of only once.
J. WOMEN WORKERS.
1. Acts of discrimination under the Labor Code. (a)Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe
benefits, to a female employee as against a male employee, for work of equal value; and
(b) Favoring a male employee over a female employee with respect to promotion, training opportunities,
study and scholarship grants solely on account of their sexes.
2. Discrimination against women as defined under the Magna Carta of Women [R. A. No. 9710
approved on August 14, 2009]. It refers to any of the following circumstances:
(a) Any gender-based distinction, exclusion, or restriction which has the effect or purpose of impairing or

nullifying the recognition, enjoyment, or exercise by women, irrespective of their marital status, on a
basis of equality of men and women, of human rights and fundamental freedoms in the political,
economic, social, cultural, civil, or any other field.
(b) Any act or omission, including by law, policy, administrative measure, or practice, that directly or
indirectly excludes or restricts women in the recognition and promotion of their rights and their access to
and enjoyment of opportunities, benefits, or privileges.
(c) A measure or practice of general application is discrimination against women if it fails to provide for
mechanisms to offset or address sex or gender-based disadvantages or limitations of women, as a result
of which women are denied or restricted in the recognition and protection of their rights and in their
access to and enjoyment of opportunities, benefits, or privileges; or women, more than men, are shown
to have suffered the greater adverse effects of those measures or practices.
(d) Discrimination compounded by or intersecting with other grounds, status, or condition, such as ethnicity,
age, poverty, or religion.
3. Stipulation against marriage. It is an unlawful act of the employer to require as a condition for or
continuation of employment that a woman employee shall not get married or to stipulate expressly or
tacitly that upon getting married, a woman employee shall be deemed resigned or separated or to
dismiss or discriminate or otherwise prejudice a woman employee merely by reason of her marriage.
4. Prohibited acts. In addition to the stipulation against marriage (see above), the following are prohibited:
a. To discharge any woman employed by him for the purpose of preventing such woman from enjoying
maternity leave, facilities and other benefits provided under the Labor Code;
b. To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her
pregnancy;
c. To discharge or refuse the admission of such woman upon returning to her work for fear that she may
again be pregnant;
d. 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.
5.

Anti-Sexual Harassment Act (R. A.


situations,

No.

namely:

7877), - Penalizes sexual harassment only in three (3)


(1) employment(work-related); (2) education (education-

related); and (3) training (training-related).


In a work-related or employment environment, sexual harassment is committed when:
a. The sexual favor is made a condition in the hiring or in the employment, re-employment or continued
employment of said individual or in granting said individual favorable compensation, terms, conditions,
promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or
classifying the employee which in any way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;
b. The above acts would impair the employees rights or privileges under existing labor laws; or
c. The above acts would result in an intimidating, hostile, or offensive environment for the employee.
K. EMPLOYMENT OF MINORS (Labor Code and R. A. No. 7678, R. A. No. 9231).
1. Child, meaning. - For legal purposes, the term child refers to any person less than eighteen (18) years
of age.
2. Working child, meaning. - A working child refers to any child engaged as follows:
i. when the child is below eighteen (18) years of age, in work or economic activity that is not child
labor; and
ii. when the child below fifteen (15) years of age:
(a) in work where he/she is directly under the responsibility of his/her parents or legal guardian and where

only members of the childs family are employed; or


(b) in public

entertainment

or

information which refers

to

artistic,

literary,

and

cultural

performances for television show, radio program, cinema or film, theater, commercial advertisement,
public relations activities or campaigns, print materials, internet, and other media.
3. Prohibition of employing minors in certain undertakings and in certain advertisements. - No
child below eighteen (18) years of age is allowed to be employed as a model in any advertisement directly or
indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products, gambling or any
form of violence or pornography.
L. EMPLOYMENT OF HOUSEHELPERS (NOW KNOWN AS DOMESTIC WORKERS OR KASAMBAHAY)[8]
1. Prevailing applicable law. R. A. No. 10361, otherwise known as Domestic Workers Act or Batas
Kasambahay approved on January 18, 2013.
2. Domestic worker or Kasambahay - refers to any person engaged in domestic work within an
employment relationship such as, but not limited to, the following: general househelp, nursemaid or yaya,
cook, gardener, or laundry person, but shall exclude any person who performs domestic work only
occasionally or sporadically and not on an occupational basis. This term shall not include children who are
under foster family arrangement, and are provided access to education and given an allowance incidental to
education, i. e. , baon, transportation, school projects and school activities.
3. Household - refers to the immediate members of the family or the occupants of the house that are
directly provided services by the domestic worker.
4. Employer - refers to any person who engages and controls the services of a domestic worker and is party
to the employment contract.
5. Important principles under R. A. No. 10361.
Standard of treatment - just and humane manner and in no case shall the former inflict physical
violence upon the kasambahay.
Free board, lodging and medical attendance.
Privacy to all forms of communication and personal effects.
Right to have access to the outside world through such modern modes, equipment and devices as the
internet, cellphones, etc.
Right to education and training (without any age limitation of 18 years as provided previously).
Prohibition on disclosure by kasambahay of all privileged and confidential communication or information
pertaining to employer.
There should be a written contract of employment between employer and kasambahay.
No more cap on duration of contract.
Kasambahay cannot acquire regularity of employment.
Employment of kasambahay is fixed-term in nature.
The kasambahay cannot be required to make deposits from which loss or damage to tools, materials,
furniture and equipment may be deducted.
The kasambahay cannot be placed under debt bondage meaning the rendering of service by the
domestic worker as security or payment for a debt where the length and nature of service is not clearly
defined or when the value of the service is not reasonably applied in the payment of the debt.
Children whose age is below 15 years are now absolutely prohibited to work as kasambahay.
The employer is now required to report and register the kasambahay working for him/her in the
Barangay where the former resides.
Daily rest period - Aggregate daily rest period shall be 8 hours per day.
Weekly rest period - At least 24 consecutive hours of rest in a week.
It is prohibited to assign the kasambahay to non-household work in a commercial, industrial or
agricultural enterprise on the basis of the wage rates for domestic workers.
Minimum wage on a monthly basis. Should not be less than:

(a)P2,500. 00 a month for those employed in the National Capital Region (NCR);
(b)P2,000. 00 a month for those employed in chartered cities and first class municipalities;
and
(c)P1,500. 00 a month for those employed in other municipalities.
All kasambahay are entitled to:
(a)

13th month pay.

(b) 5-day service incentive leave after 1 year of service.


(c)

SSS, PhilHealth and Pag-IBIG coverage who have rendered at least 1 month of service.
(NOTE: Premium payments or contributions shall be shouldered by the employer. However,
if the domestic worker is receiving a wage of P5,000. 00 and above per month, the domestic
worker shall pay the proportionate share in the premium payments or contributions, as
provided by law).

(d) The kasambahay shall be entitled to all other benefits under existing laws.
Rules on termination of employment:
(1) If employment contract is fixed, it cannot be terminated before its expiration.
(i) If terminated by kasambahay without just cause, he/she forfeits unpaid salary due not
exceeding the equivalent 15 days work.

The employer may recover the deployment

expenses provided that the service has been terminated within 6 months from the domestic
workers employment.
(ii)If terminated by employer without just cause, the domestic worker shall be paid the
compensation already earned plus the equivalent of 15 days work by way of indemnity.
(iii)The kasambahay and the employer may mutually agree upon written notice to pre-terminate the
contract of employment to end the employment relationship.
(2) If employment contract is not fixed, the employer or the kasambahay may give notice to end the
working relationship 5 days before the intended termination of the service.
(3) Grounds to terminate employment contract by the kasambahay. - The domestic worker may
terminate the employment relationship at any time before the expiration of the contract for any
of the following causes:
(a)Verbal or emotional abuse of the domestic worker by the employer or any member of the
household;
(b)Inhuman treatment including physical abuse of the domestic worker by the employer or any
member of the household;
(c)Commission of a crime or offense against the domestic worker by the employer or any member of
the household;
(d)Violation by the employer of the terms and conditions of the employment contract and other
standards set forth under this law;
(e)Any disease prejudicial to the health of the domestic worker, the employer, or member/s of the
household; and
(f) Other causes analogous to the foregoing.
(NOTE: The grounds are a combination of both just and authorized causes).
(4) Grounds to terminate employment contract by the employer. -An employer may terminate the
services of the domestic worker at any time before the expiration of the contract, for any of the
following causes:
(a)Misconduct or willful disobedience by the domestic worker of the lawful order of the employer in
connection with the formers work;
(b)Gross or habitual neglect or inefficiency by the domestic worker in the performance of duties;
(c) Fraud or willful breach of the trust reposed by the employer on the domestic worker;
(d) Commission of a crime or offense by the domestic worker against the person of the employer or
any immediate member of the employers family;

(e) Violation by the domestic worker of the terms and conditions of the employment contract and other
standards set forth under this law;
(f) Any disease prejudicial to the health of the domestic worker, the employer, or member/s of the
household; and
(g) Other causes analogous to the foregoing.
(NOTE: The grounds are a combination of both just and authorized causes).
Employment Certification. - It is the duty of the employer to issue a certificate of employment to the
domestic worker within 5 days from the time it is requested.
M. EMPLOYMENT OF HOMEWORKERS.
1. Industrial homeworker is a worker who is engaged in industrial homework.
2. Industrial homework is a system of production under which work for an employer or contractor is
carried out by a homeworker at his/her home. Materials may or may not be furnished by the employer or
contractor. It differs from regular factory production principally in that, it is a decentralized form of production
where there is ordinarily very little supervision or regulation of methods of work.
3. Home means any nook, house, apartment or other premises used regularly, in whole or in part, as a
dwelling

place,

except

those

situated

within

the

premises

or

compound

of

an

employer,

contractor/subcontractor and the work performed therein is under the active or personal supervision by or for
the latter.
4. Payment for homework. - Immediately upon receipt of the finished goods or articles, the employer is
required to pay the homeworker or the contractor or subcontractor, as the case may be, for the work
performed less the corresponding homeworkers share of SSS, PhilHealth and ECC premium contributions
which should be remitted by the contractor or subcontractor or employer to the SSS with the employers
share. However, where payment is made to a contractor or subcontractor, the homeworker should likewise
be paid immediately after the goods or articles have been collected from the workers.
5.

Prohibitions on certain kinds of homework.

- 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.
Distinctions. - The following are the distinctions between apprentices and learners:
1. Practical training. Both learnership and apprenticeship involve practical training on-the-job.
2. Training agreement.

Learnership is governed by a learnership agreement; while apprenticeship is

governed by an apprenticeship agreement.


2. Occupation. Learnership involves learnable occupations consisting of semi-skilled and other industrial
occupations which are non-apprenticeable; while apprenticeship concerns apprenticeable occupations or any
trade, form of employment or occupation approved for apprenticeship by the DOLE Secretary.
3. Theoretical instructions. Learnership may or may not be supplemented by related theoretical instructions;
while apprenticeship should always be supplemented by related theoretical instructions.
4. Ratio of theoretical instructions and on-the-job training. For both learnership and apprenticeship, the
normal ratio is one hundred (100) hours of theoretical instructions for every two thousand (2,000) hours of
practical or on-the-job training. Theoretical instruction time for occupations requiring less than two thousand
(2,000) hours for proficiency should be computed on the basis of such ratio.
5. Competency-based system. Unlike in apprenticeship, it is required in learnership that it be implemented
based on the TESDA-approved competency-based system.
6. Duration of training. Learnership involves practical training on the job for a period not exceeding three
(3) months; while apprenticeship requires for proficiency, more than three (3) months but not over six

(6) months of practical training on the job.


7. Qualifications. The law does not expressly mention any qualifications for learners; while the following
qualifications are required to be met by apprentices under Article 59 of the Labor Code:
(a) Be at least fourteen (14) years of age;
(b)Possess vocational aptitude and capacity for appropriate tests; and
(c) Possess the ability to comprehend and follow oral and written instructions.
8. Circumstances justifying hiring of trainees. Unlike in apprenticeship, in learnership, the law, Article 74
of the Labor Code, expressly prescribes the pre-requisites before learners may be validly employed, to wit:
a. When no experienced workers are available;
b. The employment of learners is necessary to prevent curtailment of employment opportunities; and
c. The employment does not create unfair competition in terms of labor costs or impair or lower working
standards.
9. Limitation on the number of trainees. In learnership, a participating enterprise is allowed to take in
learners only up to a maximum of 20% of its total regular workforce. No similar cap is imposed in the case of
apprenticeship.
10. Option to employ. In learnership, the enterprise is obliged to hire the learner after the lapse of the
learnership period; while in apprenticeship, the enterprise is given only an option to hire the apprentice
as an employee.
11. Wage rate. The wage rate of a learner or an apprentice is set at 75% of the statutory minimum wage.
O. PERSONS WITH DISABILITY [PWDs] (R. A. No. 7277, as amended by R. A. No. 9442).
1. Definitions of important terms. a. Persons with Disability are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within the range
considered normal for a human being. [NOTE: It is not correct to refer to them as Disabled
Persons].
b. Impairment refers to any loss, diminution or aberration of psychological, physiological, or anatomical
structure or function.
c. Disability means (1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical functions of an individual or activities of such individual; (2) a
record of such an impairment; or (3) being regarded as having such an impairment.
d. Handicap refers to a disadvantage for a given individual, resulting from an impairment or a disability
that limits or prevents the function or activity that is considered normal given the age and sex of the
individual.
e. Reasonable Accommodations include: (1) improvement of existing facilities used by employees in
order to render these readily accessible to and usable by persons with disability; and (2) modification of
work schedules, reassignment to a vacant position, acquisition or modification of equipment or devices,
appropriate adjustments or modifications of examinations, training materials or company policies, rules
and regulations, the provision of auxiliary aids and services, and other similar accommodations for
persons with disability.
f.

Marginalized

Disabled

Persons or

more

appropriately, Marginalized

Persons

with

Disability refer to persons with disability who lack access to rehabilitative services and opportunities to
be able to participate fully in socio-economic activities and who have no means of livelihood and whose
incomes fall below the poverty threshold.
g. Qualified Individual with a Disability means an individual with a disability who, with or without
reasonable accommodations, can perform the essential functions of the employment position that such
individual holds or desires. However, consideration shall be given to the employers judgment as to what
functions of a job are essential, and if an employer has prepared a written description before advertising
or interviewing applicants for the job, this description shall be considered evidence of the essential

functions of the job.


h. Covered Entity means an employer, employment agency, labor organization or joint-labor
management committee.
2. Rights of persons with disability.
a. Equal opportunity for employment.
b. Wage rate. - 100% of the applicable minimum wage.
c. Sheltered employment for persons with disability. - Sheltered Employment refers to the
provision of productive work for persons with disability through workshops providing special facilities,
income-producing projects or homework schemes with a view to giving them the opportunity to earn a
living thus enabling them to acquire a working capacity required in open industry.
d. Vocational rehabilitation. - The State shall take appropriate vocational rehabilitation measures that
shall serve to develop the skills and potentials of persons with disability and enable them to compete
favorably for available productive and remunerative employment opportunities in the labor market.
e.

Vocational guidance and counselling.

- The DSWD shall implement measures providing and

evaluating vocational guidance and counselling to enable persons with disability to secure, retain and
advance in employment. It shall ensure the availability and training of counsellors and other suitably
qualified staff responsible for the vocational guidance and counselling of persons with disability.
f. Persons with disability are eligible for apprenticeship and learnership.
3. Prohibition on discrimination against PWDs.
4. Discrimination on employment prohibited. - No entity, whether public or private, shall discriminate
against a qualified person with disability by reason of disability in regard to job application procedures, the
hiring, promotion, or discharge of employees, employee compensation, job training, and other terms,
conditions and privileges of employment. The following constitute acts of discrimination:
(1) Limiting, segregating or classifying a job applicant with disability in such a manner that adversely affects
his work opportunities;
(2) Using qualification standards, employment tests or other selection criteria that screen out or tend to
screen out a person with disability unless such standards, tests or other selection criteria are shown to be
job-related for the position in question and are consistent with business necessity;
(4) Utilizing standards, criteria, or methods of administration that:
(a) have the effect of discrimination on the basis of disability; or
(b) perpetuate the discrimination of others who are subject to common administrative control.
(5) Providing less compensation, such as salary, wage or other forms of remuneration and fringe benefits, to
a qualified employee with disability, by reason of his disability, than the amount to which a non-disabled
person performing the same work is entitled;
(6) Favoring a non-disabled employee over a qualified employee with disability with respect to promotion,
training opportunities, study and scholarship grants, solely on account of the latters disability;
(7) Re-assigning or transferring an employee with a disability to a job or position he cannot perform by
reason of his disability;
(8) Dismissing or terminating the services of an employee with disability by reason of his disability unless the
employer can prove that he impairs the satisfactory performance of the work involved to the prejudice of
the business entity; provided, however, that the employer first sought to provide reasonable
accommodations for persons with disability;
(9) Failing to select or administer in the most effective manner employment tests which accurately reflect the
skills, aptitude or other factor of the applicant or employee with disability that such tests purports to
measure, rather than the impaired sensory, manual or speaking skills of such applicant or employee, if
any; and
(10) Excluding persons with disability from membership in labor unions or similar organizations.

4. Incentives for employers who employ persons with disability. - Private entities that employ persons
with disability who meet the required skills or qualifications, either as a regular employee, apprentice or
learner, shall be entitled to an additional deduction from their gross income equivalent to twentyfive percent (25%) of the total amount paid as salaries and wages to persons with disability;
provided, however, that such entities could present proof as certified by the Department of Labor and
Employment that persons with disability are under their employ and provided further that the employee with
disability is accredited with the Department of Labor and Employment and the Department of Health as to his
disability, skills and qualifications. [9]
Private entities that improve or modify their physical facilities in order to provide reasonable
accommodation for persons with disability shall also be entitled to an additional deduction from
their net taxable income equivalent to fifty percent (50%) of the direct costs of the
improvements or modifications.
oooooooooOoOooooooooo

[1] Republic Act No. 10151 [An Act Allowing the Employment of Night Workers, Thereby Repealing Articles 130 and 131
of P. D. No. 442, As Amended, Otherwise Known as the Labor Code of the Philippines] which was approved on June
21, 2011, has repealed Article 130 [Nightwork Prohibition] and Article 131 [Exceptions] of the Labor Code and
accordingly renumbered the same articles as described above.
Additionally, the same R. A. No. 10151 has inserted a new Chapter V of Title III of Book III of the Labor Code entitled
Employment of Night Workers which addresses the issue on nightwork of all employees, including women workers.
Chapter V covers newly renumbered Articles 154 up to 161 of the Labor Code.
[2] As inserted by Section 4, R. A. No. 10151, June 21, 2011.
[3] See Lagatic v. NLRC, G. R. No. 121004, January 28, 1998.
[4] As stated in the Letter-Opinion of the Department of Labor and Employment dated February 19, 1993.
[5]R. A. No. 8187 [June 11, 1996].
[6]R. A. NO. 8972, otherwise known as THE SOLO PARENTS WELFARE ACT OF 2000 [NOVEMBER 7, 2000].
[7]R. A. NO. 9262, otherwise known as ANTI-VIOLENCE AGAINST WOMEN AND THEIR CHILDREN ACT OF 2994
[MARCH 8, 2004].
[8] Under the 2013 Syllabus for Labor Law, the following legal bases were referred to: 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. Reference to these laws is is no longer proper with the advent of Republic Act No.

10361,

otherwise known as Domestic Workers Act or Batas Kasambahay approved on January 18, 2013, which repealed
the entire Chapter III, Title III of Book III of the Labor Code on Househelpers - covering Articles 141 to 152 thereof.
[9]

Section 8[b], Chapter 1, Title II, Ibid.

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PRE-WEEK NOTES
ON THE 2013 BAR EXAMINATION IN LABOR LAW
By: Prof. JoselitoGuianan Chan
(These Notes, consisting of 8 parts, are supplementary to the authors book entitled 2012 Bar
Reviewer on Labor Law)
========================================================
PART FOUR
TERMINATION OF EMPLOYMENT
A. EMPLOYER-EMPLOYEE RELATIONSHIP.
1. 4-fold test:
a. Selection and engagement of the employee;
b. Payment of wages or salaries;
c. Exercise of the power of dismissal; or
d. Exercise of the power to control the employees conduct the controlling test. It addresses the issue of
whether the employer controls or has reserved the right to control the employee not only as to
the result of the work to be done but also as to the means and methods by which the same is to be
accomplished.
2. Kinds of employment.
a. Probationary employment. - A probationary employee is one who, for a given period of time, is on
observation, evaluation and trial by an employer during which the employer determines whether or not he
is qualified for permanent employment.
Probationary period. 6 months is neither the maximum nor the minimum period. The employer
may provide for such period which may either be less or more than 6 months.
Probationary period, how reckoned and computed.

If for example 6 months, it should be

reckoned from the date of appointment up to the same calendar date of the 6 th month
following.
Distinction between probationary employment and fixed-term employment.

It is in

the intention of the parties that determines the distinction. If parties intend to make their relationship
regular after the agreed period, it is probationary; if none in the sense that they intend to terminate it
at the expiration of the agreed period, it is simply fixed-term.
2 grounds to terminate probationary employment. (1) For a just cause or authorized cause;
and (2) When the probationary employee fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the start of the employment.
Due process. Due process is required in the first ground above; It is not required in the second
ground.
Some principles on probationary employment.
1. The probationary period may be extended but only upon the mutual agreement by the employer and
the probationary employee.
2. An employee who is allowed to work after a probationary period is considered a regular employee.
3. Employment is deemed regular if the employment contract has no stipulation on probationary
period.
4. Repetitive rehiring of a probationary employee means he has become a regular employee.
b. Regular employment.

Three (3) ways of becoming a regular employee:


1. By nature of work. When the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer.
2. By period of service. When the employee has rendered at least one (1) year of service, whether
such service is continuous or broken, with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
3. By probationary employment. When the employee successfully passes the probationary period. .
c. Project employment. A project employee is one who is hired: (1) for a specific project or undertaking;
and (2) the completion or termination of such project has been determined at the time of their
engagement.
Principal distinctions between project employment and regular employment.
1. Length of service - Project employee - coterminous with the project or any phase thereof and may be terminated
upon the end or completion of the project or phase thereof for which they were hired.
- Regular employee - legally entitled to remain in the service of their employer up to retirement.
2. Due process
- Project employee no due process is required if termination is by reason of completion of the
project or any phase thereof.
- Regular employee - due process is required.
d. Seasonal employment. - A seasonal employee is one whose work or service to be performed is
seasonal in nature and the employment is for the duration of the season.
Regular seasonal employment. A seasonal employee may attain regularity in his employment if:
1. He performs work or services that are seasonal in nature; and
2. He must have been employed for more than one (1) season.
e. Casual employment. A casual employee is one who is engaged to perform a job, work or service
which is merely incidental to the business of the employer, and such job, work or service is for a definite
period made known to the employee at the time of engagement.
Some principles on casual employment.
1. Casual employee becomes regular after one year of service by operation of law.
2. The one (1) year period should be reckoned from the hiring date.
3. Repeated rehiring of a casual employee makes him a regular employee.
f. Fixed-term employment. A fixed-term employee is one whose employment is for a fixed or definite
period the termination of which is pre-determined at the time of his engagement.
Two (2) requisites for validity of fixed-term employment contract:
1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without
any force, duress or improper pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former on the latter.
Some principles on fixed-term employment.
1. Fixed-term employment is valid even if duties are usually necessary or desirable in the employers
usual business or trade. It is the exception to the rule on the regularity of employment by reason of
nature of work.
2. Notice of termination not necessary in fixed-term employment.
3. Employee is deemed regular if contract failed to state the specific fixed period of employment.
4. Employees allowed to work beyond fixed term become regular employees.
5. Rendering work beyond one (1) year would result to regular employment.
6. Successive renewals of fixed-period contracts will result to regular employment.
7. 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.
8. Employment on a day-to-day basis for a temporary period will result to regular employment.
9. Termination prior to lapse of fixed-term contract should be for a just or authorized cause.
Some principles on fixed-term employment of OFWs.
1. OFWs can never acquire regular employment. It is always on a fixed-term basis.
2. Employment contracts of OFWs for indefinite period, not valid.
3. OFWs do not become regular employees by reason of nature of work.
4. Series of rehiring of OFWs cannot ripen into regular employment
5.

CBA cannot override the terms and conditions prescribed by the POEA under the Standard
Employment Contract for OFWs.

3. Job contracting.
a. As defined in Article 106 to Article 109 of the Labor Code and its latest implementing rules
- Department Order No.

18-A [November 14, 2011].

- Job contracting is legitimate if all the

following three (3) circumstances concur:


(1) The contractor must be registered with the DOLE and carries a distinct and independent
business and undertakes to perform the job, work or service on its own responsibility, according
to its own manner and method, and freeform control and direction of the principal in all
matters connected with the performance of the work except as to the results thereof;
(2) The contractor has substantial capital and/or investment; and
(3) The Service Agreement ensures compliance with all the rights and benefits under Labor Laws.
Some principles on job contracting per Department Order No. 18-A.
1. Absence of any of the foregoing requisites makes it a labor-only contracting arrangement.
2. Lack of control by the job contractor over the manner and method of the performance of the work
of its employees supplied to the principal would amount to labor-only contracting.
3. "Substantial capital" means:
For corporations,

partnerships and cooperatives

P3

Millions of paid-up

capital

stocks/shares.
For single proprietorship - P3 Million of net worth.
4. Substantial capital and investment in tools, equipment, implements, machineries and
work premises should be treated as two (2) distinct and separate factors. The existence of one is
sufficient to establish legitimate job contracting. Failure to prove substantial capital or investment in
tools, equipment, etc. , would result in labor-only contracting arrangement.
5. Renting out the plant, tools and equipment to the contractor does not prove substantial capitalization.
6. The fact that the contractor has only the principal as its single client indicates labor-only contracting.
7. Direct relationship of the job, work or service contracted with the main business of the principal
indicates labor-only contracting.
8. Violation of the following rights of contractors employees would make the principal the direct
employer:
(a)Safe and healthful working conditions;
(b) Labor standards such as but not limited to service incentive leave, rest days, overtime pay, holiday
pay, 13th month pay, and separation pay as may be provided in the Service Agreement or under
the Labor Code;
(c) Retirement benefits under the SSS or retirement plans of the contractor, if there is any;
(d) Social security and welfare benefits;
(e) Self-organization, collective bargaining and peaceful concerted activities; and
(f) Security of tenure.
9. Registration of job contractors with the DOLE is now mandatory. Failure to register shall give rise

to the presumption that the contractor is engaged in labor-only contracting.


b. Department Circular No. 01-12 [March 13, 2012]. This issuance:
1. Excepted job contractors in the construction industry from the registration requirement under D. O. No.
18-A, Series of 2011.
2. Clarified that D. O. No. 18-A, Series of 2011 BPOs are not covered by the same Department Order No.
18-Adoes not contemplate information technology-enabled services involving an entire business
processes (for example, business process outsourcing, knowledge process outsourcing, legal
process outsourcing, hardware and/or software support, medical transcription, animation
services, back office operations/support).

These companies engaged in business processes

("BPOs") may hire employees in accordance with applicable laws, and maintain these employees based
on business requirements, which may or may not be for different clients of the BPOs at different periods
of the employees' employment. Thus, vendor-vendee relationship for entire business processes covered
by the applicable provisions of the Civil Code on Contracts is excluded.
c. Effects of Labor-Only Contracting. The following are the effects:
1. The labor-only contractor will be treated as the agent or intermediary of the principal.
2. The principal will become the direct employer of the workers supplied by the labor-only contractor.
3. The principal and the labor-only contractor will be solidarily treated as the employer.
d. Trilateral relationship in job contracting. -There are three (3) parties involved in these arrangements:
(1) The principal who/which farms out a work, job or service to a job contractor;
(2) The job contractor who/which has the capacity to independently undertake the performance of the
work, job, task, project or service; and
(3) The contractual workers supplied by the job contractor to the principal to accomplish the work, job, or
service contemplated in the Service Agreement.
B. DISMISSAL FROM EMPLOYMENT.
1. Just Causes. The following are the just causes under the law:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c)Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
(e)Other causes analogous to the foregoing such as:
1. Knowingly participating by the union officers in an illegal strike;
2. Knowingly participating in the commission of illegal acts by any employee, union officer or ordinary
member during a strike (irrespective of whether the strike is legal or illegal).
3. Violation by strikers of orders, prohibitions and/or injunctions issued by the DOLE Secretary.
4. Violation of the union security clause stipulated in the CBA.
5. Violation of company rules and regulations.
6. Theft of property of co-employee. [1]
7. Inefficiency or failure to attain work quota. [2]
8. Failure to comply with weight standards of employer. [3]
2. Authorized causes. The following are the authorized causes under the law:
(a) Installation of labor-saving device;
(b) Redundancy;
(c) Retrenchment;
(d)Closure or cessation of business operations;

(e)Disease.
3. Due process. Due process in termination of employment refers to statutory,[4] and not constitutional,
[5] due process.
(a)Twin-notice requirement. Refers to the requirement that an employee who is dismissed for just
cause must be given at least two (2) notices described in King of Kings Transport, Inc. v. Mamac, [G. R.
No. 166208, June 29, 2007], thus:
(1) First written notice. - The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that the employees are given
the opportunity to submit their written explanation within the reasonable period of at least five (5)
calendar days from receipt of the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather data and evidence, and decide on
the defenses they will raise against the complaint.

Moreover, in order to enable the employees to

intelligently prepare their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the charge against
the employees.

A general description of the charge will not suffice.

Lastly, the notice

should specifically mention which company rules, if any, are violated and/or which among the
grounds under Article 282 is being charged against the employees.
(2) Hearing required. - After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity to: (1) explain and
clarify their defenses to the charge/s against them; (2) present evidence in support of
their defenses; and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice.

Moreover, this

conference or hearing could be used by the parties as an opportunity to come to an amicable


settlement.
(3) Second written notice.

- After determining that termination of employment is justified, the

employers shall serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge/s against the employees have been considered; and
(2) grounds have been established to justify the severance of their employment.
(b) Hearing; meaning of opportunity to be heard. [See No. 2 above in re King of Kings Transport v.
Mamac]. New guiding principles on the hearing aspect of procedural due process have been enunciated in
the en banc decision in the 2009 case of Perez v. Philippine Telegraph and Telephone Company, [G.
R. No. 152048, April 7, 2009, 584 SCRA 110], thus:
(1) 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.
(2)A formal hearing or conference becomes mandatory only under any of the following circumstances:
(a) When requested by the employee in writing; or
(b) When substantial evidentiary disputes exist; or
(c) When a company rule or practice requires it; or
(d) When similar circumstances justify it.
(3)The ample opportunity to be heard standard in the Labor Code prevails over the hearing or
conference requirement in its implementing rules and regulations.
C. RELIEFS FOR ILLEGAL DISMISSAL.
1. Reinstatement. - It means restoration to a state or condition from which one had been removed or

separated. The person reinstated assumes the position he had occupied prior to his dismissal or, if no longer
available, to a substantially equivalent position.
a. Pending appeal (Article 223, Labor Code).

This relief applies only to orders of reinstatement

issued by Labor Arbiters and to no other. The employee need not file a motion for the issuance of the
writ of execution since the Labor Arbiter shall thereafter motu proprio issue the writ. Thus, if ordered by
the NLRC, CA or SC, the same is not immediately executory since it is not covered by the rule under Article
223; hence, there should be a writ of execution to effect reinstatement.
[NOTE:

See

more

discussion

on

this

topic

in

PART

entitled PROCEDURE

AND

JURISDICTION of Labor Arbiters].


b.

Separation pay in lieu of reinstatement.

The following circumstances justify the award of

separation in lieu of reinstatement:


1. Where the continued relationship between the employer and the employee is no longer viable due to
the strained relations and antagonism between them.
2. When reinstatement proves impossible, impracticable, and hardly in the best interest of the parties.
3. When there has been long passage of time from the date of the incident to the final resolution of the
case or due to certain realities of the situation.
4. Where the dismissed employees position is no longer available at the time of reinstatement for reasons
not attributable to the fault of the employer.
5. Where the employee decides not to be reinstated as when he does not pray for reinstatement in his
complaint or position paper.
6. Where the employee expressly prayed for the award of separation pay instead of reinstatement
thereby effectively foreclosing reinstatement as a relief.
7. In case the establishment where the employee is to be reinstated has closed or ceased operations.
8. Where the company has been declared insolvent.
9. When, by reason of compassionate justice or long years of service or lack of bad records in the past, an
employee is granted by the court separation pay in accordance with his entitlement under the law, or
under the CBA or company rules or practice, whichever is higher, although there was a finding of
legality of dismissal.
10. When reinstatement is rendered moot and academic due to supervening events such as fire.
11. When there is takeover of the business of the employer by another company and there is no
agreement regarding assumption of liability by the acquiring company.
12. When the illegally dismissed employees are over-age and their reinstatement would unjustly prejudice
their employer.
13. When the general sales agency contract between the employer and its client has been terminated and
reinstatement is no longer feasible.
Some principles on separation pay in lieu of reinstatement.
a. The amount of separation pay should be equivalent to at least one (1) month salary or to one (1)
month salary for every year of service, whichever is higher, a fraction of at least six (6) months being
considered as one (1) whole year. Regular allowances should be included.
b. Separation pay as a substitute remedy is only proper for reinstatement but not for backwages nor for
both reinstatement and backwages. Separation pay in lieu of reinstatement and backwages, not
inconsistent with each other.
c. The law intended reinstatement to be the general rule.

It is only when reinstatement is no longer

feasible that payment of separation pay is awarded to an illegally dismissed employee.


2. Backwages. - An employee who is illegally dismissed is entitled not only to reinstatement, without loss of
seniority rights and other privileges, but also to the payment of his full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time of his illegal
dismissal when his compensation was withheld from him up to the time of his actual reinstatement, or if

reinstatement is not possible, up to the finality of the decision. Backwages represent compensation that
should have been earned by the employee but were lost because of the unjust or illegal dismissal.
a. Computation. The backwages shall be computed on the basis of the wage rate level at the time
of the illegal dismissal and not in accordance with the latest, current wage level of the employees
position. Regular allowances and other benefits should be made part of the computation of backwages.
Some principles on backwages.
1. Salary increases during period of unemployment, not included as component in the computation of
backwages.
2. Dismissed employees ability to earn, irrelevant in the award of backwages.
3. 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.
4. The rule is different if employment is for a definite period.

The illegally dismissed fixed-term

employee is entitled only to the payment of his salaries corresponding to the unexpired portion of his
fixed-term employment contract.
5. If the illegally dismissed employee has reached 60 or 65 years of age, his backwages should only
cover the time when he was illegally dismissed up to the time when he reached 60 or 65 years old,
as the case may be.
b. Limited backwages. Instead of giving FULL backwages as mandated under Article 279 of the Labor
Code, the Supreme Court grants limited backwages due to the following justifications:
(i) The dismissal was made in good faith; or
(ii) The penalty of dismissal is too harsh a penalty.
Examples: In the 1992 case of Dolores v. NLRC, [6] the employee was terminated for her continuous
absence without permission. Although it was found that the employee was indeed guilty of breach of
trust and violation of company rules, the Supreme Court still pronounced that the employees dismissal
was illegal on the basis of its finding that it was too severe a penalty considering that besides that fact
that she had served the company for 21 years, it was her first offense, and her leave to study the French
language would ultimately benefit the employer who no longer had to spend for translation services.
Even so, other than ordering the employees reinstatement, the said employee was awarded backwages
limited to a period of two (2) years, given that the employer acted without malice or bad faith in
terminating the employees services.
The full backwages originally awarded in the 2008 case of Victory Liner, Inc. v. Race,[7] was reduced and
limited to only five (5) years because of the good faith of the employer. While petitioners argument that
respondent had already abandoned his job in 1994 was not upheld, the Court conceded that petitioner,
given the particular circumstances of this case, had sufficient basis to reasonably and in good faith deem
respondent resigned by 1998.
D. PREVENTIVE SUSPENSION.
Preventive suspension,[8]which is not a penalty, may be imposed only in cases where an employee is
undergoing an investigation for committing a serious offense and his continued presence in the company premises
during the investigation poses a serious and imminent threat to the life or property of the employer or of his co-workers.
Without this threat, preventive suspension is not proper. Thus, an employees absences and tardiness or failure to wear
proper uniform or to attend a meeting called by his supervisor are not valid grounds to impose preventive suspension.

Some principles on preventive suspension.


1. Maximum Period of preventive suspension - 30 days. After the lapse thereof, the employer is required to
reinstate the worker to his former position or to a substantially equivalent position. During the 30-day
period, the worker is not entitled to his wages and other benefits.
2. Extension of period must be justified. It may only be extended if the employer failed to complete the
investigation within the 30-day period due to justifiable grounds. Once extended, employee must be paid

his wages and benefits during the 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.
3. Indefinite preventive suspension amounts to constructive dismissal.
4. Preventive suspension does not mean that due process may be disregarded.
5. Preventive suspension, by itself, does not signify that the company has already adjudged the employee
guilty of the charges for which she was asked to answer and explain.
E. CONSTRUCTIVE DISMISSAL.
Constructive dismissal contemplates any of the following:
1. An involuntary resignation resorted to when continued employment is rendered impossible, unreasonable
or unlikely;
2. A demotion in rank and/or a diminution in pay; or
3. A clear discrimination, insensibility or disdain by an employer which becomes unbearable to the
employee that it could foreclose any choice by him except to forego his continued employment.
Test of constructive dismissal. - The test of constructive dismissal is whether a reasonable person in the
employees position would have felt compelled to give up his position under the circumstances.

It is an act amounting

to dismissal but made to appear as if it were not. In fact, the employee who is constructively dismissed may be allowed
to keep on coming to work.

Constructive dismissal is, therefore, a dismissal in disguise.

The law recognizes and

resolves this situation in favor of the employees in order to protect their rights and interests from the coercive acts of the
employer.
oooooooooOoOooooooooo

[1] John Hancock Life Insurance Corp. v. Davis, G. R. No. 169549, September 3, 2008.
[2] Buiser v. Leogardo, Jr. , G. R. No. L-63316, July 13, 1984, 131 SCRA 151, 158.
[3] Yrasuegui v. Philippine Airlines, Inc. , G. R. No. 168081, October 17, 2008.
[4] Article 277(b) of the Labor Code.
[5] Section 1, Article III of the Constitution.
[6] G. R. No. 87673, January 24, 1992, 205 SCRA 348,
[7] G. R. No. 164820, December 8, 2008.
[8] Preventive suspension is not found in the Labor Code. It is provided in Sections 8 and 9, Rules XXIII, Book V, Rules
to Implement the Labor Code.
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PRE-WEEK NOTES
ON THE 2013 BAR EXAMINATION IN LABOR LAW
By: Prof. JoselitoGuianan Chan
(These Notes, consisting of 8 parts, are supplementary to the authors book entitled 2012 Bar Reviewer
on Labor Law)
========================================================
PART FIVE
MANAGEMENT PREROGATIVES
A. DISCIPLINE.
The employers prerogative to discipline includes the following rights:
1.

To dismiss;

2.

To promulgate disciplinary rules and regulations;

3.

To determine who to punish;

4.

To impose proper penalty under the Reasonable Proportionality Rule which means that infractions
committed by an employee should merit only the corresponding sanction demanded by the circumstances.
The penalty must be commensurate with the gravity of the offense, the act, conduct or omission imputed to
the employee and imposed in connection with the employers disciplinary authority.

B. TRANSFER OF EMPLOYEES.
A transfer means a movement:
1. From one position to another of equivalent rank, level or salary, without a break in the service; or
2. From one office to another within the same business establishment.
Some principles on transfer of employees.
1. The transfer of an employee may constitute constructive dismissal when it amounts to an involuntary
resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely;
when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee leaving him with no option but to forego with
his continued employment. More specifically, the following three (3) conditions must concur in order for
the transfer to be considered as constructive dismissal:
(a)When the transfer is unreasonable, inconvenient or prejudicial to the employee;
(b)When the transfer involves a demotion in rank or diminution of salaries, benefits and other privileges;
and
(c)When the employer performs a clear act of discrimination, insensibility, or disdain towards the
employee, which forecloses any choice by the latter except to forego his continued employment.
2. Even if the employee is performing well in his present assignment, management may reassign him to a
new post.
3. The refusal of an employee to be transferred may be held justified if there is a showing that the transfer
was directed by the employer under questionable circumstances. For instance, the transfer of employees
during the height of their unions concerted activities in the company where they were active participants
is illegal.
4. An employee who refuses to be transferred when such transfer is valid is guilty of insubordination or willful
disobedience of a lawful order of an employer under Article 282 of the Labor Code. For example: The
dismissal of a medical representative who acceded in his employment application to be assigned anywhere
in the Philippines but later refused to be transferred from Manila to a provincial assignment, was held valid.
The reason is that when he applied and was accepted for the job, he agreed to the policy of the company
regarding assignment anywhere in the Philippines as demanded by his employers business operation. [1]
5. Refusal to transfer due to parental obligations, additional expenses, inconvenience, hardship and anguish,

held not valid. An employee could not validly refuse lawful orders to transfer based on these grounds.
6. Refusal to transfer by reason of promotion is valid.
C. PRODUCTIVITY STANDARDS OR QUOTA.
The employer has the prerogative to prescribe the standards of productivity which the employees should
comply. The productivity standards may be used by the employer as:
1. an incentive scheme; and/or
2. a disciplinary scheme.
As an incentive scheme, employees who surpass the productivity standards or quota are usually given additional
benefits. As a disciplinary scheme, employees may be sanctioned for failure to meet the productivity standards or
quota.

D. GRANT OF BONUS.
1. General rule; bonus is not demandable or enforceable. - Bonus, as a general rule, is an amount
granted and paidex gratia to the employee. Its payment constitutes an act of enlightened generosity and
self-interest on the part of the employer rather than as a demandable or enforceable obligation.
2. Bonus; when demandable and enforceable. - Bonus is demandable and enforceable under any of the
following circumstances:
a. When it is stipulated in an employment contract or CBA;
b. When the grant of bonus is a company policy or practice;
c. When 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 and, thus, must be
deemed part of wage or salary; hence, demandable.
It thus becomes a demandable and enforceable obligation only when it is made part of the wage or salary
or compensation. When considered as part of the compensation and therefore demandable and enforceable, the
amount is usually fixed.
But if the amount of bonus is dependent upon the realization of profits, the bonus is not demandable and
enforceable.
E. CHANGE OF WORKING HOURS.
Employers have the freedom and prerogative, according to their discretion and best judgment, to regulate and
control the time when workers should report for work and perform their respective functions.
Manila Jockey Club Employees Labor Union PTGWO, v.

Manila Jockey Club, Inc. , [G. R.

No.

167760, March 7, 2007]. - The validity of the exercise of the same prerogative to change the working hours
was affirmed in this case In this case. It was found that while Section 1, Article IV of the CBA provides for a 7hour 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, however, expressly reserves on 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 was changed from 9:00 a. m. to 5:00 p. m. to 1:00 p. m. to 8:00 p. m. when horse
races are held, that is, every Tuesday and Thursday. The 9:00 a. m. to 5:00 p. m. schedule for non-race days
was, however, retained. Respondent, as employer, cited the change in the program of horse races as reason for
the adjustment of the employees work schedule. It rationalized that when the CBA was signed, the horse races
started at 10:00 a. m.

When the races were moved to 2:00 p. m. , there was no other choice for management

but to change the employees work schedule as there was no work to be done in the morning.

Evidently, the

adjustment in the work schedule of the employees is justified.


F. RULE ON MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR-EMPLOYERS.
The best case to illustrate this rule is Duncan Association of Detailman-PTGWO v.

Glaxo Welcome

Philippines, Inc. , [G. R. No. 162994, September 17, 2004]. The contract of employment expressly prohibited an
employee from having a relationship with an employee of a competitor company. It provides:

10. You agree to disclose to management any existing or future relationship you
may have, either by consanguinity or affinity with co-employees or employees of competing
drug companies. Should it pose a possible conflict of interest in management discretion,
you agree to resign voluntarily from the Company as a matter of Company policy.
The Supreme Court ruled that this stipulation is a valid exercise of management prerogative. The prohibition
against personal or marital relationships with employees of competitor-companies upon its employees is reasonable
under the circumstances because relationships of that nature might compromise the interests of the company. In laying
down the assailed company policy, the employer only aims to protect its interests against the possibility that a
competitor company will gain access to its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information.
Reasonable business necessity rule as applied to the prohibition against marriage policy. This rule
dictates that the requirement of reasonableness must be clearly established in order to make the policy against
marriage valid. The employer has the burden to prove the existence of a reasonable business necessity. The burden
was successfully discharged in above case of Duncan.
G. POST-EMPLOYMENT BAN
a. Freedom to contract. - The employer and the employee are free to stipulate in an employment contract
prohibiting the employee within a certain period from and after the termination of his employment, from
starting a similar business, profession or trade or working in an entity that is engaged in a similar business
that might compete with the employer. Contracts which prohibit an employee from engaging in business in
competition with the employer are not necessarily void for being in restraint of trade. The non-compete
clause is agreed upon to prevent the possibility that upon an employees termination or resignation, he might
start a business or work for a competitor with the full competitive advantage of knowing and exploiting
confidential and sensitive information, trade secrets, marketing plans, customer/client lists, business
practices, upcoming products, etc. , which he acquired and gained from his employment with the former
employer.
b. Philippine jurisprudence on the non-compete clause. - The nature and extent to which a noncompete clause is legally allowed usually varies from one jurisdiction to another. In the Philippines, several
cases dating back to as early as 1910 have dealt with issues on jurisdiction and validity of non-compete or
non-involvement stipulations, also known as Covenant Not to Compete (CNC) in an employment contract.
The rule is clear: 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.
In order to appreciate the principles affecting this clause in our jurisdiction, the following cases of significance
may be cited and are worth looking into:
1. Carlos Gsell v. Pedro Koch, [G. R. No. 4907. March 22, 1910];
2. AnselmoFerrazzini v. Carlos Gsell, [G. R. No. 10712. August 10, 1916];
3. William Ollendorf v. Ira Abrahamson (En Banc), [G. R. No. 13228, September 13, 1918];
4. G. Martini (Ltd. ) v. J. M. Glaiserman (En Banc), [G. R. No. L-13699. November 12, 1918];
5. Alfonso del Castillo v. Shannon Richmond, [G. R. No. 21127. February 9, 1924];
6. Raquel P. Consulta v. CA, Pamana Philippines, Inc. , et al. , [G. R. No. 145443. March 18, 2005];
7. Yusen Air and Sea Service Philippines, Inc. v. Villamor, [G. R. No. 154060, August 16, 2005];
8. Daisy B. Tiu v. Platinum Plans Philippines, Inc. , [G. R. No. 163512, February 28, 2007];
Two (2) cases dealing with the issue of jurisdiction over breach of the non-compete clause have also been
decided by the Supreme Court, namely:
1. Dai-Chi Electronics Manufacturing Corporation v. Hon. Villarama, [G. R. No. 112940. November 21,
1994]; and
2. Portillo v. Rudolf Lietz, Inc. , [G. R. No. 196539, October 10, 2012].

The best case to illustrate the principles on non-compete clause is the 2007 case of Daisy B. Tiu v. Platinum
Plans Philippines, Inc. , [G. R. No. 163512, February 28, 2007]. The non-compete clause (called NonInvolvement Provision in this case) provides as follows:
8. NON INVOLVEMENT PROVISION The EMPLOYEE further undertakes that during his/her
engagement with EMPLOYER and in case of separation from the Company, whether voluntary or for
cause, he/she shall not, for the next TWO (2) years thereafter, engage in or be involved with any
corporation, association or entity, whether directly or indirectly, engaged in the same business or
belonging to the same pre-need industry as the EMPLOYER. Any breach of the foregoing provision shall
render the EMPLOYEE liable to the EMPLOYER in the amount of One Hundred Thousand Pesos
(P100,000. 00) for and as liquidated damages.
Starting on January 1, 1993, petitioner worked for respondent as Senior Assistant Vice-President and Territorial
Operations Head in charge of its Hongkong and Asean operations under a 5-year contract of employment containing the
afore-quoted clause. On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became
the Vice-President for Sales of Professional Pension Plans, Inc. , a corporation engaged also in the pre-need industry.
Consequently, respondent sued petitioner for damages before the RTC of Pasig City. Respondent alleged, among others,
that petitioners employment with Professional Pension Plans, Inc. violated the above-quoted non-involvement clause in
her contract of employment. Respondent thus prayed for P100,000 as compensatory damages; P200,000 as moral
damages; P100,000 as exemplary damages; and 25% of the total amount due plus P1,000 per counsels court
appearance, as attorneys fees. Petitioner countered that the non-involvement clause was unenforceable for being
against public order or public policy: First, the restraint imposed was much greater than what was necessary to afford
respondent a fair and reasonable protection. Petitioner contended that the transfer to a rival company was an accepted
practice in the pre-need industry. Since the products sold by the companies were more or less the same, there was
nothing peculiar or unique to protect. Second, respondent did not invest in petitioners training or improvement. At the
time petitioner was recruited, she already possessed the knowledge and expertise required in the pre-need industry and
respondent benefited tremendously from it. Third, a strict application of the non-involvement clause would amount to a
deprivation of petitioners right to engage in the only work she knew.
In upholding the validity of the non-involvement clause, the trial court ruled that a contract in restraint of trade
is valid provided that there is a limitation upon either time or place. In the case of the pre-need industry, the trial
court found the two-year restriction to be valid and reasonable.
On appeal, the Court of Appeals affirmed the trial courts ruling. It reasoned that petitioner entered into the
contract on her own will and volition. Thus, she bound herself to fulfill not only what was expressly stipulated in the
contract, but also all its consequences that were not against good faith, usage, and law. The appellate court also ruled
that the stipulation prohibiting non-employment for two years was valid and enforceable considering the nature of
respondents business.
In affirming the validity of the Non-Involvement Clause, the Supreme Court ratiocinated as follows:
Petitioner avers that the non-involvement clause is offensive to public policy since the
restraint imposed is much greater than what is necessary to afford respondent a fair and reasonable
protection. She adds that since the products sold in the pre-need industry are more or less the same,
the transfer to a rival company is acceptable. Petitioner also points out that respondent did not invest in
her training or improvement. At the time she joined respondent, she already had the knowledge and
expertise required in the pre-need industry. Finally, petitioner argues that a strict application of the noninvolvement clause would deprive her of the right to engage in the only work she knows.
Respondent counters that the validity of a non-involvement clause has been sustained by the
Supreme Court in a long line of cases. It contends that the inclusion of the two-year non-involvement
clause in petitioners contract of employment was reasonable and needed since her job gave her
access to the companys confidential marketing strategies. Respondent adds that the non-involvement

clause merely enjoined her from engaging in pre-need business akin to respondents within two years
from petitioners separation from respondent. She had not been prohibited from marketing
other service plans.
As early as 1916, we already had the occasion to discuss the validity of a non-involvement
clause. In Ferrazzini v. Gsell, [supra] we said that such clause was unreasonable restraint of
trade and therefore against public policy. In Ferrazzini, the employee was prohibited from
engaging in any business or occupation in the Philippines for a period of five years after
the termination of his employment contract and must first get the written permission of his
employer if he were to do so. The Court ruled that while the stipulation was indeed limited as to
time and space, it was not limited as to trade. Such prohibition, in effect, forces an employee to
leave the Philippines to work should his employer refuse to give a written permission.
In G. Martini, Ltd. v. Glaiserman,[supra] we also declared a similar stipulation as void
for being an unreasonable restraint of trade. There, the employee was prohibited from engaging
in any business similar to that of his employer for a period of one year. Since the employee was
employed only in connection with the purchase and export of abaca, among the many businesses of
the employer, the Court considered the restraint too broad since it effectively prevented the employee
from working in any other business similar to his employer even if his employment was limited only to
one of its multifarious business activities.
However, in Del Castillo v.

Richmond,[supra] we upheld a similar stipulation as legal,

reasonable, and not contrary to public policy.

In the said case, the employee was restricted from

opening, owning or having any connection with any other drugstore within a radius of four miles from
the employers place of business during the time the employer was operating his drugstore. We said
that a contract in restraint of trade is valid provided there is a limitation upon either time or place and
the restraint upon one party is not greater than the protection the other party requires.
Finally, in Consulta v. Court of Appeals,[supra] we considered a non-involvement clause in
accordance with Article 1306 of the Civil Code. While the complainant in that case was an independent
agent and not an employee, she was prohibited for one year from engaging directly or indirectly in
activities of other companies that compete with the business of her principal. We noted therein that the
restriction did not prohibit the agent from engaging in any other business, or from being connected with
any other company, for as long as the business or company did not compete with the principals
business. Further, the prohibition applied only for one year after the termination of the agents contract
and was therefore a reasonable restriction designed to prevent acts prejudicial to the employer.
Conformably then with the aforementioned pronouncements, a non-involvement clause is
not necessarily void for being in restraint of trade as long as there are reasonable
limitations as to time, trade, and place.
In this case, the non-involvement clause has a time limit: two years from the time
petitioners employment with respondent ends. It is also limited as to trade, since it only
prohibits petitioner from engaging in any pre-need business akin to respondents.
More significantly, since petitioner was the Senior Assistant Vice-President and Territorial
Operations Head in charge of respondents Hongkong and Asean operations, she had been privy to
confidential and highly sensitive marketing strategies of respondents business. To allow her to engage
in a rival business soon after she leaves would make respondents trade secrets vulnerable especially in
a highly competitive marketing environment. In sum, we find the non-involvement clause not
contrary to public welfare and not greater than is necessary to afford a fair and reasonable
protection to respondent.

In any event, Article 1306 of the Civil Code provides that parties to a contract may establish
such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.
Article 1159of the same Code also provides that obligations arising from contracts have the
force of law between the contracting parties and should be complied with in good faith. Courts cannot
stipulate for the parties nor amend their agreement where the same does not contravene law, morals,
good customs, public order or public policy, for to do so would be to alter the real intent of the parties,
and would run contrary to the function of the courts to give force and effect thereto. Not being contrary
to public policy, the non-involvement clause, which petitioner and respondent freely agreed upon, has
the force of law between them, and thus, should be complied with in good faith.
Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay
respondent P100,000 as liquidated damages. While we have equitably reduced liquidated damages in
certain cases, we cannot do so in this case, since it appears that even from the start, petitioner had not
shown the least intention to fulfill the non-involvement clause in good faith. [Emphasis supplied].
oooooooooOoOooooooooo

[1] Abbott Laboratories, Inc. v. NLRC, G. R. No. 76959, October 12, 1987. .
Powered by: chanroblesbar. com. ph

PRE-WEEK NOTES
ON THE 2013 BAR EXAMINATION IN LABOR LAW
By: Prof. JoselitoGuianan Chan
(These Notes, consisting of 8 parts, are supplementary to the authors book entitled 2012 Bar Reviewer
on Labor Law)
========================================================
PART SIX
SOCIAL AND WELFARE LEGISLATION
A. SSS LAW (R. A. No. 8282).
1. Compulsory coverage.
a. All employees - not over sixty (60) years of age and their employers.
b. Domestic workers/kasambahay Under the Kasambahay Law [R. A. No. 10361],[1]it is required that
the domestic worker or kasambahay must have rendered at least one (1) month of service. Premium
payments or contributions shall be shouldered by the employer.

However, if the domestic

worker is receiving a wage of Five thousand pesos (P5,000. 00) and above per month, the
domestic worker shall pay the proportionate share in the premium payments or contributions,
as provided by law.
2. Compulsory coverage of self-employed.
Coverage in the SSS shall also be compulsory upon such self-employed persons as may be determined by the
SS Commission under such rules and regulations as it may prescribe, including but not limited to the following:
a. All self-employed professionals;
b. Partners and single proprietors of businesses;
c. Actors and actresses, directors, scriptwriters and news correspondents who do not fall within the definition
of the term employee;
d. Professional athletes, coaches, trainers and jockeys; and
e. Individual farmers and fishermen.
Unless otherwise specified herein, all provisions of this Act applicable to covered employees shall also be
applicable to the covered self-employed persons.
3. Voluntary coverage.
a. Spouses who devote full time to managing the household and family affairs, unless they are also engaged
in other vocation or employment which is subject to mandatory coverage, may be covered by the SSS on a
voluntary basis.
b. Filipinos recruited by foreign-based employers for employment abroad may be covered by the SSS on a
voluntary basis.
4. Effective date of coverage.
1. Employees: Compulsory coverage of the employer shall take effect on the first day of his operation and
that of the employee on the day of his employment
2.

Self-Employed: The compulsory coverage of the self-employed person shall take effect upon his
registration with the SSS.

5. Benefits.
The following are the benefits provided under the SSS Law:
a. Monthly pension
b. Dependents pension
c. Retirement benefits

d. Death benefits
e. Permanent disability benefits
f. Funeral benefit
g. Sickness benefit
h. Maternity leave benefit
6. Beneficiaries.
a. Dependency rule under the SSS Law.
Under the SSS Law, dependent shall refer to:
(1) The legal spouse entitled by law to receive support from the member;
(2) The legitimate, legitimated, or legally adopted, and illegitimate child who is unmarried, not
gainfully employed and has not reached 21 of age, or if over 21 years of age, he
is congenitally or while still a minor has been permanently incapacitated and incapable of selfsupport, physically or mentally; and
(3) The parent who is receiving regular support from the member.
b. Beneficiaries under the SSS Law.
I. PRIMARY BENEFICIARIES.
The following are primary beneficiaries:
1. The dependent spouse until he or she remarries;
2. The dependent legitimate, legitimated or legally adopted, and illegitimate children
[Note: The dependent illegitimate children shall be entitled to 50% of the share of the legitimate,
legitimated or legally adopted children: Provided, further, That 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. ]
II. SECONDARY BENEFICIARIES.
The following are secondary beneficiaries:
1. The dependent parents, in the absence of the primary beneficiaries.
2. Any other person designated by the member as his/her secondary beneficiary, in the absence
of all the foregoing (primary beneficiaries and dependent parents),
B. GSIS LAW (R. A. No. 8291).
1. Compulsory coverage.
Membership in the GSIS shall be compulsory for all employees receiving compensation who have not reached
the compulsory retirement age, irrespective of employment status.
2. Exclusions from coverage.
Excepted from GSIS coverage are:
1.

Members of the Armed Forces of the Philippines (AFP);

2.

Members of the Philippine National Police (PNP);

3.

Contractuals who have no employer and employee relationship with the agencies they serve;

4.

Members of the judiciary and constitutional commissions.


constitutional commissions shall have life insurance only.

3. Benefits.
All members of the GSIS shall have the following benefits:
1. Monthly pension
2. Separation benefits
3. Unemployment or involuntary separation benefits
4. Retirement benefits

- Members of the judiciary and

5. Permanent disability benefits


(a) Total and permanent disability benefits
(b) Permanent and partial disability benefits
6. Temporary disability benefits
7. Non-scheduled disability
8. Survivorship benefits
9. Funeral benefits
10. Life insurance benefits
(a) Compulsory life insurance
(b) Optional insurance
4. Beneficiaries.
a. Dependents.
Dependents shall be the following:
(a) the legitimate spouse dependent for support upon the member or pensioner;
(b)the legitimate, legitimated, legally adopted child, including the illegitimate child, who is unmarried,
not gainfully employed, not over the age of majority, or is over the age of majority but incapacitated
and incapable of self-support due to a mental or physical defect acquired prior to age of majority; and
(c) the parents dependent upon the member for support.
b. Beneficiaries.
There are 2 kinds of beneficiaries under the GSIS Law as follows:
1.

Primary beneficiaries The legal dependent spouse until he/she remarries and the dependent
children.

2.

Secondary beneficiaries The dependent parents and, subject to the restrictions on dependent
children, the legitimate descendants.

C. LIMITED PORTABILITY LAW(R. A. No. 7699). [2]


a. Purpose of the law is to establish a unitary social security system. - It is the declared policy of the
State to institute a scheme for totalization and portability of social security benefits with the view of
establishing within a reasonable period, a unitary social security system.
b. Totalization, defined.

It refers to the process of adding up the periods of creditable services or

contributions under each of the Systems, for the purpose of eligibility and computation of benefits.
c. Portability, defined.

It refers to the transfer of funds for the account and benefit of a worker who

transfers from one system to the other.


d. Applicability of limited portability scheme. - The benefits provided under R. A.

No.

7699 apply

to active or inactive members of either System (GSIS/SSS) as of the date of its effectivity on May 20, 1994.
e. Coverage. - The law applies to all worker-members of the GSIS and/or SSS who transfer from the public
sector to the private sector or vice-versa, or who wish to retain their membership in both Systems. [3]
f. Creditability and totalization of contributions and benefits in SSS and GSIS. - A covered worker
who transfers employment from one sector to another (i. e. , from private sector to public sector, or vice
versa), or is employed in both sectors, shall have his creditable services or contributions in both Systems
(GSIS and SSS) credited to his service or contribution record in each of the Systems and shall be totalized for
purposes of old-age, disability, survivorship and other benefits in case the covered member does not qualify
for such benefits in either or both Systems without totalization provided, however, that overlapping periods
of membership shall be credited only once for purposes of totalization.
g. Limited portability of funds. - The processes involved in the prompt payment of money benefits to
eligible members are the joint responsibility of the GSIS and SSS. The System or Systems responsible for the
payment of money benefits due a covered worker shall release the same within fifteen (15) working days
from receipt of the claim, subject to the submission of the required documents and availability of complete
employee/employer records in the System or Systems.

h. Totalization of contributions and benefits; how processed.


1. Contributions. - All contributions paid by such member personally and those that were paid by his
employers to both Systems (GSIS and SSS) shall be considered in the processing of benefits which he can
claim from either or both Systems, provided, however, that the amount of benefits to be paid by one
System shall be in proportion to the number of contributions actually remitted to that System.

The

term contributions refers to the contributions paid by the employee or worker to either the GSIS or the
SSS on account of the workers membership.
2.

Creditable

services

or

periods

of

contributions.

- All creditable

services or periods

of

contributions made continuously or in the aggregate of a worker under either of the sectors shall be
added up and considered for purposes of eligibility and computation of benefits. The term creditable
services insofar as the public sector is concerned, refers to the following:
1.

All previous services rendered by an official/employee pursuant to an appointment, whether


permanent, provisional or temporary;

2. All previous services rendered by an official/employee pursuant to a duly-approved appointment to a


position in the Civil Service with compensation or salary;
3. The period during which an official or employee was on authorized sick leave of absence without pay
not exceeding one (1) year;
4. The period during which an official or employee was out of the service as a result of illegal termination
of his services as finally decided by the proper authorities; and
5. All previous services with compensation or salary rendered by elective officials.
The term periods of contributions for the private sector refers to the periods during which a person
renders services for an employer with compensation or salary, and during which contributions were paid
to the SSS. A self-employed person is considered an employee and employer at the same time. The
term eligibility means that the worker has satisfied the requirements for entitlement to the benefits
provided for under R. A. No. 7699.
3. Benefits. - All services rendered or contributions paid by a member personally and those that were paid
by the employers to either System shall be considered in the computation of benefits which may be
claimed from either or both Systems. However, the amount of benefits to be paid by one System shall be
in proportion to the services rendered or periods of contributions made to that System. The benefits are:
a. Old-age benefit;
b. Disability benefit;
c. Survivorship benefit;
d. Sickness benefit;
e. Medicare benefit, provided that the member shall claim said benefit from the System where he was
last a member; and
f. Such other benefits common to both Systems that may be availed of through totalization.
i. Totalization; when applicable. - Totalization applies in the following instances:
a. if a worker is not qualified for any benefits from both Systems; or
b. if a worker in the public sector is not qualified for any benefits from the GSIS; or
c. if a worker in the private sector is not qualified for any benefits from the SSS.
For purposes of computation of benefits, totalization applies in all cases so that the contributions made by
the worker-member in both Systems shall provide maximum benefits which otherwise will not be available.
In no case shall the contribution be lost or forfeited.
j. Effect if worker is not qualified after totalization. - If after totalization, the worker-member still does
not qualify for any benefit, the member will then get whatever benefits correspond to his/her contributions in
either or both Systems.
k.

Effect if worker qualifies for benefits in both Systems. - If a worker qualifies for benefits in both
Systems, totalization shall not apply.

l. Effect of overlapping periods of creditable services. - Overlapping periods of creditable services or


contributions in both Systems shall be credited only once for purposes of totalization. Overlapping of
periods refers to the periods during which a worker simultaneously contributes to both Systems.
D. EMPLOYEES COMPENSATION COVERAGE AND WHEN COMPENSABLE.
a. General coverage. - The following shall be covered by the Employees Compensation Program (ECP):
1. All employers;
2. Every employee not over sixty (60) years of age;
3. An employee over 60 years of age who had been paying contributions to the System (GSIS/SSS) prior to
age sixty (60) and has not been compulsorily retired; and
4. Any employee who is coverable by both the GSIS and SSS and should be compulsorily covered by both
Systems.
b. Sectors of employees covered by the ECP. - The following sectors are covered under the ECP:
1.

All public sector employees including those of government-owned and/or controlled corporations and
local government units covered by the GSIS;

2. All employees in the private sector covered by the SSS; and


3. Overseas Filipino workers (OFWs), namely:
a. Filipino seafarers compulsorily covered under the SSS.
b. Land-based contract workers provided that their employer, natural or juridical, is engaged in any trade,
industry or business undertaking in the Philippines; otherwise, they shall not be covered by the ECP.
c. 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. The coverage is compulsory in
nature.
d. Employees compensation benefits. - 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
e. Temporary total disability. - A total disability is temporary if, as a result of the injury or sickness, the
employee is unable to perform any gainful occupation for a continuous period of not exceeding 120
days, except when such disability still requires medical attendance beyond 120 days, but not to
exceed 240 days. If the disability is the result of an injury or sickness, the period of compensability shall be
counted from the first day of such injury or sickness. An employee who later had to stop working due to a
compensable illness is also entitled to temporary total disability benefits.
f. Permanent total disability. It is the inability of a worker to perform his job for more than 120 days,
regardless of whether or not he loses the use of any part of his body.
Total disability, on the other hand, means disablement of an employee to earn wages in the same kind of
work, or work of a similar nature that he was trained for, or accustomed to perform, or any kind of work which
a person of his mentality and attainment could do. It is lack of ability to follow continuously some substantial
gainful occupation without serious discomfort or pain and without material injury to health and danger to life.
Total disability does not mean a state of absolute helplessness. A total disability does not require that the
employee be absolutely disabled or totally paralyzed. What is necessary is that the injury must be such
that the employee cannot pursue his usual work and earn therefrom.
A disability is total and permanent if, as a result of the injury or sickness, the employee is unable to perform
any gainful occupation for a continuous period exceeding 120 days.

Moreover, the fact that the

permanently and totally disabled employee continues to work after such disability does not deprive him of the
benefits provided under the law. For what is important consideration is the inability to do substantially all
material acts necessary for the prosecution of a gainful occupation without serious discomfort or pain and
without material injury or danger to life.

In disability compensation, it is not the injury per se which is

compensated but the incapacity to work.


g. Death benefit. - Within the context of the employees compensation program, the term death means
loss of life resulting from an injury or sickness. Compensable death refers to death which is the result of
a work-related injury or sickness.
h. Funeral benefit. - The funeral benefit shall be P10,000. 00 for the private sector and P3,000. 00 for the
public sector.
oooooooooOoOooooooooo

[1] Section 30, Article IV of R. A. No. 10361, otherwise known as Domestic Workers Act or Batas
Kasambahay approved by President Benigno S. Aquino III on January 18, 2013.
[2] R. A. No. 7699 [An Act Instituting Limited Portability Scheme in the Social Security Insurance System by Totalizing
the Workers Creditable Services or Contributions in Each of the Systems] approved on May 1, 1994.
[3] Section 1, Rule I, Ibid.
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PRE-WEEK NOTES
ON THE 2013 BAR EXAMINATION IN LABOR LAW
By: Prof. JoselitoGuianan Chan
(These Notes, consisting of 8 parts, are supplementary to the authors book entitled 2012 Bar Reviewer
on Labor Law)
========================================================
PART SEVEN
LABOR RELATIONS LAW
A. RIGHT TO SELF-ORGANIZATON.
1. Who may unionize for purposes of collective bargaining? - The following are eligible to join, form or
assist a labor organization:
a. All persons employed in commercial, industrial and agricultural enterprises;
b. Employees of religious, charitable, medical or educational institutions, whether operating for
profit or not;
c. Alien employees with valid working permits who are nationals of a country which grants the same right to
self-organization to Filipino citizens as certified by the Philippine Department of Foreign Affairs (DFA) or
which has ratified either ILO Convention No. 87[1] or ILO Convention No. 98.

[2]

d. First-line managers or supervisors. For purposes of joining a union, there are three (3) kinds of
managerial employees: (1) Top Managers; (2) Middle Managers; and (3) First-Line Managers or
Supervisors. Only First-Line Managers or supervisory employees may form their own union. They are,
however, not allowed to become members of a rank-and-file union. In case of mixed membership of
supervisors and rank-and-file employees in one union, the new rule enunciated in Article 245-A of the
Labor Code is that it cannot be invoked as a ground for the cancellation of the registration of the union.
The employees so improperly included are automatically deemed removed from the list of members of the
union by operation of law.
e. Employees of government-owned or controlled corporations without original charters established under
the Corporation Code;
f. In the government sector, all rank-and-file employees of all branches, subdivisions, instrumentalities,
and agencies of government, including government-owned and/or controlled corporations with original
charters, can form, join or assist employees organizations of their own choosing for the furtherance and
protection of their interests.

[3]

Employees who are allowed to organize a labor organization only for mutual aid and
protection but not for collective bargaining purposes.

- Ambulant, intermittent and other

workers, the self-employed, rural workers and those without any definite employers may form labor
organizations for their mutual aid and protection and other legitimate purposes except collective
bargaining. The reason for this rule is that these persons have no employers to collectively
bargain with.

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.

2. Who cannot form, join or assist labor organizations. The following are not allowed to unionize:
a. Top Managers and Middle Managers.

They are absolutely prohibited from forming, joining or

assisting a labor organization.


b. Alien employees with no valid working permit or who are nationals of a country which does not grant
the same right to self-organization to Filipino citizens.
c. Confidential employees who (1) assist or act in a confidential capacity; (2) to persons or officers who
formulate, determine, and effectuate management policies specifically in the field of labor relations.

These two (2) criteria are cumulative and both must be met if an employee is to be considered a
confidential employee under the Confidential Employee Rule. These confidential employees may
either be rank-and-file or supervisory employees but because they have access to confidential
information in the field of labor relations, they are not eligible to form, join or assist a labor organization.
The rationale is to avoid conflict of interest since they may obtain advance information on the companys
position with regard to collective bargaining negotiations, the disposition of grievances, or other labor
relations matters.
d. In the government sector, the following are not eligible to form employees organizations:
a. High-level employees whose functions are normally considered as policy-making or managerial or
whose duties are of a highly confidential nature are not eligible to join the organization of rank-and-file
government employees;
b. Members of the Armed Forces of the Philippines;
c. Police officers;
d. Policemen;
e. Firemen; and
f. Jail guards.
3. Bargaining unit. It refers to a group of employees sharing mutual interests within a given employer unit,
comprised of all or less than all of the entire body of employees in the employer unit or any specific
occupational or geographical grouping within such employer unit. It may also refer to the group or cluster of
jobs or positions within the employers establishment that supports the labor organization which is applying
for registration.
(a) Tests to determine the constituency of an appropriate bargaining unit. There is no hard and
fast rule to determine the valid formation of a bargaining unit.

However, the following four (4)

doctrines may be used to determine its validity:


(1) Substantial mutual interest doctrine. - The employees sought to be represented by the collective
bargaining agent must have substantial mutual interest in terms of employment and working
conditions as evinced by the type of work they perform.

It is characterized by similarity of

employment status, same duties and responsibilities and substantially similar compensation and
working conditions.
(2) Globe doctrine. - The determination of the bargaining unit is based on the will of the employees.
It is called Globe doctrine because this principle was first enunciated in the United States case
of Globe Machine and Stamping Co. ,[3 NLRB 294 (1937)] where it was ruled, in defining the
appropriate bargaining unit, that in a case where the companys production workers can be
considered either as a single bargaining unit appropriate for purposes of collective bargaining or as
three (3) separate and distinct bargaining units, the determining factor is the will or desire of the
workers themselves.
(3) Collective bargaining history doctrine. - This principle puts premium to the prior collective
bargaining history and affinity of the employees in determining the appropriate bargaining unit.
However, the existence of a prior collective bargaining history has been held as neither decisive nor
conclusive in the determination of what constitutes an appropriate bargaining unit.
(4) Employment status doctrine. - The determination of the appropriate bargaining unit is based on
the employment status of the employees. For example, casual employees and those employed on a
day-to-day basis do not have the mutuality or community of interest with regular and permanent
employees. Hence, their inclusion in the bargaining unit composed of the latter is not justified.
4. Bargaining agent. The sole and exclusive bargaining agent is chosen through any of the following
modes:
a. Voluntary recognition.

It refers to the process by which a legitimate labor union is voluntarily

recognized by the employer as the exclusive bargaining representative or agent in a bargaining unit. It is

proper only in cases where there is only one legitimate labor organization existing and operating in a
bargaining unit. It cannot be done in case there are two or more unions in contention.
b. Certification election.

It 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 negotiations. A certification election is conducted only upon the order of the Med-Arbiter of the
Bureau of Labor Relations (BLR).
(i) In an unorganized establishment.

- In case of a petition filed by a legitimate organization

involving an unorganized establishment, the Med-Arbiter is required to immediately order the


conduct of a certification election upon filing of a petition for certification election by a legitimate labor
organization. The twenty-five percent (25%) minimum support of the employees in the bargaining unit
which is required in organized establishments is not necessary in the case of unorganized
establishments.
(ii) In an organized establishment. The Med-Arbiter is required to automatically order the conduct
of a certification election by secret ballot in an organized establishment as soon as the following
requisites are fully met:
1. That a petition questioning the majority status of the incumbent bargaining agent is filed before the
DOLE within the 60-day freedom period;
2. That such petition is verified; and
3. That the petition is supported by the written consent of at least 25% of all the employees in the
bargaining unit.
Two (2) kinds of majorities required in the process of certification election. - The process of
certification election requires two (2) kinds of majority votes, viz:
1. To have a valid certification election, at least a majority of all eligible voters in the
bargaining unit should cast their votes; and
2. To win and be certified as the sole and exclusive bargaining agent in the certification
election, the union should garner the majority vote of the valid votes cast.
c. Run-off election.

It refers to an election between the labor unions receiving the two (2) highest

number of votes in a certification election or consent election with three (3) or more choices, where such a
certification election or consent election results in none of the three (3) or more choices receiving the
majority of the valid votes cast, provided that the total number of votes for all contending unions is at
least fifty percent (50%) of the number of votes cast.
d. Re-run election.

- This mode of choosing the sole and exclusive bargaining unit is not expressly

provided in the Labor Code or in its implementing rules.

The circumstances which would justify the

holding of a re-run election are not set out in the law. However, a re-run election may be justified if certain
irregularities have been committed during the conduct of the certification election such as, inter
alia, disenfranchisement of the voters, lack of secrecy in the voting and bribery, in which case,
the certification election should be invalidated. Such invalidation would necessitate the conduct of a rerun election among the contending unions to determine the true will and desire of the employeeelectorates.
Example: National Federation of Labor v. The Secretary of Labor, [G. R. No. 104556, March 9,
1998, 287 SCRA 599, 607]. [4]
A certification election was conducted on November 12, 1988, among the rank-and-file employees of the
Hijo Plantation, Inc. resulting in the choice of no union. However, on July 3, 1989, on allegations that
the company intervened in the election, the BLR Director nullified the results of the certification election
and ordered a new one to be held. The new election was held on August 20, 1989 under the supervision
of the DOLE Regional Office in Davao City with the following results: Total Votes cast - 1,012; Associated
Trade Unions (ATU) 39 votes; TRUST KILUSAN - 5 votes; National Federation of Labor (NFL) 876 votes;

Southern Philippines Federation of Labor 4 votes; SANDIGAN 6 votes; UFW 15 votes; No Union
55 votes; and Invalid votes 13.
Private respondent-employer HPI alleged that the certification election was marred by massive fraud
and irregularities and that out of 1,692eligible voters, 913, representing 54% of the rank-and-file
workers of private respondent, were not able to vote, resulting in a failure of election. Upon the order of
the DOLE Secretary, the Med-Arbiter conducted an investigation on the companys claim that 54% of the
rank-and-file workers were not able to vote in the certification election.
In a resolution dated February 14, 1991, the DOLE upheld the August 20, 1989 certification election. The
DOLE gave no weight to the report of the Med-Arbiter that the certification election was marred by
massive fraud and irregularities. Although affidavits were submitted showing that the election was held
outside the company premises and private vehicles were used as makeshift precincts, the DOLE found
that this was because respondent company did not allow the use of its premises for the purpose of
holding the election, company guards were allegedly instructed not to allow parties, voters and DOLE
representation officers to enter the company premises, and notice was posted on the door of the company
that the election had been postponed.
Nor was weight given to the findings of the Med-Arbiter that a majority of the rank-and-file workers had
been disfranchised in the August 20, 1989 election and that the secrecy of the ballot had been violated,
first, because the NFL was not given notice of the investigation nor the chance to present its evidence to
dispute this finding and, second, the Med-Arbiters report was not supported by the minutes of the
proceedings nor by any record of the interviews of the 315 workers. Moreover, it was pointed out that the
report did not state the names of the persons investigated, the questions asked and the answers given.
The DOLE held that the report was totally baseless.
Accordingly, the Labor Secretary denied the petition to annul the election and instead certified petitioner
NFL as the sole and exclusive bargaining representative of the rank-and-file employees of private
respondent HPI.
However, on motion of HPI, the Secretary of Labor, on August 29, 1991, reversed his resolution of
February 14, 1991. In this resolution of August 29, 1991, the Secretary of Labor said he was reversing his
earlier resolution because workers of Hijo Plantation, Inc.

have deluged this Office with their letter-

appeal, either made singly or collectively expressing their wish to have a new certification election
conducted and that as a result the firm position we held regarding the integrity of the electoral exercise
had been somewhat eroded by this recent declaration of the workers, now speaking in their sovereign
capacity.
In upholding this reversal of his earlier resolution by the DOLE Secretary, the Supreme Court ratiocinated,
thus:
It is clear from this, that what the DOLE Secretary considered in reversing its earlier
rulings was not the petition of the employer but the letter-appeals that the employees sent to
his office denouncing the irregularities committed during the August 20, 1989 certification
election. The petition of private respondent was simply the occasion for the employees to
voice their protests against the election. Private respondent HPI attached to its Supplemental
Appeal filed on September 5, 1989 the affidavits and appeals of more or less 784 employees
who claimed that they had been disfranchised, as a result of which they were not able to cast
their votes at the August 20, 1989 election. It was the protests of employees which moved the
DOLE to reconsider its previous resolution of February 14, 1991, upholding the election.
xxx
In this case, petitioner maintains that private respondent did not make any protest
regarding the alleged irregularities (e. g. , massive disfranchisement of employees) during the
election. Hence, the appeal and motions for reconsideration of private respondent HPI should
have been dismissed summarily.
The complaint in this case was that a number of employees were not able to cast

their votes because they were not properly notified of the date. They could not therefore have
filed their protests within five (5) days. At all events, the Solicitor General states, that the
protests were not filed within five (5) days, is a mere technicality which should not be allowed
to prevail over the workers welfare. As this Court stressed in LVN Pictures, Inc. v. Phil.
Musicians Guild, [1 SCRA 132 (1961)], it is essential that the employees must be accorded an
opportunity to freely and intelligently determine which labor organization shall act in their
behalf. The workers in this case were denied this opportunity. Not only were a substantial
number of them disfranchised, there were, in addition, allegations of fraud and other
irregularities which put in question the integrity of the election. Workers wrote letters and
made complaints protesting the conduct of the election. The Report of Med-Arbiter Pura who
investigated these allegations found the allegations of fraud and irregularities to be true.
In one case (citing Confederation of Citizens Labor Unions v. Noriel, G. R. No. L56902. September 21, 1982, 116 SCRA 694), this Court invalidated a certification election
upon a showing of disfranchisement, lack of secrecy in the voting and bribery. We hold the
same in this case. The workers right to self-organization as enshrined in both the Constitution
and Labor Code would be rendered nugatory if their right to choose their collective bargaining
representative were denied. Indeed, the policy of the Labor Code favors the holding of a
certification election as the most conclusive way of choosing the labor organization to
represent workers in a collective bargaining unit. In case of doubt, the doubt should be
resolved in favor of the holding of a certification election.
Re-run election distinguished from failure of election. - In re-run election, there was a valid
certification election but because of certain circumstances, the election is nullified and another one is
ordered to truly reflect the will and sentiment of the electorate-employees in the choice of their bargaining
representative. In failure of election, the number of votes cast in the certification or consent election is
less than the majority of the number of eligible voters and there are no challenged votes that could
materially change the results of the election. [5] Consequently, a motion for the immediate holding of
another certification or consent election within six (6) months from the date of declaration of the failure
of election may be filed. [6]
e. Consent election. - It refers to the process of determining through secret ballot the sole and exclusive
representative of the employees in an appropriate bargaining unit for purposes of collective bargaining or
negotiation.

It is voluntarily agreed upon by the parties, with or without the intervention of the

Department of Labor and Employment.


Consent election and certification election, distinguished.

- A consent election is one

mutually agreed upon by the parties, with or without the intervention by the DOLE, its purpose being
merely to determine the issue of majority representation of all the workers in an appropriate collective
bargaining unit; while a certification election is one which is ordered by the DOLE and is aimed at
determining the sole and exclusive bargaining agent of all the employees in an appropriate bargaining
unit for the purpose of collective bargaining. From the very nature of consent election, it is a separate
and distinct process and has nothing to do with the import and effect of a certification election. In fact,
aconsent election may be conducted even during the pendency of a certification election by mutual
agreement of the contending unions. Consequently, the Med-Arbiter is not allowed to issue a formal
order calling for the conduct of a certification election.

Instead, he should enter the fact of the

agreement in the minutes of the hearing which should then be signed by the parties and attested to by
the Med-Arbiter.

The results thereof shall constitute a bar to the holding of a certification election

for one (1) year from the holding of such consent election. Where an appeal has been filed from the
results of the consent election, the running of the one-year period is suspended until the decision on
appeal has become final and executory.
5. Affiliation of the local union with a mother union. - Affiliation with a federation or a national union is

principally for the purpose of strengthening the collective bargaining leverage of the affiliate.
An affiliate refers to (a) an independent union affiliated with a federation or a national union; or (b)
a local chapter (formerly known as chartered local) which has been subsequently granted independent
registration but did not disaffiliate from the federation or national union which created it. Technically, a
local chapter created through chartering under Article 234-A of the Labor Code cannot be properly called
an affiliate of a federation or a national union if it has not acquired any independent registration of its
own.
Some principles on affiliation.
1. The relationship between the affiliate union (independent union) and the mother union (federation or
national union) is that of principal-agent relationship. The affiliate union is the principal and
the mother union, the agent. This principle applies in the case of a local chapter created by a
federation or a national union.
2. Affiliation does not give the mother federation the license to act independently of the affiliate union. It
only gives rise to a contract of agency, where the former acts in representation of the latter.
3. The appendage of the federations acronym to the affiliate unions name in the registration with the
Bureau of Labor Relations does not change the principal-agent relationship between them.

Such

inclusion of the acronym is merely to indicate that the local union is affiliated with the federation or
national union at the time of the registration.

It does not mean that the affiliate union cannot

independently stand on its own.


6. Disaffiliation of the local union from the mother union. The right of the affiliate union to disaffiliate
from its mother federation or national union is a constitutionally-guaranteed right which may be invoked by
the former at any time. 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.
Some principles on disaffiliation.
1. Disaffiliation should be approved by the majority of the union members.
2. Disaffiliation does not divest an affiliate union of its legal personality.
3. Disaffiliation of an affiliate union is not an act of disloyalty.
4. Disaffiliation for purposes of forming a new union does not terminate the status of the members thereof
as employees of the company.
5. Disaffiliation terminates the right to check-off federation dues.
6. Disaffiliation does not affect CBA. It does not operate to amend it or change the administration of the
contract.
7. Substitutionary doctrine. At any time during the 5-year lifetime of the CBA, the bargaining
agent may lose its majority status as when there exists a union schism or split which completely changes
the situation of the employer and the bargaining agent in terms of the latters membership, structure and
others. To determine majority support of the members of the bargaining unit being represented by the
bargaining agent, a petition for certification election may be filed to determine which of the unions has the
majority status. The union certified as the new sole and exclusive bargaining agent will thus substitute the
previous one as a party to the existing CBA. This is allowed under this doctrine.
8. Union dues and special assessments.

- All unions are authorized to collect reasonable amounts

for membership fees, union dues, assessments and fines. This is done through check-off which is
the method of deducting by the employer from the employees pay at prescribed periods, of any amount due
for such fees, fines or assessments.
Requirements for validity. To be valid, the following requisites should be complied with:
(1) Authorization by a written resolution of the majority of all the members at a general membership
meeting duly called for the purpose;
(2) Secretarys record of the minutes of said meeting; and
(3) Individual written authorizations for check-off duly signed by the employees concerned.

The law strictly prohibits the check-off from any amount due an employee of any special assessment,
attorneys fees, negotiation fees or any other extraordinary fees without the individual written
authorization duly signed by the employee.

Such authorization must specifically state the amount,

purpose and beneficiary of the deduction. The purpose of the individual written authorization is to protect
the employees from unwarranted practices that diminish their compensation without their knowledge or
consent.
9.

Agency fees.

This term refers to the reasonable dues and other fees that may be collected by

the bargaining agent

from non-members who

availed

of

the

benefits

from

the

CBA

which

said agent successfully negotiated and concluded with the employer. It is called agency fee because it is
paid to such bargaining agent of which they are not members but which represented them in the CBA
negotiations. The legal basis of the bargaining agents right to agency fees is neither contractual nor
statutory, but quasi-contractual, deriving from the established principle that non-bargaining union
employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by
the bargaining agent.
Some principles on agency fees.
1. No individual written authorization is required to check-off agency fees. The fact of acceptance by the
non-bargaining agent members is all that is required to justify such check-off of agency fees.
2. Employer has the duty to check-off agency fees.
3. Non-members of the bargaining agent need not become members thereof. Their acceptance of the
benefits flowing from the CBA and their act of paying the agency fees do not make them members
thereof.
B. RIGHT TO COLLECTIVE BARGAINING.
1. Duty to bargain collectively. - The duty to bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating
an agreement with respect to wages, hours of work and all other terms and conditions of employment
including proposals for adjusting any grievances or questions arising under such agreement and executing
a contract incorporating such agreements if requested by either party but such duty does not compel
any party to agree to a proposal or to make any concession.
(a) When there is absence of CBA. - In the absence of an agreement or other voluntary arrangement
providing for a more expeditious manner of collective bargaining, it shall be the duty of employer and the
representatives of the employees to bargain collectively in accordance with the provisions of the Labor
Code.
(b) When there is a CBA. - When there is a CBA, the duty to bargain collectively shall mean that neither
party shall terminate nor modify such agreement during its lifetime. However, either party can serve a
written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration
date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect
the terms and conditions of the existing agreement during the 60-day period and/or until a new
agreement is reached by the parties. The said 60 days is called the freedom period because it is the
only time when the law allows the parties to freely serve a notice to terminate, alter or modify the
existing CBA. It is also the time when the majority status of the bargaining agent may be challenged by
another union by filing the appropriate petition for certification election.
2.

Collective Bargaining Agreement (CBA).

It refers to the negotiated contract between a

duly recognized or certified exclusive bargaining agent of workers and the employer concerning wages,
hours of work and all other terms and conditions of employment in the appropriate bargaining unit, including
mandatory provisions for grievances and arbitration machineries. During its lifetime, the CBA is considered
the law between the parties - the collective bargaining agent and its members, on the one hand, and the
employer, on the other.
a. Mandatory provisions of CBA. The following are mandatorily required to be embodied in the CBA:

(1) Grievance Procedure. It refers to the internal rules of procedure established by the parties in their
CBA with voluntary arbitration as the terminal step, which are intended to resolve all issues arising
from (1) the interpretation or implementation of their CBA or (2) the interpretation or enforcement of
company personnel policies. It is that part of the CBA which provides for a peaceful way of settling
differences and misunderstanding between the parties.
(2) Voluntary Arbitration. It refers to the mode of settling labor-management disputes in which the
parties select an impartial third person called Voluntary Arbitrator who is tasked to decide on the
merits of the case and whose decision is final and executory.
(3) No Strike-No, Lockout Clause.

It is a clause in the CBA which indicates the respective

commitments of the parties thereto not to stage a strike, on the part of the union, and not to conduct a
lockout, on the part of the employer, during the lifetime of the CBA. This clause may be invoked
to bar an economic strike/lockout but not an unfair labor practice strike/lockout.
(4) Labor-Management Council. It is mandated to be created in every establishment pursuant to the
constitutional grant[7] to employees of the right to participate in policy and decision-making
processes in all matters affecting their rights, duties, benefits and welfare.

It is composed of

representatives of the employer and the employees of the establishment.


Distinctions between Labor-Management Council (LMC) and Grievance Committee (GC).
- These two (2) bodies may be differentiated from each other as follows:
1. Constitutional basis. As distinguished from LMC, the creation of the GC is based on a
different constitutional principle, that is, the preferential use of voluntary modes of settling
disputes. [8]
2. Legal basis. - The creation of LMC is provided under Article 255 of the Labor Code; while the
formation of GC is mandated under Article 260 of the same Code.
3. Purpose. - The LMC is created for the purpose of affording workers the right to participate in
policy and decision-making processes in matters affecting their rights, benefits and welfare; while
that of the GC is to resolve grievances involving (1) the interpretation or implementation of the
CBA or (2) the interpretation or enforcement of company personnel policies.
4. Nature. - The LMC is more of a preventive measure; while a GC is necessary when there is
already the occurrence of a grievance ripe for adjudication.
5. Classification of the establishment.

The classification of the establishment, whether

organized or unorganized, is not material as far as LMC is concerned since it is required to be


established in all establishments; while the GC is required only in case of organized
establishments since it is required to be stipulated in the CBA.
6. Function. The function of the LMC is non-adjudicatory in nature, that is, to make policies or
decisions on matters affecting the workers rights, benefits and welfare; while that of the GC is
adjudicatory in character, that is, to resolve and decide on grievances.
7. Nature of issues. The issues presented to the LMC is non-adversarial; while those submitted
to the GC are adversarial.
8. Composition. - The representatives of the workers to the LMC may or may not be nominated by
the bargaining agent, depending on whether the establishment is organized or unorganized.
In organized establishments, the workers representatives to the LMC should be nominated by
the exclusive bargaining agent. In establishments where no legitimate labor organization
exists, the workers representative should be elected directly by the employees at large; while
those in the GC are nominated solely by the bargaining agent.
9. Appeals. Any decision made by the LMC is not appealable to any office or authority; while
the decision of the GC should be elevated to voluntary arbitration if not resolved with finality by
the GC.
b. Duration of CBA. A CBA has a lifetime of 5 years reckoned from the effectivity of the CBA. The

following principles are worthy of note:


1. As far as the right of the bargaining agent to represent the employees covered by the bargaining unit
(representation aspect of the CBA) 5 years.
2. All other provisions of the CBA (both economic and non-economic provisions) Should be renegotiated, except said representation aspect, after the lapse of the first 3 years of the 5-year
lifetime thereof. Such re-negotiation, however, should only pertain to the terms and conditions of the
parties relationship for the last remaining 2 years of the CBAs 5-year term.
3. Freedom period refers to the last 60 days immediately preceding the expiry date of the 5year term of the CBA when the majority status of the existing bargaining agent which concluded the
CBA may be challenged by another union/s by filing a petition for certification election.
3. Union security clause. It is a stipulation in a CBA which requires mandatory membership in the sole and
exclusive collective bargaining agent which successfully negotiated said CBA as a condition for continued
employment. 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.

All future hires (new

employees) are mandatorily required to join the bargaining agent as a condition for their continued
employment.
Excepted from this provision are the following:
1. Employees who, at the time the union security agreement takes effect, are bona-fide members of
a religious organization which prohibits its members from joining labor unions on religious
grounds [Religious Objectors].
2. Employees already in the service and 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. Employees excluded from the union security clause by express terms of the agreement.
Classification of union security agreements.
1. Closed shop agreement - It is a scheme in which, by agreement between the employer and its
employees or their representatives, no person may be employed in any or certain agreed departments of
the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in
good standing of a union entirely comprised of or of which the employees in interest are a part.
2. 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. The role of a Union Shop
provision is to compel the membership of those who are not yet union members. Under this scheme, the
employer is given the freedom to hire and employ any person who is not a member of the bargaining
agent. Once such person becomes an employee, he is required to become a member of the bargaining
agent and to remain as such member in good standing for the whole period of the effectivity of the CBA as
a condition for his continued employment.
3. Modified union shop agreement - Employees under this arrangement who are not union members at
the time of the signing or execution of the CBA are not required to join the bargaining union. However,
any and all workers hired or employed after the signing or execution of the CBA are required to join the
bargaining union.
4.

Maintenance of membership agreement - There is maintenance of membership shop when


employees, who are union members as of the effective date of the agreement, or who thereafter become
members, must maintain union membership as a condition for continued employment until they are
promoted or transferred out of the bargaining unit, or the agreement is terminated.

4. Unfair Labor Practice (ULP) in Collective Bargaining.


(1) Bargaining in bad faith. Bad faith is a question of fact the determination of which will depend upon
the circumstances of each case. Good faith bargaining requires that claims made by either bargainer
should be honest claims. It would not be far-fetched to reach the conclusion that bargaining lacks good

faith when an employer mechanically repeats claim of inability to pay without making the slightest effort
to substantiate the claim. Once proved, the bad faith of the party will make it liable for ULP. It must be
noted that:
a. Parties have no obligation to precipitately agree to the proposals of each other.
b. Making a promise during the CBA negotiations, not an indication of bad faith.
c. Adamant stance resulting in an impasse, not an indicium of bad faith.
d. Allegations of bad faith wiped out with the signing of the CBA.
(2) Refusal to bargain. - The employers refusal to submit an answer or reply to the written bargaining
proposals of the certified bargaining union is ULP. While the law does not compel the parties to reach an
agreement, it does contemplate that both parties will approach the negotiation with an open mind and
make a reasonable effort to reach a common ground of agreement.
Examples:
General Milling Corporation v. CA, [G. R. No. 146728, February 11, 2004] - The Supreme Court
found the petitioner guilty of ULP for refusing to send a counter-proposal to the union and to bargain
anew on the economic terms of the CBA.
Colegio de San Juan de Letran v. Association of Employees and Faculty of Letran, [G. R. No.
141471, September 18, 2000] - The petitioner school was declared guilty of unfair labor practice
when it failed to make a timely reply to the proposals of the certified bargaining union more than a
month after the same were submitted to it. In explaining its failure to reply, the school merely offered
the feeble excuse that its Board of Trustees had not yet convened to discuss the matter. Clearly, its
actuation showed a lack of sincere desire to negotiate the CBA thereby rendering it guilty of an unfair
labor practice.
(3) Individual bargaining. The employers act of negotiating with individual members of the bargaining
agent is ULP. This is so because once a bargaining agent has been recognized or certified, the employer
should bargain only therewith and not with the individual members thereof.
(4) Blue sky bargaining. - This means making exaggerated or unreasonable proposals. This kind of ULP
can only be committed by the bargaining agent.
(5) Surface bargaining. - This means going through the motions of negotiating without any legal intent
to reach an agreement. This kind of ULP can only be committed by the employer.
5. Unfair Labor Practice. Not all unfair acts constitute ULP. The act complained of as ULP must have a
proximate and causal connection with the exercise of the employees right to self-organization and
collective bargaining or to the observance of a CBA. Sans this connection, the unfair acts cannot be
considered ULP.
(a) Nature of ULP.

- It is both civil and criminal in nature. Its civil aspect includes claims for actual,

moral and exemplary damages, attorneys fees and other affirmative reliefs. The Labor Arbiters have
jurisdiction over the civil aspect; while the regular courts have jurisdiction over the criminal aspect.
(b) ULPs of employers. The following are the ULPs of employers under Article 248 of the Labor Code:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
(b) To require as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs (YELLOW DOG CONTRACT);
(c) To contract out services or functions being performed by union members when such will interfere
with, restrain

or coerce

employees

in the exercise

of their

rights

to self-organization

(CONTRACTUALIZATION);
(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor
organization, including the giving of financial or other support to it or its organizers or
supporters (COMPANY UNION);
(e) To discriminate in regard to wages, hours of work and other terms and conditions of employment in

order to encourage or discourage membership in any labor organization (DISCRIMINATION).


Nothing in this Code or in any other law shall stop the parties from requiring membership in a
recognized collective bargaining agent as a condition for employment, except those employees who
are already members of another union at the time of the signing of the collective bargaining
agreement (UNION SECURITY).
Employees of an appropriate bargaining unit who are not members of the recognized collective
bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by
members of the recognized collective bargaining agent, if such non-union members accept the
benefits under the collective bargaining agreement: Provided, that the individual authorization
required under Article 250 [241], paragraph (o) of this Code shall not apply to the non-members of
the recognized collective bargaining agent (AGENCY FEE)
(f) To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or
being about to give testimony under this Code (THIS IS THE ONLY ULP WHICH NEED NOT BE
CONNECTED TO THE EXERCISE OF THE EMPLOYEES OF THEIR RIGHT TO SELFORGANIZATION AND COLLECTIVE BARGAINING);
CBA-RELATED ULPs:
(g) To violate the duty to bargain collectively as prescribed by the Labor Code;
(h) 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; or
(i) To violate a CBA but only when the violation is gross in character which means flagrant and/or
malicious refusal by the employer to comply with the economic provisions of the CBA.
(c) ULPs of labor organizations. Under Article 249 of the Labor Code, it shall be unfair labor practice for
a labor organization, its officers, agents or representatives:
(a) To restrain or coerce employees in the exercise of their right to self-organization. However, a labor
organization shall have the right to prescribe its own rules with respect to the acquisition or retention
of membership;
(b) To cause or attempt to cause an employer to discriminate against an employee, including
discrimination against an employee with respect to whom membership in such organization has
been denied or to terminate an employee on any ground other than the usual terms and conditions
under which membership or continuation of membership is made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the employer, provided it is the
representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or
other things of value, in the nature of an exaction, for services which are not performed or not to be
performed, including the demand for fee for union negotiations (ANTI-FEATHER BEDDING);
(e) To ask for or accept negotiation or attorneys fees from employers as part of the settlement of any
issue in collective bargaining or any other dispute; or
(f) To violate a CBA but only when the violation is gross in character which means flagrant and/or
malicious refusal by the labor organization, its officers, agents or representatives to comply
with the economic provisions of the CBA.
C. RIGHT TO PEACEFUL CONCERTED ACTIVITIES.
1. Forms of Concerted Activities. - There are three (3) forms of concerted activities, namely:
(a) Strike - means any temporary stoppage of work by the concerted action of the employees as a result of
an industrial or labor dispute. It encompasses slowdowns, mass leaves, sitdowns, overtime boycott,
attempts to damage, destroy or sabotage plant equipment and facilities and similar activities

and sporting by the workers of closely cropped hair or cleanly shaven heads after their union
filed a notice of strike as a result of a CBA deadlock. [9]
(b) Lockout - means the temporary refusal of an employer to furnish work as a result of an industrial or
labor dispute. It consists of shutdowns, mass retrenchment and dismissals or the employers act of
excluding employees who are union members.
(c) Picketing means the act of workers in peacefully marching to and fro before an establishment involved
in a labor dispute generally accompanied by the carrying and display of signs, placards and banners
intended to inform the public about the dispute.
2. Who may declare a strike? Only a duly recognized or certified bargaining agent may declare a strike.
A minority union can never declare a strike.

In unorganized establishments, any legitimate labor

organization in the establishment may declare a strike but only on the ground of ULP.
3. Who may declare a lockout? The employer can declare a lockout.
4. Requisites for a valid strike. The following are the seven (7) procedural but mandatory requisites:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of strike must be filed with the NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the
taking of the strike vote by secret balloting, informing said office of the decision to conduct a strike vote, and
the date, place, and time thereof;
4th requisite - A strike vote must be taken where a majority of the members of the union obtained by
secret ballot in a meeting called for the purpose, must approve it;
5th requisite - A strike vote report should be submitted to the NCMB-DOLE at least seven (7) days before
the intended date of the strike;
6th requisite - Except in cases of union-busting, the cooling-off period of 15 days, in the case of unfair
labor practices, or 30 days, in the case of collective bargaining deadlock, should be fully observed;
and
7th requisite - The 7-day waiting period or strike ban reckoned after the submission of a strike vote
report to the NCMB-DOLE should also be fully observed in all cases.
5. Requisites for a valid lockout. The following are the seven (7) procedural but mandatory requisites:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of lockout must be filed with the NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the
taking of the lockout vote by secret balloting, informing said office of the decision to conduct a lockout vote,
and the date, place, and time thereof;
4th requisite - A lockout vote must be taken where a majority of the members of the Board of Directors of
the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting
called for the purpose, must approve it;
5th requisite - A lockout vote report should be submitted to the NCMB-DOLE at least seven (7) days before
the intended date of the lockout;
6th requisite - The cooling-off period of 15 days, in the case of unfair labor practices, or 30 days, in the case
of collective bargaining deadlock, should be fully observed; and
7th requisite - The 7-day waiting period or lockout ban reckoned after the submission of the lockout vote
report to the NCMB-DOLE should also be fully observed in all cases.
6. Requisites for a lawful picketing. The only requisite for the lawful conduct of picketing is that it should
be peacefully carried out. There should be no violence, coercion or intimidation attendant thereto. This is so
because it is fully guaranteed under the freedom of speech and of expression and to peaceably assemble to
air grievances under Section 4, Article III (Bill of Rights) of the constitution, unlike strike which finds its
constitutional basis in the grant to workers of the right to conduct peaceful concerted activities under Section
3, Article XIII thereof. The requisites for the conduct of a valid strike are therefore not applicable

to lawful picketing.

When picket becomes a strike. - In distinguishing between a picket and a strike, the totality of the
circumstances obtaining in a case should be taken into account.
Examples:
Leyte Geothermal Power Progressive Employees Union-ALU-TUCP v.

Philippine National Oil

Company Energy Development Corporation, [G. R. No. 170351, March 30, 2011] - Petitioner
union contends that there was no stoppage of work; hence, they did not strike. Euphemistically, petitioner
union avers that it only engaged in picketing, and maintains that without any work stoppage, [its officers
and members] only engaged in xxx protest activity. The Supreme Court, however, ruled that it was a strike
and not picketing or protest activity that petitioner union staged. It found the following circumstances in
support of such finding:
1. Petitioner union filed a Notice of Strike on December 28, 1998 with the DOLE grounded on respondents
purported unfair labor practices, i. e. ,refusal to bargain collectively, union busting and mass termination.
On even date, petitioner Union declared and staged a strike.
2. The DOLE Secretary intervened and issued a Return-to-Work Order dated January 4, 1999, certifying the
labor dispute to the NLRC for compulsory arbitration. The Order indicated the following facts: (1) filing of the
notice of strike; (2) staging of the strike and taking control over respondents facilities of its Leyte Geothermal
Project on the same day petitioner union filed the notice of strike; (3) attempts by the NCMB to forge a
mutually acceptable solution proved futile; (4) in the meantime, the strike continued with no settlement in
sight placing in jeopardy the supply of much needed power supply in the Luzon and Visayas grids.
3. Petitioner union itself, in its pleadings, used the word strike.
4. Petitioner unions asseverations are belied by the factual findings of the NLRC, as affirmed by the CA thus:
The failure to comply with the mandatory requisites for the conduct of strike is both admitted and clearly
shown on record. Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off period
was not observed and that the 7-day strike ban after the submission of the strike vote was not complied with
since there was no strike vote taken.
In fine, petitioner unions bare contention that it did not hold a strike cannot trump the factual findings of the
NLRC that petitioner union indeed struck against respondent. In fact, and more importantly, petitioner union
failed to comply with the requirements set by law prior to holding a strike.
Santa Rosa Coca-Cola Plant Employees Union v.

Coca-Cola Bottlers Phils. , Inc., [G. R.

Nos.

164302-03, January 24, 2007] - Petitioners contend that what they conducted was a mere picketing and
not a strike. In disagreeing to this contention, the High Court emphasized that it is not an issue in this case
that there was a labor dispute between the parties as petitioners had notified the respondent of their
intention to stage a strike, and not merely to picket. Petitioners insistence to stage a strike is evident in the
fact that an amended notice of strike was filed even as respondent moved to dismiss the first notice. The
basic elements of a strike are present in this case: 106 members of petitioner Union, whose respective
applications for leave of absence on September 21, 1999 were disapproved, opted not to report for work on
said date, and gathered in front of the company premises to hold a mass protest action.

Petitioners

deliberately absented themselves and instead wore red ribbons and carried placards with slogans such as:
YES KAMI SA STRIKE, PROTESTA KAMI, SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN, CBA-WAG
BABOYIN, STOP UNION BUSTING. They marched to and fro in front of the companys premises during
working hours.
operations.

Thus, petitioners engaged in a concerted activity which already affected the companys

The mass concerted activity obviously constitutes a strike. Moreover, the bare fact that

petitioners were given a Mayors permit is not conclusive evidence that their action/activity did not amount to
a strike. The Mayors description of what activities petitioners were allowed to conduct is inconsequential.

To repeat, what is definitive of whether the action staged by petitioners is a strike and not merely a picket is
the totality of the circumstances surrounding the situation.
7. Assumption of jurisdiction by the Secretary of Labor or Certification of the Labor dispute to the
NLRC for compulsory arbitration. - When in the opinion of the DOLE Secretary, the labor dispute causes
or will likely to cause a strike or lockout in an industry indispensable to the national interest, he is empowered
to do either of two (2) things:
1. He may assume jurisdiction over the labor dispute and decide it himself; or
2. He may certify it to the NLRC for compulsory arbitration, in which case, it will be the NLRC which shall
hear and decide it.
This power may be exercised by the DOLE Secretary even before the actual staging of a strike or lockout
since Article 263 [g] does not require the existence of a strike or lockout but only of a labor dispute involving
national interest.
8. Nature of Assumption Order or Certification Order. - It is in the nature of a police power measure.
This is done for the promotion of the common good considering that a prolonged strike or lockout can be
inimical to the national economy. The DOLE Secretary is mandated to act to maintain industrial peace. Thus,
his assuming jurisdiction over a labor dispute or his certification thereof to the NLRC for compulsory
arbitration is not intended to impede the workers right to strike but to obtain a speedy settlement of the
dispute. It is confined only in labor disputes involving industries indispensable to the national interest.
A prolonged strike or lockout in such industries can be inimical to the national economy and, therefore, the
situation is imbued with public necessity and involves the right of the State and the public to self-protection.
Effects of certification of labor disputes to the NLRC, similar to those assumed directly by
the DOLE Secretary. - The following are the effects of both assumption or certification of labor disputes:
a. On intended or impending strike or lockout. Upon assumption or certification, the intended or
impending strike or lockout is automatically enjoined, notwithstanding the filing of any motion for
reconsideration of the certification order or the non-resolution of any such motion which may have been
duly submitted to the Office of the DOLE Secretary.
b. On actual strike or lockout. If a work stoppage has already taken place at the time of the
assumption or certification, all striking or locked-out employees shall immediately return to work and
the employer shall immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout.
c. On cases already filed or may be filed. All cases between the same parties, except where the
assumption or certification order specifies otherwise, the issues submitted for arbitration which are
already filed or may be filed and are relevant to or are proper incidents of the certified case, shall be
considered subsumed or absorbed by the assumed or certified case, and shall be decided by the DOLE
Secretary or, in certified cases, by the appropriate Division of the NLRC.
d. On other pending cases. The parties to an assumed or certified case, under pain of contempt, are
required to inform their counsels and the DOLE Secretary or NLRC Division concerned, of all cases
pending with the Labor Arbiters and Voluntary Arbitrators relative or incident to the assumed or certified
case before it.
9. Effect of defiance of Assumption or Certification Orders. - The defiance by the union, its officers and
members of the DOLE Secretary's assumption of jurisdiction or certification order constitutes a valid ground
for dismissal. The following are the justifications for the defiant employees dismissal:
1. A strike that is undertaken after the issuance by the DOLE Secretary of an assumption or certification
order becomes a prohibited activity and thus illegal. The 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 staging a strike after the assumption or certification for compulsory arbitration, the workers forfeit

their right to be readmitted to work, having, in effect, abandoned their employment.


Some principles on defiance of the assumption/certification order.
1. All defiant strikers, regardless of whether they are officers or ordinary members, are deemed
dismissed.
2. The assumption/certification order may be served at any time of the day or night.
3. The refusal to acknowledge receipt of such orders and other processes is an apparent attempt to
frustrate the ends of justice, hence, invalid. The union cannot be allowed to thwart the efficacy of the
assumption and return-to-work orders issued in the national interest through the simple expediency of
refusing to acknowledge receipt thereof.
4. Period of defiance, not material; defiance of less than one (1) day, sufficient to effect termination of
defiant strikers. (University of San Agustin Employees Union-FFW v. The CA, [G. R.
169632, March 28, 2006], the period of defiance was from 8:45 a. m.

No.

to 5:25 p. m.

on September 19, 2003).


10. Illegal Strike. In case of illegal strike the liabilities are as follows:
(1) Liability of officers of the unions. - The mere finding or declaration of illegality of a strike will result
in the termination of all union officers who knowingly participated therein. It is not required that the
officers should commit an illegal act during the strike.
(2) Liability of ordinary workers. The mere finding or declaration of illegality of a strike will not result
in termination of ordinary union members. For an ordinary union member to suffer termination, it must
be shown that he has committed illegal acts during the strike.

Liability for illegal acts should be

determined on an individual basis. In all cases, the erring strikers must be identified individually and
the specific illegal acts they each committed should be described with particularity.
(3) Liability of employer. The employer is liable to pay backwages, damages and other affirmative
reliefs, including criminal prosecution in case of defiance of return-to-work order.
(4) Waiver of illegality of strike. The employer may waive expressly or impliedly the illegality of the
strike.

An employer may be considered to have waived its right to proceed against the striking

employees for alleged commission of illegal acts during the strike when, during a conference before the
Chairman of the NLRC, it agreed to reinstate them and comply fully with the return-to-work order issued
by the DOLE Secretary. [10]
11. Injunctions. The rule is no temporary or permanent injunction or restraining order in any case involving
or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided
in Articles 218 (referring to the injunction power of the NLRC) and 264 (referring to the prohibited activities
during a strike or lockout) of the same Code.
(a) Requisites for Labor Injunctions. - A preliminary or permanent injunction may be granted only after
hearing the testimony of witnesses and with opportunity for cross-examination in support of the
allegations of the complaint or petition made under oath, and testimony by way of opposition thereto, if
offered, and only after a finding of fact by the Commission (NLRC):
(a) That prohibited or unlawful acts have been threatened and will be committed and will be continued
unless restrained, but no injunction or temporary restraining order shall be issued on account of any
threat, prohibited or unlawful act, except against the person or persons, association or organization
making the threat or committing the prohibited or unlawful act or actually authorizing or ratifying
the same after actual knowledge thereof.
(b) That substantial and irreparable injury to petitioner's property will follow;
(c) That as to each item of relief to be granted, greater injury will be inflicted upon the petitioner by the
denial of relief than will be inflicted upon respondents by the granting of relief;
(d) That petitioner has no adequate remedy at law; and
(e) That the public officers charged with the duty to protect petitioner's property are unable
or unwilling to furnish adequate protection.

Can the strike itself be enjoined? - In some cases, injunctions issued to enjoin the conduct of the
strike itself and not only the commission of illegal or prohibited acts in the course thereof, were held to
be valid.
San Miguel Corporation v. NLRC, [G. R. No. 119293, June 10, 2003]. - The Supreme Court
ruled that injunction may be issued not only against the commission of illegal acts in the course of the
strike but against the strike itself. In this case, the notice of strike filed by the union has been
converted into a preventive mediation case. Having been so converted, a strike can no longer be
staged based on said notice. Upon such conversion, the legal effect is that there is no more notice of
strike to speak of. When the NCMB ordered the preventive mediation, the union had thereupon lost the
notice of strike it had filed. However, the NCMB which effected the conversion has, under the law, no
coercive powers of injunction. Consequently, petitioner company in the instant case sought recourse
from the NLRC.

The NLRC, however, issued a TRO only for the free ingress to and egress from

petitioners plants, but did not enjoin the conduct of the unlawful strike itself. It ignored the fatal lack of
notice of strike consequent to the conversion thereof into a preventive mediation case. Article 264
[a] of the Labor Code explicitly states that a declaration of strike without first having filed the required
notice is a prohibited activity, which may be prevented through an injunction in accordance with Article
254 of the same Code. Clearly, public respondent should have granted the injunctive relief to prevent
the grave damage brought about by the unlawful strike.
San Miguel Corporation v. NLRC, [G. R. No. 99266, March 2, 1999, 304 SCRA 1] - In this case,
the same issue of NLRCs duty to enjoin an unlawful strike was raised. The Supreme Court ruled that
the NLRC committed grave abuse of discretion when it denied the petition for injunction to restrain the
union from declaring a strike based on non-strikeable grounds.
ILaw at Bulked ng Manggagawa [IBM] v. NLRC, [G. R. No. 91980, June 27, 1991, 198 SCRA
586] - It was held here that it is the legal duty and obligation of the NLRC to enjoin a partial strike
staged in violation of the law. Failure to promptly issue an injunction by the NLRC was likewise held
therein to be an abuse of discretion.
(b) Innocent Bystander Rule. This rule is applicable to picketing which adversely affect third partyemployers or innocent bystanders not involved in the labor dispute. Under this rule, the third
party-employers who have no employer-employee relationship with the picketers, may apply for
injunction with the regular courts to enjoin the conduct of the picket.

Absent such employer-

employee relationship, it is the regular court and not the NLRC which has jurisdiction to entertain
such application for injunction from innocent bystanders. If it is the employer which applies for
injunction, the NLRC, and not the regular court, which has jurisdiction thereover since there exists
an employer-employee relationship between the employer and the picketers.
When picketing may be enjoined. -As a general rule, injunction cannot be issued against the
conduct of picketing by the workers. Under our constitutional set up, picketing is considered part of
the freedom of speech duly guaranteed by the Constitution. However, excepted from this legal
proscription is when picketing is carried out through the use of illegal means [11] or where picketing
involves the use of violence and other illegal acts. [12]
oooooooooOoOooooooooo

[1] Under Article 2 of ILO Convention No. 87 [Freedom of Association and Protection of the Right to Organize] of which
the Philippines is a signatory, workers and employers, without distinction whatsoever, shall have the right to establish
and subject only to the rules of the organization concerned, job organizations of their own choosing without previous
authorization.
[2] Article 2 of ILO Convention No. 98 which dwells on the Right to Organize and Collective Bargaining.

[3] Sections 1 and 2, Executive Order No. 180, June 01, 1987; Sections 1 and 2, Rule II, Rules and Regulations to Govern
the Exercise of the Right of Government Employees to Self-Organization.
[4] See also Confederation of Citizens Labor Unions v. Noriel, G. R. No. L-56902. September 21, 1982, 116 SCRA 694.
[5] Section 16 [formerly Section 17], Rule IX, Book V, Rules to Implement the Labor Code, as amended by Department
Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as re-numbered by Department Order No. 40-F-03, Series of
2008 [Oct. 30, 2008].
[6] Sections 17 and 18 [formerly Sections 18 and 19], Rule IX, Book V, Ibid.
[7] See 1st paragraph, Section 3, Article XIII of the 1987 Constitution.
[8] The State shall promote the principle of shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith
to foster industrial peace. (See 2nd paragraph, Section 3, Article XIII of the 1987 Constitution).
[9] As ruled in National Union of Workers in the Hotel, Restaurant and Allied Industries [NUWHRAIN-APL-IUF] Dusit Hotel
Nikko Chapter v. The HonorableCA, G. R. Nos. 163942 and 166295, November 11, 2008.
[10] Trans-Asia Shipping Lines, Inc. Unlicensed Crews Employees Union Associated Labor Unions [TASLI-ALU] v.
CA, G. R. No. 145428, July 7, 2004.
[11] Mortera v. CIR, G. R. No. L-1340, Oct. 13, 1947, 79 Phil. 345.
[12] PAFLU v. Barot, G. R.

No. L-9281, Sept.

28, 1956, 99 Phil.

1008; Caltex Filipino Managers and Supervisors

Association v. CIR, G. R. Nos. L-30632-33, April 11, 1972, 44 SCRA 350.

PRE-WEEK NOTES
ON THE 2013 BAR EXAMINATION IN LABOR LAW
By: Prof. Joselito Guianan Chan
(These Notes, consisting of 8 parts, are supplementary to the authors book entitled 2012 Bar Reviewer
on Labor Law)
========================================================
PART EIGHT
PROCEDURE AND JURISDICTION
A. LABOR ARBITER
1. Jurisdiction. - 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 (ULP) cases;
(b) Termination disputes or illegal dismissal cases;
(c) If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates
of pay, hours of work and other terms and conditions of employment;
(d) Claims for actual, moral, exemplary and other forms of damages arising from employer-employee
relations;
(e) Cases arising from any violation of Article 264 of the Labor Code, as amended, including questions
involving the legality of strikes and lockouts;
(f)Except claims for employees compensation not included in the next succeeding paragraph, social
security, Philhealth(medicare) and maternity benefits, all other claims arising from employer-employee
relations, including those of persons in domestic or household service, involving an amount exceeding
Five Thousand Pesos (P5,000. 00), whether or not accompanied with a claim for reinstatement;
2. Under Article 124 of the Labor Code, as amended by R. A. No. 6727:
Wage distortion disputes in unorganized establishments not voluntarily settled by the parties pursuant to R.
A. No. 6727 (Wage Rationalization Act);
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 pursuant to
Article 233 [227] of the Labor Code, as amended;
5. Under Section 10 of R. A. No. 8042, as amended in 2010 by R. A. No. 10022:
Money claims arising out of employer-employee relationship or by virtue of any law or contract, involving
Filipino workers for overseas deployment, including claims death and disability benefits and for actual,
moral, exemplary and other forms of damages as provided by Section 10 of R. A. No. 8042, as amended
by R. A. No. 10022; and
6. Under the 2011 NLRC Rules of Procedure:
Other cases as may be provided by law. [1]
(a) versus Regional Director. This refers to two (2) situations:
(1) Contested cases under the exception clause in Article 128(b) of the Labor Code; and
(2) When the threshold total amount of monetary claims is P5,000. 00 or less, the jurisdiction belongs to
the Regional Director.
Other issues/cases falling under the jurisdiction of the Labor Arbiters. - Per jurisprudence,
the following issues fall under the jurisdiction of the Labor Arbiters:
1. Issues involving employees in government-owned and/or controlled corporations without original

charters;
2. Issues involving alien parties;
3. Illegal dismissal cases involving priests and ministers;
4. Monetary claims of domestic workers or kasambahay exceeding P5k;
5. Cases involving employees of cooperatives;
6. Cases involving employees of local water utilities districts;
7. Tax deductions as money claim which reduce the amount thereof;
8. Claims or counter-claims of employers against employees arising from employer-employee
relationship.
Other issues/cases NOT falling under the jurisdiction of the Labor Arbiters. - Per
jurisprudence, the following issues do not fall under the jurisdiction of the Labor Arbiters but of the
regular courts:
1. Claims for damages arising from violation of the non-compete clause and other postemployment prohibitions;
2. Claims for payment of car, appliance and other loans of employees;
3. Collection of payment for loans availed of from the retirement fund by dismissed employees;
4. Dismissal of corporate officers and their monetary claims;
5. Issues involving suspension of payment of debts (rehabilitation receivership);
6. Cases involving entities immune from suit;
7. Cases falling under the doctrine of forum non conveniens;
8. Quasi-delict or tort cases;
9. Criminal and civil liabilities arising from violations of certain provisions of the Labor Code;
10. Constitutionality of CBA provisions.
OFW-related cases over which the POEA, and not the Labor Arbiters, has jurisdiction.
- The Philippine Overseas Employment Administration (POEA) has original and exclusive jurisdiction to
hear and decide:
(a) All cases which are administrative in character, involving or arising out of violation of rules and
regulations relating to licensing and registration of recruitment and employment agencies or
entities, including refund of fees collected from workers and violation of the conditions for the
issuance of license to recruit workers.
(b)Disciplinary action cases and other special cases which are administrative in character, involving
employers, principals, contracting partners and Filipino migrant workers.
Additional notes on jurisdiction of Labor Arbiters:
a. Employment relationship, a pre-requisite for exercise of jurisdiction.
b. In cases of money claims of OFWs, Labor Arbiters may exercise jurisdiction even absent the
employment relationship. This is so because the Labor Arbiter may exercise jurisdiction over the
claims of OFWs arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment, including claims for actual,
moral, exemplary and other forms of damage.
c. Labor Arbiters have jurisdiction even if the case is filed by the heirs of the OFW.
d. Exceptions to the original and exclusive jurisdiction of Labor Arbiters are as follows:
(1) When the Secretary of Labor and Employment or the President exercises his power under Article
263 [g] of the Labor Code to assume jurisdiction over national interest cases and decide them
himself; or
(2) When the NLRC exercises its power of compulsory arbitration over national interest cases that
are certified to it by the Secretary of Labor and Employment pursuant to the exercise by the
latter of his certification power under the same Article 263 [g]; or
(3) 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.
e. Reasonable causal connection rule This is the rule in case of conflict of jurisdiction between
labor court and regular court. Under this rule, if there is a reasonable causal connection between
the claim asserted and the employer-employee relations, then the case is within the jurisdiction of
labor courts. In the absence of such nexus, it is the regular courts that have jurisdiction.
f. Labor disputes, not subject to barangay conciliation.
g. Labor Arbiter has no injunction power. It is only the Commission (NLRC) which has injunctive power.
h.

Labor Arbiters have no jurisdiction over termination of a corporate officer which is in the
nature of an intra-corporate dispute. New Matling doctrine[2] is that corporate officers refer
only to those mentioned in the Corporation Code and the By-Laws; all other officers not so
mentioned are deemed employees.

2. Reinstatement pending appeal. This relief exclusively applies to orders of reinstatement issued
by Labor Arbiters and not to similar orders issued by the NLRC, on appeal, the CA, on Rule 65certiorari petition, or the Supreme Court, on Rule 45-petition for review on certiorari which requires a writ
of execution. The order of reinstatement of the Labor Arbiter is self-executory or immediately executory.
This means that the employee ordered reinstated need not secure a writ of execution to effect his
reinstatement.
Some principles on reinstatement pending appeal under Article 223.
1. Posting of a bond does not stay the execution of immediate reinstatement.
2. The employer has only 2 options:
a. Actual reinstatement, i. e. , the employee should be reinstated to his position which he occupies
prior to his illegal dismissal under the same terms and conditions prevailing prior to his dismissal
or separation or, if no longer available, to a substantially-equivalent position; or
b. Payroll reinstatement, i. e. , reinstatement of the employee in the payroll of the company without
requiring him to report back to his work.
3. Employer has the obligation to notify the employee ordered reinstated of his choice of option
within ten (10) calendar days from receipt of the Labor Arbiters decision, disobedience to which
clearly denotes a refusal to reinstate.
4. Roquero doctrine[3] - Employer is liable to pay the salaries for the period that the
employee was ordered reinstated pending appeal even if his dismissal is later finally
found to be legal on appeal.
5.

The Genuino doctrine[4] that the payroll-reinstated employee should refund the salaries he
received if his dismissal is finally found legal on appeal no longer applies.

Whether reinstated

actually or in the payroll, the employee is not required to refund what he has received even if the
decision of the Labor Arbiter is subsequently reversed on appeal.
6.

The Roquero and Genuino doctrines have already been modified by the Garcia doctrine.
[5]

Thus, after the Labor Arbiters decision is reversed by a higher tribunal, the employee may be

barred from collecting the accrued reinstatement wages (i. e. , from the time he was ordered
reinstated by the Labor Arbiter until reversed on appeal), if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer.
8. The test under the Garcia doctrine is 2-fold:
(a) There must be actual delay or the fact that the order of reinstatement pending appeal was not
executed prior to its reversal; and
(b) The delay must not be due to the employers unjustified act or omission.

If the delay is due to

the employers unjustified refusal, the employer may still be required to pay the salaries
notwithstanding the reversal of the Labor Arbiters decision.

3. Requirements to perfect appeal to NLRC. The 2011 NLRC Rules of Procedure[6] prescribe the
requisites for perfection of an appeal to the NLRC. Thus, the appeal should be:
(1) filed within the reglementary period, to wit:
(a) 10 calendar days in appeals from decisions of the Labor Arbiter; and
(b) 5 calendar days in appeals from DOLE Regional Directors under Article 129 (small money claims
of P5,000. 00 or less).
(2) verified by the appellant himself/herself in accordance with Section 4, Rule 7 of the Rules of Court,
as amended;
(3) in the form of a memorandum of appeal which shall state the grounds relied upon and
the arguments in support thereof, the relief prayed for, and with a statement of the date the
appellant received the appealed decision, award or order;
(4) in three (3) legibly typewritten or printed copies; and
(5) accompanied by:
(i) proof of payment of the required appeal fee and legal research fee;
(ii) posting of a cash or surety bond (only in cases of monetary awards but excluding moral and
exemplary damages and attorneys fees in the computation thereof); and
(iii)proof of service upon the other parties.
B. NATIONAL LABOR RELATIONS COMMISSION (NLRC)
1. Jurisdiction. - The NLRC exercises two (2) kinds of jurisdiction:
1. Original jurisdiction over the following cases:
a. Injunction in ordinary labor disputes to enjoin or restrain any actual or threatened commission of
any or all prohibited or unlawful acts or to require the performance of a particular act in any labor
dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any
party.
b. Injunction in strikes or lockouts under Article 264 of the Labor Code.
c. Labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the
national interest, certified to it by the Secretary of Labor and Employment for compulsory arbitration
under Article 263(g) of the Labor Code.
2. Exclusive appellate jurisdiction over the following cases:
a. All cases decided by the Labor Arbiters.
b. Contempt cases decided by the Labor Arbiters.
c. Cases decided by the DOLE Regional Directors involving recovery of wages, simple money claims and
other benefits under Article 129 of the Labor Code.
2. Effect of NLRC reversal of Labor Arbiters order of reinstatement. -The following are the effects:
1. On backwages - The employer, as a general rule, has to pay the so-called reinstatement wages of
the employee from the time he was ordered reinstated by the Labor Arbiter until the reversal by the NLRC
of such reinstatement order. The exception is when there exists justifiable reason for not effecting actual
or payroll reinstatement pending appeal, as enunciated under the Garcia doctrine. [7]
2.

On reinstatement If the employee was, pending appeal, reinstated either to his former
position/substantially equivalent position or in the payroll, the reversal of the reinstatement ordered by the
Labor Arbiter will not affect such reinstatement if the employee elevates his case to the Court of Appeals or
subsequently, to the Supreme Court. However, if the employee no longer elevates the case to the Court of
Appeals or to the Supreme Court, the reversal shall mean the end of the litigation, hence, the
reinstatement of the employee should cease as a matter of course upon the finality of the reversal decision
of the NLRC.

3. Remedies. The following are the remedies from the decision, order or award of the NLRC:
For the losing party:
a. Filing of a motion for reconsideration within ten (10) calendar days from receipt thereof; and
b. Filing of a Rule 65-petition for certiorari with the Court of Appeals within sixty (60) days from receipt of the

denial of the motion for reconsideration. (Decisions of the NLRC are not final during the pendency
of a certiorari petition.

Although it is not in the nature of an appeal, certiorari should be

treated as being similar to the concept of an appeal). [8]


For the winning party:
a. Filing of a motion for the issuance of a writ of execution with the Labor Arbiter of origin to enforce the
monetary award or effect reinstatement ordered by the Commission (NLRC) on appeal. This is so because
a petition for certiorari with the Court of Appeals or the Supreme Court shall not stay the execution of the
assailed decision unless a restraining order is issued by said courts. [9]Consequently, such petition shall
not stop the Sheriff from enforcing the assailed decision unless a restraining order is issued by the Court of
Appeals or the Supreme Court. [10]
4. Certified cases. These refer to national interest cases certified to the NLRC by the DOLE Secretary for
purposes of compulsory arbitration under Article 263(g) of the Labor Code.
C. BUREAU OF LABOR RELATIONS MED ARBITERS
1. Original jurisdiction. - The BLR has original and exclusive over the following cases:
a. Inter-union or representation dispute. It refers to a petition for certification election filed by a duly
registered labor organization which is seeking to be recognized as the sole and exclusive bargaining agent
of the rank-and-file employees or supervisory employees, as the case may be, in the appropriate
bargaining unit of an establishment.
b. Intra-union dispute. - It refers to 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.
c. All disputes, grievances or problems arising from or affecting labor-management relations in
all workplaces, whether agricultural or non-agricultural, except those arising from the implementation
or interpretation of CBAs which shall be the subject of grievance procedure and/or voluntary arbitration;
d. Application for registration of labor unions; and
e. Petition for cancellation of union registration.
2. Appellate jurisdiction. - The following are the rules on appeals with respect to the BLR:
a. In inter-union disputes - Decisions of the Med-Arbiter in inter-union disputes (certification elections) are
not appealable to the BLR but to the DOLE Secretary.
b. In intra-union disputes - Decisions of Med-Arbiters in intra-union disputes are appealable to the BLR.
c.

The BLR exercises appellate jurisdiction over all cases originating from the DOLE Regional Director
involving the following issues:
1. Union registration;
2. Cancellation of certificates of union registration; and
3. Complaints for examination of unions books of accounts.

d. As far as cancellation of union registration is concerned, in case the decision is rendered by the BLR
Director in the exercise of his original jurisdiction, the same may be appealed to the Office of the DOLE
Secretary by any party within the same period of ten (10) days, copy furnished the opposing party.
3. Administrative functions. In addition, the BLR has the following administrative functions:
a. Registration of labor unions;
b. Keeping of registry of labor unions;
c. Maintenance and custody of the files of Collective Bargaining Agreements (CBAs) and other related
agreements.
d. Records of settlement of labor disputes; and
e. Copies of orders and decisions of Voluntary Arbitrators.
D. NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB)
1.

Nature of proceedings.

The NCMB is not a quasi-judicial agency. [11] Consequently, its

proceedings are non-litigious in nature. It does not render decisions in cases brought before it. Its function is
confined to the conduct of conciliation and mediation. It accredits Voluntary Arbitrators to whom it refers
cases for voluntary arbitration purposes.
2. Conciliation vs. Mediation. In both conciliation and mediation, there is a third party called Conciliator
(in case of conciliation) or Mediator (in case of mediation) to whom the parties submit their disputes for
purposes of reconciling their differences or persuading them into adjusting or settling their dispute. The
distinction lies on the extent of the power and authority granted to the neutral third party.
In mediation, there are two (2) classifications:
1.

Facilitative Mediation where the Mediator does not make or offer any opinion; or

2.

Evaluative Mediation where the Mediator offers an opinion which is not binding on the parties.

In conciliation, the Conciliator is given more power and authority in that he may not only offer an opinion on
the issues at hand but may actually make a binding opinion thereon provided the parties stipulate in advance
to this effect. His opinion is based on the facts and the law involved in the controversy before him.
3. Preventive mediation. Although this is not provided in the Labor Code, the law[12] that created the
NCMB mandates that it should provide preventive mediation to disputing parties. The validity of this remedy
has been affirmed by the Supreme Court. The issues that may be submitted for preventive mediation may
either be strikeable or non-strikeable.
In cases of strikeable issues, the parties may mutually agree that the same be treated or converted into a
preventive mediation case, in which event, no strike or lockout may be legally and validly mounted based on
the same issues since their conversion into a preventive mediation case has the effect of dismissing the
notice of strike or notice of lockout and removing it from the docket of notices of strike/lockout.
In cases of non-strikeable issues raised in a notice of strike or notice of lockout, the NCMB
may, motu proprio, convert the same into a preventive mediation case or, alternatively, refer
said issues to voluntary arbitration, if they are in the nature of unresolved grievances or to the MedArbiter, if they involve representation or inter-union disputes.
Strike is illegal if staged after conversion of the notice of strike into a preventive mediation
case.
Philippine Airlines, Inc. v. Secretary of Labor and Employment, [G. R. No. 88210, January 23,
1991, 193 SCRA 223] - The strike was declared illegal for lack of a valid notice of strike in view of the
NCMBs conversion of said notice into a preventive mediation case.
San Miguel Corporation v. NLRC, [G. R. No. 119293, June 10, 2003] - The moment the NCMB
orders the preventive mediation in a strike case, the union thereupon loses the notice of strike it had filed.
Consequently, if it still defiantly proceeds with the strike while mediation is on-going, the strike is illegal.
E. DOLE REGIONAL DIRECTORS
1. Jurisdiction. DOLE Regional Directors have original jurisdiction over the following:
a. Exercise of the visitorial and enforcement power as duly authorized representatives of the DOLE Secretary
under Article 128 of the Labor Code; and
b. Recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee
or person employed in domestic or household service or kasambahay under Article 129 of the Labor Code.
Requisites for the valid exercise of jurisdiction by DOLE Regional Directors under Article
129.
(1) The claim is presented by an employee or person employed in domestic or household service or
kasambahay under the code;
(2) The claimant whose employment has been severed does not seek reinstatement; and
(3) The aggregate money claim of the employee or domestic worker/kasambahay does not
exceed P5,000. 00.
F. DOLE SECRETARY

1. Visitorial and Enforcement Powers. - The visitorial and enforcement powers granted to the DOLE
Secretary or his duly authorized representatives under Article 128 of the Labor Code are in the nature of
a quasi-judicial power.

[13]

There are three (3) separate powers treated in Article 128, to wit:
1. Visitorial power embodied in paragraph [a] thereof which covers the following:
a. Access to employers records and premises at any time of the day or night, whenever work is being
undertaken therein; and
b. The right:
1. to copy from said records;
2. To question any employee and investigate any fact, condition or matter which may be necessary to
determine violations or which may aid in the enforcement of the Labor Code and of any labor law,
wage order, or rules and regulations issued pursuant thereto.
2. Enforcement power treated in paragraphs [b] and [c] thereof which includes the following:
a. To issue compliance orders to give effect to the labor standards provisions of the Labor Code and
other labor legislations based on the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection.
b. To issue writs of execution to the appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor employment and enforcement officer and
raises issues supported by documentary proofs which were not considered in the course of inspection.
c. To order stoppage of work or suspension of operations of any unit or department of an
establishment when non-compliance with the law or implementing rules and regulations poses grave
and imminent danger to the health and safety of workers in the workplace. Within twenty-four (24)
hours, a hearing shall be conducted to determine whether an order for the stoppage of work or
suspension of operations shall be lifted or not. In case the violation is attributable to the fault of the
employer, he shall pay the employees concerned their salaries or wages during the period of such
stoppage of work or suspension of operation.
d. To require employers, by appropriate regulations, to keep and maintain such employment records as
may be necessary in aid of his visitorial and enforcement powers under the Labor Code.
3. Appellate power or power of review which is found in the sub-paragraph of paragraph [b] thereof.
The appeal from the order of the DOLE Regional Director issued under Article 128 should be made to the
DOLE Secretary within ten (10) calendar days from receipt of a copy of the order of the DOLE Regional
Director based on any of the following grounds:
1. There is a prima facie evidence of abuse of discretion on the part of the Regional Director;
2. The order was secured through fraud, coercion or graft and corruption;
3. The appeal is made purely on questions of law; or
4. Serious errors in the findings of facts were committed which, if not corrected, would cause grave and
irreparable damage or injury to the appellant.
2. Power to suspend effects of termination.

- Under Article 277 [b] of the Labor Code, the DOLE

Secretary is empowered to suspend the effects of termination based on the following grounds:
1. The termination may cause a serious labor dispute; or
2. The termination is in implementation of a mass lay-off.
The obvious purpose behind this rule is to bring the parties back to the status quo ante litem, that is, their
state of relationship prior to the termination. In this way, the workers will be litigating the issue of the validity
or legality of their termination on more or less equal footing with the employer since they will not be deprived
of their wages while the litigation is on-going.
3. Assumption of jurisdiction. The DOLE Secretary, under Article 263(g) of the Labor Code, may assume
jurisdiction over a labor dispute when, in his opinion, it will cause or likely to cause a strike or lockout in
an industry indispensable to the national interest.

Such assumption shall have the effect

of automatically enjoining the intended or impending strike or lockout as specified in the


assumption order. If a strike or lockout has already taken place at the time of assumption, all striking or
locked out employees shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the
strike or lockout.

The DOLE Secretary may seek the assistance of law enforcement agencies to

ensure compliance with the law as well as with such orders as he may issue to enforce the same.
A different rule is applicable to labor disputes involving hospitals, clinics and similar medical
institutions. In line with the national concern for and the highest respect accorded to the right of patients
to life and health, strikes and lockouts in hospitals, clinics and similar medical institutions shall, to every
extent possible, be avoided, and all serious efforts, not only by labor and management but government as
well, be exhausted to substantially minimize, if not prevent, their adverse effects on such life and health,
through the exercise, however legitimate, by labor of its right to strike and by management to lockout. In
labor disputes adversely affecting the continued operation of such hospitals, clinics or medical institutions, it
shall be the duty of the striking union or locking-out employer to provide and maintain an effective
skeletal workforce of medical and other health personnel, whose movement and services shall be
unhampered and unrestricted, as are necessary to insure the proper and adequate protection of the life and
health of its patients, most especially emergency cases, for the duration of the strike or lockout. In such
cases, therefore, the DOLE Secretary may immediately assume, within twenty four (24) hours from
knowledge of the occurrence of such a strike or lockout, jurisdiction over the same. For this
purpose, the contending parties are strictly enjoined to comply with such orders, prohibitions and/or
injunctions as are issued by the DOLE Secretary, under pain of immediate disciplinary action,
including dismissal or loss of employment status or payment by the locking-out employer of
backwages, damages and other affirmative relief, even criminal prosecution against either or
both of them.
4. Appellate jurisdiction. The appellate jurisdiction of the DOLE Secretary may be summarized as follows:
a. Appeal from the order of the DOLE Regional Director under Article 128 (Visitorial and Enforcement Power).
[NOTE: APPEAL FROM DECISIONS OF THE DOLE REGIONAL DIRECTORS UNDER ARTICLE 129
(Recovery of small money claims) IS TO THE NLRC WITHIN 5 CALENDAR DAYS].
b. Appeal from the order of the Med-Arbiter in certification election cases (Article 259) based only on one
(1) ground: That the rules and regulations or parts thereof established by the DOLE Secretary
for the conduct of the certification election have been violated.
[NOTE: Rule on appeal in unorganized establishments.

The order GRANTING the petition for

certification election in an unorganized establishment is not subject to appeal. Any issue arising from
its conduct or from its results is proper subject of a protest. Appeal may only be made in case
of DENIAL of the petition within ten (10) days from receipt of the decision of denial. [14]
Rule on appeal in organized establishments. BOTH THE GRANT AND DENIAL of the petition for
certification election ARE APPEALABLE. The order GRANTING the conduct of a certification election in
an organized establishment and the decision DISMISSING or DENYING the petition may be appealed
to the Office of the DOLE Secretary within ten (10) days from receipt thereof. [15]]
Employer is not a proper party to file an appeal from the certification election order
because he is considered under the law as a mere bystander or stranger. [16]
c. Appeal in cancellation of union registration proceedings. The rule on appeal depends on where the
petition for cancellation was originally filed.
1. If originally filed with the DOLE Regional Director, his decision rendered in his original
jurisdiction may be appealed to the BLR Director by any of the parties within ten (10) days from
receipt thereof, copy furnished the opposing party.

2.

If originally filed with the BLR Director, his decision rendered in the exercise of
his original jurisdiction may be appealed to the Office of the DOLE Secretary by any party within
the same period of ten (10) days, copy furnished the opposing party. [17]

APPELLATE JURISDICTION OF THE BLR AND DOLE SECRETARY, DISTINGUISHED.


According to the High Court in Abbott,[18]the appellate jurisdiction of the DOLE Secretary is limited
only to a review of cancellation proceedings decided by the BLR in the exercise of the
latters exclusive and original jurisdiction. The DOLE Secretary has no jurisdiction over decisions of the
BLR rendered in the exercise of its appellate jurisdiction to review the decisions of the Regional Directors
in cancellation cases, said decisions being final and inappealable.
Simply stated, there are two (2) situations contemplated, thus:
(a)The first situation involves a petition for cancellation of union registration which is filed with
a Regional Office. A decision of a Regional Office cancelling a unions certificate of registration may
be appealed to the BLR Director whose decision on the matter shall be final and inappealable.
(b)The second situation involves a petition for cancellation of certificate of union registration which is
filed directly with the BLR. A decision of the BLR cancelling a unions certificate of registration may
be appealed to the DOLE Secretary whose decision on the matter shall be final and inappealable.
d. Appeal in contempt cases decided by BLR Director shall be made to the DOLE Secretary. [19]
5. Voluntary arbitration powers of the DOLE Secretary. This is a new rule of dispute settlement
where

the

DOLE

Secretary

himself

may

now

conduct

voluntary

arbitration

of

cases.

It

is

called Administrative Intervention for Dispute Avoidance (AIDA).[20]


This recourse is separate from the established dispute resolution modes of mediation, conciliation and
arbitration under the Labor Code, and is an alternative to other voluntary modes of dispute resolution such as
the voluntary submission of a dispute to the Regional Director for mediation, to the NCMB for preventive
mediation, or to the intervention of a regional or local tripartite peace council for the same purpose.
Parties who may request for the DOLE Secretarys intervention.
Either or both the employer and the certified collective bargaining agent (or the representative of the
employees where there is no certified bargaining agent) may voluntarily bring to the Office of the DOLE
Secretary, through a Request for Intervention, any potential or ongoing dispute defined below.
Potential or ongoing dispute.
A potential or ongoing dispute refers to:
a. a live and active dispute;
b. that may lead to a strike or lockout or to massive labor unrest; and
c. is not the subject of any complaint or notice of strike or lockout at the time a Request for Intervention is
made.
Pre-requisite to intervention by the DOLE Secretary.
The Office of the Secretary or the Regional Director, in the proper case, shall proceed to intervene after the
parties shall have manifested that:
a. They voluntarily submit their potential or ongoing dispute to intervention by the Office of the DOLE
Secretary;
b. There is no pending notice of strike or lockout or any related complaint in relation to their potential or
ongoing dispute;
c. They shall refrain from any strike or lockout or any form of work stoppage or from filing any related
complaint while the Secretary's intervention is in effect; and

d. They shall abide by the agreement reached, whose terms may be enforced through the appropriate
writs issued by the DOLE Secretary.
All agreements settling the dispute should be in writing and signed by the parties as well as the official
who mediated the dispute.
Voluntary arbitration by the DOLE Secretary.
If AIDA fails, either or both parties may avail themselves of the remedies provided under the Labor Code.
Alternatively, the parties may submit their dispute to the Office of the DOLE Secretary for voluntary
arbitration.
Such voluntary arbitration should be limited to the issues defined in the parties' submission to voluntary
arbitration agreement and should be decided on the basis of the parties' position papers and submitted
evidence.
The Office of the DOLE Secretary is mandated to resolve the dispute within sixty (60) days from the parties'
submission of the dispute for resolution.
[NOTE: DOLE REGIONAL DIRECTORS AND ASSISTANT REGIONAL DIRECTORS MAY NOW ACT
AS EX-OFFICIO VOLUNTARY ARBITRATORS (EVAs).

Regional Directors and Assistant Regional

Directors of the Department of Labor and Employment are neither expressly authorized to act as Voluntary
Arbitrators under the Labor Code nor explicitly prohibited from acting as such. This is a void in the law
which was appropriately addressed with the issuance by DOLE Secretary Arturo D.

Brion,

of Department Order No. 83-07, Series of 2007 on June 8, 2007 designating all Regional Directors and
Assistant Regional Directors of the Department of Labor and Employment as Ex-Officio Voluntary
Arbitrators (EVAs)].
G. GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION
1. Subject matter of grievance. A grievance may involve the following subject matters:
1. Interpretation or implementation of the CBA; or
2. Interpretation or enforcement of company personnel policies.
If these two issues are unresolved within 7 days from their submission for resolution by the Grievance
Committee, they shall be forwarded to a Voluntary Arbitrator for voluntary arbitration.
2. Jurisdiction of Voluntary Arbitrator. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall
have exclusive and original jurisdiction over the following cases:
1. Unresolved grievances arising from the interpretation or implementation of the collective bargaining
agreement (CBA).
2. Unresolved grievances arising from the interpretation or enforcement of company personnel policies.
3. Violations of the CBA which are not gross in character.
4. Wage distortion issues arising from the application of any wage orders in organized establishments.
5. Other labor disputes, including unfair labor practices and bargaining deadlocks, upon agreement of the
parties.
6. Unresolved grievances arising from the interpretation and implementation of the Productivity Incentive
Programs under R. A. No. 6971 [November 22, 1990], otherwise known as the Productivity Incentives
Act of 1990.

Some principles on jurisdiction of Voluntary Arbitrators.


a. Cases cognizable by Voluntary Arbitrators but filed with the Labor Arbiters, DOLE Regional Offices or
NCMB should be referred to the Voluntary Arbitrators mutually chosen by the parties.

They are

required to immediately dispose and refer the same to the appropriate grievance machinery or
voluntary arbitration provided in the CBA.
b. Cases cognizable by Voluntary Arbitrators but filed with the regular courts should be dismissed.
c. WHEN A CASE DOES NOT INVOLVE THE PARTIES TO A CBA THE EMPLOYER AND THE

BARGAINING UNION - IT IS NOT SUBJECT TO VOLUNTARY ARBITRATION.

Only disputes

involving the bargaining union and the company shall be referred to the grievance machinery or
voluntary arbitrators.
d. A termination dispute is not a grievable issue; hence, grievance machinery and Voluntary Arbitrators
have no jurisdiction over this issue. Termination cases do not call for the interpretation or enforcement
of company personnel policies and so they may not be considered grievable or arbitrable.
e. In termination cases, if the bargaining union is not named a party to the illegal dismissal suit either
because it failed to object to the dismissal of the employee or the suit was initiated by the employee
alone, without the assistance of his union, Voluntary Arbitrator has no jurisdiction thereover.
f. To confer jurisdiction with the Voluntary Arbitrator over termination disputes, there must be express
agreement between employer and the bargaining agent to submit the termination case to voluntary
arbitration.
g. The Voluntary Arbitrators have original and exclusive jurisdiction over money claims arising from the
interpretation or implementation of the CBA and, those arising from the interpretation or enforcement
of company personnel policies, under Article 261. The Labor Arbiters jurisdiction over money
claims cases is limited only to those arising from statutes or contracts other than a CBA.
h. The Voluntary Arbitrators may hear and decide issue of legality of strikes or lockouts for as long as the
parties mutually agree to submit it to voluntary arbitration.
i. Ordinary violation of a CBA which involves non-economic provisions thereof is not ULP and should be
resolved as a grievance or grievable issue properly cognizable under the grievance machinery and
voluntary arbitration provisions of a CBA. If the violation of the CBA is gross in character, i. e. , the
refusal to comply with the economic provisions thereof is flagrant and/or malicious, it should be treated
as an unfair labor practice and thus may be taken cognizance of by the Labor Arbiter under Article
217 or by the Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties,
under Article 262 of the Labor Code.
j.

Jurisdictional

over

wage

is organized or unorganized.

distortion
If

cases

organized,

depends
the

on

Voluntary

whether

the

Arbitrator

establishment

has

jurisdiction.

If unorganized, the Labor Arbiter has jurisdiction.


3. Procedure. Voluntary arbitration is 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.
If after exhausting the grievance procedure, the grievance remains unresolved and one party refuses to
submit the same to voluntary arbitration, the following procedure should be observed:
1. A Notice to Arbitrate should be served upon the refusing or unwilling party, copy furnished the permanent
Voluntary Arbitrator, if one is named in the CBA, and the NCMB Regional Branch having jurisdiction over
the workplace;
2. After the lapse of the 7-day period within which to respond to the Notice to Arbitrate, the permanent
Voluntary Arbitrator shall immediately commence the arbitration proceedings;
3. In the absence of a permanent Voluntary Arbitrator named in the CBA, the NCMB shall appoint a Voluntary
Arbitrator who shall immediately commence the arbitration proceedings upon receipt of such
appointment.
4. The Voluntary Arbitrator shall have the following powers:
1. To require any person to attend hearing/s;
2. To subpoena witnesses and receive documents when the relevancy of the testimony and the materiality
thereof have been demonstrated to the arbitrator;
3. To take whatever action is necessary to resolve the issue/s subject of the dispute;

4. To issue a writ of execution to enforce final decisions and in connection therewith, it shall be his duty to:
4. 1. see to it that his decision is fully satisfied;
4. 2. inquire into the correctness of the execution of his final decision;
4. 3. consider whatever supervening event that may transpire during such execution;
4. 4. determine every question of fact and law which may be involved in the execution.
4.

Remedies.

- As

general

rule,

decisions

or

awards

of

Voluntary

Arbitrators

are

final, inappealable and executory after ten (10) calendar days from receipt of a copy thereof by the parties.
It is well-settled a rule, however, that the findings of fact and law made by the Voluntary Arbitrator may be
reviewed by the court.

[21]

The decision, order or award of Voluntary Arbitrators may be elevated directly to the Court of Appeals by
way of

ordinary

appeal under Rule

43 of

the 1997

Rules

of

Civil

Procedure[22] within

the reglementary period of 15 days from receipt thereof.


The Voluntary Arbitrators decisions or awards may be contested on the following grounds:
1. Lack or want of jurisdiction;
2. Grave abuse of discretion;
3. Violation of due process;
4. Denial of substantive justice;
5. Erroneous interpretation of the law. [23]
Appeal will be dismissed if erroneously filed under Rule 65 instead of Rule 43. It must be noted that Rule 65
petition for certiorari is not a substitute for a lapsed appeal. [24]
H. COURT OF APPEALS
1. Rule 65, Rules of Court. - In cases where the decisions, orders or awards of the NLRC, the DOLE
Secretary or the BLR Director (in cases where he rendered the same in his appellate jurisdiction) are
rendered without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction, the aggrieved party may elevate the case to the Court of Appeals not by way of
ordinary appeal but by and through the special civil action for certiorari provided under Rule 65 thereof which
states in its Section 1 as follows:
Section 1. Petition for certiorari. When any tribunal, board, or officer exercising judicial
functions, has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order or resolution
subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn
certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46.
An extraordinary remedy, a petition for certiorari is available only and restrictively in truly exceptional cases.
The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave
abuse of discretion amounting to lack or excess of jurisdiction.
[NOTE:

THE

ONLY

WAY

THE

DECISIONS,

ORDERS

OR AWARDS

OF THE NLRC,

THE DOLE

SECRETARY OR THE BLR DIRECTOR(WHEN HE RENDERED THEM IN HIS APPELLATE JURISDICTION)


COULD REACH THE COURT OF APPEALS IS BY WAY OF RULE 65 PETITION FOR CERTIORARI. THERE
IS NO APPEAL FROM THEIR DECISIONS, ORDERS OR AWARDS].
I. SUPREME COURT
1. Rule 45, Rules of Court. - Rule 45-petition for review on certiorari is the only mode of elevating a labor
case from the Court of Appeals to the Supreme Court. Since the Court of Appeals has jurisdiction over the

petition for certiorari under Rule 65 that may be filed before it from the decisions of the NLRC, any alleged
errors committed by it in the exercise of its jurisdiction would be errors of judgment which are reviewable
by means of a timely appeal to the Supreme Court and not by a special civil action of certiorari. Such appeal
from a final disposition of the Court of Appeals is a petition for review on certiorari under Rule 45 and not a
special civil action of certiorari under Rule 65 of the Rules of Court.
Some principles on Rule 45, Rules of Court.
1. Reglementary period to appeal is 15 days from notice of judgment or denial of the motion for
reconsideration.
2. A petition for certiorari under Rule 65 cannot be a substitute for a lost appeal under Rule 45; hence, it
should be dismissed.
3. A party cannot file a petition both under Rules 45 and 65.
J. PRESCRIPTION OF ACTIONS
1. Money claims. 3 years. [25]All money claims of workers, including OFWs, [26] prescribe in 3 years from
the time the cause of action accrued; otherwise, they shall be forever barred. [27]
2. Illegal dismissal. 4 years. The 3-year prescriptive period in Article 291 solely applies to money claims
but not to illegal dismissal cases which are not in the nature of money claims. The 4-year prescriptive period
of illegal dismissal cases is based on Article 1146 of the Civil Code. [28]
3. Unfair labor practice. 1 year. The prescriptive period for all complaints involving unfair labor practices
is one (1) year from the time the acts complained of were committed; otherwise, they shall be forever barred.
[29]

Before a criminal action for ULP may be filed, it is a condition sine qua non that a final judgment finding

that an unfair labor practice act was committed by the respondent should first be secured or obtained in the
labor or administrative case initiated before the Labor Arbiter or the Voluntary Arbitrator, as the case may be.
[30]

Final judgment is one that finally disposes of the action or proceeding. For instance, if the remedy of

appeal is available but no appeal is made, then, the judgment is deemed final and executory. If an appeal is
made, then the final judgment rendered by the last tribunal, say the Supreme Court, to which the case was
elevated should be the reckoning factor.
Interruption of prescriptive period of offenses.
As far as ULP cases are concerned, the running of the one (1) year prescriptive period is interrupted during
the pendency of the labor case.

[31]

Evidentiary value of the final judgment in the labor case.


In ULP cases, the final judgment in the administrative case cannot be presented as evidence of the facts
proven therein or as evidence of the guilt of the respondent therein. Its evidentiary or probative value is
confined merely in proving the fact of compliance with the condition sine qua non prescribed by law, i. e. ,
that a final judgment has been secured in the administrative proceeding finding that an unfair labor
practice act was in fact committed by the respondent.

[32]

4. Offenses penalized by the Labor Code. 3 years. [33]The prescriptive period of all criminal offenses
penalized under the Labor Code and the Rules to Implement the Labor Code is three (3) years from the time
of commission thereof. Failure to initiate or file the criminal action or complaint within the prescriptive period
shall forever bar such action. The act of the employer in dismissing an employee without cause, although a
violation of the Labor Code and its implementing does not amount to an offense as this term is
understood and contemplated under Article 290. [34]
5. OTHER RELEVANT PRESCRIPTIVE PERIODS UNDER THE LAW.
a. Simple illegal recruitment 5 years
b. Illegal recruitment involving economic sabotage 20 years
c. Disciplinary action cases (POEA) 3 years
d. SSS violations 20 years from the time the delinquency is known or the assessment is made by the
SSS, or from the time the benefit accrues, as the case may be.
e. Employees compensation claims 3 years

f. Actions involving the funds of the union 3 years from the date of submission of the annual financial
report to the Department of Labor and Employment or from the date the same should have been
submitted as required by law, whichever comes earlier.
oooooooooOoOooooooooo

[1] Section 1, Rule V, 2011 NLRC Rules of Procedure.


[2] Matling Industrial and Commercial Corp. v. Coros, G. R. No. 157802, October 13, 2010.
[3] Roquero v. Philippine Air Lines, Inc. , G. R. No. 152329, April 22, 2003.
[4] Genuino v. NLRC, G. R. Nos. 142732-33, December 4, 2007.
[5] Garcia v. Philippine Airlines, Inc. , G. R. No. 164856, January 20, 2009 (En Banc).
[6] Section 4 [a], Rule VI, 2011 NLRC Rules of Procedure.
[7] Garcia v. Philippine Airlines, Inc. , [G. R. No. 164856, January 20, 2009 (En Banc)].
[8] Delima v. Gois, G. R. No. 178352, June 17, 2008.
[9] Section 4, Rule XI, 2011 NLRC Rules of Procedure; See old provision of Section 10, Rule XI, 2005 NLRC Revised Rules
of Procedure.
[10] Section 7, Rule III, 2012 NLRC Sheriffs Manual on Execution of Judgment [November 15, 2012], effective January 11,
2013.
[11] Tabigue v. International Copra Export Corporation, [G. R. No. 183335, December 23, 2009.
[12] Section 22, Executive Order No. 126.
[13] Dole Philippines, Inc. v. Esteva, G. R. No. 161115, Nov. 30, 2006.
[14] Section 17, Rule VIII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03,
Series of 2003, [Feb. 17, 2003].
[15] Ibid.
[16] Article 258, Labor Code; See also SMC Quarry 2 Workers Union February Six Movement [FSM] Local Chapter No.
1564 v. Titan Megabags Industrial Corporation, supra; Toyota Motor Phils. Corporation Workers Association (TMPCWA)
v. Court of Appeals, G. R. No. 148924, Sept. 24, 2003.
[17] Section 16, Rule XI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03,
Series of 2003, [Feb. 17, 2003].
[18] Abbott Laboratories Philippines, Inc. v. Abbott Laboratories Employees Union, G. R. No. 131374, January 26, 2000.
[19] Section 1, Rule XXIII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03,
Series of 2003, [Feb. 17, 2003].
[20] It was enunciated in DOLE Circular No. 1, Series of 2006 issued on August 11, 2006 by former DOLE
Secretary Arturo D. Brion, now a distinguished member of the Highest Court and the Chairman of the
2013 Bar Examination Committee.
[21] Continental Marble Corporation v. NLRC, G. R. No. L-43825, May 9, 1988.
[22] Luzon Development Bank, [supra]; Alcantara, Jr. v. CA, [G. R. No. 143397, August 6, 2002]; See Leyte IV Electric
Cooperative, Inc. v. LEYECO IV Employees Union-ALU, G. R. No. 157775, October 19, 2007; Centro Escolar University
Faculty and Allied Workers-Independent Union v. Court of Appeals, [G. R. No. 165486, May 31, 2006, 490 SCRA 61,
69-70].
[23] Sime Darby Pilipinas, Inc. v. Magsalin, G. R. No. 90426, Dec. 15, 1989; No. 107, NCMB Primer on Grievance
Settlement and Voluntary Arbitration.
[24] Manila Midtown Hotel v. VA Borromeo, [G. R. No. 138305, September 22, 2004],
[25] Article 291, Labor Code.
[26] Degamo v. Avantgarde Shipping Corp. , [G. R.
Navarra, Jr. , [G. R.

No.

No.

154460, November 22, 2005]; Southeastern Shipping v.

167678, June 22, 2010]; Medline Management, Inc.

v. Roslinda, [G. R.

No.

168715,

September 15, 2010].


[27] Section 1, Rule II, Book VII, Rules to Implement the Labor Code; E. Ganzon, Inc. v. NLRC, G. R. No. 123769, Dec.

22, 1999; Surima v. NLRC, G. R. No. 121147, June 26, 1998.


[28] Callanta v. Carnation Philippines, [G. R. No. 70615, February 29, 1986]; See also PLDT v. Pingol, [G. R. No.
182622, September 8, 2010]; AzcorManufacturing, Inc.

v.

NLRC, G. R.

No.

117963, Feb.

11, 1999; Premiere

Development Bank v. NLRC, G. R. No. 114695, July 23, 1998; Hagonoy Rural Bank, Inc. v. NLRC, G. R. No. 122075,
Jan. 28, 1998, 285 SCRA 297.
[29] Paragraph 2, Article 290, Labor Code; Section 2, Rule II, Book VII, Rules to Implement the Labor Code.
[30] As provided under Article 247 of the Labor Code.
[31] Id.
[32] Id.
[33] Article 290, Labor Code.
[34] Callanta v. Carnation Philippines, Inc. , G. R. No. 70615, Feb. 29, 1986.