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UP

L
AW
BAR REVIEWER

2012

LABOR

LAW
Dean Danilo L. Concepcion
Dean, UP College of Law

Prof. Concepcion L. Jardeleza


Associate Dean, UP College of Law
Prof. Ma. Gisella D. Reyes
Secretary, UP College of Law
Prof. Florin T. Hilbay
Faculty Adviser, UP Law Bar Operations
Commission 2012
Ramon Carlo F. Marcaida
Commissioner
Eleanor Balaquiao
Mark Xavier Oyales
Academics Committee Heads
Remy Rose Alegre
Sandra M.T. Magalang
Labor Law Subject Heads
Graciello Timothy Reyes
Layout

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UP
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2012

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BAR OPERATIONS COMMISSION 2012

EXECUTIVE COMMITTEE
Ramon Carlo Marcaida |Commissioner
Raymond Velasco Maria Kriska Chen |Deputy Commissioners
Barbie Kaye Perez |Secretary
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COMMITTEE HEADS
Eleanor Balaquiao Mark Xavier Oyales | Acads
Monique Morales Katleya Kate Belderol Kathleen Mae
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LABOR LAW TEAM 2012


Faculty Editor | Prof. Evelyn (Leo) Battad)
Subject Heads| Remy Rose Alegre
Sandra M.T. Magalang
Contributors| Dana Genevieve Dela Cruz
Henry Flordeliza Ricardo Jesus
Gutierrez Ann Margaret Lorenzo Ellery
Magbato Hannah Camille Marquez PJ
Navarro Jill Te Andrew Velasco
LAYOUT TEAM 2012
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2012 UP Law Bar Reviewer

Copyright and all other relevant rights over this


material are owned jointly by the University of the
Philippines College of Law and the Student Editorial
Team.
The ownership of the work belongs to the University of
the Philippines College of Law. No part of this book
shall be reproduced or distributed without the consent
of the University of the Philippines College of Law.
All Rights reserved.

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LABOR
Labor Law
I. Fundamental Principles and Policies ........ 6
A. Constitutional provisions ................. 6
B. Civil Code ................................... 7
C. Labor Code.................................. 8
II.

Recruitment and Placement............... 9


A. Recruitment of Local and Migrant
Workers ............................................ 9
TOPIC A-I. DEFINITION OF TERMS .......... 9
TOPIC A-II: ILLEGAL RECRUITMENT ...... 10
TOPIC A-III: PRE-TERMINATION OF ....... 15
CONTRACT OF MIGRANT WORKER ........ 15
TOPIC A-IV: DIRECT HIRING ............... 16
B. Regulation and Enforcement .......... 16
TOPIC B-I. DISQUALIFIED ENTITIES ....... 16
TOPIC B-II. CITIZENSHIP REQUIREMENT . 16
TOPIC
B-III.
CAPITALIZATION
REQUIREMENT ............................... 16
TOPIC B-IV. NON-TRANSFERABILITY OF
LICENSE OR AUTHORITY ................... 16
TOPIC B-V. REGISTRATION FEES AND
BONDS......................................... 17
TOPIC VI. WORKERS FEES ................. 17
TOPIC B-VII. REPORTS/SUBMISSION ...... 17
TOPIC B-VIII. SUSPENSION ................. 17
TOPIC B-IX. PROHIBITED ACTIVITIES ..... 18
TOPIC X. REMITTANCE OF FOREIGN
EXCHANGE EARNING ........................ 18
TOPIC B-XI. REGULATORY AND VISITORIAL
POWERS OF THE LABOR SECRETARY ..... 18

III. Labor Standards .............................. 19


TOPIC I. COVERAGE ......................... 19
A. Hours of Work ............................ 20
TOPIC A-I COVERAGE/EXCLUSIONS....... 20
TOPIC A-II NORMAL HOURS OF WORK.... 21
TOPIC A-III. COMPENSABLE HOURS OF
WORK ......................................... 21
TOPIC A-IV. MEAL BREAK .................. 24
TOPIC A-V. OVERTIME PAY ................ 24
TOPIC A-VI. NIGHT WORK.................. 26
B. Wages...................................... 26
TOPIC B-I. GENERAL CONCEPT............ 26
TOPIC B-II. WAGE DISTORTION ........... 27
TOPIC B-III. NON-DIMINUTION OF BENEFITS
................................................. 27
TOPIC B-IV. WORKERS PREFERENCE IN
CASE OF BANKRUPTCY ..................... 28
TOPIC B-V. LABOR CODE PROVISIONS FOR
WAGE PROTECTION ......................... 28
TOPIC B-VI. CRITERIA/FACTORS FOR WAGE
SETTING ...................................... 30
C. Rest Day ................................... 31
D. Holidays ................................... 32

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TOPIC D-I. EXCLUSIONS FROM COVERAGE


................................................. 32
TOPIC D-II REGULAR HOLIDAYS ........... 33
TOPIC D-III HOLIDAY PAY COMPUTATION 33
TOPIC D-IV. RIGHT TO HOLIDAY PAY .... 34
E. Leaves ..................................... 35
TOPIC E-1. Service Incentive Leave Pay 35
TOPIC E-II. MATERNITY LEAVE ............ 36
TOPIC E-III. PATERNITY LEAVE ............ 37
TOPIC E-IV. PARENTAL LEAVE............. 37
TOPIC E-V. LEAVES FOR VICTIMS OF
VIOLENCE AGAINST WOMEN ............... 37
F. Service Charges .......................... 39
TOPIC F-I. COVERAGE ...................... 39
TOPIC F-II. EXCLUSION ..................... 39
TOPIC F-III. DISTRIBUTION ................. 39
TOPIC F-IV. INTEGRATION ................. 39
G. Thirteenth (13th) Month Pay and other
bonuses .......................................... 39
TOPIC G-I. COVERAGE ...................... 40
TOPIC G-II. EXCLUSION/EXEMPTIONS FROM
COVERAGE.................................... 40
TOPIC G-III. NATURE OF 13TH MONTH PAY
................................................. 40
TOPIC G-IV. 13TH MONTH PAY IN SPECIAL
CASES ......................................... 40
TOPIC G-V. COMMISSIONS VIS--VIS 13TH
MONTH PAY .................................. 41
TOPIC G-VI. CBA VIS--VIS 13TH MONTH
PAY ............................................ 41
H. Women Workers ......................... 41
TOPIC H-I. DISCRIMINATION (ART. 135, LC)
................................................. 41
TOPIC
H-II.
STIPULATION
AGAINSTMARRIAGE (ART. 136, LC) ....... 41
TOPIC H-III. PROHIBITED ACTS (Art. 137,
LC) ............................................. 42
TOPIC H-IV. Classification of certain
women workers (Art. 138, LC) ........... 43
TOPIC H-V. Anti-Sexual Harassment Act
(RA 7877) ..................................... 43
I.
Minor Workers (RA 7610, RA 9231) ... 44
J.
Employment of Househelpers ......... 45
TOPIC J-I. Definition ....................... 45
TOPIC
J-II.
BENEFITS
ACCORDED
HOUSEHELPERS .............................. 45
TOPIC J-III. TERMINATION ................. 45
TOPIC J-IV. RELIEFS FOR UNJUST
TERMINATION ................................ 46
K. Employment of Homeworkers ......... 46
TOPIC K-I. Definition ....................... 46
TOPIC K-II. RIGHTS AND BENEFITS
ACCORDED HOMEWORKERS ................ 46
TOPIC K-III. CONDITIONS FOR DEDUCTION
FROM HOMEWORKERS EARNINGS ........ 46
L.
Apprentices and Learners .............. 47

LABOR
M. Handicapped Workers (RA 7277)
Differently-abled Workers .................... 50
TOPIC M-I. DEFINITION OF HANDICAPPED
WORKERS.................................... 50
TOPIC M-II. RIGHTS OF DISABLED WORKERS
................................................. 50
TOPIC
M-III.
PROHIBITIONS
ON
Discrimination Against Disabled Persons 50
TOPIC M-IV. INCENTIVES FOR EMPLOYERS
................................................. 51
IV. Termination of Employment ............... 51
A. Employer-employee relationship ..... 51
TOPIC A-I. TESTS FOR DETERMINING ER EE
RELATIONSHIP ............................... 51
TOPIC A-II. PROBATIONARY EMPLOYMENT
................................................. 52
TOPIC A-III. KINDS OF EMPLOYMENT ..... 54
TOPIC A-IV. JOB CONTRACTING AND
LABOR-ONLY CONTRACTING .............. 57
B. Termination of employment ........... 60
TOPIC B-I. SUBSTANTIVE DUE PROCESS . 61
TOPIC B-II. Procedural Due Process ..... 65
TOPIC B-III. RELIEFS FOR ILLEGAL
DISMISSAL..................................... 67
C. Retirement Pay Law .................... 69
TOPIC C-I. Coverage ........................ 70
TOPIC C-II. Exclusions from coverage ... 70
TOPIC C-III. Components of retirement
pay ............................................ 70
TOPIC C-IV. Retirement pay under RA 7641
vis--vis retirement benefits under SSS
and GSIS laws ................................ 70
V. Management Prerogative .................... 70
VI. Social Legislation ............................. 72
A. SSS Law (RA 8282) ....................... 72
1. Coverage ............................... 72
B. GSIS (RA 8291) ........................... 73
1. Coverage ............................... 73
2. Exclusions from coverage ........... 73
3. Benefits ................................ 74
4. Beneficiaries .......................... 75
C. Limited Portability Law (RA 7699).... 75
D. Employees Compensation Coverage
and when compensable ....................... 75
VII. Labor Relations Law ........................ 76
A. RIGHT TO SELF-ORGANIZATION ....... 76
a. Who may unionize for purposes of
collective
bargaining
(covered
employees/workers) ....................... 76
b. Right To Self-Organization: Basis ..... 78
c. Right to Self-Organization: Extent and
Scope.......................................... 79

LAW

d. Worker Qualification .................... 79


d. Bargaining Unit .......................... 79
B. Right to Collective Bargaining......... 91
1. Duty to Bargain Collectively ....... 91
2. Mandatory provisions of CBA ....... 97
3.
Unfair Labor Practice in Collective
Bargaining ................................... 101
4. Unfair Labor Practice (ULP) ....... 102
C. Right to Peaceful Concerted Activities
105
1. Forms of Concerted Activities .... 106
2. Who may declare a strike or lockout
109
3. Requisites of a valid strike ........ 109
4. Requisites of a valid lockout ...... 111
5. Requisites for lawful picketing ... 112
6. Role of Peace Officers during Strike and
Picket ........................................ 113

VIII. Procedure and Jurisdction ..............113


A. Labor Arbiter ............................ 113
B. National Labor Relations Commission
(NLRC) ........................................... 114
C. Bureau of Labor Relations (BLR) Med
Arbiters ......................................... 115
D. National Conciliation and Mediation
Board (NCMB) .................................. 115
E. DOLE regional directors ............... 115
F. DOLE secretary.......................... 116
G. Voluntary Arbitrators .................. 116
H. Court of Appeals ........................ 117
I.
Supreme Court .......................... 117
J.
Prescription of Actions ................ 117

LABOR LAW REVIEWER

Labor Law

LABOR LAW
I. Fundamental Principles and Policies
II. Recruitment and Placement
III. Labor Standards
IV. Termination of Employment
V. Management Prerogative
VI. Social Legislation
VII. Labor Relations Law
VIII. Procedure and Jurisdiction

I. Fundamental Principles and


Policies
A. Constitutional provisions
1. Article II, Secs. 9, 10, 11, 13, 14, 18, 20.
Article II, 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.
Article II, Section 10. The State shall promote social
justice in all phases of national development.
General definition
Social Justice is neither communism, nor despotism,
nor atomism, nor anarchy, but the humanization of
laws and the equalization of social and economic
forces by the State so that justice in its rational and
objectively secular conception may at least be
approximated. (Calalang vs. Williams, 1940)
Welfare State
The welfare state concept is found in the
constitutional clause on the promotion of social
justice to ensure the well-being and economic
security of all the people, and in the pledge of
protection to labor with specific authority to
regulate the relations between landowners and
tenants and between labor and capital. (Alalayan vs.
National Power Corporation, 1968)
Article II, Section 11. The State values the dignity
of every human person and guarantees full respect
for human rights.
Article II, Section 13. The State recognizes the vital
role of the youth in nation-building and shall
promote and protect their physical, moral, spiritual,
intellectual, and social well-being. It shall inculcate
in the youth patriotism and nationalism, and
encourage their involvement in public and civic
affairs.
Article II, Section 14. The State recognizes the role
of women in nation-building, and shall ensure the
fundamental equality before the law of women and
men.

Article II, Section 18. The State affirms labor as a


primary social economic force. It shall protect the
rights of workers and promote their welfare.

Article II, Section 20. The State recognizes the


indispensable role of the private sector, encourages
private enterprise, and provides incentives to
needed investments.
Limits of Social Justice
Social justice should be used only to correct an
injustice. It must be founded on the recognition of
the necessity of interdependence among diverse
units of a society, and of the protection that should
be equally and evenly extended to all groups as a
combined force in our social and economic life. As
partners in nation-building, labor and management
need each other to foster productivity and economic
growth; hence, the need to weigh and balance the
rights and welfare of both the employee and
employer. (Agabon vs. NLRC, 2004)
Liberty of Contract/Laissez Faire
The prohibition to impair the obligation of contracts
is not absolute and unqualified. In spite of the
constitutional prohibition and the fact that both
parties are of full age and competent to contract, it
does not necessarily deprive the State of the power
to interfere where the parties do not stand upon an
equality, or where the public health demands that
one party to the contract shall be protected against
himself. (Leyte Land Transportation Co. vs. Leyte
Farmers & Workers Union, 1948)
The Constitution is primarily a document of social
justice, and although it has recognized the
importance of the private sector, it has not
embraced fully the concept of laissez-faire or relied
on pure market forces to govern the economy.
(Employees Confederation of the Philippines vs.
NWPC, 1991)
2.

Article III, Secs. 1, 4, 8.

Article III, 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.
Due Process
Due process requirements are two-fold substantive
(dismissal should be for a valid and authorized cause
as provided by law) and procedural (due notice and
hearing). (Salaw vs. NLRC, 1991)
Labor as Property Right
Ones employment is a property right, and the
wrongful interference therewith is an actionable
wrong. (Sibal vs. Notre Dame of Greater Manila,
1990)
Article III, 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

LABOR LAW REVIEWER


assemble and petition the government for redress of
grievances.
Article III, 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.
3.

Art. XIII, Secs. 1, 2, 3, 14.

Article XIII, Section 1. The Congress shall give


highest priority to the enactment of measures that
protect and enhance the right of all the people to
human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities
by equitably diffusing wealth and political power for
the common good.
To this end, the State shall regulate the acquisition,
ownership, use, and disposition of property and its
increments.
Article XIII, Section 2. The promotion of social
justice shall include the commitment to create
economic opportunities based on freedom of
initiative and self-reliance.
Article XIII, 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 selforganization, 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.
Participation In Decision-Making Process
Verily, a line must be drawn between management
prerogatives regarding business operations per se
and those which affect the rights of the employees.
In treating the latter, management should see to it
that its employees are at least properly informed of
its decisions or modes action. Indeed, industrial
peace cannot be achieved if the employees are
denied their just participation in the discussion of
matters affecting their rights. (Phil. Airlines Inc. vs.
NLRC, 1993)

Management and the Constitution: Management


Function/Prerogative
The law in protecting the rights of the employees
authorizes neither oppression nor self-destruction of
the employer. It should be made clear that when the
law tilts the scale of justice in favor of labor, it is
but a recognition of the inherent economic
inequality between labor and management. Never
should the scale be so tilted if the result is an
injustice to the employer. (Phil. Geothermal Inc. vs.
NLRC, 1994)
This Court held that the employers right
to
conduct the affairs of his business, According to its
own discretion and judgment, is well-recognized. An
employer has a free reign and enjoys wide latitude
of discretion to regulate all aspects of employment.
This is a management prerogative, where the free
will of management to conduct its own affairs to
achieve its purpose takes form. (Torreda vs.
Toshiba, 2007)
But, like other rights, there are limits thereto. The
managerial prerogative to transfer personnel must
be exercised without grave abuse of discretion,
bearing in mind the basic elements of justice and
fair play. Having the right should not be confused
with the manner in which the right is exercised.
(Tinio vs. CA, 2007)
This Court declared that it recognizes the exercise of
management prerogatives and it often declines to
interfere with the legitimate business decisions of
the employer. Xxx However, as expressed in PAL v
NLRC, the privilege is not absolute, but subject to
exceptions. One of these exceptions is when the
Secretary of Labor assumes jurisdiction over labor
disputes involving industries indispensable ti the
national interest under Article 263(g) of the Labor
Code. (University of Immaculate Concepcion Inc v
Sec of Labor, 2005)
Article XIII, 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.

B. Civil Code
1.Article 1700, New Civil Code
Art. 1700. The relations between capital and labor
are not merely contractual. They are so impressed
with public interest that labor contracts must yield
to the common good. Therefore, such contracts are
subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor and
similar subjects.
Contracts
Under the Civil Code, contracts of labor are
explicitly subject to the police power of the state

LABOR LAW REVIEWER


because they are not ordinary contracts but are
impressed with public interest. Inasmuch as in this
particular instance the contract in question would
have been deemed in violation of pertinent labor
laws, the provisions of said laws would prevail over
the terms of the contract, and private respondent
would still be entitled to overtime pay. (PAL
Employees Savings And Loan Assn., Inc. vs. NLRC,
1996)
Liberal Construction
While the terms and conditions of a CBA constitute
the law between the parties, it is not however, an
ordinary contract to which is applied the principles
of law governing ordinary contracts. A CBA, as a
labor contract within the contemplation of Article
1700 of the Civil Code of the Philippines which
governs the relations between labor and capital, is
not merely contractual in nature but impressed with
public interest, thus, it must yield to the common
good. As such, it must be construed liberally rather
than narrowly and technically, and the courts must
place a practical and realistic construction upon it,
giving due consideration to the context in which it is
negotiated and purpose which it is intended to
serve. (Cirtek Employees Labor Union-FFW v Cirtek
Electronics, 2010)
Fair treatment
The right of an employer to dismiss an employee
differs from and should not be confused with the
manner in which such right is exercised. It must not
be oppressive and abusive since it affects one's
person and property. (General Bank and Trust Co.
vs. CA, 1985)
Mutual obligation
The employer's obligation to give his workers just
compensation and treatment carries with it the
corollary right to expect from the workers adequate
work, diligence and good conduct. (Firestone Tire
And Rubber Co. vs. Lariosa, 1987)
Compliance with law
It is also important to emphasize that the return-towork order not so much confers a right as it imposes
a duty; and while as a right it may be waived, it
must be discharged as a duty even against the
worker's will. (Sarmiento vs. Tuico, 1988)
Employee's compliance and obedience to
employer's orders
The lack of a written or formal designation should
not be an excuse to disclaim any responsibility for
any damage suffered by the employer due to his
negligence. The measure of the responsibility of an
employee is that if he performed his assigned task
efficiently and according to the usual standards,
then he may not be held personally liable for any
damage arising there from. Failing in this, the
employee must suffer the consequences of his
negligence if not lack of due care in the
performance of his duties. (PCIB vs. Jacinto, 1991)

C. Labor Code
1. Article 3
Art. 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 selforganization, collective bargaining, security of
tenure, and just and humane conditions of work.
2. Article 211
Art. 211. Declaration of Policy.
A. It is the policy of the State:
(a) To promote and emphasize the primacy of free
collective bargaining and negotiations, including
voluntary
arbitration,
mediation
and
conciliation, as modes of settling labor or
industrial disputes;
(b) To promote free trade unionism as an
instrument for the enhancement of democracy
and the promotion of social justice and
development;
(c) To foster the free and voluntary organization of
a strong and united labor movement;
(d) To promote the enlightenment of workers
concerning their rights and obligations as union
7 members and as employees;
(e) To provide an adequate administrative
machinery for the expeditious settlement of
labor or industrial disputes;
(f) To ensure a stable but dynamic and just
industrial peace; and
(g) To ensure the participation of workers in
decision and policy-making processes affecting
their rights, duties and welfare.
To encourage a truly democratic method of
regulating the relations between the employers and
employees by means of agreements freely entered
into through collective bargaining, no court or
administrative agency or official shall have the
power to set or fix wages, rates of pay, hours of
work or other terms and conditions of employment,
except as otherwise provided under this Code. (As
amended by Section 3, Republic Act No. 6715, March
21, 1989)
3. Article 212
Art. 212. Definitions.
(a) "Commission" means the National Labor
Relations Commission or any of its divisions, as
the case may be, as provided under this Code.
(b) "Bureau" means the Bureau of Labor Relations
and/or the Labor Relations Divisions in the
regional offices established under Presidential
Decree No. 1, in the Department of Labor.
(c) "Board" means the National Conciliation and
Mediation Board established under Executive
Order No. 126.
(d) "Council" means the Tripartite Voluntary
Arbitration Advisory Council established under
Executive Order No. 126, as amended.

LABOR LAW REVIEWER


(e) "Employer" includes any person acting in the
interest of an employer, directly or indirectly.
The term shall not include any labor
organization or any of its officers or agents
except when acting as employer.
(f) "Employee" includes any person in the employ of
an employer. The term shall not be limited to
the employees of a particular employer, unless
the Code so explicitly states. It shall include any
individual whose work has ceased as a result of
or in connection with any current labor dispute
or because of any unfair labor practice if he has
not obtained any other substantially equivalent
and regular employment.
(g) "Labor organization" means any union or
association of employees which exists in whole
or in part for the purpose of collective
bargaining or of dealing with employers
concerning
terms
and
conditions
of
employment.
(h) "Legitimate labor organization" means any labor
organization
duly
registered
with
the
Department of Labor and Employment, and
includes any branch or local thereof.
(i) "Company union" means any labor organization
whose formation, function or administration has
been assisted by any act defined as unfair labor
practice by this Code.
(j) "Bargaining representative" means a legitimate
labor organization whether or not employed by
the employer.
(k) "Unfair labor practice" means any unfair labor
practice as expressly defined by the Code.
(l) "Labor dispute" includes any controversy or
matter concerning terms and conditions of
employment or the association or representation
of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions
of employment, regardless of whether the
disputants stand in the proximate relation of
employer and employee.
(m) "Managerial employee" is one who is vested with
the powers or prerogatives to lay down and
execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory
employees are those who, in the interest of the
employer,
effectively
recommend
such
managerial actions if the exercise of such
authority is not merely routinary or clerical in
nature but requires the use of independent
judgment. All employees not falling within any
of the above definitions are considered rankand-file employees for purposes of this Book.
(n) "Voluntary Arbitrator" means any person
accredited by the Board as such or any person
named or designated in the Collective
Bargaining Agreement by the parties to act as
their Voluntary Arbitrator, or one chosen with or
without the assistance of the National
Conciliation and Mediation Board, pursuant to a
selection procedure agreed upon in the
Collective Bargaining Agreement, or any official
that may be authorized by the Secretary of
Labor and Employment to act as Voluntary

(o)
(p)
(q)

(r)

(s)

Arbitrator upon the written request and


agreement of the parties to a labor dispute.
"Strike" means any temporary stoppage of work
by the concerted action of employees as a result
of an industrial or labor dispute.
"Lockout" means any temporary refusal of an
employer to furnish work as a result of an
industrial or labor dispute.
"Internal union dispute" includes all disputes or
grievances arising from any violation of or
disagreement over any provision of the
constitution and by laws of a union, including
any violation of the rights and conditions of
union membership provided for in this Code.
"Strike-breaker" means any person who
obstructs, impedes, or interferes with by force,
violence, coercion, threats, or intimidation any
peaceful picketing affecting wages, hours or
conditions of work or in the exercise of the right
of self-organization or collective bargaining.
"Strike area" means the establishment,
warehouses, depots, plants or offices, including
the sites or premises used as runaway shops, of
the employer struck against, as well as the
immediate vicinity actually used by picketing
strikers in moving to and fro before all points of
entrance to and exit from said establishment.

4. Article 255
Art. 255. Exclusive bargaining representation and
workers participation in policy and decisionmaking. 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 decisionmaking 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 labormanagement
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. (As
amended by Section 22, Republic Act No. 6715,
March 21, 1989)

II. Recruitment and Placement


A. Recruitment of Local and
Migrant Workers
TOPIC A-I. DEFINITION OF TERMS
License vs. Authority

LABOR LAW REVIEWER


A license is a document issued by the Department of
Labor and Employment (DOLE) authorizing a person
or entity to operate a private employment agency,
while an authority is a document issued by the DOLE
authorizing a person or association to engage in
recruitment and placement activities as a private
recruitment agency. [Art. 13(d) and (f), Labor
Code]
Private
employment
agency
v.
Private
recruitment agency
Type
Definition
Requires
Private
Any person or entity
License
employment engaged in
agency
recruitment and
placement of workers
for a fee
Private
Any person or
Authority
recruitment association engaged in
agency
the recruitment and
placement of workers,
locally or overseas,
without charging,
directly or indirectly,
any fee
Recruitment and placement; defined
Labor Code, Art. 13 (b): Recruitment and
placement" refers to any act of (C-E-C-T-U-H)
(a) canvassing,
(b) enlisting,
(c) contracting,
(d) transporting,
(e) utilizing, or
(f) hiring procuring workers,
And also includes
(a) referrals,
(b) contract services,
(c) promising, or
(d) 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.
(a) Any of the acts mentioned above
constitutes recruitment and placement.
(b) The proviso provides for a presumption that
a person or entity so described engages in
recruitment and placement (See People v.
Panis).
What constitutes recruitment:
The number of persons dealt with is not an essential
ingredient of the act of recruitment and placement
of workers. Any of the acts mentioned in Article
13(b) will constitute recruitment and placement
even if only one prospective worker is involved. The
proviso merely lays down a rule of evidence that
where a fee is collected in consideration of a
promise or offer of employment to two or more
prospective workers, the individual or entity dealing
with them shall be presumed to be engaged in the

act of recruitment and placement. (People v. Panis,


1988)
Acts of referral
The act of referral, which is included in recruitment,
is "the act of passing along or forwarding of an
applicant for employment after an initial interview
of a selected applicant for employment to a selected
employer, placement officer or bureau." Petitioners
admission that she brought private complainants to
the agency whose owner she knows and her
acceptance of fees including those for processing
betrays her guilt. (Rodolfo vs. People, 2006)
Promising employment:
The Court finds that accused-appellant was engaged
in unlawful recruitment and placement activities.
The prosecution established that accused-appellant
promised three complainants employment as factory
workers and he asked them for money in order to
process their papers and procure their passports.
Relying completely upon such representations,
complainants entrusted hard-earned money to
accused-appellant in exchange for what they would
later discover to be a vain hope of obtaining
employment abroad. It is not disputed that accusedappellant is not authorized nor licensed by the DOLE
to engage in recruitment and placement
activities. The absence of the necessary license or
authority renders all of accused-appellants
recruitment activities criminal. (People vs. Saulo,
2000)

TOPIC A-II: ILLEGAL RECRUITMENT


To determine which law applies, the place of work is
the determining factor:
(1) If in the Philippines: Labor Code (LC) applies
(2) If abroad: Migrant Workers Act (R.A. 8042, as
amended by R.A. 10022).
Illegal recruitment for Local Workers (Governed by
the Labor Code)
A. Simple Illegal Recruitment
Elements:
(1) The person charged with the crime must have
undertaken recruitment activities defined
under Art. 13(b) or prohibited activities
defined under Art. 34; and
(2) The said person does not have a license or
authority to do so.
Profit or lack thereof is immaterial
In 1996, LCL had no approved POEA license to
recruit. C.F. Sharps accreditation as LCLs new
manning agency was still pending approval at that
time. Yet it entertained applicants for LCLs vessels,
and conducted preparatory interviews. Based on Art.
13 (b), this is a recruitment activity. The fact that
C.F. Sharp did not receive any payment during the
interviews is of no moment. The act of recruitment
may be "for profit or not." Notably, it is the lack of
the necessary license or authority, not the fact of
payment that renders the recruitment activity of LCL
unlawful. (C.F. Sharp vs. Espanol, 2007)

10

LABOR LAW REVIEWER


Accused must give the impression of ability to
send complainant abroad
It is well-settled that to prove illegal recruitment, it
must be shown that appellant gave complainants the
distinct impression that she had the power or ability
to send complainants abroad for work such that the
latter were convinced to part with their money in
order to be employed. (People v. Ochoa, 2011)
Labor Code, Art. 38. Illegal Recruitment (a) Any recruitment activities, including the
prohibited practices enumerated under Article
34 of this Code, to be undertaken by nonlicensees or non-holders of authority, shall be
deemed illegal and punishable under Article 39
of this Code. The Department of Labor and
Employment or any law enforcement officer
may initiate complaints under this Article.
Art. 34. Prohibited practices. It shall be unlawful
for any individual, entity, 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, or to make a worker pay
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 this Code.
(d) To induce or attempt to induce a worker
already employed to quit his employment in
order to offer him to another unless the
transfer is designed to liberate the worker
from oppressive terms and conditions of
employment;
(e) To influence or to attempt to influence any
person or entity not to employ any worker who
has not applied for employment through his
agency;
(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 or by his duly
authorized representatives;
(h) To fail to file 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.
(i) To substitute or alter employment contracts
approved and verified by the Department of
Labor from the time of actual signing thereof
by the parties up to and including the periods

of expiration of the same without the approval


of the Secretary of Labor;
(j) 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 a travel agency; and
(k) To withhold or deny travel documents from
applicant workers before departure for
monetary or financial considerations other
than those authorized under this Code and its
implementing rules and regulations.

B.

Offense involving Economic Sabotage


(Large-Scale or by a Syndicate)

Illegal recruitment is considered economic sabotage


when the commission thereof is attended by the ff.
qualifying circumstances:
(1) By a syndicate - if carried out by a group of 3 or
more persons conspiring and confederating with
one another;
(2) In large scale - if committed against 3 or more
persons individually or as a group. [Art. 38(b),
LC]
Illegal recruitment by a syndicate
(1) The offender undertakes either any activity
within the meaning of "recruitment and
placement" defined under Article 13(b), or any
of the prohibited practices enumerated under
Art. 34 of the Labor Code;
(2) He has no valid license or authority required by
law to enable one to lawfully engage in
recruitment and placement of workers; and
(3) The illegal recruitment is committed by a group
of three (3) or more persons conspiring or
confederating with one another. (People v.
Gallo, 2010)
Illegal recruitment in large scale
The acts committed by the accused constituted
illegal recruitment in large scale, whose essential
elements are the following:
(1) The accused engages in acts of recruitment and
placement of workers defined under Article
13(b) of the Labor Code or in any prohibited
activities under Article 43 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 unlawful acts against
three or more persons individually or as a
group.
Labor Code, Art. 39 (b): Illegal recruitment when
committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage
and shall be penalized in accordance with Article 39
hereof.

11

LABOR LAW REVIEWER


Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or
more persons conspiring and/or confederating with
one another in carrying out any unlawful or illegal
transaction, enterprise or scheme defined under the
first paragraph hereof.
Illegal recruitment is deemed committed in large
scale if committed against three (3) or more persons
individually or as a group.
Three or more complainants must be in a single
case
When the Labor Code speaks of illegal recruitment
"committed against three (3) or more persons
individually or as a group," it must be understood as
referring to the number of complainants in each case
who
are
complainants
therein,
otherwise,
prosecutions for single crimes of illegal recruitment
can be cumulated to make out a case of large scale
illegal recruitment.
In other words, a conviction for large scale illegal
recruitment must be based on a finding in each case
of illegal recruitment of three or more persons
whether individually or as a group. (People vs.
Reyes, 1995)
Illegal recruitment is different from estafa
Illegal recruitment and estafa are entirely different
offenses and neither one necessarily includes or is
necessarily included in the other. A person who is
convicted of illegal recruitment may, in addition, be
convicted of estafa by false pretenses or fraudulent
acts under Article 315, paragraph 2(a) of the
Revised Penal Code. In the same manner, a person
acquitted of illegal recruitment may be held liable
for estafa. Double jeopardy will not set in because
illegal recruitment is malum prohibitum, in which
there is no necessity to prove criminal intent,
whereas estafa is malum in se, in the prosecution of
which,
proof
of
criminal
intent
is
necessary. (Rosita Sy vs. People of the Philippines,
2010)
One convicted for IR may still be convicted of
estafa
In People v. Cortez the Court explained that: In this
jurisdiction, it is settled that a person who commits
illegal recruitment may be charged and convicted
separately of illegal recruitment under the Labor
Code and estafa under par. 2(a) of Art. 315 of the
Revised Penal Code. The offense of illegal
recruitment is malum prohibitum where the criminal
intent of the accused is not necessary for conviction,
while estafa is malum in se where the criminal
intent of the accused is crucial for conviction.
Conviction for offenses under the Labor Code does
not bar conviction for offenses punishable by other
laws. Conversely, conviction for estafa under par.
2(a) of Art. 315 of the Revised Penal Code does not
bar a conviction for illegal recruitment under the
Labor Code. It follows that one's acquittal of the
crime of estafa will not necessarily result in his
acquittal of the crime of illegal recruitment in large

scale, and vice versa. (People v. Ochoa, 2011;


People v. Ocden, 2011)
Illegal recruitment for Migrant Workers (Governed
by R.A. 8042, as amended by, R.A. 10022)
A. Simple Illegal Recruitment
1st type:
(1) Person charged undertakes any recruitment
activity as defined in Art.13 (b) of the Labor
Code; and
(2) Said person does not have a license or
authority to do so.
2nd type:
(1) Person charged commits any of the
enumerated acts under Sec. 6 of R.A. 8042,
as amended by, R.A. 10022.
(2) It is immaterial whether he is a holder or not
of any license or authority
SEC. 6. Definition. - For purposes of this Act, illegal
recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring,
or procuring workers and includes referring, contract
services, promising or advertising for employment
abroad, whether for profit or not, when undertaken
by non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential
Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines: Provided, That
any such non-licensee or non-holder who, in any
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 nonlicensee, 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 nonexistent 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;

12

LABOR LAW REVIEWER


(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;
(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 Department of Labor and Employment from
the time of actual signing thereof by the parties up
to and including the period of the expiration of the
same without the approval of the Department of
Labor and Employment;
(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
Department of Labor and Employment;
(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.
Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or
more persons conspiring or confederating with one
another. It is deemed committed in large scale if
committed against three (3) or more persons
individually or as a group.
In addition to the acts enumerated above, 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, postdated
checks in relation to the said loan;
(2) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to
avail of a loan only from specifically designated
institutions, entities or persons;
(3) Refuse to condone or renegotiate a loan incurred
by an overseas Filipino worker after the latter's
employment contract has been prematurely
terminated through no fault of his or her own;
(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/shipowner;
(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 fpr
recommendatory
trainings
mandated
by
principals/shipowners where the latter shoulder the
cost of such trainings;
(6) For a suspended recruitment/manning agency to
engage in any kind of recruitment activity including
the processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign
principal/employer to pass on the overseas Filipino
worker or deduct from his or her salary the payment
of the cost of insurance fees, premium or other
insurance related charges, as provided under the
compulsory worker's insurance coverage.
The persons criminally liable for the above offenses
are the principals, accomplices and accessories. In
case of juridical persons, the officers having
ownership, control, management or direction of
their business who are responsible for the
commission of the offense and the responsible
employees/agents thereof shall be liable.
In the filing of cases for illegal recruitment or any of
the prohibited acts under this section, the Secretary
of Labor and Employment, the POEA Administrator or
their duly authorized representatives, or any
aggrieved person may initiate the corresponding
criminal action with the appropriate office. For this
purpose, the affidavits and testimonies of operatives
or personnel from the Department of Labor and
Employment, POEA and other law enforcement
agencies who witnessed the acts constituting the
offense shall be sufficient to prosecute the accused.
In the prosecution of offenses punishable under this
section, the public prosecutors of the Department of
Justice shall collaborate with the anti-illegal
recruitment branch of the POEA and, in certain

13

LABOR LAW REVIEWER


cases, allow the POEA lawyers to take the lead in
the prosecution. The POEA lawyers who act as
prosecutors in such cases shall be entitled to receive
additional allowances as may be determined by the
POEA Administrator.
The filing of an offense punishable under this Act
shall be without prejudice to the filing of cases
punishable under other existing laws, rules or
regulations.
MWA expands the definition of illegal recruitment
The amendments to the Labor Code introduced by
Republic Act No. 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995,
broadened the concept of illegal recruitment and
provided stiffer penalties, especially for those that
constitute economic sabotage. (People v. Ocden,
2011)
Law

Applicability

Acts
Punishable

Who can be
punished

Labor
Code

Local
Workers

Art. 13(b)

Nonlicensee

Art. 34

Nonlicensee

Art. 13(b)
Labor Code

Nonlicensee

Enumerated
prohibited
acts
in
Section 6

Licensee/No
n-licensee

RA
8042 as
amend
ed by
RA
10022

B.

Migrant
Workers

Offense involving Economic Sabotage


(Large-Scale or by a Syndicate)

Liabilities and Penalties for Illegal Recruitment


A. Illegal Recruitment Involving
Workers

Local

Labor Code, Art. 39. Penalties.


The penalty of life imprisonment and a fine of One
Hundred Thousand Pesos (P1000,000.00) shall be
imposed if illegal recruitment constitutes economic
sabotage as defined herein;
(a) Any licensee or holder of authority found
violating or causing another to violate any
provision of this Title or its implementing rules
and regulations shall, upon conviction thereof,
suffer the penalty of imprisonment of not less
than two years nor more than five years or a
fine of not less than P10,000 nor more than
P50,000, or both such imprisonment and fine, at
the discretion of the court;
(b) Any person who is neither a licensee nor a
holder of authority under this Title found
violating any provision thereof or its
implementing rules and regulations shall, upon
conviction thereof, suffer the penalty of
imprisonment of not less than four years nor

more than eight years or a fine of not less than


P20,000 nor more than P100,000 or both such
imprisonment and fine, at the discretion of the
court;
(c) If the offender is a corporation, partnership,
association or entity, the penalty shall be
imposed upon the officer or officers of the
corporation, partnership, association or entity
responsible for violation; and if such officer is
an alien, he shall, in addition to the penalties
herein prescribed, be deported without further
proceedings;
(d) In every case, conviction shall cause and carry
the automatic revocation of the license or
authority and all the permits and privileges
granted to such person or entity under this
Title, and the forfeiture of the cash and surety
bonds in favor of the Overseas Employment
Development Board or the National Seamen
Board, as the case may be, both of which are
authorized to use the same exclusively to
promote their objectives.
B.

Illegal Recruitment Involving Migrant


Workers

RA 8042, Sec. 6 (as amended by RA 10022)


(a) Any person found guilty of illegal recruitment
shall suffer the penalty of imprisonment of not
less than twelve (12) years and one (1) day but
not more than twenty (20) years and a fine of
not less than One million pesos (P1,000,000.00)
nor
more
than
Two
million
pesos
(P2,000,000.00).
(b) The penalty of life imprisonment and a fine of
not less than Two million pesos (P2,000,000.00)
nor
more
than
Five
million
pesos
(P5,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as
defined therein. Provided, however, That the
maximum penalty shall be imposed if the person
illegally recruited is less than eighteen (18)
years of age or committed by a non-licensee or
non-holder of authority.
(c) Any person found guilty of any of the prohibited
acts shall suffer the penalty of imprisonment of
not less than six (6) years and one (1) day but
not more than twelve (12) years and a fine of
not less than Five hundred thousand pesos
(P500,000.00) nor more than One million pesos
(P1,000,000.00).
If the offender is an alien, he or she shall, in
addition to the penalties herein prescribed, be
deported without further proceedings.
In every case, conviction shall cause and carry the
automatic revocation of the license or registration of
the
recruitment/manning
agency,
lending
institutions, training school or medical clinic.

14

LABOR LAW REVIEWER


Common Rules on Liability
(1) Employees of a company corporation engaged in
illegal recruitment may be held liable as
principal, together with his employer, if it is
shown that he actively and consciously
participated in illegal recruitment. E.g. In this
case the appellant was both the APSC VicePresident-Treasurer and the Assistant General
Manager. She was a high corporate officer who
had direct participation in the management,
administration, direction and control of the
business of the corporation, and is thus liable
under Sec. 6 of RA 8042. The terms control,
management or direction broadly cover all
phases of business operation, including the
aspects of administration, marketing and
finances, among others. (People vs. Sagayaga,
2004).
(2) Local Employment Agency is solidarily liable
with foreign principal. Severance of relations
between local agent and foreign principal does
not affect liability of local recruiter. Private
employment agencies are held jointly and
severally liable with the foreign-based employer
for any violation of the recruitment agreement
or contract of employment. This joint and
solidary liability imposed by law against
recruitment agencies and foreign employers is
meant to assure the aggrieved worker of
immediate and sufficient payment of what is
due him. (Becmen Service Exporter and
Promotion, Inc. v. Spouses Cuaresma, G.R.
182978-79, April 7, 2009)
(3) If the recruitment/placement agency is a
juridical being, the corporate officers and
directors and partners as the case may be, shall
themselves be jointly and solidarily liable with
the corporation or partnership for the aforesaid
claims and damages. (Becmen Service Exporter
and Promotion, Inc. v. Spouses Cuaresma, G.R.
182978-79, April 7, 2009)
(4) Foreign employer shall assume joint and solidary
liability with the employer for all claims and
liabilities which may arise in connection with
the implementation of the contract, including
but not limited to payment of wages, death and
disability compensation and repatriation
Joint and Several Liability of Agent and Principal,
POEA Rules, Book II, Rule II, Sec. 1 (f)
Sec. 1. Requirements for Issuance of License.- Every
applicant for license to operate a private
employment agency or manning agency shall submit
a written application together with the following
requirements:
f. A verified undertaking stating that the
applicant:
xxx
(2) Shall assume full and complete responsibility for
all claims and liabilities which may arise in
connection with the use of license;
(3) Shall assume joint and solidary liability with the
employer for all claims and liabilities which may
arise in connection with the implementation of
the contract, including but not limited to

payment of wages, death and disability


compensation and repatriation;
(4) Shall guarantee compliance with the existing
labor and social legislations of the Philippines
and of the country of employment of recruited
workers; and
(5) Shall assume full and complete responsibility for
all acts of its officials, employees and
representatives done in connection with
recruitment and placement;
(5) Theory of imputed knowledge - This is a
doctrine in agency which states that the
principal is chargeable with and bound by the
knowledge of or notice to his agent received
while the agent was acting as such. Simply put,
notice to the agent is notice to the principal.
Since the local employment agency is
considered the agent of the foreign employer,
1 1the principal, knowledge of the former of
existing labor and social legislation in the
Philippines
is binding
on
the
latter.
Consequently, notice to the former of any
violation thereof is notice to the latter.
Common Rules on Illegal Recruitment (Local or
Overseas)
Venue: A criminal action arising from illegal
recruitment shall be filed with the RTC of the
province or city:
(1) where the offense was committed or
(2) where the offended party actually resides at
the time of the commission of the offense. (Sec.
9, R.A. 8042 [this part was not amended by R.A.
10022]).
Prescriptive Periods:
(1) Simple Illegal Recruitment 5 years
(2) Illegal
Recruitment
involving
Economic
Sabotage 20 years. (Sec. 12, R.A. 8042 [this
part was not amended by R.A, 10022]).

TOPIC A-III: PRE-TERMINATION OF


CONTRACT OF MIGRANT WORKER
Sec. 10, R.A. 8042, as amended by R.A. 10022.
Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original
and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employeremployee 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. Consistent
with this mandate, the NLRC shall endeavor to
update and keep abreast with the developments in
the global services industry.
xxx xxx xxx
In case of termination of overseas employment
without just, valid or authorized cause as defined by
law or contract, or any unauthorized deductions
from the migrant worker's salary, the worker shall be

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LABOR LAW REVIEWER


entitled to the full reimbursement if his placement
fee and the deductions made with interest at twelve
percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for
three (3) months for every year of the unexpired
term, whichever is less.
Rule before Serrano: 3-month salary rule applies
The employment contract involved in the instant
case covers a two-year period but the overseas
contract worker actually worked for only 26 days
prior to his illegal dismissal. Thus, the three months
salary rule applies (Flourish Maritime Shipping v.
Almanzor, G.R. No. 177948, March 14, 2008).

(1) Travel agencies and sales agencies of airline


companies. (Art. 26)
(2) Officers or members of the Board of any
corporation or members in partnership
engaged in the business of a travel agency.
(3) Corporations and partnerships, when any of its
officers, members of the board or partners, is
also an officer, member of the board of
partner of a corporation or partnership
engaged in the business of a travel agency.
(4) Persons, partnerships or corporations which
have derogatory records.
(5) Any official or employee of the DOLE, POEA,
OWWA, DFA and other government agencies
directly involved in the implementation of R.A.
8042 as amended and/or any of his/her
relatives within the 4th civil degree of
consanguinity and affinity.
(POEA Rules of
2002).

Serrano ruling: invalidated the 3-month salary cap


The issue in this case is the constitutionality of the
last clause of Sec.10 of RA 8042:
Sec. 10. Money Claims. - x x x In case of
termination of overseas employment without just,
valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of
twelve percent (12%) per annum, plus his salaries for
the unexpired portion of his employment contract or
for three (3) months for every year of the unexpired
term, whichever is less. Court held that said clause
is unconstitutional for being an invalid classification,
in violation of the equal protection clause. (Serrano
v. Gallant Maritime Services, Inc., G.R. No. 167614,
March 24, 2009)

Labor Code, Art. 27.


(1) Only Filipino citizens or
(2) Corporations, partnerships or entities at least
seventy-five percent (75%) of the authorized and
voting capital stock of which is owned and
controlled by Filipino citizens shall be permitted
to participate in the recruitment and placement
of workers, locally or overseas.
SEE: POEA Rules, Part II, Rule I, Sec. 1(a)

TOPIC A-IV: DIRECT HIRING

TOPIC B-III. CAPITALIZATION REQUIREMENT

General Rule: No employer may hire a Filipino


worker for overseas employment except through the
Boards and entities authorized by the Secretary of
Labor. (Article 18 of the Labor Code).

Labor Code, Art. 28. All applicants for authority to


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

Exceptions:
(1) Members of the diplomatic corps;
(2) International organizations;
(3) Such other employees as may be allowed by
the Sec. of Labor;
(4) Name hirees those individuals who are able
to
secure
contracts
for
overseas
employment on their own efforts and
representation without the assistance or
participation of any agency. Their, hiring
nonetheless, has to be processed through
the POEA. (Part III, Rule III of the POEA
Rules Governing Overseas Employment as
amended in 2002)

Based on POEA Rules the following are the


substantial capital requirements:
(1) Single proprietorships or partnerships with
minimum capitalization of P2,000,000.
(2) Corporations with minimum paid-up capital
of P2,000,000.

B. Regulation and Enforcement


NOTE: See also 2002 POEA Rules Governing the
Recruitment and Employment of Land-based
Overseas Workers

TOPIC B-I. DISQUALIFIED ENTITIES


The following are disqualified from being issued a
license:

TOPIC B-II. CITIZENSHIP REQUIREMENT

TOPIC B-IV. NON-TRANSFERABILITY OF


LICENSE OR AUTHORITY
Labor Code, Art. 29.
(1) No license or authority shall be used directly or
indirectly by any person other than the one in
whose favor it was issued or at any place other
than that stated in the license or authority,
(2) Nor may such license or authority be
transferred, conveyed, or assigned to any other
person or entity.
Any transfer of business address, appointment or
designation of any agent or representative including
the establishment of additional offices anywhere
shall be subject to the prior approval of the
Department of Labor.
SEE: POEA Rules Part II, Rule II, Sec. 7, 8, and 9.

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LABOR LAW REVIEWER


License is a document issued by the DOLE
authorizing a person or entity to operate a private
employment agency.
Authority is a document by the DOLE authorizing a
person or association to engage in recruitment and
placement activities as private recruitment entity.
License

Authority

Authorize an entity to
operate as a private
employment agency

Authorize an entity to
operate as a private
recruitment entity

When a license is given,


one is also authorized to
collect fees

Does not entitle a


private
recruitment
entity to collect fees.

Enforceability of the license - Licensed agencies are


prohibited from conducting any recruitment
activities of any form outside of the address stated
in the license, acknowledged branch or extension
office, without securing prior authority from the
POEA. (People vs. Buli-e, 2003)
Duration of Validity 4 years (POEA Rules of 2002)

TOPIC B-V. REGISTRATION FEES AND BONDS


Labor Code, Art. 30: The Secretary of Labor shall
promulgate a schedule of fees for the registration of
all applicants for license or authority.
SEE: POEA Rules, Part II, Rule II, Sec. 4
Labor Code, Art. 31: All applicants for license or
authority shall post such cash and surety bonds as
determined by the Secretary of Labor to guarantee
compliance with prescribed recruitment procedures,
rules and regulations, and terms and conditions of
employment as may be appropriate.
SEE: POEA Rules, Part II, Rule II, Sec. 4
The POEA possesses the power to enforce liability
under the cash or surety bonds. To compel the POEA
to go to the Insurance Commissioner and to the
regular courts of law to enforce the bond would be
to collide with the public policy which requires
prompt resolutions of claims against private
recruitment and placement agencies. (Finaman
General Assurance v. Innocencio, G.R. No. 90273-75,
Nov. 15, 1989).

TOPIC VI. WORKERS FEES


Labor Code, Art. 32: Any person applying with a
private fee-charging employment agency for
employment assistance shall not be charged any fee
until he has obtained employment through its efforts
or has actually commenced employment. Such fee
shall be always covered with the appropriate receipt
clearly showing the amount paid. The Secretary of
Labor shall promulgate a schedule of allowable fees.

SEE: POEA Rules, Part II, Rule V., Sec. 3


Chargeable Fees The POEA Rules provides that:
unless otherwise provided, the principal shall be
responsible for the payment of the following:
(1) visa fee
(2) airfare
(3) POEA processing fee
(4) OWWA membership fee (Sec. 2, POEA Rules
of 2002)
Except where the prevailing system in the country
where the worker is to be deployed, either by law,
policy or practice, does not allow the charging or
collection of placement and recruitment fee, a
landbased agency may charge and collect from its
hired workers a placement fee in the amount
equivalent to one month salary, exclusive of
documentation costs. (Part I, Rule V, Sec. 3 of POEA
Rules of 2002). Note however, that such fees shall
be collected from the hired workers only after he
has obtained employment through the facilities of
the recruitment agency. (Part I, Rule V, Sec. 2 of
POEA Rules of 2002).
Refund of Fees - POEA has the power to order
refund of illegally collected fees. Implicit in its
power to regulate the recruitment and placement
activities of all agencies is the award of appropriate
relief to the victims of the offenses committed by
the respondent agency or contractor. (Eastern
Assurance and Surety Corp. v. Secretary of Labor,
et. al., G.R. No. 79436-50, January 17, 1990).

TOPIC B-VII. REPORTS/SUBMISSION


Labor Code, Art. 33: Whenever the public interest
so requires, the Secretary of Labor and Employment
may direct all persons or entities within the
coverage of this Title to submit a report on the
status of employment, including job vacancies;
details of job requisitions, separation from jobs,
wages, other terms and conditions, and other
employment data.
Labor Code, Art. 14: The Secretary of Labor shall
have the power and authority:
(d) To require any person, establishment,
organization or institution to submit such
employment information as may be prescribed by
the Secretary of Labor.

TOPIC B-VIII. SUSPENSION


Labor Code, Art. 35: The Secretary of Labor shall
have the power to suspend or cancel any license or
authority to recruit employees for overseas
employment for violation of rules and regulations
issued by the Department of Labor, the Overseas
Employment Development Board, and the National
Seamen Board, or for violation of the provisions of
this and other applicable laws, General Orders and
Letters of Instructions.
The acts prohibited under Article 34 are grounds for
suspension or cancellation of license. Note that they

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LABOR LAW REVIEWER


likewise constitute illegal recruitment under R.A.
8042 as amended by R.A. 10022.
Who can suspend or cancel the license?
(1) DOLE Secretary
(2) POEA Administrator
The power to suspend or cancel any license or
authority to recruit employees for overseas
employment is concurrently vested with the POEA
and the Secretary of Labor. (People v. Diaz, 259
SCRA 441 [1996]).

TOPIC B-IX. PROHIBITED ACTIVITIES


Art. 34. Prohibited practices. It shall be unlawful
for any individual, entity, licensee, or holder of
authority:
(1) 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, or to make a worker pay any
amount greater than that actually received by
him as a loan or advance;
(2) To furnish or publish any false notice or
information or document in relation to
recruitment or employment;
(3) 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 this Code.
(4) To induce or attempt to induce a worker already
employed to quit his employment in order to
offer him to another unless the transfer is
designed to liberate the worker from oppressive
terms and conditions of employment;
(5) To influence or to attempt to influence any
person or entity not to employ any worker who
has not applied for employment through his
agency;
(6) 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;
(7) To obstruct or attempt to obstruct inspection by
the Secretary of Labor or by his duly authorized
representatives;
(8) To fail to file 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.
(9) To substitute or alter employment contracts
approved and verified by the Department of
Labor from the time of actual signing thereof by
the parties up to and including the periods of
expiration of the same without the approval of
the Secretary of Labor;
(10) 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 a travel agency; and
(11) To withhold or deny travel documents from
applicant workers before departure for
monetary or financial considerations other than

those authorized under this Code and its


implementing rules and regulations.

TOPIC X. REMITTANCE OF FOREIGN EXCHANGE


EARNING
It shall be mandatory for all Filipino workers abroad
to remit a portion of their foreign earnings to their
families, dependents, and/or beneficiaries in the
country (Art. 22, LC)
Under Executive Order No. 857, the amount of
ones salary required to be remitted depends on the
type or nature of work performed by the employee.
The following are the percentages of foreign
exchange remittance required from various kinds of
migrant workers:
(1) Seaman or mariner 80% of their basic
salary
(2) Workers for Filipino contractors and
construction companies 70%
(3) Doctors, engineers, teachers, nurses and
other professional workers whose contract
provide for free board and lodging 70%
(4) All other professional workers whose
employment contracts do not provide for
free board and lodging facilities 50%
(5) Domestic and other service workers 50%
(6) All other workers not falling under the
aforementioned categories 50%
(7) Performing artists 50%
The following individuals, however, are exempted
from the mandatory remittance requirement:
(1) The immediate family members, dependents
or beneficiaries of migrant workers residing
with the latter abroad;
(2) Filipino servicemen working within US
military installations;
(3) Immigrants and Filipino professionals
working with the United Nations and its
agencies or other specialized bodies.

TOPIC B-XI. REGULATORY AND VISITORIAL


POWERS OF THE LABOR SECRETARY
Regulatory power
SEE: Labor Code, Art. 35
Labor Code, Art. 36: The Secretary of Labor shall
have the power to restrict and regulate the
recruitment and placement activities of all agencies
within the coverage of this Title and is hereby
authorized to issue orders and promulgate rules and
regulations to carry out the objectives and
implement the provisions of this Title.
Visitorial power
SEE: Art. 35
Labor Code, Art. 37: The Secretary of Labor or his
duly authorized representatives may, at any time,
inspect the premises, books of accounts and records
of any person or entity covered by this Title, require
it to submit reports regularly on prescribed forms,
and act on violations of any provisions of this Title.

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LABOR LAW REVIEWER

III. Labor Standards


TOPIC I. COVERAGE
General rule
Labor Code, Art. 82. The provisions of this Title
shall apply to employees in all establishments and
undertakings whether for profit or not. xxx
Exceptions (NOT Covered):
(1) Government employees (Art. 82; Art. 76)
(2) Managerial Employees including members of
the managerial staff (Art. 82)
(3) Field Personnel (Art. 82)
(4) Members of the family of the employer who
are dependent on him on support (Art. 82);
(5) Domestic helpers and persons in personal
service of another (Art. 141)
(6) Workers who paid by result as determined by
DOLE regulation (Art. 82).
Art. 82. xxx but not to government employees,
managerial employees, field personnel, members of
the family of the employer who are dependent on
him for support, domestic helpers, persons in the
personal service of another, and workers who are
paid by results as determined by the Secretary of
Labor in appropriate regulations.
SEE ALSO: IRR of Labor Code, BK. III, Rule I, Sec. 1-2
(a) Government employees
Art. 76:
The terms and conditions of employment of all
government employees, including employees of
government-owned and controlled corporations,
shall be governed by the Civil Service Law, rules and
regulations.
IRR Bk. III Rule I Sec 2a: Exemption. The provisions
of this Rule shall not apply to the following persons
if they qualify for exemption under the conditions
set forth herein:
a. Government employees whether employed by the
National Government or any of its political
subdivisions,
including
those
employed
in
government-owned and/or controlled corporations
xxx
Government employees are governed by the Civil
Service rules and regulations, not by the Labor Code,
particularly on employment conditions. But this
exclusion DOES NOT refer to employees of
government agencies and government corporations
that are incorporated under the Corporation Code.
(b) Managerial employees
Art. 82: "Managerial Employees" Refer to those
whose primary duty consists of the management of
the establishment in which they are employed or of
a department or subdivision thereof, and to other
officers or members of the managerial staff.
IRR, Bk III, Rule 1, Sec. 2 (b) & (c): Exemption.
The provisions of this Rule shall not apply to the
following persons if they qualify for exemption under

the conditions set forth herein:


b. Managerial employees are covered (by the
exemption)
if
they
have
the
following
characteristics:
(1) Their primary duty consists of the management
of the establishment in which they are
employed or of a department or sub-division
thereof.
(2) They customarily and regularly direct the work
of two or more employees therein.
(3) They have the authority to hire or fire
employees of lower rank; or their suggestions
and recommendations as to hiring and firing and
as to the promotion or any other change of
status of other employees, are given particular
weight.
c. Officers or members of a managerial staff if they
perform the following duties and responsibilities:
(1) The primary duty consists of the performance of
work directly related to management policies of
their employer;
(2) Customarily and regularly exercise discretion
and independent judgment; and
(3) (a)Regularly and directly assist a proprietor or a
managerial employee whose primary duty
consists
of
the
management
of
the
establishment in which he is employed or
subdivision thereof; or (b) execute under
general supervision work along specialized or
technical lines requiring special training,
experience, or knowledge; or (c) execute, under
general supervision, special assignments and
tasks; and
(4) Who do not devote more than 20 percent of
their hours worked in a work week to activities
which are not directly and closely related to the
performance of the work described in
paragraphs (1), (2) and (3) above.
The definition of managerial employees in Article
82 covers more people than that in Article 212 (m)
as Article 82 also includes managerial staff. In
effect, managerial employees in Article 82 includes
supervisors, but Article 212(m) does not.
It follows that under Book V, supervisors are allowed
to form, join or assist a labor union. Supervisors are
not, however, entitled to the benefits under Book III
Articles 83 through 96, being part of the exemption
of managerial employees as defined in Article 82.
(Azucena)
(c) Field personnel
Art. 82: xxx "Field personnel" shall refer to nonagricultural employees who regularly perform their
duties away from the principal place of business or
branch office of the employer and whose actual
hours of work in the field cannot be determined with
reasonable certainty.
Field Personnel are those whose performance of
their job/service is not supervised by the employer
or his representative, the workplace being away
from the principal office and whose hours and days

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LABOR LAW REVIEWER


of work cannot be determined with reasonable
certainty.
Legal Test: Field personnel
The clause "whose time and performance is
unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose
actual hours of work in the field cannot be
determined with reasonable certainty." The former
clause is still within the scope and purview of Article
82 which defines field personnel. Hence, in deciding
whether or not an EE's actual working hours in the
field can be determined with reasonable certainty,
query must be made as to whether or not such EE's
time and performance is constantly supervised by
the employer. (Union of Filipro Employees v. Vivar,
1992)
Actual hours work in the field is to be read in
conjunction with Rule IV, Book III of the
Implementing Rules. Therefore field personnel are
EEs whose time and performance is unsupervised by
the employer. (Salazar v. NLRC, 1996)
If required to be at specific places at specific times,
employees including drivers cannot be said to be
field personnel, despite the fact that they are
performing work away from principal office of EE.
(Auto Bus Transport Systems, Inc. v. Bautista, 2005)
The fishermen, although performing non-agricultural
work away from petitioners business offices, the
fact remains that throughout the duration of their
work they are under the effective control and
supervision of petitioner through the vessels patron
or master. Hence, the fishermen are not field
personnel. (Mercidar Fishing Corporation v. NLRC,
1998)

the conditions set forth herein: xxx


Domestic servants and persons in the personal
service of another if they perform such services in
the employers home which are usually necessary or
desirable for the maintenance and enjoyment
thereof, or minister to the personal comfort,
convenience, or safety of the employer as well as
the members of his employers household.
Exclusivity of function required
Note that the definition contemplates a domestic
servant who is employed in the employers home to
minister exclusively to the personal comfort and
enjoyment of the employers family. (Azucena)
Thus, it has been held that the following personnel
are NOT domestic employees:
(1) House personnel hired by a ranking
company official but paid by the company
itself to maintain a staff house provided for
the official. (Cadiz v. Philippine Sinter
Corp, NLRC Case No. 7-1729, cited by
Azucena)
(2) A family cook, who is later assigned to
work as a watcher and cleaner of the
employers
business
establishment,
becomes an industrial worker entitled to
receive the wages and benefits flowing from
such status. (Villa v. Zaragosa and
Associates, OP Decision No. 0183, cited by
Azucena).
(g) Workers Paid by Result
Bk III, Rule 1, Sec. 2(e) of the IRR: Exemption.
The provisions of this Rule shall not apply to the
following persons if they qualify for exemption under
the conditions set forth herein:

(d) Dependent family members


Art. 82: xxx but not to government employees,
managerial employees, field personnel, members of
the family of the employer who are dependent on
him for support, domestic helpers, persons in the
personal service of another, and workers who are
paid by results as determined by the Secretary of
Labor in appropriate regulations.

Workers who are paid by results, including those who


are paid on piece-work, takay, pakiao or task
basis, and other non-time work if their output rates
are in accordance with the standards prescribed
under Section 8, Rule VII, Book Three of these
regulations, or where such rates have been fixed by
the Secretary of Labor and Employment in
accordance with the aforesaid Section.

Workers who are family members of the employer,


and who are dependent on him for their support, are
outside the coverage of this Title on working
conditions and rest periods.

Philosophy underlying the exclusion of piece workers


from the 8-hour law is that said workers are paid
depending upon the work they do irrespective of the
amount of time employed in doing said work. (Red
vs. Coconut Products Ltd., v. CIR, 1966)

(e) Domestic helpers


Art. 141. "Domestic or household service" shall mean
service in the employers home which is usually
necessary or desirable for the maintenance and
enjoyment thereof and includes ministering to the
personal comfort and convenience of the members
of the employers household, including services of
family drivers.
(f) Persons in personal service of another
Bk III, Rule 1, Sec. 2(d) of the IRR: Exemption.
The provisions of this Rule shall not apply to the
following persons if they qualify for exemption under

A. Hours of Work
TOPIC A-I COVERAGE/EXCLUSIONS
NOTE: Please see previous section (Coverage) which
deals with the general rules of coverage and
exclusions for the applicability of the Conditions of
Employment provisions in Book III of the Labor Code.

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LABOR LAW REVIEWER


TOPIC A-II NORMAL HOURS OF WORK
General Rule: 8-Hour Labor Law
Art. 83: The normal hours of work of any employee
shall not exceed eight (8) hours a day.
The law prescribes a maximum and not a minimum.
Thus, part-time work, or a days work less than eight
hours, is not prohibited.
Exception to the 8-Hour Law: Work Hours of Health
Personnel
Art. 38: Health personnel in cities and municipalities
with a population of at least one million (1,000,000)
or in hospitals and clinics with a bed capacity of at
least one hundred (100) shall hold regular office
hours for eight (8) hours a day, for five (5) days a
week, exclusive of time for meals, except where the
exigencies of the service require that such personnel
work for six (6) days or forty-eight (48) hours, in
which case, they shall be entitled to an additional
compensation of at least thirty percent (30%) of
their regular wage for work on the sixth day.
For purposes of this Article, "health personnel" shall
include resident physicians, nurses, nutritionists,
dietitians, pharmacists, social workers, laboratory
technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital or clinic
personnel.
Note: Medical secretaries are also considered clinic
personnel. (Azucena)

TOPIC A-III. COMPENSABLE HOURS OF WORK


Art. 84. Hours worked shall include (a) all time
during which an employee is required to be on duty
or to be at a prescribed workplace; and (b) all time
during which an employee is suffered or permitted
to work.
General principles in determining if time is
considered as hours worked
According to Book III, Rule 1, Sec. 4, the following
principles shall govern in determining whether the
time spent by an employee is considered hours
worked for purposes of this Rule:
(1) All hours are hours worked which the
employee is required to give his employer,
regardless of whether or not such hours are
spent in productive labor or involve physical
or mental exertion.
(2) An employee need not leave the premises of
the work place in order that his rest period
shall not be counted, it being enough that he
stops working, may rest completely and may
leave his work place to go elsewhere,
whether within or outside the premises of his
work place.
(3) If the work performed was necessary, or it
benefited the employer, or the employee
could not abandon his work at the end of his
normal working hours because he had no

replacement, all time spent for such work


shall be considered as hours worked, if the
work was with the knowledge of his employer
or immediate supervisor.
(4) The time during which an employee is
inactive by reason of interruptions in his work
beyond his control shall be considered
working time either:
a. if the imminence of the resumption of
work requires the employees
presence at the place of work, or
b. if the interval is too brief to be
utilized effectively and gainfully in
the employees own interest.
Rest period short duration or coffee break
Art. 84, par. 2: Rest periods of short duration
during working hours shall be counted as hours
worked.
IRR Book III, Rule 1, Sec. 7, par. 2: Rest periods or
coffee breaks running from five (5) to twenty (20)
minutes shall be considered as compensable working
time.
Preliminary and Postliminary Activities
Preliminary (before work) and postliminary (after
work) activities are deemed performed during
working hours if such activities are controlled or
required by the employer and are pursued
necessarily and primarily for the employers benefit.
Rest period
IRR Sec 4 (b):
An employee need not leave the premises of the
work place in order that his rest period shall not be
counted, it being enough that he stops working, may
rest completely and may leave his work place, to go
elsewhere, whether within or outside the premises
of his work place.
Continuous work
The provision of section 1 of Commonwealth Act No.
444, which states that "when the work is not
continuous, the time during which the laborer is not
working and can leave his working place and can rest
completely shall not be counted", finds no
application in the present case, where the laborer's
work is continuous, and during the time that he is
not working he cannot leave and completely rest
owing to the place and nature of his work. (State
Marine Corporation v. Cebu Seamens Association,
1963)
On call
IRR, Book III, Rule 1, Sec. 5(b): An employee who is
required to remain on call in the employers
premises or so close thereto that he cannot use the
time effectively and gainfully for his own purpose
shall be considered as working while on call.
An employee who is not required to leave word at
his home or with company officials where he may be
reached is not working while on call.

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LABOR LAW REVIEWER


Inactive due to work interruptions
IRR, Book III, Rule 1, Sec. 4(d): The time during
which an employee is inactive by reason of
interruptions in his work beyond his control shall be
considered working time either if the imminence of
the resumption of work requires the employee's
presence at the place of work or if the interval is too
brief to be utilized effectively and gainfully in the
employee's own interest.
Work interruption due to brownouts
Brownouts of short duration, but not exceeding 20
minutes, shall be treated as hours worked, whether
used productively by the employees or not. If they
last more than 20 minutes, the time may not be
treated as hours worked if the employees can leave
their workplace or go elsewhere whether within or
without the work premises; or the employees can
use the time effectively for their own interest. In
this case, the employer may extend the working
hours beyond the regular schedule on that day to
compensate for the loss of productive man-hours
without being liable for overtime pay. (Policy
Instruction No. 36, May 22, 1978)
Note: The time during which an employee is inactive
by reason of work interruptions beyond his control is
considered working time, either if the imminence of
the resumption of work requires the employees
presence at the place of work or if the interval is too
brief to be utilized effectively and gainfully in the
employees own interest. (Book III, Rule 1 Sec. 4-c
OR
Work after normal hours
IRR, Book III, Rule 1, Sec. 4(c): If the work
performed was necessary, or it benefited the
employer, or the employee could not abandon his
work at the end of his normal working hours because
he had no replacement, all the time spent for such
work shall be considered as hours worked if the work
was with the knowledge of his employer or
immediate supervisor.
Lectures, meetings, trainings
IRR, Book III, Rule 1, Sec. 6. Attendance at
lectures, meetings, training programs, and other
similar activities shall not be counted as working
time if ALL of the following conditions are met:
(1) Attendance is outside of the employees regular
working hours;
(2) Attendance is in fact voluntary; and
(3) The employee does not perform any productive
work during such attendance.
Note:
(1) Attendance in lectures, meetings, and
training periods sanctioned by the employer
are considered hours worked.
(2) Attendance in CBA negotiations or grievance
meeting is compensable hours worked.
(3) Attendance in hearings in cases filed by the
employee is NOT compensable hours
worked.
(4) Participation in strikes is NOT compensable
working time.

Compressed Work Week (CWW)


NOTE: SEE DOLE Advisory No. 02, Series of 2004
Under the CWW scheme, the normal workday goes
beyond eight hours without the corresponding
overtime premium.
The total hours of work, however, shall not exceed
12 hours a day or 48 hours a week, or the employer
is obliged to pay the worker the overtime premium
in excess of said work hours.
Conditions for CWW
(1) The CWW scheme is undertaken as a result of
an express and voluntary agreement of
majority of the covered employees or their
duly
authorized
representatives.
This
agreement may be expressed through
collective bargaining or other legitimate
workplace mechanisms of participation such
as labor management councils, employee
assemblies or referenda.
(2) In firms using substances, chemicals and
processes or operating under conditions
where there are airborne contaminants,
human carcinogens or noise prolonged
exposure to which may pose hazards to
employees health and safety, there must be
a certification from an accredited health and
safety organization or practitioner from the
firms safety committee that work beyond
eight hours is within threshold limits or
tolerable levels of exposure, as set in the
OSHS.
(3) The employer shall notify DOLE, through the
Regional Office having jurisdiction over the
workplace, of the adoption of the CWW
scheme. The notice shall be in DOLE CWW
Report Form attached to this Advisory. (DOLE
Advisory No. 02-04).
Effects of CWW
(1) Unless there is a more favorable practice
existing in the firm, work beyond eight
hours will not be compensable by overtime
premium provided the total number of hours
worked per day shall not exceed twelve (12)
hours. In any case, any work performed
beyond 12 hours a day or 48 hours a week
shall be subject to overtime premium.
(2) Consistent with Art. 85 of the LC, employees
under a CWW scheme are entitled to meal
periods of not less than 60 minutes. There
shall be no impairment of the right of the
employees to rest days as well as to holiday
pay, rest day pay or leaves in accordance
with law or applicable collective bargaining
agreement or company practice.
(3) Adoption of the CWW scheme shall in no
case result in diminution of existing
benefits. Reversion to the normal eight-hour

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LABOR LAW REVIEWER


workday shall not constitute a diminution of
benefits.
Idle time, waiting time, commuting time, travel
time, whether part of hours of work or not
Idle time
The idle time that an employee may spend for
resting & dining which he may leave the spot or
place of work though not the premises of his
employer, is not counted as working time only where
the work is broken or is not continuous. (National
Development Co. v. CIR, 1962)
A laborer need not leave the premises of the
factory, shop or boat in order that his period of rest
shall not be counted, it being enough that he "cease
to work", may rest completely and leave or may
leave at his will the spot where he actually stays
while working, to go somewhere else, whether
within or outside the premises of said factory, shop
or boat. If these requisites are complied with, the
period of such rest shall not be counted. (Luzon
Stevedoring Co. v. Luzon Marine Department Union,
1957)
Waiting time
IRR, Book III, Rule 1, Sec. 5(a): 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.
(1) Waiting time spent by the 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.
(2) An employee who is required to remain on
call in the employers premises or so close
thereto that he cannot use the time
effectively and gainfully for his own purpose
shall be considered as working while on call.
(Sec. 5, Rule I, Book III, Labor Code
Implementing Rules and Regulation)
Legal test: Whether waiting time constitutes
working time depends upon the circumstances of
each particular case. The facts may show that the
employer was engaged or was waiting to be
engaged. The controlling factor is whether waiting
time spent in idleness is so spent predominantly for
the employers benefit or for the employees.
(Azucena citing Armour v. Wantock,)
Travel time
(1) Travel from home to work An employee who
travels from home before his regular workday
and returns to his home at the end of the
workday is engaged in ordinary home-to-work
travel which is NOT worktime except:
a. When
called
to
travel
during
emergency;
b. When travel is done through a
conveyance furnished by the employer;
c. Travel is done under vexing and
dangerous circumstances;

d.

Travel is done under the supervision and


control of the employer.

(2) Travel that is all in the days work Time


spent by an employee in travel from jobsite to
jobsite during the workday, must be counted
as hours worked. Where an employee is
required to report at a meeting place to
receive instructions or to perform other work
there, the travel from the designated place to
the workplace is part of the days work.
(3) Travel away from home - Travel that keeps
an employee away from home overnight is
travel away from home. Travel away from
home is worktime when it cuts across the
employees workday. The time is hours worked
not only on regular working hours but also
during the corresponding hours on non-working
days. (Department of Labor Manual).
Semestral Break of Private School Teachers
Regular full-time teachers are entitled to salary
during semestral breaks. These semestral breaks are
in the nature of work interruptions beyond the
employees control. As such, these breaks cannot be
considered as absences within the meaning of the
law for which deductions may be made from monthly
allowances. (University of the Pangasinan Faculty
Union v. University of Pangasinan, No. L-63122, Feb.
20, 1984).
Work Hours of Seamen
Seamean are required to stay on board of their
vessels by the very nature of their duties, and it is
for this reason that, in addition to their regular
compensation, they are given free living quarters to
be on board. It could not have been the purpose of
the law to require their employers to pay them
overtime pay even when they are not actually
working. The correct criterion in determining
whether or not sailors are entitled to overtime pay is
not, therefore, whether they are on board and
cannot leave ship beyond the regular eight working
number of hours, but whether they actually
rendered service in excess of said number of hours.
(Cagampan, et. al. v. NLRC, G.R. Nos. 85122-24,
March 2, 1991).
Hours worked: Proof of work
Entitlement to overtime pay must first be
established by proof that said overtime work was
actually performed, before an employee may avail
of said benefit. (Lagatic v. NLRC, 1998)
Hours worked: Burden of Evidence
When an employer alleges that his employee works
less than the normal hours of employment as
provided for in the law, he bears the burden of
proving his allegation with clear and satisfactory
evidence. (Prangan v. NLRC, et. al., G.R. No.
126529, April 15, 1998).

23

LABOR LAW REVIEWER

TOPIC A-IV. MEAL BREAK


Regular meal
Art. 85: Subject to such regulations as the Secretary
of Labor may prescribe, it shall be the duty of every
employer to give his employees not less than sixty
(60) minutes time-off for their regular meals.
IRR, Book III, Rule 1, Sec. 7: Every employer shall
give his employees, regardless of sex, not less than
one (1) hour time-off for regular meals,
Shorter meal period when allowed (less than 1 hour,
but not less than 20 min)
IRR, Book III, Rule 1, Sec. 7: A meal period of not
less than twenty (20) minutes may be given by the
employer provided that such shorter meal period is
credited as compensable hours worked of the
employee:
(1) Where the work is non-manual work in nature or
does not involve strenuous physical exertion;
(2) Where the establishment regularly operates not
less than sixteen (16) hours a day;
(3) In case of actual or impending emergencies or
there is urgent work to be performed on
machineries, equipment or installations to avoid
serious loss which the employer would otherwise
suffer; and
(4) Where the work is necessary to prevent serious
loss of perishable goods.

Conditions for shortened meal breaks upon


employees request.
(1) The employees voluntarily agree in writing to
a shortened meal period of 30 minutes and
are willing to waive the overtime pay for such
shortened meal period;
(2) There will be no diminution whatsoever in
the salary and other fringe benefits of the
employees existing before the effectivity of
the shortened meal period;
(3) The work of the employees does not involve
strenuous physical exertion and they are
provided with adequate coffee breaks in
the morning and afternoon.
(4) The value of the benefits derived by the
employees
from
the
proposed
work
arrangement is equal to or commensurate
with the compensation due them for the
shortened meal period as well as the
overtime pay for 30 minutes as determined
by the employees concerned;
(5) The overtime pay of the employees will
become due and demandable if ever they are
permitted or made beyond 4:30pm; and
(6) The effectivity of the proposed working time
arrangement shall be of temporary duration
as determined by the Secretary of Labor.
Jurisprudence:

General Rule: Meal periods are NOT compensable.

(1) During meal period where the laborers are


required to stand by for emergency work, or
where said meal hour is not one of complete
rest, such period is considered overtime.
(Pan-American Airways v. Pan-American
Employees Association, 1961)

Exception: It becomes compensable:


(1) Where the lunch period or meal time is
predominantly spent for the employers
benefit. (Azucena citing 31 Am. Jur. 881;
Duka, Labor Laws and Social Legislation)

(2) The eight-hour work period does not include


the meal break. Employees are not prohibited
from going out of the premises as long as they
return to their posts on time. (Phil. Airlines,
Inc. v. NLRC, 1999)

Synthesis of the Rules

(2) Meal periods of 1 hour is deemed


compensable when the employee is on
continuous shift. (National Development Co.
v. CIR, G.R. No. L-15422, Nov. 30, 1962).
(3) Shortened meal period of less than 1 hour
(say, 30 minutes) must be compensable.
(Sec. 7, Rule I, Book III of the IRR).
Note: To shorten meal time to less than 20
minutes is not allowed. If the so-called meal
time is less than 20 minutes, it becomes only
a REST PERIOD and is considered working
time.
Exception to the Exemption: Shortened meal
breaks upon the employees request NOT
compensable. The employees themselves may
request that the meal period be shortened so that
they can leave work earlier than the previously
established schedule. (Drilon: Letter to Kodak
Philippines, Nov. 27, 1989; also Cilindro: BWC-WHSD
Opinion No. 197, s. 1998).

TOPIC A-V. OVERTIME PAY


NOTE: SEE ALSO: IRR of Labor Code, Sec. 7-10
Definition
Overtime compensation is additional pay for service
or work rendered or performed in excess of eight
hours a day by employees or laborers covered by the
Eight-hour Labor Law. (National Shipyard and Steel
Corp. v. CIR, 1961).
Rationale
There can be no other reason than that he is made
to work longer than what is commensurate with his
agreed compensation for the staturily fixed or
voluntary agreed hours of labor he is supposed to do.
(PNB v. PEMA, 1982).
Overtime on ordinary working day
Art. 87. Overtime work. Work may be performed
beyond eight (8) hours a day provided that the
employee is paid for the overtime work, an

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LABOR LAW REVIEWER


additional compensation equivalent to his regular
wage plus at least twenty-five percent (25%)
thereof.
Work performed beyond eight hours on a holiday or
rest day shall be paid an additional compensation
equivalent to the rate of the first eight hours on a
holiday or rest day plus at least thirty percent (30%)
thereof.
Art. 90. Computation of additional compensation.
For purposes of computing overtime and other
additional remuneration as required by this Chapter,
the "regular wage" of an employee shall include the
cash wage only, without deduction on account of
facilities provided by the employer.
Emergency or overtime
Art. 89: Any employee may be required by the
employer to perform overtime work in any of the
following cases:
(1) When the country is at war or when any other
national or local emergency has been declared
by the National Assembly or the Chief Executive;
(2) When it is necessary to prevent loss of life or
property or in case of imminent danger to public
safety due to an actual or impending emergency
in the locality caused by serious accidents, fire,
flood, typhoon, earthquake, epidemic, or other
disaster or calamity;
(3) When there is urgent work to be performed on
machines, installations, or equipment, in order
to avoid serious loss or damage to the employer
or some other cause of similar nature;
(4) When the work is necessary to prevent loss or
damage to perishable goods; and
(5) Where the completion or continuation of the
work started before the eighth hour is necessary
to prevent serious obstruction or prejudice to
the business or operations of the employer.
Overtime pay does not preclude night differential
pay
When the tour of duty of a laborer falls at nighttime
[between 10:00pm and 6:00am], the receipt of
overtime pay will not preclude the right to night
differential pay. The latter is payment for work done
during the night while the other is payment for the
excess of the regular eight-hour work. (Naric v.
Naric Workers Union, 1959).
Overtime Rate based on Regular Wage
Base of Computation: Regular wage or means
regular base pay; it excludes money received in
different concepts such as Christmas bonus and
other fringe benefits. (Bisig ng Manggagawa ng
Philippine Refining Co. v. Philippine Refining Co,
G.R. No. L-27761, Sept. 30, 1981).
BUT when the overtime work was performed on the
employees rest day or on special days or regular
holidays (Art. 93 and 94), the premium pay, must be
included in the computation of the overtime pay.
(See p. 19 of Handbook on Workers Statutory
Monetary Benefits, issued by the Bureau of Working
Conditions, 2006).

Synthesis of Rules
(1) Demandable only if the employer had
knowledge and consented to the overtime
work rendered by the employee.
Exception: Express approval by a superior
NOT a requisite to make overtime
compensable:
a. If the work performed is necessary, or
that it benefited the company; or
b. That the employee could not abandon
his work at the end of his eight-hour
work because there was no substitute
ready to take his place. (Manila
Railroad Co. v. CIR, G.R. No. L-4614,
July 31, 1952).
Note: However, the Court has also ruled that
a claim for overtime pay is NOT justified in
the absence of a written authority to render
overtime after office hours during Sundays
and holidays. (Global Incorporated v. Atienza)
(2) Compensation for work rendered in excess of
the eight (8) normal working hours in a day.
a.
b.

For ordinary days, additional 25% of


the basic hourly rate.
For rest day/special day/holiday,
additional 30% of the basic hourly rate.

(3) Not unless a day is a rest day, the given day is


considered an ordinary day.
(4) Undertime does NOT offset overtime
Art. 88: Undertime work on any particular day shall
not be offset by overtime work on any other day.
Permission given to the employee to go on leave on
some other day of the week shall not exempt the
employer from paying the additional compensation
required in this Chapter.
Jurisprudence:
(1) NO Waiver of overtime pay - The right to
overtime pay cannot be waived. Labor Code
(Art. 87) requires that an employee be paid all
overtime compensation notwithstanding any
agreement to work for a lesser wage.
Consequently, such an agreement or "waiver"
will not prevent an employee from recovering
the difference between the wages paid the
employee and the overtime compensation he or
she is entitled to receive. (Cruz v. Yee Sing,
G.R. No. L-12046. Oct. 1959).
Exception: When the waiver of overtime pay is in
consideration of benefits and privileges which
may be more than what will accrue to them in
overtime pay, the waiver MAY be permitted.
(Meralco Workers Union v. MERALCo, G.R. No. L11876, May 29, 1959)
(2) Composite or Package Pay NOT per se illegal

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LABOR LAW REVIEWER


Composite or package pay or all-inclusive
salary is an arrangement where the employees
salary includes the overtime pay. In other
words, the overtime pay is built-in.
The conditions for validity of the arrangement
are:
a. There is a clear written agreement
knowingly and freely entered by the
employee; and
b. The mathematical result shows that
the agreed legal wage rate and the
overtime pay, computed separately,
are equal to or higher than the
separate
amounts
legally
due.
(Damasco v. NLRC, G.R. No. 115755,
December 4, 2000).

TOPIC A-VI. NIGHT WORK


Art. 86. 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.
NOTE: SEE IRR of Labor Code, Book III, Rule II, Sec.
1-6
IRR SEC. 1 This Rule (On night shift differential)
covers all employees except:
(1) Those of the government and any of its political
subdivisions,
including
government-owned
and/or controlled corporations;
(2) Those of retail and service establishments
regularly employing not more than five (5)
workers;
(3) Domestic helpers and persons in the personal
service of another;
(4) Managerial employees as defined in Book Three
of this Code;
Field personnel and other employees whose time and
performance is unsupervised by the employer
including those who are engaged on task or contract
basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective
of the time consumed in the performance thereof.

B. Wages
TOPIC B-I. GENERAL CONCEPT
Definition
Art. 97(f)
(1) It is the remuneration or earnings, however
designated capable of being expressed in
terms of money,
(2) whether fixed or ascertained on a time, task,
piece, or commission basis, or other method of
calculating the same,
(3) which is payable by an employer to an employee
(4) under a written or unwritten contract of
employment for work done or to be done, or for
services rendered or to be rendered and
(5) includes the fair and reasonable value, as

determined by the Secretary of Labor and


Employment, of board, lodging, or other
facilities customarily furnished by the employer
to the employee
(6) Fair and reasonable value - shall not include
any profit to the employer, or to any person
affiliated with the employer.
No work no pay principle
GENERAL RULE: a fair days wage for a fair days
labor or no work no pay
EXCEPTION: when the laborer was able, willing and
ready to work but was illegally locked out,
suspended or dismissed, or otherwise illegally
prevented from working. (Sugue v Triumph
International (2009) and Aklan Electric Cooperative,
Inc. vs. NLRC (2000)
Equal Work for Equal Pay Principle
Employees working in the Philippines, if they are
performing similar functions and responsibilities
under similar working conditions should be paid
equally. If an employer accords employees the same
position and rank, the presumption is that these
employees perform equal work. (International
School Alliance of Educators v. Hon. Quisumbing,
G.R. No. 128845, June 1, 2000).
Coverage/Exclusions
The Labor Code Title on wages shall not apply to the
following: (Art. 98 and BOOK 3, RULE VII, Sec 3 of
the IRR)
(1) Farm tenancy or leasehold;
(2) Household or domestic helpers, including family
drivers and other persons in the personal service
of another;
(3) Homeworkers engaged in needlework;
(4) Workers in registered cottage industries who
actually work at home;
(5) Workers in registered cooperatives when so
recommended by the Bureau of Cooperative
Development upon approval of the Secretary of
Labor;
(6) Workers in registered barangay micro business
enterprise (RA 9178).
Facilities v. supplements
The distinction between facilities and supplement is
relevant because the former are wage-deductible
while the latter is not. Simply put, a wage includes
facilities. (Art. 97)
The IRR definition (IRR Book III Rule 7-A Sec. 5) has 2
components:
(1) Facilities are articles or services for the benefit
of the employee or his family. This 1st part
defines facilities.
(2) Facilities shall not include tools of the trade or
articles or service primarily for the benefit of
the employer or necessary to the conduct of
the employers business. This 2nd part is
essentially defines what a supplement.
Criterion: In determining whether a privilege is a

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LABOR LAW REVIEWER


facility, the criterion is not so much its kind but its
PURPOSE (Millares v NLRC & PICOP, 1999). Facilities
are items of expense necessary for the laborers and
his familys existence and subsistence. (States
Marine Corp. v. Cebu Seamen's Assoc., Inc., 1963)
Comparison between Facilities and Supplements
Category
Facilities
Supplements
Articles or
Extra
What it is
services/items of
remuneration or
not
expense
special benefits /
much
articles or
difference
services / tools of
here
the trade
For the benefit of
For the benefit or
the employee and
convenience of
Purpose
his family; for
the employer
their existence
and subsistence
Part of wage so it
Independent of
How
is deductible
the Wage so not
Treated
deductible
Requirements for deducting value of facilities
(1) Customarily furnished by the trade - "Customary"
is founded on long-established and constant
practice connoting regularity. The receipt of an
allowance on a monthly basis does not ipso
facto characterize it as regular and forming part
of salary because the nature of the grant is a
factor worth considering (Millares v. NLRC,
1999)
(2) Voluntarily accepted in writing by the
employee; and
(3) Charged at fair and reasonable value. (Mabeza
v. NLRC, 1997)
Wages vs. salaries
Wages and salary are in essence synonymous.
(Songco v. NLRC, 1990)
There are slight differences:
Wage

Salary

Paid for skilled or


unskilled manual labor

Paid to white collar


workers and denote a
higher grade of
employment

Not subject to
execution, garnishment
or attachment except
for debts related to
necessities (Art. 1708)

Not exempt from


execution, garnishment
or attachment (Gaa vs.
CA, 1985)

differentiation
4 Elements of wage distortion
(1) 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. (Prubankers Assn. v.
Prudential Bank and Co., 1999)
How to Resolve
Organized
Establishment
(with
bargaining
representative)
(1) Employer and the union shall negotiate to
correct the distortions.
(2) Disputes shall be resolved through the grievance
procedure.
(3) If still unresolved, voluntary arbitration.
Grievance Procedure (under the CBA)
unresolved
VOLUNTARY arbitration

if

Unorganized Establishment
(1) ERs and Employees shall endeavor to correct
such distortions.
(2) Disputes shall be settled through the National
Conciliation and Mediation Board.
(3) If still unresolved after 10 calendar days of
conciliation, it shall be referred to the
appropriate branch of the NLRC compulsory
arbitration
Both the employer and employee cannot
use economic weapons.
(4) Employer cannot declare a lock-out; Employee
cannot declare a strike because the law has
provided for a procedure for settling
(5) The salary or wage differential does not need to
be maintained. (National Federation of Labor v.
NLRC, 1994)
National Conciliation and Mediation Board
if
unresolved
COMPULSORY arbitration by the
NLRC
CBA vis--vis Wage Orders CBA creditability
In determining an employees regular wage, the
pertinent stipulations in the CBA are controlling,
provided the result is not less than the statutory
requirement (Philippine National Bank vs. PEMA, 115
SCRA 507)

TOPIC B-III. NON-DIMINUTION OF BENEFITS


TOPIC B-II. WAGE DISTORTION
Definition
A situation where an increase in prescribed wage
rates results in the elimination or severe contraction
of intentional quantitative differences in wage or
salary rates between and among employee groups in
an establishment as to effectively obliterate the
distinctions embodied in such wage structure based
on skills, length of service, or other logical bases of

GENERAL RULE: prohibition against elimination or


diminution of benefits (Art. 100)
Requisites
If the following are met, then the employer cannot
remove or reduce benefits:
(1) Ripened company policy: Benefit is founded on
a policy which has ripened into a practice over a
long period (Prubankers Assn. vs. Prudential
Bank and Co., 1999)

27

LABOR LAW REVIEWER


(2) Practice is consistent and deliberate and
(3) Not due to error in the construction or
application of a doubtful or difficult question of
law. (Globe Mackay Cable vs. NLRC, 1988)
(4) The diminution or discontinuance is done
unilaterally by the employer.
When not applicable: When at least one of the
requisites is absent.
(1) Mistake in the application of the law (Globe
Mackay Cable v. NLRC, G.R. No. 74156, June 29,
1988)
(2) Negotiated benefits (Azucena)
(3) Reclassification of Positions e.g. loss of some
benefits by promotion.
(4) Contingent or Conditional Benefits the rule
does not apply to a benefit whose grant depends
on the existence of certain conditions, so that
the benefit is not demandable if those
preconditions are absent.
Note: Benefits initiated through negotiation between
Employee and Employer, e.g. CBA, can only be
eliminated or diminished bilaterally.

TOPIC B-IV. WORKERS PREFERENCE IN CASE


OF BANKRUPTCY
Statutory Provisions
Labor Code, Art. 110. In the event of bankruptcy or
liquidation of an employer's business, his workers
shall enjoy first preference as regards their wages
and other monetary claims, any provision of law to
the contrary notwithstanding.
Such unpaid wages and monetary claims shall be
paid in full before the claims of the Government and
other creditors may be paid. (As amended by R. A.
6715)
Civil Code, Art. 1707. The laborer's wages shall be a
lien on the goods manufactured or the work done.
Civil Code, Art. 2241 (6). With reference to specific
movable property of the debtor, the following claims
or liens shall be preferred:
6. Claims for laborers' wages, on the goods
manufactured or the work done;
Civil Code, Art. 2242 (2) & (3). With reference to
specific immovable property and real rights of the
debtor, the following claims, mortgages and liens
shall be preferred, and shall constitute an
encumbrance on the immovable or real right:
(2) Credits for services rendered the insolvent by
employees, laborers, or household helpers for one
year preceding the commencement of the
proceedings in insolvency.
(3) Claims of laborers, masons, mechanics and other
workmen, as well as of architects, engineers and
contractors,
engaged
in
the
construction,
reconstruction or repair of buildings, canals or other
works, upon said buildings, canals or other works
Jurisprudence
Summary
(1) It only creates a preference and not a lienso;
(2) Worker preference shall apply only to ordinary

preferred credits (meaning unencumbered


property)
(3) It must yield to special preferred credits where
liens are attached;
(4) Covers unpaid wages as well as other monetary
claims; and
(5) Judicial declaration of insolvency/bankruptcy
and filing of claims by workers still required.
Republic vs. Peralta (1987):
Article 110 of the Labor Code did not sweep away
the overriding preference accorded under the
scheme of the Civil Code:
(1) Tax claims of the government or any subdivision
thereof which constitute a lien upon properties
of the Insolvent still preferred over wages.
(2) The use of the phrase "first preference" in
Article 110 indicates that what Article 110
intended to modify is the order of preference
found in Art. 2244, which pertains to
unencumbered property.
(3) Art. 2241 and 2242 pertain to encumbered
property and such property shall still remain
reserved to its respective lienholder.
(4) Exception is if either 2241 (6) or 2242 (3)
applies.
(5) Primary effect: it moves wages from 2nd priority
in 2244 to 1st priority; as if 2244 (2) became
2244 (1).
Development Bank of the Philippines vs. NLRC
(1995):
(1) Art. 110 of the Labor Code cannot be viewed in
isolation but must be read in relation to the
Civil Code scheme on classification and
preference of credits.
(2) Requirements of judicial liquidation
/
declaration of bankruptcy still intact; workers
must also file their claims.
(3) A preference applies only to claims which do
not attach to specific properties. A lien creates
a charge on a particular property. The right of
first preference as regards unpaid wages
recognized by Art. 110 does not constitute a
lien on the property of the insolvent debtor in
favor of workers. It is but a preference of credit
in their favor, a preference in application.
Rubberworld (Phils.), Inc. vs. NLRC (1999):
Preference does not apply when the Employer
corporation is under rehabilitation / receivership.

TOPIC B-V. LABOR CODE PROVISIONS FOR


WAGE PROTECTION
(1) Prohibition against interference in wage
disposal (Art. 112)
No employer shall limit or otherwise
interfere with the freedom of any employee
to dispose of his wages.
He shall not in any manner force, compel,
or oblige his employees
to purchase merchandise, commodities or
other property from any other person, or
otherwise make use of any store or services
of such employer or any other person.

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LABOR LAW REVIEWER


Related Civil Code Provisions
Art. 1705. The laborer's wages shall be paid in legal
currency.
Art. 1706. Withholding of the wages, except for a
debt due, shall not be made by the employer.
Art. 1707. The laborer's wages shall be a lien on the
goods manufactured or the work done.
Art. 1708. The laborer's wages shall not be subject
to execution or attachment, except for debts
incurred for food, shelter, clothing and medical
attendance.
Art. 1709. The employer shall neither seize nor
retain any tool or other articles belonging to the
laborer.
(2) Prohibition against wage deduction (Art. 113)
General Rule: No employer, in his own behalf or in
behalf of any person, shall make any deduction from
the wages of his employees.
Exceptions:
(1) Employee 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 Secretary of
Labor and Employment, such as:
(a) Employee debt to employer is due and
demandable (CC 1706);
(b) Attachment or execution in cases of
debts incurred for necessities: food,
shelter, clothing, medical attendance
(CC 1708);
(c) Withholding tax;
(d) Deductions of a legally established
cooperative;
(e) Payment to 3rd parties upon written
authority by employee;
(f) Deductions for loss or damage;
(g) SSS, Medicare, Pag-IBIG premiums;
(h) Deduction for value meals and other
facilities.
It shall be unlawful to make any deduction from the
wages of any Employee for the benefit of the
Employer as consideration of a promise of
employment or retention in employment. (Art. 117)
or to retaliate against the Employee who filed a
complaint. (Art. 118)
With
Employees
consent in Writing
(1) SSS Payments
(2) PHILHEALTH
payments

Without
Employees
consent
(1) Workers insurance
acquired by the
employer

(3) Contributions
to
PAG-IBIG Fund
(4) Value of meals and
other facilities
(5) Payments to third
persons
with
employees consent
(6) Deduction
of
absences
(7) Union dues, where
check-off is not
provided in the CBA.

(2) Union dues, where


the right to checkoff is recognized by
the
employer
(provided in the
CBA)
(3) Debts
of
the
employee to the
employer that have
become due and
demandable

Rationale: Prohibition seeks to protect the employee


against unwarranted practices that would diminish
his compensation without his knowledge and
consent. (Radio Communication of the Phil., Inc. v.
Sec. of Labor, 1989)
(3) Prohibition against requirement to make
deposits for loss or damage (Art 114-115)
General Rule: No deposits from which deductions
shall be made for the reimbursement of loss of or
damage to tools, materials, or equipment supplied
by the employer
Exception:
(1) Recognized industry practice or
(2) When such is necessary or desirable
determined by the DOLE Secretary
appropriate rules and regulations. (Art. 114)

as
in

Conditions for the deductions


(1) EE is clearly shown to be responsible for the loss
or damage;
(2) The EE is given ample opportunity to show cause
why deduction should not be made;
(3) The amount of the deduction is fair and
reasonable and shall not exceed the actual loss
or damage; and
(4) The deduction from the employees wage does
not exceed 20% of the employees wages in a
week. (Art. 115)
Daily Deposits to Cover Shortage in Boundary
Illegal
The article providing the rule on deposits for loss or
damage to tools, materials or equipment supplied by
the employer does not apply to or permit deposits to
defray any deficiency which the taxi driver may
incur in the remittance of his "boundary." When
employee stops working for employer, the alleged
purpose for the unauthorized deposits no longer
exists. Any balance due must be returned to
employee with legal interest. (Five J Taxi vs. NLRC
(1994))
(4) Prohibition against withholding of wages (Art.
116)
It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the wages
of a worker or induce him to give up any part of his
wages by force, stealth, intimidation, threat or by
any other means whatsoever without the workers
consent.

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LABOR LAW REVIEWER


(5) Prohibition against deduction to ensure
employment (Art 117)
It shall be unlawful to make any deductions from the
wages of any employee for the benefit of any
employer or his representative or intermediary as
consideration of a promise of employment or
retention in employment.

support, and such persons are more in need of the


exemption than any others.

(6) Prohibition against retaliatory measures (Art


118)
It shall be unlawful for an employer to refuse to pay
or reduce the wages and benefits, discharge or in
any manner discriminate against any employee who
has filed any complaint or instituted any proceeding
under this Title or has testified or is about to testify
in such proceedings.
This article is similar to Art. 248(f) which
classifies as unfair labor practice (ULP) an
employers prejudicial act against an
employee who gave or is about to give a
testimony under the Code. However, they
differ on the subject of the testimony.

Attorneys fees and union service fee in labor


cases

Art. 118
Subject of testimony is
wages
The
employers
retaliatory
act
is
unlawful but not ULP
(unless
the
act
is
intended to impair the
right to self-organization
of employees)

Art. 248(f)
Subject
is
anything
under the Code
The
employers
retaliatory act is ULP.

(7) Prohibition against False Reporting (Art. 119)


It shall be unlawful for any person to make any
statement, report, or record filed or kept pursuant
to the provisions of this Code knowing such
statement, report or record to be false in any
material respect.
(8) Prohibition against keeping of employees
records in a place than the workplace
All employment records of the employees of an
employer shall be kept and maintained in or about
the premises of the workplace main or branch
office or establishment, if any, depending upon
where the employees are regularly assigned.
The keeping of the employee's records in another
place is prohibited. (IRR Book II Rule X Sec. 11)
(9) Prohibition against garnishment/execution (Art
1708 of the Civil Code)
General Rule: The laborer's wages shall not be
subject to execution or attachment
Exception: for debts incurred for food, shelter,
clothing and medical attendance
Article 1708 of the New Civil Code to operate in
favor of any but those who are laboring men or
women in the sense that their work is manual.
Persons belonging to this class usually look to the
reward of a day's labor for immediate or present

Allowable deductions without employees consent


NOTE: Please refer to the exceptions to prohibition
against wage deduction in the previous subsection.

In cases of unlawful withholding of wages, the


culpable party may be assessed attorney's fees
equivalent to 10% of the amount of wages recovered.
It shall be unlawful for any person to demand or
accept, in any judicial or administrative proceedings
for the recovery of the wages, attorneys fees,
which exceed 10% of the amount of wages
recovered.

TOPIC B-VI. CRITERIA/FACTORS FOR WAGE


SETTING
Factors/Criteria in determining regional minimum
wages: (Art. 124)(DXCN IS PREQ)
(1) Demand for living wages;
(2) Wage adjustment vis-a-vis the consumer price
index;
(3) Cost of living and changes or increases therein;
(4) The needs of workers and their families;
(5) The need to induce industries to invest in the
countryside;
(6) Improvements in standards of living;
(7) Prevailing wage levels;
(8) Fair return of the capital invested and capacity
to pay of employers;
(9) Effects in employment generation and family
income; and
(10) Equitable distribution of income and wealth
along the imperatives of economic and social
development.
Procedure for Wage Fixing by Regional Board
(Art. 123)
(1) Investigate and study pertinent facts, based on
criteria set in Art. 124
(2) Conduct public hearings or consultations with
notice to employer and employee groups,
provinces, city, municipal officials and other
interested parties
(3) Decide to ISSUE or NOT TO ISSUE a wage order
Frequency: Wage orders issued may not be
disturbed for 12 months from effective
date; this serves as a bar for petitions for
wage hikes as well
EXCEPT: when Congress passes a new law
affecting wages or other supervening
circumstances
Effectivity: If it decides to ISSUE a wage
order, the wage order takes effect after
15 days from complete publication in at
least 1 newspaper of general circulation
in the region
(4) Appeal wage order to Commission within 10
calendar days; mandatory for the Commission to

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LABOR LAW REVIEWER


decide within 60 calendar days from filing
Filing of an appeal DOES NOT STAY order unless
appellant files an undertaking with a surety, to
guarantee payment of employees if the wage order
is affirmed (as amended by RA 6727)
Agencies on Wage Studies and Determination
National Wages and Productivity Commission
Composition:
(1) Secretary of Labor and Employment as exofficio Chairman;
(2) Director-General of NEDA as ex-officio vicechairman;
(3) Two members each from the workers and
employers sectors who shall be appointed
by the President of the Philippines upon the
recommendation of the Sec. of Labor
(4) Executive Director of the Commission
Secretariat
(1) Headed by the Executive Director
(2) Two (2) Deputy Directors
Powers and Functions of the Commission:
(1) To act as the national consultative and
advisory body to the President of the
Philippines and Congress on matters relating
to wages, incomes and productivity;
(2) To formulate policies and guidelines on
wages,
incomes
and
productivity
improvement at the enterprise, industry
and national levels;
(3) To prescribe rules and guidelines for the
determination of appropriate minimum
wage and productivity measures at the
regional, provincial, or industry levels;
(4) To review regional wage levels set by the
Regional Tripartite Wages and Productivity
Boards to determine if these are in
accordance with prescribed guidelines and
national development plans;
(5) To undertake studies, researches and
surveys necessary for the attainment of its
functions and objectives, and to collect and
compile data and periodically disseminate
information on wages and productivity and
other related information, including, but
not limited to, employment, cost-of-living,
labor costs, investments and returns;
(6) To review plans and programs of the
Regional Tripartite Wages and Productivity
Boards to determine whether these are
consistent with national development plans;
(7) To exercise technical and administrative
supervision over the Regional Tripartite
Wages and Productivity Boards;
(8) To call, from time to time, a national
tripartite conference of representatives of
government, workers and employers for the
consideration of measures to promote wage
rationalization and productivity; and
(9) To exercise such powers and functions as
may be necessary to implement this Act.
(Art. 121)

Regional Tri-partite Wages and Productivity Boards


Composition:
(1) Regional Director of DOLE Chairman
(2) Regional Director of NEDA Vice Chairman
(3) Regional Director of DTI Vice Chairman
(4) 2 Members from the employer sector
(5) 2 Members from the employee sector
(6) Secretariat
Tri-partite body 3 sectors are represented: (a)
government, (b) employers, and (c) employees.
Powers and Functions of the Board:
(1) To develop plans, programs and projects
relative to wages, incomes and productivity
improvement for their respective regions;
(2) To determine and fix minimum wage rates
applicable in their regions, provinces or
industries therein and to issue the
corresponding wage orders, subject to
guidelines issued by the Commission;
(3) To undertake studies, researches, and
surveys necessary for the attainment of
their functions, objectives and programs,
and to collect and compile data on wages,
incomes, productivity and other related
information and periodically disseminate
the same;
(4) To coordinate with the other Regional
Boards as may be necessary to attain the
policy and intention of this Code;
(5) To receive, process and act on applications
for exemption from prescribed wage rates
as may be provided by law or any Wage
Order; and
(6) To exercise such other powers and functions
as may be necessary to carry out their
mandate under this Code. (Art. 122)

C. Rest Day
NOTE: See IRR of Labor Code Book III, Rule III
Every employee regardless of the nature of his work
is entitled to at least one whole day every week as
his rest day. The rest day or day off shall be
determined by the employer. However, in cases
where the employee is required by his religious
belief to rest on certain days, such belief shall be
respected by the employer.
1. Right to weekly rest day
Art. 91 (a): It shall be the duty of every employer,
whether operating for profit or not, to provide each
of his employees a rest period of not less than
twenty-four (24) consecutive hours after every six
(6) consecutive normal work days.
2. Preference of the employee
Art. 94 (b): The employer shall determine and
schedule the weekly rest day of his employees
subject to collective bargaining agreement and to
such rules and regulations as the Secretary of Labor
and Employment may provide. However, the
employer shall respect the preference of employees

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LABOR LAW REVIEWER


as to their weekly rest day when such preference is
based on religious grounds.
3. When work on rest day authorized
Art. 92. When employer may require work on a
rest day. The employer may require his employees
to work on any day:
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
imminent danger to public safety;
b) In cases of urgent work to be performed on the
machinery, equipment, or installation, 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 loss or damage to perishable goods;
e) Where the nature of the work requires
continuous operations and the stoppage of
work may result in irreparable injury or loss to
the employer; and
f) Under other circumstances analogous or similar
to the foregoing as determined by the Secretary
of Labor and Employment.
2. Premium pay
NOTE: SEE DOLE Memorandum Circular 1, Series of
2004. This is important.
WHEN WORK PERFORMED
On scheduled rest day
On Sunday ONLY IF
ESTABLISHED rest day
No regular work and rest
days
On any special
holiday/special day
On any special holiday
/special day falling on
scheduled rest day
On any regular holiday
falling on scheduled rest
day

PREMIUM PAY
30% of regular wage
30% of regular wage
30% of regular wage
for work performed on
Sundays and holidays
30% of regular wage
50% of regular wage
230% of regular wage

Art. 93(d): Where the collective bargaining


agreement or other applicable employment contract
stipulates the payment of a higher premium pay than
that prescribed under this Article, the employer
shall pay such higher rate.
IRR Book III, Rule III, Sec. 8: Nothing in this Rule
shall justify an employer in reducing the
compensation of his employees for the unworked
Sundays, holidays, or other rest days which are
considered paid-off days or holidays by agreement or
practice subsisting upon the effectivity of the Code.
Sec. 9.: Nothing herein shall prevent the employer
and his employees or their representatives in
entering into any agreement with terms more

favorable to the employees than those provided


herein, or be used to diminish any benefit granted to
the employees under existing laws, agreements, and
voluntary employer practices.
Synthesis of the Rules
(1) Rest day of not less than 24 consecutive
hours after 6 consecutive days of work.
(2) No work, no pay principle applies
(3) If an employee works on his designated rest
day, he is entitled to a premium pay.
(4) Premium pay is additional 30% of the basic
pay.
(5) Employer selects the rest day of his
employees
(6) However, employer must consider the
religious reasons for the choice of a rest
day.

D. Holidays
NOTE: Art. 94 (c) was superseded by E.O. 203, which
was subsequently amended by RA 9177, 9256, and
9492.
Holiday pay is a one-day pay given by law to an
employee even if he does not work on a regular
holiday. This gift of a days pay is limited to each of
the eleven regular holidays.

TOPIC D-I. EXCLUSIONS FROM COVERAGE


General Rule: All employees
Exceptions:
(1) Those of the government and any of the
political subdivision, including governmentowned and controlled corporation;
(2) Those of retail and service establishments
regularly employing less than 10 workers;
(3) Domestic helpers and persons in the
personal service of another;
(4) Managerial employees as defined in Book III
(5) Field personnel and other employees whose
time and performance is unsupervised by
the employer including those who are
engaged on task or contract basis, purely
commission basis, or those who are paid a
fixed amount for performing work
irrespective of the time consumed in the
performance thereof. (Sec. 1, Rule IV of the
IRR)
(6) Retail and service establishments regularly
employing less than ten (10) workers
Art. 94(a): Every worker shall be paid his regular
daily wage during regular holidays, except in retail
and service establishments regularly employing less
than ten (10) workers
IRR of RA 6727 or the Wage Rationalization Act
f) "Retail Establishment" is one principally engaged in
the sale of goods to end-users for personal or
household use;
g) "Service Establishment" is one principally engaged
in the sale of service to individuals for their own or
household use and is generally recognized as such;

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LABOR LAW REVIEWER


TOPIC D-II REGULAR HOLIDAYS
RA 9492, Sec. 26: Unless otherwise modified by
law, and or proclamation, the following regular
holidays and special days shall be observed in the
country:
Regular Holidays
(1) New years Day - January 1
(2) Maundy Thursday - Movable date
(3) Good Friday - Movable date
(4) Eidul Fitr - Movable date
(5) Araw ng Kagitingan- Monday nearest April 9
(Bataan and Corregidor Day)
(6) Labor Day - Monday nearest May 1
(7) Independence Day - Monday nearest June 12
(8) National Heroes Day - Last Monday of August
(9) Bonifacio Day - Monday nearest November 30
(10) Christmas Day - December 25
(11) Rizal Day - Monday nearest December 30
Nationwide Special Holidays
(1) Ninoy Aquino Day - Monday nearest August 21
(2) All Saints Day - November 1
(3) Last Day of the Year - December 31
In the event the holiday falls on a Wednesday,
the holiday will be observed on the Monday of
the week. If the holiday falls on a Sunday, the
holiday will be observed on the Monday that
follows.
Provided, That for movable holidays, the
President shall issue a proclamation, at least six
months prior to the holiday concerned, the
specific date that shall be declared as a
nonworking day
Provided, however, The Eidul Adha shall be
celebrated as a regional holiday in the
Autonomous Region in Muslim Mindanao.
P.D. 1083 (Code of Muslim Personal Laws) SEE:
Arts. 169-173
Muslim Holidays
Specifically for the Muslim Areas P.D. 1083, in its
Book V, Title, recognizes five (5) Muslim Holidays,
namely:
1) Amun Jadid (New Year) which falls on the first
(1st) day of the lunar month of Muharram;
2) Mauli-un-Nabi (Birthday of the Prophet
Muhammad) which falls on the twelfth (12th) day of
the third (3rd) lunar month of Rabi-ul-Awwal;
3) Lailatul Isra Wal Mi Rai (Nocturnal Journey and
Ascencion of the Prophet Muhammand) which falls
on the twenty-seventh (27th) day of the seventh (7th)
lunar month of Rajab;
4. Id-ul-Fitr (Hari Raja Pausa) which falls on the first
(1st) day of the tenth (10th) lunar month of Shawwal
commemorating the end of the fasting season; and
5. Id-ul-Adha (Hari Raha Haji) which falls on the
tenth (10th) of the twelfth (12th) lunar month of
Dhul-Hijja.
Note:

Id-ul-Fitr (Eidl Fitr) and Id-ul-Adha (Eidl Adha)


have been added to the list of national legal
holidays.
There should be no distinction between Muslims &
non-Muslims as regards to the payment of benefits
for Muslim holidays. Wages & other emoluments
granted by law to the working man are determined
on the basis of the criteria laid down by laws & not
on workers faith. Art. 3(3), PD 1083 states that
nothing herein shall be construed to operate to the
prejudice of a non-Muslim. (San Miguel Corp vs. CA,
2002)

33

TOPIC D-III HOLIDAY PAY COMPUTATION


SEE: Art. 94 Labor Code, Book III, Rule IV of IRR, RA
9424 and DOLE Memorandum Circular 1 Series of
2004
GENERAL RULE: An employer may require an
employee to work on any holiday but such employee
shall be paid a compensation equivalent to twice his
regular rate (Art. 94(b)).
According to the LC, IRR and Memo:
Work on any regular holiday, 200% of regular daily
not exceeding 8 hours
wage
Work on any regular holiday, if 200% of regular daily
it exceeds 8 hours/overtime
wage (for the 1st 8
hours)
+ 30% of hourly rate
on said day
Work on any regular holiday 200% of regular daily
which falls on the scheduled wage + 30% of such
rest day, not exceeding 8
amount
hours
Work on any regular holiday Regular holiday-onwhich falls on scheduled rest rest day rate (200% of
day, if it exceeds 8
regular daily wage
hours/overtime
plus 30% of such
amount) + 30% of
hourlyrate on said
day.
Work on special holiday not Regular daily wage +
exceeding 8 hours
30% thereof
Work on special holiday
Regular daily wage +
50% thereof
NOTE:
(1) According to DOLE Memo Circular 1-04, a
special holiday/special day includes
the National Special Days, and declared
special days such as Special Non-working
Holiday, Special Public Holiday and Special
National Holiday. Such days are entitled to
the rates prescribed above. These days are
not the same as a special working holiday.
(2) A special working holiday is considered an
ordinary working day, so there is no
premium pay.
Double holiday pay
According to DOLE Explanatory Bulletin on Workers
Entitlement to Holiday Pay on 9 April 1993, if two
holidays fall on the same day:

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LABOR LAW REVIEWER


Supreme Court ruled that he Regional
Director erred in saying that if a holiday
fell on Sunday, an extra day of pay was
created; thus, an employer should pay
twice the amount of holiday pay on that
day.
In fixing the salary, Wellington simply
deducted 51 Sundays from the 365 days
normally comprising a year and used the
difference,
314,
as
divisor
for
determining the monthly salary. The
monthly salary thus fixed actually covers
payment for 314 days of the year,
including regular and special holidays.
No provision of law requires any employer
to make adjustments in the monthly
salary rate set by him to take account of
legal holidays falling on Sundays in a
given year, otherwise to reckon a year at
more than 365 days.

(1) If unworked, 200% of basic wage.


(2) If worked, 300% of basic wage. (Azucena)
Double Holiday Rule for Monthly-paid employees
For covered employees whose monthly salaries are
computed based on 365 days and for those other
employees who are paid using factor 314, or 262, or
any other factor which already considers the
payment for the 11 regular holidays, NO additional
payment is due them. (BWC-WHSD Opinion No. 053,
s. 1998).
Successive holiday pay
According to IRR, Rule IV, Sec. 10, Employee entitled
to holiday pay for both days, IF:
(1) He is present on day immediately preceding
first holiday; or
(2) He works on first holiday, which entitles him
to pay on second holiday.
NOTE: SEE IRR Book III, Rule IV, Sec. 10
Divisors
Divisor assumes important role in determining
whether or not holiday pay is already computed.
(1) Monthly paid employees are not entitled to
the holiday pay if their total annual income
is divided by 365 days resulting in a wage
which is beyond the minimum wage per day
because they are considered paid everyday
of the year including holidays, rest days,
and other non-working days. The 365 days
are as follows:
365 days = 300 days ordinary days
51 days rest days
11 days regular holidays
3 days special holidays
(2) As a general rule, for a company with a 6day working schedule, the divisor 314
already means that the legal holidays are
included in the monthly pay of the
employee. The divisor is arrived at by
subtracting all Sundays from the total
number of calendar days in a year.
(3) As a general rule for a company with a 5day working schedule, the divisor 261
means that the holiday pay is already
included in the monthly salary of the
employee.
Sundays
Letter of Instruction No. 1087:
(1) When a holiday falls on a Sunday, the following
Monday will not be considered a holiday unless
a proclamation says so.
(2) Furthermore as stated in the Wellington case
(see below), a legal holiday falling on a Sunday
does not create a legal obligation to pay extra,
aside from the usual holiday pay, to monthlypaid employees (Azucena).
Holidays falling on a Sunday
Wellington
Investment
and
Corporation vs. Trajano (1995):

Manufacturing

Non-working/scheduled rest day


IRR, Book III, Rule V, Sec 6 (c): Where the day
immediately preceding the holiday is a non-working
day in the establishment or the scheduled rest day
of the employee, he shall not be deemed to be on
leave of absence on that day, in which case he shall
be entitled to the holiday pay if he worked on the
day immediately preceding the non-working day or
rest day.
Example,
If a holiday falls on Monday, and Sunday is a nonworking day in the establishment or is the scheduled
rest day of the employee, the employee shall be
entitled to holiday pay if he worked on Saturday
(which is the day immediately preceding Sunday, the
non-working day or rest day).

TOPIC D-IV. RIGHT TO HOLIDAY PAY


a) In case of absences
IRR, Book III, Rule IV, Sec 6(a): All covered
employees shall be entitled to the benefit provided
herein when they are on leave of absence with pay.
Employees who are on leave of absence without pay
on the day immediately preceding a regular holiday
may not be paid the required holiday pay if he has
not worked on such regular holiday.
Note:
(1) If an employee is on leave of absence with pay
on the day immediately preceding a regular
holiday, he is entitled to holiday pay.
(2) If an employee is on leave of absence without
pay on the day immediately preceding a
regular holiday, he is not entitled to holiday
pay unless he works on such regular holiday.
b)

In case of temporary cessation of


work
IRR, Book III, Rule IV, Sec 7:
(a) In cases of temporary or periodic shutdown and
temporary cessation of work of an establishment, as
when a yearly inventory or when the repair or

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LABOR LAW REVIEWER


cleaning of machineries and equipment is
undertaken, the regular holidays falling within the
periods shall be compensated in accordance with
this Rule.
(b) The regular holiday during the cessation of
operation of an enterprise due to business reverses
as authorized by the Secretary of Labor may not be
paid by the employer.
An employee is entitled to holiday pay for the
regular holidays falling within the period in cases of
temporary shutdowns or cessation of work, when:
(1) an annual inventory; or
(2) repair or cleaning of machineries and equipment
is undertaken.
The employer may not pay his employees for the
regular holidays during the suspension of work if: the
cessation of operation is due to business reverses,
and is authorized by the Secretary of Labor.
c)

Of
teachers,
piece
workers,
seafarers, seasonal workers, etc.
SECTION 8. Holiday pay of certain employees.
(a) Private school teachers, including faculty
members of colleges and universities, may not be
paid for the regular holidays during semestral
vacations. They shall, however, be paid for the
regular holidays during Christmas vacation;
(b) Where a covered employee, is paid by results or
output, such as payment on piece work, his holiday
pay shall not be less than his average daily earnings
for the last seven (7) actual working days preceding
the regular holiday; Provided, However, that in no
case shall the holiday pay be less than the applicable
statutory minimum wage rate.
(c) Seasonal workers may not be paid the required
holiday pay during off-season when they are not at
work
(d) Workers who have no regular working days shall
be entitled to the benefits provided in this Rule.
Holiday Pay of Hourly-Paid Faculty Members
(1) They are not entitled to payment of holiday
pay because they are paid only for work
actually done. Since regular holidays are
known to both the school and faculty
members as no class day; certainly the
latter do not expect payment for said
unworked holidays.
(2) They are entitled to their hourly rate on days
declared as special holidays. Be it noted that
when a special public holiday is declared, the
faculty member paid by the hour is deprived
of expected income, and it does not matter
that the school calendar is extended in view
of the days or hours lost, for their income that
could be earned from other sources is lost
during the extended days.
(3) Similarly, when classes are called off or
shortened on account of typhoons, floods,
rallies, and the like, these faculty members
must likewise be paid, whether or not
extensions are ordered. (Jose Rizal College v.
NLRC, G.R. No. 65482, Dec. 1, 1987)

Piece workers
Philosophy underlying the exclusion of piece workers
from the 8-hour law is that said workers are paid
depending upon the work they do irrespective of the
amount of time employed in doing said work. (Red V
Coconut Products Ltd., v. CIR, 1966)
Seafarers
Any hours of work or duty including hours of watchkeeping performed by the seafarer on designated
rest days and holidays shall be paid rest day or
holiday pay. (Section 11.C, Standard Terms and
Conditions Governing the Employment of Filipino
Seafarers on Board Ocean-Going Vessels)
Seasonal workers
Seasonal workers who do not work during off-season
are not entitled to pay for the regular holidays
occurring during their off-season. Workers assigned
to skeleton crews that work during the off-season
have the right to be paid on regular holidays falling
in that duration.

E. Leaves
TOPIC E-1. Service Incentive Leave Pay
Right to service incentive leave
Art. 95. Right to service incentive leave.
A. Every employee who has rendered at least one
year of service shall be entitled to a yearly service
incentive leave of five days with pay.
SIL DOES NOT apply to the following employees:
(1) Those of the government and any of its political
subdivisions, including GOCCs;
(2) Domestic helpers and persons in the personal
service of another;
(3) Managerial employees as defined in Book 3 of
this Code;
(4) Field personnel and other employees whose
performance is unsupervised by the employer
including those who are engaged on task or
contract basis, purely commission basis, or
those who are paid a fixed amount for
performing work irrespective of the time
consumed in the performance thereof;
(5) Those who are already enjoying the benefit
herein provided;
(6) Those enjoying vacation leave with pay of at
least 5 days;
(7) Those employed in establishments regularly
employing less than 10 employees. (Sec. 1, Rule
V, Implementing Rules and Regulations).
Jurisprudence:
(1) Teachers of private school on contract basis are
entitled to service incentive leave. (Cebu
Institute of Technology v. Ople, 156 SCRA 531).
(2) Piece Rate Workers In the case of Makati
Haberdashery v. NLRC (G.R. No. 83380-81, Nov.
15, 1989) the Court ruled that piece-rate
employees are not entitled to service incentive
leave. However, in the case of Labor Congress of

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LABOR LAW REVIEWER


the Philippines v. NLRC (G.R. No. 123938, May
21, 1998).
Meaning of 1 year of service
IRR Book III, Rule V, Sec. 3: The term "at least oneyear service" shall mean service for not less than 12
months, whether continuous or broken, reckoned
from the date the employee started working,
including authorized absences and paid regular
holidays unless the working days in the
establishment as a matter of practice or policy, or
that provided in the employment contract is less
than 12 months, in which case said period shall be
considered as one year.
Court held that petitioners are entitled to service
incentive leave. Court concluded that factors led
them to conclude that petitioners, although piecerate workers, were regular employees of private
respondents. (Labor Congress vs. NLRC, 1998)
Entitlement
Art. 95 (c): The grant of benefit in excess of that
provided herein shall not be made a subject of
arbitration or any court or administrative action.
IRR Sec. 5 The service incentive leave shall be
commutable to its money equivalent if not used or
exhausted at the end of the year.
The cause of action of an entitled employee to claim
his service incentive leave pay accrues from the
moment the employer refuses to remunerate its
monetary equivalent if the employee did not make
use of said leave credits but instead chose to avail of
its commutation (into money). Accordingly, if the
employee wishes to accumulate his leave credits and
opts for its commutation upon his resignation or
separation from employment, his cause of action to
claim the whole amount of his accumulated service
incentive leave shall arise when the employer fails
to pay such amount at the time of his resignation or
separation from employment. (Auto Bus Transport
vs. NLRC, 2005)
(b) Exclusions from coverage
Art. 95. Right to service incentive leave.
B. This provision shall not apply to those
(1) who are already enjoying the benefit herein
provided,
(2) those enjoying vacation leave with pay of at
least five days and
(3) those employed in establishments regularly
employing less than ten employees or
(4) in establishments exempted from granting this
benefit by the Secretary of Labor and
Employment after considering the viability or
financial condition of such establishment.
(c) Commutable nature of benefit
They are not entitled to service incentive leave pay
because as piece-rate workers being paid at a fixed
amount for performing work irrespective of time
consumed in the performance thereof, they fall
under one of the exceptions stated in Section 1(d),

Rule V, Book III, IRR of Labor Code. (Makati


Haberdashery vs. NLRC, 1989)

TOPIC E-II. MATERNITY LEAVE


NOTE: SEE Sec. 14-A of RA 1161 (Social Security
Law) as amended by RA 7322 and RA 8282
Coverage
Every woman in the private sector, whether married
or unmarried, is entitled to the maternity leave
benefits.
Conditions to entitlement
Requisites
(1) Employment: A female employee employed at
the time of delivery, miscarriage or abortion
(2) Contribution: who has paid at least 3 monthly
contributions
in
the
12-month
period
immediately preceding the semester of her
childbirth, or miscarriage.
(3) Notice: employee notified employer of her
pregnancy and the probable date of her
childbirth, which notice shall be transmitted to
the SSS in accordance with the rules and
regulations it may provide.
Benefit received
A daily maternity benefit equivalent to 100% of
her average daily salary credit for:
(1) 60 days for normal delivery
(2) 78 days for caesarean delivery
This benefit shall NOT be included in the
computation of 13th month pay as it is granted to an
employee in lieu of wages which is the basis for
computing 13th month.
Availment
Other conditions
(1) Employer shall advance the payment subject to
reimbursement by the SSS within 30 days from
filing of leave application.
(2) Availment shall be a bar to the recovery of
sickness benefits provided by this Act for the
same period for which daily maternity benefits
have been received.
(3) Employee may only avail of benefit for the first
four (4) deliveries or miscarriages.
(4) Sanction:
That if an employee should give birth or suffer
miscarriage
a. without the required contributions
26
having been remitted for her by her ER
to the SSS, or
b. without the latter having been
previously notified by the ER of time of
the pregnancy, then the employer shall
pay to the SSS damages equivalent to
the benefits which said employee
member would otherwise have been
entitled to.

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LABOR LAW REVIEWER


TOPIC E-III. PATERNITY LEAVE
Coverage
Every married male employee in the private and
public sectors shall be entitled to a paternity leave
of 7 days with full pay for the first four deliveries of
the legitimate spouse with whom he is cohabiting.
Conditions to entitlement
Requisites
(1) Employment
(2) Marriage to and cohabitation with his legitimate
spouse
(3) Delivery of the legitimate spouse (must not
exceed fourth delivery)
Availment
every married male employee in the private and
public sectors shall be entitled to a paternity leave
of 7 days with full pay for the first four deliveries of
the legitimate spouse with whom he is cohabiting.
The male employee applying for paternity leave shall
notify his employer of the pregnancy of his
legitimate spouse and the expected date of such
delivery.
Note: For purposes of this Act, delivery shall include
childbirth or any miscarriage.

TOPIC E-IV. PARENTAL LEAVE


RA 8972 (Solo Parents Welfare Act of 2000)
NOTE: SEE Sec. 3(a) for definition of term Solo
Parent
Section 6. Flexible Work Schedule. - The employer
shall provide for a flexible working schedule for solo
parents: Provided, That the same shall not affect
individual and company productivity: Provided,
further, That any employer may request exemption
from the above requirements from the DOLE on
certain meritorious grounds.
Section 7. Work Discrimination. - No employer shall
discriminate against any solo parent employee with
respect to terms and conditions of employment on
account of his/her status.
Section 8. Parental Leave. - In addition to leave
privileges under existing laws, parental leave of not
more than seven (7) working days every year shall be
granted to any solo parent employee who has
rendered service of at least one (1) year.
Leave benefits granted to a solo parent to enable
him/her
to perform
parental duties and
responsibilities where physical presence is required.
(Parental Leave for Solo Parents, RA 8972)
Coverage
Any solo parent or individual who is left alone with
the responsibility of parenthood due to:
(1) Giving birth as a result of rape or, as used by
the law, other crimes against chastity;
(2) Death of spouse;
(3) Spouse is detained or is serving sentence for a
criminal conviction for at least one (1) year;

(4) Physical and/or mental incapacity of spouse as


certified by a public medical practitioner;
(5) Legal separation or de facto separation from
spouse for at least one (1) year: Provided that
he/she is entrusted with the custody of the
children;
(6) Declaration of nullity or annulment of marriage
as decreed by a court or by a church: Provided,
that he/she is entrusted with the custody of the
children;
(7) Abandonment of spouse for at least one (1)
year;
(8) Unmarried father/mother who has preferred to
keep and rear his/her 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:
Provided, that he/she is duly licensed as a
foster parent by the Department of Social
Welfare and Development (DSWD) or duly
appointed legal guardian by the court; and
(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:
Provided,
that
such
abandonment,
disappearance, or prolonged absence lasts for at
least one (1) year.
Conditions to entitlement
A solo parent employee shall be entitled to the
parental leave under the following conditions:
(1) He/she has rendered at least one (1) year of
service, whether continuous or broken;
(2) He/she has notified his/her employer that
he/she will avail himself/herself of it, within a
reasonable period of time; and
(3) He/she has presented to his/her employer a
Solo Parent Identification Card, which may be
obtained from the DSWD office of the city or
municipality where he/she resides.
Availment
The parental leave is an additional benefit which
shall be for seven (7) working days every year, with
full pay, consisting of basic salary and mandatory
allowances.

TOPIC E-V. LEAVES FOR VICTIMS OF VIOLENCE


AGAINST WOMEN
Coverage
VAWC leave is granted to women employees who are
victims of violence, as defined in RA 9262. The leave
benefit covers the days that the women employee
has to attend to medical or legal concerns.
SECTION 3. Definition of Terms.- As used in this Act,
(a) "Violence against women and their children"
refers to any act or a series of acts committed by
any person against a woman who is his wife, former
wife, or against a woman with whom the person has
or had a sexual or dating relationship, or with whom
he has a common child, or against her child whether
legitimate or illegitimate, within or without the

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LABOR LAW REVIEWER


family abode, which result in or is likely to result in
physical, sexual, psychological harm or suffering, or
economic abuse including threats of such acts,
battery, assault, coercion, harassment or arbitrary
deprivation of liberty. It includes, but is not limited
to, the following acts:
A. "Physical Violence" refers to acts that include
bodily or physical harm;
B. "Sexual violence" refers to an act which is sexual
in nature, committed against a woman or her child.
It includes, but is not limited to:
a)

b)

c)

rape, sexual harassment, acts of lasciviousness,


treating a woman or her child as a sex object,
making demeaning and sexually suggestive remarks,
physically attacking the sexual parts of the victim's
body, forcing her/him to watch obscene publications
and indecent shows or forcing the woman or her
child to do indecent acts and/or make films thereof,
forcing the wife and mistress/lover to live in the
conjugal home or sleep together in the same room
with the abuser;
acts causing or attempting to cause the victim to
engage in any sexual activity by force, threat of
force, physical or other harm or threat of physical or
other harm or coercion;
Prostituting the woman or child.
C. "Psychological violence" refers to acts or omissions
causing or likely to cause mental or emotional
suffering of the victim such as but not limited to
intimidation, harassment, stalking, damage to
property, public ridicule or humiliation, repeated
verbal abuse and mental infidelity. It includes
causing or allowing the victim to witness the
physical, sexual or psychological abuse of a member
of the family to which the victim belongs, or to
witness pornography in any form or to witness
abusive injury to pets or to unlawful or unwanted
deprivation of the right to custody and/or visitation
of common children.
D. "Economic abuse" refers to acts that make or
attempt to make a woman financially dependent
which includes, but is not limited to the following:

a)

b)

c)
d)

withdrawal of financial support or preventing the


victim from engaging in any legitimate profession,
occupation, business or activity, except in cases
wherein the other spouse/partner objects on valid,
serious and moral grounds as defined in Article 73 of
the Family Code;
deprivation or threat of deprivation of financial
resources and the right to the use and enjoyment of
the conjugal, community or property owned in
common;
destroying household property;
controlling the victims' own money or properties or
solely controlling the conjugal money or properties.
Conditions to entitlement
RA 9262 (Anti-Violence Against Women and Their
Children Act of 2004), Sec. 43:

Victims under this Act shall be entitled to take a


paid leave of absence up to ten (10) days in addition
to other paid leaves under the Labor Code and Civil
Service Rules and Regulations, extendible when the
necessity arises as specified in the protection order.
Any employer who shall prejudice the right of the
person under this section shall be penalized in
accordance with the provisions of the Labor Code
and Civil Service Rules and Regulations. Likewise, an
employer who shall prejudice any person for
assisting a co-employee who is a victim under this
Act shall likewise be liable for
discrimination.
Implementing Rules and Regulations of RA 9262
Section 42. Ten-day paid leave in addition to other
leave benefits. - At any time during the application
of any protection order, investigation, prosecution
and/or trial of the criminal case, a victim of VAWC
who is employed shall be entitled to a paid leave of
up to ten (10) days in addition to other paid leaves
under the Labor Code and Civil Service Rules and
Regulations and other existing laws and company
policies, extendible when the necessity arises as
specified in the protection order.
The Punong Barangay/kagawad or prosecutor or the
Clerk of Court, as the case may be, shall issue a
certification at no cost to the woman that such an
action is pending, and this is all that is required for
the employer to comply with the 10-day paid leave.
For government employees, in addition to the
aforementioned
certification,
the
employee
concerned must file an application for leave citing as
basis R.A. 9262. The administrative enforcement of
this leave entitlement shall be considered within the
jurisdiction of the Regional Director of the DOLE
under Article 129 of the Labor Code of the
Philippines, as amended, for employees in the
private sector, and the Civil Service Commission, for
government employees.
The availment of the ten day-leave shall be at the
option of the woman employee, which shall cover
the days that she has to attend to medical and legal
concerns. Leaves not availed of are noncumulative
and not convertible to cash.
The employer/agency head who denies the
application for leave, and who shall prejudice the
victim-survivor or any person for assisting a coemployee who is a victim-survivor under the Act
shall be held liable for discrimination and violation
of R.A 9262.
The provision of the Labor Code and the Civil Service
Rules and Regulations shall govern the penalty to be
imposed on the said employer/agency head.
A victim of VAWC who is employed shall be entitled
to a paid leave of up to ten (10) days in addition to
other paid leaves under the Labor Code and Civil
Service Rules and Regulations and other existing laws
and company policies:

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LABOR LAW REVIEWER


(1) At any time during the application of any
protection order, investigation, prosecution
and/or trial of the criminal case, extendible
when the necessity arises as specified in the
protection order.
(2) Upon
the
issuance
of
the
Punong
Barangay/kagawad or prosecutor or the Clerk of
Court, as the case may be, of a certification (at
no cost) to the woman that such an action is
pending, and this is all that is required for the
employer to comply with the 10- day paid leave.
(3) For government employees, in addition to the
aforementioned certification, the employee
concerned must file an application for leave
citing as basis R.A. 9262.

Service charges are distributed in accordance with


the following percentage of sharing:
(1) Eighty-five percent (85%) for the employees to
be distributed equally among them; and The
shares shall be distributed to employees not less
than once every 2 weeks or twice a month at
intervals not exceeding 16 days. (Sec 4, Rule VI,
Book 3)
(2) Fifteen percent (15%) for the management to
answer for losses and breakages and, at the
discretion of the management, distribution to
managerial employees. (Sec 3, Rule VI, Book 3)

Availment
In addition to other paid leaves under existing labor
laws, company policy, and/or collective bargaining
agreement, the qualified victim employee shall be
entitled to a leave of up to 10 days with full pay,
consisting of basic salary and mandatory allowances
fixed by the Regional Wage Board, if any.

TOPIC F-IV. INTEGRATION

F. Service Charges
TOPIC F-I. COVERAGE
Sec 1, Rule VI, Book 3. This rule shall apply only to
establishments which collect service charges such
as:
(1) Hotels, restaurants, lodging houses, night clubs,
cocktail lounge, massage clinics, bars, casinos
and gambling houses and similar enterprises
(2) Including those entities operating primarily as
private subsidiaries of the Government
Sec 2, Rule VI, Book 3. Shall apply to ALL employees
of covered employers
(1) Regardless of their positions, designations, or
employment status,
(2) Irrespective of the method by which their wages
are paid

TOPIC F-II. EXCLUSION


Managerial employees or one who is vested with
powers or prerogatives to lay down and execute
managerial policies and/or hire, transfer, suspend,
layoff, recall, discharge, assign or discipline
employees or to effectively recommend such
managerial actions. All employees not falling within
this definition shall be considered rank and file
employees.

TOPIC F-III. DISTRIBUTION


Art 96: All service charges collected by hotels,
restaurants and similar establishments shall be
distributed at the rate of 85% for all covered
employees and 15% for management. The share of
the employees shall be equally distributed among
them. In case the service charge is abolished, the
share of the covered employees shall be considered
integrated in their wages.

Note: The P2,000.00 salary ceiling for entitlement


thereto is no longer applicable.

Art 96, par. 2: In case service charge is abolished:


shares of covered employees shall be considered
integrated in their wages.
The basis of the amount to be integrated shall be
the average monthly share of each employee for the
past twelve (12) months immediately preceding the
abolition of withdrawal of such charges. (Sec. 5,
Rule VI, Book 3, sentence 2)
Synthesis of the Rules
(1) Service charges must be pooled;
(2) Where a restaurant or similar establishment
does not collect service charges but has a
practice or policy of monitoring and pooling
tips given voluntarily by its customers to its
employees, the pooled tips should be
monitored, accounted for and distributed in
the same manner as the services charges.
(DOLE Handbook on Workers Statutory
Monetary Benefits, 2006 ed., p. 27).
(3) The amount collected is divided between
the company (15%) and employees (85%);
(4) It shall be given twice a month with
intervals of not more than 15 days;
(5) If discontinued, removed, or stopped, the
average share of the employees of their
service charge or tips shall be integrated
with their basic wage.

G. Thirteenth (13th) Month Pay


and other bonuses
Revised Guidelines on the Implementation of the
13th Month Pay Law and PD 851
Rationale
(1) To further protect the level of real wages from
the ravage of world-wide inflation;
(2) There has been no increase in the legal
minimum wage rates since 1970;
(3) The Christmas season is an opportune time for
society to show its concern for the plight of the
working masses so they may properly celebrate
Christmas and New Year.

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LABOR LAW REVIEWER


TOPIC G-I. COVERAGE
General Rule: ALL EMPLOYERS are hereby required
to pay all their rank and file employees a 13th
month pay not later than Dec 24 of every year,
Provided that they have worked for at
least one (1) month during a calendar
year.

TOPIC G-II. EXCLUSION/EXEMPTIONS FROM


COVERAGE
Exempted Employers:
(1) Government, its political subdivisions, including
GOCCs except those operating essentially as
private subsidiaries of the Government;
(2) Employers already paying their employees a
13th month pay or more in a calendar year or its
equivalent at the time of this issuance;
Equivalent includes:
(a) Christmas bonus, mid-year bonus, cash bonuses
(b) and other payments amounting to not less than
1/12 of the basic salary
(c) but shall NOT INCLUDE cash and stock dividends,
cost of living allowances and all other
allowances regularly enjoyed by the employee
as well a non-monetary benefits.
(3) Employers of household helpers and persons in
the personal service of another relation to such
workers; and
(4) Employers of those who are paid on purely
commission, boundary or task basis and those
who are paid a fixed amount for performing
specific work.
EXCEPT where the workers are paid on piece-rate
basis in which case the employer shall grant the
required 13th month pay to such workers.
Workers paid on a piece-rate basis: 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.

TOPIC G-III. NATURE OF 13TH MONTH PAY


Amount and Date of Payment
Minimum Amount: 1/12 of the total basic salary
earned by an employee within a calendar year for
the year 1987
BASE AMOUNT, which is the basic salary shall
include:
(1) cost of living allowances (COLA) integrated into
the basic salary of a covered employee pursuant
to EO 178.
(2) all remunerations or earning paid by this
employer for services rendered.
(3) But not the allowances and monetary benefits
which are not considered or integrated as part
of the regular or basic salary, such as the cash

equivalent of:
a. unused vacation and sick leave credits,
b. overtime,
c. premium,
d. night differential,
e. holiday pay and, and
f. cost-of-living allowances.
Time of payment
GENERAL RULE: paid not later than Dec 24 of each
year.
EXCEPTION: ER may give to his employees half ()
of the required 13th Month Pay before the opening
of the regular school year and the other half on or
before the 24th of December every year.
The frequency of payment of this
monetary benefit may be the subject of
agreement between the employer and
the recognized CBA of the employees.

TOPIC G-IV. 13TH MONTH PAY IN SPECIAL


CASES
(1) Paid by Results: Employees who are paid on
piece work basis are, by law, entitled to the
13th Month Pay.
(2) Employees who are paid a fixed or guaranteed
wage plus commission are entitled to 13th
month pay (not purely commission); the basis
for computation shall be both their fixed or
guaranteed wage and commission.
(3) Those with Multiple Employers: Government
Employees working part time in a private
enterprise,
including private
educational
institutions, as well as Employees working in
two or more private firms, whether on full or
part time bases, are entitled to the required
13th Month Pay from all their private Employers
regardless of their total earnings from each or
all their Employers.
(4) Private School Teachers: Private school
teachers, including faculty members of
universities and colleges, are entitled to the
required 13th month pay, regardless of the
number of months they teach or are paid within
a year, if they have rendered service for at least
one (1) month within a year.
Overload pay is NOT included in the
computation for 13th month pay; overload is
not overtime as it is additional work done
within the normal shift (Letran Calamba
Faculty vs. NLRC, 2008)
(5) Resigned or Separated Employee: an Employee
who has resigned or whose services were
terminated at any time before the time for
payment of the 13th month pay is entitled to
this monetary benefit in proportion to the
length of time he worked during the year,
reckoned from the time he started working
during the calendar year up to the time of his
resignation or termination from service.
(6) Wage Difference: The difference between the
minimum wage and the actual salary received
by the Employee cannot be deemed as his 13 th
month pay as such difference is not equivalent

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LABOR LAW REVIEWER


to or of the same import as the said benefit
contemplated
by
law.
(JPL
Marketing
Promotions vs. CA, 2005)
(7) Terminated Employees: the payment of the
13th month pay may be demanded by the
employee upon the cessation of employeremployee relationship. (Archilles Manufacturing
Corp. vs. NLRC, 1995)
Additional Rules:
(1) Commissions: If the commissions may be
properly considered part of the basic salary,
then they should be INCLUDED. If they are not
an integral part of the basic salary, then they
should be EXCLUDED. (Phil. Duplicators Inc. vs.
NLRC, 1995)
(2) Substitute Payment not allowed: benefits in
the form of food or free electricity, assuming
they were given, were not a proper substitute
for the 13th month pay required by law. Neither
may year-end rewards for loyalty and service be
considered in lieu of 13th month pay. (Framanlis
Farms, Inc. v. MOLE, 1989)
(3) 14th Month Pay is not mandated: Employers
already paying their employees a 13th month
pay or its equivalent are not covered by this
Decree. (Kamaya Port Hotel v. NLRC, 1989)

TOPIC G-V. COMMISSIONS VIS--VIS 13TH


MONTH PAY
The so-called commissions paid to or received by
medical representatives of Boie-Takada Chemicals or
by the rank-and-file employees of Philippine Fuji
Xerox Co., were excluded from the term basic
salary because these were paid to the medical
representatives and rank-and-file employees as
productivity bonuses. These have no clear direct
or necessary relation to the amount of work actually
done by each individual employee. More generally, a
bonus is an amount granted and paid ex gratia to an
employee. If an employer cannot be compelled to
pay a productivity bonus to its employees, it should
follow that such productivity bonus, when given,
should not be deemed to fall within the basic
salary of employees when the time comes to
compute their 13th month pay (Boie Takada v de la
Serna, 228 SCRA 329; 1993)
The decision in Boie Takada and the doctrine
enunciate in this case in fact co-exist with the other.
The two cases present quite different factual
situations (although the same word commissions
was used or invoked) the legal characterizations of
which must accordingly differ.
In the instant case, there is no question that the
sales commission earned by the salesmen who make
or close a sale of duplicating machines constitute
part of the compensation or remuneration paid to
salesmen for serving as salesmen, and hence as part
of the wage or salary of petitioners salesmen. It
appears that petitioner pays its salesmen a small
fixed or guaranteed wage; the greater part of the
salesmens wages or salaries being composed of the
sales or incentive commissions earned on actual

sales closed by them. The sales commissions were


an integral part of the basic salary structure. They
are not overtime payments, or profit sharing
payments or any other fringe benefit.
(Phil.
Duplicators vs. NLRC, 227 SCRA 747; 1995)

TOPIC G-VI. CBA VIS--VIS 13TH MONTH PAY


In order to exempt the employer from paying 13 th
month pay, a bonus stipulation in the CBA should be
general in scope, applicable to all employees, not
only a few, for the legal obligation benefits all
employees regardless of their designation or
employment status so long as they have worked at
least one month during the calendar year.
(Marcopper Mining Corp. vs. Ople)

H. Women Workers
TOPIC H-I. DISCRIMINATION (ART. 135, LC)
Art. 135. Discrimination prohibited. It shall be
unlawful for any employer to discriminate against
any woman employee with respect to terms and
conditions of employment solely on account of her
sex.
The following are acts of discrimination:
(1) Payment of a lesser compensation, including
wage, salary or other form of remuneration and
fringe benefits, to a female employees as
against a male employee, for work of equal
value; and
(2) Favoring a male employee over a female
employee with respect to promotion, training
opportunities, study and scholarship grants
solely on account of their sexes.
Criminal liability for the willful commission of any
unlawful act as provided in this article or any
violation of the rules and regulations issued pursuant
to Section 2 hereof shall be penalized as provided in
Articles 288 and 289 of this Code: Provided, That the
institution of any criminal action under this provision
shall not bar the aggrieved employee from filing an
entirely separate and distinct action for money
claims, which may include claims for damages and
other affirmative reliefs. The actions hereby
authorized shall proceed independently of each
other.

TOPIC H-II. STIPULATION AGAINSTMARRIAGE


(ART. 136, LC)
Art. 136. Stipulation against marriage. It shall be
unlawful for an employer to require as a condition of
employment or continuation of employment that a
woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting
married a woman employee shall be deemed
resigned or separated or to actually dismiss,
discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.
Bona fide occupational qualification exception
When the employer can prove that the reasonable
demands of the business require a distinction based
on marital status and there is no better available or

41

LABOR LAW REVIEWER


acceptable policy which would better accomplish the
business purpose, an ER may discriminate against an
EE based in the identity of the EEs spouse. (Star
Paper Corp. vs. Simbol, 2006)
The Court sustained the validity of employer policy
prohibiting an employee from having a personal or
marital relationship with an employee of a
competitor. The prohibition was reasonable under
the circumstances because relationships of such
nature might compromise the interests of the
company. (Duncan Association of Detailmen vs.
Glaxo Wellcome, 2004)

TOPIC H-III. PROHIBITED ACTS (Art. 137, LC)


(a) Nightwork/ Exception (Art 130-131) No
more nightwork prohibition under R.A.
10151.
NOTE: Art 130 and 131 have been repealed
already by R.A. 10151 (June 21, 2011). Articles
130 and 131 are cited here just for your
information.
Art. 130. Nightwork prohibition. No woman,
regardless of age, shall be employed or permitted or
suffered to work, with or without compensation:
In any industrial undertaking or branch thereof
between ten oclock at night and six oclock in the
morning of the following day; or

a.

In any commercial or non-industrial undertaking or


branch thereof, other than agricultural, between
midnight and six oclock in the morning of the
following day; or
In any agricultural undertaking at nighttime unless
she is given a period of rest of not less than nine (9)
consecutive hours.
Art. 131. Exceptions. The prohibitions prescribed by
the preceding Article shall not apply in any of the
following cases:
(1) In cases of actual or impending emergencies
caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disasters or
calamity, to prevent loss of life or property, or
in cases of force majeure or imminent danger to
public safety;
(2) In case of urgent work to be performed on
machineries, equipment or installation, to avoid
serious loss which the employer would otherwise
suffer;
(3) Where the work is necessary to prevent serious
loss of perishable goods;
(4) Where the woman employee holds a responsible
position of managerial or technical nature, or
where the woman employee has been engaged
to provide health and welfare services;
(5) Where the nature of the work requires the
manual skill and dexterity of women workers
and the same cannot be performed with equal
efficiency by male workers.
(6) Where the women employees are immediate

members of the family operating the


establishment or undertaking; andUnder other
analogous cases exempted by the Secretary of
Labor
and
Employment
in
appropriate
regulations.
NOTE: Art 130 and 131 have been repealed
already by R.A. 10151 (June 21, 2011). Articles
130 and 131 are cited here just for your
information.
(b) Discrimination (Art 135, RA 9710)
Art. 135. Discrimination prohibited. It shall be
unlawful for any employer to discriminate against
any woman employee with respect to terms and
conditions of employment solely on account of her
sex.
The following are acts of discrimination:
(1) Payment of a lesser compensation, including
wage, salary or other form of remuneration and
fringe benefits, to a female employees as
against a male employee, for work of equal
value; and
(2) Favoring a male employee over a female
employee with respect to promotion, training
opportunities, study and scholarship grants
solely on account of their sexes.
Criminal liability for the willful commission of any
unlawful act as provided in this Article or any
violation of the rules and regulations issued pursuant
to Section 2 hereof shall be penalized as provided in
Articles 288 and 289 of this Code: Provided, That the
institution of any criminal action under this provision
shall not bar the aggrieved employee from filing an
entirely separate and distinct action for money
claims, which may include claims for damages and
other affirmative reliefs. The actions hereby
authorized shall proceed independently of each
other. (As amended by Republic Act No. 6725, May
12, 1989)
(c) Stipulation against marriage (Art 136)
See previous section
(d) Discharge to prevent enjoyment of
benefits [Art 137(a)(1)]
Art. 137. Prohibited acts. (a) It shall be unlawful for
any employer:
(1) To deny any woman employee the benefits
provided for in this Chapter or to discharge any
woman employed by him for the purpose of
preventing her from enjoying any of the benefits
provided under this Code;
(e) Discharge on account of pregnancy [Art
137(a)(2)]
Art 137. Prohibited acts. (a) It shall be unlawful for
any employer:
(2) To discharge such woman on account of her
pregnancy, while on leave or in confinement due to
her pregnancy; or
(f) Discharge on account of testimony [Art
137(a)(3)]

42

LABOR LAW REVIEWER


Art. 137. Prohibited acts. (a) It shall be unlawful for
any employer:
(3) To discharge or refuse the admission of such
woman upon returning to her work for fear that
she may again be pregnant.

i. impair the employees rights or


privileges under existing labor
laws; or
ii. result in an intimidating, hostile,
or offensive environment for the
employee.

[Book III, Rule XII, Sec 13(d)] It shall be


unlawful for any employer: to discharge any
woman or child or any other employee for
having filed a complaint or having testified or
being about to testify under the Code

(2) Education or Training environment. In an


education or training environment, sexual
harassment is committed:
a. Against one who is under the care,
custody or supervision of the offender
b. Against one whose education, training,
apprenticeship or tutorship is entrusted
to the offender;
c. When the sexual favor is made a
condition to the giving of a passing
grade, or the granting of honors and
scholarships, or the payment of a
stipend, allowance or other benefits,
privileges, or considerations; or
d. When the sexual advances result in an
intimidating,
hostile
or
offensive
environment for the result, trainee or
apprentice.

(g) Expulsion of Women faculty/ female


student due to pregnancy outside of
marriage (Sec 13c RA 9710 Magna Carta of
Women)
c) Expulsion and non-readmission of women faculty
due to pregnancy outside of marriage shall be
outlawed. No school shall turn out or refuse
admission to a female student solely on the account
of her having contracted pregnancy outside of
marriage during her term in school.

TOPIC H-IV. Classification of certain women


workers (Art. 138, LC)
Art. 138. Any woman who is permitted or suffered
to work with or without compensation in any night
club, cocktail lounge, massage clinic, bar or
similar establishment, under the effective control
or supervision of the employer for a substantial
period of time as determined by the Secretary of
Labor and Employment, shall be considered as an EE
of such establishments for purposes of labor and
social legislation.

TOPIC H-V. Anti-Sexual Harassment Act (RA


7877)
NOTE: SEE RA 7877: Anti-Sexual Harassment Act of
1995
Unlawful Forms of Sexual Harassment
(1) Employment or Work Related
a. The sexual favor is made as a condition
i. in the hiring or in the
employment, re-employment or
continued employment of said
individual or
ii. in
granting
said
individual
favorable compensation, terms,
conditions,
promotions,
or
privileges, or
iii. in the refusal to grant the sexual
favor
results
in
limiting,
segregating or classifying the EE
which in
any
way
would
discriminate, deprive or diminish
employment opportunities or
otherwise adversely affect said
employee;
b.

The above acts would either:

Persons who may be liable


(1) Any employer, employee, manager, supervisor,
agent of the employer, teacher, instructor,
professor, coach, trainer or any other person,
regardless of whether the demand, request for
requirement for submission is accepted by the
object of said act having authority, influence
or moral ascendancy over another in a work or
training or education environment, who
demands, requests or otherwise requires any
sexual favor from another,
(2) Any person who directs or induces another to
commit any act of sexual harassment as herein
defined. OR
(3) Any person who cooperates in the commission
by another without which it would NOT have
been committed, shall also be held liable under
this Act
Role of the employer or Head of Office
The Employer or Head of Office shall have the duty:
(1) to prevent the commission of such acts and
(2) to lay down the procedure for the resolution,
settlement or prosecution of committed acts.
He shall be solidarily liable for damages:
(1) if he is informed of such acts by the offended
party and
(2) no immediate action is taken thereon.
Independent Action for Damages
The victim of work, education or training-related
sexual harassment can institute a separate and
independent action for damages and other
affirmative relief.
Sanctions
(1) Criminal: imprisonment of 1 month to mos. Or
fine of P10k to P20k or both
Prescription of such action is in 3 years.
(2) Termination

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LABOR LAW REVIEWER


As a managerial employee, petitioner is bound by
more exacting work ethics. When such moral
perversity is perpetuated against his subordinate, he
provides a justifiable ground for his dismissal for lack
of trust and confidence. It is the right, nay the duty
of every employer to protect its employees from
oversexed superiors. (Libres v. NLRC, 1999)
Cortezs plant manager manifested a special liking
for her, so much so that she was receiving special
treatment from him who would oftentimes invite her
"for a date," which she would as often refuse.
On many occasions, he would make sexual advances
- touching her hands, putting his arms around her
shoulders, running his fingers on her arms and telling
her she looked beautiful. The special treatment and
sexual advances continued during her employment
for four (4) years but eventually, he made her
understand that if she would not give in to his sexual
advances he would cause her termination from the
service; and he made good his threat when he
started harassing her.
Public respondent appears baffled why it took
private respondent more than four years to expose
William Chua's alleged sexual harassment. The
gravamen of the offense in sexual harassment is
not the violation of the employee's sexuality but
the abuse of power by the employer. Any
employee, male or female, may rightfully cry
"foul" provided the claim is well substantiated.
Strictly speaking, there is no time period within
which he or she is expected to complain through
the proper channels. The time to do so may vary
depending upon the needs, circumstances, and
more importantly, the emotional threshold of the
employee.
Not many women are made of the stuff that can
endure the agony and trauma of a public, even
corporate, scandal. If petitioner corporation had not
issued the third memorandum that terminated the
services of private respondent, we could only
speculate how much longer she would keep her
silence. Perhaps, to private respondent's mind, for
as long as she could outwit her employer's ploys she
would continue on her job and consider them as
mere
occupational
hazards.
(Phil.
Aelous
Automotive United Corp. v. NLRC, 2000)

I. Minor Workers (RA 7610, RA


9231)
Constitutional basis
Art II, Sec. 13 of the 1987 Constitution
1) The State recognizes the vital role of the youth
in nation-building and shall promote and protect
their physical, moral, spiritual, intellectual, and
social well-being.
2) It shall inculcate in the youth patriotism and
nationalism, and encourage their involvement in
public and civic affairs.
GENERAL RULE: Children below 15 shall NOT be
employed

Legal Basis: Art. 139(a) of the Labor Code and Sec.


12 to 16 of RA 7610 as amended by RA 7658 and RA
9231
EXCEPTIONS
(1) Child works directly under the sole
responsibility of his parents or legal guardian
and where only members of the ERs family are
employed, provided:
(a) his employment does NOT endanger his
life, safety, health and morals,
(b) nor impairs his normal development, and
(c) the parent or legal guardian shall provide
the said minor child with the prescribed
primary and/or secondary education;
[Sec. 12 of RA 7610 as amended by RA 7658]
(2) childs employment or participation in public
entertainment or information through cinema,
theater, radio or television is essential, provided
that: [Sec. 12 of RA 7610 as amended by RA
7658]
(a) employment does NOT involve ads or
commercials promoting alcohol, tobacco
and its by-products or violence [Sec. 14 of
RA 7610]
(b) the employment contract is concluded by
the childs parents or guardian, and
approved by DOLE
(c) The ER shall ensure the protection, health,
safety and morals of the child
(d) The ER shall institute measures to prevent
the childs exploitation or discrimination
taking into account the system and level of
remuneration, and the duration and
arrangement of working time
(e) The ER shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing
program for training and skills acquisition
of the child. [Sec. 12 of RA 7610 as
amended by RA 7658]
Employment of Children from 15 to 18 - allowed
but restricted to non-hazardous undertakings.
The following are HAZARDOUS workplaces:
(1) Nature of the work exposes the workers to
dangerous
environmental
elements,
contaminants or working conditions;
(2) construction work, logging, fire-fighting, mining,
quarrying, blasting, stevedoring, dock work,
deep sea fishing, and mechanized farming;
(3) manufacture or handling of explosives and other
pyrotechnic products;
(4) exposure to or use of heavy power-driven
machinery or equipment;
(5) exposure to or use of power-driven tools (IRR
Book III Rule XII Sec. 3)

REGULATION OF WORKING HOURS OF A CHILD

44

LABOR LAW REVIEWER


Quantity
Age Bracket

Daily Max

Weekly Max

Below 15 y

4 hours

20 hours

15 to below 18

8 hours

40 hours

Night work prohibition


Age Bracket
Below 15 y
15 to below 18

Prohibited Hours
8 pm to 6 am (10 hrs)
10 pm to 6 am (8 hrs)

EMPLOYMENT OF THE CHILD IN PUBLIC


ENTERTAINMENT
NOTE: Please refer to the second exception in the
preceding subsection.
PROHIBITION OF EMPLOYING MINORS IN CERTAIN
UNDERTAKINGS AND IN CERTAIN ADVERTISEMENTS
NOTE: Please refer to the second exception.

J. Employment of Househelpers
TOPIC J-I. Definition
Art. 141: This Chapter shall apply to all persons
rendering services in households for compensation.
"Domestic or household services" shall mean
service in the ER's home, which is usually
necessary or desirable for the maintenance and
enjoyment thereof and includes ministering to the
personal comfort and convenience of the members
of the ER's household, including services of family
drivers.
IRR Rule XII Sec1b
(b) The term househelper as used herein is
synonymous to the term domestic servant and
shall refer to any person, whether male or female,
who renders services in and about the employers
home and which services are usually necessary or
desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the persona
comfort and enjoyment of the employers family.
The term `househelper' is synonymous to the term
`domestic servant' and shall refer to any person,
whether male or female, who renders services in and
about the ER's home and which services are usually
necessary or desirable for the maintenance and
enjoyment thereof, and ministers exclusively to the
personal comfort and enjoyment of the ER's family.
A househelper or a laundry woman, as well as a
gardener, driver, or a houseboy who work in the
staff house of a company are NOT househelpers. The
criterion is not the nature of the work but the
personal comfort and enjoyment of the family of the
employer in the home of said employer. (Apex
Mining Co. v. NLRC, 1991)

TOPIC J-II. BENEFITS ACCORDED


HOUSEHELPERS
Compensation

Minimum wage rates shall be equivalent to the basic


cash wages plus lodging, food and medical
attendance. (Art. 143-144; Civil Code Art. 1689)
Time and Manner of Payment: Wages shall be paid
directly to the househelper to whom they are due at
least once a month. No deductions therefrom shall
be made by the employer unless authorized by the
househelper himself or by existing laws. (Book III,
Rule XIII, Sec. 9)
Right against assignment to non-household work at
a wage rate lower than that mandated for
agricultural
or
non-agricultural
enterprises
depending on the case. (Art 145)
Opportunity for education if househelper is below
18 years (Art 146; NCC 1691)
(1) ER shall provide for at least elementary
education;
(2) cost shall be part of the EEs compensation
UNLESS otherwise agreed upon.
Just and humane treatment (Art 147; NCC 1694)
The employer shall treat the househelper in a just
and humane manner. In no case shall physical
violence be used upon the househelper (Art. 147)
Board, lodging and medical attendance shall be
furnished by employer (Art 148; NCC 1690)
Household work - Non-hazardous work for persons
between 15-18 years old. (DO 4-99 Sec. 4)
Contract for Domestic Service shall NOT exceed 2
years but renewable annually [Art 142; NCC1692]
Hours of Work - House helpers shall NOT be required
to work more than ten hours a day. [NCC 1695]
Vacation with Pay - Shall be allowed 4 paid vacation
days per month [NCC 1695]
Funeral Expenses
In case of death of the house helper:
(1) The head of the family shall bear the funeral
expenses
(2) If the house helper has no relatives in the place
where the head of the family lives, with
sufficient means. [NCC 1696]
Employment Certification
ER shall give the househelper a written statement of
the nature and duration of the service and his or her
efficiency and conduct as househelper upon
severance. [Art 151; NCC 1699]
Employment Records
The employer may keep such records as he may
deem necessary to reflect the actual terms and
conditions of employment of his househelper, which
the latter shall authenticate by signature or
thumbmark upon request of the employer. [Art 152]

TOPIC J-III. TERMINATION

In case of termination

(1) Fixed- Security of tenure

45

LABOR LAW REVIEWER


Termination prior to contract expiry must be for
just cause, if the duration of the household
service is NOT determined either by stipulation
or by the nature of the service, the ER or the
househelper may give notice to put an end to
the relationship five days before the intended
termination of the service. [Art 149; NCC 1697]
If the period for household service is fixed, the
house helper has a right against termination before
the expiration of the term, except for a just cause.
(2) Not fixed- Indemnity for unjust termination of
service [Art 150; NCC 1698]
If the duration of the household service is not fixed
either by stipulation or by the nature of the service,
the employer or the house helper may give notice to
end, the relationship five days before the intended
termination. (Rule XII, Book III Sec. 10-17 IRR)

TOPIC J-IV. RELIEFS FOR UNJUST


TERMINATION
If unjustly dismissed, the house helper is entitled to
be paid the compensation already earned plus that
for 15 days by way of indemnity.

K. Employment of Homeworkers
TOPIC K-I. Definition
Note: DO 5, DOLE (February 4, 1992), is now Rule
XIV, Book III of the IRRI.
Sec. 1, Rule XIV, Book III: [Homeworker] applies to
any person who performs industrial homework for an
employer, contractor, or sub-contractor.
Sec. 2(a), Rule XIV, Book III: Industrial homework
(1) Is a system of production under which work for
an ER or contractor is carried out by a
homeworker at his/her home.
(2) Materials may or may not be furnished by the ER
or contractor.
(3) Decentralized form of production, where there
is ordinarily very little supervision or regulation
of methods of work.
Definition of employer
Art. 155: The employer means any person who
(1) Acts as a contractor delivers or causes to be
delivered any goods, articles, or materials to be
processed or fabricated in or about a home and
thereafter to be returned or to be disposed of or
distributed in accordance with ERs direction; or
(2) Sells any goods, articles, or materials to be
processed or fabricated in or about a home and
then rebuys them after.
Note: Sec 2(d), Rule XIV, Book III is substantially
similar to the above.

TOPIC K-II. RIGHTS AND BENEFITS ACCORDED


HOMEWORKERS
(1) Right to form, join or assist organizations
(Sec 3, Rule XIV, Book III).
(2) Right to acquire legal personality and the
rights and privileges granted by law to
legitimate
labor
organizations
upon
issuance of the certification of registration
(Sec 4, Rule XIV, Book III)
(3) Immediate payment upon ERs receipt of
finished goods or articles (Sec 6, Rule XIV,
Book III)
(4) SSS,
MEDICARE
and
ECC
premium
contributions shall be deducted from their
pay
and
shall
be
remitted
by
ER/contractor/subcontractor to the SSS
(Sec 6, Rule XIV, Book III)
(5) ER may require homeworker to redo work
improperly executed without additional pay
(Sec 9a, Rule XIV, Book III)
(6) ER need not pay homeworker for any work
done on goods or articles not returned due
to homeworkers fault (Sec 9b, Rule XIV,
Book III)
(7) If subcontractor/contractor fails to pay
homeworker, ER is jointly and severally
liable with the former to the homeworker
for his/her wage (Sec 11, Rule XIV, Book III)
(8) ER shall assist the homeworkers in the
maintenance of basic safe and healthful
working conditions at the homeworkers
place of work. (Sec 11, Rule XIV, Book III)
(9) Homework prohibited in the ff:
(10) explosives, fireworks and articles of like
character;
(11) drugs and poisons; and
(12) other articles, the processing of which
requires exposure to toxic substances. (Sec
13, Rule XIV, Book III)
Regional Office shall provide technical assistance to
registered homeworkers organizations (Sec 14, Rule
XIV, Book III)

TOPIC K-III. CONDITIONS FOR DEDUCTION


FROM HOMEWORKERS EARNINGS
Sec. 8, Rule XIV, Book III: Deduction - No deduction
from the homeworkers earnings for the value of
materials lost, destroyed or damaged unless:
(1) Homeworker is clearly shown to be responsible
for loss or damage
(2) Reasonable opportunity to be heard
(3) Amount of deduction is fair and reasonable, and
does not exceed actual loss or damage
(4) Deduction does not exceed 20% of homeworkers
weekly earnings

46

LABOR LAW REVIEWER

L. Apprentices and Learners


APPRENTICES
Definition
Art. 58: An apprentice is a worker who is covered
by a written apprenticeship agreement with an
individual employer.
Apprenticeship means practical training on the job
supplemented by related theoretical instruction.
An Apprenticeable occupation means any trade,
form of employment or occupation which requires
more than three (3) months of practical training on
the job supplemented by related theoretical
instruction.
Note: Art. 58 has been superseded by Section 4
(j), (k), (l), (m) of RA 7796 quoted below:
RA 7796, Sec. 4: (j)"Apprenticeship" training within
employment with compulsory related theoretical
instruction involving a contract between an
apprentice and an employer on an approved
apprenticeable occupation.
(k)Apprentice" is a person undergoing training for
an approved apprenticeable occupation during an
apprenticeship agreement.
(l)"Apprenticeship Agreement" is a contract
wherein a prospective employer binds himself to
train the apprentice who in turn accepts the terms
of training for a recognized apprenticeable
occupation emphasizing the rights, duties and
responsibilities of each party.
Apprenticeable occupation
RA 7796, Sec. 4(m): Apprenticeable Occupation is
an occupation officially endorsed by a tripartite
body and approved to be apprenticeable by the
authority.
The act of filing the proposed apprenticeship
program with the DOLE is a preliminary step towards
its final approval, and does not instantaneously give
rise to an employer-apprentice relationship. It must
be duly approved by the Minister of Labor and
Employment. Hence, since the apprenticeship
agreement between petitioner and respondent has
no force and effect, respondent's assertion that he
was hired not as an apprentice but as a delivery boy
deserves credence. (Nitto Enterprises vs. NLRC,
1995)
Qualifications
RA 7160, Sec. 12 as amended by RA 7658, Sec. 1:
Children below fifteen (15) years of age shall not be
employed except:
(1) When a child works directly under the sole
responsibility of his parents or legal guardian
and where only members of the employer's
family are employed: Provided, however, That
his employment neither endangers his life,
safety, health and morals, nor impairs his
normal development: Provided, further, That

the parent or legal guardian shall provide the


said minor child with the prescribed primary
and/or secondary education; o
(2) Where a child's employment or participation in
public entertainment or information through
cinema, theater, radio or television is essential:
Provided, The employment contract is
concluded by the child's parents or legal
guardian, with the express agreement of the
child concerned, if possible, and approval of the
Department of Labor and Employment: and
Provided, That the following requirements in all
instances are strictly complied with:
a. The employer shall ensure the protection,
health, safety, morals and normal development
of the child;
b. The employer institute measures to prevent the
child's exploitation or discrimination taking into
account the system and level of remuneration
and the duration and arrangement of working
time; and
c. The employer shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing program for
training and skills acquisition of the child.
In the above exceptional cases where any such child
may be employed, the employer shall first secure,
before engaging child, a work permit from the
Department of Labor and Employment which shall
ensure observance of the above requirements.
The Department of Labor and Employment shall
promulgate rules and regulations necessary for the
effective implementation of this Section.
Art. 59: Qualifications of Apprentice:
(b) Possess vocational aptitude and capacity for
appropriate tests; and
(c) Possess the ability to comprehend and follow oral
and written instructions.
Integrating both the abovementioned provisions
then the qualifications of an apprentice are as
follows:
(1) At least 15 years of age (as amended by R.A.
7610), provided that if he is below 18 years, he
shall not be eligible for hazardous occupation;
(2) Possess vocational aptitude and capacity for
appropriate tests;
(3) Possess the ability to comprehend and follow
oral and written instructions. (Art. 59 of the LC,
as amended by R.A. 7610).
Allowed employment
SEE: RA 7769, Sec. 4 (m) above
LC Art. 60: Only employers in the highly technical
industries may employ apprentices and only in
apprenticeable occupations approved by the
Secretary of Labor and Employment.
Employment of Apprentices: When applicable:
(1) Only employers in highly technical
industries may employ apprentices; and

34

47

LABOR LAW REVIEWER


(2) Only
in
apprenticeable
occupations
approved by the Secretary of Labor. (Art.
60)
Terms and conditions
LC Art. 61: Apprenticeship agreements, including
the wage rates of apprentices, shall conform to the
rules issued by the Secretary of Labor and
Employment. The period of apprenticeship shall not
exceed six months. Apprenticeship agreements
providing for wage rates below the legal minimum
wage, which in no case shall start below 75
percent of the applicable minimum wage, may be
entered into only in accordance with apprenticeship
programs duly approved by the Secretary of Labor
and Employment. The Department shall develop
standard model programs of apprenticeship.
Note: Wage Order No. NCR-14, May 16, 2008 also
provides that the wages of apprentices and learners
shall in no case be less than seventy-five percent
(75%) of the applicable minimum wage rates.
LC Art. 72: The Secretary of Labor and Employment
may authorize the hiring of apprentices without
compensation whose training on the job is required
by the school or training program curriculum or as
requisite for graduation or board examination.
Enforcement
LC Art. 65: Upon complaint of any interested person
or upon its own initiative, the appropriate agency of
the Department of Labor and Employment or its
authorized representative shall investigate any
violation of an apprenticeship agreement pursuant to
such rules and regulations as may be prescribed by
the Secretary of Labor and Employment.
LC Art. 66: The decision of the authorized agency of
the Department of Labor and Employment may be
appealed by any aggrieved person to the Secretary
of Labor and Employment within five (5) days from
receipt of the decision. The decision of the
Secretary of Labor and Employment shall be final
and executory.
LC Art. 67: No person shall institute any action for
the enforcement of any apprenticeship agreement
or damages for breach of any such agreement,
unless
he
has
exhausted
all
available
administrative remedies.
LC Art. 71: An additional deduction from taxable
income of one-half (1/2) of the value of labor
training expenses incurred for developing the
productivity and efficiency of apprentices shall be
granted to the person or enterprise organizing an
apprenticeship program: Provided, That such
program is duly recognized by the Department of
Labor and Employment: Provided, further, That such
deduction shall not exceed ten (10%) percent of
direct labor wage: and Provided, finally, That the
person or enterprise who wishes to avail himself or
itself of this incentive should pay his apprentices
the minimum wage.

Summary of Rules:
What are the features of Apprenticeship Training?
(1) The apprentice must be paid not less than
75% of the prescribed minimum salary (Art.
61);
Exception: The employer MAY NOT pay any
wage if the apprenticeship training is:
a. part of the school curriculum,
b. a requirement for graduation, or
c. a requirement for board examination
(Art. 72)
(2) The apprenticeship agreement must be
approved by the DOLE Secretary (without
such one shall be deemed a regular
employee) (Nitto Enterprises v. NLRC, G.R.
No. 114337, Sept. 29, 1995);
(3) The employer is not compelled to continue
ones employment upon termination of
apprenticeship;
(4) One-half (1/2) of the value of labor training
expenses incurred for developing the
productivity and efficiency of apprentices of
the training cost is deducted from the
employers income tax but it shall not exceed
10% of direct labor wage (Art. 71)
Requisites of the deduction:
a. Apprenticeship program must be duly
approved by the DOLE;
b. Deduction shall NOT exceed 10% of
direct labor wage;
c. Employer must pay his apprentices
the minimum wage.
Working scholars there is no employer-employee
relationship between students on one hand, and
schools, colleges or universities on the other, where
there is written agreement between them under
which the former agree to work for the latter in
exchange for the privilege to study free of charge,
provided, the students are given real opportunities,
including such facilities as may be reasonable and
necessary to finish their chosen courses under such
agreement. (Sec. 14, Rule X, IRR)LEARNERS
Definition
RA 7796, Sec. 4: "Learners" refers to persons hired
as trainees in semi-skilled and other industrial
occupations
which
are
non-apprenticeable.
Learnership programs must be approved by the
authority.
Art. 73, sentence 2: [Occupations] which may be
learned through practical training on the job in a
relatively short period of time which shall not
exceed three (3) months.
Allowed employment
LC Art. 74: Learners may be employed when no
experienced workers are available, the employment
of learners is necessary to prevent curtailment of
employment opportunities, and the employment
does not create unfair competition in terms of labor
costs or impair or lower working standards.

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LABOR LAW REVIEWER


When learners may be hired
(1) No experienced workers are available;
(2) The employment of learners being necessary
to prevent the curtailment of employment
opportunities; and
(3) The employment will neither create unfair
competition in terms of labor costs nor impair
working standards.
Terms and conditions of employment
LC Art. 75. Any employer desiring to employ
learners shall enter into a learnership agreement
with them, which agreement shall include:
(1) The names and addresses of the learners;
(2) The duration of the learnership period, which
shall not exceed three (3) months;
(3) The wages or salary rates of the learners which
shall begin at not less than seventy-five percent
(75%) of the applicable minimum wage; and
(4) A commitment to employ the learners if they so
desire, as regular employees upon completion of
the learnership. All learners who have been
allowed or suffered to work during the first two
(2) months shall be deemed regular employees if
training is terminated by the employer before
the end of the stipulated period through no fault
of the learners.
(5) The learnership agreement shall be subject to
inspection by the Secretary of Labor and
Employment
or
his
duly
authorized
representative.
LC Art. 76: Learners employed in piece or
incentive-rate jobs during the training period shall
be paid in full for the work done.
LC Art. 77: Any violation of this Chapter or its
implementing rules and regulations shall be subject
to the general penalty clause provided for in this
Code.
Summary of Rules
What are the features of Learnership?
(1) The duration of learnership shall not exceed 3
months (Art. 73);
(2) If the learnership of 3 months is completed,
the employer may be compelled to continue
with the services of the learner as a regular
employee (Art. 75[d]);
(3) There is a commitment from the employer to
employ the learners if they so desire, as
regular employees upon completion of the
learnership (Art. 75[d]);
(4) If the learner is dismissed from service
without just and valid cause and without due
process after 2 months of service, he will be
deemed as regular employee; and
(5) The wages or salary rates of the learners
which shall begin at not less than 75% of the
applicable minimum wage.

1.

Distinctions between Learnership and


Apprenticeship
Apprenticeship
Learnership
Highly technical
Semi-skilled industrial
industries
occupations
Practical training
Practical training
supplemented by related
whether or not such
theoretical instruction
practical training is
supplemented by
theoretical instructions
Apprenticeable
Non-apprenticeable
occupations approved by
occupations
the SOLE
Written apprentice
Learnership agreement
agreement ratified by the
appropriate committees
More than three months,
Shall not exceed 3
shall not exceed six
months
months
(1) The person is at least (1) When
no
fifteen (15) years of
experienced
age, provided those
workers
are
who are at least
available;
fifteen (15) years of (2) The employment of
age but less than
learners
is
eighteen (18) may be
necessary
to
eligible
for
prevent curtailment
apprenticeship only
of
employment
in
non-hazardous
opportunities; and
occupation;
(3) The
employment
(2) The
person
is
does not create
physically fit for the
unfair competition
occupation in which
in terms of labor
he desires to be
costs or impair or
trained;
lower
working
(3) The person possesses
standards.
vocational aptitude
and capacity for the
particular occupation
as
established
through appropriate
tests; and
(4) The person is able to
comprehend
and
follow
oral
and
written instructions
Wage rate shall begin at
Wage rate shall begin at
not less than 75% of the
not less than 75% of the
min wage
min wage
No
Learners in
compensation if
piecework shall
SOLE authorizes,
be paid in full
as OJT is
for the work
required by the
done.
school
- A commitment to
employ the learners if
they so desire, as
regular employees upon
completion of the
learnership.
- All learners who have
been allowed or
suffered to work during
the first two (2) months
shall be deemed regular

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LABOR LAW REVIEWER


employees if training is
terminated by the
employer before the
end of the stipulated
period through no fault
of the learners.
Deductibility of of
training costs
incurred, provided:
Program is duly
recognized by
DOLE
Deduction shall
not exceed 10%
of direct labor
wage
Payment of
minimum wage
to apprentices

M. Handicapped Workers (RA


7277) Differently-abled
Workers
TOPIC M-I. DEFINITION OF HANDICAPPED
WORKERS
RA 7277, Sec. 4:
(a) Disabled Persons 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
(b) Impairment is any loss, diminution or
aberration of psychological, physiological, or
anatomical structure or function
(c) Disability shall mean:
1.) physical or mental impairment that substantially
limits one or more psychological, physiological or
anatomical function of an individual or activities of
such individual;
2.) a record of such an impairment;
3.) or 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.

TOPIC M-II. RIGHTS OF DISABLED WORKERS


i. Equal opportunity for employees
RA 7277, Sec. 5 (par. 1): No disabled person shall
be denied access to opportunities for suitable
employment. A qualified disabled EE shall be
subject to the same terms and conditions of
employment and the same compensation, privileges,
benefits, fringe benefits, incentives or allowances as
a qualified able-bodied person
ii. Reserved contractual positions
RA 7277, Sec. 5 (par. 2): 5% of all casual,
emergency and contractual positions in the DSWD;
DOH, DepEd; and other government agencies,
offices or corporations engaged in social

development
persons.

shall

be

reserved

for

disabled

iii. Sheltered employment


RA 7277, Sec. 6: If suitable employment for
disabled persons cannot be found through open
employment as provided in the immediately
preceding Section, the State shall endeavor to
provide it by means of sheltered employment.
In the placement of disabled persons in sheltered
employment, it shall accord due regard to the
individual qualities, vocational goals and inclinations
to ensure a good working atmosphere and efficient
production.
iv. Apprenticeship opportunity
RA 7277, Sec. 7: Disabled persons shall be eligible
as apprentices or learners: Provided, that their
handicap is NOT as much as to effectively impede
the performance of job operations in the particular
occupation for which they are hired; provided,
further, That after the lapse of the period of
apprenticeship, if found satisfactory in the job
performance, they shall be eligible for employment.
v. Wages
Sec 7 of Wage Order No. NCR-14, May 16, 2008: All
qualified handicapped workers shall receive the full
amount of the minimum wage rate prescribed
herein.
In this light, the Magna Carta for Disabled Persons
mandates that a qualified disabled EE should be
given the same terms and conditions of employment
as a qualified able-bodied person. Since the Magna
Carta accords them the rights of qualified ablebodied persons, they are thus covered by Article 280
of the Labor Code. In the present case, the handicap
of petitioners (deaf-mutes) is NOT a hindrance to
their work. The eloquent proof of this statement is
the repeated renewal of their employment
contracts. (Bernardo v. NLRC, 1999)

TOPIC M-III. PROHIBITIONS ON Discrimination


Against Disabled Persons
RA
7277,
SEC.
32.
Discrimination
of
Employment.- No entity, whether public or
private shall discriminate against a qualified
disabled person by reason of disability in regard to
job application procedures, the hiring, promotion,
or discharge of employees compensation, job
training and other terms, conditions and privileges
of employment. The following constitute acts of
discrimination:
(1) Limiting, segregating or classifying a
disabled job applicant 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 disabled person unless such
standards, tests or other selection
criteria are shown to be related for the
position in question and are consistent

50

LABOR LAW REVIEWER


with business necessity;
(3) 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 the subject to
common administrative control.
(4) Providing less compensation, such as
salary, wage or other forms of
remuneration and fringe benefits, to
qualified disabled employee, by reason of
his disability, than the amount to which a
non-disabled person performing the same
work is entitled;
(5) Favoring a non-disabled employee over a
qualified disabled employee with respect
to promotion, training opportunities,
study and scholarship grants, solely on
account of the latter's disability;
(6) Re-assigning or transferring a disabled
employee to a job or position he cannot
perform by reason of his disability;
(7) Dismissing or terminating the services of
a disabled employee 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 the disabled persons;
(8) Failing to select or administer in the most
effective manner employment tests which
accurately reflect the skills, aptitude or
other factor of the disabled applicant or
employee that such test purports to
measure, rather than the impaired
sensory, manual or speaking skills of such
applicant or employee, if any; and
(9) Excluding
disabled
persons
from
membership in labor unions or similar
organizations.
RA 7277, SEC. 33. Employment Entrance
Examination.- Upon an offer of employment, a
disabled applicant may be subjected to medical
examinations, on the following occasions:
(a) all entering employees are subjected to
such an examination regardless of
disability;
(b) Information obtained during the medical
condition or history of the applicant is
collected and maintained on separate
forms and in separate medical files and is
treated as a confidential medical record;
Provided, however, That:
(1) supervisors and managers may be
informed
regarding
necessary
restrictions on the work or duties of
the
employees
and
necessary
accommodations:
(2) first aid and safety personnel may be
informed, when appropriate, if the
disability might require emergency
treatment;

(3) government officials investigating


compliance with this Act shall be
provided relevant information on
request; and
(4) the results of such examination are
used only in accordance with this
Act.

TOPIC M-IV. INCENTIVES FOR EMPLOYERS


Tax incentives for employment of disabled persons
RA 7277, Sec. 8 (b): Private entities that employ
disabled persons who meet the required skills or
qualifications, either as regular
employee,
apprentice or learner, shall be entitled to an
additional deduction, from their gross income,
equivalent to 25% of the total amount paid as
salaries and wages to disabled persons: Provided,
however, That such entities present proof as
certified by the Department of Labor and
Employment and the Department of Health as to his
disability, skills, and qualifications.
Tax incentives for construction of disabledfriendly facilities
RA 7277, Sec. 8 (c): Private entities that improve or
modify their physical facilities in order to provide
reasonable accommodation for disabled persons
shall also be entitled to an additional deduction
from their net taxable income, equivalent to 50%
of the direct costs of the improvements or
modifications. This Section, however, does NOT
apply to improvements or modifications or facilities
required under BP 344.

IV. Termination of Employment


A. Employer-employee
relationship
TOPIC A-I. TESTS FOR DETERMINING ER EE
RELATIONSHIP
The existence or absence of ER-EE relationship is a
question of law and a question of fact, each in its
defined sense.
The recognition of the existence of ER-EE
relationship is not dependent upon the agreement of
the parties. The characterization of the law prevails
over that in the contract. In this sense, the
existence of an EE-ER relationship is a matter of law.
(Tabas et.al. v. California Manufacturing Co., et.
Al., G.R. No. 80680, January 26, 1989).
The conclusion that an EE-ER relationship depends
upon the facts of each case. In this sense, it is a
question of fact. (SSS v. CA, G.R. No. 100388, Dec.
14, 2000).

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LABOR LAW REVIEWER


The four-fold test is composed of four elements.
This test is the yardstick to determine employeremployee relationship:
(1) selection and engagement of the employee;
(2) payment of wages;
(3) power of dismissal; and
(4) employers power to control the employees
conduct with respect to the means and
methods by which the work is to be
accomplished. (Brotherhood Labor Unity
Movement of the Philippines et. al. v.
Zamora, G.R. No. 48645, Jan. 7, 1987).
Power to control is the most important element.
(Sonza v. ABS-CBN Broadcasting Corp, G.R. No.
138051, June 10, 2004)
The control test calls merely for the existence
of the right to control and not the actual
exercise of the right. (Zanotte Shoes v. NLRC,
G.R. No. 100665, Feb. 13, 1995)
Not every form of control will have the effect of
establishing ER-EE relationship. The line should
be drawn between:
(1) Rules that merely serve as guidelines
towards the achievement of mutually
desired results without dictating the means
or methods to be employed in attaining it.
These aim only to promote the result. In
such case, NO EE-ER relationship exists.
(2) Rules that control or fix the methodology
and bind or restrict the party hired to the
use of such means. These address both the
result and the means used to achieve it and
hence, EE-ER relationship exists. (Insurance
Life v. NLRC, G.R. No. 84484, Nov. 15, 1989)
Economic Dependence Test two-tiered approach.
(1) First Tier: Control Test (refer to the FourFold Test)
(2) Second Tier: The underlying economic
realities of the activity or relationship.
(Sevilla v. Court of Appeals).
The benchmark of economic reality in
analyzing
possible
employment
purposes ought to be the economic
dependence of the worker on his
employer.
The
standard
of
economic
dependence is whether the worker is
dependent on the alleged employer for
his continued employment in that line
of business. (Francisco v. NLRC, G.R.
No. 170087, Aug. 31, 2006).

TOPIC A-II. PROBATIONARY EMPLOYMENT


Art. 281. Probationary Employment Probationary
employment shall not exceed 6 months from the
date the employee started working, unless it is
covered by an apprenticeship agreement stipulating
a longer period. The services of an employee who
has been engaged on a probationary basis may be

terminated for a just cause or when he fails to


qualify as a regular employee in accordance with
reasonable standards made known by the employer
to the employee at the time of his engagement. An
employee who is allowed to work after a
probationary period shall be considered a regular
employee.
IRR, Book VI, Rule 1, Sec. 6(d): In all cases of
probationary employment, the employer shall make
known to the employee the standards under which
he will qualify as regular employee at the time of his
engagement. Where no standards are made known to
the employee at the time of engagement, he shall
be deemed a regular employee.
Not to exceed six (6) months from the date the
employee started working, unless covered by an
apprenticeship agreement stipulating a longer
period.
Definition
A probationary employee is one who is on trial by an
employer during which the employer determines
whether or not he is qualified for permanent
employment (International Catholic Migration
Comm. vs. NLRC, 1989)
Termination - Can only be terminated for:
(1) Just causes; or
(2) Failure to qualify as a regular employee in
accordance with reasonable standards made
known by the employer to the employee at
the time of engagement.
Note: The probationary employee is entitled to
substantial and procedural due process before
termination.
Limitations to termination
(1) It must be exercised accordance with the
specific requirements of the contract
(2) If a particular time is prescribed, the
termination must be within such time and if
formal notice is required, then that form
must be used;
(3) The employers dissatisfaction must be real
and in good faith, not feigned so as to
circumvent the contract or the law;
(4) There must be no unlawful discrimination in
the dismissal. (Manila Hotel Corporation v.
NLRC, G.R. No. 53453, January 22, 1986).
Purposes
(1) Observance Period for employer to
determine if employee is qualified and for
employee to demonstrate to the ER his skills
(2) Restrictive- As long as the termination was
made before the expiration of the six-month
probationary period, the employer has a right
to sever the employer-employee relationship
Indeed, the employer has the right or is at liberty to
choose as to who will be hired and who
will
be
declined. It is within the exercise of this right to
select his employees that the employer may set or

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LABOR LAW REVIEWER


fix a probationary period within which the latter
may test and observe the conduct of the former
before hiring him permanently. The right of a
laborer to sell his labor to such persons as he may
choose is, in its essence, the same as the right of an
employer to purchase labor from any person whom it
chooses. The employer and the employee have thus
an equality of right guaranteed by the Constitution.
(Grand Motors Corp. vs. MOLE, 1984)
Duration
Petitioner claims that under the terms of his
contract, his probationary employment was only for
five months as indicated by the remark "Please be
informed that after five months, your performance
shall be evaluated and any adjustment in salary shall
depend on your work performance." The argument
lacks merit. As correctly held by the labor arbiter,
the appointment contract also stated in another part
that
petitioners
employment
status
was
"probationary (6 mos.)." The five-month period
referred to the evaluation of his work. (Alcira vs.
NLRC, 2004)
Generally, the probationary period of employment is
limited to six (6) months. The exception to this
general rule is when the parties to an employment
contract may agree otherwise, such as when the
same is established by company policy or when the
same is required by the nature of work to be
performed by the employee. In the latter case,
there is recognition of the exercise of managerial
prerogatives in requiring a longer period of
probationary employment, such as in the present
case where the probationary period was set for
eighteen (18) months, i.e. from May, 1980 to
October, 1981 inclusive, especially where the
employee must learn a particular kind of work such
as selling, or when the job requires certain
qualifications, skills, experience or training. (Busier
vs. Leogardo, 1984)
Honasan was certainly under observation during her
three-week on-the-job training. If her services
proved unsatisfactory then, she could have been
dropped as early as during that period. But she was
not. On the contrary, her services were continued,
presumably because they were acceptable, although
she was formally placed this time on probation.
Even if it be supposed that the probation did not end
with the three-week period of on-the-job training,
there is still no reason why that period should not be
included in the stipulated six-month period of
probation. Honasan was accepted for on-the-job
training on April 15, 1991. Assuming that her
probation could be extended beyond that date, it
nevertheless could continue only up to October 15,
1991, after the end of six months from the earlier
date. Under this more lenient approach, she had
become a regular employee of Holiday Inn and
acquired full security of tenure as of October 15,
1991. (Holiday Inn Manila vs. NLRC, 1993)
Paras started reporting for work on May 27, 1996.
The employers unanimously agreed that his
performance was unsatisfactory. On November 26,

1996, he received a Notice of Termination dated


November 25, 1996, Applying Article 13 of the Civil
Code, the probationary period of six (6) months
consists of one hundred eighty (180) days. As clearly
provided for in the last paragraph of Article 13, in
computing a period, the first day shall be excluded
and the last day included. Thus, the one hundred
eighty (180) days commenced on May 27, 1996, and
ended on November 23, 1996. By the time Paras
received the letter he was already a regular
employee of the petitioner under Article 281 of the
Labor Code. (Mitsubishi Motors vs. Chrysler Union,
2004)
To reiterate, the rule
summarized as follows:

on

duration

may

be

General Rule: Probationary employment shall not


exceed six (6) months from the date the employee
started working.
Exceptions:
(1) When the parties to an agreement contract
otherwise:
(2) When the same is established by company
policy;
(3) When the same is required by the nature of
the work performed by the employee; and
(4) When it is covered by an apprenticeship
agreement stipulating a longer period
Question: May the employer and the employee
validly agree to extend the probationary period
beyond 6 months?
If the extension was ex gratia, an act of liberality on
the part of his employer affording him a second
chance to make good after having initially failed to
prove his worth as an employee. Such an act cannot
now unjustly be turned against said employers
account to compel it to keep on its payroll one who
could not perform according to its work standards.
(Mariwasa Manufacturing v. Leogardo, G.R. No.
74246, Jan. 26, 1989).
Criteria for regularization must be disclosed
In all cases of probationary employment, the
employer shall make known to the employee the
standards under which he will qualify as a regular
employee at the time of his engagement. Where no
standards are made known to the employee at that
time, he shall be deemed a regular employee.
Conversely, an employer is deemed to substantially
comply with the rule on notification of standards if
he apprises the employee that he will be subjected
to a performance evaluation on a particular date
after his hiring. (Alcira vs. NLRC, 2004)
Regular Status After Probation
When the bank renewed the contract after the lapse
of the six-month probationary period, the employees
thereby became regular employees. No employer is
allowed to determine indefinitely the fitness of its
employees. (Bernardo vs. NLRC, 1999)

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LABOR LAW REVIEWER


Absorbed employees
The private respondents could not be considered
probationary employees because they were already
well-trained in their respective functions. As
stressed by the Solicitor General, while private
respondents were still with the CCAS they were
already clerks. Respondent Gelig had been a clerk
for CCAS for more than ten (10) years, while
respondent Quijano had slightly less than ten (10)
years of service. They were, therefore, not novices
in their jobs but experienced workers. (Cebu
Stevedoring Co., Inc. vs. Regional Director, 1988)
Double probation
There is no basis for subjecting an employee to a
new probationary or temporary employment where
he had already become a regular employee when he
was absorbed by a sister company. (A Prime Security
Services, Inc. vs. NLRC, 2000)
Termination and salary
A probationary employee enjoys only a temporary
employment status. This means that he is
terminable at any time, permanent employment not
having been attained in the meantime. The
employer could well decide he no longer needed the
probationary employees services or his performance
fell short of expectations, etc. As long as the
termination was made before the termination of the
six-month probationary period, the employer was
well within his rights to sever the employeremployee relationship. A contrary interpretation
would defect the clear meaning of the term
probationary. (De la Cruz, Jr. vs. NLRC, 2004)
Private school teachers
The provisions of Article 280 of the Labor Code are
not applicable to the present case especially with
respect to the issue of respondent's acquisition of
security of tenure. It is settled that questions
respecting a private school teachers entitlement to
security of tenure are governed by the Manual of
Regulations for Private Schools and not the Labor
Code. (Paragraph 75 of the 1970 Manual) (Aklan
College vs. Guarino, 2007)

TOPIC A-III. KINDS OF EMPLOYMENT


a) Regular employment
Regular employment is not synonymous with
permanent employment, because there is no such
thing as a permanent employment. Any employee
may be terminated for just cause.
A regular employee is one who is engaged to perform
activities which are necessary and desirable in the
usual business or trade of the employer as against
those which are undertaken for a specific project or
are seasonal. There are two separate instances
whereby it can be determined that an employment is
regular:
(1) if the particular activity performed by the
employee is necessary or desirable in the
usual business or trade of the employer; and,

(2) if the employee has been performing the job


for at least a year. (Pangilinan vs. Gen.
Milling Corp., 2004)
(i) Reasonable connection rule: Standard of
determination
The primary standard in determining regular
employment is the reasonable connection between
the particular activity performed by the employee in
relation to the usual business or trade of the
employer. The connection can be determined by
considering the nature of the work performed and its
relation to the scheme of the particular business or
trade in its entirety. The repeated and continuing
need for the performance of the job has been
deemed sufficient evidence of the necessity, if not
indispensability of the activity to the business. In the
case at bar, continuous and repeated rehiring, some
for nearly two decades, of these bill collectors
indicate the necessity and desirability of their
services, as well as the importance of the role of bill
collectors in the MWSS. (Lopez vs. MWSS, 2005)
Hiring for an extended period
Where the employment of project employees is
extended long after the supposed project has been
finished, the employees are removed from the scope
of project employees and considered regular
employees. (Audion Electric Co., Inc. vs. NLRC,
1999)
Repeated renewal of contract
Beta Electric Corp. vs. NLRC, 1990
The petitioner cannot rightfully say that since the
private respondent's employment hinged from
contract to contract, it was "temporary", depending
on the term of each agreement. Under the Labor
Code, an employment may only be said to be
"temporary" "where:
(1) [it] has been fixed for a specific undertaking,
the completion of or termination of which has
been
determined at the time of the
engagement of the employee or
(2) where the work or services to be performed
is seasonal in nature and the employment is
for the duration of the season.
Quite to the contrary, the private respondent's work,
that of "typist-clerk" is far from being "specific" or
"seasonal", but rather, one "where the employee has
been engaged to perform activities which are usually
necessary or desirable in the usual business." And
under the Code, where one performs such activities,
he is a regular employee, "[t]he provisions of written
agreement to the contrary notwithstanding
It is true that in Biboso vs Victorias Milling Company,
Inc. we recognized the validity of contractual
stipulations as to the duration of employment. But
we cannot apply it here because clearly, the
contract-to-contract arrangement given to the
private respondent was but an artifice to prevent
her from acquiring security of tenure and to
frustrate constitutional decrees.
Length of time involved

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LABOR LAW REVIEWER


Length of time not controlling, merely serves as a
badge of regular employment. (Maraguinot vs. NLRC,
1998)

b) Project employment
Employment fixed on a specific project or
undertaking, completion or termination of which is
determined at the time of engagement of the
employee.
Must have been forewarned of the nature/scope and
duration of the project.
Whether or not the project has a direct relation to
the business of the ER is not important, BUT:
EE must be informed of the nature and duration
of project
project and principal business of ER are two
separate things
no attempt to deny security of tenure to the
worker
Test of project employment
The principal test for determining whether
employees are properly characterized as "project
employees," as distinguished from
"regular
employees," is whether or not the project employees
were assigned to carry out a "specific project or
undertaking," the duration and scope of which were
specified at the time the employees were engaged
for that project. As defined, project employees are
those workers hired:
(1) for a specific project or undertaking, and
(2) the completion or termination of such project or
undertaking has been determined at the time of
the engagement of the employee. (PNOC Energy
Devt Corp vs. NLRC, 2007)
(i) Indicators of project employment
(1) The duration of the specific/identified
undertaking for which the worker is
engaged is reasonably determinable;
(2) Such duration, as well as the specific
work/service to be performed, is defined in
an employment agreement and is made
clear to the employee at the time of the
hiring;
(3) The work/service to be performed by the
employee is in connection with the
particular project/undertaking for which he
is engaged;
(4) The employee, while not employed and
awaiting engagement, is free to offer his
services to any other employer;
(5) The termination of his employment in the
particular project/undertaking is reported
to the DOLE Regional Office having
jurisdiction over the workplace within 30
days following the date of his separation
from work, using the prescribed form on
employees
terminations
/dismissals
/suspensions;
(6) An undertaking in the employment contract
by the employer to pay completion bonus to
the project employee as practiced by most

construction companies. (Samson v. NLRC,


G.R. No. 11366, Feb. 1, 1996).
SEE Policy No. 2 of 1997 and D.O. 19 of 1993
Samson vs. NLRC (1996):
When the present action for regularization was filed
on November 5, 1989 and during the entire period of
petitioner's employment with private respondent
prior to said date, the rule in force then was Policy
Instruction No. 20, which required the employer
company to report to the nearest Public Employment
Office the fact of termination of a project employee
as a result of the completion of the project or any
phase in which he is employed.
Furthermore, Department Order No. 19, which was
issued on April 1, 1993, did not totally dispense with
the notice requirement. Instead, it made provisions
and considered it (i.e. the notice) as one of the
"indicators" that a worker is a project employee.

39

Work pool employee


A project EE or a member of a work pool may
acquire the status of a regular employee when the
following concur:
(1) There is a continuous rehiring of project
employees even after cessation of a project;
and
(2) The tasks performed by the alleged project
employee
are
vital,
necessary,
and
indispensable to the usual business or trade of
the employer. However, the length of time
during which the EE was continuously rehired is
not controlling, but merely serves as a badge of
regular employment.
A work pool may exist although the workers in the
pool do not receive salaries and are free to seek
other employment during temporary breaks in the
business, provided, that the worker shall be
available when called to report for a project.
Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to
project workers insofar as the effect of temporary
cessation of work is concerned. (Maraguinot vs.
NLRC, 1998)
Members of a work pool from which a construction
company draws its project employees, if considered
employees of the construction company while in the
work pool, are non-project employees, or employees
for an indefinite period. If they are employed in a
particular project, the completion of the project or
any phase thereof will not mean severance of the
employer-employee relationship. (Aguilar Corp. vs.
NLRC, 1997)
Rationale for project employment
If a project has already been completed, it would
be unjust to require the employer to maintain them
in the payroll while they are doing absolutely
nothing except waiting until another project is
begun, if at all. In effect, these stand-by workers
would be enjoying the status of privileged retainers,
collecting payment for work not done, to be

55

LABOR LAW REVIEWER


disbursed by the employer from profits not earned.
(De Ocampo vs. NLRC, 1990)
Examples of project employment
Private respondents, as well as the other 30 workers,
were needed as additional hands for the renovation
work and not for ordinary upkeep and maintenance.
The erection of the fire escape and other small jobs
after the renovation cannot be deemed maintenance
but more of casual work. (Phil. Jai-Alai and
Amusement Corp. vs. Clave, 1983)
The corporation does not construct vessels for sale
or otherwise which will demand continuous
production of ships and will need regular workers. It
merely accepts contracts for ship-building or for
repair of vessels from third parties. It is only on
occasion when it has work contract of this nature
that it hires workers to do the job which, needless to
say, lasts only for less than a year or longer.
Completion of their work or project automatically
terminates their employment. (Sandoval Shipyards,
Inc. vs. NLRC, 1985)
Petitioner was engaged to perform data encoding
and keypunching, and her employment was fixed for
a specific project or undertaking the completion or
termination of which had been determined at the
time of her engagement. [This] may be observed
from the series of employment contracts between
petitioner and private respondent, all of which
contained a designation of the specific job contract
and a specific period of employment. (Imbuido vs.
NLRC, 2000)
Employer obligation to make standards known
The law is clear that in all cases involving employees
engaged on probationary' basis, the employer shall
make known to the employee at the time he is
hired, the standards by which he will qualify as a
regular employee.
Nowhere in the employment contract executed
between petitioner and respondent Grulla is there a
stipulation that the latter shall undergo a
probationary period for three months before he can
quality as a regular employee.
There is also no evidence on record showing that the
respondent Grulla had been apprised of his
probationary status and the requirements which he
should comply in order to be a regular employee. In
the absence of these requisites, there is justification
in concluding that respondent Grulla was a regular
employee at the time he was dismissed by
petitioner, and as such cannot be done without just
and authorized cause. (A. M. Oreta and Co., Inc. vs.
NLRC, 1989)
Specified period
The Court has upheld the legality of fixed-term
employment. It ruled that the decisive determinant
in term employment should not be the activities that
the employee is called upon to perform but the day
certain agreed upon by the parties for the
commencement
and
termination
of
their
employment relationship. But, this Court went on to

say that where from the circumstances it is apparent


that the periods have been imposed to preclude
acquisition of tenurial security by the employee,
they should be struck down or disregarded as
contrary to public policy and morals. (Purefoods
Corp. vs. NLRC, 1987)
Continuous rehiring
Despite the insistence of petitioner that they were
project employees, the facts show that as masons,
carpenters and fine graders in petitioners various
construction projects, they performed work which
was usually necessary and desirable to petitioners
business which involves construction of roads and
bridges. It is not enough that an employee is hired
for a specific project or phase of work. There must
also be a determination of, or a clear agreement on,
the completion or termination of the project at the
time the employee was engaged. This second
requirement was not met in this case. (Chua vs.
Court of Appeals, 2004)
The fact that the workers have been employed with
the company for several years on various projects,
the longest being nine (9) years, did not
automatically make them regular employees
considering that
the definition of regular
employment in Article 280 of the Labor Code, makes
specific exception with respect to project
employment. The re-hiring of petitioners on a
project-to-project basis did not confer upon them
regular employment status. The practice was
dictated by the practical consideration that
experienced construction workers are more
preferred. It did not change their status as project
employees. (C.E. Construction Corp vs. Cioco, 2004)
(1) Circumstances that Make a Project
Employee Regular (Maraguinot vs. NLRC,
1998)
(2) Work Pool Employee

c) Seasonal employment
Work or services to be performed are seasonal in
nature, employment is for the duration of the
season.
No continuing need for the worker.
Regular Seasonal Employees After One Season
Regular seasonal employees are those called to work
from time to time. The nature of their relationship
with the employer is such that during off season they
are temporarily laid off but during summer season
they are reemployed, or when their services may be
needed. They are not, strictly speaking, separated
from the service but are merely considered as on
leave of absence without pay until they are
reemployed. Their employment relationship is never
severed but only suspended. As such those
employees can be considered as in the regular
employment of the employer. (Manila Hotel Co. v.
CIR, G.R. No. L-18875, Sept. 30, 1963).
Hacienda Bino vs. Cuenca (2005):
For respondents to be excluded from those classified
as regular employees, it is not enough that they

56

LABOR LAW REVIEWER


perform work or services that are seasonal in nature.
They must have been employed only for the duration
of one season. While the records sufficiently show
that the respondents work in the hacienda was
seasonal in nature, there was, however, no proof
that they were hired for the duration of one season
only. In fact, the payrolls, submitted in evidence by
the petitioners, show that they availed the services
of the respondents since 1991. Absent any proof to
the contrary, the general rule of regular
employment should, therefore, stand.

d) Casual employment

St. Theresas School vs. NLRC (1998):


Article 280 of the Labor Code does not proscribe or
prohibit an employment contract with a fixed period
provided the same is entered into by the parties,
without any force, duress or improper pressure being
brought to bear upon the employee and absent any
other circumstance vitiating consent.
(1) It does not necessarily follow that where the
duties of the employee consist of activities
usually necessary or desirable in the usual
business of the employer, the parties are
forbidden from agreeing on a period of time for
the performance of such activities. There is thus
nothing essentially contradictory between a
definite period of employment and the nature of
the employee's duties.
(2) It goes without saying that contracts or
employment govern the relationship of the
parties. In this case, private respondent's
contract provided for a fixed term of nine (9)
months, from June 1, 1991 to March 31, 1992.
Such stipulation, not being contrary to law,
morals, good customs, public order and public
policy, is valid, binding and must be respected.

When not regular, project or seasonal employee.


Requirements to become Regular employees:
(1) one (1) year service, continuous or broken
(2) with respect to activity employed
(3) employment shall continue while such
activity exists

However, the Court upholds the principle that where


from the circumstances it is apparent that periods
have been imposed to preclude acquisition of
tenurial security by the employee, they should be
disregarded for being contrary to public policy.
(Servidad vs. NLRC, 1999)

Nature of work
What determines regularity or casualness is not the
employment contract, written or otherwise, but the
nature of the job. If the job is usually necessary or
desirable to the main business of the employer, then
employment is regular. (A. M. Oreta and Co., Inc.
vs. NLRC, 1989)

(i)Requisites for validity


Fixed-period employees/ term employment
This arrangement does NOT circumvent Security of
Tenure when:
(1) Knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper
pressure or any other circumstances vitiating his
consent; OR
(2) The employer and the employee dealt with each
other on more or less equal terms with no moral
dominance exercised by the former or the
latter. Brent Doctrine (Brent School v. Zamora,
1990; Romares v. NLRC, 1998; Medenilla v. Phil.
Veterans Bank, 2000)
(3) If a contract is for a fixed term and the
Employee is dismissed without just cause, he is
entitled to the payment of his salaries
corresponding to the unexpired portion of the
employment contract. (Medenilla v. Phil.
Veterans Bank, 2000)

The disparity in facts between the Mercado Sr., vs.


NLRC case case and the instant case is best
exemplified by the fact that the farm laborers, work
only for a definite period for a farm worker, after
which they offer their services to other farm owners.
In Mercado, although respondent constantly availed
herself of the petitioners services from year to
year, it was clear from the facts therein that they
were not in her regular employ. In other words, they
worked for respondent, but were nevertheless free
to contract their services with other farm owners.

One-year service
Tabas vs. California Marketing Co., Inc. (1989):
The fact that the petitioners have been hired on a
"temporary or seasonal" basis merely is no argument
either.
As held in Philippine Bank of Communications v.
NLRC, a temporary or casual employee, under Article
281 of the Labor Code, becomes regular after service
of one year, unless he has been contracted for a
specific project.
And we cannot say that merchandising is a specific
project for the obvious reason that it is an activity
related to the day-to-day operations of California.
The records show that the petitioners had been
given an initial six month contract, renewed for
another six months. Accordingly, under Article 281
of the Code, they had become regular employees
of California and had acquired a secure tenure.
Hence, they cannot be separated without due
process of law.

e) Fixed term employment

TOPIC A-IV. JOB CONTRACTING AND LABORONLY CONTRACTING


NOTE: These provisions should be read in
conjunction with the latest Department Order
regulating contracting and subcontracting, D.O.
18-A, Series of 2011 (November 14, 2011).
Substantial capital refers to paid-up
capital
stocks/shares
of
at
least
P3,000,000 in the case of corporations,
partnerships and cooperatives; in case of

57

LABOR LAW REVIEWER


single proprietorship, a net worth of at
least P3,000,000. (Sec 3, D.O. 18-A-11)
A Service Agreement ensures compliance with all the
rights and benefits under Labor Laws. (Sec. 4, D.O.
18-A-11)
Service agreement refers to the contract between
the principal and contractor containing the terms
and conditions governing the performance or
completion of a specific job, work or service being
farmed out for a definite or predetermined period.
Mafinco vs. Ople (1976): When an independent
contractor and not an employee: We recognize that
contracting out is not unlimited; rather, it is a
prerogative that management enjoys subject to
well-defined legal limitations. As we have previously
held, the company can determine in its best business
judgment whether it should contract out the
performance of some of its work for as long as the
employer is motivated by good faith, and
(1) the contracting out must not have been restored
to circumvent the law or
(2) must not have been the result of malicious or
arbitrary action. (Manila Electric Co. v.
Quisumbing, 1999)
We perceive at the outset the disposition of the
NLRC that janitorial services are necessary and
desirable to the trade or business of petitioner CocaCola. But this is inconsistent with our
pronouncement in Kimberly Independent Labor
Union v. Drilon where the Court took judicial notice
of the practice adopted in several government and
private institutions and industries of hiring janitorial
services on an independent contractor basis. In
this respect, although janitorial services may be
considered directly related to the principal
business of an employer, as with every business,
we deem them unnecessary in the conduct
of
the employers principal business.
(Coca-Cola
Bottlers Phil. Inc. vs. NLRC, 1999)
Trilateral
Relationship
in
contracting
arrangements. There are three parties involved:
(1) Principal who decides to farm out a job,
work or service to a contractor;
(2) Contractor who has the capacity to
independently undertake the performance
of the job, work, or service; and
(3) Contractual workers engaged by the
contractor to accomplish the job, work or
service. (Sec. 3 D.O. 18-A-11)
In legitimate contracting the exists:
(1) An ER-EE relationship between the
contractor and the employees it engaged to
perform the specific job, work or service
being contracted
(2) A contractual relationship between the
principal and the contractor as governed by
the provisions of the CC.
Note: In the event of any violation of any provisions
of the LC (including failure to pay wages) there
exists a solidary liability on the part of the principal

and the contractor for purposes of enforcing the


provisions of the LC and other social legislation, to
the extent of the worked performed under the
employment contract. (Sec. 5, D.O. 18-A-11)
1.

When is there job contracting?

Art. 106 (par. 1 and 2): Whenever an employer


enters into a contract with another person for
the performance of the formers work, the
employees of the contractor and of the latters
subcontractor, if any, shall be paid in
accordance with the provisions of this Code.
In the event that the contractor or
subcontractor fails to pay the wages of his
employees in accordance with this Code, the
employer shall be jointly and severally liable
with his contractor or subcontractor to such
employees to the extent of the work performed
under the contract, in the same manner and
extent that he is liable to employees directly
employed by him.
Art 107: The provisions of the immediately
preceding article shall likewise apply to any
person, partnership, association or corporation
which, not being an employer, contracts with an
independent contractor for the performance of
any work, task, job or project.
Art. 109: The provisions of existing laws to the
contrary notwithstanding, every employer or
indirect employer shall be held responsible with
his contractor or subcontractor for any violation
of any provision of this Code. For purposes of
determining the extent of their civil liability
under this Chapter, they shall be considered as
direct employers.
2.

When is there labor-only


contracting?

Art 106 (par. 4): There is "labor-only" contracting


where the person supplying workers to an employer
does not have substantial capital or investment in
the form of tools, equipment, machineries, work
premises, among others, and the workers recruited
and placed by such person are performing activities
which are directly related to the principal business
of such employer. In such cases, the person or
intermediary shall be considered merely as an agent
of the employer who shall be responsible to the
workers in the same manner and extent as if the
latter were directly employed by him.
DO No. 18-02, Section 5: Labor-only contracting is
hereby declared prohibited. For this purpose, laboronly contracting shall refer to an arrangement where
the contractor or subcontractor merely recruits,
supplies or places workers to perform a job, work or
service for a principal, and any of the following
elements are present:
(1) The contractor or subcontractor does not have
substantial capital or investment which relates

58

LABOR LAW REVIEWER


to the job, work or service to be performed and
the employees recruited, supplied or placed by
such contractor or subcontractor are performing
activities which are directly related to the main
business of the principal; or
(2) The contractor does not exercise the right to
control over the performance of the work of the
contractual employee
"Substantial capital or investment" refers to capital
stocks and subscribed capitalization in the case of
corporations,
tools,
equipment,
implements,
machineries and work premises, actually and directly
used by the contractor or subcontractor in the
performance or completion of the job, work or
service contracted out.

Lakas vs. Burlingame (2007):


No proof was adduced to show F. Garils
capitalization. The work of the promo-girls was
marketing and selling, and thus directly related to
the principal business or operation of Burlingame.
Finally, F. Garil did not undertake the performance
of its service contract according to its own manner
and method, free from the control and supervision
of Burlingame. Based on the contract, F. Garil was
responsible in the hiring process only with respect to
the screening, testing and pre-selection of the
personnel it provided to Burlingame. Actual hiring
itself was done through the deployment of personnel
to establishments by Burlingame.

The "right to control" shall refer to the right reserved


to the person for whom the services of the
contractual workers are performed, to determine
not only the end to be achieved, but also the
manner and means to be used in reaching that end.

The contract also stipulated that Burlingame shall


pay F. Garil a certain sum per worker. F. Garil
merely served as conduit in the payment of wages to
the personnel. The interpretation would have been
different if the payment was for the job, project, or
services rendered during the month and not on a per
worker basis.

Art. 109. The provisions of existing laws to the


contrary notwithstanding, every employer or indirect
employer shall be held responsible with his
contractor or subcontractor for any violation of any
provision of this Code. For purposes of determining
the extent of their civil liability under this Chapter,
they shall be considered as direct employers.

The Court has taken judicial notice of the practice of


employers who do not issue payslips directly to
employees. Under current practice, a third person,
usually the purported contractor (service or
manpower placement agency), assumes the act of
paying the wage.

Examples
Aboitiz Haulers vs. Dimapatoi (2006):
The allegation of petitioner that Grigio is an
independent job contractor is without basis. The
respondents, as checkers, were employed to check
and inspect cargo, a task which is clearly necessary
for the petitioners business of forwarding and
distributing cargo. Grigio did not undertake the
performance of its service contract according to its
own manner and method, free from the control and
supervision of its principal.
The work activities, shifts, and schedules of the
respondents, including time allowed for "recess"
were set under the Written Contract of Services.
This clearly indicates that these matters, which
consist of the means and methods by which the work
is to be accomplished, were not within the absolute
control of Grigio.
Petitioners allegation that Grigio retained control
by providing supervisors to monitor the performance
of the respondents cannot be given much weight.
Instead of exercising their own discretion or
referring the matter to the officers of Grigio, its
supervisors were obligated to refer to petitioners
supervisors any discrepancy in the performance of
the respondents.
Lastly, the law casts the burden on the contractor to
prove that it has substantial capital, investment,
tools etc. In this case, neither Grigio nor the
petitioner was able to present any proof that Grigio
had substantial capital.

The contract also provides that any personnel found


to be inefficient, troublesome, uncooperative and
not observing the rules and regulations set forth by
Burlingame shall be reported to F. Garil and may be
replaced upon request. Corollary to this
circumstance would be the exercise of control and
supervision by Burlingame over workers supplied by
F. Garil in order to establish the nature of
undesirable personnel.
3.

Conditions that must concur in


legitimate job contracting

Job contracting is permissible only if the following


conditions are met:
(1) the contractor carries on an independent
business and undertakes the contract work on
his own account under his own responsibility
according to his own manner and method, free
from the control and direction of his employer
or principal in all matters connected with the
performance of the work except as to the
results thereof; and
(2) the contractor has substantial capital or
investment in the form of tools, equipment,
machineries, work premises, and other
materials which are necessary in the conduct of
the business. (Lakas vs. Burlingame Corp.,
2007)
Factors to determine existence of independent
contractor relationship
Mafinco vs. Ople (1976):
(1) Whether the contractor is carrying on an
independent business

59

LABOR LAW REVIEWER


(2) Whether the work is part of the employers
general business.
(3) The nature and extend of the work.
(4) The skill required.
(5) The terms and duration of the relationship.
(6) The right to assign the performance of the work
to another.
(7) The control and supervision of the work and the
employers powers with respect to the hiring,
firing and payment of salaries.
(8) The duty to supply premises, tools, and
appliances.
4.

Effects of finding that there is laboronly contracting

Art. 107:
The provisions of the immediately
preceding article shall likewise apply to any person,
partnership, association, or corporation which, not
being an employer, contracts with an independent
contractor for the performance of any work, task,
job or project.
Art. 108: An employer or indirect employer may
require the contractor or subcontractor to furnish a
bond equal to the cost of labor under contract, on
condition that the bond will answer for the wages
due the employees should the contractor or
subcontractor, as the case may be, fail to pay the
same.
Art. 109: The provisions of existing laws to the
contrary notwithstanding, every employer or indirect
employer shall be held responsible with his
contractor or subcontractor for any violation of any
provision of this Code. For purposes of determining
the extent of their civil liability under this Chapter,
they shall be considered as direct employers.
If found to be labor-only contractor, it is equivalent
to finding that there exists an employer-employee
relationship between the owner of the project and
the employees of the labor-only contractor since
that relationship is defined and prescribed by the
law itself. (Industrial Timber Corporation vs. NLRC,
1997)
In legitimate job contracting, no employer-employee
relation exists between the principal and the job
contractor's employees. The principal is responsible
to the job contractor's employees only for the proper
payment of wages. But in labor-only contracting, an
employer-employee relation is created by law
between the principal and the labor-only
contractor's employees, such that the former is
responsible to such employees, as if he or she had
directly employed them. (PAL vs. NLRC, 1998)
The only time the indirect employer may be made
solidarily liable with the contractor is when the
contractor fails to pay his employees their wages
and other benefits claimed. (Landazares vs.
Amethyst Security, 2003)
Eparwa Security,
University (2006):

Inc. vs Liceo

de

Cagayan

Citing Eagle Security Agency vs. NLRC--In the case at


bar, it is beyond dispute that the security guards are
the employees of EAGLE (contractor.) That they
were assigned to guard the premises of PTSI
(principal) pursuant to the latters contract with
EAGLE and that neither of these two entities paid
their wage and allowance increases under the
subject wage orders are also admitted. Thus, the
application of the aforecited provisions of the Labor
Code on joint and several liability of the principal
and contractor is appropriate.
The solidary liability of PTSI and EAGLE, however,
does not preclude the right of reimbursement from
his co-debtor by the one who paid [See Article 1217,
Civil Code]. It is with respect to this right of
reimbursement that petitioners can find support in
the aforecited contractual stipulation.

B. Termination of employment
SECURITY OF TENURE
Definition
Right not be removed from ones job without valid
cause and valid procedure. (Kiamco v. NLRC, 1999)
Art. 279: in case of regular employment, the
employer shall not terminate the services of an
employee except for
a. just cause (Art. 282)
b. authorized cause (Art. 283-284)
Nature
It is a constitutionally protected right (Art. XIII Sec.
3, 1987 Constitution); it cannot be blotted out by an
employment contract.
It does not give the Employee an absolute right to
his position; when a transfer is not unreasonable,
nor inconvenient, nor prejudicial to an employee;
and it does not involve a demotion in rank or
diminution of his pay, benefits, and other privileges,
the employee may not complain that it amounts to
constructive dismissal. (Lanzadares vs. Amethyst
Security, 2003)
A finding of illegal dismissal entitles the Employee
to:
(1) reinstatement without loss of seniority
rights and privileges, and
(2) full backwages inclusive of allowances and
to benefits or their monetary equivalent
from the time withheld up to actual
reinstatement (Art. 279)
Separation pay in lieu of reinstatement: Doctrine
of Strained Relations: If reinstatement is not
feasible, expedient or practical, as where there is
strained relations between the parties, particularly
where the; illegally dismissed employee held a
managerial or key position. (Quijano vs. Mercury
Drug Corp., 1998)
Coverage
1987 Constitution: all workers (Art. XIII Sec. 3)

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LABOR LAW REVIEWER


Labor Code: regular employees (Art. 279) in all
establishments or undertakings, whether for profit
or not (Art. 278), except government and its
political subdivisions including government owned
or controlled corporations or GOCCs (IRR Book VI
Rule I Sec. 1)
Security of tenure extends to non regular
Employees (Kiamco vs. NLRC, 1999)
Contract Employees limited extent; secured
during the period their respective contracts of
employment remain in effect. (Labajo vs.
Alejandro, 1988)
Probationary Employees limited extent;
additional limitations on power of Employer to
terminate:
o must be exercised in accordance with the
specific requirements of the contract;
o dissatisfaction of the Employer must be real
and in good faith, not feigned so as to
circumvent the contract or the law;
Project/seasonal Employees limited extent;
secured for the duration of the limited period of
their employment
Managerial Employees may be dismissed upon
loss of confidence; entitled to security of tenure
(Maglutac vs. NLRC, 1990).
An employee cannot be arbitrarily dismissed at
any time, and without cause as reasonably
established in an appropriate investigation. (Inter
Orient Maritime Enterprises, Inc. vs. NLRC,
1994)
Fixed-period Employees / Term Employment:
this arrangement does NOT circumvent Security of
Tenure when:
(a) knowingly and voluntarily agreed upon by
the parties without any force, duress, or
improper pressure or any other
circumstances vitiating his consent; OR
(b) Brent Doctrine: the employer and the
employee dealt with each other on more or
less equal terms with no moral dominance
exercised by the former or the latter.
(Brent School v. Zamora, 1990; Romares
v. NLRC, 1998; Medenilla v. Phil. Veterans
Bank, 2000)
(c) If a contract is for a fixed term and the
Employee is dismissed without just cause,
he is entitled to the payment of his
salaries corresponding to the unexpired
portion of the employment contract.
(Medenilla v. Phil. Veterans Bank, 2000)
Conflict with management prerogatives
Management prerogatives
(1) Discipline (San Miguel v. NLRC, 1980)
(2) Right to dismiss or otherwise impose
disciplinary sanctions upon an employee for
just and valid cause, pertains in the first
place to the employer, as well as the
authority to determine the existence of said
cause in accordance with the norms of due
process. (Makati Haberdashery, Inc. v.
NLRC, 1989)
(3) To Demote (Petrophil vs. NLRC, 1986)

(4) To Dismiss it is a measure of self


protection (Reyes vs. Ministry of Labor,
1989)
Requisites for the validity of management
prerogative affecting security of tenure
(1) Exercised in good faith for the advancement
of the Employer's interest, and
(2) NOT for the purpose of defeating or
circumventing the rights of the Employees
under special laws or under valid
agreements (San Miguel vs. Ople, 1989)

TOPIC B-I. SUBSTANTIVE DUE PROCESS


Dismissal for any of the just or authorized causes
under Arts. 282 284

a) JUST CAUSES
No written notice to employer required
(i) Serious misconduct or willful disobedience
Misconduct
improper or wrongful conduct
transgression of some established and
definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and
implies wrongful intent and not mere error
in judgment. (Dept of Labor Manual, Sec.
4343.01; Hayuan Restaurant vs. NLRC,
2006)
Requisites
(1) Serious to be serious, misconduct must be:
a. of such grave and aggravated
character
b. in connection with the employee's
work. (Lakpue Drug, Inc. vs. Belga,
2005)
(2) Shows that the Employee has become unfit
to continue working for the Employer.
(Philippine Aeolus Automotive United Corp.
vs. NLRC)
Willful disobedience:
Requisites:
(1) The employees assailed conduct has been
willful or intentional, the willfulness being
characterized by a wrongful and perverse
attitude; and
(2) The order violated must have been:
a. Reasonable and lawful;
b. Made known to the employee; and
c. In connection to the duties which
he has been engaged to discharge.
(Acesite Corp. v. NLRC, G.R. No.
152308, January 26, 2005).
(ii) Gross and habitual neglect of duties
Gross negligence is want of even slight care, acting
or omitting to act in a situation where there is a
duty to act, not inadvertently but willfully and

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LABOR LAW REVIEWER


intentionally with a conscious indifference to
consequences insofar as other persons may be
affected. (Tres Reyes v. Maxim's Tea House, 2003)
Habitual neglect implies repeated failure to perform
one's duties for a period of time, depending upon the
circumstances. (Chua v. NLRC, 2005)
Requisites
(1) Neglect of duty must be both gross and
(2) Habitual
(iii) Fraud or willful breach of trust (loss of trust
and confidence)
Requisites
(1) Committed against the Employer or his
representative;
(2) willful since fraud implies wrongful intent;
(3) EE concerned holds a position of trust and
confidence; and (Mabeza vs. NLRC, 1997)
(4) Act complained of must be work-related
i.e. it must show the employee concerned
to be unfit to continue working for the
employer.
Proof beyond reasonable doubt not necessary
Uniwide Sales Warehouse Club v. NLRC (2008)
(1) It is sufficient that there is some basis for
such loss of confidence such as when the
employer has reasonable ground to believe
that the employee concerned is responsible
for the purported misconduct;
(2) And the nature of his participation therein
renders him unworthy of the trust and
confidence demanded of his position
Loss of confidence: managerial/confidential vs.
rank-and-file employees
Managerial
Rank-and-file
Substantial evidence
Proof of involvement in
reasonable ground to
the alleged events in
believe Employees guilt; question required; mere
mere existence of a basis uncorroborated
for the belief (Etcuban
assertions
and
vs. Sulpicio Lines, 2005)
accusations
are not enough (Etcuban
Employment for a long
vs. Sulpicio Lines, 2005)
time is counted against
the Employee (Salvador
v. Phil. Mining Service
Corp., 2003)
General rule: trust and
Except: when rank-andconfidence is restricted file position is reposed
to MANAGERIAL
with trust and
Employees (Fujitsu
confidence (Coca-Cola
Computer Products Corp. vs. NLRC, 1989) e.g. care
v. CA, 2005)
and custody of property
(iv) Abandonment of employment; elements that
must concur
Abandonment is the deliberate and unjustified
refusal of an Employee to resume his employment.
(Nueva Ecija Electric Cooperative v. NLRC, 2005)
Requisites:

(1) Failure to report to work or absence w/o valid


reason;
(2) Clear intent to sever the employer-employee
relationship via overt acts (Floren Hotel v.
NLRC, 2005)
Cannot be lightly inferred, much less
legally
presumed
from
certain
equivocal acts such as interim
employment (Hacienda Dapdap v.
NLRC, 1998)

45

(v) Termination of employment pursuant to a


union security clause

Art. 283 and 284 are not exhaustive; other


authorized causes are:
total and permanent disability,
disease incurable in 6 mos,
valid application of union security clause,
expiry of term employment period,
completion of project,
failure in probation, etc
(vi) Totality of infractions doctrine
The totality of infractions or the number of
violations committed during the period of
employment shall be considered in determining the
penalty to be imposed upon an erring employee. The
offenses committed by petitioner should not be
taken singly and separately. Fitness for continued
employment cannot be compartmentalized into tight
little cubicles of aspects of character, conduct and
ability separate and independent of each other.
While it may be true that petitioner was penalized
for his previous infractions, this does not and should
not mean that his employment record would be
wiped clean of his infractions. After all, the record
of an employee is a relevant consideration in
determining the penalty that should be meted out
since an employee's past misconduct and present
behavior must be taken together in determining the
proper imposable penalty. (Merin v. NLRC, 2008)

b) Authorized causes
(1) Recognized right
Uichico v. NLRC (1997):
The law recognizes the right of every business entity
to reduce its workforce if the same is made
necessary by compelling economic factors which
would endanger its existence or stability.
The fundamental law itself guarantees, even during
the process of tilting the scales of social justice
towards workers and employees, the right of
enterprises to reasonable returns of investment and
to expansion and growth.
Art. 283 and 284 are not exhaustive; other
authorized causes are:
total and permanent disability,
disease incurable in 6 mos,
valid application of union security clause,
expiry of term employment period,
completion of project,

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LABOR LAW REVIEWER


failure in probation, etc
In computing separation pay, a fraction of at least
six (6) months shall be considered as one (1) year.
(Art. 283)

(i) Redundancy, retrenchment and closure


Redundancy
Dusit School Nikko v. NUWHRAIN (2005):
1) [redundancy] exists where the service capability
of the workforce is in excess of what is reasonably
needed to meet the demands of the business
enterprise;
2) a reasonably redundant position is one rendered
superfluous by any number of factors, such as
overhiring of workers, decreased volume of business,
dropping of a particular product line previously
manufactured by the company, or phasing out of
service activity previously undertaken by the
business
Entitlement
Employee is entitled to separation pay of 1 month
pay or 1 month pay per year of service, whichever is
higher
Redundancy does not refer to duplication of work.
That no other person was holding the same position
which the dismissed employee held prior to the
termination of his services does not show that his
position had not become redundant. (Escareal v.
NLRC, 1992)
Financial loss is not a requisite. (Escareal v. NLRC,
1992)
Creation of positions with functions related or
similar to those of the abolished functions does not
necessarily
invalidate
the
declaration
of
redundancythe old and new positions were
different and the declaration was not maliciously
motivated. (Santos v. CA, 2001)
Employers good faith in implementing a redundancy
program is not necessarily put in doubt by the
availment of services of an independent contractor.
(Asian Alcohol Corp. v. NLRC, 1999)
Retrenchment
Retrenchment is the termination of employment
effected by management during periods of business
recession,
industrial
depressions,
seasonal
fluctuations, lack of work or considerable reduction
in the volume of the employers business. (AMA
Computer College v. Ely Garcia, 2008)
Entitlement: Employee is entitled to separation pay
of 1 month pay or 1/2 month pay per year of service,
whichever is higher
General standards for when retrenchment is
preventive rather than curative (SINS)
Losses expected are (S)ubstantial and not
merely de minimis in extent;

Apprehended
losses
are
reasonably
(I)mminent, can be perceived objectively
and in good faith;
Retrenchment
must
be
reasonably
(N)ecessary to prevent the expected
lossesmeasure of last resort; and
Expected or actual losses must be proved by
(S)ufficient and convincing evidence. (Lopez
Sugar Corp. v. Federation of Free Workers,
1990)
Reduction of work days may be considered
constructive retrenchment (International Hardware
v. NLRC, 1989)
Temporary retrenchment or temporary cessation or
suspension of operations (Art. 286)
A specific period that employees may remain
temporarily laid-off or in floating status. The
temporary lay-off or bona fide suspension of
operations of a business or undertaking wherein the
employees likewise cease to work should not last
longer than 6 months. After 6 months, the
employees should either be recalled to work or
permanently entrenched following the requirements
of the law, and that failing to comply with this
would be tantamount to dismissing the employees
and the employer would thus be liable for such
dismissal. (International Hardware v. NLRC, 1989)
Closure
Employer may close or cease his business operations
or undertaking even if he is not suffering from
serious business losses or financial reverses, as long
as he pays his employees their termination pay in
the amount corresponding to their length of service.
(Catatista v. NLRC, 1995)
It includes both the complete cessation of all
business operations and the cessation of only part of
a companys business (Coca-Cola Bottlers, Inc. v.
NLRC, 1991)
(b) Requirements
Must de bona fide or in good faith
(a) Procedural steps required
At least 1 month before the intended date of
termination, Employer is to serve written notice to:
(1) Affected employees; and
(2) DOLE (Art. 283)
(b) Requirements for valid
Retrenchment/redundancy
Requisites: Redundancy
(1) Written notice served on both the
Employees and the DOLE at least 1 month
prior to the intended date;
(2) Payment of separation pay equivalent to
one month pay or one month pay for every
year of service, whichever is higher;
(3) Good faith in abolishing the redundant
positions; and

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LABOR LAW REVIEWER


(4) Fair and reasonable criteria in ascertaining
what positions are to be declared
redundant and accordingly abolished. The
following are usually considered in
redundancy: position itself, nature of the
services performed by the employee, and
necessity of such position. (Edge Apparel
v. NLRC, 1998)
Requisites: Retrenchment
Necessary to prevent or minimize losses and
such losses are proven;
There must be 1 month written notice to the
DOLE and the employee;
Separation pay is paid;
Exercised in good faith the prerogative was
exercised for the advancement of the
employers interest and not to defeat or
circumvent the employees right to security of
tenure; and
Fair and reasonable criteria in ascertaining who
will be affected

(a) Requisites
1) Employee has been found to be suffering from
any disease;
2) His continued employment is prohibited by law
or is prejudicial to his health as well as to the
health of his co-employees;
3) Payment of separation pay;
4) A medical certification by a competent public
health authority that the disease cannot be
cured w/in 6 months even with proper medical
treatment (IRR Book VI. Rule I. Sec. 8)
Medical certification cannot be dispensed
with (Manlyl Express, Inc. v. Payong,
4 7 2005)
It must be issued by a competent public
health authority and not the company
physician (Cebu Royal Plant v. Deputy
Minister of Labor, 1987
JUST CAUSES
Serious
Misconduct

(c) Criteria in selecting employees for dismissal


Fair and reasonable criteria in ascertaining who will
be affected:
(1) preferred status (e.g. temporary, casual or
regular Employees),
(2) efficiency
(3) physical fitness,
(4) age,
(5) financial hardship, or
(6) seniority. (Asian Alcohol Corp. v. NLRC,
1999)
(d) Standards to be followed
Table: Comparison of Retrenchment, Redundancy
and Closure
Retrenchment
Reduction of
personnel
usually due to
poor financial
returns so as
to cut down
on costs of
operations in
terms of
salaries and
wages
Resorted to
primarily to
avoid or
minimize
business losses

Redundancy
The service
of an
Employee is
in excess of
what is
required by
an
enterprise

Closure
The reversal of the
fortune of the
employer whereby
there is a complete
cessation of
business operations
and/or actual
locking-up of the
doors of the
establishment,
usually due to
financial losses
Aims to prevent
further financial
drain upon the
Employer

(ii) Disease or illness


Entitlement: Employee is entitled to separation pay
of 1 month pay or month pay per year of service,
whichever is higher

Willful
Disobedience

Gross and
Habitual
Neglect
Fraud or
Willful Breach
of Trust

REQUISITES
Serious
- Grave and aggravated
character,
- In connection with work;
and
Shows that Employee is unfit to
work for
Employer.
Willful
conduct
wrongful and
perverse attitude; and
Order violated must be:
Reasonable,
Lawful,
Sufficiently known
to Employee,
In connection to
the duties.
Neglect must be both gross and
habitual.
Loss of Confidence
- Committed against the
Employer or his
representative (direct);
- willful since fraud implies
wrongful intent;
- EE concerned holds a
position of trust and
confidence (Mabeza vs.
NLRC, 1997);
- Act complained of must be
work-related.
Additional Guidelines
- NOT simulated;
- NOT used as a
subterfuge;
- NOT arbitrarily asserted;
and
- genuine, NOT a mere
afterthought (Vitarich v.
NLRC, 1999; Coca-Cola
Bottlers, Phils., Inc. v.
Kapisanan ng Malayang
Manggagawa sa Coca-Cola,
2005)

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LABOR LAW REVIEWER


JUST CAUSES
Commission
of a crime or
offense
against
Employer

Analogous
auses

AUTHORIZED
CAUSES
Installation of
Labor Saving
Devices

Redundancy

Retrenchment

physical fitness,
age,
financial hardship, or
seniority. (Asian Alcohol
Corp. v. NLRC, 1999)

REQUISITES
Crime against the
Employer,
Immediate member
of employers
family, or
Employers duly
authorized
representative; and
Conviction or prosecution NOT
required.
Due to a voluntary and/or willful
act or omission by Employee
(Nadura vs. Benguet
Consolidated, 1962)
REQUISITES
- 1 month written notice to
DOLE and Employee
- separation pay equivalent to
one month pay or one month
pay for every year of service,
whichever is higher
- 1 month written notice to
DOLE and Employee
- separation pay equivalent to
one month pay or one month
pay for every year of service,
whichever is higher;
- Good faith in abolishing the
redundant positions; and
- Fair and reasonable criteria
in choosing those affected
(Asian Alcohol Corp. v. NLRC,
1999), such as but not limited
to:
- preferred status (e.g.
temporary,
- casual or regular
Employees)efficiency, or
- seniority. (Panlilio v. NLRC,
1997; Golden Thread Knitting
Industries, Inc. v. NLRC,
1999)
Basic Requisites: N N S G F
Necessary to prevent or
minimize losses and such
losses are proven
1 month written notice
to DOLE and the Employees
Separation pay
equivalent to at least one
month pay or at least 1/2
month pay for every year of
service, whichever is higher;
Exercise is in good
faith; and
Fair and reasonable
criteria in ascertaining who
will be affected
preferred status (e.g.
temporary, casual or
regular Employees)
efficiency,

Closure or
Cessation of
Operations

Disease

General Standards: S I N S for


when retrenchment is preventive
rather than curative
Losses expected are
substantial and not merely
de minimis in extent;
Apprehended losses are
reasonably imminent;
Retrenchment must be
reasonably necessary to
prevent the expected losses;
and
Expected or actual losses
must be proved by sufficient
and convincing evidence.
(Lopez Sugar Corp. vs.
Federation of Free Workers,
1990)
Must be done in good faith
(bona fide)
1 month written notice to
DOLE and Employee
Separation pay equivalent
to one month pay or 1/2
month pay for every year of
service, whichever is higher.
Employee is suffering from
any disease;
His continued employment is
prohibited by law or is
prejudicial to his health as
well as as to the health of
his co-employees. (Art. 284)
Separation pay equivalent
to at least one month pay or
at least 1/2 month pay for
every year of service,
whichever is higher; and
Medical certification by a
competent public health
authority that the disease
cannot be cured within 6 mos
even with proper medical
treatment. (IRR Book VI Rule
I Sec. 8)

TOPIC B-II. Procedural Due Process


Procedural Due Process - Employee must be given
notice with adequate opportunity to be heard before
he/she is notified of his/her actual dismissal for
Cause. (Fujitsu v. CA, 2005)
ER may NOT substitute the required prior notice &
opportunity to be heard with the mere payment of
30 days' salary. (PNB v. Cabanag, 2005)

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LABOR LAW REVIEWER


(a) Procedure to be observed in
termination cases
Basis for termination
Requirements
Just cause Art. 282
1. Notice specifying the
grounds for which dismissal
is sought
2. Hearing or opportunity
to be heard
3. Notice of the decision to
dismiss (Art. 277(b))
Authorized Cause
Notice to:
Arts. 283 & 284
1. Employee, &
2. DOLE
at least 1 month prior to
the effectivity of the
separation
Consequences for non-compliance
Situation
Effect
Just or
Dismissal valid
Authorized
Cause + Due
Process
No
Just
or
Authorized
Cause
+ Due Process

Dismissal
invalid

No Just or
Authorized
Cause + No Due
Process

Dismissal
invalid

Just or
Authorized
Cause + No Due
Process

Dismissal valid

Liability of ER
No liability
* separation
pay if for
authorized
cause
Reinstatement
+
Full
Backwages
* if
reinstatement
NOT possible =
separation pay
Reinstatement
+
Full
Backwages
* if
reinstatement
NOT possible =
separation pay
Liable
for
damages due to
non-compliance
with procedural
req'ts
*separation pay
if for
authorized
cause

(b) Guiding Principles in connection with


the hearing requirements in dismissal
cases
Right to counsel
A very basic requirement of substantive due process;
it has to be observed. Indeed, the rights to counsel
and to due process of law are two of the
fundamental rights guaranteed by the 1987
Constitution to any person under investigation, be
the proceeding administrative, civil, or criminal.
(Salaw v. NLRC, 1991)
Notice
Notice not needed when Employee
consented to the retrenchment or
voluntarily applied for one. (International
Hardware Inc. vs. NLRC, 1989)

Notice must be individual, not collective.


(Shoppers Gain Supermart vs. NLRC, 1996);
Voluntary arbitration satisfies notice
requirement for authorized causes (Revidad
vs. NLRC, 1995)

66

Hearing
A formal or trial type hearing is not at all times and
in all instances essential to due process; it is enough
to that the parties are afforded fair and reasonable
opportunity to explain their side of the controversy.
(Mendoza vs. NLRC, 1991)
Summary proceeding may be conducted; written
explanations, affidavits, position papers or other
pleadings may be used as well; what is essential is
the ample opportunity to be heard. (Homeowners
Savings and Loan Assoc. Inc. vs. NLRC, 1996)
No formal hearing necessary when the Employee
already admitted his responsibility for the act he
was accused of. (Magos v. NLRC, 1998)
Burden of Proof
Upon the employer. Employer must comply with due
process requirements before any termination is
done. (Gothong Lines, Inc. v. NLRC, 1999)
Unsubstantiated
suspicions
and
baseless
conclusions by employers are not legal
justification for dismissing employees. (Maranaw
Hotel and Resort Corp. v. NLRC, 1999)
Degree of Proof
Substantial evidence; proof beyond reasonable doubt
not required. (Manila Electric Co., Inc. v. NLRC,
1991)
Prescription Period
An action for reinstatement by reason of illegal
dismissal is one based on an injury which may be
brought within 4 years from the time of dismissal.
(Art. 1146 of the Civil Code)
(c) Agabon doctrine
Prior to 1989
Wenphil Corp. v.
NLRC, 1989
- Belated Due
Process Rule
Serrano v. NLRC,
2000

Current rule:
Agabon v. NLRC,
2004

Illegal dismissal
Dismissal is valid (NO
reinstatement and
backwages)
BUT Employer to indemnify
Employee for damages
Dismissal is valid.
EE is entitled to the payment
of full backwages - Computed
from the time of dismissal
until the Court finds the
dismissal to be for just
cause.
Dismissal is valid (NO
reinstatement and
backwages)
BUT Employer to indemnify
Employee in the form of
nominal damages
indemnity stiffer
than Wenphil Corp. vs.

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LABOR LAW REVIEWER


NLRC to discourage the
practice of dismiss now,
pay later.

TOPIC B-III. RELIEFS FOR ILLEGAL DISMISSAL


(a) Reinstatement aspect
Definition: restoration of an employee who was
unjustly dismissed to the position from which he was
removed, that is, to his status quo ante dismissal
(Santos vs. NLRC, 1987)
Note: an offer by Employer to re-employ the
Employee did not cure the vice of earlier arbitrary
dismissal. (Ranara v. NLRC, 1992)
Alternative: In lieu of reinstatement, Employee is
entitled to separation pay of 1 month pay per year
of service. (Gaco vs. NLRC, 1994)
General Rule: reinstatement is a matter of right to
an illegally dismissed Employee.
Exceptions:
Closure of business (Retuya vs. Dumarpa, 2003)
Economic
business
conditions:
The
reinstatement remedy must always be adapted
to economic-business conditions. (Union of
Supervisors, etc. v. Sec. of Labor, 1984)
EEs unsuitability (Divine World High School vs.
NLRC, 1986)
EEs Retirement/Coverage (Espejo vs. NLRC,
1996)
(1) Doctrine of Strained Relations
(i) Immediately executory
Art. 223 is clear that an award for reinstatement
shall be immediately executory even pending appeal
and the posting of a bond by the employer shall not
stay the execution for reinstatement.
Reinstatement ordered by Labor Arbiter is selfexecutory; reinstatement ordered by NLRC is not
and, though immediately executory, still requires
writ of execution. (Panuncillo vs. CAP Phil. Inc.,
2007)
(ii) Actual reinstatement
(iii) Payroll reinstatement
(b) Separation pay in lieu of Reinstatement
Separation pay
Kinds
(1) SP as a statutory requirement for authorized
causes
(2) SP as financial assistance found in the next
section
(3) SP in lieu of reinstatement where reinstatement
is not feasible; and
(4) SP as a benefit in the CBA or company policy

Computation: SP as a statutory requirement is


computed by integrating the basic salary with
regular allowances employee has been receiving
(Planters Products Inc. v. NLRC, 1989); allowances
include transportation and emergency living
allowances (Santos v. NLRC, 1987)
Commissions may not be included since they must be
earned by actual market transactions by employee
(Soriano v. NLRC, 1989)
A dismissed employee who has accepted separation
pay is not necessarily estopped from challenging the
validity of his or her dismissal. Neither does it
relieve the employer of legal obligations. (Anino v.
NLRC, 1998)
(i) Strained Relation rule
If reinstatement is not feasible, expedient, or
practical, as where there is strained relations
between the parties, particularly where the illegally
dismissed employee held a managerial or key
position (Quijano v. Mercury Drug Corp. 1998)
Quijano v. Mercury Drug Corp. (1998)
(a) Where reinstatement is not feasible, expedient
or practical,
(b) As where reinstatement would only exacerbate
the tension and strained relations between the
parties
(c) Or where the relationship between the
employer and employee has been unduly
strained by reason of their irreconcilable
differences, particularly where the illegally
dismissed employee held a managerial or key
position in the company
(d) It would be more prudent to order payment of
separation pay instead of reinstatement
(c) Backwages
Definition
(1) According to St. Theresas School of
Novaliches Foundation v. NLRC (1998): )
earnings lost by a worker due to his illegal
dismissal; a form of relief that restores the
income lost by reason of such unlawful
dismissal;
(2) it is not private compensation or damages; nor is
it a redress of a private right;
(3) but, rather, in the nature of a command to the
employer to make a public reparation for
illegally dismissing an employee.
Effect of failure to order
A plain error which may be rectified, even if
employee did not bring an appeal regarding the
matter (Aurora Land v. NLRC, 1997)
(i) Components of the amount of
backwages
Computation
(1) Without deduction for their earnings elsewhere
during the layoff (Bustamante v. NLRC, 1996)

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LABOR LAW REVIEWER


(2) Awards including salary differentials are not
allowed (Insular Life Assurance Co. v. NLRC,
1987)
(3) The salary base properly used should be the
basic salary rate at the time of dismissal plus
the regular allowances; allowances include:
Emergency cost of living allowances
(ECOLA), transportation allowances,
13th month pay (Paramount Vinyl
Product Corp. v. NLRC, 1990)
Also included are vacation leaves,
service incentive leaves, and sick
leaves
(4) The effects of extraordinary inflation are not to
be applied without an official declaration
thereof by competent authorities (Lantion v.
NLRC, 1990)
(d) Constructive dismissal
The ff. constitute constructive dismissal:
(1) Bona fide suspension of the operation of a
business or undertaking exceeding 6 months
(Valdez v. NLRC, 1998)
(2) Floating status of more than 6 months (Agro
Commercial Security Services v. NLRC, 1989)

for a valid quitclaim are: 1) there was no fraud or


deceit on the part of any of the parties; 2) the
consideration for the quitclaim is credible and
reasonable; and 3) the contract is not contrary to
law, public order, public policy, morals, or good
customs or prejudicial to a 3rd person with a right
recognized by law. (Soriano, Jr. v. NLRC, 2007)
(g) TERMINATION OF EMPLOYMENT BY EMPLOYEE
Termination by Employee with Just Cause no
written notice to Employer required; the following
are just causes: S I C A
(1) Serious insult by the Employer or his
representative on the honor and person of the
Employee;
(2) Inhuman and unbearable treatment accorded
the Employee by the Employer or his
representative;
(3) Commission of a crime or offense by the
Employer or his representative against the
person of the Employee or any of the immediate
family members of his family; and
(4) Other causes analogous to any of the foregoing.
(Art 285 (b))

An involuntary resignation is resorted to 1) when


continued employment is rendered impossible,
unreasonable, or unlikely; 2) when there is a
demotion in rank and/or a diminution in pay; 3) or
when a clear discrimination, insensibility or disdain
by an employer becomes unbearable to the
employee. (Phil. Wireless, Inc. v. NLRC, 1998)

Termination by Employee without Just Cause


(1) EE to serve written notice on Employer at least
1 month in advance. (Art 285(a))
(2) Effect of failure to serve notice: Employer may
hold Employee liable for damages. (Art 285(a))

If an employee was forced to remain without work or


assignment for a period exceeding 6 months, then he
is in effect constructively dismissed (Valdez v. NLRC,
1998)

Definition
The voluntary act of an Employee who finds himself
in a situation in which he believes that personal
reasons cannot be sacrificed in favor of the exigency
of the service and he has no other choice but to
dissociate himself from his employment. (Oriental
Shipmanagement Co. vs. CA, 2006)

(e) Preventive Suspension


Definition
It is a disciplinary measure for the protection of the
company's property pending investigation of any
alleged malfeasance or misfeasance committed by
the employee. The employer may place the worker
concerned under preventive suspension if his
continued employment poses a serious and imminent
threat to the life or property of the employer or of
his co-workers. (PAL v. NLRC, 1998)
Preventive suspension is limited to 30 days; any
more than that amounts to constructive dismissal.
(Pido vs. NLRC, 2007)
(f) Quitclaims
Generally, deeds of release, waiver or quitclaims
cannot bar employees from demanding benefits to
which they are legally entitled or from contesting
the legality of their dismissal since quitclaims are
looked upon with disfavor and are frowned upon as
contrary to public policy. Where, however, the
person making the waiver has done so voluntarily,
with a full understanding thereof, and the
consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as
being a valid and binding undertaking. The requisites

Resignation

Requisites
(1) Unconditional (Azcor Manufacturing, Inc. vs.
NLRC, 1999)
(2) Intention to relinquish a portion of the term of
office accompanied by an act of relinquishment.
(Azcor Manufacturing, Inc. vs. NLRC, 1999);
(3) No valid resignation where it was made without
proper
discernment
(Metro
Transit
Organization, Inc. vs. NLRC, 1998)
(4) Voluntary
(5) Acceptance of Employer necessary to make the
resignation effective. (Shie Jie Corp./Seastar
Ex-im Corp. vs. National Federation of Labor,
2005; Reyes v. CA, 2003)
Resignations once accepted and being the sole act of
the employee, may not be withdrawn without the
consent of the employer. (Intertrod Maritime, Inc.
v. NLRC, 1991)
Rule: Filing of an illegal dismissal case is
inconsistent with resignation. (Valdez v. NLRC, 1998)
Except when the filing of an illegal dismissal case by
respondent was evidently a mere afterthought: it

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LABOR LAW REVIEWER


was filed not because Employee wanted to return to
work but to claim separation pay and back wages.
(Willi Hahn Enterprises vs. Maghuyop, 2004)
No Termination Circumstances that shall NOT
terminate employment:
(1) Bona fide suspension of the operation of a
business or undertaking NOT exceeding 6
months; OR
(2) Fulfillment by the Employee of a military or
civic duty. (Art 286)
Employer shall reinstate the Employee to
his former position without loss of
seniority rights if Employee indicates his
desire to resume to work not later than 1
month from the resumption of operations
of his Employer or from relief from the
military or civic duty. (Art 286)
Employer-Employee relationship deemed
SUSPENDED in case of suspension
of
operation, unless suspension is for the
purpose of defeating the rights of the
Employees, or mandatory fulfillment of
military or civic duty. (Bk VI, Rule I, Sec
12, Omnibus Rules)
Guidelines on Imposition of Dismissal and other
penalties
Must not be exercised wantonly, but must be
controlled by substantive due process and tempered
by the fundamental policy of protection to labor
enshrined in the Constitution (Farrol v. CA, 2000)
The penalty must be commensurate with the
act, conduct or omission imputed to the employee
and imposed in connection with the employers
disciplinary authority (Farrol v. CA, 2000)
Policies, rules and regulations on work-related
activities of the employees must always be fair and
reasonable (VH Manufacturing, Inc. v. NLRC, 2000;
St. Michaels Institute v. Santos, 2001)
Employers are allowed a wider latitude of
discretion in terminating the employment of
managerial personnel or those of similar rank
performing functions which by their nature require
the employers trust and confidence, than in the
case of ordinary rank-and-file employees. (Etcuban,
Jr. v. Sulpicio Lines, Inc. 2005)
Substantial evidence is sufficient as basis for the
imposition of any disciplinary action upon the
employee

C. Retirement Pay Law


Labor Code, Art. 287. Retirement. Any employee
may be retired upon reaching the retirement age
established in the collective bargaining agreement or
other applicable employment contract.
In case of retirement, the employee shall be entitled
to receive such retirement benefits as he may have
earned under existing laws and any collective
bargaining agreement and other agreements:
Provided, however, That an employee's retirement
benefits under any collective bargaining and other
agreements shall not be less than those provided
herein.

In the absence of a retirement plan or agreement


providing for retirement benefits of employees in
the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixtyfive (65) years which is hereby declared the
compulsory retirement age, who has served at least
five (5) years in the said establishment, may retire
and shall be entitled to retirement pay equivalent to
at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being
considered as one whole year.
Unless the parties provide for broader inclusions, the
term one-half (1/2) month salary shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month
pay and the cash equivalent of not more than five
(5) days of service incentive leaves.
An underground mining employee upon reaching the
age of fifty (50) years or more, but not beyond sixty
(60) years which is hereby declared the compulsory
retirement age for underground mine workers, who
has served at least five (5) years as underground
mine worker, may retire and shall be entitled to all
the retirement benefits provided for in this Article.
Retail, service and agricultural establishments or
operations employing not more than ten (10)
employees or workers are exempted from the
coverage of this provision.
Violation of this provision is hereby declared
unlawful and subject to the penal provisions
provided under Article 288 of this Code.
Nothing in this Article shall deprive any employee of
benefits to which he may be entitled under existing
laws or company policies or practices. (As amended
by Republic Act No. 8558).
RA 7641 is undoubtedly a social legislation. The law
has been enacted as a labor protection measure and
as a curative statute that absent a retirement plan
devised by, an agreement with, or a voluntary grant
from, an employer can respond, in part at least, to
the financial well-being of workers during their
twilight years soon following their life of labor.
There should be little doubt about the fact that the
law can apply to labor contracts still existing at the
time the statute has taken effect, and that its
benefits can be reckoned not only from the date of
the law's enactment but retroactively to the time
said employment contracts have started. (Enriquez
Security Services, Inc. v. Cabotaje, 2006)
Pursuant thereto, this Court imposed two (2)
essential requisites in order that R.A. 7641 may be
given retroactive effect: (1) the claimant for
retirement benefits was still in the employ of the
employer at the time the statute took effect; and
(2) the claimant had complied with the requirements
for eligibility for such retirement benefits under the
statute. (Universal Robina Sugar Milling Corp. v.
Cabanella, 2008)

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LABOR LAW REVIEWER


TOPIC C-I. Coverage
All employees in the private sector, regardless of
their position, designation, or status, and
irrespective of the method by which their wages are
paid (Sec 1, RA 7641)
The only exceptions are:
(1) employees covered by the Civil Service Law;
(2) domestic helpers and persons in the personal
service of another, and
(3) employees in retail, service and agricultural
establishments
or
operations
regularly
employing not more than ten employees

TOPIC C-II. Exclusions from coverage


R.A. No. 7641, otherwise known as "The Retirement
Pay Law," only applies in a situation where (1) there
is no collective bargaining agreement or other
applicable employment contract providing for
retirement benefits for an employee; or (2) there is
a collective bargaining agreement or other
applicable employment contract providing for
retirement benefits for an employee, but it is below
the requirements set for by law. The reason for the
first situation is to prevent the absurd situation
where an employee, who is otherwise deserving, is
denied retirement benefits by the nefarious scheme
of employers in not providing for retirement benefits
for their employees. The reason for the second
situation is expressed in the Latin maxim pacta
privata juri publico derogare non possunt. Private
contracts cannot derogate from the public law.
(Oxales v. Unilab, 2008)

TOPIC C-III. Components of retirement pay


IRR, Book VI, Rule II, Section 5.2. Components of
One-half (1/2) Month Salary. For the purpose of
determining the minimum retirement pay due an
employee under this Rule, the term "one-half month
salary" shall include all the following:
(a) Fifteen (15) days salary of the employee based on
his latest salary rate. x x x;
(b) The cash equivalent of not more than five (5)
days of service incentive leave;
(c) One-twelfth of the 13th month pay due an
employee;
(d) All other benefits that the employer and
employee may agree upon that should be
included in the computation of the employees
retirement pay.

TOPIC C-IV. Retirement pay under RA 7641


vis--vis retirement benefits under SSS and
GSIS laws
RA 7641 mandates payment of retirement benefits.
All private sector employees regardless of their
position, designation or status and irrespective of
the method by which their wages are paid are
entitled to retirement benefits upon compulsory
retirement at the age of sixty-five (65) or upon
optional retirement at sixty (60) or more but not 65.

The minimum retirement pay due covered


employees shall be equivalent to one-half month
salary for every year of service, a fraction of at least
six (6) months being considered as one whole year.
The benefits under this law are other than those
granted by the SSS or the GSIS.

V. Management Prerogative
This Court held that the employers right
to
conduct the affairs of his business, According to its
own discretion and judgment, is well-recognized. An
employer has a free reign and enjoys wide latitude
of discretion to regulate all aspects of employment.
This is a management prerogative, where the free
will of management to conduct its own affairs to
achieve its purpose takes form. (Torreda vs.
Toshiba, 2007)

A. Discipline
The employers right to conduct the affairs of his
business, according to its own discretion and
judgment, includes the prerogative to instill
discipline in its employees and to impose penalties,
including dismissal, upon erring employees. This is a
management prerogative where the free will of
management to conduct its own affairs to achieve its
purpose takes form. The only criterion to guide the
exercise of its management prerogative is that the
policies, rules and regulations on work-related
activities of the employees must always be fair and
reasonable and the corresponding penalties, when
prescribed, commensurate to the offense involved
and to the degree of the infraction. (Consolidated
Food Corporation vs. NRLC, 1999) (St. Michaels
Institute vs. Santos, 2001)
Right to dismiss or otherwise impose disciplinary
sanctions upon an employee for just and valid cause,
pertains in the first place to the employer, as well as
the authority to determine the existence of said
cause in accordance with the norms of due process.
(Makati Haberdashery, Inc. v. NLRC, 1989)

B. Transfer of employees
Westin Phil. Plaza Hotel v. NLRC (1999):
(1) An Employees right to security of tenure does
not give him such a vested right in his position
as would deprive the company of its prerogative
to change his assignment or transfer him where
he will be most useful.
(2) The Employer has the right to transfer or assign
Employees from one area of operation to
another, or one office to another or in pursuit of
its legitimate business interest,
(3) provided there is no demotion in rank or
diminution of salary, benefits and other
privileges and not motivated by discrimination
or made in bad faith, or effected as a form of
punishment or demotion without sufficient
cause.

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LABOR LAW REVIEWER


Bisig ng Manggagawa sa TRYCO v. NLRC (2008)
This prerogrative extends to the managements right
to regulate, according to its own discretion and
judgment, all aspects of employment, including the
freedom to transfer and reassign employees from
one are to another in order to meet the
requirements of the business is, therefore, not
general constitutive of constructive dismissal. Thus,
the consequent transfer of Trycos personnel,
assigned to the Production Department was well
within the scope of its management prerogative.
When the transfer is not unreasonable, or
inconvenient, or prejudicial to the employee, and it
does not involve a demonition in rank or diminution
of salaries, benefits, and other privileges, the
employee may not complain that it amounts to a
constructive dismissal.

C. Productivity standard
The employer has the right to demote and transfer
an employee who has failed to observe proper
diligence in his work and incurred habitual tardiness
and absences and indolence in his assigned work.
(Petrophil Corporation vs. NLRC, 1986)
In the consolidated cases of Leonardo vs. NLRC [G.
R. No. 125303, June 16, 2000] and Fuerte vs. Aquino
[G. R. No. 126937, June 16, 2000], the employer
claimed that the employee was demoted pursuant to
a company policy intended to foster competition
among its employees. Under this scheme, its
employees are required to comply with a monthly
sales quota. Should a supervisor such as the
employee fail to meet his quota for several
consecutive months, he will be demoted, whereupon
his supervisors allowance will be withdrawn and be
given to the individual who takes his place. When
the employee concerned succeeds in meeting the
quota again, he is re-appointed supervisor and his
allowance is restored. The Supreme Court held that
this arrangement is an allowable exercise of
company rights since an employer is entitled to
impose productivity standards for its workers. In
fact, non-compliance may be visited with a penalty
even more severe than demotion.

D. Grant of Bonus
A bonus is "a gratuity or act of liberality of the giver
which the recipient has no right to demand as a
matter of right" (Aragon vs. Cebu Portland Cement
Co., 61 O.G. 4597). "It is something given in addition
to what is ordinarily received by or strictly due the
recipient." The granting of a bonus is basically a
management prerogative which cannot be forced
upon the employer "who may not be obliged to
assume the onerous burden of granting bonuses or
other benefits aside from the employee's basic
salaries or wages" (Kamaya Point Hotel vs.
National Labor Relations Commission, Federation of
Free Workers and Nemia Quiambao, G.R. No. 75289,
August 31, 1989). (Traders Royal Bank vs. NLRC,
1990)

With regard to the private respondents claim for


the mid-year bonus, it is settled doctrine that a
grant of a bonus is a prerogative, not an obligation
of the employer. The matter of giving a bonus over
and above the workers lawful salaries and
allowances is entirely dependent on the financial
capability of the employer to give it. (KimberlyClark Philippines, Inc. vs. Dimayuga, 2009)

E. Change of working hours


Further, management retains the prerogative,
whenever exigencies of the service so require, to
change the working hours of its employees. So long
as such prerogative is exercised in good faith for the
advancement of the employers interest and not for
the purpose of defeating or circumventing the rights
of the employees under special laws or under valid
agreements, this Court will uphold such exercise.
(Sime Darby Pilipinas Inc. v. NLRC, 1998)

F. Marital discrimination
In the recent case of Duncan Association of
Detailman-PTGWO and Pedro Tecson v. Glaxo
Wellcome Philippines, Inc., we passed on the
validity of the policy of a pharmaceutical company
prohibiting its employees from marrying employees
of any competitor company. We held that Glaxo has
a right to guard its trade secrets, manufacturing
formulas,
marketing
strategies
and
other
confidential programs and information from
competitors. We considered the prohibition against
personal or marital relationships with employees of
competitor companies upon Glaxos employees
reasonable under the circumstances because
relationships of that nature might compromise the
interests of Glaxo. In laying down the assailed
company policy, we recognized that Glaxo only aims
to protect its interests against the possibility that a
competitor company will gain access to its secrets
and procedures. (Star Paper Corp. vs. Simbol, 2006)

G. Post-employment ban
In cases where an employee assails a contract
containing a provision prohibiting him or her from
accepting competitive employment as against public
policy, the employer has to adduce evidence to
prove that the restriction is reasonable and not
greater than necessary to protect the employers
legitimate business interests. The restraint may not
be unduly harsh or oppressive in curtailing the
employees legitimate efforts to earn a livelihood
and must be reasonable in light of sound public
policy. (Rivera v Solidbank, 2006)

H. Limitations in its exercise


The right of employees to security of tenure does
not give them vested rights to their positions to the
extent of depriving management of its prerogative to
change their assignments or to transfer them.
Managerial prerogatives, however, are subject to
limitations provided by law, collective bargaining
agreements, and general principles of fair play and

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LABOR LAW REVIEWER


justice. (The Philippine American Life and General
Insurance Co. v. Gramaje, 2004)

1)

Management has the prerogative to discipline its


employees and to impose appropriate penalties on
erring workers pursuant to company rules and
regulations. This Court has upheld a companys
management prerogatives so long as they are
exercised in good faith for the advancement of the
employers interest and not for the purpose of
defeating or circumventing the rights of the
employees under special laws and valid agreementsI
(Courts emphasis) (Marival Trading v. NLRC, 2007)

2)
3)
4)
5)

VI. Social Legislation


A. SSS Law (RA 8282)

b. Benefits

1. Coverage
1)

2)

Compulsory
(1) Employers as defined above;
(2) Employees not over 60 years including
domestic helpers with at least P1,000
monthly pay; and
(3) Self-employed as may be determined by the
Commission, but not limited to:
i. Self-employed professionals
ii. Partners and single proprietors of
businesses
iii. Actors and actresses, directors,
scriptwriters,
and
news
correspondents who do not fall
within the definition of the term
employee under Section 8 (d)
iv. Professional athletes, coaches,
trainers and jockeys
v. Individual farmers and fishermen
Voluntary
(1) Spouses who devote full time to managing
household and family affairs, unless they
are also engaged in other vocation or
employment
(which
is
subject
of
compulsory coverage);
(2) OFWs recruited by foreign-based employers;
(3) Employees (previously under compulsory
coverage)
already
separated
from
employment or those self-employed (also
under compulsory coverage) with no
realized income for a given month, who
chose to continue with contributions to
maintain right to full benefit.
NOTE: Foreign governments, international
organizations
or
their
wholly
owned
instrumentality employing workers in the
Philippines may enter into an agreement with
the Philippine government to include their
employees in the SSS except those already
covered by their civil service retirement system.

a. Exclusions from coverage

Employment purely casual and not for the


purpose of occupation or business of the
employer;
Service performed on or in connection with an
alien vessel by an employee if he is employed
when such vessel is outside the Philippines;
Service performed in the employ of the
Philippine Government or instrumentality or
agency thereof;
Service performed in the employ of a foreign
government or international organization, or
their wholly-owned instrumentalities; and
Services performed by temporary and other
employees which may be excluded by SSS
regulation. Employees of bona fide independent
contractors shall not be deemed employees of
the employer engaging the services of said
contractors.

Monthly pension
Computation of monthly pension: the monthly
pension shall be the highest of the following
amounts:
(1) P300 + [20% x (ave. monthly credit)] + [2% x
(ave. monthy credit) x (# of cash credited years
of service in excess of 10 years)]; or
(2) 40% x (ave. monthly credit); or
(3) P1,000; provided, that the monthly pension shall
in no case be paid for an aggregate amount of
less than 60 months.
(4) Notwithstanding the abovementioned, minimum
pension is P1,200 for members with at least 10
years credit service, P2,400 for those with 20
years.
Dependents pension
a.
b.
c.

Paid when member dies, retires or with


permanent total disability;
Paid to each child conceived on or prior to
contingency, but not exceeding 5, beginning
with the youngest and preferring the legitimate;
Amount is either P250 or 10% of the monthly
pension as computed above, whichever is higher.

Retirement benefits
Eligibility requirements
1) 120 monthly contributions;
2) Age
a. 65 years old; or
b. a member who has reached 60 years may
also avail if he is already separated from
employ-ment or has ceased to be selfemployed.
Benefit entitlement to monthly pension from
retirement until death.
Lump Sum Alternative
Member may opt to receive his first 18 monthly
pensions in lump sum but such is discounted at a
preferential rate of interest.

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LABOR LAW REVIEWER


To those ineligible to the 60 year old with less
than 120 monthly contributions who is no longer
employed or self-employed, and who is not
continuing contributions independently, he is
entitled to a lump sum
equal to his total
contributions paid.
Permanent disability benefits
a)

b)
c)

Eligibility
requirement:
36
monthly
contributions prior to the semester of disability;
same as death benefit; only difference is that
the pension is paid directly to the member.
In case the permanently disabled member dies,
it would be given the same treatment as a
retiree dying. (see section B-5 above).
For permanent partial disability, the pension is
not lifetime. (e.g. loss of thumb entitles
member to only 10 months of pension, while loss
of arm 50 months).
It shall be paid in lump sum if the period is
less than 12 months.
For multiple partial disabilities, they shall
be additive when related or deteriorating
the percentage shall be equal to the
number of months the partial disability is
entitled to divided by 75 months. (e.g. loss
of sight in one eye
25/75; loss of arm
50/75; if both occur due to same cause,
then 25/75 + 50/75 = 100% so treated as if
it were permanent total disability.

Death benefits
Eligibility requirement: 36 monthly contributions
prior to the semester of death.
Benefit monthly pension to primary or secondary
beneficiaries.
To those ineligible lump sum benefit which shall
be the higher between the two:
(monthly pension) x 12; or
(monthly pension) x (# of monthly contributions)
Funeral benefits
P12,000 in cash or in kind, upon death of member
Loan Social Security Commission Resolution
No. 669. Moreover, several SSS-issued circulars
such as Circular No. 21-P and No. 52 pertain to
the treatment of salary loans, sometimes
providing for more flexible payment terms or
condonation for delinquent payers; Santiago v.
CA and SSS, GR # L-39949 (1984) resolved an
issue involving the treatment of salary loan
repayments; SSS website also shows loans

(3) At least 3 months of contributions in the 12


month period immediately before the semester
of sickness or injury has been paid;
(4) All company sick leaves with pay for the current
year has been used up;
(5) Maximum of 120 days per 1 calendar year (so
maximum permissible for the same sickness and
confinement is 240 days for 2 consecutive
years);
(6) The employer has been notified, or, if a
separated, voluntary or self-employed member,
the SSS directly notified within 5 days of
confinement;
(7) Notice to employer or SSS not needed when
confinement is in a hospital; notice to employer
not required as well when Employee became
sick or injured while working or within premises
of the employer.
Benefit: daily cash allowance paid for the number of
days a member is unable to work due to sickness or
injury equivalent to 90% x (average daily salary
credit)
Maternity leave benefits (limited only to first
four deliveries or miscarriage)
Note: All of these benefits are tax-exempt.

c. Beneficiaries
1)

Primary
Dependent spouse until remarriage (see
above);
Dependent children (legitimate, legitimated,
legally adopted, and illegitimate) (see above);
illegitimate children are entitled only to 50%
of the share of legitimate children unless
there are no legitimate children, in which
case, they get 100%.

2) Secondary shall only receive when the primary


beneficiaries are absent
Dependent parents
3) Others shall only receive when the primary
and secondary beneficiaries are absent
Any other person designated by member as
his/her secondary beneficiary.

B. GSIS (RA 8291)


1. Coverage

All public sector employees below the compulsory


retirement age of 65, irrespective of employment
status.

Sickness benefits
Eligibility requirements and other conditions
(1) Inability to work due to sickness or injury
(2) Confined for at least 4 days either in a hospital
or elsewhere with SSS approval;

2. Exclusions from coverage


AFP and PNP;
Members of the Judiciary and Constitutional
Commissions who are covered only by life
insurance as they have
separate retirement
schemes;

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LABOR LAW REVIEWER


Contractual employees with no employeremployee relationship with the agency they
serve.

3. Benefits
Monthly pension
The amount shall be:
a) 37.5% x (revalued ave. monthly compensation)
b) Plus 2.5 x (revalued ave. monthly compensation)
x (years in service in excess of 15 years).
The monthly pension shall not exceed 90% of the
average monthly compensation.
It shall not be less than P2,400 for those with 20
years of service and not less than P1,300 for
everyone else.
Retirement benefits
Eligibility requirements
(1) 15 years service;
(2) 60 years of age; and
(3) Not receiving pension benefit from permanent
total disability.
Note: Retirement is compulsory for employees 65
years of age who have rendered at least 15 years of
service; if employee has less than 15 years of
service, he may be allowed to continue in
accordance with civil service laws.
Benefit: choice between
60 x (basic monthly pension) lump sum payment
at the time of retirement plus basic monthly
pension payable monthly for life after expiry of
the 5-year guaranteed period which is already
covered by the lump sum; or
Cash payment equivalent to 18 x (basic monthly
pension) plus monthly pension for life
immediately but with no 5-year guarantee
Permanent disability benefits
Eligibility requirements for Permanent Total
Disability
(1) Disability not due to employees own grave
misconduct, notorious negligence, habitual
intoxication, or willful intention to kill
himself or another;
(2) Employee is: in service at the time of
disability; or b) even if separated, he has
paid at least 36 monthly contributions
within the 5-year period immediately prior
to disability or has paid a total of at least
180 monthly contributions prior to
disability; and
(3) Member is not enjoying old-age retirement
benefit.
Benefit for Permanent Total Disability
Monthly income benefit for life equal to basic
monthly pension This is effective from date of
disability;
If member is in service at the time of disability
and he has paid at least 180 monthly

contributions, in addition to the monthly income


benefit, he shall receive an additional cash
payment of 18 times basic monthly pension.
To the ineligible
If member has rendered at least 3 years of service,
then he shall receive cash payment equal to 100% of
ave. monthly compensation for each year of service
(essentially total amount of contributions made) or
P12,000 whichever is higher.
Partial Disability
Paid according to GSIS prescribed schedule (this is
similar to the scheme used by SSS; refer to section II
subsection D-3 above); member availing of
permanent partial disability must satisfy condition
E.1.a. above regarding the disability not being due
to his own fault and either E.1.b.i. or E.1.b.ii.
regarding employment status and services rendered.
Death Benefits
When member dies, the primary beneficiaries are
entitled to only one of the following:
a) Survivorship pension (check G.1 above)
If he was in the service when he died; or
Even if separated from the service, he has
at least 3 years of service and has paid 36
monthly contributions within the 5 years
immediately preceding death; or
Even if separated from the service, he has
paid 180 monthly contributions prior to
death.
b) Survivorship pension plus cash payment of 100%
ave. monthly compensation for every year of
service (so essentially, pension plus total
contributions made)
If he was in the service when he died; and
With 3 years of service.
c) Cash payment equivalent to 100% ave. monthly
compensation for each year of service he paid
contributions or P12,000 whichever is higher
With 3 years of service; and
He has failed to qualify in the prior 2
schemes.
Funeral benefits
Fixed by GSIS rules and regulations (currently at
P20,000)
Entitled to this are the following:
(1) Active member;
(2) Member separated from service but still
entitled to funeral benefit;
(3) Pensioner;
(4) Retiree who at the time of retirement was
of pensionable age but opted to retire
under RA 1616.
Loan GSIS website provides for this
Temporary disability benefits (similar to sickness)
Eligibility requirements and other conditions:
(1) Employee must be
in service at the time of disability; or

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if separated, he has rendered at least 3
years of service and paid at least 6 monthly
contributions in the 12 month period
immediately prior to disability;
(2) All sick leave credits including CBA sick leaves
for the current year has been used up; and
(3) Maximum of 120 days per 1 calendar year (so
maximum permissible for the same sickness and
confinement is 240 days for 2 consecutive
years).
Benefit
75% of the current daily compensation for every day
or fraction thereof of disability or P70 whichever is
higher.
Separation benefits
Eligibility requirements
(1) 60 years of age, or separation from service with
at least 3 years but not over 15 years served
(2) Below 60 years of age, but at least 15 years of
service rendered.
Benefit
(1) For 60 years of age or separated from service
with 3 to 15 years of service: cash payment of
100% of ave. monthly compensation for each
year of service (so essentially, the total amount
of all contributions paid) or P12,000 whichever
is higher.
(2) Below 60 years of age and at least 15 years of
service: cash payment equivalent to 18 x
(monthly pension) at the time of resignation or
separation plus an old-age pension benefit equal
to basic monthly pension.
Unemployment benefits Sec 11
Eligibility requirements
a) Employee separated from service due to
abolition of his office or position; and
b) Employee
has
been
paying
integrated
contributions for at least 1 year prior to
separation.
Benefit
Monthly cash payments of 50% of average monthly
compensation for a duration which is proportional to
years rendered, ranging from 2 months to 6 months.
Survivorship benefits
Beneficiaries are entitled to the following:
Basic survivorship pension which is 50% of basic
monthly pension; and
Dependent childrens pension not exceeding 50%
of the basic monthly pension.
Life insurance benefits
Note: Judiciary and Constitutional Commissions are
entitled to life insurance only.

4. Beneficiaries
1)

Primary
Dependent spouse until remarriage;

Dependent
children
(legitimate,
legitimated,
legally
adopted,
and
illegitimate) but RA 8291 does not
distinguish share of legitimate and
illegitimate children.
2) Secondary shall only receive when the primary
beneficiaries are absent
Dependent parents
Legitimate descendants, subject to the
restrictions on dependent children.
(See Annex B for Comparison between the SSS law
and the GSIS Law)

C. Limited Portability Law (RA


7699)
Coverage
(1) Workers who transfer employment from one
sector to another; or
(2) Those employed in both sectors (public and
private).
Process
The covered worker shall have his credible services
or contributions in both Systems 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 (Sec. 3)
Totalization shall refer to the process of adding up
the periods of creditable services or contributions
under each of the Systems, for purposes of eligibility
and computation of benefits (Sec. 2e).
Note:
Overlapping periods of membership in case of
those employed in both sectors at once are to be
counted only ONCE for purposes of totalization.
Why?
To be able to satisfy eligibility requirements of
benefits provided for by either SSS or GSIS.

D. Employees Compensation
Coverage and when
compensable
Coverage
Sec. 2. Scope (a) Every employer shall be
covered.
(b) Every employee not over sixty (60) years of age
shall be covered.
(c) An employee over sixty (60) years of age shall
be covered if he had been paying contributions
to the System prior to age sixty (60) and has not
been compulsorily retired.

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LABOR LAW REVIEWER


(d) An employee who is coverable by both the GSIS
and SSS shall be compulsorily covered by both
Systems.
Sec. 5. Foreign Employment (a) Filipinos working
abroad in the service of an employer as defined in
Section 3 hereof shall be covered by the System, and
entitled to the same benefits as are provided for
employees working in the Philippines.
Sec. 6. Effectivity (b) Coverage of employees shall
take effect on the first day of employment.
When compensable
Grounds:
(1) For the injury and the resulting disability or
death to be compensable, the injury must be
the result of accident arising out of and in the
course of the employment.
(2) For the sickness and the resulting disability or
death to be compensable, the sickness must be
the result of an occupational disease listed
under Annex A of these Rules with the
conditions set therein satisfied, otherwise, proof
must be shown that the risk of contracting the
disease is increased by the working conditions.
Limitation: No compensation shall be allowed to the
employee or his dependents when the injury,
sickness, disability, or death was occasioned by any
of the following:
(1) his intoxication;
(2) his willful intention to injure or kill himself or
another; or
(3) his notorious negligence
(4) As otherwise provided by law.

VII. Labor Relations Law


A. Right to Self-organization
B. Right to Collective Bargaining
C. Right to Peaceful Concerted Activities

(2) The term shall not be limited to the employees


of a particular employer, unless this code
explicitly states.
(3) It shall include any individual whose work has
ceased as a result of or in connection with any
current labor dispute or because of any unfair
labor practice if he has not obtained any other
substantially
equivalent
and
regular
employment
Rank-and-File Employees: Definition
IRR Book V Rule I Sec. 1:
(nn) Rank-and-File Employee refers to an
employee whose functions are neither managerial
nor supervisory in nature.
Art. 244 now allows employees of non-profit
organizations to join, form and/or assist labor
organizations. (FEU-Dr. Nicanor Reyes Medical
Foundation Inc. v. Trajano, 1992)
(1) Government
Corporate
Employees
(Corporations created under the Corporation
Code)
Art. 244. Right of Employees in the Public Service
Employees of government corporations established
under the corporation code shall have the right to
organize and to bargain collectively with their
respective employers.
1987 Constitution, Art. IX-B, Sec. 2 (5)
5. The right to self-organization shall not be denied
to government employees.
E.O. 180, Sec. 2
All government employees can form, join, or assist
employees organizations of their own choosing for
the furtherance and protection of their interests.
They can also form, in conjunction with appropriate
government
authorities,
labor-management
committees, work councils and other forms of
workers participation schemes to achieve the same
objectives.

A. RIGHT TO SELF-ORGANIZATION

(2) Supervisory Employees

a. Who may unionize for purposes of


collective bargaining (covered
employees/workers)

Art. 212 (m). Supervisory employees are those who,


in the interest of the employer, effectively
recommend such managerial actions if the exercise
of such authority is not merely routinary or clerical
in nature but requires the use of independent
judgment.

(a) All Employees (General Rule)


Right to Self-Organization: Coverage
General Rule: ALL employees of all kind of
employers public or private, profit or non-profit,
commercial or religious. (Art. 243)
Employee: Definition
Who is an employee? Art. 212(f). Employee
includes:
(1) Any person in the employ of an employer.

Art. 245. Ineligibility of Managerial Employees to


Join any Labor Organization; Right of Supervisory
Employees
Managerial employees are not eligible to join, assist
or form any labor organization. Supervisory
employees shall not be eligible for membership in a
labor organization of the rank-and-file employees
but may join, assist or form separate labor
organizations of their own.

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Why cant supervisors join a union of rank-andfile?
This policy of segregation is founded on fairness to
the employer and the employees themselves. It will
be detrimental to the employer if the supervisors
and the rank-and-file, as members of only one union,
could take a common stand against the employer
(Azucena).

disqualification of security guards and with that


security guards were thus free to join a rank and file
organization. Under the old rule, security guards
were barred from joining labor organizations of the
rank-and-file but under RA 6715, they may now
freely join a labor organization with the rank-andfile or the supervisory union, depending on their
rank. (Manila Electric Co. v.Sec. of Labor, 1991)

Supervisory employees, while in the performance of


supervisory functions, become the alter ego of the
management in the making and the implementing of
key decisions. It would be difficult to find unity or
mutuality of interests in a bargaining unit consisting
of a mixture of rank-and-file and supervisory
employees. (Toyota Motor Phil. Corp. v Toyota
Motor Phil. Corp. Labor Union, 1997)

(1) Who cannot form, join, or assist


labor organizations

What is the Effect of Mixed Membership?


As stated in Article 245-A the employees that should
not have been included in membership are
automatically deemed removed from the list of
membership.
Note: The rank and file union and the supervisors
union operating the same establishment may join the
same federation or national union. (Art. 245).
(3) Aliens
Art. 269. Prohibition against Aliens; Exceptions
General Rule: They are strictly PROHIBITED from
engaging directly or indirectly in all forms of trade
union activities
Exception: Aliens working in the country who:
(1) Have valid permits issued by DOLE
(2) Reciprocity: That said aliens are nationals of a
country which grants the same or similar rights
to Filipino workers
IRR, Book V, Rule II, Sec. 2, Par. 1, 3rd sentence
Alien employees with valid working permits issued by
the Department may exercise the right to selforganization and join or assist labor unions for
purposes of collective bargaining if they are
nationals of a country which grants the same or
similar rights to Filipino workers, as certified by the
Department of Foreign Affairs.
(4) Security Guards
The security guards and other personnel employed
by the security service contractor shall have the
right:
To form, join, or assist in the formation of a
labor organization of their own choosing for
purposes of collective bargaining and
To engage in concerned activities which are not
contrary to law including the right to strike.
(D.O. No. 14 Series of 2001 Guidelines
Governing the Employment and Working
Conditions of Security Guards and Similar
Personnel in the Private Security Industry)
In Dec 1986, President Aquino issued EO No. 111
which
eliminated
the
provision
on
the

1. Managerial Employees and Confidential


Employees
Who are managerial employees? (Functional Test)
Art. 212 (m) Managerial Employee
One who is vested with powers or prerogatives to:
(1) lay down and execute management policies,
AND/OR
(2) to hire, transfer, suspend, lay off, recall,
discharge, assign or discipline employees.
Art. 245. Ineligibility of Managerial Employees to
Join any Labor Organization; Right of Supervisory
Employees
1) Managerial employees are NOT eligible to join,
assist or form any labor organization.
2) Supervisory employees shall not be eligible for
membership in a labor organization of the rank-andfile employees but may join, assist or form separate
labor organizations of their own.
Art. 245-A. Effect of Inclusion as Members of
Employees Outside the Bargaining Unit
The inclusion as union members of employees
outside the bargaining unit shall not be a ground for
the cancellation of the registration of the union.
Said employees are automatically deemed removed
from the list of membership of said union.
Confidential Employees: (Nature of Access Test)
Confidential employees are those who:
(1) assist or act in a confidential capacity (integral
part of the job)
(2) to persons who formulate, determine, and
effectuate management policies in the field of
labor relations.
Note: These two criteria are cumulative, both must
be met if an employee is to be considered as
confidential.
Even if an employee has access to confidential labor
relations information BUT such is merely incidental
to his duties and knowledge hereof is NOT necessary
in the performance of such duties, said access does
not render the employee a confidential employee.
(San Miguel Corp. Supervisors v. Laguesma, 1997)
Exclusion of Confidential Employees: Rationale
Employees should not be placed in a position
involving a potential conflict of interests.
By the very nature of their functions, they assist and
act in a confidential capacity to, or have access to

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confidential matters of, persons who exercise
managerial functions in the field of labor relations.
{Thus there is a fiduciary and confidential
relationship between manager and employer.} It is
not far-fetched that in the course of CB, they might
jeopardize that interest which they are duty bound
to protect. (Metrolab Industries Inc. v. RoldanConfessor, 1996)
The disqualification of managerial and confidential
employees from joining a bargaining unit for rank
and file employees is already well-entrenched in
jurisprudence. While Article 245 of the Labor Code
limits the ineligibility to join, form and assist any
labor organization to managerial employees,
jurisprudence has extended this prohibition to
confidential employees or those who by reason of
their positions or nature of work are required to
assist or act in a fiduciary manner to managerial
employees and hence, are likewise privy to sensitive
and highly confidential records. (Standard Chartered
Bank Employees Union v SCB, 2008)
Nomenclature not Controlling: Function Test
The mere fact that an employee is designated
manager does not ipso facto make him one.
Designation should be reconciled with the actual job
description of the employee. (Paper Indurstries
Corp. of the Philippines. v. Laguesma ,2000)
2.

Employee-Member of Cooperative

The right to collective bargaining is not available to


an employee of a cooperative who at the same time
is a member and co-owner thereof.
Exclusion: Fact of Ownership Controlling
The fact of ownership of the cooperative and not the
involvement in the management thereof, which
disqualifies a member from joining any labor
organization within the cooperative.
Exclusion: Rationale
They cannot invoke the right to collective bargaining
for "certainly an owner cannot bargain with himself
or his co-owners." (Benguet Electric Cooperative v.
Ferrer-Calleja)
BUT
Employees who withdrew their membership from the
cooperative are entitled to form or join a labor
union for the negotiations of a CBA. (CENECO v
DOLE, 1991)
3.

Employees of International Organizations

International organizations are endowed with some


degree of international legal personality. They are
granted jurisdictional immunity.
A certification election cannot be conducted in an
international
organization
which
the
Phil.
Government has granted immunity from local
jurisdiction. (International Catholic Migration
Commission v. Calleja, 1990)
4.

Non-Employees

Since the persons involved are not employees of the


company, they are not entitled to the constitutional
right to join or form a labor organization for
purposes of collective bargaining. (Republic Planters
v Laguesma , 1996)
Respondents are found not to be employees of the
Company, they are not entitled to the constitutional
right to join or form a labor organization for
purposes of collective bargaining. Citing La Suerte
Cigar and Cigarette Factory v. Director of Bureau of
Labor Relations the court here reiterated, The
question of whether employer-employee relationship
exists is a primordial consideration before extending
labor benefits under the workmen's compensation,
social security, medicare, termination pay and labor
relations law. Failure to establish this juridical
relationship between the union members and the
employer affects the legality of the union itself.
(Singer Sewing Machine Co. v. Drilon , 1993)
5.

Members of the Armed Forces of the


Philippines, Policemen, Police Officers,
Firemen and Jail Guards (E.O. 180, Sec. 4)

6.

High-level
or
managerial
employees (E.O. 180, Sec. 3)

government

High-level Employee: Definition


Is one whose functions are normally considered
policy determining, managerial or one whose duties
are highly confidential in nature.
Managerial Functions
(1) Effectively recommend managerial actions;
(2) Formulate or execute management policies and
decisions; or
(3) Hire, transfer, suspend, lay-off, recall, dismiss,
assign or discipline employees.

b. Right To Self-Organization: Basis


(1) 1987 Constitution
Art. III Sec. 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.
Art. XIII Sec. 3. The state shall afford full protection
to labor, local and overseas, organized and
unorganized, and promote full 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.
(2) Labor Code
Art. 243. Coverage and Employees Right to SelfOrganization
(1) All persons employed in commercial, industrial
and agricultural enterprises and in religious,
charitable, medical, or educational institutions,
whether operating for profit or not, shall have the
right to self-organization and to form, join, or assist

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LABOR LAW REVIEWER


labor organizations of their own choosing for
purposes of collective bargaining.
(2) Ambulant, intermittent, and itinerant workers,
self-employed people, rural workers and those
without any definite employers may form labor
organizations for their mutual aid and protection.
Art. 244. Right of Employees in the Public Service
Employees of government corporations established
under the corporation code shall have the right to
organize and to bargain collectively with their
respective employers.
Right to Self-Organization: A Fundamental Right
Self-organization is a fundamental right guaranteed
by the Philippine Constitution and the Labor Code.
Employees have the right to form, join or assist labor
organizations for the purpose of collective
bargaining or for their mutual aid and protection.
Whether employed for a definite period or not, any
employee shall be considered as such, beginning on
his first day of service, for purposes of membership
in a labor union. (UST Faculty Union v Bitonio)

c. Right to Self-Organization: Extent and


Scope
ART. 246: Non-abridgment of Right to SelfOrganization
It shall be unlawful for any person to restrain,
coerce, discriminate against or unduly interfere with
employees and workers in their exercise of the right
to self-organization.
Right to Self-Organization: Scope
The right to self organization shall also include:
(1) Right to form, join and assist labor
organizations of their own choosing for the
purpose of collective bargaining through
representatives (Art. 246);
(2) Right to engage in lawful concerted
activities for the same purpose or for their
mutual aid and protection (Art. 246);
(3) Right not to exercise it: the right NOT to
join, affiliate with, or assist any union, and
to disaffiliate or resign from a labor
organization, is subsumed in the right to
join, affiliate with, or assist any union, and
to maintain membership therein. It is selfevident that just as no one should be
denied the exercise of a right granted by
law, so also, no one should be compelled to
exercise such a conferred right (Reyes v.
Trajano, 1992)
In the very recent case of Heritage Hotel Manila v.
PIGLAS-Heritage, G.R. No. 177024, October 30,
2009, the Supreme Court reiterated the rule that
the right of any person to join an organization also
includes the right to leave that organization and join
another one.
Right to withdraw from the organization: the right of
the employees to self-organization is a compelling
reason why their withdrawal from the cooperative
must be allowed. As pointed out by the union, the

resignation of the member-employees is an


expression of their preference for union membership
over that of membership in the cooperative (Central
Negros Electric Cooperative v. Sec. of Labor,
1991)
The BLR correctly observed that the :recognition of
the tenets of the [INC] sect xxx should not infringe
on the basic right to self-organization granted by the
constitution to workers, regardless of religious
affiliation. (Kapatiran sa Meat and Canning Division
v Calleja, 1988)

d. Worker Qualification
Art. 277. Miscellaneous Provisions
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.
Whether employed for a definite period or not, any
employee shall be considered as such, beginning on
his first day of service, for purposes of membership
in a labor union. To become a union member, an
employee must, as a rule, not only signify the intent
to become one, but also take some positive steps to
realize that intent. (UST Faculty Union v. Bitonio ,
1999)
(2) Executive Order No. 180
See previous page

d. Bargaining Unit
(1) Test
to
determine
the
constituency of an appropriate
bargaining unit

(W-A-P-E)
(1) Will of the Employees (Globe Doctrine)
(2) Affinity & unity of Employees interest, such as
substantial similarity of works and duties or
similarity of compensation & working conditions
(3) Prior CB history
(4) Employment status i.e. temporary, seasonal, &
probationary. (UP v. Ferrer-Calleja, 1992
citing Democratic Labor Assoc v. Cebu
Stevedoring Co.)
Community or Mutuality of Interests
FUNDAMENTAL TEST: [T]he basic test of an
asserted bargaining units ACCEPTABILITY is whether
or not it is fundamentally the combination which will
best assure to all employees the exercise of their CB
rights. This is related to the policy of the law in
ensuring the right to collective bargain. (UP v.
Ferrer-Calleja, 1992)
Mutuality of Interest: Rationale
There are greater chances of success for the
collective bargaining process. The bargaining unit is
designed to maintain the mutuality of interest
among the employees in such unit.
Reason to dissolve, change or expand a certain
bargaining unit: When THE INTEREST BETWEEN
GROUPS HAS CHANGED OVER TIME

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LABOR LAW REVIEWER

Collective Bargaining History


The existence of a prior collective bargaining history
is neither decisive nor conclusive in the
determination of what constitutes an appropriate
bargaining unit. (San Miguel Corp. v. Laguesma,
1994)
Geography Location
Geography and location only play a significant role
if:
(1) The separation between the camps and the
different kinds of work in each all militate
in favor of the system of separate
bargaining units;
(2) When the problems and interests of the
workers are peculiar in each camp or
department;
(3) The system of having one collective
bargaining unit in each camp has operated
satisfactorily in the past. (Benguet
Consolidated Inc. and Balatok Mining Co.
v. Bobok Lumberjack Assn.,1958)
Size - Composition
It bears noting that the goal of the DOLE is geared
towards "a single employer wide unit which is more
to the broader and greater benefit of the employees
working force." The philosophy is to avoid
fragmentation of the bargaining unit so as to
strengthen the employees bargaining power with
the management. To veer away from such goal would
be contrary, inimical and repugnant to the
objectives of a strong and dynamic unionism. (Phil.
Diamond Hotel and Resort Inc v Manila Diamond
Hotel and Employees Union, 2006)
Since the confidential employees are very few in
number and are by practice and tradition identified
with the supervisors in their role as representatives
of management vis--vis the rank and file
employees, such identity of interest has allowed
their inclusion in the bargaining of supervisors for
purposes of collective bargaining in turn as
employees in relation to the company as their
employer. This identity of interest logically calls for
their inclusion in the same bargaining unit and at the
same time fulfills the laws objective of insuring to
them the full benefit of their right to self
organization and to collective bargaining, which
could hardly be accomplished if the respondent
associations membership were to be broken up into
five separate ineffective tiny units. Creating
fragmentary units would not serve the interest of
industrial peace. The breaking up of bargaining units
into tiny units will greatly impair their organizational
value. (Filoil Refinery Corp. v Filoil Supervisory
and Confidential Employees Union, 1972)
Corporate Entities
GENERAL RULE: Two companies having separate
juridical personalities shall NOT be treated as a
single bargaining unit.
EXCEPTION:
Pervasive
Unitary
Aspect
of
Management Doctrine. The cross-linking of the

agencies command, control, and communication


systems indicate their unitary corporate personality.
(Philippine Scouts Veterans v. Torres)
Principles in determining whether to establish
separate bargaining units: (Indophil Textile Mills
Workers Union v. Calica, 1992; Diatagon Labor
Federation v. Ople, 1980)
(1) The existence of a bonafide business
relationship between the 2 companies is not
proof of being a single corporate entity,
especially when the services provided by
the other company are merely auxiliary.
(2) The fact that there are as many bargaining
6 6 units as there are companies in a
conglomeration of companies is a positive
proof that a corporation is endowed with a
legal personality DISTINCTLY ITS OWN,
independent and separate from other
corporations.
(3) Separate legitimate purposes militate
against treating one corporation as an
adjunct or alter ego of the other.
(4) The fact that the businesses are related,
that some of the employees are the same
persons working in the other company and
the physical plants, offices and facilities are
in the same compound are NOT sufficient to
justify piercing the corporate veil. In Umali
vs CA, legal corporate entity is disregarded
only if it is sought to hold the officers and
stockholders directly liable for a corporate
debt or obligation.
Spun-off corporations
The transformation of companies is a management
prerogative and business judgment which the courts
cannot look into unless it is contrary to law, public
policy or morals. If, considering the spin-offs, the
companies would consequently have their respective
and distinctive concerns in terms of nature of work,
wages, hours of work and other conditions of
employment. The nature of their products and scales
of business may require different skills, volumes of
work, and working conditions which must necessarily
be commensurate by different compensation
packages. (San Miguel Union v Confesor, 1996)
Unit Severance and Globe Doctrine
Globe Doctrine: Concept
[A] practice designated as the "Globe doctrine,"
which sanctions the holding of a series of elections,
not for the purpose of allowing the group receiving
an over all majority of votes to represent all
employees, but for the specific purpose of
permitting the employees in each of the several
categories to select the group which each chooses as
a bargaining unit. (Kapisanan ng mga Manggagawa
sa Manila Road Co. v. Yard Crew Union , 1960)
Globe Doctrine: Rationale
Highly skilled workers have to separate to increase
their market value. It is best explained in the
context of a market place and the demand of
employment on such market place. The GLOBE

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LABOR LAW REVIEWER


DOCTRINE usually applies to employees with rare
skills or highly technical ones.
CBA Coverage
When there has been a factual determination by the
Labor Arbiter that the petitioners were regular
employees, said employees shall fall within the
coverage of the bargaining unit and are therefore
entitled to CBA benefits as a matter of law and
contract. (Farley Fulache, et a. v ABS-CBN, 2010)
Effect of Prior Agreement
Prior agreement as to the inclusion or exclusion of
workers in a bargaining unit or prohibition from
forming their own union agreed upon by the
corporation
with
the
previous
bargaining
representatives can never bind subsequent
federations (General Rubber & Footwear Corp. v
BLR, 1987)
RATIONALE: It is a curtailment of the right to selforganization. During the freedom period, the parties
may not only renew the existing collective
bargaining agreement but may also propose and
discuss modifications or amendments thereto. (DLSU
v. DLSUEA, 2000)
Effect of Including Employees Outside the
Bargaining Unit / Mixture of RAF and Supervisory
Employees
Art. 245-A. Effect of Inclusion as Members of
Employees Outside the Bargaining Unit
The inclusion as union members of employees
outside the bargaining unit shall not be a ground for
the cancellation of the registration of the union.
Said employees are automatically deemed removed
from the list of membership of said union.
Definition and role of law
Art. 255. Exclusive Bargaining and workers
participation in the policy and decision making
General rule: 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 a
unit for the purpose of collective bargaining.
Exception: 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, to participate in the
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 labor-management councils shall be elected by
at least the majority of all employees in said
establishment.
Bargaining Unit: Defined
Book V, Rule 1, Sec1(d) Definition of Terms-

Bargaining Unit refers to a group of employees


sharing mutual interests within a given employer
unit, comprised of all or less than all of the entire
body of employees in the employer unit or any
specific occupational or geographical grouping within
such employer unit.
Appropriate Bargaining Unit: Defined
A group of employees of a given employer comprised
of all or less than all of the entire body of
employees, which the collective interests of all the
employees indicate to be best suited to serve
reciprocal rights and duties of the parties consistent
with equity to the employer. (Belyca Corp. vs
Calleja, 1988)
Appropriate Bargaining Unit: Function
An ELECTORAL DISTRICT. It marks the
boundaries of those who may participate in a
certification election.
An ECONOMIC UNIT. They are a group of
employees with community of interests.
A SOVEREIGN BODY. It selects the sole and
exclusive bargaining agent.

(2) Voluntary recognition


Definition
Book V, Rule 1, Sec 1 (bbb)
Voluntary Recognition refers to the process by
which a legitimate labor union is recognized by the
employer as the exclusive bargaining representative
or agent in a bargaining unit, reported with the
Regional office in accordance to Rule VII, Sec 2 of
these Rules.
Conditions
(1) Unorganized establishment;
(2) Only one union asking for recognition;
(3)6 7The members of the bargaining unit did not
object to the projected recognition of the
union.
(a) Requirements
Book V Rule VII Sec 2-The notice of voluntary
recognition shall be accompanied by the original
copy and two (2) duplicate copies of the following
documents:
(1) A joint statement under oath of voluntary
recognition attesting to the fact of voluntary
recognition
(2) Certificate of posting of the joint statement of
voluntary
recognition
for
fifteen
(15)
consecutive days in at least two (2) conspicuous
places in the establishment or bargaining unit
where the union seeks to operate;
(3) The approximate number of employees in the
bargaining unit, accompanied by the names of
those who support the voluntary recognition
comprising at least a majority of the members
of the bargaining unit; and
(4) A statement that the labor union is the only
legitimate labor organization operating within
the bargaining unit.

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LABOR LAW REVIEWER


All accompanying documents of the notice for
voluntary recognition shall be certified under oath
by the employer representative and president of the
recognized labor union.
The employer may voluntarily recognize the
representation status of a union in unorganized
establishments. In this case, however, the company
[SLECC] was not an unorganized establishment when
it voluntarily recognized SMSLEC as its exclusive
bargaining representative. Prior to the voluntary
recognition, another union [CLUP-SLECC] has already
filed a petition for certification election. Thus, the
companys voluntary recognition of SMSLEC is void.
(SLECC v Sec. of Labor, 2009)

(3) Certification election


The certification election is the best method of
determining the will of the workers on the crucial
question of who shall represent them in their
negotiations with the management for a collective
bargaining agreement that will best protect and
promote their interests. It is essential that there be
no collusion against this objective between an
unscrupulous management and a union covertly
supporting it while professing its loyalty to labor, or
at least that the hopes of labor be not frustrated
because of its representation by a union that does
not enjoy its approval and support. It is therefore
sound policy that any doubt regarding the real
representation of the workers be resolved in favor of
the holding of the certification election. This is
preferable to the suppression of the voice of the
workers through the prissy observance of technical
rules that will exalt procedure over substantial
justice. (Port Workers Union of the Philippines v
Laguesma, 1992)
Purpose
The purpose of a certification election is precisely
the ascertainment of the wishes of the majority of
the employees in the appropriate bargaining unit: to
be or not to be represented by a labor organization,
and in the affirmative case, by which particular
labor organization. (Reyes v Trajano, 1992)
Nature of proceeding/ effect of private agreement
It is not litigation, but a mere investigation of a nonadversary character. The object of the proceedings is
merely the determination of proper bargaining units
and the ascertainment of the will and choice of the
employees in respect of the selection of the
bargaining representative. The determination of the
proceeding does not entail the entry of remedial
orders or redress of rights, but culmination solely in
an official designation of bargaining units and an
affirmation of the employees expressed choice of
bargaining agent. (Young Men Labor Union
Stevedores v CIR, 1965)
Implications
Technical rules and objections should not hamper
the correct ascertainment of the labor union that
has the support and confidence of the majority of
the workers and is thus entitled to represent them in

bargaining for the terms and conditions of their


employment. (Port Workers Union v. DOLE, 1992)
It is the most DEMOCRATIC and most efficacious/
effective way. (Samahang Manggagawa sa Permex v
Sec. of Labor, 1998)
It is a STATUTORY POLICY. (Belyca Corp. v. FerrerCalleja, 1998)
Thus it should not be circumvented There should be
no obstacle in conducting the Certification election.
(George & Peter Lines, Inc. v. Associated Labor
Union, 1985)
Certification election is the fairest and most
effective way of determining which labor
organization can truly represent the working force.
It is a fundamental postulate that the will of the
majority given expression in an honest election with
freedom on the part of the voters to make their
choice, is controlling. (PLUM Federation of
Industrial and Agrarian Workers v Noriel, 1978)
Who may vote?
All employees whether union members or not, as
long as they belong to the appropriate bargaining
unit can vote.
Note: Certification election is different from a union
election. The objective of a union election is to
elect union officers. Thus, in union elections only
union members can vote.
Procedure
(a) Certification election in an
unorganized establishment (Art. 257)
(1) A petition shall be filed by a legitimate labor
organization.
(2) Upon filing of the petition, the Med-Arbiter shall
AUTOMATICALLY
conduct
a
certification
election.
Filing of petition is by A LEGITIMATE labor
organization. It cannot be an unregistered labor
organization. This is best read in relation to Art. 242
which enumerates the rights granted to a legitimate
labor organization and one of those rights is the right
to be chosen as the exclusive bargaining
representative. This is one way the law encourages
union registration.
Venue: BLR Regional Office which issued the
petitioning unions certificate of registration or
certificate of creation of chartered local.
(b) Certification election in an
organized establishment (Art.
256)
A petition questioning the majority status shall be
filed by a legitimate labor organization (including
mother union and local chapter)

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LABOR LAW REVIEWER


Requisites for petition:
(1) Verified
(2) Filed within the 60-day period before expiration
of CBA (freedom period)
(3) Supported by written consent of at least 25% of
ALL employees in the bargaining unit.
Substantial Support Rule
Rationale: In organized establishments, the
incumbent sole bargaining agent should not be easily
replaced for that would disturb industrial stability.
To justify the disturbance, it must appear that at
least a substantial number seeks to have a new
exclusive bargaining unit.

(5) Labor union receiving MAJORITY of the valid


votes cast shall be certified as the exclusive
bargaining agent of all workers in the unit.

Election process and procedure


(Book V Rule VIII, IRR)
WHO may
file?
SEC. 1

Note: A union that is merely filing a MOTION FOR


INTERVENTION in a CE filed by another union need
NOT present substantial support. The substantial
support is only needed when filing for a petition for
certification election. (Port Workers Union v DOLE,
1992)
Discretionary Rule
If you strictly follow the letter of the law it would
seem to be mandatory. However, if the petition does
not comply with
the
substantial support
requirement, the BLR may exercise its discretion
in determining whether or not a certification
election must be conducted. (Scout Albano
Memorial College v. Noriel , 1978)

WHERE to
file?
SEC. 2

A rival union does not have authority to verify the


signatures in the substantial support requirement.
Only the department of labor has authority to verify.
(Todays Knitting Free Workers Union v. Noriel,
1977)
Effects of Withdrawal of Signature
Eagle Ridge Golf and Country Club v CA and EREU
(2010): Citing S.S. Ventures International, Inc. v S.S.
Venture Labor Union, the Court said that the
employees withdrawal from a labor union made
before the filing of the petition for certification
election is presumed voluntary, while withdrawal
after the filing of such petition is considered to be
involuntary and does not affect the petition. Hence,
such withdrawal cannot work to nullify the
registration of the union.
(1) Before the filing. The withdrawal is presumed
voluntary and it would affect the propriety of
the petition. After the filing. The withdrawal
is presumed to be involuntary and not was
procured through duress, coercion, or for a
valuable consideration. (Oriental Tin Can Labor
Union v. Secretary of Labor and Employment ,
1998)
(2) If the petition is filed by a national union or
federation, it shall not be required to disclose
the names of the local chapters officers and
members.
(3) Med-Arbiter shall automatically order an
election.
(4) Requisites for election:
o by secret ballot
o at least majority of ALL eligible voters in
the unit must have cast their votes.

WHEN to
file?
SEC. 3

(1) Any
legitimate
labor
organization may file a petition
for certification election.
(2) When requested to bargain
collectively, an employer may
file a petition for certification
election with the Regional
Office.
(3) 3) If there is no existing
registered collective bargaining
agreement in the bargaining
unit, the Regional Office shall,
after
hearing,
order
the
conduct of a certification
election.
Regional Office which issued the
petitioning union's certificate of
registration/certificate of creation
of chartered local.
The petition shall be heard and
resolved by the Med-Arbiter.
Where two or more petitions
involving the same bargaining
unit are filed in one Regional
Office, the same shall be
automatically
consolidated
with the Med-Arbiter who first
acquired jurisdiction.
Where the petitions are filed in
different Regional Offices, the
Regional Office in which the
petition was first filed shall
exclude all others; in which
case, the latter shall indorse
the petition to the former for
consolidation.
A petition for certification election
may be filed anytime, except:
(1) when a fact of voluntary
recognition has been entered or
a valid certification, consent or
run-off election has been
conducted
within
the
bargaining unit within one (1)
year prior to the filing of the
petition
for
certification
election.
Where an appeal has been
filed from the order of the
Med-Arbiter certifying the
results of the election, the
running of the one year
period shall be suspended
until the decision on the
appeal has become final
and executory;
(2) when the duly certified union
has commenced and sustained
negotiations in good faith with

83
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LABOR LAW REVIEWER


the employer in accordance
with Article 250 of the Labor
Code within the one year
period referred to in the
immediately
preceding
paragraph;
(3) when a bargaining deadlock to
which
an
incumbent
or
certified bargaining agent is a
party had been submitted to
conciliation or arbitration or
had become the subject of a
valid notice of strike or
lockout;
(4) when a collective bargaining
agreement
between
the
employer and a duly recognized
or certified bargaining agent
has
been
registered
in
accordance with Article 231 of
the Labor Code.
Where
such
collective
bargaining agreement is
registered, the petition
may be filed only within
sixty (60) days prior to its
expiry.
Forced Intervenor
Book V Rule VIII sec. 7. The incumbent bargaining
agent shall automatically be one of the choices in
the certification election as forced intervenor
Motion for Intervention
Book V Rule VIII Sec 8
a) In an organized establishment:
[A]ny legitimate labor union other than the
incumbent bargaining agent operating within the
bargaining unit may file a motion for intervention
with the Med-Arbiter
When to file: during the freedom period of the
collective bargaining agreement.
The form and contents of the motion shall be the
same as that of a petition for certification election.
b) In an unorganized establishment:
When to file: [T]he motion shall be filed at anytime
prior to the decision of the Med-Arbiter.
The form and contents shall likewise be the same as
that of a petition for certification election. The
motion for for intervention shall be resolved in the
same decision issued in the petition for certification
election.
The requisite written consent representing
substantial support of the workers in the bargaining
unit [as required in Art. 256] applies to petitioners
for certification ONLY, and NOT to motions for
intervention.(PAFLU v Calleja, 1989)
Preliminary Conference; hearing
Book V Rule VIII Sec9
Who: The Med-Arbiter shall conduct a preliminary
conference and hearing

When: within the ten (10) days from receipt of the


petition to determine the following:
1. the bargaining unit to be represented;
2. the contending labor unions;
3. possibility of a consent election;
4. the existence of anuy opf the bars to
certification election under Section 3 of this
rule; and
5. such other matters as may be relevant for the
final disposition of the case.

84

Order (Sec 13, as amended by D.O. 40-F-03 Series


of 2008, Nov. 8, 2008)
Order/Decision on the Petition
Book V Rule VIII Sec 13
Who: the Med-Arbiter shall formally issue a ruling
granting or denying the petition.
When: Within ten (10) days from the last hearing
Except in an organized establishment where the
grant of petition can only be made after the lapse of
the freedom period.
The ruling for the conduct of certification election
shall state the following:
(1) the name of the employer or the establishment;
(2) A description of the bargaining unit;
(3) a statement that none of the grounds for
dismissal enumerated in the succeeding
paragraph exists;
(4) the names of the contending labor unions which
shall appear in the following order:
a. the petitioner unions in the order of
the
date of filing of their respective
petitions;
b. the forced intervenor; and
c. No union;
(5) To afford an individual an informed choice
where a local/chapter is one of the contending
unions, a directive to an unregistered
local/chapter to personally submit to the
election office its certificate of creation at least
five (5) working days before the actual conduct
of the certification election. Non-submission of
this requirement as certified by the election
offcver shall disqualify the local/chapter from
participating in the certification election; and
(6) directive to the employer and the contending
union(s) to submit within ten (10) days from
receipt of the order, the certified list of
employees in the bargaining unit, or where
necessary, the payrolls covering the members of
the bargaining unit for the last three (3) months
prior to the issuance of the order.
Certification Election MECHANICS
a) Posting of Notice
Book V Rule IX Sec 6, IRR:
Who: Election Officer shall cause the posting
What: notice of election
Where: 2 conspicuous places in company premises
When: at least 10 days before actual election
Contents of Notice:

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LABOR LAW REVIEWER


a) Date and Time of election;
b) Names of all contending unions;
c) Description of the bargaining unit
d) List of eligible and challenged Voters.

Petition
filed
Freedom
Period

The posting of the notice of election, the


information required to be included therein and the
duration of the posting cannot be waived by the
contending unions or the employer.
b) Voting List and Voters
The basis of determining voters may be agreed upon
by the parties (i.e. the use of payroll). (Acoje
Workers Union v NAMAWU, 1963)

Rationale for Non-Distinction Policy


Collective bargaining covers all aspects of the
employment relation and the resultant CBA binds all
employees in the bargaining unit. All rank and file
employees, probationary or permanent, have a
substantial interest in the selection of the
bargaining representative. (Reyes v. Trajano ,
1992)
d) Effect of Non-participation in previous election
Failure to take part in previous elections is no bar to
the right to participate in future elections. No law,
administrative rule or precedent prescribes
forfeiture of the right to vote by reason of neglect to
exercise the right in past cases. (Reyes v. Trajano,
1992)
e) Challenge Voter
An employer has no standing to question a
certification election since this is the sole concern of
the workers but may question the inclusion of any
disqualified employee in the certification election
during the exclusion-inclusion proceedings before
the representation officer. (Phil. Telephone &
Telegraph Co. v Laguesma, 1993)
f) Voting Day
IRR, Book V Rule IX Sec. 2. The election shall be set
on a regular business day.
Organized v. Unorganized Establishment
Art. 256:
Art. 257:
ORGANIZED
UNORGANIZED
Bargaining Existing, has one
None
agent

No need to be
verified
Not applicable.
No freedom
period.
Can file petition
anytime.

85

Take note how SC


interpreted the
term WITHIN.

c) All Employees entitled to vote


All rank-and-file employees in the appropriate
bargaining unit. The Code makes no distinction as to
their employment status. All they need to be eligible
to support the petition is to belong to a bargaining
unit. (Airtime Specialists, Inc. v Director of BLR,
1990)
Employees who have been improperly laid off but
who have a present, unabandoned right to or
expectation of reemployment, are eligible to vote
in certification elections. If the dismissal is under
question, employees concerned could still qualify to
vote in the elections. (Philippine Fruits v Torres,
1992)

Has to be a
VERIFIED petition
No petition for
Certification
election EXCEPT
within 60 days
before the
expiration of the
collective
bargaining
agreement (See
Art. 253 & 253-A)

Substantial
support
rule

What is the
rationale of
freedom period in
Organized
establishments,
why is there none
in unorganized
establishments?
It has something
to do with
industrial peace
Must be duly
supported by 25%
of ALL THE
MEMBERS OF THE
APPROPRIATE
BARGAINING UNIT.
Percentage base:
all members of an
appropriate
bargaining unit.
What is intent and
purpose of law for
requiring the
substantial
support rule?
Law wants to
know the intention
of the employees.
If they really want
a CE, since they
already have a
bargaining agent.

NO substantial
support rule.
WHY?
Intention of law
is to bring in the
union, to
implement policy
behind Art. 211a.

EMPLOYER as initiating party


An employer may file a petition ONLY when it is
requested to bargain collectively.
Art. 258 Par. 1. When an employer may file
petition.
When requested to bargain collectively, an employer
may petition the Bureau for an election. If there is
no existing certified collective bargaining agreement
in the unit, the Bureau shall, after hearing, order a
certification election.
Art 258-A Employer as by-stander. In all cases,
whether the petition for certification election is
filed by an employer or a legitimate labor

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LABOR LAW REVIEWER


organization, the employer shall not be considered a
party thereto with the concomitant right to oppose a
petition for certification election. The employer
participation is such proceedings shall be limited to:
a. being notified or informed of petitions of such
nature; and
b. submitting the list of employees during preelection conference should the Med-Arbiter act
favorably on the petition.
The employer is not a party to a certification
election, which is the sole or exclusive concern of
the workers. The only instance when the employer
may be involved in that process is when it is obliged
to file a petition for certification election on its
workers request to bargain collectively pursuant to
Art. 258. (Hercules Industries, Inc. v Sec. of Labor,
1992)
Employer is a TOTAL STRANGER in the process of
Certification Election. Employer has NO STANDING to
file a MOTION TO DISMISS. (PT&T v Laguesma, 1993)
A companys interference in the CE creates a
suspicion that it intends to establish a company
union. (Oriental Tin Can Labor Union v. Secretary
of Labor, 1998)
(c) Rules prohibiting the filing of
petition for certification election
General Rule: The Bureau shall not entertain any
petition for certification election or any other action
which may disturb the administration of duly
registered existing collective bargaining agreements
affecting the parties. (Art. 232 sec. 15 of RA 6715)
Exceptions: Art. 253, 253-A and 256 of this Code (60
day freedom period)
Freedom Period
The last 60 days in a Collective Bargaining
Agreement (CBA) is referred to as the freedom
period when rival union representation can be
entertained during the existence of a CBA. It is
during this particular period when the majority
status of the incumbent bargaining agent can be
challenged. (Tanduay Distillery Labor Union v.
NLRC, 1987)
The purpose of the prohibition against the filing of a
petition for certification election outside the socalled freedom period is to ensure industrial peace
between the employer and its employees during the
existence of the CBA. (Republic Planters Bank
Unionv. Laguesma, 1996)
The premature renewal of a CBA cannot bar the
holding of a certification election by virtue of a bona
fide petition filed within the freedom period if the
clear intention was to frustrate the constitutional
right of the employees to self-organization.
(Associated Labor Union v. Calleja, 1989)

One-Year Bar Rule


Book V, Rule VIII, Sec 3 (a). Within 1 year from fact
that voluntary recognition has been entered, or time
of valid certification, consent or run-off election has
been conducted.
Reckoning period: If APPEALED, date when decision
is final and executory.
Book V, Rule VIII, Sec 14 (d) [formerly sec 14(c) as
amended by D.O. 40-F-03 Series of 2008, Nov. 8,
2008)].
[F]rom the date of recording of voluntary recognition
or from valid certification, consent, run-off election
where no appeal on the results of election is
pending.
Negotiation Bar Rule
Book V, Rule VIII, Sec 3 (b): When to file
A petition for certification election may be filed
anytime, EXCEPT:
o When the duly certified union has commenced
and sustained negotiations in good faith with
the employer
o in accordance with Art 250 of the Labor Code
o within one year period referred to in the
immediate paragraph
Sec 14 (e) [formerly sec 14(d) as amended by
D.O. 40-F-03 Series of 2008, Nov. 8, 2008]
The Med-Arbiter may dismiss a petition on any of
the following grounds:
xxx xxx xxx
e) Where a duly certified union has commenced and
sustained negotiations in accordance with Art 250
of the Labor code within the one-year period
referred to in Section 14 of this Rule or
xxx xxx xxx
Deadlock Bar Rule
Book V, Rule VIII, Sec. 3 (c).
A petition for certification election may be filed
anytime, EXCEPT:
c) when a bargaining deadlock to which an
incumbent or certified bargaining agent is a party
had been submitted to conciliation or arbitration or
had become the subject of a valid notice of strike or
lockout;
Book V, Rule VIII, Sec. 14 (e), as amended by DO40-F-03.
The Med-Arbiter may dismiss a petition on any of the
following grounds:
xxx xxx xxx
e) Xxx where there exists a bargaining deadlock
which has been submitted to conciliation or
arbitration or has become the subject of a valid
notice of strike or lockout where an incumbent or
certified bargaining agent is a party;
A deadlock is defined as the counteraction of
things producing entire stoppage; a state of inaction
or of neutralization caused by the opposition of
persons or of factions (as in government or voting
body); standstill. (Divine World University v Sec of
Labor and Employment, 1992)

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LABOR LAW REVIEWER


Collective Bargaining Deadlock is defined as the
situation between the labor and the management of
the company where there is failure in the collective
bargaining negotiations resulting in a stalemate.
(SMC v NLRC, 1999)
There is no bargaining deadlock where there is
failure to exhaust all the steps in the grievance
machinery. (SMC v NLRC, 1999)
Contract Bar Rule (Art. 232)
Book V, Rule VIII, Sec 3 (d). When a collective
bargaining agreement between the employer and a
duly recognized or certified bargaining agent has
been registered in accordance with Art 231 of the
Labor Code. Where such collective bargaining
agreement is registered, the petition may be filed
only within sixty (60) days prior to its expiry.
Book V, Rule VIII, Sec 14 (a) (as amended by D.O.
40-F-03 Series of 2008, Nov. 8, 2008)]:
a) The petitioning union or national
union/federation is not listed in the Departments
registry of legitimate labor unions or that its
registration certificate has been cancelled with
finality in accordance with Rule XIV of these rules.
Contract Bar Rule Applied: Extended CBA (Colegio
de San Juan de Letran v Assoc., 2000)
No petition for CE may be filed after the lapse
of the 60 day freedom period.
The old CBA is extended until a new one is
filed.
The purpose is to ensure stability in the relationship
of the workers and the company
Suspension of Election: Prejudicial Question Rule
Formal charge of ULP against the employer for
establishing a company union triggers suspension.
(B.F. Goodrich Phils. Marikina v. B.F. Goodrich
Confidential and Salaried Employees Union)
Note: The ONLY party who could ask for the
suspension of the CE is the labor union which filed a
complaint for ULP against the employer.
Suspension of Election: Rationale
If there is a union dominated by the company, to
which some of the workers belong, an election
among workers and employees of the company
would not reflect the true sentiment and wishes of
the said workers and employees because the votes of
the members of the dominated union would not be
free. Such charge of company domination is a
prejudicial question that until decided, shall
suspend or bar proceedings for certification election.
If it were a labor organization objecting to the
participation in a certification election of a
company-dominated union, as a result of which a
complaint for an unfair labor practice case against
the employer was filed, and when the court finds
that said union is employer-dominated in the unfair
labor practice case, the union selected would be
decertified and the whole election proceedings

would be rendered useless and nugatory.' There


would be an impairment of the integrity of the
collective bargaining process if a companydominated union were allowed to participate in a
certification election. (United CMC Textile
Workers Union v. BLR,1984)
(d) Requirements for validity
certification election

of

Voting Turnout
For the election to be valid, majority of all eligible
voters must have cast their votes. (Art. 256)

7 2 Voter: Defined
Eligible
Book V, Rule 1, Sec 1(q). Eligible voter refers to
a voter belonging to the appropriate bargaining unit
that is the subject of a petition for certification
election
Failure of Election
Where the number of votes cast in a certification
election is less than the majority of the number of
eligible voters; AND there are NO material
challenged votes.
Book V, Rule IX sec 17
The election office shall declare a failure of election
in the minutes of the election proceeding
Failure of Election: Effect
Book V, Rule IX sec 18
It shall NOT bar the filing of a motion for the
immediate holding of another certification or
consent election within six (6) months from the date
of the declaration of failure of election.
Valid Election: Certification of designated majority
union
Arts. 255, 256:
The labor union 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.
Book V Rule IX Sec 15 (as amended by D.O. 40-F03 Series of 2008, Nov. 8, 2008)The union which obtained a majority of the valid
votes cast shall be certified as the sole and exclusive
bargaining agent of all the employees in the
appropriate bargaining unit within five (5) days from
the day of the election, provided no protest is
recorded in the minutes of the election.
Sec 19 (as amended by D.O. 40-F-03 Series of
2008, Nov. 8, 2008)(1) When: Within twenty-four (24) hours from final
canvass of votes, there being a valid election
(2) Who: the Election officer shall transmit
(3) What: the records if the case to the Med-Arbiter
who shall, within the same period from receipt
of the minutes and result of election, (i) issue
an order proclaiming the results of the election
and (ii) certifying the union which obtained a

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LABOR LAW REVIEWER


majority of the valid votes cast as the sole and
exclusive bargaining agent on the subject
bargaining unit under any of the following
conditions: (a) no protest was filed or even if
one was filed, the same was not perfected
within the five-day period for perfection of the
protest; (b) no challenge or eligibility issue was
raised or, even if one was raised, the resolution
of the same will not materially change the
results of the election. xxx xxx xxx
(e) Protests and Other Questions
Arising
from
Conduct
of
Certification Election
Requirements in order that a protest filed would
prosper
(1) The protest must be filed with the
representation officer and made of record in the
minutes of the proceedings before the close of
election proceedings, AND
(2) The protest must be formalized before the MedArbiter within five (5) days after the close of the
election proceedings.
Protests not so raised are deemed waived. (Jisscor
Independent Union v Torres, 1993)
Appeal from Certification Election (Art. 259)
i. Appealable: Order of Med-Arbiter
ii. Where to Appeal: with the Secretary of Labor
Ground - The rules and regulations or parts
established by the Secretary of Labor for the
conduct of election have been violated.
iv. Period for decision: 15 calendar days
Annulment
General allegation of duress is not sufficient to
invalidate a certification election; it must be shown
by competent and credible proof (United Employees
Union of Gelmart Inv. v. Noriel, 1975)
Irregularities that may invalidate certification
election:
inability of workers to vote;
failure to safeguard secrecy of the ballot;
intimidation of election supervisors; and
neglect
in
performance
of
duties.
(Confederation of Citizens Labor Union v.
Noriel, 1982)
Effect of Petition for Cancellation of Trade Union
Registration
Certification election can be conducted despite
pendency of a petition to cancel the union
registration certificate. For the fact is that at the
time the union, whose registration certificate is
sought to be cancelled, filed its petition for
certification, it still had legal personality to perform
such act absent an order directing its cancellation.
(Samahan ng mga Manggagawa v Laguesma, 1997)

(4) Run-off election


(a) Requirements
(1) valid election took place because majority of
the CBU members voted
(2) The election provides for 3 or more choices. E.g.
Union A, Union B, and No Union, thus there
are at least two union candidates
(3) No Choice receives a majority of the valid
votes cast;
(4) The total number of votes for all contending
unions is at least 50% of the total number of
votes cast.
(5) There is no unresolved challenge of voter or
election protest;
(6) The run-off election shall be conducted
between the labor unions receiving the two
highest number of votes.

73

Run-Off Election: Illustration


The CBU has 100 members and eighty of which
voted. Union A= 30; Union B= 15; Union C=15
and No Union= 20. There were no invalid votes.
Since none got the majority of the 80 valid votes and
the contending unions obtained 60 votes, which even
exceed one-half (), a run-off election is proper.
The run-off will be between the labor unions
receiving the two highest number of votes. The
rematch is NOT between two unions but between
two highest votes. Thus the run-off will be among
Union A, B and C. (Azucena)
At the expiration of the freedom period, the
employer shall continue to recognize the majority
status of incumbent bargaining agent where no
petition for certification election is filed.

(5) Re-run election


Book V, Rule IX sec 18.
A motion for the immediate holding of another
certification or consent election can be filed within
six (6) months from the date of the declaration of
failure of election.

(6) Consent election


Voluntarily agreed upon by the parties, during the
preliminary conference after the receipt of petition
for certification election
Book V RVIII Sec 10 (as amended by DO 40-F-03
Series of @008, Nov 8, 2008)
The contending unions may agree to the holding of
an election. In which case, it shall be called a
consent election. The Med-Arbiter shall forwith call
for the consent election reflecting the parties
agreement and the call in the minutes of the
conference.

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LABOR LAW REVIEWER


Certification election v. consent election
Certification
Consent
election
Election
Purpose
Aimed at
Merely to
determining the
determine the
sole and exclusive
issue of
bargaining agent of majority
all employees in an representation
appropriate
of all the
bargaining unit for
workers in the
the purpose of
appropriate
collective
collective
bargaining
bargaining unit
1st Level of
Choice: Yes Union
or No Union

Conduct

2nd Level of
Choice: If Yes
Union wins,
WHICH union.
(UST Faculty Union
v. Bitonio, 1999)
Ordered by the
DOLE

Voluntarily
agreed upon by
the parties,
with or w/o
intervention
from DOLE

(7) Affiliation and disaffiliation of local


union to mother union
A. Affiliation: Purpose and Nature of Relations
ART 211: Declaration of Policy
(c) To foster the free and voluntary organization of a
strong and united labor movement
Purpose
The sole essence of affiliation is to increase, by
collective action, the common bargaining power of
local unions for the effective enhancement and
protection of their interests. Admittedly, there are
times when without succor and support local unions
may find it hard, unaided by other support groups,
to secure justice for themselves. (Phil Skylanders v.
NLRC, 2002)
Nature of Relationship (Agency)
The mother union, acting for and in behalf of its
affiliate, had the status of an agent while the local
remained the basic unit of the association, free to
serve the common interest of all its members,
subject only to restraints imposed by the
constitution and by the by-laws of the association.
The same is true even if the local is not a legitimate
labor organization (Filipino Pipe and Foundry Corp
v. NLRC ,1998).
Effect of Affiliation
Locals remain the basic units of association, free to
serve their own and the common interest of all.
Inclusion of FFW in the registration is merely to
stress that they are its affiliates at the time of
registrations. It does not mean that said local unions

cannot stand on their own. Affiliation does not mean


they lost their own legal personality (Adamson v.
CIR ,1984).
Definition: Independent Union/Local Union
Book V Rule 1 Sec. 1 (w) Independent Union a
labor organization operating at the enterprise level
that required legal personality through independent
registration under Art. 234 of the Labor Code and
Rule III Sec. 2-A of the IRR.
Definition: Chartered Local (Local Chapter)
Book V Rule 1 Sec. 1 (i) Chartered Local a labor
organization in the private sector operating at the
enterprise level that acquired legal personality
through the issuance of a charter certificate by a
duly registered federation or national union, and
reported to the Regional Office in accordance with
Rule III Sec. 2-E of the IRR.
Definition: Affiliate
Book V Rule 1 Sec. 1 (a) Affiliate an independent
union affiliated with a federated, national union or a
chartered local which was subsequently granted
independent registration but did not disaffiliate from
its federation, reported to the Regional Office and
the Bureau in accordance with Rule III Secs. 6 and 7
of the IRR.
Definition: National Union or Federation
Book V Rule 1 Sec. 1 (kk) National Union or
Federation a group of legitimate labor unions in a
private establishment organized for collective
bargaining or for dealing with employers concerning
terms and conditions of employment for their
member union or for participating in the formulation
of social and employment policies, standards and
programs, registered with the BLR in accordance
with Rule III Sec. 2-B of the IRR.

74

Supervisor/Rank and File Union Affiliation


ART 245. Ineligibility of managerial employees to
join any labor organization; right of supervisory
employees
Managerial employees are not eligible to join, assist
or form any labor organization. Supervisory
employees shall not be eligible for membership in
a labor organization of the rank and file employees
but may join, assist or form separate labor
organizations of their own.
ART 245-A. Effect of Inclusion as Members of
Employees outside the Bargaining Unit
The inclusion as members of employees outside the
bargaining unit shall not be a ground for the
cancellation of the registration of the union. Said
employees are automatically deemed removed from
the list of membership of said union.
In Toyota Motor Philippines Corp. v. Toyota
Motor Philippines Corp. Labor Union and the
Secretary of Labor and Employment (G.R. No.
121084, February 19, 1997), it was held that a labor
organization composed of both rank and file and
supervisory employees is no labor organization at all.

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LABOR LAW REVIEWER


Hence, it is not a legitimate labor organization.
Consequently, because it carries a mixture of rank
and file and supervisory employees, it cannot
possess any of the rights of a legitimate labor
organization, including the right to file a petition for
certification election for the purpose of collective
bargaining. This ruling was, however, abandoned in
Tagaytay Highlands International Golf Club v.
Tagaytay Highlands Employees Union, G.R. No.
142000, January 22, 2003 where the Court stated
that the inclusion in a union of disqualified
employees is not among the grounds for
cancellation, unless such inclusion is due to
misrepresentation, false statement or fraud. In
Republic of the Philippines v. Kawashima Textile
Marketing Phils., G.R. No. 160352, G.R. No. 160352,
July 23, 2008, the Tagaytay ruling was reiterated.
B.

Local Union Disaffiliation/ Mass Disaffiliation

Nature of Right of Disaffiliation


A local union, being a separate and voluntary
association, is free to serve the interests of all its
members. It has the right to disaffiliate or declare
its autonomy from the federation to which it belongs
when circumstances warrant, in accordance with the
constitutional guarantee of freedom of association,
and such disaffiliation cannot be considered
disloyalty. (Malayang Samahan ng mga Manggagawa
vs. Ramos, 2000)
The locals are separate and distinct units primarily
designed to secure and maintain an equality of
bargaining power between the employer and their
employee-members; and the association of the locals
into the national union was in furtherance of the
same end. These associations are consensual
entities capable of entering into such legal relations
with their member. The essential purpose was the
affiliation of the local unions into a common
enterprise to increase by collective action the
common bargaining power in respect of the terms
and conditions of labor. (Tropical Hut Employees
Union vs. Tropical Hut Food Market, Inc ,1990)
Local unions remain the basic units of association,
free to serve their own interests subject to the
restraints imposed by the constitution and by-laws of
the national federation, and free also to renounce
the affiliation upon the terms laid down in the
agreement which brought such affiliation into
existence. (Phil. Skylanders Inc vs. NLRC, 2002)
Disaffiliation: Must be by a Majority Decision
Disaffiliation is a major policy question. Thus, it
shall be made by a majority decision of the entire
membership, after due deliberation, by secret
ballot, unless, the nature of the organization or
force majeure renders such secret ballot
impractical, in which case, the board of directors of
the organization may make the decision. (Art.
241[d])
Disaffiliation: Effect on Legal Status
If union is independently registered It retains its
legal personality.

If union is a chartered local It losses its legal


personality.
(a) Substitutionary doctrine
Disaffiliation; effect on existing CBA: The CBA shall
subsist until expiration. The new bargaining agent is
bound to respect the CBA.
The terms of an existing CBA, particularly its
economic provisions, can be extended beyond the 3
year period prescribed by law in the absence of a
new agreement. Until a new CBA has been executed
by and between the parties, they are duty bound to
keep the status quo and to continue in full force and
effect the terms and conditions of the existing
agreements. The law does not provide for an
exception nor qualification as to which of the
economic provisions of the existing agreements are
to retain force and effect, therefore it encompasses
all provisions. The New CBA is given PROSPECTIVE
effect generally since 253 and 253-A provides for an
automatic renewal clause in existing CBAs.
PURPOSE: To avoid creating a gap during which no
agreement would govern. It is better for industrial
peace if effectivity of the CBA is longer. (New
Pacific Timber and Supply Co. Inc v. NLR, 2000)

(8) Union dues and special assessments


Union Dues and Special Assesments: Distinguished
Union dues are defined as payments to meet the
unions general and current obligations. The
payment must be regular, periodic, and uniform.
Special assessments are payments for a special
purpose, especially if required only for a limited
time. (Azucena)
A. Union Funds
Rights/Conditions
Organization

of Membership in

Labor

ART 241 (b) Members are entitled to full/detailed


financial transaction reports
(g) Collection of any fees, dues or other
contributions in behalf of the labor org, or any
disbursement of its money/funds allowed if duly
authorized by CBL
(h) Payment of fees, dues or other contributions by
member shall be evidenced by a receipt signed by
the officer or agent making the collection and
entered into the record of the org
(i) Funds of the org shall not be applied for any
purpose or object other than those expressly
provided by the CBL or authorized by written
resolution adopted by the majority of the members
at a general meeting duly called for the purpose
(j) Every income or revenue of the org shall be
evidenced by a record showing its source, and every
expenditure of its funds shall be evidenced by a
receipt
(l) The treasurer shall render account (duly audited
and verified by affidavit and a copy thereof shall be
furnished the Secretary of Labor)

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LABOR LAW REVIEWER


1. At least once a year within 30 days after the close
of its fiscal year;
2. At such other times as may be required by a
resolution of the majority of the members of the
organization; and
3. Upon vacating his office.
(m) Books of accounts and other records of the
financial activities of any labor org shall be open to
inspection by any officer or member thereof during
office hours
(n) No special assessment or other extraordinary
fees may be levied upon the members of a labor org
unless authorized by a written resolution of a
majority of all the members of a general
membership meeting duly called for the purpose
(o) Other than for mandatory activities under the
Code, no special assessments, atty.s fees,
negotiation fees or any other extraordinary fees may
be checked off from any amount due to an
employee
without
an
individual
written
authorization duly signed by the Employeee. The
authorization should specifically state the amount,
purpose and beneficiary of the deduction.
Note: Sec of Labor or his duly authorized
representative may inquire into financial activities
of legitimate labor orgs UPON filing of complaint
under oath and supported by written consent of at
least 20% of total membership, Provided, such
inquiry shall not be conducted during (60)-day
freedom period nor within the thirty (30) days
immediately preceding the date of election of union
officials (Art. 274).
B.

Source of Payment Attorneys Fees, Special


Assessments

ART. 222 (b) Attorneys fees, negotiation fees or


similar charges of any kind arising from any
collective bargaining negotiations or conclusion of
the collective agreement shall NOT be imposed on
individual member of contracting union, but may be
charged against union funds in an amount to be
agreed upon by the parties. Any contract, agreement
or arrangement of any sort to the contrary shall be
null and void.
(a) Requirements
for
validity
(checkoff)
(1) Authorization by written resolution of
majority of ALL the members at the general
membership meeting called for that
purpose
(2) Secretarys record of the minutes of the
meetings attested to by the president.
(3) Individual written authorization for checkoff duly signed by the employees
concerned.
A check-off is a process or device whereby the
employer, on agreement with the Union, recognized
as the proper bargaining representative, or on prior
authorization from the employees, deducts union
dues or agency fees from the latters wages and
remits them directly to the Union.
(Marino v
Gamilla, 2009)

The system of check-off is primarily for the benefit


of the Union, and only indirectly, for the individual
employees. (Marino v Gamilla, 2009)

91

Note: There must be strict and full compliance with


the requisites. NO SHORTCUTS. Substantial
compliance is not enough. (Palacol v. FerrerCalleja)
Although the law does not prescribe a particular
form for the written authorization for the levy or
check-off of special assessments, the authorization
must embody the genuine consent of the union. In
this case, since the authorization of the check-off
and the ratification of the MOA are embodied in one
document, there was no way for the union member
to separate his/her consent to the ratification from
the authorization. This constitutes unsatisfactory
compliance. (Marino v Gamilla, 2009)
The Office of the President has no jurisdiction to
make adjudication on the attorneys fees. (Pacific
Banking Corp. v Clave, 1984)
Union funds [not withheld portion of compensation
of employees] should be used for the payment of
attorneys fees. It is the union, not the employees,
who is obligated to the attorney. (Pacific Banking
Corp. v Clave, 1984)
Jurisdiction over Check-off disputes
The Bureau of Labor Relations has jurisdiction to
hear, decide and to mete out punishment any
reported violation under Article 24.1

(9) Agency fees


[Agency fee] is an amount, equivalent to union dues,
which a non-union member pays to the union
because he benefits from the CBA negotiated by the
union. (Azucena)

B. Right to Collective Bargaining


1. Duty to Bargain Collectively
a) Kiok Loy v. NLRC (1986) ruling
(1) While it is a mutual obligation, the employer is
not under any legal duty to initiate contract
negotiation.
(2) The mechanics of collective bargaining is set in
motion when the following are present:
Possession
of the
status of majority
representation of the employees' representative
in accordance with any of the means of
selection or designation provided for by the
Labor Code,
Proof of majority representation and
Demand to bargain under Article 251, par.
(a) of the New Labor Code

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LABOR LAW REVIEWER

General Concepts
Duty to Bargain: Constitutional Policies
1987 Constitution. Art. XIII, Sec. 3
The State shall guarantee the rights of
workers
to
collective
bargaining
and
negotiations.
The State shall promote the principle of
shared responsibilities 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.
Duty to Bargain: Statutory Policy
Labor Code, Art 211 A It is the policy of the State:
(a). To promote and emphasize the primacy of FREE
COLLECTIVE BARGAINING and negotiations, including
voluntary arbitration, mediation and conciliation, as
modes of setting labor or industrial disputes.
Book V Rule XVI Sec. 1. Policy
It is the policy of the State to promote and
emphasize the primacy of free and responsible
exercise of the right to self-organization and
collective bargaining, either through single
enterprise level negotiations or through the
creation of a mechanism by which different
employers and recognized certified labor unions in
their establishments bargain collectively.
Collective Bargaining: Definition
Collective bargaining, which is defined as
negotiations towards a collective agreement, is one
of the democratic frameworks under the New Labor
Code, designed to stabilize the relation between
labor and management and to create a climate of
sound and stable industrial peace. It is a mutual
responsibility of the employer and the Union and is
characterized as a legal obligation.
So much so that Article 249, par. (g) of the Labor
Code makes it an unfair labor practice for an
employer to refuse "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. (Kiok Loy v. NLRC, 1986)
Collective Bargaining: Nature and Purpose
The institution of collective bargaining is a prime
manifestation of industrial democracy at work. The
two parties to the relationship, labor and
management, make their own rules by coming to
terms to govern themselves in matters that really
count. (United Employees Union of Gelmart
Industries v. Noriel, 1975)
Collective Bargaining: Waiver of Right
The right to free collective bargaining includes the
right to suspend it. (Rivera v. Espiritu ,2000)
Duty to Bargain: Meaning
Art. 252. Meaning of duty to bargain collectively.

The duty to bargain collectively means the


performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms
and conditions of employment including proposals
for adjusting any grievances or questions arising
under such agreement and executing a contract
incorporating such agreements if requested by either
party but such duty does not compel any party to
agree to a proposal or to make any concession.

92

Art. 253. Duty to bargain collectively when there


exists a collective bargaining agreement.
When there is a collective bargaining agreement, the
duty to bargain collectively shall also mean that
neither party shall terminate nor modify such
agreement during its lifetime. However, either party
can serve a written notice to terminate or modify
the agreement at least 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.
Rights of the Parties during Bargaining
Art. 242 (c) Right of legitimate labor organization
to be furnished by the employer with annual audited
financial statements, including the balance sheet
and profit and loss statement, upon request.
Book V Rule XVI Sec 2. Disclosure information
A. The parties shall, at the request of either of
them, make available such up-to-date financial
information on the economic situation of the
undertaking, which is normally submitted to
relevant government agencies, as is material
and necessary for meaningful negotiations.
B. Where the disclosure of some of this information
could be prejudicial to the undertaking, its
communication may be made condition upon a
commitment that it would be regarded as
confidential to the extent required. The
information to be made available may be agreed
upon between the parties to collective
bargaining.
Collective Bargaining Deadlock: Definition
The situation between the labor and the
management of the company where there is failure
in the collective bargaining negotiations resulting in
a stalemate. It is a ground for strike or lockout [IRR,
Book V, Rule XXII, Sec. I of the Labor Code]. (San
Miguel Corp. v. NLRC, 1999)
Bargaining Procedure: (Book V, Rule XVI)
A. Private Procedure
Art. 251. Duty to bargain collectively in the
absence of collective bargaining agreements.
In the ABSENCE of a) an agreement or b) other
VOLUNTARY ARRANGEMENT providing for a MORE
EXPEDITIOUS manner of collective bargaining, it shall
be the duty of the employer and the representatives

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LABOR LAW REVIEWER


of the employees to bargain collectively
accordance with the provisions of this Code.

in

Private Procedure: Expediency as a Requirement


The Labor Code authorizes parties to provide for
their own procedures in Collective Bargaining but it
must be more EXPEDITIOUS than that provided in
Art. 250. If they are unable to agree they must
follow procedure in the Labor Code (Art. 250).
Private Procedure: Rationale
It is the policy of the state to promote the primacy
of FREE collective bargaining. (Art. 211a).
B. Labor Code Procedure (Art. 250)
Party desiring to bargain collectively shall serve
written notice on other party with statement of
proposals

Reply by other party within 10 calendar days from


receipt of notice

If dispute not settled, National Conciliation


Mediation Board (NCMB) shall intervene on
request or motu proprio & call parties to
conciliation meetings

Art. 253. Duty to bargain collectively when there


exists a collective bargaining agreement.
When there is a collective bargaining agreement, the
duty to bargain collectively shall also mean that
neither party shall terminate nor modify such
agreement during its lifetime. However, either party
can serve a written notice to terminate or modify
the agreement at least 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.
Note: Whenever a party serves a written notice upon
the employer making demands, the latter shall reply
not later than 10 days. However, this condition is
merely procedural, and non-compliance cannot be
deemed to be an act of ULP. (National Union of
Restaurant Workers vs. CIR, 1964)
Compare with: More than a month after the
proposals were submitted, the employer has not
made any counter-proposals. The companys refusal
to make a counter-proposal to the unions proposed
CBA is an indication of its bad faith. Where the
employer did not even bother to submit an answer to
the bargaining proposals of the union, there is a
clear evasion of the duty to bargain collectively. The
employers actuations show a lack of sincere desire
to negotiate, rendering it guilty of unfair labor
practice. (Colegio de San Juan de Letran vs.
Association, 2000)

Failure to reply as indicia of bad faith


GMCs failure to make a timely reply to the proposal
sent by the union is indicative of its utter lack of
interest in bargaining with the union. Its excuse that
it felt the union no longer represented the workers
was mainly dilatory as it turned out to be utterly
baseless. GMCs refusal to make a counter-proposal
is an indication of its bad faith. Where the employer
did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear
evasion of the duty to bargain collectively. It is
guilty of ULP. (General Milling Corp. vs. CA , 2004)
Conciliation/Preventive Mediation
Art. 233. Privileged Communication
Information and statements made at conciliation
proceedings shall be treated as privileged
communication and shall not be used as evidence in
the Commission.
Conciliators and similar officials shall not testify in
any court or body regarding any matters taken up at
conciliation proceedings conducted by them.
In Nissan Motors Philippines Inc. v. Secretary of
Labor and Employment, G.R. 158190-91, June 21,
2006, the Supreme Court reversed the award made
by the Secretary based on the revelation of the
NCMB Administrator that was sourced from the
confidential position given him by the Company. The
reason for this was Article 233 which prohibits the
use in evidence of confidential information given
during conciliation proceedings. And in Pentagon
Steel Corporation v. Court of Appeals, G.R. No.
174141, June 26, 2009, the Supreme Court
mentioned the two-fold justification for the
exclusionary rule as follows:
First, since the law favors the settlement of
controversies out of court, a person is entitled to
buy his or her peace without danger of being
prejudiced in case his or her efforts fail; hence, any
communication made toward that end will be
regarded as privileged. Indeed, if every offer to buy
peace could be used as evidence against a person
who presents it, many settlements would be
prevented and unnecessary litigation would result,
since no prudent person would dare offer or
entertain a compromise if his or her compromise
position could be exploited as a confession of
weakness.
Second, offers for compromise are irrelevant
because they are not intended as admissions by the
parties making them. A true offer of compromise
does not, in legal contemplation, involve an
admission on the part of a defendant that he or she
is legally liable, or on the part of a plaintiff, that his
or her claim is groundless or even doubtful, sine it is
made with a view to avoid controversy and save the
expense of litigation. It is the distinguishing mark of
an offer of compromise that it is made tentatively,
hypothetically, and in contemplation of mutual
concessions.
Board Intervention

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Art. 250 (c) If the dispute is not settled, the
Board shall intervene upon request of either or both
parties or at its own initiative and immediately call
the parties to conciliation meetings.
Art. 250. Procedure in collective bargaining. The
following procedures shall be observed in collective
bargaining:
When a party desires to negotiate an
agreement, it shall serve a written notice
upon the other party with a statement of its
proposals. The other party shall make a
reply thereto not later than ten (10)
calendar days from receipt of such notice;
Should differences arise on the basis of such
notice and reply, either party may request
for a conference which shall begin not later
than ten (10) calendar days from the date
of request.
If the dispute is not settled, the Board shall
intervene upon request of either or both
parties or at its own initiative and
immediately call the parties to conciliation
meetings. The Board shall have the power
to issue subpoenas requiring the attendance
of the parties to such meetings. It shall be
the duty of the parties to participate fully
and promptly in the conciliation meetings
the Board may call;
During the conciliation proceedings in the
Board, the parties are prohibited from
doing any act which may disrupt or impede
the early settlement of the disputes; and
The Board shall exert all efforts to settle
disputes amicably and encourage the
parties to submit their case to a voluntary
arbitrator.
EO 251, Sec. 4. Section 22 of Executive Order No.
126 is hereby amended to read as follows:
"Sec. 22. National Conciliation and Mediation Board.
National Conciliation and Mediation Board
Overview
A National Conciliation and Mediation Board,
herein referred to as the "Board", is hereby
created and which shall absorb the conciliation
mediation and voluntary arbitration functions of
the Bureau of Labor of Relations.
It shall be an attached agency under the
administrative supervision of the Secretary of
Labor and Employment.
The Board shall have its main office in
Metropolitan Manila and its Administrators shall
exercise supervision over Conciliators-Mediators
and all its personnel.
Branches
It shall establish as many branches as there are
administrative regions in the country, with a
many Conciliator-mediators as shall be
necessary for its effective operation.
Each branch of the Board shall be headed by an
Executive Conciliator-Mediator.

Composition
The Board shall be composed of:
a) Administrator, and
b) 2 Deputy Administrators
The
Administrators
and
the
Deputy
Administrators shall be appointed by the
President upon recommendation of the
Secretary of Labor and Employment.
There shall be as many Conciliators-Mediators as
the needs of the public service require, who
shall have at least three (3) years of experience
in handling labor relations and who shall be
appointed by the Secretary.
Functions
Formulate policies, programs, standards,
procedures, manuals of operation and guidelines
pertaining
to
effective
mediation
and
conciliation of labor disputes;
Perform preventive mediation and conciliation
functions;
Coordinate and maintain linkages with other
sectors of institutions, and other government
authorities concerned with matters relative to
the prevention and settlement of labor disputes;
formulate policies, plans, programs, standards,
procedures, manuals of operation and guidelines
pertaining to the promotion of cooperative and
non-adversarial schemes, grievance handling,
voluntary arbitration and other voluntary modes
of dispute settlements;
Administer the voluntary arbitration program;
maintain/update a list of voluntary arbitrations;
compile arbitration awards and decisions;
Provide counselling and preventive mediation
assistance particularly in the administration of
collective agreement; awards and decisions;
Monitor and exercise technical supervision over
the Board programs being implemented in the
regional offices; and
Perform such other functions as may be
provided by law or assigned by the Secretary.
Tripartite Voluntary Arbitration Advisory Council
A Tripartite Voluntary Arbitration Advisory Council is
hereby created and attached to the National
Conciliation and Mediation Board.
The Tripartite Voluntary Arbitration Advisory Council
shall advise the National Conciliation Board on
matters pertaining to the promotion of voluntary
arbitration as the preferred mode of dispute
settlement.
Composition
(1) Administrator of the National Conciliation and
Mediation Board as Chairman,
(2) 1 other member from the government,
(3) 2 members representing labor, and
(4) 2 other members representing management.
Appointment
The members shall be appointed by the
President to serve for a term of 3 years.
The Chairman and Members thereof shall serve
without compensation.

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Bargainable Issues
Art. 252
xxx xxx xxx
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.
xxx xxx xxx
Mandatory Issues (Art. 252)
(1) Wages
(2) Hours of work
(3) All other terms and conditions of employment
including proposals for adjusting any grievances
or questions arising under such agreement
Permissive Issues:
Unilateral benefits extended by the employer (cf.,
Union of Filipro Employees-Drug v. Nestle, 2008)
A collective bargaining agreement refers to the
negotiated contract between a legitimate labor
organization and the employer concerning wages,
hours of work and all other terms and conditions of
employment in a bargaining unit, including
mandatory provisions for grievances and arbitration
machineries. As in all other contracts, the parties in
a CBA 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. (Manila
Fashions v. NLRC, 1996)
Test for Mandatory Bargainable Issues: NEXUS
Between the Nature of Employment and the
Nature of the Demand.
The other terms and conditions of employment to
become a mandatory bargainable issue must have a
connection between the proposal and the nature of
the work.
Importance of determining whether an issue is a
mandatory bargaining issue or only a permissive
bargaining issue:
"The question as to what are mandatory and what
are merely permissive subjects of collective
bargaining is of significance on the right of a party to
insist on his position to the point of stalemate. A
party may refuse to enter into a collective
bargaining contract unless it includes a desired
provision as to a matter which is a mandatory
subject of collective bargaining. But a refusal to
contract unless the agreement covers a matter
which is not a mandatory subject is in substance a
refusal to bargain about matters which are
mandatory subjects of collective bargaining; and it is
no answer to the charge of refusal to bargain in good
faith that the insistence on the disputed clause was
not the sole cause of the failure to agree or that
agreement was not reached with respect to other
disputed clauses. (Samahang Manggagawa sa Top
Form v. NLRC, 1998)

Collective Bargaining Agreement


CBA: Definition
Book V Rule I Sec. 1 (j) Collective Bargaining
Agreement or CBA
refers to the contract between a legitimate labor
union and the employer concerning wages, hours of
work, and all other terms and conditions of
employment in a bargaining unit.
A contract executed upon request of either the
employer or the exclusive bargaining representative
incorporating the agreement reached after
negotiations 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. (cf. Art.
250, 252)
CBA: Impressed with Public Policy
A CBA, as a labor contract within the contemplation
of Article 1700 Civil Code which governs the
relations between labor and capital, is not merely
contractual in nature but impressed with public
interest, thus, it must yield to the common good.
(Davao Integrated Port Stevedoring Services v.
Abarquez, 1993)
CBA: Effect of Sub-standard Contract
This was deleted as a ground for cancellation of
registration by R.A. 9481. But it is nonetheless
prohibited to enter into sub-standard contract. An
incomplete CBA cannot be a bar to an election
certification.
CBA: Registration
Art. 231. Registry of unions and file of CBAs General Rule: The file shall be open and accessible
to interested parties.
Exceptions: No specific information submitted in
confidence shall be disclosed unless:
a. authorized by the Secretary of Labor; or
b. when it is at issue in any judicial litigation when
public interest or national security so requires.
Note: Refer to Book V Rule XVII Sec. 1-3 for the
venue of filing, the requirements for registration,
and the payment of registration fee.
CBA: Beneficiaries
All workers in a CBU. When a collective bargaining
contract is entered into by the union representing
the employees and the employer, even the nonmember employees are entitled to the benefits of
the contract. (New Pacific Timber and Supply v.
NLRC, 2000)
To accord its benefits only to members of the union
without any valid reason would constitute undue
discrimination against non-members.
CBA
Interpretation,
Enforcement

Administration

Nature of Contract and Contract Interpretation

and

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The terms and conditions of a collective bargaining
contract constitute the law between the parties.
(Mactan Workers Union vs. Aboitiz 1972)
Those who are entitled to its benefits can invoke its
provisions. In the event that an obligation therein
imposed is not fulfilled, the aggrieved party has the
right to go to court for redress. (Babcock-Hitachi
(Phils.) v. Babcock-Hitachi, 2005)
Contract Interpretation: Interpretation Tools
A CBA, just like any other contract, is respected as
the law between the contracting parties and
compliance in good faith is mandated. Similarly, the
rules embodied in the Civil Code (Art. 1700) on the
proper interpretation of contracts can very well
govern.
GENERAL RULE: If the terms of the contract are
clear, the literal meaning of the stipulations shall
control.
EXCEPTION: If the words appear to be contrary to
the evident intention of the parties, the latter shall
prevail over the former. (Kimberly Clark Phils. V.
Lorredo, 1993)
Contract Effectivity, Duration and Renewal
Art. 253-A. Terms of a CBA
POLITICAL ASPECT: Any Collective Bargaining
Agreement that the parties may enter into shall,
insofar as the representation aspect is concerned, be
for a term of five (5) years.
No petition questioning the majority status of the
incumbent bargaining agent shall be entertained and
no certification election shall be conducted by the
DOLE outside of the sixty-day period immediately
before the date of the expiry of such five year term
of the Collective Bargaining Agreement.
ECONOMIC ASPECT: All other provisions of the CBA
shall be renegotiated not later than three (3) years
after its execution.
Any agreement on such other provisions of the CBA
entered into within six months from the expiry of
the term of such other provisions as fixed in such
CBA, shall retroact to the day immediately following
such date. If any such agreement is entered into
beyond six months, the parties shall agree on the
duration of the retroactivity thereof. In case of a
deadlock in the renegotiation of the CBA, the parties
may exercise their rights under this Code.
CBA Effectivity
If it is the first ever CBA, the effectivity date is
whatever date the parties agree on.
If it is renegotiated CBA, the effectivity date
depends upon the duration of conclusion. If it is
concluded within 6 months from the expiry
date, the new CBA will retroact to the date
following the expiry date (Illustration: expiry
date: December 13; effectivity date: December
14). If the renegotiated CBA is concluded
beyond 6 months from the expiry date, the
matter of retroaction and effectivity is left with
the parties.
Art. 253-A serves as the guide in determining when
the CBA at bar is to take effect. It provides that the

representation aspect of the CBA is to be for a term


of 5 years. All other provisions of the CBA shall be
renegotiated not later than 3 years after its
execution. Any agreement on such other provision of
the CBA entered into within 6 months from the date
of expiry of the term of such other provisions as
fixed in such Collective Bargaining Agreement shall
retroact to the day immediately following such date.
If such agreement is entered into beyond 6 months,
the parties shall agree on the duration of the
effectivity thereof. If no agreement is reached
within 6 months from the expiry date of the 3 years
that follow the CBA execution, the law expressly
gives the parties not anybody else the discretion
to fix the effectivity of the agreement. The law does
not specifically cover the situation where 6 months
have elapsed but no agreement has been reached
with respect to effectivity. In this eventuality, any
provision of law should then apply. (Manila Electric
Co. v. Quisumbing, 1999)

80

CBA Duration
Political Aspect (representation): 5 years. This
refers to the identity and majority status of the
collective bargaining agent that negotiated the CBA.
Non-political aspect: 3 years. This refers to other
provisions in the CBA, economic or otherwise other
than representational or political.
Hold Over Principle
Art. 253. In the absence of a new CBA, the parties
must maintain the status quo and must continue in
full force and effect the terms and conditions of the
existing agreement during the sixty (60) day period
and/or until a new agreement is reached.
In this manner, the law prevents the existence of a
gap in the relationship between the collective
bargaining parties.
The last sentence of Article 253, which provides for
automatic renewal pertains only to the economic
provisions of the CBA, and does not include
representational aspect of the CBA. An existing
existing CBA cannot constitute a bar to a filing of
petition for certification election. When there is a
representational issue, the status quo provision
insofar as the need to await the creation of a new
agreement will not apply. Otherwise, it will create
an absurd situation where the union members will be
forced to maintain membership by virtue of the
union security clause existing under the CBA and,
thereafter, support another union when filing a
petition for certification election. If we apply it,
there will always be an issue of disloyalty whenever
the employees exercise their right to selforganization. The holding of a certification election
is a statutory policy that should not be
circumvented, or compromised. (PICOP Resources,
Inc. v. Taneca et. al., 2010)
Arbitrated CBA
In the absence of an agreement between the parties,
an arbitrated CBA takes on the nature of any judicial
or quasi-judicial award. It operates and may be
executed only prospectively unless there are legal

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justifications for its retroactive application. (Manila
Electric Company vs. Quisumbing, 1999)
CBA in this case, on the other hand, is part of an
arbitral award. As such, it may be made retroactive
to the date of expiration of the previous agreement.
Therefore, in the absence of a specific provision of
law prohibiting retroactivity of the effectivity of
arbitral awards issued by the Secretary of Labor
pursuant to Art. 263(g), the latter is deemed vested
with plenary and discretionary powers to determine
the effectivity thereof. (Manila Central Line Corp.
v. Manila Central Line Free Workers Union, 1998)
CBA and 3rd Party Applicability
Labor contracts such as employment contracts and
CBAs are not enforceable against a transferee of an
enterprise, labor contracts being in personam, is
binding only between the parties. As a general rule,
there is no law requiring a bona fide purchaser of
the assets of an on-going concern to absorb in its
employ the employees of the latter. However,
although the purchaser of the assets or enterprise is
not legally bound to absorb in its employ the
employees of the seller of such assets or enterprise,
the parties are liable to the employees if the
transaction between the parties is colored or clothed
with bad faith. (Sundowner Devt. Corp. v Drilon,
1989)
General Rule: An innocent transferee of a business
establishment has no liability to the employees of
the transferor to continue employing them. Nor is
the transferee liable for past unfair labor practices
of the previous owner.
Exception:
(1) when the liability therefore is assumed by the
new employer under the contract of sale, or
(2) when liability arises because of the new owner's
participation in thwarting or defeating the rights of
the employees.
The most that the transferee may do, for reasons of
public policy and social justice, is to give preference
to the qualified separated employees in the filling of
vacancies in the facilities of the purchaser.
(Manlimos v. NLRC, 1995)

2. Mandatory provisions of CBA


(a) Grievance Procedure
Art. 255. Exclusive Bragaining Representation and
Workers Participation in Policy and DecisionMaking
xxx However, an individual employee or group of
employees shall have the right at any time to
present grievances to their employer. xxx
Art. 260. Grievance Machinery and Voluntary
Arbitration
The parties to a Collective Bargaining Agreement
shall include therein:
1) Provisions that will ensure the mutual observance
of its terms and conditions.
2) A machinery for the adjustment and resolution of

grievances arising from:


a) the interpretation or implementation of
their CBA; and
b) those arising from the interpretation or
enforcement of company personnel policies.
3) All grievances submitted to the grievance
machinery which are not settled within 7 calendar
days from the date of its submission shall
automatically be referred to voluntary arbitration
prescribed in the CBA.
Grievances arising from the interpretation or
implementation of the CBA are subjects of the
grievance procedure. (Navarro III v. Damasco, 1995)
It should be remembered that a grievance procedure
is part of the continuous process of collective
bargaining. It is intended to promote a friendly
dialogue between labor and management as a means
of maintaining industrial peace. (Master Iron Labor
Union v. NLRC, 1993)
No particular setup for a grievance machinery is
required by law. Art. 260 of, as incorporated by R.A.
6715, only mandates that the parties to the CBA
establish a machinery to settle problems arising from
"interpretation or implementation of their collective
bargaining agreement and those arising from the
interpretation or enforcement of company personnel
policies." (Caltex Refinery Employees Association
v. Brillantes, 1997)
(b) Voluntary Arbitration
Voluntary Arbitration: Procedure
Art. 260. Grievance Machinery and Voluntary
Arbitration
xxx xxx xxx
1) Parties to a CBA shall:
a) Name and designate in advance a Voluntary
Arbitrator or panel of Voluntary Arbitrators, OR
b) Include in the agreement a procedure for the
selection of such Voluntary Arbitrator or panel of
Voluntary Arbitrators preferably from the listing of
qualified Voluntary Arbitrators duly accredited by
the Board.
2) In case the parties fail to select a Voluntary
81
Arbitrator
or panel of Voluntary Arbitrators, the
Board shall designate the Voluntary Arbitrator or
panel of Voluntary Arbitrators, as may be necessary,
pursuant to the selection Voluntary Arbitrator or
panel of Arbitrators procedure agreed upon in the
CBA, which shall act with the same force and effect
as if the has been selected by the parties as
described above.
Art. 255. However, an individual employee or group
of employees shall have the right at any time to
present grievances to their employer
Voluntary Arbitration: Features
The stipulation to refer all future disputes to an
arbitrator or to submit an ongoing dispute to one
is valid. Being part of a contract between the
parties, it is binding and enforceable in court in
case one of them neglects, fails or refuses to

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arbitrate. Going a step further, in the event that
they declare their intention to refer their
differences to arbitration first before taking court
action, this constitutes a condition precedent, such
that where a suit has been instituted prematurely,
the court shall suspend the same and the parties
shall be directed forthwith to proceed to arbitration.
A court action may likewise be proper where the
arbitrator has not been selected by the parties.
(Chung Fu Industries v. CA, 1992)
Voluntary Arbitration: Basis and Rationale
1987 Constitution. Art. XIII, Sec. 3
x x x 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.
Promotion
Establishing Machinery Dispute Settlement
Collective Bargaining Agreement and Time Frame

Art. 260. Grievance Machinery and Voluntary


Arbitration.
The parties to a Collective Bargaining Agreement
shall include therein provisions that will ensure the
mutual observance of its terms and conditions. They
shall establish a machinery for the adjustment and
resolution of grievances arising from the
interpretation of their Collective Bargaining
Agreement and those arising from the interpretation
or enforcement of company personnel policies.
All grievances submitted to the grievance machinery
which are not settled within 7 month calendar days
from the date of its submission shall automatically
be referred to voluntary arbitration prescribed in the
Collective Bargaining Agreement.
xxx
Executive Order 251, Sec. 4:
Sec. 4. Section 22 of Executive Order No. 126 is
hereby amended to read as follows:
"Sec. 22. National Conciliation and Mediation Board.
A National Conciliation and Mediation Board, herein
referred to as the "Board", is hereby created and
which shall absorb the conciliation mediation and
voluntary arbitration functions of the Bureau of
Labor of Relations in accordance with Section 29 (c)
hereof
xxx
A Tripartite Voluntary Arbitration Advisory Council is
hereby created and attached to the National
Conciliation and Mediation Board. The Tripartite
Voluntary Arbitration Advisory Council shall advise
the National Conciliation Board on matters
pertaining to the promotion of voluntary arbitration
as the preferred mode of dispute settlement.
Voluntary Arbitration: Arbitrable Issues
Disputes covered in Voluntary Arbitration:
General Rule (Art. 261):

- Those unresolved grievances arising from the


interpretation or implementation of the CBA;
- Also, those arising from the interpretation or
enforcement of company personnel policies
- Gross violations of CBA provision
Exception (Art. 262):
- If parties agree, VA may hear and decide all other
labor disputes including ULP and bargaining deadlock
For purposes of this article, gross violations of CBA
shall mean flagrant and/ or malicious refusal to
comply with the economic provisions of such
agreement.
Rights
Disputes
Distinguished

and

Interest

Disputes:

Rights disputes: Claim for violation of a specific


right (Arising from a contract, ex: CBA or company
policies). Voluntary Arbitrator has original and
exclusive jurisdiction over these matters.
Interest Disputes: These ponder on the question
what should be included in the CBA. Strictly
speaking, the parties may choose a voluntary
arbitrator to decide on terms and conditions of
employment, but that is impracticable because it
will be a value judgment of the arbitrator and not
the parties.
Voluntary Arbitrator Selection
Art. 260. How Voluntary Arbitrator is selected
1) As stated in CBA (or selection procedure of a VA),
preferably from a list of qualified VAs accredited by
NCMB
2) If parties fail to select, the Board (NCMB) shall
select VA pursuant to selection procedure as stated
in CBA
Art. 260
x x x. For this purpose, parties to a Collective
Bargaining Agreement shall name and designate in
advance a Voluntary Arbitrator or panel of Voluntary
Arbitrators,
or include in the agreement the procedure for
the selection of such Voluntary Arbitrator or
panel of voluntary Arbitrators, preferably from
the listing of qualified Voluntary Arbitrators duly
accredited by the Board.
In case the parties fail to select a Voluntary
Arbitrators, the Board shall designate the
Voluntary Arbitrators, as may be necessary,
pursuant to the selection procedure agreed
8 2upon in the Collective Bargaining Agreement,
which shall act with the same force and effect
as if the Arbitrator or panel of Arbitrators has
been selected by the parties as prescribed.
Indeed, the Labor Code formerly provided that if the
parties in collective bargaining fail to reach an
agreement, the Bureau of Labor Relations should call
them to conciliation meetings and, if its efforts were
not successful, certify the dispute to a labor arbiter
for compulsory arbitrarion. But this was changed by
R.A.No. 6715 which took effect on March 21, 1989.

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Art 250(e) of the Labor Code now provides that if
effects of conciliation fail, the Board shall
encourage the parties to submit their case to a
voluntary arbitrator. This is what the parties did in
this case. After the Board failed to resolve the
bargaining deadlock between parties, the union filed
a petition for compulsory arbitration in the
Arbitration Branch of the NLRC. Petitioner joined
the petition and the case was submitted for
decision. Although the unions petition was for
compulsory arbitration, the subsequent agreement
of petitioner to submit the matter for arbitration in
effect made the arbitration a voluntary one. The
essence of voluntary arbitration, after all is that it is
by agreement of the parties, rather than compulsion
of law, that a matter is submitted for arbitration. It
does not matter that the person chosen as arbitrator
is a labor arbiter who, under Art 217 of the Labor
Code, is charged with the compulsory arbitration of
certain labor cases. There is nothing in the law that
prohibits these labor arbiters from also acting as
voluntary arbitrators as long as the parties agree to
have him hear and decide their dispute. (Manila
Central Line Free Workers Union v. Manila Central
Line Corp., 1998)
Voluntary Arbitration: Procedure
Art. 262-A. Procedures
The voluntary Arbitrators or panel of Voluntary
Arbitrators shall have the power to hold hearings,
receive evidences and take whatever action is
necessary to resolve the issue or issues subject of
dispute, including efforts to effect a voluntary
settlement between parties.
All parties to the dispute shall be entitled to attend
the arbitration proceedings. The attendance of any
third party or the exclusion of any witness from the
proceedings shall be determined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing
may be adjourned for a cause or upon agreement by
the parties.
Unless the parties agreed otherwise, it shall be
mandatory for the Voluntary Arbitrators or panel of
Voluntary Arbitrators to render an award or decision
within twenty ?(20) calendar days from the date of
submission of the dispute to voluntary arbitration.
The award or decision shall contain the facts and the
law on which it is based. It shall be final and
executory after ten (10) calendar days from receipt
of the copy of the award or its decision by the
parties. Upon motion of any interested party, the
Voluntary Arbitrator or panel of Voluntary
Arbitrators or the Labor Arbiter in the region where
the movant resides, in case of the absence or
incapacity of the voluntary arbitrator or panel of
voluntary arbitrators for any reason, may issue a writ
of execution requiring wither the sheriff of the
Commission or regular Courts or any public official
whom the parties may designate in the submission
agreement to execute the final decision, order, or
award.

Awards and Orders


Art. 262-A
xxx
The award or decision shall contain the facts and the
law on which it is based. It shall be final and
executory after ten (10) calendar days from receipt
of the copy of the award or its decision by the
parties.
Upon motion of any interested party, the Voluntary
Arbitrator or panel of Voluntary Arbitrators or the
Labor Arbiter in the region where the movant
resides, in case of the absence or incapacity of the
voluntary arbitrator or panel of voluntary arbitrators
for any reason, may issue a writ of execution
requiring the sheriff of the Commission or regular
Courts or any public official whom the parties may
designate in the submission agreement to execute
the final decision, order, or award.
Petitioner-company's objection to the authority of
the Voluntary Arbitrator to direct the commutation
of the unenjoyed portion of the sick leave with pay
benefits of intermittent workers in his decision is
misplaced. Article 261 of the Labor Code is clear.
The questioned directive of the herein public
respondent is the necessary consequence of the
exercise of his arbitral power as Voluntary Arbitrator
under Article 261 of the Labor Code "to hear and
decide all unresolved grievances arising from the
interpretation or implementation of the Collective
Bargaining Agreement." We, therefore, find that no
grave abuse of discretion was committed by public
respondent in issuing the award (decision).
Moreover, his interpretation of Sections 1 and 3,
Article VIII of the 1989 CBA cannot be faulted with
and is absolutely correct. (Davao Integrated v.
Abarquez, 1993)
The award of the arbitrator in this case is not to be
equated with a judicial decision. In effect, when in
relation to a controversy as to working conditions,
which necessarily include the amount of wages,
allowances, bonuses, overtime pay, holiday pay,
etc., the parties submit their differences to
arbitration, they do not seek any judicial
pronouncement technically as such:
- They are merely asking the arbitrator to fix
for them what would be the fair and just
condition or term regarding the matter in
dispute that should govern further collective
bargaining relations between them.
- Stated differently, the arbitrator's award
when stipulated by the parties to be
conclusive becomes part and parcel of the
CBA. Viewed in this sense, which We are fully
convinced is most consistent with the
principles of collective bargaining, the
subsequent or supervening facts referred to
by the Solicitor General consisting of acts of
none other than the respondent Minister may
not be invoked to alter, modify, reform, much
less abrogate, the new terms, so to speak, of
the collective bargaining inserted by virtue of
the award of the arbitrator. To do otherwise
would violate the prescription of the

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Constitution against impairment
obligation of contracts.

of

the

We hold that regardless of any law anterior or


posterior to the Arbitrator's award, the collective
bargaining agreement in this case has been
correspondingly amended in a manner that is
unalterable, immovable and immutable like the rock
of Gibraltar, during the lifetime of the said
collective
bargaining
agreement.
(Citibank
Employees Union v. MOLE, 1980)
Finality and Execution of Awards
Art 262-A:
Award or decision of the voluntary arbitrator shall be
final and executory after 10 days from receipt of the
copy of the award or decision by the parties.
When the parties submitted their grievance to
arbitration, they expressly agreed that the decision
of the Voluntary Arbitrator
would be final,
executory and unappealable. In fact, even without
this stipulation, the first decision had already
become so by virtue of Article 263 of the Labor Code
making voluntary arbitration awards or decisions
final and executory. (Imperial Textile Miles, etc.
Calica, 1992)
In the case of The Consolidated Bank & Trust
Corporation (SOLIDBANK) v. Bureau of Labor
Relations, et al., the Court held that the Voluntary
Arbitrator lost jurisdiction over the case submitted
to him the moment he rendered his decision.
Therefore, he could no longer entertain a motion for
reconsideration of the decision for its reversal or
modification. Thus by modifying the original award,
respondent arbitrator exceeded
his authority as
such, a fact he was well aware of, as shown by his
previous Resolution of Inhibition wherein he refused
to act on the Union's motion for reconsideration of
the award or decision.
It is a hornbook rule that once a judgment has
become final and executory, it may no longer be
modified in any respect, even if the modification is
meant to be an erroneous conclusion of fact or law,
and regardless of whether the modification is
attempted to be made by the court rendering it or
by the highest court of the land, as what remains to
be done is the purely ministerial enforcement or
execution of the judgment. The doctrine of finality
of judgment is grounded on fundamental
considerations of public policy and sound practice
that at the risk of occasional errors, the judgment of
adjudicating bodies must become final and
executory on some definite date fixed by law. In the
more recent case of DBP v. NLRC, the Supreme Court
reiterated that the doctrine of immutability of final
judgment is adhered to by necessity notwithstanding
occasional errors that may result thereby, since
litigations must somehow come to an end for
otherwise, it would be even more intolerable than
the wrong and injustice it is designed to correct.
Rule VII, Section 1 of the Procedural Guidelines in
the Conduct of Voluntary Arbitration Proceedings
provides the key. Therein, what constitutes the

84

voluntary arbitrators decision (and, by extension,


that of the Panel of voluntary arbitrators) is defined
with precision, to wit:
Sec. 1. Decision Award. -- The final arbitral
disposition of issue/s submitted to voluntary
arbitration is the Decision. The disposition may take
the form of a dismissal of a claim or grant of specific
remedy, either by way of prohibition of particular
acts or specific performance of particular acts. In
the latter case the decision is called an Award.
In herein case, the Decision of the Panel was in the
form of a dismissal of petitioners complaint.
Naturally, this dismissal was contained in the main
decision and not in the dissenting opinion. Thus,
under Section 6, Rule VII of the same guidelines
implementing Article 262-A of the Labor Code, this
Decision, as a matter of course, would become final
and executory after ten (10) calendar days from
receipt of copies of the decision by the parties even
without receipt of the dissenting opinion unless, in
the meantime, a motion for reconsideration or a
petition for review to the Court of Appeals under
Rule 43 of the Rules of Court is filed within the same
10-day period. (Coca-Cola v. Coca-Cola, 2005)
Appeal
The Jurisdiction conferred by law on a voluntary
arbitrator or a panel of such arbitrators is quite
limited compared to the original jurisdiction of the
labor arbiter and the appellate jurisdiction of the
NLRC for that matter. The state of our present law
relating to voluntary arbitration provides that "the
award or decision of the Voluntary Arbitrator x x x
shall be final and executory after ten (10) calendar
days from receipt of the copy of the award or
decision by the parties," while the "decision, awards,
or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any
or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders."
Hence, while there is an express mode of appeal
from the decision of a labor arbiter, Republic Act
No. 6715 is silent with respect to an appeal from the
decision of a voluntary arbitrator. (Luzon
Development Bank v. Assoc of Luzon Devt
Employees, 1995)
Assuming arguendo that the voluntary arbitrator or
the panel of voluntary arbitrators may not strictly be
considered as a quasi-judicial agency, board or
commission, still both he and the panel are
comprehended within the concept of a "quasijudicial instrumentality." A fortiori, the decision or
award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the
Court of Appeals, in line with the procedure outlined
in Revised Administrative Circular No. 1-95, just like
those of the quasi-judicial agencies, boards and
commissions enumerated therein. This would be in
furtherance of, and consistent with, the original
purpose of Circular No. 1-91 to provide a uniform
procedure for the appellate review of adjudications
of all quasi-judicial entities18 not expressly
excepted from the coverage of Sec. 9 of B.P. 129 by

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LABOR LAW REVIEWER


either the Constitution or another statute. In effect,
this equates the award or decision of the voluntary
arbitrator with that of the regional trial court.
Consequently, in a petition for certiorari from that
award or decision, the Court of Appeals must be
deemed to have concurrent jurisdiction with the
Supreme Court. As a matter of policy, this Court
shall henceforth remand to the Court of Appeals
petitions of this nature for proper disposition.
Costs
Art. 262-B. Cost of Voluntary Arbitration and
Voluntary Arbitrators fee
The parties to a Collective Bargaining Agreement
shall provide therein a proportionate sharing scheme
on the cost of the voluntary arbitration including the
Voluntary Arbitrators fee.
The fixing of the fee of the Voluntary Arbitrators,
whether shouldered wholly by the parties or
subsidized by the special voluntary arbitration fund,
shall take into account the following factors:
a. Nature of the case
b. Time consumed in hearing the case
c. Professional Standing of the Voluntary
Arbitrator
d. Capacity to Pay of the parties.
(c) No Strike-No Lockout Clause
A "no strike, no lock-out" provision in the CBA is a
valid stipulation although the clause may be invoked
by an employer only when the strike is economic in
nature or one which is conducted to force wage or
other concessions from the employer that are not
mandated to be granted by the law itself. It would
be inapplicable to prevent a strike which is grounded
on unfair labor practice. (Panay Electric Co. v.
NLRC, 1995; Malayang Samahan ng mga
Manggagawa sa Greenfield v. Ramos , 2000)
- The stipulation is VALID but not absolute.
(d) Labor Management Council
Art. 255. Exclusive Bargaining Representation and
Workers Participation in Policy and DecisionMaking x x x
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 decisionmaking 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 labormanagement
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.

3.

Unfair Labor Practice in Collective


Bargaining

(a) Bargaining in bad faith

GMCs failure to make a timely reply to the


proposals presented by the union is indicative of its
utter lack of interest in bargaining with the union.
Its excuse that it felt the union no longer
represented the workers, was mainly dilatory as it
turned out to be utterly baseless. We hold that
GMCs refusal to make a counter-proposal to the
unions proposal for CBA negotiation is an indication
of its bad faith. Where the employer did not even
bother to submit an answer to the bargaining
proposals of the union, there is a clear evasion of
the duty to bargain collectively. Failing to comply
with the mandatory obligation to submit a reply to
the unions proposals, GMC violated its duty to
bargain collectively, making it liable for unfair labor
practice. Perforce, the Court of Appeals did not
commit grave abuse of discretion amounting to lack
or excess of jurisdiction in finding that GMC is, under
the circumstances, guilty of unfair labor practice.
(General Milling Corp. v. Court of Appeals, 2004)

101

(b) Refusal to bargain


Of employers
Art. 248 (g) To violate the duty to bargain
collectively as prescribed by this Code;
Of labor organizations
Art. 249 (c) To violate the duty, or refuse to bargain
collectively with the employer, provided it is the
representative of the employees;
Art. 251. Duty to bargain collectively in the
absence of collective bargaining agreements.
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 this Code.
Art. 252. Meaning of duty to bargain collectively.
The duty to bargain collectively means the
performance of a mutual obligation
to
meet
and convene
promptly
and
expeditiously in good faith for the purpose of
negotiating an agreement with respect
to wages, hours of work and all other terms and
conditions of employment including proposals
for adjusting any grievances or questions arising
under such agreement and executing a contract
incorporating such agreements if requested by
either party but such duty does not compel any
party to agree to a proposal or to make any
concession.
Art 250. Procedure in collective bargaining. The
following procedures shall be observed in collective
bargaining:
When a party desires to negotiate an
agreement, it shall serve a written notice upon
the other party with a statement of its
proposals. The other party shall make a reply
thereto not later than ten (10) calendar days
from receipt of such notice;

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LABOR LAW REVIEWER


Should differences arise on the basis of such
notice and reply, either party may request for a
conference which shall begin not later than ten
(10) calendar days from the date of request.
If the dispute is not settled, the Board shall
intervene upon request of either or both parties
or at its own initiative and immediately call the
parties to conciliation meetings. The Board shall
have the power to issue subpoenas requiring the
attendance of the parties to such meetings. It
shall be the duty of the parties to participate
fully and promptly in the conciliation meetings
the Board may call;
During the conciliation proceedings in the
Board, the parties are prohibited from doing any
act which may disrupt or impede the early
settlement of the disputes; and
The Board shall exert all efforts to settle
disputes amicably and encourage the parties to
submit their case to a voluntary arbitrator.
GMCs failure to make a timely reply to the
proposals presented by the union is indicative of its
utter lack of interest in bargaining with the union.
Its excuse that it felt the union no longer
represented the workers, was mainly dilatory as it
turned out to be utterly baseless. We hold that
GMCs refusal to make a counter-proposal to the
unions proposal for CBA negotiation is an indication
of its bad faith. Where the employer did not even
bother to submit an answer to the bargaining
proposals of the union, there is a clear evasion of
the duty to bargain collectively. Failing to comply
with the mandatory obligation to submit a reply to
the unions proposals, GMC violated its duty to
bargain collectively, making it liable for unfair labor
practice. Perforce, the Court of Appeals did not
commit grave abuse of discretion amounting to lack
or excess of jurisdiction in finding that GMC is, under
the circumstances, guilty of unfair labor practice.
(General Milling Corp. v. Court of Appeals , 2004)
The school is guilty of unfair labor practice when it
failed to make a timely reply to the proposals of the
union more than one month after the same were
submitted by the union. In explaining its failure to
reply, the school merely offered a 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. (Colegio de San
Juan de Letran v. Association , 2000)
(c) Individual bargaining
It is an unfair labor practice for an employer
operating under a CBA to negotiate with his
employees
individually.
That
constitutes
interference because the company is still under
obligation to bargain with the union as the
bargaining representative.
(The Insular Life
Assurance Co. Ltd., Employees Assn. v. Insular Life
Assurance Co. Ltd, 1971)
(d) Blue sky bargaining
Sky high economic demands or making exaggerated
or unreasonable proposals are indicative of blue-sky
bargaining. (Standard Chartered Bank Employees
Union v. Confesor, 2004)

(e) Surface bargaining


Surface bargaining is defined as "going through the
motions of negotiating," without any real intent to
reach an agreement. It violates the Act's
requirement that parties negotiate in "good faith." It
is prohibited because, as one commentator
explained: The bargaining status of a union can be
destroyed by going through the motions of
negotiating almost as easily as by bluntly withholding
recognition As long as there are unions weak
enough to be talked to death, there will be
employers who are tempted to engage in the forms
of collective bargaining without the substance. (KMART Corporation v NLRB, 1980 626 F.2d 704 )

102

4. Unfair Labor Practice (ULP)


Unfair Labor Practice (ULP): Definition
Art. 212 (k) Unfair labor practice - any unfair labor
practice as expressly defined by the Code.
Art. 247
Unfair labor practices violate the constitutional right
of workers and employees to self-organization
These are inimical to the legitimate interests of both
labor and management, including their right to
bargain collectively and otherwise deal with each
other in an atmosphere of freedom and mutual
respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management
relations.
Unfair Labor Practices are not only violations of the
civil rights of both labor and management but are
also criminal offenses
Purpose of the Policy against ULP
Protection of right to self-organization and/or
collective bargaining:
(1) The employee is not only protected from the
employer but also from labor organization
(2) Employer is also protected from ULP committed
by a labor organization
(3) The public is also protected because it has an
interest in continuing industrial peace
Unfair labor practice refers to acts that violate the
workers right to organize. The prohibited acts are
related to the workers right to self-organization and
to the observance of a CBA. Without that element,
the acts, no matter how unfair, are not unfair labor
practices. The only exception is Art. 248 (f) [i.e. to
dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or
being about to give testimony under this Code].
(Philcom Employees Union v. Phil. Global , 2006)
ULP: Employer-Employee Relationship Required
An unfair labor practice may be committed only
within the context of an employer-employee
relationship (American President Lines v. Clave,
1982)
Exception: Yellow Dog Condition: To require as a
condition of employment that a person or an
employee shall not join a labor organization or shall

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withdraw from one to which he belongs. (Art 248
[b])
ULP: Statutory Construction
The Labor Code does not undertake the impossible
task of specifying in precise and unmistakable
language each incident which constitutes an unfair
labor practice. Rather, it leaves to the court the
work of applying the law's general prohibitory
language in light of infinite combinations of events
which may be charged as violative of its terms.
(HSBC Employee Union V. NLRC , 1997)
ULP: Not Cured by Estoppel
The eventual signing of the CBA does not operate to
estop the parties from raising unfair labor practice
charges against each other. (Standard Chartered
Bank Union v. Confesor, 2004)

(a) ULP of Employers


Specific Acts

a) Interference/ Restraint/ Coercion


Art. 248. It shall be unlawful for an employer to
commit any of the following unfair labor practice:
(a) To interfere with, restrain or coerce employees
in the exercise of their right to self-organization;
Interrogation
Questioning of employees concerning union
membership and activities and disparaging remarks
by supervisory employees made in such away as to
hamper the exercise of free choice on the part of
the employees, have been uniformly condemned as
an unfair labor practice. (Scotys Dept. Store v.
Micaller, 1956)
An employer is not denied the privilege of
interrogating its employees as to their union
affiliation, provided the same is for a legitimate
purpose and assurance is given by the employer that
no reprisals would be taken against unionists.
Nonetheless, any employer who engages in
interrogation does so with notice that he risks a
finding of unfair labor practice if the circumstances
are such that his interrogation restrains or interferes
with employees in the exercise of their rights to selforganization.
When the interrogation and
investigation by the companys supervisory officials
of the employees in such a way that it hampers the
exercise of their right to self-organization, ULP is
committed. The subjection by the company of union
to vilification and its participation in soliciting
membership for a competing union is also ULP act.
(Phil. Steam Navigation Co. v. Phil. Marine
Officers Guild, 1965)
Speech
Indeed, it is an unfair labor practice for an employer
operating under a collective bargaining agreement
to negotiate or to attempt to negotiate with his
employees individually in connection with changes in
the agreement. And the basis of the prohibition
regarding individual bargaining with the strikers is

that although the union is on strike, the employer is


still under obligation to bargain with the union as
the employees' bargaining representative. This is
tantamount to an illegal act of interference. The
sending of letter containing promises of benefits to
the individual employees in order to entice them to
return to work is not protected by the free speech
provision of the Constitution. The same is true with
letters containing threats to obtain replacements for
the striking employees in the event they do not
report to work on a certain date. The free speech
protection under the Constitution is inapplicable
where the expression of opinion by the employer or
his agent contains promise of benefits, threats or
reprisals. (Insular Life Assurance Co. Employees
Assn. v. Insular Life Assurance Co. Ltd, 1971)
Espionage
As regards espionage, it is said that picketing is
inherently explosive. As pointed out by one author,
The picket line is an explosive front, charged with
the emotions and fierce loyalties of the unionmanagement dispute. It is marked by colorful namecalling, intimidating threats or sporadic fights
between the pickets and those who pass the line.It
has been held in a great number of decisions that
espionage by the employer of union activities, or
surveillance thereof, are such instances of
interference, restraint or coercion of employees in
connection with their right to organize, form and
join unions as to constitute unfair labor practice.
Nothing is more calculated to interfere with, restrain
or coerce employees in the exercise of their right to
self-organization than such activity even where no
discharge results. The information obtained by
means of espionage is invaluable to the employer
and can be used in a variety of cases to break a
union. The unfair labor practice is committed
whether espionage is carried on by a professional
labor spy or detective, by officials or supervisory
employees of the employer, or by fellow employees
acting at the request or direction of the employer or
an ex-employee. (Insular Life Assurance Co.
Employees Assn. v. Insular Life Assurance Co. Ltd,
1971)
Economic Coercion
Concerted Activities
The demonstration held by the petitioners before
the Malacanang was against the alleged abuses of
some Pasig policemen, not against their employer.
Said demonstration was purely and completely an
exercise of their freedom of expression in general
and of their right to assembly and petition for
redress of grievances in particular before
appropriate governmental agency, the Chief
Executive, again the officers of the municipality of
Pasig.
They exercised their civil and political rights for
their mutual aid and protection from what they
believed were police excesses. As a matter of fact,
it was the duty of the company to protect Union and
its members from harassment of local police
officers.

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LABOR LAW REVIEWER


Acts of ULP in this case are: Refusal of the Company
to permit all its employees and workers to join the
mass demonstration against alleged police abuses
and the subsequent separation of the eight
petitioners from the service. (Philippine Blooming
Mills Employees Organization v. Philippine
Blooming Mills, Co., 1973)

b) Non-Union Membership or Withdrawal from


Membership as Condition of Employment

Art. 248 (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;
This particular provision signifies what is known as a
yellow dog contract. A typical yellow dog contract
embodies the following stipulations:
(1) a representation by the employee that he is not
a member of a labor organization
(2) a promise by the employee that he will not join
a union
(3) a promise by the employee that upon joining a
labor organization, he will quit his employment

c) Company Dominated Union


Art. 248 (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;
ART 212(i) "Company union" means any labor
organization
whose
formation,
function
or
administration has been assisted by any act defined
as unfair labor practice by this Code.

d) Discrimination
Unionism

Encourage/Discourage

Art. 248 (e)


GENERAL RULE: It shall be unlawful 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.
EXCEPTION: 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
EXCEPTION TO THE EXCEPTION: Those employees
who are already members of another union at the
time of the signing of the collective bargaining
agreement.
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 nonunion members accept the benefits under the
collective bargaining agreement: Provided, that the
individual authorization required under Article 242,
paragraph (o) of this Code shall not apply to the nonmembers of the recognized collective bargaining
agent;
UNION SECURITY CLAUSE is a stipulation in the
CBA whereby the management recognizes that the

membership of employees in the union which


negotiated the said agreement should be maintained
and continued as a condition for employment or
retention of employment. Its purpose is to safeguard
and ensure the continued existence of the union.
CLOSED-SHOP may be defined as an enterprise in
which, by agreement between the employer and his
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 part of. (Del Monte v. Saldivar , 2007)
Different kinds of Union Security Clause (Azucena,
2010)
(1) Closed shop agreement Only union members
can be hired by the company and they must
remain as members to retain employment in the
company.
(2) Union shop agreement Nonmembers may be
hired, but to retain employment must become
union members after a certain period. The
requirement applies to present and future
employees.
(3) Agency shop agreement An agreement
whereby employees must either join the union
or pay to the union as exclusive bargaining
agent a sum equal to that paid by the members.
(4) Maintenance of membership agreement No
employee is complelled to join the union, but all
present or future must, as a condition of
employment, remain in good standing in the
union.
(5) Modified union shop agreement Employees
who are not union members at the time of
signing the contract need not join the union, but
all hired workers thereafter must join.
Under the Labor Code, a dismissal may only be
effected for any just or authorized causes as
provided by the said law. A dismissal based on a
union security clause of company CBA is not
enumerated as one of the just or authorized causes
in the Labor Code. But jurisprudence recognized that
it is a State policy to promote unionism to enable
workers to negotiate with management on an even
level playing field and with more persuasiveness
than if they were individually and separately bargain
with the employer. For this reason, the law has
allowed stipulations for union shop and closed
shop as a means of encouraging workers to join
ands support the union of their choice in the
protection of their rights and interests vis--vis the
employer. Even though the law recognizes union
shop agreement as valid, yet it cannot be used as a
means to guarantee to the union an unmitigated
discretion in terminating the employment status on
an employee-member. Therefore, the requirements
laid down by the law in determining whether or not
an employee was validly terminated must still be
followed even if it is based on a closed-shop
provision of a CBA, i.e. the substantive as well as the
procedural due process requirements. (Del Monte v.
Saldivar, 2007)

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LABOR LAW REVIEWER


interference to a right to self-organization

e) Retaliation for Testimony against Employer


Art. 248 (f) To dismiss, discharge or otherwise
prejudice or discriminate against an employee for
having given or being about to give testimony under
this Code;

f) Exaction-Featherbedding (ULP of Labor


Organizations. See next sub topic)
g) Contracting out to discourage unionism
Art. 248 (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;
The act of an employer in having certain services or
functions being performed by union members
contracted out is NOT per se an unfair labor practice
act. It is only when the contracting out of the
services or functions being performed by union
members will interfere with, restrain or coerce
employees in the exercise of their right to selforganization that it shall be unlawful and shall
constitute ULP act. [Sec. 6 (f) DOLE Department
Order No. 18-02, Series of 2002]

h) Violate duty to bargain or the bargaining


agreement
Art. 248 (g) To violate the duty to bargain
collectively as prescribed by this Code;
(i) To violate a collective bargaining agreement

i) Pay Negotiation/Attys Fees to settle


disputes
Art. 248 (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;

(b) ULP of Labor Organizations

Arts. 248(a) and 249(a) are the general grant of


protection. All other cases of ULP enumerated under
the said provisions are derivatives of Arts. 248(a) and
249 (a).

2) Discrimination Encourage/Discourage
Unionism
Art. 249(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;
UNION SECURITY CLAUSE is a stipulation in the
CBA whereby the management recognizes that the
membership of employees in the union which
negotiated the said agreement should be maintained
and continued as a condition for employment or
retention of employment. Its purpose is to safeguard
and ensure the continued existence of the union.

3) Exaction-Featherbedding
Art. 249 (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

4) VIOLATE DUTY to bargain or the CBA


Art. 249 (c) To violate the duty, or refuse to bargain
collectively with the employer, provided it is the
representative of the employees;
(f) To violate a collective bargaining agreement

5) PAY Negotiation/Attys Fees to settle


disputes
Art. 249 (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;

1) Interference/ Restraint/ Coercion


Art. 249. Unfair labor practices of labor
organizations. 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;
Note the difference between the wordings of Art.
248(a) and Art. 249(a).
Art. 248 (a) interfere, restraint, coerce
Art. 249(a) restraint, coerce
interfere not included in Art. 249 because any
act of a labor organization amounts to

C. Right to Peaceful Concerted


Activities
Right to Engage in Concerted Activities: Basis
Constitution
ART. XIII. Sec. 3. The state shall guarantee the rights
of all workers to:
(1) self-organization,
(2) collective bargaining and negotiations, and
(3) peaceful concerted activities,
(4) including the right to strike in accordance with
law.
Statutory
ART. 263.

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LABOR LAW REVIEWER


1)

Workers shall have the right to engage in


concerted activities:
a. for purposes of collective bargaining; or
b. for their mutual benefit and protection.
2) The right of legitimate labor organizations to
strike and picket and of employers to lockout,
consistent with the national interest, shall
continue to be recognized and respected.
However, no labor union may strike and no employer
may declare a lockout on grounds involving interunion and intra-union disputes.
Constitution
In accordance with law
Labor Code

Consistent with National Interest

Art. 246. It shall be unlawful for any person to:


(1) Restrain,
(2) Coerce,
(3) Discriminate Against Or
(4) Unduly Interfere With Employees And Workers In
Their Exercise Of The Right To SelfOrganization.
Right to self-organization shall include the right to:
form,
(1) join, or
(2) assist labor organizations

i. for the purpose of collective


bargaining
ii. through representatives of their own
choosing, and
(3) to engage in lawful concerted activities for the
same purpose for their mutual aid and protection.
Right to Engage in Concerted Activities:
Limitations
The strike is a powerful weapon of the working class.
Precisely because of this, it must be handled
carefully, like a sensitive explosive, lest it blow up
in the workers own hands. Thus, it must be
declared only after the most thoughtful consultation
among them, conducted in the only way allowed,
that is, peacefully, and in every case conformably to
reasonable regulation. Any violation of the legal
requirements and strictures will render the strike
illegal, to the detriment of the very workers it is
supposed to protect. (Batangas Laguna Tayabas Bus
Co. v NLRC, G.R. No. 101858, Aug. 21, 1992)

1. Forms of Concerted Activities


a. Strike
International Covenant on Economic, Social and
Cultural Rights. ART. 8: The States Parties to the
present Covenant undertake to ensure:
(d) The right to strike, provided that it is exercised
in conformity with the laws of the particular
country.
Definition
Art. 212 (o) Strike: Any temporary stoppage of work
by the concerted action of employees as a result of
an industrial or labor dispute

The term strike shall comprise not only concerted


work stoppages, but also slowdowns, mass leaves,
sitdowns, attempts to damage, destroy or sabotage
plant equipment and facilities, and similar activities.
(Samahang Manggagawa v. Sulpicio Lines, 2004)
The right to strike is a constitutional and legal
right of the workers as employers have the right
to lockout, all within the context of labor
relations and collective bargaining.
Subject to the enactment by Congress of
amendments or a new law on labor relations,
the provisions of existing laws shall govern the
exercise of those rights.
Strike: A Coercive Measure
A strike is a coercive measure resorted to by
laborers to enforce their demands. The idea behind
a strike is that a company engaged in a profitable
business cannot afford to have its production or
activities interrupted, much less, paralyzed. (Phil.
Can Co. v. CIR, 1950)
Strike: Effect on work relationship
Although during a strike the worker renders no work
or service and receives no compensation, yet his
relationship as an employee with his employer is not
severed or dissolved. (Elizalde Rope Factory, Inc. v.
SSS, 1972)
Strike: Economic Burden
GENERAL RULE: Striking employees are not entitled
to the payment of wages for un-worked days during
the period of the strike pursuant to the principle of
No work- No pay.
EXCEPTION: The parties are not precluded from
entering into an agreement to the contrary.
On the other hand, when strikers abandon the strike
and apply for reinstatement despite the existence of
valid grounds but the employer either: a) refuses to
reinstate them or b) imposes upon
their
reinstatement new conditions, such act would
constitute unfair labor practices.
The strikers, who refuse to accept the new
conditions
and
are
consequently
refused
reinstatement, are entitled to the losses of pay they
may have suffered by reason of the employers
discriminatory acts from the time they were refused
reinstatement.
Strikes: Forms
(1) LEGAL STRIKE one called for a valid purpose
and conducted through means allowed by law.
(2) ILLEGAL STRIKE one staged for a purpose not
recognized by law, or if for a valid purpose,
conducted through means not sanctioned by
law.
(3) ECONOMIC STRIKE one staged by workers to
force wage or other economic concessions from
the employer which he is not required by law to
grant (Consolidated Labor Association of the
Phil. v. Marsman and Company 1964)

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(4) ULP STRIKE called against a company's unfair
labor practice to force the employer to desist
from committing such practices.
(5) SLOWDOWN STRIKE one by which workers,
without a complete stoppage of work, retard
production or their performance of duties and
functions to compel management to grant their
demands (Ilaw at Buklod ng Manggagawa v.
NLRC, 1991)
(6) WILD-CAT STRIKE one declared and staged
without filing the required notice of strike and
without the majority approval of the recognized
bargaining agent.
(7) SIT DOWN STRIKE one wherein workers take
over possession of the property of such business
to cease production and to refuse access to
owners.
(8) SYMPATHETIC STRIKE one in which the
striking workers have no demands of their own,
but strike to make common cause with other
strikers in other establishments.
Strike: Conversion
It is possible for a strike to change its character from
an economic to a ULP strike. In the instant case,
initially, the strike staged by the Union was meant to
compel the Company to grant it certain economic
benefits set forth in its proposal for collective
bargaining. However, the strike changed its
character from the time the Company refused to
reinstate complainants because of their union
activities after it had offered to admit all the
strikers and in fact did readmit the others. It was
then converted into an unfair labor practice strike.
(Consolidated Labor Assoc. of the Phil. v.
Marsman and Company, 1964)
Non-conversion: Strike to lockout
A strike CANNOT be converted into a pure and
simple lockout by the mere expedient filing before
the trial court a notice of offer to return to work
during the pendency of the labor dispute between
the union and the employer. (Rizal Cement Workers
Union v. CIR, 1962)
Strike: Grounds
Book V Rule XXII Sec. 5. Grounds for Strike or
Lockout:
A strike or lockout may be declared in cases of:
a) Bargaining deadlocks
b) ULP.
Violations of collective bargaining agreements,
except flagrant and/or malicious refusal to
comply with its economic provisions, shall not
be considered ULP and shall not be strikeable.
No strike or lockout may be declared:
a) On grounds involving inter-union and intra
union disputes, or
b) Without first having filed a notice of strike or
lockout, or
c) Without the necessary strike or lockout vote
having been obtained and reported to the
NCMB,

or
d) After assumption by the Secretary or after
certification or submission of the dispute to
compulsory or voluntary arbitration or during
the pendency of cases involving the same
grounds for the strike or lockout.

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Allowable strikes
Art. 263 (c): Strikes, picketing and lockouts
Bargaining Deadlocks:
In case of bargaining deadlocks, the duly certified or
recognized bargaining agent may file a notice of
strike or the employer may file a notice of lockout
with the Department at least 30 days before the
intended date thereof.
ULP:
a) In cases of unfair labor practice, the period of
notice shall be 15 days.
b) In the absence of a duly certified or recognized
bargaining agent, the notice of strike may be filed
by any legitimate labor organization in behalf of its
members.
c) In case of dismissal from employment of union
officers duly elected in accordance with the union
constitution and by-laws, which may constitute
union busting, where the existence of the union is
threatened, the 15-day cooling-off period shall not
apply and the union may take action immediately.

b. Employer Lockout
Lockout: Definition
Art. 212(p). Lockout: the temporary refusal of an
employer to furnish work as a result of an industrial
or labor dispute.
Lockout: Grounds
Art. 263 (c): Strikes, picketing and lockouts
Bargaining Deadlocks:
In case of bargaining deadlocks, the duly certified or
recognized bargaining agent may file a notice of
strike or the employer may file a notice of lockout
with the Department at least 30 days before the
intended date thereof.
ULP:
a) In cases of unfair labor practice, the period of
notice shall be 15 days.
b) In the absence of a duly certified or recognized
bargaining agent, the notice of strike may be filed
by any legitimate labor organization in behalf of its
members.
c) In case of dismissal from employment of union
officers duly elected in accordance with the union
constitution and by-laws, which may constitute
union busting, where the existence of the union is
threatened, the 15-day cooling-off period shall not
apply and the union may take action immediately.
Lockout: Prohibitions
Art. 263 (b), last sentence:

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LABOR LAW REVIEWER


No labor union may strike and no employer may
declare a lockout on grounds involving inter-union
and intra-union disputes.
Art. 264 (a):
(1) No labor organization or employer shall declare a
strike or lockout without first having:
a) Bargained collectively in accordance with
Title VII of this Book, or
b) Filed the notice required in the preceding
Article or without the necessary strike or lockout
vote first having been obtained and reported to the
Department.
(2) No strike or lockout shall be declared after
assumption of jurisdiction by the President or the
Secretary or after certification or submission of the
dispute to compulsory or voluntary arbitration or
during the pendency of cases involving the same
grounds for the strike or lockout.
(3) Any union officer who knowingly participates in
an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal
acts during a strike may be declared to have lost his
employment status:
PROVIDED, That mere participation of a worker in a
lawful strike shall not constitute sufficient ground
for termination of his employment, even if a
replacement had been hired by the employer during
such lawful strike.

c. Picketing
Picketing: Definition
NCMB Manual of Procedures for Conciliation and
Preventive Mediation Cases.
Sec. 1: Definition of Terms
Picketing the right of workers to peacefully march
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.
Picketing: Limitation
Picketing, like other freedom of expression in
general, has limits. To the extent that it is an
instrument of coercion rather than of persuasion, it
cannot rightfully be entitled to the protection
associated with free speech. Equally so, there can
be no indiscriminate ban on the freedom to
disseminate the facts of a labor dispute and to
appeal for public sympathy, which is the aim of
peaceful picketing, without a transgression of the
Constitution, sufficient to oust a court of
jurisdiction, even on the assumption that it was
originally possessed of such a competence. (Security
Bank Employees Union v. Security Bank and Trust
Co., 1968)
Picketing and libel laws
There is a unique aspect to this action for libel
against the Philippine National Bank Employees'
Association. It was filed by plaintiff PCIB as a result
of placards and signboards along the PNB building in
Escolta, Manila, containing the following: "PCIB BAD
ACCOUNTS TRANSFERRED TO PNB-NIDC?"

There was a labor controversy resulting in a strike,


fortunately lasting only for one day. The labor union
made use of its constitutional right to picket. From
the time of Mortera vs. CIR, a 1947 decision this
Court has been committed to the view that' peaceful
picketing is part of the freedom of speech guarantee
of the Constitution. The latest case in point where
such a principle was reaffirmed expressly is
Associated Labor Union v. Gomez, a 1980 decision.
There is no mention of the other placards but it is
not unlikely that to bolster its claim, mention was
likewise made and in bold letters at that of such
alleged failing of its management. That was the aim
and intent as found by the lower court. That could
not very well be disputed by plaintiff-appellant.
Unfortunately, the offending imputation, but in the
form of a question, was included. It was due to a
former official of plaintiff appellant's bank who was
thereafter named as President of the Philippine
National Bank. Should there be an automatic
attitude of condemnation for such incident? If the
realistic observation of Justice Frankfurter in Milk
Wagon Drivers Union of Chicago v. Meadowmoor
Dairies be heeded that labor disputes give rise to
strong emotional response, then the decision
reached by the lower court becomes even more
acceptable. It is a fact of industrial life, both in the
Philippines as in the United States, that in the
continuing confrontation between labor and
management, it is far from likely that the language
employed would be both courteous and polite. Such
being the case, there is no affront either to reason
or to the law in the complaint for libel being
dismissed. In placing reliance on the constitutional
right of freedom of expression, this Court once again
makes manifest its adherence to the principle first
announced by Justice Malcolm as ponente in the
leading case of United States v. Bustos. In no
uncertain terms, it made clear that the judiciary, in
deciding suits for libel, must ascertain whether or
not the alleged offending words may be embraced by
the guarantees of free speech and free press. It
cannot be too often said that Bustos was
promulgated as far back as March 8, 1918. (PCIB V.
Philnabank Employees, 1981)
Curtailment
Peaceful picketing cannot be restrained because the
same is part of the freedom of speech. However,
petitioner fails to realize that the questioned July
16, 1965 order of the Court of Industrial Relations
did not refer to peaceful picketing. In Mortera
(supra), where the therein questioned order partly
declared that ". . . picketing under any guise and
form is hereby prohibited . . .," this Court ruled that
the "order of the Court of Industrial Relations
prohibiting picketing must be understood to refer
only to illegal picketing, that is, picketing through
the use of illegal means. In this case, the questioned
restraining order should also be taken as limited to
the lifting of the picket lines which constituted
illegal picketing especially so because it expressly
stated that the petitioner union and its officers,
agents or symphatizers "are hereby directed to call
off the strike declared on July 17, 1965, and to lift
the picket lines established in and around the
premises of respondent company's various offices

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and installations xxx The persons manning the picket
lines in these places are hereby enjoined from
impeding and interfering with implementation of this
Order as well as from interfering in any manner with
the operations of respondent. (Free Telephone
Workers Union v. PLDT Co., 1982)

2. Who may declare a strike or lockout


Striking party
Book V, Rule XXII, Sec. 6
(1) Certified or duly recognized bargaining
representative
(2) Employer
(3) In the absence of certified or duly recognized
bargaining representative, any legitimate labor
organization in the establishment, but only on
grounds of ULP.

3. Requisites of a valid strike


Strike: Procedural requirements
The procedural requirements are mandatory. Failure
to comply with the following requirements makes
the strike illegal. Consequently, the officers of the
union who participated therein are deemed to have
lost their employment.
(1) Effort to bargain
Art. 264 (a):
1) No labor organization or employer shall declare a
strike or lockout without first having bargained
collectively in accordance with Title VII of this
Book...
(2) Filing of notice of intention to strike
Art. 263 (c), (d):
1) In case of bargaining deadlocks, the duly certified
or recognized bargaining agent may file a notice of
strike or the employer may file a notice of lockout
with the Department at least 30 days before the
intended date thereof.
2) In cases of unfair labor practice, the period of
notice shall be 15 days.
3) In the absence of a duly certified or recognized
bargaining agent, the notice of strike may be filed
by any legitimate labor organization in behalf of its
members.
5) The notice must be in accordance with such
implementing rules and regulations as the Secretary
may promulgate.
Book V Rule XXII Sec. 8:
Contents of Notice (3NS)
(1) Names and addresses of the employer and the
union involved
(2) Nature of the industry to which the employer
belongs
(3) Number of union members and of workers in the
bargaining unit
(4) Such other relevant data as may facilitate the

settlement of the dispute.


Additional Requirements
In cases of bargaining deadlocks: (UPCP)
(1) Statement of Unresolved issues in the bargaining
negotiations
(2) Written Proposals of the union
(3) Counterproposals of the employer
(4) Proof of a request for conference to settle the
differences.
In cases of ULP:
1) Statement of Acts complained of
2) Efforts taken to resolve the dispute
amicably.
In case the notice does not conform with the
requirements, the regional branch of the NMCB shall
inform the concerned party of such fact.
Book V Rule XXII Sec. 9
Action on Notice:
Upon receipt of a valid notice of strike or
lockout, the NCMB, through its ConciliatorMediators, shall call the parties to a conference
the soonest possible time in order to actively
assist them to explore all possibilities for
amicable settlement.
The Conciliator-Mediator may suggest/offer
proposals as an alternative avenue for the
resolution of their disagreement/conflict which
may not necessarily bind the parties.
If conciliation/mediation fails, the parties
shall be encouraged to submit their dispute for
voluntary arbitration.
The procedural requirements are mandatory,
meaning, non-compliance therewith makes the strike
illegal. The evident intention of the law in requiring
the strike notice and strike-vote report is to
reasonably regulate the right to strike. (Stamford
Marketing Corp v. Julian, 2004)
Aside from the mandatory notices embedded in Art.
263, paragraphs (c) and (f) of the Labor Code, a
union intending to stage a strike is mandated to
notify the NCMB of the meeting for the conduct of
strike vote, at least twenty-four (24) hours prior to
such meeting. Unless the NCMB is notified of the
date, place and time of the meeting of the union
members for the conduct of a strike vote, the NCMB
would be unable to supervise the holding of the
same, if and when it decides to exercise its power of
supervision. The requirement of giving notice of the
conduct of a strike vote to the NCMB at least 24
hours before the meeting for the said purpose is
designed to:
(1) Inform the NCMB of the intent of the union
to conduct a strike vote;
(2) Give the NCMB ample time to decide on
whether or not there is a need to supervise
the conduct of the strike vote to prevent
any acts of violence and/or irregularities
attendant thereto; and
(3) Should the NCMB decide on its own
initiative or upon the request of an
interested party including the employer, to

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supervise the strike vote, to give it ample
time to prepare for the deployment of the
requisite
personnel, including peace
officers if need be. (Capitol Medical
Center, Inc. v. NLRC, 2005)
(3) Observance of cooling-off periods
Art. 263 (c), (e):
1) In case of dismissal from employment of union
officers duly elected in accordance with the union
constitution and by-laws, which may constitute
union busting, where the existence of the union is
threatened, the 15-day cooling-off period shall not
apply and the union may take action immediately.
2) During the cooling-off period, it shall be the duty
of the Ministry to exert all efforts at mediation and
conciliation to effect a voluntary settlement. Should
the dispute remain unsettled until the lapse of the
requisite number of days from the mandatory filing
of the notice, the labor union may strike or the
employer may declare a lockout.
The purpose of the cooling-off period is to provide
an opportunity for mediation and conciliation. The
waiting period, on the other hand, is intended to
provide opportunity for the members of the union
or the management to take the appropriate remedy
in case the strike or lockout vote report is false or
inaccurate. The observance of both periods must be
complied with, although a labor union may take a
strike vote and report the same within the statutory
cooling-off period. The cooling-off and 7-day strike
ban provisions of law constitute a valid exercise of
police power of the State. (National Federation of
Sugar Workers vs. Ovejera, 1982)
The 7-day strike ban is a distinct and separate
requirement from the cooling-off period prescribed
by law. The latter cannot be substituted for the
former. Both periods are mandatory. (Gold City
Integrated Port Service, Inc. vs. NLRC, 1995)
The language of the law leaves no room for doubt
that the cooling-off period and the seven-day strike
ban after the strike-vote report were intended to be
mandatory and in case of union busting where the
existence of the union is threatened, it is only the
15-day cooling-off period that may be dispensed
with. (Sukhothai Cuisine & Restaurant v CA, 2006)
4)

Strike vote

Art. 263 (f):


A decision to declare a strike must be approved by
a majority of the total union membership in the
bargaining unit concerned, obtained by secret ballot
in meetings or referenda called for that purpose.
A decision to declare a lockout must be approved
by a majority of the board of directors of the
corporation or association or of the partners in a
partnership, obtained by secret ballot in a meeting
called for that purpose.
The decision shall be valid for the duration of the
dispute based on substantially the same grounds

considered when the strike or lockout vote was


taken.
The Department may, at its own initiative or upon
the request of any affected party, supervise the
conduct of the secret balloting.
In every case, the union or the employer shall
furnish the Department the results of the voting at
least 7 days before the intended strike or lockout,
subject to the cooling-off period herein provided.
5)

Strike Vote Report

The result of the strike or lockout voting should be


reported to the NCMB at least 7 days before the
intended strike or lockout. The seven-day period is
intended to give the DOLE an opportunity to verify
whether the projected strike has the approval of the
majority of the union members.
Query: If the strike vote was reported within the
cooling-off period, how should the 7-day period be
computed?
There are at least 2 interpretations:
(1) The cooling off period and the 7-day period are
mutually exclusive. Thus, in the case of
Capitol Medical Center v. NLRC, the Court
held that when the strike vote is conducted
within the cooling-off period, the 7-day
requirement shall be counted from the day
following the expiration of the cooling off
period.
(2) The cooling-off period and the 7-day
requirement may coexist. After all, the purpose
of the 7-day requirement is to give time for the
DOLE to verify if the projected strike is
supported by the majority. There is no reason to
add it to the cooling-off period.
Strike: Test of Legality
Legal strike
Purpose and Means Test
There must be concurrence between the validity of
the purpose of the strike and the means of
conducting it.
A strike is a legitimate weapon in the universal
struggle for existence. It is considered as the most
effective weapon in protecting the rights of the
employees to improve the terms and conditions of
their employment. But to be valid, a strike must be
pursued within legal bounds. The right to strike as
a means for the attainment of social justice is never
meant to oppress or destroy the employer. The law
provides limits for its exercise. Among such limits
are the prohibited activities under Art. 264,
particularly paragraph (e), which states that no
person engaged in picketing shall:
- commit any act of violence, coercion, or
intimidation or
- obstruct the free ingress to or egress from
the employer's premises for lawful purposes
or

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- obstruct public thoroughfares.
(Association of Independent Unions
Philippines (AIUP), et. al. v NLRC, 1999)

in

the

Even if the strike is valid because its objective or


purpose is lawful, the strike may still be declared
invalid where the means employed are illegal. (Phil.
Diamond Hotel and Resort, Inc. v. Manila Diamond
Hotel Employees Union, 2006)
Acts of violence in this jurisdiction, when committed
in carrying on a strike are not to be overlooked in
determining its legality or illegality. To overlook
these acts of violence would encourage abuses and
terrorism and subvert the purpose of the law which
provides for arbitration and peaceful settlement of
disputes. If a strike is unjustified as when it is
declared for trivial, unjust or unreasonable purpose,
the employer may not be compelled to reinstate the
strikers to their employment. More so, when the
strike is carried on illegally. (Philippine Marine
Officers Guild v. Cia. Maritima, 1968)
Guidelines and Balancing of Interest
(1) A strike otherwise valid, if violent in character,
may be placed beyond the pale.
(2) Care is to be taken especially where an unfair
labor practice is involved, to avoid stamping it
with illegality just because it is tainted by such
acts. To avoid rendering illusory the recognition
of the right to strike, responsibility in such a
case should be individual and not collective.
(3) A different conclusion would be called for if the
existence of force while the strike lasts is
pervasive and widespread, consistently and
deliberately resorted to as a matter of policy. It
could be reasonably concluded then that even if
justified as to ends, it becomes illegal because
of the means employed'.
(4) This is not by any means to condone the
utilization of force by labor to attain its
objectives. It is only to show awareness that in
labor conflicts, the tension that fills the air as
well as the feeling of frustration and bitterness
could break out in sporadic acts of violence.
(5) If there be in this case a weighing of interests
in the balance, the ban the law imposes on
unfair labor practices by management that
could provoke a strike and its requirement that
it be conducted peaceably, it would be, to
repeat, unjustified, considering all the facts
disclosed, to stamp the strike with illegality. It
is enough that individual liability be incurred by
those guilty of such acts of violence that call
for loss of employee status. Such an approach is
reflected in our recent decisions. (Shell Oil
Workers Union v. Shell Co. of the Phils, 1971)
Defense: Good faith-Strike
GENERAL RULE: A strike based on non-strikeable
grounds is illegal
EXCEPTION: Where the employees believe in good
faith that ULP acts exist so as to constitute a valid
ground to strike.

Although rejecting the argument that PNOC and its


subsidiaries were guilty of discrimination, the NLRC
reiterated the policy enunciated in several labor
cases "that a strike does not automatically carry the
stigma of illegality even if no unfair labor practice
were committed by the employer. It suffices if such
a belief in good faith is entertained by labor as the
inducing factor for staging a strike." The
presumption of legality prevails even if the
allegation of unfair labor practice is subsequently
found to be untrue, provided that the union and its
members believed in good faith in the truth of such
averment. (PNOC Dockyard v. NLRC, 1998)
In the instant case, petitioners believed in good faith
that in dismissing them upon request by the
federation, respondent company was guilty of unfair
labor practice in that it violated the petitioners
right to self-organization.
The strike was staged to protest respondent
companys act of dismissing the union officers. Even
if the allegations of unfair labor practice are
subsequently found out to be untrue, the
presumption of legality of the strike prevails.
(Malayang Samahan ng mga Manggagawa sa
Greenfield v. Ramos, 2000)
Caveat: Good Faith-Strike requires Rational Basis
A mere claim of good faith would not justify the
holding of a strike under the aforesaid exception as,
in addition thereto, the circumstances must have
warranted such belief. It is, therefore, not enough
that the union believed that the employer
committed acts of ULP when the circumstances
clearly negate even a prima facie showing to sustain
such belief. (Interwood Employees Assoc. v. Intl
Hardwood, 1956)
Caveat: Good Faith-Strike requires compliance
with Procedural Requirements
Even if the union acted in good faith in the belief
that the company was committing an unfair labor
practice, if no notice of strike and a strike vote were
conducted, the said strike is illegal. (First City
Interlink Transportation v. Roldan-Confesor)

4. Requisites of a valid lockout


Lockout: Procedural Requirements
a) Effort to bargain
Art. 264 (a):
1) No labor organization or employer shall declare a
strike or lockout without first having bargained
collectively in accordance with Title VII of this
Book...
b) Filing of notice of intention
Art. 263 (c), (d):
(1) In case of bargaining deadlocks, the duly
certified or recognized bargaining agent may
file a notice of strike or the employer may file a

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LABOR LAW REVIEWER


notice of lockout with the Department at least
30 days before the intended date thereof.
(2) In cases of unfair labor practice, the period of
notice shall be 15 days.
(3) In the absence of a duly certified or recognized
bargaining agent, the notice of strike may be
filed by any legitimate labor organization in
behalf of its members.
(4) The notice must be in accordance with such
implementing rules and regulations as the
Secretary may promulgate.
Book V Rule XXII Sec. 8:
Contents of Notice (3NS)
(1) Names and addresses of the employer and the
union involved
(2) Nature of the industry to which the employer
belongs
(3) Number of union members and of workers in the
bargaining unit
(4) Such other relevant data as may facilitate the
settlement of the dispute.
Additional Requirements
In cases of bargaining deadlocks: (UPCP)
(1) Statement of Unresolved issues in the bargaining
negotiations
(2) Written Proposals of the union
(3) Counterproposals of the employer
(4) Proof of a request for conference to settle the
differences.
In cases of ULP:
(1) Statement of Acts complained of
(2) Efforts taken to resolve the dispute amicably.
In case the notice does not conform with the
requirements, the regional branch of the NMCB shall
inform the concerned party of such fact.
Book V Rule XXII Sec. 9
Action on Notice:
Upon receipt of a valid notice of strike or
lockout, the NCMB, through its ConciliatorMediators, shall call the parties to a conference
the soonest possible time in order to actively
assist them to explore all possibilities for
amicable settlement.
The Conciliator-Mediator may suggest/offer
proposals as an alternative avenue for the
resolution of their disagreement/conflict which
may not necessarily bind the parties.
If conciliation/mediation fails, the parties shall
be encouraged to submit their dispute for
voluntary arbitration.
Effect of Illegal Lockout
Art. 264 (a), par. 3, 1st sentence
Any worker whose employment has been terminated
as a consequence of any unlawful lockout shall be
entitled to reinstatement with full backwages.

5. Requisites for lawful picketing

Regulation/restrictions, innocent third party rule


and liabilities
While peaceful picketing is entitled to protection as
an exercise of free speech, the courts are not
without power to confine or localize the sphere of
communication or the demonstration to the parties
of the labor dispute, including those with related
interest and to insulate establishments or persons
with no industrial connection or having interest
foreign to the context of the dispute. Liwayway
Publishing Co. v. Permanent Concrete Workers
Union (1981):

112

Thus, the right may be regulated at the instance of


third parties or 'innocent bystanders' if:
(1) it appears that the inevitable result of its
exercise is to create an impression that a labor
dispute with which they have no connection or
interest exists between them, and
(2) the picketing union or constitute an invasion of
their rights.
Regulation: Rationale
Mere innocent bystanders are entitled to seek
protection of their rights from the courts and the
courts may, accordingly, legally extend the same.
The picket is merely regulated to protect the rights
of third parties. If the law fails to afford said
protection, men will endeavor to safeguard their
rights by their own might, take the law in their own
hands, and commit acts which lead to breaches of
the law. This should not be allowed to happen."
An "innocent bystander," who seeks to enjoin a labor
strike, must satisfy the court that aside from the
grounds specified in Rule 58 of the Rules of Court, it
is entirely different from, without any connection
whatsoever to, either party to the dispute and, its
interests are totally foreign to the context thereof.
(MSF Tire and Rubber Inc. v. CA, 1999)
Absence of Employer-Employee Relationship:
Effect.
Picketing, peacefully carried out, is not illegal even
in the absence of employer-employee relationship,
for peaceful picketing is a part of the freedom of
speech guaranteed by the Constitution. (De Leon v.
National Labor Union, 1957)
Prohibited activities
Art. 264 (b):
No person shall:
a) Obstruct, impede, or interfere with, by force,
violence, coercion, threats or intimidation, any
peaceful picketing by employees during any labor
controversy or in the exercise of the right to selforganization or collective bargaining, or
b) Aid or abet such obstruction or interference.
Slowdown
A slowdown is inherently illicit and unjustifiable
because
while the employees continue to work,
94
they, at the same time, select what part of their
duties they perform. In essence, they work on their
own terms. (Ilaw at Buklod ng Manggagawa (IBM) v.
NLRC, 1991)

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6. Role of Peace Officers during Strike and
Picket
A. Escorting
Art. 264 (d)
No public official or employee, including officers and
personnel of the AFP or the Integrated National
Police, or armed person
a) shall bring in, introduce or escort in any
manner,
b) any individual who seeks to replace strikers in
entering or leaving the premises of a strike area, or
work in place of the strikers.
The police force shall keep out of the picket lines
unless actual violence or other criminal acts occur
therein: Provided, That nothing herein shall be
interpreted to prevent any public officer from taking
any measure necessary to maintain peace and order,
protect life and property, and/or enforce the law
and legal order.
B. Arrest and Detention of Law Violators
Art. 266
1) GENERAL RULE: No union members or union
organizers may be arrested or detained for
union activities without previous consultations
with the Secretary of Labor.
2) EXCEPTION:
a) On grounds of national security and public
peace, or
b) In case of commission of a crime
CONFLICT OF INTEREST:
(1) Insofar as practicable, no officer of the law shall
be allowed to render services in connection with
a strike or lockout:
a) if there is question or complaint as regards
his relationship by affinity or consanguinity
to any official/leader of the parties in the
controversy or
b) if he has financial or pecuniary interest
therein.

VIII. Procedure and Jurisdction


A. Labor Arbiter
B. National Labor Relations Commission (NLRC)
C. Bureau of Labor Relations (BLR) Med-Arbiters
D. National Conciliation and Mediation Board
E. DOLE Regional Directors
F. DOLE Secretary
G. Voluntary Arbitrators
H. Court of Appeals
I. Supreme Court
J. Prescription of Actions

A. Labor Arbiter
a.

Jurisdiction

Except as otherwise provided under the Code the


Labor Arbiters shall original and exclusive
jurisdiction to hear and decide:
(1) Unfair labor practices cases;
(2) Termination disputes;

(3) 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;
(4) Claims for actual, moral, exemplary and other
forms of damages arising from the employeremployee relations;
(5) Cases arising from any violation of Art. 264 of
this Code, including questions involving the
legality of strikes and lockouts;
(6) Except claims for Employees Compensation,
Social Security, 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)
regardless
of
whether
accompanied with a claim for reinstatement.
(Art. 217)
(7) Money claims arising out of employer-employee
relationship or by virtue of any law or contract,
involving claims for actual, moral, exemplary an
other forms of damages, as well as employment
termination of OFWs;
(8) Wage distortion disputes in unorganized
establishments not voluntarily settled by the
parties. (Art. 124)
(9) Enforcement of compromise agreements when
there is non-compliance by any of the parties.
(Art. 227)
(10) Other cases as may be provided by law.
Exclusive and Original Jurisdiction subject to
Articles 261 and 262
A case under Art 217 may be lodged instead with a
voluntary arbitrator. The policy of the law is to give
primacy to voluntary modes of settling dispute.
Jurisdiction on Money Claims
A money claim arising from ER-EE relations,
excepting SSS, ECC/Medicare claims, is within the
jurisdiction of a labor arbiter if:
(1) The claim,
regardless of amount, is
accompanied with a claim of reinstatement; or
(2) The claim exceeds P5,000, whether or not there
is a claim for reinstatement.
Note: The money claim must arise from law or
contracts other then CBA.
Money arising from an implementation of the CBA
Voluntary Arbitrator or Panel of Voluntary
Arbitrators have jurisdiction
Money claims which does not arise from ER-EE
relations Regular Courts have jurisdiction.
Nature of Proceeding: Non-litigious. The Labor
Arbiter is not bound by the technical rules of
procedure.
The Labor Arbiter shall use every and all reasonable
means to ascertain the facts in each speedily and
objectively. (Art. 221)

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Employer-employee relationship is a jurisdictional
requisite, absent of which, the NLRC has no
jurisdiction to hear and decide the case. (HawaiianPhilippine Company v. Gulmatico)
Venue: Regional Arbitration Branch (RAB) having
jurisdiction over the workplace of the complainant
or petitioner.
Workplace place or locality where the employee is
regularly assigned at the time the cause of action
arose.
In the case of field employees, ambulant or itinerant
workers, their workplace is (a) where they are
regularly assigned or (b) where they are supposed to
regularly receive their salaries and wages or work
instructions from, and report the results of their
assignment to their employers.
Some Rules on Venue
(1) Where 2 or more Regional Arbitration Branches
have jurisdiction over the workplace of the
complainant, that first which acquired
jurisdiction over the case shall exclude others.
(2) When venue is not objected to before the filing
of position papers, such issue shall be deemed
waived.
(3) Venue of an action may be transferred to a
different Regional Arbitration Branch upon
written agreement of the parties or upon order
of the LA in meritorious cases and on motion of
the proper party.
(4) Cases involving overseas Filipino workers may be
filed before the RAB having jurisdiction over the
place where the complainant resides or where
the principal office of any of the respondents is
situated.
b.

Effect of self-executing
reinstatement on backwages

order

of

An order for reinstatement entitles an employee to


receive his accrued backwages from the moment the
reinstatement order was issued up to the date when
the same was reversed by a higher court without
fear of refunding what he had received. (Garcia v.
Philippine Airlines, Inc., G.R. No.164856, January
20, 2009)
c.

Requirements to perfect appeal to NLRC

(1) The appeal should be filed within the


reglementary period;
(2) The Memorandum of Appeal should be under
oath;
(3) The appeal fee should be paid;
(4) There should be posting of cash or surety bond,
if judgment involves monetary award; and
(5) There should be proof of service to the adverse
party.

B. National Labor Relations


Commission (NLRC)
a.

Jurisdiction

NLRC divisions
Original Jurisdiction: over petitions for
injunction or temporary restraining order under
Art. 218 (e).
Exclusive Appellate Jurisdiction: over all cases
decided by labor arbiters (Art 217[b]) and the
DOLE regional directors under Art 129.
Period of Appeal (2005 NLRC Rules of Procedure)
From Labor Arbiter to NLRC: Decisions and
resolutions of the Labor Arbiter shall be final and
executory unless appealed to the Commission by any
or both parties within (10) calendar days from
receipt thereof
From Regional Director to NLRC pursuant to Art.
129: Decisions and resolutions of the Regional
Director shall be final and executory unless appealed
within 5 days from receipt thereof.
Note: If the 5th or 10th day falls on a Saturday,
Sunday, or a holiday, the last day shall shall be the
next working day.
Grounds of Appeal
(1) If there is prima facie evidence of abuse of
discretion on the part of the Labor Arbiter or
Regional Director;
(2) If the decision, resolution or order was secured
through fraud or coercion, including graft and
corruption;
(3) If made purely on questions of law; and/or
(4) If serious errors in the findings of fact are raised
which, if not corrected, would cause grave or
irreparable injury to the appellant
b.

Effect of NLRC reversal of Labor Arbiters


order of reinstatement

1 0 4if the order of reinstatement of the Labor


Even
Arbiter is reversed on appeal, it is obligatory on the
part of the employer to reinstate and pay the wages
of the dismissed employee during the period of
appeal until reversal by the higher court.
On the other hand, if the employee has been
reinstated during the appeal period and such
reinstatement order is reversed with finality, the
employee is not required to reimburse whatever
salary he received for he is entitled to such, more so
if he actually rendered services during the period.
(Garcia v. Philippine Airlines, Inc., 2009)
c.

Requirements to perfect appeal to Court


of Appeals

Requisites for Perfection of Appeal


(1) The appeal shall be:
Filed within the reglementary period;
Verified by the appellant himself in
accordance with Section 4, Rule 7 of the
Rules of Court;
In the form of a memorandum of appeal
which shall state the grounds relied upon
and the arguments in support thereof,

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LABOR LAW REVIEWER


the relief prayed for, and with a
statement of the date the appellant
received
the
appealed
decision,
resolution or order;
In three (3) legibly typewritten or printed
copies; and
Accompanied by (a) proof of payment of
the required appeal fee; (b) posting of a
cash or surety bond as provided in Section
6 of the 2005 NLRC Rules, (c) a certificate
of non-forum shopping; and (d) proof of
service upon the other parties.
(2) A mere notice of appeal without complying with
the other requisites aforestated shall not stop
the running of the period for perfecting an
appeal.
(3) The appellee may file with the Regional
Arbitration Branch or Regional Office where the
appeal was filed, his answer or reply to
appellants memorandum of appeal, not later
than 10 calendar days from receipt thereof.
Failure on the part of the appellee who was
properly furnished with a copy of the appeal to
file his answer or reply within the said period
may be construed as a waiver on his part to file
the same.
(4) Subject to the provisions of Article 218 of the
Labor Code, once the appeal is perfected in
accordance with these Rules, the Commission
shall limit itself to reviewing and deciding only
the specific issues that were elevated on
appeal.

C. Bureau of Labor Relations (BLR)


Med Arbiters
a. Jurisdiction (Original and Appellate)
Art. 226:
The Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the
Department of Labor and Employment shall have
original and exclusive authority to act, at their own
initiative or upon request of either or both parties,
on all inter-union and intra-union conflicts, and 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 collective bargaining agreements
which shall be the subject of grievance procedure
and/or voluntary arbitration.
The Bureau shall have fifteen (15) calendar days to
act on labor cases before it, subject to extension by
agreement of the parties.
Appellate Jurisdiction
BLR has the power to review the decision of the
Regional Director
Decisions rendered through its appellate power
are final and executory. Hence, the remedy of
the aggrieved party is to seasonably avail of the
special civil action of certiorari under Rule 65 of
the Rules of Court.

D. National Conciliation and


Mediation Board (NCMB)
a.

Conciliation vs. Mediation

Conciliation
An ADR mode of intervention by a neutral third
party, the Conciliator-Mediator, wherein the CM
takes an active role in assisting parties by trying to
keep disputants talking, facilitating other procedural
niceties, carrying messages back and forth between
the parties
Mediation
An ADR mode of intervention by a neutral third
party, the Conciliator-Mediator, wherein the CM
advises the parties or offers solutions or alternatives
to the problems with the end in view of assisting
them towards voluntarily reaching their own
mutually acceptable settlement of the dispute.
b.

Preventive Mediation

Preventive mediation case refers to the potential


or brewing labor dispute which is the subject of a
formal or informal request for conciliation and
mediation assistance sought by either or both parties
in order to remedy, contain or prevent its
degeneration into a full blown dispute through
amicable settlement.

E. DOLE regional directors


1. Small money claims
Art. 129. Recovery of wages, simple money claims
and other benefits.
Upon complaint of any interested party,
the Regional Director of the Department of
Labor and Employment or any of the duly
authorized hearing officers of the
Department
is empowered, through summary proceeding
and after due notice,
to hear and decide any matter involving the
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
househelper under this Code, arising from
employer-employee relations:
Provided, That such complaint does not
include a claim for reinstatement:
Provided, further, That the aggregate
money claims of each employee or
househelper do not exceed five thousand
pesos (P5,000).
The Regional Director or hearing officer shall decide
or resolve the complaint within thirty (30)
calendar days from the date of the filing of the
same.
Any sum thus recovered on behalf of any
employee or househelper pursuant to this

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LABOR LAW REVIEWER


Article shall be held in a special deposit
account by, and shall be paid, on order of
the Secretary of Labor and Employment or
the Regional Director directly to the
employee or househelper concerned.
Any such sum not paid to the employee or
househelper, because he cannot be located
after diligent and reasonable effort to
locate him within a period of three (3)
years, shall be held as a special fund of the
Department of Labor and Employment to be
used exclusively for the amelioration and
benefit of workers.
xxx
The Secretary of Labor and Employment or his duly
authorized representative may supervise the
payment of unpaid wages and other monetary
claims and benefits, including legal interest,
found owing to any employee or househelper
under this Code.

F. DOLE secretary
1. Visitorial and enforcement powers
Article 128. Visitorial and enforcement power.
The Secretary of Labor and Employment or his duly
authorized
representatives,
including
labor
regulation officers, shall have access to employers
records and premises at any time of the day or night
whenever work is being undertaken therein, and the
right to copy therefrom, 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 this Code and of any
labor law, wage order or rules and regulations issued
pursuant thereto.
Notwithstanding the provisions of Articles 129 and
217 of this Code to the contrary, and in cases where
the relationship of employer-employee still exists,
the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to
issue compliance orders to give effect to the labor
standards provisions of this Code and other labor
legislation based on the findings of labor
employment and enforcement officers or industrial
safety engineers made in the course of inspection.
The Secretary or his duly authorized representatives
shall issue writs of execution to the appropriate
authority for the enforcement of their orders,
except in cases where the employer contests the
findings of the labor employment and enforcement
officer and raises issues supported by documentary
proofs which were not considered in the course of
inspection. (As amended by Republic Act No. 7730,
June 2, 1994).
Article 37. Visitorial Power. The Secretary of Labor
or his duly authorized representatives may, at any
time, inspect the premises, books of accounts and
records of any person or entity covered by this Title,
require it to submit reports regularly on prescribed
forms, and act on violation of any provisions of this
Title.

Article 274. Visitorial power. The Secretary of


Labor and Employment or his duly authorized
representative is hereby empowered to inquire into
the financial activities of legitimate labor
organizations upon the filing of a complaint under
oath and duly supported by the written consent of
at least twenty percent (20%) of the total
membership of the labor organization concerned
and to examine their books of accounts and other
records to determine compliance or non-compliance
with the law and to prosecute any violations of the
law and the union constitution and by-laws:
Provided, That such inquiry or examination shall not
be conducted during the sixty (60)-day freedom
period nor within the thirty (30) days immediately
preceding the date of election of union officials. (As
amended by Section 31, Republic Act No. 6715,
March 21, 1989)
1. Power to suspend effects of termination
Article 277 (b): 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 the
implementation of a mass lay-off.

G. Voluntary Arbitrators
1. Submission Agreement
Written agreement jointly submitted by parties to
the voluntary arbitrator which contains:
The parties statement/agreement to
submit to arbitration,
The issues to be resolved,
The agreement to abide by the decision or
award, the conduct of proceedings,
payment of arbitrator's fees, etc.
2. Rule 43, Rules of Court
The decision of a Voluntary Arbitrator or panel of
Voluntary Arbitrators is appealable by ordinary
appeal under Rule 43 of the Rules of Civil
Procedure directly to the Court of Appeals.
RULE 43, Appeals From the Court of Tax
Appeals and Quasi-Judicial Agencies to the
Court of Appeals
Section 1. Scope. This Rule shall apply to
appeals from judgments or final orders of the
Court of Tax Appeals and from awards,
judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the
exercise of its quasi-judicial functions. Among
these agencies are the Civil Service Commission,
Central Board of Assessment Appeals, Securities
and Exchange Commission, Office of the
President, Land Registration Authority, Social
Security Commission, Civil Aeronautics Board,
Bureau of Patents, Trademarks and Technology
Transfer, National Electrification Administration,

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Energy
Regulatory
Board,
National
Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657,
Government Service Insurance System, Employees
Compensation Commission, Agricultural Invention
Board, Insurance Commission, Philippine Atomic
Energy Commission, Board of Investments,
Construction Industry Arbitration Commission,
and voluntary arbitrators authorized by law. (n)

H. Court of Appeals
1.

Rule 65, Rules of Court

I. Supreme Court
Therefore, all references in the amended Section
9 of B.P. No. 129 to supposed appeals from the
NLRC to the Supreme Court are interpreted and
hereby declared to mean and refer to petitions
for certiorari under Rule 65. Consequently, all
such petitions should hence forth be initially filed
in the Court of Appeals in strict observance of the
doctrine on the hierarchy of courts as the
appropriate forum for the relief desired. (St.
Martin Funeral Home vs. NLRC, 1998)
1.

Rule 45, Rules of Court

RULE 45, Appeal by Certiorari to the Supreme


Court
Section 1. Filing of petition with Supreme Court.
A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court
of Appeals, the Sandiganbayan, the Regional Trial
Court or other courts whenever authorized by
law, may file with the Supreme Court a verified
petition for review on certiorari. The petition
shall raise only questions of law which must be
distinctly set forth. (1a, 2a)
Appeal from CA to SC should be under Rule 45
(Petition for Review on Certiorari) and not Rule 65
(Special Civil Action for Certiorari). (Sea Power
Shipping Enterprises, Inc. vs. CA, G. R. No.
138270, June 28, 2001)
Since the Court of Appeals had jurisdiction over the
petition under Rule 65, any alleged errors
committed by it in the exercise of its jurisdiction
would be errors of judgment which are reviewable
by timely appeal and not by a special civil action
of certiorari. If the aggrieved party fails to do so
within the reglementary period, and the decision
accordingly becomes final and executory, he cannot
avail himself of the writ of certiorari, his
predicament being the effect of his deliberate
inaction. (Tirazona v Phil EDS Techno-Service Inc,
2009)

J. Prescription of Actions
Article 201. Prescriptive period. No claim for
compensation shall be given due course unless

said claim is filed with the System within three


(3) years from the time the cause of action
accrued. (As amended by Section 5, Presidential
Decree No. 1921)
1. Money claims
Art. 291. Money claims. All money claims arising
from employer-employee relations accruing during
the effectivity of this Code shall be filed within
three (3) years from the time the cause of action
accrued; otherwise they shall be forever barred.
All money claims accruing prior to the effectivity of
this Code shall be filed with the appropriate entities
established under this Code within one (1) year from
the date of effectivity, and shall be processed or
determined in accordance with the implementing
rules and regulations of the Code; otherwise, they
shall be forever barred.
Workmens compensation claims accruing prior to the
effectivity of this Code and during the period from
November 1, 1974 up to December 31, 1974, shall be
filed with the appropriate regional offices of the
Department of Labor not later than March 31, 1975;
otherwise, they shall forever be barred. The claims
shall be processed and adjudicated in accordance
with the law and rules at the time their causes of
action accrued.
The Labor Code has no specific provision on when a
monetary claim accrues. Thus, again the general law
on prescription applies. Article 1150 of the Civil
Code provides that
Article 1150. The time for prescription for all kinds
of actions, when there is no special provision which
ordains otherwise, shall be counted from the day
they may be brought.
The day the action may be brought is the day a
claim started as a legal possibility. In the present
case, the day came when petitioner learned of
Asiakonstrukts deduction from his salary of the
amount of advances he had received but had, by his
claim, been settled, the same having been reflected
in his payslips, hence, it is assumed that he learned
of it at the time he received his monthly paychecks.
(Anabe v Asian Const, et al., 2009)
2.

Illegal dismissal

In illegal dismissal cases, the employee concerned is


given a period of four years from the time of his
dismissal within which to institute a complaint. This
is based on Article 1146 of the New Civil Code which
states that actions based upon an injury to the rights
of the plaintiff must be brought within four years.
(Victory Liner, Inc. v Race, 2007)
Article 1146. The following actions must be
instituted within four years:
(1) Upon an injury to the rights of the plaintiff;

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(2) Upon a quasi-delict;
However, when the action arises from or out of
any act, activity, or conduct of any public officer
involving the exercise of powers or authority
arising from Martial Law including the arrest,
detention and/or trial of the plaintiff, the same
must be brought within one (1) year. (As
amended by PD No. 1755, Dec. 24, 1980.)
3. Unfair labor practice
Art. 290. Offenses. Offenses penalized under this
Code and the rules and regulations issued pursuant
thereto shall prescribe in three (3) years. All unfair
labor practice arising from Book V shall be filed with
the appropriate agency within one (1) year from
accrual of such unfair labor practice; otherwise,
they shall be forever barred.
Article 247. Concept of unfair labor practice
and procedure for prosecution thereof. (last
par.)
No criminal prosecution under this Title may be
instituted without a final judgment finding that
an unfair labor practice was committed, having
been first obtained in the preceding paragraph.
During the pendency of such administrative
proceeding, the running of the period of
prescription of the criminal offense herein
penalized shall be considered interrupted:
Provided, however, that the final judgment in the
administrative proceedings shall not be binding in
the criminal case nor be considered as evidence
of guilt but merely as proof of compliance of the
requirements therein set forth. (As amended by
Batas Pambansa Bilang 70, May 1, 1980 and later
further amended by Section 19, Republic Act No.
6715, March 21, 1989)
4. Offenses penalized by the Labor Code and IRR
issued pursuant thereto
Art. 290. Offenses. Offenses penalized under this
Code and the rules and regulations issued pursuant
thereto shall prescribe in three (3) years.
5.
s

Prescriptive period of illegal recruitment case

Section 7. Prescription. Illegal recruitment cases


under this Rule shall prescribe in five (5) years;
Provided, however, that illegal recruitment cases
involving economic sabotage shall prescribed in
twenty (20) years. (RA 8042)

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ANNEX A
CAUSE
Serious Misconduct

TERMINABLE EXAMPLES
Teacher pressuring colleague to change a
failing grade to a passing one plus
misrepresentation. (Padilla vs. NLRC,
1997)
Obscene, insulting or offensive words
against superior. (Asian Design and
Manufacturing vs. Hon. Deputy Minister
of Labor, 1986)
Sleeping in post, gross insubordination,
dereliction of duty, challenging a superior
to a fight. (Luzon Stevedoring vs. CIR,
1965)
Immorality / Immoral Conduct: conduct
which is so willful, flagrant or shameless
as to show indifference to the opinion of
good and respectable members of the
community; such conduct must be grossly
immoral so corrupt as to constitute a
crime or so unprincipled as to be
reprehensible to a high degree or
committed under such scandalous or
revolting circumstances as to shock the
common decency. (Narag vs. Narag,
1998); to be a valid cause for dismissal,
the immoral act must render incapable
performance of duties/services or
calculated at injuring employers
business.
When a teacher engages in extramarital relationship, especially
when the parties are both married.
(Santos v. NLRC, 1998)

Willful Disobedience

Violation of Company Rules: Company


policies and regulations, unless shown to
be grossly oppressive or contrary to law,
are generally valid and binding on the
parties and must be complied with until
finally revised or amended, unilaterally or
preferably through negotiation, by
competent authority. (Aparente, Sr. v.
NLRC, 2000)
Disobeying a Valid Order to Transfer
- test of validity:
Not unreasonable
Not inconvenient
Not prejudicial
No demotion in rank
No diminution in salary,
privileges or benefits (Blue Dairy
vs. NLRC, 1999)
- Mere inconvenience does not
necessarily invalidate a transfer order;
unreasonable inconvenience makes the
order invalid. (Homeowners Savings and
Loan Assoc. vs. NLRC, 1996)
- Reasonableness pertains to the
character of orders and to the manner

NON-TERMINABLE EXAMPLES
Borrowing Money: as a general rule, it
is neither dishonest, nor immoral, nor
illegal, much less criminal (Medical
Doctors, Inc. [Makati Medical Center]
v. NLRC) except
it becomes a serious misconduct
when reprehensible behavior such
as the use of a trust relationship as
a leverage for borrowing money is
involved.
(Pearl
S.
Buck
Foundation, Inc. v. NLRC, 1990)

119

Love: teacher falling in love with


student without a showing that the
former took advantage of her position
to court her student. Yielding to this
gentle and universal emotion is not to
be so casually equated with immorality.
The deviation of the circumstances of
their marriage from the usual societal
pattern cannot be considered as a
defiance of contemporary social mores
(Chua-Qua v. Clave, 1990)

50
Assertion of employees right not to
be made to work outside of what he
had been hired to do. (Tierra
International Production Corp. v. NLRC,
1996)
Refusing
a
promotion,
since
promotion is in the nature of a gift or
reward. (PT&TC vs. CA, 2003)
Disobeying an Invalid Order to
Transfer: an invalid transfer
amounts to constructive dismissal;
it is invalid when it fails test of
validity. (refer to the adjacent
column for the test)

LABOR LAW REVIEWER


CAUSE

Gross and Habitual Neglect

TERMINABLE EXAMPLES
in which they are made. (Escobin vs.
NLRC, 1998)
Habitual tardiness and absenteeism
(Manila Electric Co. v. NLRC, 1996)
Abandonment the deliberate and
unjustified refusal of an Employee to
resume his employment. (Nueva Ecija
Electric Cooperative v. NLRC, 2005)
Requisites: failure to report to work
or absence w/o valid reason
Clear intent to sever EmployeeER
relationship via overt acts. (Labor v
NLRC, 1995; Floren Hotel v. NLRC,
2005; Leonardo v. NLRC, 2000)
o CANNOT be lightly inferred,
much less legally presumed from
certain equivocal acts such as
interim employment. (Hacienda
Dapdap v. NLRC, 1998)
Bank Employee delivered newly approved
credit cards to a total stranger without
verification protocol.

Fraud or Willful Breach of


Trust

Commission of a crime or
offense against Employer

Analogous Causes

Dishonesty:
Custodian of petty cash fund
reimbursed another employee for
services the latter did not
render. (Naguit v. NLRC, 2003)
Falsification of time cards. (San
Miguel vs. NLRC, 1989)
Theft of company property.
(Firestone Tire and Rubber Co.
vs. Lariosa, 1987)
Theft; the employee here was convicted
after she won her case for illegal
dismissal. In view of the employees
conviction, the decision of the NLRC
which had already become final and
executory calling for her reinstatement
and the payment of back wages should
not now be enforced. Otherwise, she
would in effect be undeservedly rewarded
when she should instead be punished for
her offense. (Sampaguita Garments
Corp. v. NLRC, 1994)
Quarrelsome Bossy: an Employee's
attitude problem is a valid ground for
dismissal, equivalent to loss of trust and
confidence; an Employee who cannot get
along with his fellow co-EEs is detrimental
to the company for he can upset and
restrain the working environment.
(Heavylift Manila, Inc. v. CA)
Conviction Moral Turpitude: Violation
of a company rule prohibiting the
infliction of harm or physical injury
against any person under the particular
circumstances provided for in the same
rule may be deemed analogous to serious

NON-TERMINABLE EXAMPLES

Simple negligence (RDS Trucking v.


NLRC, 1998) or unsatisfactory
performance (Oreta vs. NLRC, 1989)

120

Mere involvement in an accident,


absent any showing of fault or
recklessness on the part of the
Employee, is NOT a valid ground for
dismissal. (Paguio Transport Corp. v.
NLRC, 1998)
Filing a complaint of illegal dismissal
is inconsistent with abandonment;
Except when Employee prays for
separation
pay
instead
of
reinstatement (Jo vs. NLRC, 2000)
No Abandonment:
- Mere absence from work (Mendoza v.
NLRC, 1999)
- Going home to have dinner;
employees do not need to take their
meals within the company premises.
(PAL v. NLRC, 1999)
- Leaving his workplace to relieve
himself (Dimabayo v. NLRC, 1999)
Employee is not in a position of trust
and confidence.

51

Probable Cause: Although after


preliminary investigation probable
cause has been found and the accused
has been detained, this is NOT legal
basis for immediate termination of
employment. (Standard Electric
Manufacturing Corp. v. Standard
Electric Union, 2005)
Conviction Moral Turpitude:
Conviction of a crime involving moral
turpitude is not one of these justifiable
causes.
Not under fraud/willful breach
since the crime was unrelated

LABOR LAW REVIEWER


CAUSE

TERMINABLE EXAMPLES
misconduct. (Oania v. NLRC, 1995)
Gross inefficiency is closely related to
gross neglect for both involve specific
acts or omission on the part of the
employee resulting in damage to the
employer or to his business. (Lim v.
NLRC, 1996)
Past Offenses: Previous offenses may be
so used as valid justification for dismissal
from work only if the infractions are
related to the subsequent offense upon
which basis the termination of
employment is decreed. (Stellar
Industrial Service, Inc. v. NLRC, 1996;
La Carlota Planters Assn. v. NLRC, 1998)
Professional Training / Residency
Training: a residency or resident
physician position in a medical specialty is
never a permanent one. Residency
connotes training and temporary status. It
is the step taken by a physician right after
post-graduate internship (and after
hurdling the Medical Licensure
Examinations) prior to his recognition as a
specialist or sub-specialist in a given
field.
right to security of tenure only to
the
extent
that
they
periodically
make
the
grade.(Felix
v.
Buenaseda,
1995)

NON-TERMINABLE EXAMPLES
to the performance of the
employee's function.
Not under commission of crime
since it was not directed at
Employer or his family or
representative.
Analogous causes must have an
element similar to those found
in the specific just cause
enumerated under Article 282.
Clearly lacking in the ground
invoked by petitioner is its
relation to his work or to his
employer. (IRRI v. NLRC,
1993)
In IRRI v. NLRC (1993),
homicide
outside
IRRI
(employer)
complex
after
office hours and against a nonIRRI employee.
Courtesy Resignation Resignation
must be voluntary. Adding the word
"courtesy" did not change the essence
of resignation. That courtesy
resignations were utilized in
government reorganization did not
give private respondent the right to
use it as well in its own
reorganization and rehabilitation
plan. (Batongbacal vs. Associated
Bank, 1988)

121

CRIMINAL LAW REVIEWER


ANNEX B: COMPARISON BETWEEN SSS AND GSIS
SSS
RA 1161 as amended by RA 8282: Social Security Act
of 1997
Employer any person, natural or juridical, domestic
or foreign, who carries on in the Philippines any
trade business, industry, undertaking, and uses the
services of another person who is under his orders as
regards the employment, except those considered as
employer under the GSIS. A self-employed person
shall be both employer and employee at the same
time.

Enabling law

Employee any person who performs services for an


employer in which either or both mental and
physical efforts are used and who receives
compensation for such services, where there is an
employeremployee relationship; also, a selfemployed person who is both employee and
employer at the same time

Definition
Terms

of

Self-employed any person whose income is not


derived from employment, including, but not limited
to:
self-employed professionals;
partners and single proprietors of businesses;
actors,
directors,
scriptwriters,
news
correspondents not considered as employees
under the above definition;
athletes, coaches, trainers, jockeys; and
individual farmers and fishers.
Dependents:
Legal spouse entitled by law to receive support;
Child unmarried, not gainfully employed, and
below 21 or
Child over 21 if he or she became permanently
incapacitated and incapable of self-support,
physically or mentally,; child may be legitimate,
legitimated, legally adopted, or illegitimate;
Parent who is receiving regular support.
Beneficiaries
Primary
Dependent spouse until remarriage (see
above);
Dependent
children
(see
above);
illegitimate children are entitled only to
50% of the share of legitimate children
unless there are no legitimate children, in
which case, they get 100%.
Secondary shall only receive when the primary
beneficiaries are absent: Dependent parents
Other any other person designated by the
member as his/her secondary beneficiary.
Compensation all actual remuneration for
employment, including living allowance, as well as
the cash value of any remuneration paid in any
medium other than cash except that portion already
above the max salary credit under Sec. 18 of the
Act.

GSIS
RA 8291 amending PD 1146

Employer National government, its


political subdivisions, branches,
agencies or instrumentalities, including
government-owned or controlled
corporations and financial institutions
with original charters (GOCCs);
constitutional commissions; and
judiciary
Employee any person receiving
compensation while in service of an
employer whether by election or
appointment, irrespective of status of
appointment; baranggay officials; and
sangguniang officials
Note: No counterpart for self-employed.

Same except that a child here is below


18

Same except that RA 8291 does not


distinguish share of legitimate and
illegitimate children

Compensation basic pay received


excluding per diems, bonuses, overtime,
honoraria,
allowances
and
other
emoluments not integrated into the
basic pay under existing laws.

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CRIMINAL LAW REVIEWER


Compulsory
Employers as defined above;
Employees not over 60 years including household
helpers with at least P1,000 monthly pay; and
Self-employed.
Voluntary
Spouses who devote full time to managing
household and family affairs;
OFWs recruited by foreign-based employers;
Employees already separated from employment
or those self-employed with no realized income
for a given month, who chose to continue with
contributions to maintain right to full benefit.

Coverage

Effective Date
of Coverage

Summary
Benefits

of

Effects
of
separation
from
employment
Dispute
Settlement
Prescriptive
Period

Note:
Foreign
governments,
international
organizations or their wholly owned instrumentality
employing workers in the Philippines may enter into
an agreement with the Philippine government to
include their employees in the SSS except those
already covered by their civil service retirement
system.
Employer: 1st day of operation
Employee: 1st day at work
Self-employed: upon registration with SSS
a) Monthly pension
b) Dependents pension
c) Retirement benefits
d) Permanent disability benefits
e) Death benefits
f) Funeral benefits
g) Loan Social Security Commission Resolution No.
669. Moreover, several SSS-issued circulars such
as Circular No. 21-P and No. 52 pertain to the
treatment of salary loans, sometimes providing
for more flexible payment terms or condonation
for delinquent payers; Santiago v. CA and SSS,
GR # L-39949 (1984) resolved an issue involving
the treatment of salary loan repayments; SSS
website also shows loans
h) Sickness benefits
i) Maternity leave benefits
(1) Employers contribution, and
(2) Employees obligation to pay contribution both
cease at the end of the month of
separation;
(3) EE shall be credited with all contributions paid
on his behalf and entitled to all benefits set
forth by the law.
Social Security Commission CA (Rule 43; questions
of law and fact)
SC (Rule 45; questions of law
only)
20 years

Public sector employees below the


compulsory retirement age of 65.
Exceptions:
a. AFP and PNP;
b. Members of the Judiciary and
Constitutional Commissions who are
covered only by life insurance as
they have separate retirement
schemes;
c. Contractual employees with no
employee-employer
relationship
with the agency they serve.

a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)

Monthly pension
Retirement benefits
Permanent disability benefits
Death Benefits
Funeral benefits
Loan GSIS website provides for this
Temporary
disability
benefits
(similar to sickness)
Separation benefits
Unemployment benefits Sec 11
Survivorship benefits
Life insurance benefits

Note: Judiciary and Constitutional


Commissions are entitled to life
insurance only.
Continued
membership
for
the
unemployed member; and entitlement
to whatever benefits he has qualified to
in the event of any compensable
contingency.
GSIS
CA (Rule 43)
SC (Rule 45);
appeal does not stay execution.
4 years

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