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Table of Contents

Heading 1...................................................................................................................................3
Heading 2...............................................................................................................................3
Heading 3...........................................................................................................................3
Frequently Asked Questions......................................................................................................4
General Provisions.................................................................................................................4
Labor Standards.....................................................................................................................6
Book One: Pre-Employment..............................................................................................6
Book Two: Human Resources Development.....................................................................6
Book Three: Conditions of Employment...........................................................................7
Labor Relations....................................................................................................................15
Book Five: Labor Relations.............................................................................................16
Book Six: Post-Employment............................................................................................27
Book Seven: Transitory and Final Provisions..................................................................34
Social Legislation.................................................................................................................35
2007 Bar Questions and Answers.............................................................................................39
Bar-Type Questions..................................................................................................................45
Questions and Answers............................................................................................................57
Case Doctrines..........................................................................................................................76
Preliminary Title...................................................................................................................76
Book One: Pre-Employment................................................................................................76
Book Two: Human Resources Development.......................................................................76
Book Three: Conditions of Employment.............................................................................77
Employer-Employee Relationship...................................................................................77
Labor-Only Contracting and Job Contracting..................................................................79
Worker Preference in Case of Bankruptcy.......................................................................79
Book Five: Labor Relations.................................................................................................80
Jurisdiction of Labor Arbiters..........................................................................................80
Technical Rules Not Binding and Prior Resort to Amicable Settlement..........................80
Bureau of Labor Relations...............................................................................................81
Registration and Cancellation..........................................................................................82
Rights of Legitimate Labor Organizations.......................................................................82
Right to Self-Organization...............................................................................................83
Certification Election.......................................................................................................83
Unfair Labor Practice.......................................................................................................83
Collective Bargaining.......................................................................................................84
Strikes and Lockouts........................................................................................................84
Assumption of Jurisdiction by the Secretary of Labor.....................................................85
Book Six: Post-Employment................................................................................................85
Regular Employment.......................................................................................................85
Casual Employment.........................................................................................................86
Project Employment.........................................................................................................86
Seasonal Employment......................................................................................................86
Fixed-Term or Fixed-Period Employment.......................................................................87
Probationary Employment...............................................................................................87
Termination by Employer.................................................................................................87
Termination by Employee................................................................................................88
Employment Not Deemed Terminated.............................................................................88
Retirement From Service.................................................................................................89
Management Prerogative..................................................................................................89
Book Seven: Transitory and Final Provisions......................................................................89
Social Legislation.................................................................................................................90
Social Security Act of 1997 (R.A. 8282).........................................................................90
Government Service Insurance Act of 1997 (R.A. 8291)................................................90
13th Month Pay (P.D. 851)................................................................................................90
Tally of Frequently Asked Questions (1990-2007)..................................................................91

Frequently Asked Questions
Source: U.P. Law Center and Philippine Association of Law Schools

General Provisions
Differentiate labor standards law from labor relations law. Are the two mutually exclusive?
Labor standards law is that which sets out the minimum requirements prescribed by existing laws,
rules and regulations relating to wages, hours of work, cost-of-living allowance, and other monetary
and welfare benefits, including occupational safety, and health standards (Batong Buhay Gold
Mines, Inc. v. Dela Serna, G.R. No. 86963, August 6, 1999).
On the other hand, labor relations law is that labor law which defines the status, rights, and duties
and the institutional mechanisms that govern the individual and collective interactions of employers,
employees or their representatives.
Labor standards laws and labor relations laws are not mutually exclusive; they complement each
other. For instance, the grievance machinery is a labor relations matter, but very often the subject of
complaint is labor standards such as unpaid overtime work. Figuratively, one may think of labor
standards as the substance to be processed while labor relations is the mechanism that processes
the substance (Azucena, 2007).
Is there any distinction between labor legislation and social legislation? Explain.
YES. Labor legislation consists of statutes, regulations and jurisprudence governing the relations
between capital and labor, by providing for certain employment standards and a legal framework for
negotiating, adjusting and administering those standards and other incidents of employment. On the
other hand, Social legislation composes of laws that provide particular kinds of protection or benefits
to society or segments thereof in furtherance of social justice. In that sense, labor laws are
necessarily social legislation. Examples of social legislation are the agrarian reform law, social
security laws, and even the Labor Code provisions on State Insurance Fund to cover work-related
injuries and occupational diseases (Azucena, 2007).
May social justice as a guiding principle in labor law be so used by the courts in sympathy
with the working man if it collides with the equal protection clause of the Constitution?
YES. The State is bound under the Constitution to afford full protection to labor; and when
conflicting interests collide and they are to be weighed on the scales of social justice, the law should
accord more sympathy and compassion to the less privileged working man. (Fuentes vs. NLRC,
G.R. No. 110017, January 2, 1997) However, it should be borne in mind that social justice ceases
to be an effective instrument for the equalization of the social and economic forces by the State
when it is used to shield wrongdoing (Corazan Jamer vs. NLRC, G.R. No. 112630, September
5 1997).
NO. Social justice as a guiding principle in law may not be used by the courts if it collides with the
equal protection clause of the Constitution. Social justice is not a magic wand applicable in all
circumstances. Not all labor cases may be automatically decided in favor of the worker. Management
also has rights which are entitled to recognition and protection; justice must be dispensed according
to facts and the law; and social justice is not designed to destroy nor oppress the employer.
What are the salient features of the protection to labor provision of the Constitution?
The Constitution in Article XIII, Section 3 provides:
The State shall afford protection to labor, local and overseas, organized unorganized.
The State shall afford protection to labor by promoting full employment and equality of
employment opportunities for all.
Workers are entitled to security of tenure, humane conditions of work and a living wage.
The State shall guarantee the right of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike, in
accordance by law.
Workers 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 setting labor disputes, including
conciliation, and shall enforce mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers recognizing the
right to its just share in the fruits of production and the right of enterprises to reasonable
returns on investments, and to expansion and growth.
Harbor View Hotel has an existing Collective Bargaining Agreement (CBA) with the union of
rank-and-file employees consisting, among others, of bartenders, waiters, roomboys,
housemen and stewards. During the lifetime of the CBA, Harbor View Hotel, for reasons of
economy and efficiency, decided to abolish the position of housemen and stewards who do
the cleaning of the hotels public areas. Over the protest of the Union, the Hotel contracted out
the aforementioned job to the City Service Janitorial Company, a bona fide independent
contractor which has a substantial capital in the form of janitorial tools, equipments,
machineries and competent manpower.
Is the action of the Harbor View Hotel legal and valid?
YES. An employer is free to regulate, according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of work,
tools to be used, processes to be followed, discipline, dismissal and recall of workers. (San Miguel
Brewery Sales v. Ople, G.R. No. L-53515, February 8, 1989) Management prerogatives,
however, are subject to limitations provided by: (1) law; (2) contract or collective bargaining
agreements; and (3) general principles of fair play and justice (Mendoza v. Rural Bank of
Lucban, G.R. No. 155421, July 7, 2004).
The action of the Harbor View Hotel is legal and valid. Contracting out services or functions being
performed by union members is not illegal per se. In fact, it is the prerogative of management to adopt
cost-saving measures to ensure economy and efficiency. Contracting out services or functions being
performed by union members becomes illegal only when it interferes with, restrains or coerces
employees in the exercise of their right to self-organization under Art. 248(c).
Mr. Aristedes Epol was elected as President, Chief Executive Officer, and Board Chairman
of Transnational Insurance Corp. on May 31, 1988. At that time, he owned 51% of the
companys voting stock. Under the by-laws of the company he had a one year term of office
from June 1, 1988 to June 1, 1989. On July 15, 1988, Mr. Ramos agreed with the other
stockholders to re-organize the composition of officers by having the board declare all
positions of officers vacant, elect a new set of officers, with himself as President and Chief
Executive. Mr. Epol would be re-elected only to the ceremonial post of Board Chairman, Mr.
Epol got a Notice of Special Meeting of the Board to elect a new set of corporate officers. He
consults you as lawyer.
He asks if he is covered by the Labor Code and Constitutional guarantees of security of
tenure of workers. He theorizes that since he was elected for a fixed one-year term, he enjoys
tenure for a term.
1. What is your view? Reasons?
2. Mr. Epol, despite your opinion, observes that the Constitutional issue was not raised in
those cases. He is adamant that you seek recourse to prevent his removal as President
and Chief Executive before his term expires. Where will you file the case?
1. Mr. Epol is not covered by the Labor Code and Constitutional guarantees of security of tenure
or workers. He is not an employee. He is a corporate officer and his tenure is subject to the
Constitution and by-laws of the corporation and the Corporate Code.
2. I will file the case before the RTC which has jurisdiction over the case. Whether or not Mr.
Ramos and the other stockholders legally re-organized out Mr. Epol is an intra-corporate dispute.
Since it is an intra-corporate dispute which is involved, it is the RTC which has jurisdiction (Nacpil
vs. IBC, G.R. No. 144767, March 21, 2002; New Securities Regulation Code amending
PD 902-A).

Labor Standards
Book One: Pre-Employment
Wonder Travel and Tours Agency (WTTA) is a well-known travel agency and an authorized
sales agent of the Philippine Air Lines. Since majority of its passengers are overseas workers,
WTTA applied for a license for recruitment and placement activities. It stated in its application
that its purpose is not for profit but to help Filipinos find employment abroad. Should the
application be approved?
The application should be disapproved, as it is prohibited by Article 26 of the Labor Code, to wit:
Travel agencies and sales agencies of airline companies are prohibited from engaging in the
business of recruitment and placement of workers for overseas employment whether for profit or not.
Rule I, Part II, POEA Rules and Regulations Governing the Recruitment and Employment of Land-
Based Workers (2002) disqualifies any entity having common director or owner of travel agencies and
sales agencies of airlines, including any business entity from the recruitment and placement of Filipino
workers overseas, whether they derive profit or not.
Section 6 of R.A. No. 8042 considers the following act as illegal recruitment: (j) For an officer or
agent of a recruitment agency to become an officer or member of the Board of any corporation
engaged in travel agency or to engage directly or indirectly in the management of a travel agency.
The law considers as the operation of travel agencies and recruitment agencies as incompatible
Book Two: Human Resources Development
Is there any law providing employment assistance to poor but deserving students who want
to pursue their education?
YES. Republic Act No. 7323, approved on 1992, encourages their employment during summer
and/or Christmas vacations, through incentives granted to employers, allowing them to pay only 60%
of their salaries or wages and the 40% through education vouchers to be paid by the government. The
education vouchers shall be applied in the payment for the students tuition fees and books in any
educational institution for secondary, tertiary, vocational or technological education. Poor but
deserving students refer to those whose parents combined incomes, together with their income, if
any, do not exceed P36,000.00 per annum, and who are at least 15 years of age but not more than 25
years old.
Book Three: Conditions of Employment
Pablo was a farm-hand in a plantation owned by ABC & Co., working approximately 6 days
a week for 15 years. Upon Pablos death, his widow filed a claim for burial grant and pension
benefits with the SSS. The claim was denied on the ground that Pablo had not been a
registered member-employee. Pablos widow filed a petition before the SSS asking that ABC &
Co. be directed to pay the premium contributions of Pablo and that his name be reported for
SSS coverage. ABC & Co. countered that Pablo was hired to plow, harrow and burrow, using
his own carabao and other implements and following his own schedule of work hours, without
any supervision from the company. If proven, would this factual setting advanced by ABC &
Co. be a valid defense against the petition?
ABC & Co. has a valid defense. Under the control test, which is the most important test in
distinguishing an employee from an independent contractor, the employer must have the power or
right to control the employee not only as to the result of the work to be done but also as to the means
and methods by which the same is to be accomplished (Leonardo vs. Court of Appeals, G.R.
No. 152459. June 15, 2006). Applying this test to the facts given, it can be concluded that Pablo is
an independent contractor. Among others, he had his own schedule of work hours, without any
supervision from the company. Hence, not being an employee of ABC & Co., he is not under the
compulsory coverage of the SSS.
Zapato Custom-made Shoes, Inc. (Zapato) made shoes to customer specification and
repaired them. As a service to customers, a shoe shine stand was operated on its premises.
There were 10 shoe shine boys at the stand. They owned their shoe shine boxes with cleaning
agent polish, brushes, and rags. Walk-in customers willing to wait were led by the shoe shine
boys to sit at the stand where they waited while the boys shined the shoes. After the shoes
were cleaned, the boys asked the customer to pay the receptionist. Customers not willing to
wait leave the shoes with the stands receptionist who gave a receipt with the price for the
service and pick-up date and time indicated. The boys were free to get shoes to be shined
from the receptionist when there were no waiting walk-ins. For each pair shined, the boys got
markers corresponding to the price for their service. Zapatos staff did not interfere with nor
supervise how the boys went about their tasks. At days end, the markers held by each boy
were tallied and paid for. The boys signed a receipt to acknowledge full payment for work
A labor federation was organized and filed a petition for a consent election. The boys,
sympathizing with the workers, joined the union. At the pre-election conference, the lawyer for
Zapato moved to exclude the boys as voters.
1. As Med-Arbiter handling the case, rule on the objection.
2. Would your ruling be different if in this case, Zapato provided the boys with the shoe
shine boxes and their contents? Explain.
1. As Med-Arbiter, I will rule that the shoe shine boys should be excluded as voters in the
consent election. There is no employer-employee relationship between the company and the shoe
shine boys (Besa v. Trajano, G.R. No. 72409, December 29, 1986). For such relationship to
exist, the following four-fold test should be satisfied: (1) selection and and engagement of the
employee; (2) payment of wages; (3) power of dismissal; and (4) power to control (Pacific
Consultants International Asia, Inc. v. Schonfeld, G.R. No. 166920, Feb. 19, 2007). The
element of control, which is the most important, is not present. The facts reveal that Zapatos staff did
not supervise the boys work. Jurisprudence tells us that the greater the supervision and control the
hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well
the less control the hirer exercises, the more likely the worker is considered an independent
contractor (Sonza v. ABS-CBN Broadcasting Corp., G.R. No. 138051, June 10, 2004).
Hence, the shoe shine boys are not employees of Zapato and thus could not be considered as
employees belonging to bargaining unit who will designate or select a bargaining representative.
2. My ruling would not be different. By providing the shoe shine boxes and their contents,
Zapato is still not exercising control over the shoe shine boys. For control to exist, Zapato must have
the power or right to control the employee not only as to the result of the work to be done but also as
to the means and methods by which the same is to be accomplished.
The Central Bank ordered the liquidation of the Millionaires Bank. Under a plan approved by
the Central Bank, the liquidator turned over the Millionaires Banks assets and liabilities to a
group of investors who immediately organized the Reliable Banking Corp. The new bank hired
new employees and retained only 50 of the employees of the defunct bank. The labor union

protested the failure of the new bank management to retain all employees and charged it with
violating an existing collective bargaining agreement with the previous management.
Is the new management compelled to retain all the employees in its employ? Discuss.
The new management may not be compelled to retain all the employees of the defunct bank in its
employ, but it should at least give preference to these employees in the filling up of vacancies in the
new Banking Corporation. The Supreme Court in MDII Supervisors and Confidential Employees
Association vs. Presidential Assistant on Legal Affairs, G.R. Np. L-45421, September 9, 1977
ruled that while there is no law requiring the purchaser of the assets of a corporation to absorb the
employees of such corporation, for reasons of public and social justice, the purchaser may be directed
to give preference to the qualified separated employees of said corporation in the filling up of
vacancies in the purchasers new set up.
The new management may be compelled to retain all the employees in its employ. It may be noted
that what were turned over to the group of investors who organized the Reliable Banking Corp were
not only the assets but also the liabilities of the defunct Millionaires Bank. Given said fact, it could
be considered that part of the liabilities turned over to the new banking corporation could be the
obligation to continue, this time in its employ, the old employees of the defunct bank.
The new management may not be compelled to retain all the employees of Millionaires Bank.
When the assets and liabilities of Millionaires Bank were turned over to a group of investors who
organized the Reliable Banking Corp., a new corporation came into being. The new corporation does
not have any employer-employee relationship with the employees of Millionaires Bank which was
liquidated. The new corporation can be compelled to continue as its employees the employees of
Millionaires Bank only if the liquidation of the Millionaires Bank and the organization of the new
corporation was done in bad faith for the purpose of easing out the employees of Millionaires Bank.
This is not the case here. Thus, there is no legal obligation on the part of the new corporation to
accept as its employees all the employees of the Millionaires Bank.
The Labor Code treats differently in various aspects the employment of (i) managerial
employees, (ii) supervisory employees, and (iii) rank-and-file employees. State the basic
distinguishing features of each type of employment.


MANAGERIAL One whose primary duty One who is vested with A managerial employee
EMPLOYEES consists of the powers or prerogatives to cannot exercise the right
management of the lay down and execute to self-organization (Art.
establishment in which management policies 245).
he is employed or of a and/or to hire, transfer,
department or suspend, lay-off, recall,
subdivision thereof, and discharge, assign or
to other officers or discipline employees.
members of the
managerial staff.

Supervisors and Rank- One who, in the interest A supervisory employee

and-File employees can of the employer, may form, assist, or join
be considered as effectively recommends a labor organization of
members of the such managerial actions their own and not
managerial staff, and if the exercise of such together with the rank-
therefore a managerial authority is not merely and-file employees (R.A.
employee, if: routinary or clerical in No. 6715).
a.) their primary duty nature but requires the
consists of work directly use of independent
related to management judgment.

b.) they customarily and
regularly exercise
discretion and
independent judgment in
the performance of their
c.) regularly and directly
assist a proprietor or a
managerial employee
whose primary duty
consists of the
management of the
establishment in which
they are employed or a
subdivision thereof; and
d.) do not devote more
than 20% of their hours
worked in a workweek to
activities which are not
directly and closely
related to the
performance of the work
described above (Art.
82; Sec. 2c, Rule I,
Book III,
Implementing Rules).

RANK-AND- All others not falling All others not falling A rank-and-file employee
FILE within any of the above within any of the above can exercise the right to
EMPLOYEES definitions. definitions (Art. 212m). self-organization (Art.

The Job Valuation Contribution Statements of the union members of NBSR Supervisory
Union show that these supervisory employees were under the direct supervision of their
respective department superintendents and that, generally, they assisted the latter in planning,
organizing, staffing, directing, controlling, communicating and in making decisions in
attaining the companys set goals and objectives. These supervisory employees were likewise
responsible for the effective and efficient operation of their respective departments. Should
the supervisory employees, as defined in Article 212(m) of the Labor Code, be considered as
members of the managerial staff under Article 82 and hence, are not entitled to overtime, rest
day and holiday pay? (case cited in Azucena, 2007).
YES. From the foregoing, it is apparent that the members of the union discharge duties and
responsibilities which qualify them as members of the managerial staff, as defined in Section 2, Rule I,
Book III of Implementing Rules of the Labor Code, viz: (1) their primary duty consists of the
performance of work directly related to management policies; (2) they customarily and regularly
exercises discretion and independent judgment; (3) they regularly and directly assists in the
management of the establishment; (4) they execute, under general supervision, work along
specialized or technical lines requiring special training, experience, or knowledge; (5) they execute,
under general supervision, special assignments and tasks; and (6) they do not devote more than 20%
of their time to work other than those described above. Therefore, they are exempt from the coverage
of Article 82 (National Sugar Refineries Corp. v. NLRC, G.R. No. 101761, March 24, 1993).
This year, National Heroes Day (August 25) falls on a Sunday. Sunday is the rest day of
Bonifacio whose daily rate is P500.
If Bonifacio is required by his employer to work on that day for eight (8) hours, how much
should he be paid for his work? Explain.
For working on his scheduled rest day, according to Art. 93(a), Bonifacio should be paid P500 (his
daily rate) plus P150 (30% of his daily rate) = P650. This amount P650 should be multiplied by 2 =
P1,300, this is the amount that Bonifacio as employee working on his scheduled rest day which is also
a regular holiday should receive. Art. 94(c) of the Labor Code provides that an employee shall be paid
a compensation equivalent to twice his regular rate for working on any regular holiday. The regular
rate of Bonifacio on May 1,2002 with an additional thirty percent because the day is also his
scheduled rest day.
To get rest day pay
STEP 1: Get hourly wage rate

Daily Basic Wage

Special Holiday Wage Rate
Number of Hours Worked

130% = P81.25
8 Hours
STEP 2: Compute wage between 8:00pm to 5:00pm using rest day wage rate

Number of Hours Worked Special Holiday Wage Rate


8 Hours P81.25 = P650

To get regular holiday pay

Rest Day Wage Rate Regular Holiday


P650 200% = P1,300

All the 30 employees of the Aliw Trading, Inc. are monthly salaried, had been such since
1974, when the Labor Code took effect, whenever they would work overtime, the accounting
department would compute the daily equivalent of the employees monthly salary by using 301
days as divisor, however, for deductions due to absences not otherwise covered by the 15-day
vacation leave policy of the company, the divisor used is 313 days, the workweek is Monday-
In 1985, the employees filed as complaint for non-payment of holiday pay and service
incentive leave after years of unsuccessfully trying to convince Aliw management to grant
holiday pay and five-day service incentive leave pay. In the past whenever a demand for
payment of holiday pay was presented by the employees, management would invariably deny
liability on the other hand would give a nominal salary adjustment.
If you were counsel for Aliw, what defenses would you raise?
If you were the Labor Arbiter hearing the case, how would you resolve the issues?
As counsel for Aliw, I will contend: as regard holiday pay, when the company uses 313 as the
divisor in computing the daily equivalent of employees monthly salary, the company thereby
considers that only 52 weekly rest days are the only days not considered as paid and that the regular
holidays are therefore considered as paid even if they are unworked days. So, there is no need to
gain pay holiday pay.
As to the five-day SIL, I will contend that the Labor Code provides that the provision on SIL shall
not apply to those already enjoying the benefit, namely those enjoying vacation leaves with pay at
least five days.
The Company here has a fifteen-day vacation policy and should therefore, be already deemed as
giving five-day SIL.
As the Labor Arbiter, I will rule that the Company is liable to pay holiday pay. We will base this
ruling on the ground that the Company uses 301 as divisor in computing the daily equivalent of an
employees monthly salary. Thus, the company considers both 52 weekly rest days and 11 holidays as
unpaid days. Thus, the Company should pay holiday pay.
As for the SIL, I will rule that with its fifteen-day vacation leave policy, Aliw, pursuant to the Labor
Code is already giving the five-day SIL to its employees.
A case against an employer company was filed charging it with having violated the

prohibition against offsetting undertime for overtime work on another day. The complainants
were able to show that, pursuant to the CBA, employees of the union had been required to
work overtime on Saturday but were paid only at regular rates of pay on the thesis that they
were not required to complete, and they did not in fact complete, the eight-hour work period
daily from Monday through Friday. Given the circumstances, the employer contended that the
employees were not entitled to overtime compensation, i.e., with premium rates of pay. Decide
the controversy.
The employer is correct. While Art. 88 of the Labor Code clearly provides that undertime work on
any other particular day shall not be offset by overtime work on any other day, this rule is inapplicable
in this case pertaining to Saturday work which in reality does not constitute overtime work as Saturday
is still a working day under the law and there is no CBA stipulation against it.
Art. 88 of the Labor Code provides that undertime work on any particular day shall not be offset by
overtime work on any other day. The CBA being the law between the parties and the Union having
shown that the employees rendered overtime work on Saturday, the contention of the employer is not
tenable. The employer cannot use the undertime of Monday through Friday to offset the overtime on
Saturday. Hence, the employees are entitled to overtime compensation, i.e., premium rates of pay on
In accordance with the provisions of the CBA, RLU submitted to Zenith, a union board
resolution authorizing the deduction from the wage of the unions 2000 members a special
assessment in the sum of 20php to help pay the expenses of the RLU president during his
observation tour of New Zealand.
When the company honored the authorization and implemented the deductions, more than
a thousand of the employees complained and sought your assistance. What legal action would
you take and what legal advice would you give?
I will advise the employees to file a complaint against the company for making illegal deductions of
P20 from their wages. Article 113 of the Labor Code strictly prohibits an employer from making any
deduction from the wages of his employees. The only exceptions are (1.) when the deduction is made
with the employees consent in writing as regards SSS payments, PHILHEALTH payments,
contributions to PAG-IBIG Fund, value of meals and other facilities, payments to third persons, and
deduction of absences; (2.) when the deduction is made even without the employees consent when it
is with regard to workers insurance acquired by the employer (3.) for union dues where the right to
check-off has been recognized by the employer (4.) in those cases where the employer is authorized
by law or regulations issued by the Secretary of Labor, and (5.) debts of the employee to the employer
that have become due and demandable. The deduction made in the case at bar does not fall under
any of the exceptions. It was not made for union dues, and the union members were not shown to
have individually authorized the deductions in writing.
TRX, a local shipping firm, maintains a fleet of motorized boats plying the island barangays
of AP, a coastal town. At days end, the boat operators/crew members turn over to the boat
owner their cash collections from cargo fees and passenger fares, less the expenses for diesel
fuel, food, landing fees and spare parts.
Fifty percent (50%) of the monthly income or earnings derived from the operations of the
boats are given to the boatmen by way of compensation. Deducted from the individual shares
of the boatmen are their cash advance and peso value of their absences, if any.
Are these boatmen entitled to overtime pay, holiday pay, and 13 th month pay?
If the boatmen are considered employees, like jeepney drivers paid on a boundary system, the
boatmen are not entitled to overtime pay and holiday pay because they are workers who are paid by
results. Said workers, under the Labor Code are not entitled, among others, to overtime pay and
holiday pay.
In accordance with the Rules and Regulations implementing the 13 th month pay law, however, the
boatmen are entitled to the 13 th month pay. Workers who are paid by the results are to be paid their
13th month pay.
NO. The arrangement between the boat owner and the boat operators/crew members partook of
the nature of a joint venture. The boatmen did not receive fixed compensations as they shared only in
the cash collections from cargo fees and passenger fares, less expenses for fuel, food, landing fees
and spare parts. It appears that there was neither right of control nor actual exercise of such right on
the part of the boat owner over the boatmen. It is clear that there was no employer-employee
relationship between the boat owner and the boatmen. As such, these boatmen are not entitled to
overtime pay, holiday pay and 13th month pay.


What are the distinctions between labor-only contracting and job contracting?
There is job contracting when the following elements are present:
1. The contractor or subcontractor carries on a distinct and independent
business and undertakes to perform the job on his own account and under his own
responsibility, according to its own manner and method and free from the control and
direction of the principal in all matters connected with the performance of the work
except as to the results thereof;
2. The contractor or subcontractor has substantial capital or investment in tools,
equipment and machineries, work premises and other materials necessary in the
conduct of his business; and
3. The agreement between the principal and contractor or subcontractor
assures the contractual employees entitlement to all labor and occupational safety
and health standards, free exercise of the right to self-organization, security of tenure
and social and welfare benefits (D.O. No. 10 of 1997; Baguio v. NLRC, G.R. Nos.
79004-08, Oct. 4, 1991).
On the other hand, there is labor-only contracting when 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 is present:
1. The contractor or subcontractor does not have substantial capital or
investment which relates 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. (D.O. 18-02, Series of 2002)
Distinguish the liabilities of an employer who engages the services of a bona fide
independent contractor from one who engages a labor-only contractor?
An employer who engages the services of a bona fide independent contractor is merely an
indirect employer, by operation of law, of his contractors employees (PCI Automation Center,
Inc. v. NLRC, G.R. No. 115920, January 29, 1996). He becomes solidarily liable with the
contractor only in the event the latter fails to pay the employees wages and for violation of labor
standard laws. The liability, however, does not extend to the payment of back-wages or separation
pay of employees who are illegally dismissed (Rosewood Processing v. NLRC, G.R. No.
116476-84, May 21, 1998).
On the other hand, an employer who engages a labor-only contractor is treated as direct
employer of his contractors employees in all instances, and the contractor is deemed only as an
agent of the employer (Manila Water Company v. Pea, G.R. No. 158255, July 8, 2004). The
principal becomes solidarily liable with the contractor not only for unpaid wages but also for all the
rightful claims of the employees under the Labor Code and ancillary laws (SMC v. MAERC
Integrated Services, Inc., G.R. No. 144672, July 10, 2003).
Premiere Bank, a banking corporation, being the creditor-mortgagee of X Co., a garment
firm, foreclosed the hypothecated assets of the latter. Despite the foreclosure, X Co. continued
its business operations. A year later, the bank took possession of the foreclosed property. The
garment firms business operations ceased without a declaration of bankruptcy. Jose, an
employee of X Co. was dismissed from employment due to the cessation of business of the
firm. He filed a complaint against X Co. and the bank. The Labor Arbiter, after hearing, so
found the company liable, as claimed by Jose, for separation pay. Premiere Bank was
additionally found subsidiarily liable upon the thesis that the satisfaction of labor benefits due
to the employee is superior to the right of a mortgagee of property. Was the Labor Arbiter
NO. The preference of credits established in Art. 110 of the Labor Code cannot be invoked in the
absence of any insolvency proceedings, declaration of bankruptcy, or judicial liquidation (DBP vs.
Santos, G.R. No. 79351, November 28, 1989).
NO. What Art. 110 of the Labor Code establishes is not a lien but a preference of credit in favor of
employees. Unlike a lien, a preference of credit does not create a charge upon any particular property
of the debtor (ibid).
The decision of the Labor Arbiter holding Premiere Bank subsidiarily liable for a money obligation
of X Co. to Jose, its employee, has no legal basis for the following reasons:
There is no privity of relationship between the Bank and Jose. The relationship, upon which the
obligation to pay a sum of money is based, is between X (the mortgagor) and Jose as its employee
arising from the Labor Code provision requiring an employer to pay separation pay.
At both timesLabor Arbiter decision to pay separation pay and foreclosureX Co. was an
existing business entity and neither bankrupt or in liquidation, although its business operations after
the foreclosure ceased.
The decision of the Labor Arbiter for X Co. to pay a sum of money to Jose was based on an action
in personam not in rem, enforceable against any party (Sundowner Corporation vs. Drilon, G.R.
No. 82341, December 6, 1989)
The reference in the decision to labor benefits due to an employee is superior to the right of a
mortgagee of property is misplaced. The preferential claim rule has no basis and runs contrary to law
and jurisprudence.
Mrs. Josie Juan is the confidential secretary of the Chairman of the Board of the bank. She
is presently on maternity leave. In an arrangement where the Chairman of the Board can still
have access to her services, the bank allows her to work in her residence during her leave. For
this purpose, the bank installed a fax machine in her residence and gave her a cellphone and a
beeper. Is Mrs. Juan a homeworker under the law? Explain.
NO, she is actually an office worker. She is not an industrial homeworker who accepts work to be
fabricated or processed at home for a contractor, which work, when finished, will be returned to or
repurchased by said contractor (Art. 155, Labor Code).
Ngipin Toothpaste Co., Inc. manufactured and sold toothpaste in the market. It considered
labor contracting as a cost reduction move. The plan was for the company to continue
manufacturing the toothpaste in its facilities up to the stage where it was already packed in
labeled plastic tubes and capped. These would then be taken to the homes of women in a
militant squatter area near the plant. The women would be given the filled tubes and flat, die-
cut cardboard pieces with indented folds printed with the label. These flats cost P0.30 per
piece. The women would form the boxes, apply paste to one side so it would hold together as
a box, and then put the filled tubes onto it. Management though it was a good idea as it would
give employment and help bring the women into the money economy. The job was not hard to
learn. The women would do all the work at home in their free time.
The companys personnel staff took up the concept with the leader of the squatter womens
group who agreed it was a good idea. They showed her how the job was to be done. She
learned the work immediately. She said that women would be willing to accept the home work,
but they would insist on being paid in accordance with the law. She also told the companys
representatives that help reduce theirs headaches in the operation, she was willing to be their
main contractor and she would sub-contract the work to her neighbors. She also said that she
wants that the housewives whom she engages be allowed to use the labor of the children in
their homes to increase the number of the boxes that they assemble and the tubes that they
can box.
Management asks for your advice on the following matters:
1. Would the women who are engaged to form the boxes and pack toothpaste tubes into
them be considered employees of the company? Explain.
2. Can the women workers use their children, regardless of age, to help them perform
their task? Reasons.
3. May the company deduct spoilage costs of P0.30 per every dirty box and the value of
tubes lost or not accounted for it is provided for when in the contract for piece work?
1. NO. The company does not have control over them. The control test, which is the most
important test our courts apply in distinguishing an employee from an independent contractor, is not
satisfied. In this case, the women do the work at home in their free time. These women can be
specifically classified as industrial homeworkers. The Labor Code provides that their employment
shall be regulated through regulations issued by the Secretary of Labor and Employment to ensure
their general welfare and protection (Article 153). This rule shall apply to any homeworker who
performs, in or about his home, any processing of goods or materials, in whole or in part, which have
been furnished, directly or indirectly, by an employer and thereafter to be returned to the latter.
2. YES. If their children would work directly under their sole responsibility and are provided with
primary and/or secondary education, and the employment would not endanger their childrens life,
safety, health and morals, nor impair their normal development, then they could use their children,
regardless of age, to help them (Sec. 12, R.A. No. 9231).
3. NO. The Labor Code provides that no employer shall require his worker to make deposits
from which deductions shall be made for the reimbursement of loss of or damage to tools, materials or
equipment supplied by the employer, except where the employer is engaged in such trades,
occupation or business where the practice of making deductions or requiring deposits is a recognized
one, or is necessary or desirable as determined by the Secretary of Labor and Employment in
appropriate rules and regulations (Art.114).
These women cannot be considered as independent job contractors because they do not have
substantial capital. They are employees paid on piece-rate basis (Makati Haberdashery vs.
NLRC, G.R. Nos. 83380-81, November 15, 1989; Labor Congress of the Philippines vs.
NLRC, G.R. No. ).
Rosa Cartagena, a 14-year old orphan, was hired as a domestic helper by Elvira Pacheco, a
friend of Rosas aunt, who could no longer support her. The aunt and Elvira agreed that Rosa
would serve the Pachecos for 3 years, with clear understanding that the Pachecos would see
her through high school.
The Pachecos never sent Rosa to high school. After 2 years of unfulfilled promises of her
education, Rosa went back to her aunt, who confronted Elvira about her breach of their
agreement. The aunt demanded that Rosa be paid the cash equivalent of the 3 years high
school education that Rosa was denied. Elvira contended that Rosa quit before the end of the
fixed employment period and therefore, is not entitled to anything. The aunt filed a complaint
against the Pachecos.
Rosas quitting is justifiable, and the Pachecos should pay the cash equivalent of at least 2 years
high school education.
The Labor Code provides that the original contract of domestic service shall not last for more than
2 years but it may be renewed for such periods as may be agreed by the parties ( Art. 142). In this
case, the contract is fixed for 3 years. Hence, in conformity with the law, it should be considered as

fixed for only 2 years. Since Rosa quit after 2 years, then such action is justifiable.
The Labor Code also provides that if the househelper is under the age of 18 years, the employer
shall give him or her an opportunity for at least elementary education. The cost of education shall be
part of the househelpers compensation, unless there is stipulation to the contrary (Art. 146). Since
Rosa is only 14 years old when she was hired, and the law does not prohibit the employer from
obligating himself to give more than just elementary education, then the Pachecos should comply with
what they agreed to do under the contract they entered into.
Lydia Cancio was on her sixth and last month as a probationary employee of the Banco
Seguridad when she was confirmed to be pregnant. Being unmarried and wanting to become a
regular employee, she initially kept her pregnancy a secret from her employer. She was
subsequently appointed a regular employee on the first month of her pregnancy.
Because of morning sickness, however, Lydia frequently absented herself from work. After
2 months, the personnel manager told her that her habitual absences had become so
intolerable that she would have to go. Replying that her absences were caused by her
pregnancy, Lydia asked for a leave of absence, which was denied. She nevertheless went on
leave and was dismissed for going on leave without prior permission.
Lydia filed a complaint for illegal dismissal, praying that she be reinstated. The bank
contested that the complaint on the ground that she was not dismissed because of her
pregnancy but because of her absence without leave.
The dismissal is illegal. The Labor Code very clearly provides that: It shall be unlawful for any
employer to discharge a woman on account of her pregnancy or while on leave or in confinement due
to her pregnancy (Art. 137).
The employer should have granted her request for leave of absence, the request being made
because of her pregnancy.
Dismissal after she went on leave without prior permission is too harsh punishment for the
pregnant woman.
Filipinas Airlines advertised for stewardess. Among the requirements were that an
applicant must be single and not more than 25 years of age. Luzviminda, who happens to be
the most attractive, intelligent, and capable among the applicants, was rejected because she
was 26 years old and married. She files a complaint against the airlines pre-employment
requirements as being contrary to law and public policy. What are the arguments for and
against the above requirements? As Labor Arbiter, how would you decide the case.
In favor of the requirements: Except as limited by special laws, an employer is free to regulate,
according to his own discretion and judgment, all aspects of employment, including hiring (San
Miguel Brewery Sales v. Ople, G.R. No. L-53515, February 8, 1989).
Against the requirements: The Labor Code provides that it shall be unlawful for an employer to
require as a condition of employment that a woman employee shall not get married (Art. 136). The
Code also prohibits an employer from discriminating against any person in respect to terms and
conditions of employment on account of his age (Art. 140).
As the labor arbiter, I would rule that the requirements are contrary to law and public policy.
Although management has prerogatives, they are still subject to limitations provided by (1) law, (2)
contract or collective bargaining agreements and (3) general principles of fair play and justice.
(Mendoza v. Rural Bank of Lucban, G.R. No. 155421, July 7, 2004) The Labor Code itself
expressly makes the given requirements illegal.
A spinster school teacher took pity on one of her pupils, a robust and precocious 12-year
old boy whose poor family could barely afford the cost of his schooling. She lives alone at her
house near the school after her housemaid left. In the afternoon, she lets the boy do various
chores as cleaning, fetching water and all kinds of errands after school hours. She gives him
rice and P30 before the boy goes home at 7:00 every night. The school principal learned about
it and charged her with violating the law which prohibits the employment of children below 15
years of age. In her defense, the teacher stated that the work performed by her pupil is not
hazardous, and she invoked the exception provided in the Department Order of DOLE for the
engagement of persons in domestic and household service.
Is her defense tenable? Reason.
NO. Her defense is not tenable. Under Art. 19 of the Labor Code on minimum employable age, no
child below 15 years of age shall be employed except when he works directly under the sole
responsibility of his parents or guardian, the provisions of the alleged Department Order of DOLE to
the contrary notwithstanding. A mere Department Order cannot prevail over the express prohibitory
provisions of the Labor Code.
NOTE: Sec. 3, RA 9231, approved on July 28, 2003, allows a child below 15 years of age to work
for not more than 20 hours a week; provided that the work shall not be more than 4 hours at any given
day; provided further, that he does not work between 8PM and 6AM of the following day; and
provided, finally, that the work is not hazardous or deleterious to his health or morals.

Labor Relations
Book Five: Labor Relations
Some disgruntled members of Bantay Labor Union filed with the Regional Office of the
DOLE a written complaint against their union officers for mismanagement of union funds. The
Regional Director did not rule in the complainants favor. Not satisfied, the complainants
elevated the Regional Directors decision to the NLRC. The union officers moved to dismiss on
the ground of lack of jurisdiction. Are the union officers correct? Why?
YES, the union officers are correct in claiming that the NLRC has no jurisdiction over the appealed
ruling of the Regional Director. Sec. 16 of D.O. No. 40-03 provides that the decision of the med-arbiter
and Regional Director may be appealed to the BUREAU OF LABOR RELATIONS by any of the
parties within 10 days from receipt thereof. Hence, it is the BLR that has jurisdiction and not the
A was dismissed from the service by his employer for theft of goods owned by the
company. He was also prosecuted for theft before the Regional Trial Court of Pasay City.
Meanwhile, A filed a complaint for illegal dismissal against the employer before the Labor
Arbiter. The trial court subsequently acquitted A and ordered his reinstatement with
backwages from the time of his separation to the date of his actual reinstatement.
1. Is the decision of the court correct? State your reason.
2. Even with such acquittal, may the labor arbiter still proceed to resolve the complaint
for illegal dismissal filed by A? State your reason.
1. The decision of the court is not entirely correct. It is within the jurisdiction of the Regional Trial
Court to acquit A. As a regular court, The RTC has jurisdiction over criminal cases. But it is outside of
the jurisdiction of the RTC to order the reinstatement of A with backwages. A termination dispute,
which could give rise to a decision for the reinstatement of an illegal dismissed employee and the
payment of his backwages is outside the jurisdiction of the RTC. It is within the original and exclusive
jurisdiction of labor arbiters.
2. Even with As acquittal, the labor arbiter should still proceed to resolve the complaint for illegal
dismissal filed by A. An action for illegal dismissal is entirely separate and distinct from a criminal
Jun de Gracia a 2nd year law student and personnel assistant in the Peoples Bank and Trust
Co., never like his superior, the personnel manager, who was always putting him down. When
his patience ran out, he walked up to his boss during office hours and slugged him to
unconsciousness. He was dismissed. The personnel manager filed a complaint for damages
against de Gracia with the RTC. In retaliation, de Gracia filed a complaint for illegal dismissal
with the DOLE.
The counsel of de Gracia then filed a motion to dismiss the damage suit, alleging that LA
before whom illegal dismissal case is pending has exclusive jurisdiction over the case for

The motion to dismiss should not be granted. The fact that there is a complaint for illegal dismissal
with a Labor Arbiter filed by de Gracia is not a ground for dismissal of a damage suit filed with the
The 2 cases can be considered distinct from each other.
The case before the RTC is based on the slugging by de Gracia of his superior, the personnel
manager who filed the damage suit. This, therefore is a case based on the Civil Code, not on the
Labor Code, and is thus, within the jurisdiction of the regular courts.
On the other hand, the complaint for illegal dismissal is within the jurisdiction of the Labor Arbiter.
The Labor Arbiter could have included in the exercise of his jurisdiction also the damages arising from
the manner in which the employer dismissed an employee. But it may be noted: the damage suit here
arises from what an employee did to the personnel manager, not what the employer did to an
employee. This is an added reason why the damage suit filed by the personnel manager against de
Gracia is properly within the RTCs jurisdiction.
The affected members of the rank-and-file elevated a labor arbiters decision to the NLRC
via a petition for review filed after the lapse of the 10-day reglementary period for perfecting an
appeal. Should the NLRC dismiss the petition outright or may the NLRC take cognizance
The NLRC should dismiss the appeal outright because the same was filed beyond the
reglementary period of appeal as provided in Art. 223 of the Labor Code. The court ruled that
perfection of an appeal within the statutory or reglementary period is not only mandatory but also
jurisdictional and failure to do so renders the questioned decision final and executory (Asuncion vs.
NLRC, G.R. No.109311, June 17, 1997).
Company A, within the reglementary period, appealed the decision of the Labor Arbiter
directing the reinstatement of an employee and awarding backwages. However, As cash bond
was filed beyond the ten-day period. Should the NLRC entertain the appeal? Why?
NO, the NLRC should not entertain the appeal, as the same was not perfected for failure to file a
bond. Art. 223 of the Labor Code reads:
In case of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of cash or surety bond in the amount equivalent to the
monetary award in the judgment appealed from.
In Catubay et al vs. NLRC, GR No. 119289, April 12, 2000, the SC ruled that the bond is sine
qua non to the perfection of an appeal from the labor arbiters monetary award.
The Labor Arbiter ordered the reinstatement of 40 workers and the payment of backwages
on a finding that their termination was illegal. The decision became final and executory. The
union to which the workers belonged filed a motion for execution which was opposed by the
company. During the pendency of the motion, the union and the company entered into a
compromise agreement stipulating that for the sum of P80,000.00 , the union and its principals
waived their claims or causes of action and forever released the company from further liability
or responsibility over the matter. Ten of the dismissed employees objected to the compromise
agreement, alleging it was entered into without their consent. The union lawyer admitted
having failed to get their consent because they could not be contacted at their respective
addresses. But the lawyer alleged that the 30 other dismissed workers agreed and signed the
waiver and quitclaim.
Are the 10 employees whose consent was not secured bound by the compromise
agreement? Decide.
SA: BOA answer jag and haggar
NO. The backwages which were to be paid to the workers who were illegally dismissed belong to

each of the illegally dismissed workers. It is beyond the power of their union to waive the right of each
of the workers to these backwages. Thus, the compromise agreement which waived the right to
backwages could not apply to the workers who did not give their consent to such waiver.
Do workers have a right not to join a labor organization?
YES, workers decide whether they will or will not become members of a labor organization. That is
why a unions constitution and by-laws need the members adoption and ratification. Moreover, if they
are members of a religious group whose doctrine forbids union membership, their right not to be
compelled to become union members has been upheld. However, if the worker is not a religious
objector and there is a union security clause, he may be required to join the union if he belongs to the
bargaining unit (Kaisahan ng mga Manggagawa sa La Campana vs. Sarmineto, G.R. No. L-
47853, November 16, 1984).
Do the following workers have the right to self-organization? Reasons.
1. Employees of non-stock, non-profit organizations
2. Alien employee
1. Employees of non-stock, non-profit organizations have the right to self-organization. This is
explicitly provided for in Art. 243 of the Labor Code. A possible exception, however, are employee-
members of non-stock, non-profit cooperatives.
2. Alien employees with valid work permits in the Philippines may exercise the right to self-
organization on the basis of parity or reciprocity, that is, if Filipino workers in the aliens country are
given the same right (Art. 269, Labor Code).
Mang Bally, owner of a shoe repair shop with only nine (9) workers in his establishment,
received proposals for collective bargaining from the Bally Shoe Union. Mang Bally refused to
bargain with the workers for several reasons. First, his shoe business is just a service
establishment. Second, his workers are paid on a piecework basis (i.e. per shoe repaired) and
not on a time basis. Third, he has less than 10 employees in the establishment. Which reason
or reasons is/are tenable?
NONE. First, Mang Ballys shoe business is a commercial enterprise, albeit a service
establishment. Second, the mere fact that the workers are paid on a piece-rate basis does not negate
their status as regular employees. Payment by piece is just a method of compensation and does not
define the essence of the relation. Third, the employees right to self-organization is not delimited by
their number.
The right to self-organization covers all persons employed in commercial, industrial and
agricultural enterprises and in religious, charitable, medical or educational institutions whether
operating for profit or not.
Malou is the Executive Secretary of the Senior Vice-President of a bank while Ana is the
Legal secretary of the banks lawyer. They and other executive secretaries would like to join
the union of rank and file employees of the bank. Are they eligible to join the union? Explain.
YES. As a general rule, Executive Secretaries are considered CONFIDENTIAL EMPLOYEES.
Confidential employees -employees who ACT IN A CONFIDENTIAL CAPACITY to persons who
formulate, determine, and effectuate management policies IN THE FIELD OF LABOR-
MANAGEMENT RELATIONS, have no right to self-organization. The two criteria are cumulative and
must be met (San Miguel Corporation vs. Laguesma, G.R. No. 110399, August 15, 1997).
Since there is no showing that they have access to confidential labor relations information, there is no
legal prohibition against said confidential employees from forming, assisting, or joining labor a labor
organization (Sugbuanon Rural Bank, Inc. vs. Laguesma, G.R. No. 11694, February 2,
Article 248(d) of the Labor Code states that it shall be unlawful for an employer to initiate,
dominate, assist in or otherwise interfere with the formation or administration of any labor
organization, including the giving of financial or other support to it or to its organizers or
X Company, Inc. has been regularly contributing money to the recreation fund of the labor
union representing its employees. This fund, including the financial assistance given by the
employer, is used for refreshment and other expenses of the labor union whenever the
employees go on a picnic, on an excursion, or hold a Christmas party. Is the employer liable
for unfair labor practice under Article 248(d) of the Labor Code? Explain your answer.
If Art. 248(d) is strictly applied, the giving of money by the employer to the recreation fund of the
labor union is an unfair labor practice because said Article considers as an unfair labor practice the
giving of financial or other support to it (meaning a union) or to its organizers or officers.
The Bisig Ng Mga Manggagawa (BMM) and the Visayan Oil Mfg, Co are parties to a CBA,
containing a union security provision, which stipulates that all employees within the
bargaining unit shall join the union within thirty (30) days from the signing of the agreement.
On the date the agreement was signed, and in fact even before signing, the minority group of
employees in the bargaining unit were members of the Kapisanan ng mga Unionista (KMU).
When the KMU members failed to join the BMM within the stipulated period, BMM
demanded the termination of their employment. The company acceded to the demand and
dismissed the KMU members. KMU filed ULP case alleging that the dismissals and the
application of the union security clause is illegal.
The dismissal is ULP. A union security clause, such as the provision in question is allowed under
the Labor Code. Such clause cannot be applied to those employees who are already members of
another union at the time of the signing of the CBA. Therefore, such cannot be applied to KMU
members who were members of KMU on the date of CBA was signed and in fact, even before
signing. The union clause has no retroactive effect. It binds only new hires.
A collective bargaining agreement was signed between Ang Sarap Kainan Company and
the Ang Sarap Kainan Workers Union. Should the CBA be registered with the BLR?
YES. So that the contract-bar rule may apply, the CBA should be registered, assuming it has been
validly ratified and contains the mandatory provisions (Art. 232, Labor Code).
Company A and Union B had a 3-year CBA that expired on June 12, 1990. Negotiations
proved futile so the unresolved issues were referred to an Arbiter who rendered a decision on
March 15, 1992 retroactive to December 14, 1990. Is the Arbiters decision providing for
retroactivity tenable or not?
Since the unresolved issues in the collective bargaining negotiations were properly referred to the
Arbiter pursuant to Art. 262 of the Labor Code, which states that a Voluntary Arbitrator may hear and
decide any labor dispute, including bargaining deadlocks, the Arbiters decision providing for
retroactivity is tenable. Exercising his compulsory arbitration power, the Arbiter could decide the issue
of retroactivity in any way which is not contrary to law, morals, good customs, public order or public
What, if any, is the maximum term of a collective bargaining agreement under RA 6715?
According to RA 6715, the maximum term of a collective bargaining agreement is five (5) years,
but except as to the representation aspect, all other provisions, especially the economic provisions of
the agreement shall be renegotiated not later than three (3) years after its execution.
Company America and the union entered into five (5) year collective bargaining agreement
(CBA). Three (3) years thereafter, the Company received a demand letter from the union for

renegotiations of the terms and conditions of the CBA on the ground that the cost of living and
prices of the essential commodities have gone up by 30% since the CBA was concluded.
1. Was the five year term of the CBA legal?
2. Is the Company obligated to renegotiate the CBA as demanded by the Union? If your
reply is in the affirmative state the extent of the companys obligation.
3. What are the remedies available to the Union in the event the Company refuses to
renegotiate the CBA? Does it include the right to strike?
1. The five year term of CBA is legal. This is provided for in RA 6715.
2. The company is obligated to renegotiate the CBA as demanded by the Union. RA 6715
provides that the economic provisions of a CBA shall be renegotiated not later than three (3) years
after its execution except the representation aspect of CBA. All other provisions cannot be altered or
terminated before the expiration of the CBA, not even during the freedom period (Contract Bar Rule).
3. The refusal of the company to renegotiate not later than three (3) years after the execution of
the CBA is a refusal to bargain collectively and is, therefore, an unfair labor practice. Thus, a case of
unfair labor practice may be filed against the employer with a Labor Arbiter. Moreover, the Union may
go on an unfair labor practice strike.
Distinguish between Certification Election, Consent Election, Direct Certification,
Run-off Election and Re-run Election

CERTIFICATION ELECTION Purpose is to determine the sole Requires a petition for
and exclusive bargaining agent of certification election filed by a
all the employees in an union or employer. A med-arbiter
appropriate bargaining unit for grants the petition and an
the purpose of collective election officer is designated by
bargaining. the regional director to supervise
the election.
CONSENT ELECTION Purpose is to determine the issue Held by agreement of the unions
of majority representation of all with or without the participation of
the workers in the appropriate the med-arbiter.
collective bargaining unit mainly
for the purpose of determining
the administrator of the CBA
when the contracting union
suffered massive disaffiliation
and NOT for the purpose of
determining the bargaining agent
for purposes of collective
DIRECT CERTIFICATION A labor organization is directly Med-arbiter directly certifies that
certified as an appropriate a labor union is the exclusive
bargaining unit of a company collective bargaining
upon showing that petition is representative of the employees
supported by at least a majority of an appropriate bargaining unit
of the employees in the without holding a certification
bargaining unit. Direct election, but merely on the basis
certification is no longer allowed. of evidence in support of the
Unions claim that it is the choice
of the majority of the employees.
RUN-OFF ELECTION Takes place between the unions
who received the two highest
number of votes in a certification
election with three (3) or more

choices, where not one of the
unions obtained the majority of
the valid votes cast, provided that
the total union votes is at least
50% of the votes cast.
RE-RUN ELECTION Takes place in two instances: if
one choice receives a plurality of
vote and the remaining choices
results in a tie; or if all choices
received the same number of
votes. In both instances, the NO
UNION is also a choice.

UNIDAD, a labor organization claiming to represent the majority of the rank-and-file workers
of BAGSAK Toyo Manufacturing Corp. (BMTC), filed a petition for certification election during
the freedom period obtaining in said corporation. Despite the opposition thereto by SIGAW
Federation on the ground that UNIDAD was not possessed with all the attributes of a duly
registered union, the Med-Arbiter issued an order calling for a certification election on July 25,
This order was promulgated and served on the parties on July 12, 2001. On July 14, 2001,
UNIDAD submitted and served the required documents for its registration as an independent
union, which documents were approved by the DOLE on July 15, 2001.
During the elections, UNIDAD won over SIGAW. SIGAW questioned UNIDADs victory on the
ground that UNIDAD was not a duly registered union when it filed the petition for a certification
election. Shall SIGAWs case prosper or not? Why?
NO. SIGAWs contention will not prosper. Under the Implementing Rules as amended by D.O. no.
40-03, mere opposition to the legitimacy of the union shall not dismiss the Petition for Certification
Election. It is a statutory policy that no obstacles should be placed on the holding of a certification
election (Association of Labor Union vs. NLRC, 305 SCRA 762, 1999).
The Construction and Development Corporation has a total of one thousand and one
hundred (1,100) employees. In a certification election ordered by the Bureau of Labor
Relations to elect the bargaining representative of the employees, it was determined that only
one thousand (1,000) employees are eligible voters. In the election, nine hundred (900) ballots
were cast. There were fifteen (15) spoiled ballots and five (5) blank ballots. Four hundred (400)
votes were cast for ABC Labor Union, two hundred forty (240) votes were cast in favor of JVP
Labor Union, and two hundred and forty (240) votes were cast in favor of RLG Labor
1. Is there a valid certification election? Why?
2. You are called upon to decide the case. Which labor union will you certify as the
collective bargaining representative of the employees of the company? Why?
1. There is a valid certification election. In the facts of the case in a question, there is no bar to
the holding of the certification election. The Labor Code provides (Art. 256) that to have a valid
certification election; at least majority of all eligible voters in bargaining unit must have cast their votes
in the election. In the question, 1000 employees are eligible voters. 900 votes were cast. This means
that more than the majority (501) of the eligible voters cast their votes.
2. As med-arbiter called upon to decide the case, I will not certify any labor union as the
collective bargaining representative of the company, because none of the Labor unions who
participated in the certification election garnered a majority of the valid votes cast. According to the
Labor Code (Art. 256), the labor union receiving the majority of the valid votes cast shall be certified
as the exclusive bargaining agency of all the workers in the unit. The valid votes cast in the
certification election are 880 votes (900 votes cast minus 20 invalid votes 15 of which were spoiled
ballots and 5 blank ballots). No labor union garnered at least 441 votes which is the majority of 880
The PMG Stevedoring Company is relatively a new firm engaged in the stevedoring
business in the port of Cebu City. The company has 278 regular and permanent employees,
engaged in the loading and unloading of foreign and domestic vessels docking at the said
port. The company also employs 55 supervisory personnel.
The AH Labor Organization filed a verified petition with the company stating, inter alia, that
it is a legitimate labor organization representing majority of the employees, and that there is
no bargaining agent in the unit. The union asked for recognition as the bargaining agent of all
the employed of the company. The company replied that while it is not anti-union, it cannot
under the circumstances, accede to the union demand on the ground that the petition is not
supported by the written consent of at least twenty-five percent (25%) of all the employees and
also because the company wide unit sought to be represented by the union is not an
appropriate collective bargaining unit.
After hearing, the Med-arbiter ordered a certification election. The company elevated the
order to the Secretary of Labor.
If you were the Secretary of the Labor, how will you decide this case? Give your reasons.
As Secretary of Labor, I will affirm the order for a certification election made by the Med-arbiter but
I will amend the order. Instead of a certification election in a company-wide unit, I will order a
certification election only for a bargaining unit composed of rank-and-file employees, or only for a
bargaining unit composed of supervisory employees, in whichever bargaining unit is found the
members of the petitioning labor organization.
The order for a certification election is proper even if the petition for certification filed by AH Labor
Organization is not supported by at least 25% of the employees of the appropriate collective
bargaining unit. The petition for certification election is filed in an unorganized establishment there
being, as yet, no bargaining agent in PMG Stevedoring Company. A petition for certification election in
an unorganized establishment does not require the consent of at least 25% of all the employees in the
bargaining unit (Art. 257, Labor Code).
But the bargaining unit cannot be company-wide. RA 6715 in reaffirming the right of supervisory
employees to form a union provides that they can only be members of unions whose members are all
supervisory employees. This restriction means that unlike the situation before RA 6715, supervisory
employees and rank-and-file employees could no longer belong to one union. Thus, as a result, a
bargaining unit could no longer be composed of rank-and-file employees and supervisory employees.
As Human Resources Department Manager of EZ Components, an unorganized
manufacturer of electric components for household appliances, you are suddenly confronted
with demands for recognition and collective bargaining negotiations from two competing labor
unions. They both claim to represent all the rank-and-file employees. Union A is led by
moderate faction, while Union B is affiliated with a militant federation identified with leftist
Which of the following courses of action should you take to best protect the interests of
your company and employees?
A. Recognize Union A as the rightful bargaining representative because it will be
more reasonable to deal with;
B. Recognize Union B because you do not want to antagonize its leftist
C. Ignore the demands of either union since you cannot be compelled legally to
deal with them at this stage; or
D. Petition the Bureau of Labor Relations to conduct a certification election to
determine which union really represents the majority of the employees in the
bargaining unit.
D. Petition the Bureau of Labor Relations to conduct a certification election to determine which
union really represents the majority of the employees in the bargaining unit.
Article 258 of the Labor Code provides that when requested to bargain collectively, an employer
may petition the Bureau for an election.
Yellow Bus Company has an existing collective bargaining agreement (CBA) with Union
X. During the 60-day freedom period, Union A filed a petition for the certification election
claiming a majority of the rank-and-file employees of the company had joined it. Pending the
hearing of the petition, the company and the Union X renegotiated and signed a new CBA,
which is admittedly better than the previous one.
In view of this supervening event, the Med-arbiter dismissed the petition of Union A for
being moot and academic. Is the dismissal of the petition correct? Can the company and the
Union X claim the benefit of the contract bar rule?
The dismissal of the petition is not correct. The company and Union X cannot claim the benefit of
the contract bar rule. The rules implementing the Labor Code provide (Book V, Rule V, Sec. 4) that
the representation case shall not xxx be adversely affected by a collective agreement submitted
before or during the last 60 days of a subsisting agreement or during the pendency of a
representation case.
Assuming that the petition of Union A was supported by at least 25% of the employees in the
bargaining unit, the Med-Arbiter should have automatically ordered a certification election since the
petition was duly filed during the freedom period.
The workers engaged in picketing activity in the course of a strike.
1. Will picketing be legal if non-employees of the strike-bound employer participate in the
2. Can picketing activity be curtailed when illegal acts are committed by the picketing
workers in the course of the activity?
1. YES, the picketing is legal even though non-employees join it. Picketing is a form of exercise
of freedom of speech. Picketing, provided it is held peacefully, is a constitutional right. The disputants
in a legal dispute need not be employer-employee of each other (De Leon vs. National Labor
Union, 100 Phil. 789, [1957]).
2. NO, the picketing activity itself cannot be curtailed. What can be curtailed are the illegal acts
being done in the course of the picket. However, if what is involved is a national interest case under
Art. 263(g), the strike or work stoppage may be stopped by the power of assumption of jurisdiction by
the Secretary of Labor or certification of the case to the NLRC (Nagkakaisang Manggagawa sa
Cuison Hotel vs. Libron, G.R. No. L-64336, August 31, 1983).
Because of alleged unfair labor practices by the management of GFI system, a
government-owned and controlled financial corporation, its employees walked out from their
jobs and refused to return to work until the management would grant their union official
recognition and start negotiations with them.
The leaders of the walk-out were dismissed, and the other participants were suspended for
60 days. In arguing their case before the Civil Service Commission, they cited the principle of
social justice of workers and the right to self-organization and collective action, including the
right to strike. They claimed that the Constitution shielded them from any penalty because
their walk-out was a concerted action pursuant to their rights guaranteed by basic law.
Is the position taken by the walk-out leaders and participants legally correct? Reason
NO. Assuming that what we have is an originally chartered GOCC, they cannot, under EO 180 and
related jurisprudence, stage such walk-out which is basically a case of strike. (insert citation fr
Even if GFI was organized under the Corporation Code, still no such walk-out is allowed without
complying with the requirements of a valid strike, among which is that said strike should be validly
grounded on a (a) deadlock in collective bargaining, or (b) ULP.
Delete On May 24, 1989, the UKM urged its member-unions to join a Welga ng Bayan to
pressure Congress to increase the daily minimum wage. Union X staged a strike and put up
a picket the following day. As a result, the company officials and supervisory employees were
allowed ingress and egress to and from the company premises. The picket was likewise
peaceful. On May 28, 1989, the UKM leadership announced the end of the Welga ng Bayan.
Union X immediately lifted its picket and its member went back to work. The company
sought your legal advice on the legality of the strike and the liability, if any, of the union
officers and the participating members. What is your opinion? Explain.
The strike was illegal. For a strike to be legal, it should either be an economic strike, i.e., caused
by a bargaining deadlock or an unfair labor practice strike, i.e., caused by the commission of an unfair
labor practice by an employer.
The strike of Union X was neither an economic strike nor an unfair labor strike. Thus, it was an
illegal strike.
Because it was an illegal strike, any union officer who knowingly participated in it may be declared
to have lost his employment status, meaning such union officer could be legally terminated.
As for the union members who participated in the strike, the facts show that no illegal acts were
committed. They allowed ingress and egress to and from the company premises. The picket was
peaceful. The mere participation of the union members, without their committing illegal acts, does not
constitute sufficient ground for the termination of their employment. They shall be reinstated without
Hercules Drug Company operates a chain of drug stores around the country. In addition to
several hundreds of clerical and other rank-and-file employees, the company also employs 200
salesmen who decided to form their own exclusive union. Meanwhile, the sales manager of the
company has scheduled the transfer of several salesmen from Manila to Cebu City as part of
the rotation system. The transfer was supposed to be made on November 2, 1988. On October
10, 1988, the sales manager learned of the formation of the union. He thereafter ordered the
immediate transfer of 20 salesmen to Cebu City. Among those ordered transferred were the
union president and union treasurer. Both refused to be transferred and as a result thereof, the
company dismissed them for gross insubordination. The union held strike the following day.
Was the dismissal of these union officers legal? How about the strike?
NO. The dismissal of the union officers was illegal. It is true that the sales manager of the
Company had scheduled the transfer of several salesmen from Manila to Cebu City as part of the
rotation system of the company. But it should be noted: The Sales Manager ordered the immediate
transfer of 20 salesmen when he learned of the formation of the union. He no longer waited for the
November 2, 1988 date he had earlier scheduled for the transfer. It is noted that among those ordered
transferred were the Union President and the Union Treasurer, key officials of the Union. The
immediate transfer constitutes an unfair labor practice. It was an act of discrimination directed against
union officials; an act of union busting since the union has just been formed.
YES. The strike was a legal strike because it was caused by an unfair labor practice of an
employer. In fact, what the employer did could be considered as union busting, the existence of the
union being threatened. In which case, the Labor Code provides (Art. 263) that the 15-day cooling
off period shall not apply and the union may take action immediately.
In any case, the union must take the necessary strike vote and submit the strike vote results to the
Department of Labor and Employment in accordance with the law.
In a labor dispute, the Secretary of Labor issued an Assumption Order. Give the legal
implications of such an order.
Under Art. 263(g) of the Labor Code, such assumption order shall:
have the effect of automatically enjoining the intended or impending strike or lockout as
specified in the assumption order.
If one had already taken place at the time of assumption, all striking or lockout employees
shall immediately resume operations and re-admit all workers under the same terms and
conditions prevailing before the strike or lockout.
The Secretary of Labor may seek the assistance of law enforcement agencies to ensure
compliance with this provision as well as with such orders as he may issue to enforce the
The mere issuance of an assumption order by the Secretary of Labor automatically carries
with it a return-to-work order, even if the directive to return to work is not expressly stated
in the assumption order.
Those who violate the foregoing shall be subject to disciplinary action or even criminal
prosecution. Under Art. 264 of the Labor Code, no strike or lockout shall be declared after
the assumption of jurisdiction by the Secretary.
What are the issues covered by the Secretary of Labors jurisdiction in assumption cases?
The court holds in International Pharmaceutical vs. Secretary of Labor, G.R. Nos. 92981-83,
January 9, 1992, that the Secretarys jurisdiction over national interest labor disputes extends to all
questions and controversies arising therefrom, including cases over which the Labor Arbiter has
exclusive jurisdiction. However, the court excepted from this ruling the situation where in their CBA the
parties categorically agreed that disputes between them shall be referred to the grievance machinery
which ends in voluntary arbitration (University of San Agustin Employess Union vs. Court of
Appeals, G.R. No. 169632, March 28, 2006).
Employees of ABC declared a strike after filing a Notice of Strike with the DOLE. They
barricaded company gates and damaged vehicles entering company premises. On the second
day after the strike, ABC filed a petition with the DOLE Secretary to intervene through the
issuance of an assumption of jurisdiction order that the Secretary may issue when a strike or
lockout will adversely affect national interest. ABC furnished the Secretary with evidence to
show that company vehicles had been damaged; that electric power had been cut off; and
equipment and materials were damaged because electric power was not immediately restored.
ABC forecast that the countrys supply of chlorine for water treatment (which the company
produces) would be affected adversely if ABCs operations were closed down by the strikers.
Could the DOLE Secretary intervene, assume jurisdiction and issue a TRO? Briefly justify
your answer.
YES, the Secretary can assume jurisdiction over the dispute because ABC could be considered as
an industry indispensable to the national interest since it produces the countrys supply of chlorine for
water treatment.
The assumption of jurisdiction by the Secretary has the effect of ending the strike. The strikers will
be subject to Return-to-Work Order by the Secretary upon his assumption of jurisdiction.
Book Six: Post-Employment
Design Consultants, Inc. was engaged by the PNCC to supervise the construction of the
South Expressway Extension. Design Consultants hired Omar as a driver for 2 years. After his
two-year contract expired, he was extended another contract for 9 months. These contracts
were entered into during the various stages and before the completion of the extension
project. Omar claims that because of these repeated contracts, he is now a regular employee
of Design Consultants. Is he correct?
Although the work to be performed is only for a specific project or seasonal, where a person thus
engaged has been performing the job for at least one year, even if the performance is not continuous
or is merely intermittent, the law deems the repeated and continuing need for its performance as
being sufficient to indicate the necessity or desirability of that activity to the business or trade of the
employer. The employment of such person is also then deemed to be regular with respect to such
activity and while such activity exists (Magsalin, et. al. vs. National Organization of Working
Men, et. al., 403 SCRA 199, [2003]).
What are the requisites for willful disobedience to be a valid ground for termination?
Willful disobedience or insubordination envisages the concurrence of at least two requisites:
1. the employees assailed conduct must have been willful or intentional, the willfulness
being characterized by a wrongful and perverse attitude; and
2. the order violated must have been reasonable, or lawful, made known to the employee

and must pertain to the duties which he had been engaged to discharge.
Mr. Armand Reyes, married, 55, was the Manila manager of the International Milk Company, a
multinational corporation with main office in San Francisco, California, U.S.A., and branches
all over the world. Reyes has served the company in various capacities here and abroad for 16
years. The main office advised him of his transfer to the San Francisco main office and of his
promotion as director of international marketing. He refused the promotion and transfer for
personal and family reasons. After Reyes had remained adamant in staying in Manila, the
company dismissed him on the ground of insubordination.
Was his dismissal valid and legal? Discuss.
NO. If the transfer of Reyes from Manila to San Francisco was because the company very badly
needed his services in San Francisco, then, the dismissal may be considered valid because Reyes
could be considered as being guilty of willful disobedience of a lawful order of his employer. But in the
instant case, the employer has offered a promotion. If accepted, it was this promotion that entailed a
transfer from Manila to San Francisco. When Reyes declined to accept because of personal and
family reasons, his refusal to accept the promotion should not be taken against him. Such refusal
could not be considered as a just cause for his termination. Besides, a promotion is only a privilege
which an employee may opt not to avail of.
YES. It is the right of an employer to determine where his employees are to be assigned. This is
part of his management prerogative. Thus, when Reyes did not comply with the advice of the
company that he was being transferred from Manila to San Francisco, he was guilty of willful
disobedience to a lawful order of the employer, which is a just cause of termination under the Labor
TRANSFER TO topic: Termination by an employee Edgardo was employed as an assistant in
the accounting department of XYZ company. Aside from office work, he was required by his
employer to accompany a delivery van distributing goods to out-of-town branches with no
extra remuneration or allowance. He was also asked to clean the office and to serve coffee to
company officials. After a while, he began to complain about his additional work burdens and
the delay in the payment of his salary. But his immediate superior repeatedly ignored his
May Edgardo validly leave his employment without notice to his employer and legally sue
XYZ company for separation pay? Discuss.
According to Art. 286(b) of the Labor Code, an employee may put an end to the employer-
employee relationship without serving notice on the employer for a just cause, e.g. inhuman and
unbearable treatment accorded the employee by the employer
In this case, it could be said that Edgardo has been subjected to unbearable treatment. Thus, he
could leave his employment without notice to his employer.
It should be noted, however, that should Edgardo leave his employment, he cannot claim
separation pay. He is not being terminated by the employer. He is the one ending the employer-
employee relationship. This kind of situation is not one of the instances where the Labor Code
imposes on an employer the obligation to pay separation pay.
The examinee answering this question may say that Edgardo has been more or less forced to
resign because of his being subjected to unbearable treatment. Thus, he may be entitled to
separation pay, as if he has been terminated by the employer. Equity may then be invoked as basis of
the employers obligation to pay some separation pay. This could be a case of constructive dismissal.
Can redundancy exist where the same is due to the companys failure to properly forecast
its manpower requirements?
YES, redundancy exists when a position has become an excess or superfluous which, in turn, may
be caused by reorganization, closure of a section or department, or adoption of labor-saving

arrangements. Poor forecasting does not invalidate redundancy. Forecasting after all is not fail-free
(Wiltshire File Co., Inc. vs. NLRC, G.R. No. 82249 February 7, 1991)
What conditions must prevail and what requirements, if any, must an employer comply with
to justify/effect a valid retrenchment program?
In the case of (look for a recent case in digested cases) Asian Alcohol Corporation vs. NLRC,
G.R. No. 131108, March 25, 1999, The Supreme Court stated that the requirements for a valid
retrenchment must be proved by clear and convincing evidence:
1. That the retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual and
real or if only expected, reasonably imminent as perceived objectively and in good faith
by the employer;
2. That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
3. That the employer pays the retrenched employees separation pay equivalent to one
month pay or at least one month pay for every year of service, whichever is higher;
4. That the employer exercises his prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right of
security of tenure; and
5. That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status (i.e.,
whether they are temporary, casual, regular, or managerial employees), efficiency,
seniority, physical fitness, age, and financial hardship for certain workers.
Assuming the existence of valid grounds for dismissal, what are the requirements before
an employer can terminate the services of an employee?
SA: insert doctrine in King of Kings Transport vs. Mamac
The employer should give the employee being terminated due process. For termination of
employment based on any of the just causes for termination, the requirements of due process that the
employer must comply with are:
1. A written notice should be served on the employer specifying the ground or grounds for
termination and giving to said employee reasonable opportunity within which to explain
his side;
2. A hearing or conference should be held during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond to the
charge, present his evidence or rebut the evidence presented against him;
3. A written notice of termination, if termination is the decision of the employer, should be
served on the employee indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination; and
4. For termination of employment based on authorized causes, the requirements of due
process shall be deemed complied with upon service of a written notice to the
Department of Labor and Employment at least thirty (30) days before the effectivity of the
termination specifying the ground or grounds for termination.
Assuming that there is a valid ground to terminate employment, the employer must comply with the
requirement of procedural due process: written notice of intent to terminate stating the cause of
termination; hearing; and notice of termination. Art. 277 of the Labor Code reads:
xxx The employer shall furnish the worker whose employment is sought to be terminated
a written notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his representative
if he so desires
Not only must the dismissal be for a valid or unauthorized cause as provided by law but the
rudimentary requirements of due processnotice and hearingmust also be observed before an

employee must be dismissed (Salaw vs. NLRC, 202 SCRA 7). To meet the requirements of due
process, the law requires that an employer must furnish the workers sought to be dismissed with two
written notices before termination of employment can be legally effected, that is, (1) a notice which
apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2)
subsequent notice, after due hearing, which informs the employee of the employers decision to
dismiss him (Tanala vs. NLRC, 252 SCRA 314).
Distinguish between an award for backwages and an award for unpaid wages.
An award for backwages is to compensate an employee who has been illegally dismissed, for the
wages, allowances and other benefits or their monetary equivalent, which said employee did not
receive from the time he was illegally dismissed up to the time of his actual reinstatement.
On the other hand, an award for unpaid wages is for an employee who has actually worked but
has not been paid the wages he is entitled to receive for such work done ( Arts. 279 and 97(f),
Labor Code).
What economic components constitute backwages for a rank-and-file employee? Are these
components equally applicable to a managerial employee?
Art. 279 provides that an employee who is unjustly dismissed from work is entitled to reinstatement
and also to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to his actual
An employee is entitled to all the above benefits regardless of whether he is a rank-and-file
employee or a managerial employee.
However, backwages may also include the 13th month pay which are paid to rank-and-file
employees, as well as benefits arising from a CBA given only to employees in the bargaining unit.
Managerial employees cannot be given the same since they are ineligible to join a labor organization.
An employee was ordered reinstated with backwages. Is he entitled to the benefits and
increases granted during the period of his lay-off? Explain.
Yes. An employee who is ordered reinstated with backwages is entitled to the benefits and
increases granted during the period of his lay-off. The Supreme Court has ruled: Backwages are
granted for earnings a worker lost due to his illegal dismissal and an employer is obliged to pay an
illegally dismissed employee the whole amount of salaries plus all other benefits and bonuses and
general increases to which the latter should have been normally entitled had he not been dismissed.
(Sigma Personnel Services vs. NLRC, 224 SCRA 181, [1993]).
RS, a security guard, filed a complaint for illegal dismissal against Star Security Agency. He
alleged he was constructively dismissed after ten (10) years of service to the agency. Having
been placed on off-detail and floating status for six (6) months already, he claimed the
Agency just really wanted to get rid of him because it required him to take a neuro-psychiatric
evaluation test by Mahusay Medical Center. RS said he already submitted the result of his
evaluation test by Brent Medical Clinic as precondition to a new assignment, but the report
was rejected by the Agency. RS added that Mahusay Medical Center had close ties with Stars
president. It could manipulate tests to favor only guards whom the Agency wanted to retain.
Star defended its policy of reliance on Mahusay Medical Center because it has been duly
accredited by the Philippine National Police. It is not one of those dubious testing centers
issuing ready-made reports. Star cited its sad experience last year when a guard ran amuck
and shot an employee of a client-bank. Star claimed management prerogative in assigning its
guards, and prayed that RS complaint be dismissed.
What are the issues? Identify and resolve them.
The facts in the question raise these issues:

1. When RS was placed on off detail or floating status for more than six (6) months, can RS
claim that he was terminated?
2. Is there a valid reason for the termination of RS?
On the first issue, RS can be considered as terminated because he has been placed on off detail
or floating status for a period which is more than six (6) months.
On the second issue, it is true that disease is a ground for termination. But the neuro-psychiatric
evaluation test by Mahusay Medical Center is not the certification required for disease to be a ground
for termination. The Rules and Regulations implementing the Labor Code require a certification by a
public health authority that the disease is of such nature or at such a stage that it cannot be cured
within a period of six (6) months even with proper medical treatment.
The issues involved are as follows:
1. Is there constructive dismissal?
2. Is there a valid exercise of management prerogative?
On the first issue, there is constructive dismissal. RS cannot be placed on off detail or floating
status indefinitely. If it lasts for more than six (6) months, RS shall be deemed to have been
constructively dismissed thus entitling him to separation benefits (Superstar Security Agency vs.
NLRC, 184 SCRA 74).
On the second issue, there is no valid exercise of management prerogative. Stars claim of
management prerogative in assigning its guards cannot be exercised to defeat or circumvent RS right
to security of tenure.
Maria Banting, a weaver in the textile plant, has served the company for 16 years. Last year,
the company awarded her a prize for being a model employee. Under the retirement provision
of the collective bargaining agreement, an employee who has rendered at least 15 years of
continuous service has the option to retire and be entitled to gratuity pay equivalent to one
month pay for every year of service. One day, on dismissal time, Maria was caught by the
security guard at the gate with a meter-long piece of cloth worth P50. Under the company
rules, stealing company property is punishable with dismissal.
The company notified her of her termination effective one month later. Maria, on the other
hand, applied for retirement under the CBA. After a while, the company offered Maria a
compromise - the company would not terminate her employment and instead allow her to
retire, but her gratuity pay under the CBA would be reduced to 15 days pay for every year of
service as a punishment for her infraction of the company rules.
As counsel for Maria, what would you advise her to do? Justify your answer.
I will advise her not to accept the compromise but to persist in her application for retirement under
the CBA. It is true that the company has a just cause for terminating Maria who was caught stealing
company property. For this willful breach of the trust reposed in her by her employer, her termination
would be legal. But in this case, it may be noted that her right to retire had already accrued, having
served 16 years with the company, considering the 15-year service requirement for retirement under
the CBA.
Her termination is her punishment for stealing. But since her right to retire has already accrued,
she has the right to the retirement gratuity pay equivalent to one month pay for every year of service,
unless the CBA has an additional proviso saying that there is forfeiture of the right to the retirement
gratuity if the employee is dismissed.
I will advise Maria to accept the compromise offered by the company. It is true that by virtue of the
CBA, she was already entitled to receive the retirement gratuity pay equivalent to one month pay for
every year of service because she has already rendered more than the 15 years of service required
for receipt of said gratuity pay.
But she did not exercise her option to retire, not until after she was caught stealing company
property which is punishable with dismissal. If she will be dismissed, she cannot then exercise the
option to retire. Thus, she may not be entitled to gratuity pay. So, it is better to accept the compromise
offer of the Company for a reduced gratuity pay. (see the case of Sy vs. Metropolitan Bank & Trust
Co., G.R. No. 160618, November 2, 2006 for a similar ruling)

Book Seven: Transitory and Final Provisions

State your agreement or disagreement with the following statements and explain your
answer briefly:
1. A criminal case filed against an employee does not have the effect of suspending or
interrupting the running of the prescriptive period for the filing of an action for illegal
2. The period of prescription in Art. 291 of the Labor Code applies only to money claims
so that the period of prescription for other cases of injury to the rights of employees is
governed by the Civil Code. Thus, an action for reinstatement for injury to an
employees rights prescribes in 4 years as provided in Article 1146 of the Civil Code.
1. I agree. The two cases, namely: the criminal case where the employee is the accused and the
case for illegal dismissal, where the employee would be the complainant, are two separate and
independent actions governed by different rules, venues, and procedures. The criminal case is within
the jurisdiction of the regular courts of law and governed by the rules of procedure in criminal cases.
The action for the administrative aspect of illegal dismissal would be filed with the NLRC and
governed by the procedural rules of the Labor Code.
2. I agree. A case of illegal dismissal filed by an employee who has been terminated without a
just or authorized cause is not a money claim covered by Art. 291 of the Labor Code. An employee
who is unjustly dismissed from work is entitled to reinstatement and to his backwages. A case of
illegal dismissal is based upon an injury to the right to security of tenure of an employee. Thus, in
accordance with Art. 1146, it must be instituted within 4 years (International Harvester Macleod,
Inc. vs. NLRC, 200 SCRA 817, [1991]).
Ernesto was a salesman of Equity Supplies Co. Under company regulations, he was
required to turn over the proceeds of his sales every weekend. For three weeks he failed to
account for his sales. The company directed him to explain and turn over the proceeds of the
sales. He refused to submit any explanation and did not report for work. The company filed a
complaint for estafa in the fiscals office, and notified him and the Ministry of Labor of his
dismissal effective one month later. The fiscal later dismissed the complaint for lack of
probable cause.
May Ernesto be validly dismissed by the company despite the dismissal by the fiscal of the
criminal case against him? Explain.
YES. The dismissal by the fiscal of the criminal case filed against Ernesto does not necessarily
mean that there is no just cause for his termination. It merely means that there is no prima facie case
for his prosecution.
But on the basis of the facts available, namely his failure to account for his sales, violating thereby
company regulations; his refusal to submit the explanation demanded of his by the company; his not
reporting for work, all these constitute just causes for termination because these facts prove that he is
guilty of serious misconduct or willful disobedience of lawful orders of his employer. He is also guilty of
willful breach of the trust reposed in him by the employer.
NO. It is true that the mere fact a criminal case filed against an employee has not prospered does
not automatically mean that he thereby cannot be validly dismissed, or if he has been dismissed, that
he has the right to be reinstated. His dismissal could still be valid if there is objective basis for loss of
confidence on the part of the employer.
But in this case, what was Ernesto guilty of? He failed to account for his sales. He refused to
submit any explanation in spite of his being asked by the company to do so. He did not report to
If Ernesto turned over the proceeds of his sales, and this was the reason for the finding of the
fiscal regarding the complaint of estafa that there was no prima facie case against him, then, the
company may have basis for imposing disciplinary action against Ernesto. But his dismissal may be
too drastic a punishment under the circumstances.

Social Legislation
Sara is an unwed mother with 3 children from 3 different fathers. In 1999, she became a
member of the Social Security System. In August 2000, she suffered a miscarriage, also out of
wedlock, and again by a different father. Can Sara claim maternity benefits under the Social
Security Act of 1997?
YES, she can claim maternity benefit. Entitlement thereto is not dependent on the claimants being
legally married (Sec. 14-A, Social Security Act of 1997).
The CBA of the Golden Corp. and the Golden Corporation Workers Union provides for a
package of welfare benefits far superior in comparison with those provided for in the Social
Security Act of 1997. The welfare plan of the company is funded solely by the employer with no
contributions from the employees. Admittedly, it is the best welfare plan in the Philippines. The
company and the union jointly filed a petition with the Social Security System for exemption
from coverage. Will the petition for exemption from coverage prosper? Reason.
NO, because coverage under the SSS is compulsory where employer-employee relations exist.
However, if the private plan is superior to that of the SSS, the plan may be integrated with the SSS
plan. Still, it is integration and not exemption from SSS law (Philippine Blooming Mills Co., Inc.
vs. Social Security System, 17 SCRA 107, [1997]). (CBA benefits are separate and distinct
from SSS benefits. An employee is entitled to both benefits).
Big Foot Company has been in the business of manufacturing sandals for export since
November 5, 1980. On January 5, 1994, it employed an additional labor complement of thirty
(30) workers, two supervisors and two department managers. On February 5, 1994, it hired five
(5) carpenters to fix the roof and walls of its factory which were destroyed by a typhoon.
Who among the aforementioned persons are compulsorily covered by the Social Security
law and when should they be considered effectively covered? Discuss fully.
Assuming that all of them were not yet over sixty (60) years of age, the additional labor
complement of thirty (30) workers, two (2) supervisors and two (2) department managers were
compulsorily covered by the Social Security Law on January 5, 1994, when they were employed.
According to said law, workers are covered on the day of their employment.
But the five (5) carpenters which the company hired to fix the roof and walls of its factory were not
under the compulsory coverage of the Social Security law because said carpenters are casual
employees. The Social Security law provides that employment purely casual and not for the purpose
of occupation or the business of the employer are not under its compulsory coverage.
Pedro Tortilla and his employer were covered by the SSS. Tortilla was legally married to
Orpha de la Cruz, with whom he had two minor, unmarried and unemployed children. But for
two years, he had been living with his common-law wife, Dora, with whom he had two minor,
unmarried and unemployed children. His jobless father stayed with him. In his SSS record, he
designated as beneficiary his best friend, a 20-year old student who was totally dependent on
him for support. In a car accident, Tortilla, Orpha de la Cruz and their two children died.
Who are entitled to the death benefits?
The Social Security Law defines beneficiaries as the dependent spouse until he remarries and
dependent children, who shall be primary beneficiaries. In their absence, the dependent parents and,
subject to the restrictions imposed on dependent children, the legitimate descendants and illegitimate
children who shall be the secondary beneficiaries. In the absence of any of the foregoing, any other
person designated by the covered employee as secondary beneficiary.
Applying the above provision, when Tortilla died, he died with the persons who are his primary
beneficiaries. Thus, Tortillas secondary beneficiaries, namely, his dependent jobless father and
illegitimate children, who were minor, unmarried and unemployed are entitled to death benefits under
the Social Security Law.
Under the law, the common law wife is not among those who could be a beneficiary, either as
primary or secondary beneficiary.
As for the 20-year old student who was Tortillas best friend, because he was designated by Tortilla
as beneficiary, could have been entitled to death benefits, in the absence of either primary and
secondary beneficiaries, which is not the case, however, in the question given.
Juan was elected councilor of the municipality of San Felipe. On the second year of his
term, he left his legitimate wife, Josefa and their three minor, unmarried and unemployed
children and lived with a common-law wife, Maria, with whom he had two minor, unmarried and
unemployed children. Immediately after he completed his term, Juan was appointed cashier in
the office of the municipal treasurer of San Felipe. He was dishonorably discharged from the
service upon being convicted of malversation of public funds. A year later, he died.
Who are entitled to the GSIS survivorship benefits?
NONE. When Juan was dishonorably discharged from the service, having been convicted of
malversation of public funds, he automatically forfeited his right to the benefits that he or his
beneficiaries could have been entitled to receive from the GSIS. Thus, Juans death did not give rise
to any right to survivorship benefits.
Maya works as a corporate secretary assigned under the department headed by Mr. Many
Yakis. On account of the latters act of fondling Mayas hand, massaging her shoulder and
caressing her nape on the pretext of being mere friendly gestures, Maya was compelled to file
for a sexual harassment suit.
Would the commencement of a complaint for sexual harassment bar Maya from instituting
any other affirmative relief? May the sexual harassment suit be brought at any time desired by
the injured party?
NO. The Law provides that nothing in the said Act shall preclude the victim of work, education or
training-related sexual harassment from instituting a separate and independent action for damages
and other affirmative relief (Section 6, RA 7877).
NO. The action prescribes in three (3) years (Section 7, RA 7877). Hence, the case must be
filed within the said prescriptive period.

Can an individual, the sole proprietor of a business enterprise, be said to have violated the
Anti-Sexual Harassment Act of 1995 if he clearly discriminates against women in the adoption
of policy standards for employment and promotions in the enterprise? Explain.
When an employer discriminates against women in the adoption of policy standards for
employment and promotion in his enterprise, he is not guilty of sexual harassment. Instead, the
employer is guilty of discrimination against women employees which is declared to be unlawful by the
Labor Code.
For an employer to commit sexual harassment, heas a person of authority, influence or moral
ascendancyshould have demanded, requested or otherwise required a sexual favor from his
employee whether the demand, request or requirement for submission is accepted by the object of
said act.
In the question, no such act was committed by the sole proprietor.
How many times may a male employee go on Paternity leave? Can he avail himself of this
benefit, for example, 50 days after the first delivery by his wife?
A male employee may go on Paternity Leave up to four (4) children (Sec. 2, RA 8187). The male
employee can avail of this benefit 50 days after the delivery of his wife because the Rules
Implementing Paternity Leave Act says that the availment should not be later than 60 days after the
date of delivery.
Mrs. Mahinhin works in the ticketing office of the Cathay Pacific airways in Makati. Before
she delivered her first born child, she discovered that there is no provision in their CBA which
covers maternity leave benefits. In the absence of such a CBA provision, will she be entitled to
any maternity leave benefits? If so, what will be the basis thereof?
YES, on the basis of the Social Security Law, which provides that a covered female employee who
has paid at least three monthly maternity contributions in the twelve-month period immediately
preceding the semester of her childbirth, or miscarriage and who is currently employed shall be paid a
daily maternity benefit equivalent to one hundred percent of her average daily salary credit for 60 days
for normal delivery or 78 days in case of caesarian delivery.

2007 Bar Questions and Answers
Source: Philippine Association of Law Schools
(5 Points)
a. What is the principle of codetermination?
The principle of co-determination refers to the right of workers to participate in policy and decision-
making processes directly affecting their rights and benefits, without intruding into matters of
management prerogatives (PAL vs. NLRC, G. R. No. 85985, August 13, 1993).
b. What, if any, is the basis under the Constitution for adopting it?
Art. XII (On Social Justice and Human Rights), Sec. 3, par. 2 provides, among others, that workers
shall also participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.
- II -
(5 Points)
a. Discuss the statutory restrictions on the employment of minors?
Under Art. 139 of the Labor Code, as amended, it is prohibited to employ minors in hazardous, or
deleterious and immoral undertakings. It also prescribes that no child below 15 shall be employed
unless he works directly under his parents or guardians and his work does not interfere with his
schooling; those between 15 and 18 shall comply with appropriate DOLE regulations.
b. May a househelp be assigned to non-household work?
NO, Under Art. 145 of the Labor Code, no househelper shall be assigned to work in a commercial,
industrial, or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or
non-agricultural workers as describe herein.
YES, provided that he/she receives a salary not lower than that provide for non-agricultural
- III -
(5 Points)
Discuss the types of illegal recruitment under the Labor Code.
Types of Illegal recruitment under the Labor Code are:
1. Recruitment by a non-licensee
2. Simple illegal recruitment is committed by a licensee against one or two persons only
(People v. Sadiosa, G.R. No. 107084, May 15, 1988).
3. Large scale or qualified recruitment which is committed against three or more persons,
individually or as a group.
4. Illegal recruitment is qualified as a economic sabotage when done by a syndicate or
where it is committed in large scale.
In initiating actions against alleged illegal recruiters, may the Secretary of Labor and
Employment issue search and arrest warrants?
No, the secretary of DOLE, not being a judge, cannot issue search or arrest warrant. Under Article
III, Section 2 of the 1987 Constitution, it is only a judge, and no other, who may issue a warrant of
arrest or search (Salazar v. Achacoso, G.R. No. 81510, March 14, 1980).
- IV -
(5 Points)

a. The Globe Doctrine.
The globe doctrine to the method of determining the will or desire of employees which is important
factors in determining the appropriate bargaining unit. The best way to determine such preference is
through referendum or plebiscite (Globe Machine v. Stamping Company, 3 NLRB 294 [1937]).
b. The Community of Interest Rule.
The community of interest rule states that the employees within an appropriate bargaining unit
must have commonality of collective bargaining interest as well as substantial mutual interest in terms
of employment and working conditions as evidenced by the type of work they perform (San Miguel
Corporation v. Laguesma, G.R. No. 100485, September 21, 1994).
Under the Community of Interest Rule, groups having substantial similarity of work or duties or
similarities of working conditions shall constitute the appropriate bargaining unit (Rothenberg,
Labor Relations, pages 490-491).
(5 Points)
May non-lawyers appear before the NLRC or Labor Arbiter? May they charge attorneys fee
for such appearance provided it is charged against union funds and in an amount freely
agreed upon by the parties? Discuss fully.
Yes, non lawyers may appear before the Commissions or any Labor Arbiter only:
1. If they represent themselves; or
2. If they represent their own legitimate labor organization or members thereof; or
3. If they are duly accredited by a Legal Aid Office which id DOJ or IBP-recognized.
Non lawyers may not charge attorneys fees through charged against the union funds and agreed
upon. Attorneys fees presuppose the existence of an attorney-client relationship (PAFLU vs.
BISCOM, G.R. No. L- 23959, November 29, 1971).
- VI -
(5 Points)
Procedurally, how do you stay a decision, award or order of the Labor Arbiter? Discuss
By filing an action for injunction within ten (10) calendar days from receipt of decision on the
grounds of grave abuse of discretion, intrinsic fraud, or pure question of law and/or serious, erroneous
factual findings causing grave or irreparable damage, and such other grounds under Art. 223 of the
Labor Code, as amended.
Except for the reinstatement aspect, it is stayed by filing an appeal within ten (10) calendar days
from the receipt, subject to the posting of an appeal bond if there is a monetary award.
- VII -
(5 Points)
May the NLRC or the courts take jurisdictional cognizance over compromise
agreements/settlements involving labor matters?
Article 227 provides that any compromise agreement involving labor matters entered into by the
parties with the assistance of the DOLE shall be final and binding upon the parties, except in cases of
non-compliance or, if based on fraud, when misrepresentation or coercion is present.
Yes, provided that the compromise settlement was executed with the assistance of the BLR or the
regional office of the DOLE as required by Article 227 of Labor Code. The execution of a compromise
settlement is only valid with the assistance of BLR or the regional office of the DOLE (Mindoro
Lumber and Hardware v. Bacay, et al., G.R. No. 158753, June 8, 2005).
How sacrosanct are statements/data made at conciliation proceedings in the Department of
Labor and Employment? What is the philosophy behind your answer?
Under Article 223, statements made at conciliation proceedings are privileged communication that
can neither be used as evidence nor can conciliators testify on any matters taken up in the
proceedings. The philosophy is to ascertain the truth about the controversy which the parties may be
afraid to divulge if the revelations can be utilized against them later on.
- VIII -
(5 Points)
Discuss in full the jurisdiction over the civil and criminal aspects of a case involving an
unfair labor practice for which a charge is pending with the Department of Labor and
Jurisdiction over unfair labor practices which are also criminal offenses initially lies with the Labor
Arbiters. No criminal prosecution can be instituted without final judgment that an unfair labor practice
has in fact been committed. The administrative findings are neither binding in the criminal case nor
available as evidence of guilt, but merely prove procedural compliance.
In a labor dispute involving national interest, the Secretary of Labor under 263(g) may take
cognizance of the civil or administrative aspect of the labor case, depriving the Labor Arbiter from
taking cognizance of the unfair labor practice case. After finality of judgment finding ULP, the criminal
aspect can be instituted before the prosecutor.
- IX -
(5 Points)
Discuss the legal requirements of a valid strike.
It must comply with the purpose and means test which means that both the purpose and the
means to carry out the strike must be legal. The purpose must be based solely on bargaining
deadlock (economic) and/or unfair labor practice (political). The means to carry out the strike should
also be legal and there should be no illegal acts committed in the course of the strike.
(5 Points)
Discuss briefly the instances when non-compliance by the employer with a reinstatement
order of an illegally dismissed employee is allowed.
When reinstatement is no longer feasible due to strained employer-employee relationship, bona
fide closure of business, valid abolition of position, health and/or age reasons, separation pay in lieu
of reinstatement may be allowed.
- XI -
(5 Points)
As a rule, when is retirement due?
As a rule, optional retirement is due at age 60 and compulsory retirement at age 65, with at least 5
years of service (R.A. 7641) or as may be provided for in the CBA or company retirement program.
When is retirement due for underground miners?
Optional retirement is due for underground miners upon reaching the age of 50 years or more and
compulsory retirement at age 60, provided he has served at least 5 years as such. (R.A. 8558)
- XII -
(5 Points)
How do you execute a labor judgment which, on appeal, had become final and executory?
Discuss fully.
By filing a motion for execution, and causing a writ of execution to be served by the sheriff or such
law enforcement agency as may be deputized by the DOLE or NLRC. It may also be issued motu
propio by the Labor Arbiter (Article 223 & 224, Labor Code).
Cite two instances when an order of execution may be appealed.
1. When execution becomes impossible or unjust, it may be modified or altered on appeal to
harmonize the same with justice and the facts (Torres v. NLRC, G.R. No. 107014,
April 12, 2000).
2. Supervening events may warrant modification in the execution of the judgment, as when
reinstatement is no longer possible because the position was abolished as a cost-cutting
measure due to losses (Abalos v. Philex Mining Corp., G.R. No. 140374,
November 27, 2002).
3. Where the writ is found defective, exceeds or varies the award and/or is irregularly issued
(DBP v. Union Bank, G.R. No. 155838, January 13, 2004; Metrobank v. CA,
G.R. No. 110147, April 17, 2001).
4. Where there is wrongful computation of the award.
- XIII -
(5 Points)
May a decision of the Labor Arbiter which has become final and executory be novated
through a compromise agreement of the parties?
Compromise agreement is encouraged and authorized by law. Hence, they may be made even
when the judgment is final and executory (Jesalva v. Bautista, 105 Phil. 348, 24 March 1959).
The validity of agreement is determined by the compliance with the requisites and principles of
contracts, and not by the time it was entered into. As provided by the law on contracts, a valid
compromise must have the following elements; (1) the consent of the parties to the compromise; (2)
an object certain that is the subject matter of the compromise; (3) the cause of the obligation that is
established (Magbanua v. UY, G.R. No. 161003, May 05, 2005).
- XIV -
(5 Points)
AB, single and living-in with CD (a married man), is pregnant with her fifth child. She
applied for maternity leave but her employer refused the application because she is not
married. Who is right? Decide.
While the maternity leave is rightfully denied, the employers reason is misplaced. The SSS law
does not require marriage for entitlement. However, since AB is already pregnant with her fifth child,
she can no longer claim maternity leave benefits.
- XV -
(5 Points)
Some officers and rank-and-file members of the union staged an illegal strike. Their
employer wants all the strikers dismissed. As the lawyer, what will you advise the employer?
Discuss fully.
There is no wholesale dismissal of strikers even if the strike was declared illegal. Under Art. 264 of
the Labor Code, mere participation of a worker in an illegal strike shall not constitute sufficient ground
for termination. Union officers, however, who knowingly engaged in an illegal strike are deemed to
have lost their employment status. For a worker or a union member to suffer loss of employment, he
must have knowingly participated in the commissions of illegal act during the strike ( CCBPI Postmix
Workers Union v. NLRC, G.R. No. 114521, November 27, 1998; International Container
terminal Services, Inc. v. NLRC, G.R. No. 115452, December 21, 1996).
- XVI -
(5 Points)
A carpenter is employed by a private university in Manila. Is the carpenter a regular or a
casual employee? Discuss fully.
The carpenter is a casual employee. Under the reasonable casual connection rule, the carpenters
works is not usually necessary and desirable in the usual trade or business of the employer university.
If the employment of the carpenter is occasional or sporadic and brief in nature, his employment is
casual, because the work he is performing is not in the usual course of the schools trade or business.
However, if the carpenter has rendered services for at least one year, whether continuous or broken,
he became a regular employee by operation of law, with respect to the activity for which he is

employed. His employment shall continue while such activity exist (Article 280, Labor Code, See
also Philippine Geothermal, Inc. v. NLRC, G.R. Nos. 82643-67, August 30, 1990;
Kimberly Independent Labor Union, etc. v. Drilon, G.R. Nos. 77629 and 78791, May 9,
- XVII -
(5 Points)
P.D. 1508 requires the submission of disputes before the Barangay Lupong Tagapamayapa
prior to the filing of cases with the courts or other government bodies. May this decree be
used to defeat a labor case filed directly with the Labor Arbiter? Discuss fully.
Labor disputes are the exception to P.D. 1508 (Montoya v. Escayo, G.R. Nos. 82211-12,
March 21, 1989). Under Article 226, motion to dismiss before the Labor Arbiter are only allowed on
grounds of lack of jurisdiction, improper venue and bar by prior judgment or prescription. Hence,
failure to resort to barangay conciliation is not valid ground to defeat the labor case.
(5 Points)
Inday was employed by mining company X to perform laundry service at its staffhouse.
While attending to her assigned task, she slipped and hit her back on a stone. Unable to
continue with her work, she was permitted to go on leave for medication, but thereafter she
was not allowed to return to work. She filed a complaint for illegal dismissal but her employer
X contended that Inday was not a regular employee but a mere househelp. Decide.
Inday is a regular employee because she performs work that is usually necessary and desirable in
the business of the mining company. Services rendered in a staff house of a company within the
premises of a company cannot be considered a household work (Apex Mining Company, Inc. v.
NLRC, G.R. No. 94952, April 22, 1991).
- XIX -
(5 Points)
Cite five grounds for disciplinary action by the Philippine Overseas Employment
Administration (POEA) against overseas workers.
Pre-employment Stage:
Using false information or documents for job application; and
Unjustified refusal to depart for overseas assignment.
Employment Stage:
1. Commission of a criminal offense punishable by Philippine or host country laws;
2. Unjustifiable breach of POEA contract;
3. Embezzlement of company funds;
4. Embezzlement of money or property of fellow workers entrusted for delivery to relatives in
the Philippines;
5. Violation of the religious or sacred practices of host country;
6. Drunkenness and disorder;
7. Desertion or abandonment of work;
8. Immoral activities, including prostitution;
9. Illegal gambling;
10. Drug addiction;
11. Creating trouble at the worksite or in the vessel;
12. Initiating or adjoining a strike or work stoppage where the host country prohibits the same;
13. Mutiny
- XX -
(5 Points)
AB, a non-resident American, seeks entry to the country to work as Vice-President of a
local telecommunications company. You are with the Department of Labor and Employment
(DOLE). What permit, if any, can the DOLE issue so that AB can assume as Vice-President in
the telecommunications company? Discuss fully.
AB must secure an employment permit and employment registration from the DOLE, who shall
issue it after determining that there is no other person in the Philippines who is competent, able or
willing to do the work for which the alien is hired.

Bar-Type Questions
Paul signed a contract of employment with CF Sharp Crew and Management Inc, as a
seafarer. He was assured of a monthly salary of US$515.00, overtime pay and other benefits.
The contract was approved by the POEA. Petitioner was to be deployed on board the MSV
Seaspread. Pauls deployment was eventually disallowed by the captain of MSV Seaspread
allegedly, upon request of Pauls family. Paul filed a complaint for illegal dismissal, damages,
and attorneys fees against CF Sharp before the Labor Arbiter. CF Sharp argues that the Labor
Arbiter has no jurisdiction to award petitioners monetary claims; his employment did not
commence because his deployment was withheld for a valid reason and considering further
that the POEA-approved employment contract provides that the employer-employee
relationship shall commence only upon the seafarers actual departure from the port in the
point of hire. Consequently, the labor arbiter and/or the NLRC cannot entertain adjudication of
petitioners case; the controversy involves a breach of contractual obligations and as such is
cognizable by civil courts. Whether or not Pauls claim (arising from his non-deployment as a
seafarer pursuant to a POEA approved contract) falls within the jurisdiction of the Labor
YES. The jurisdiction of labor arbiters is not limited to claims arising from employer-employee
relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:
Sec. 10.Money Claims.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 employer-employee relationship or by virtue of any law
or contract involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages xxx
Since the present petition involves the employment contract entered into by petitioner for overseas
employment, his claims are cognizable by the labor arbiters of the NLRC. (Santiago vs. CF Sharp
Crew Management Inc., G.R. No. 162419, July 10, 2007)
Beldon, Jaime, Roberto, and Romulo went to the World Pack Travel and Tours. Upon their
inquiry, Ramon said that he sends applicants abroad and gave the four applicants an
application form which the latter accomplished. Upon their submission of the application form
and payment of processing fees and other expenses, the applicants were promised work as
factory workers in Japan by Ramon. However, such promise was unfulfilled and the applicants
demanded their money back from Ramon who refused. A complaint was filed by the applicants
against Ramon. Later, it was shown that neither Ramon nor World Pack Travel and Tours had
the necessary license to engage in recruitment and placement. In his defense, Ramon alleged
that he is a mere janitor at the company and while admitting that he received the money from
the complainants, he denied knowing what it was for. Did Ramon commit illegal recruitment in
large scale?
YES. The essential elements of the crime of illegal recruitment in large scale are: (1) the accused
engages in acts of recruitment and placement of workers as defined in Article 13 (b) of the Labor
Code or in any prohibited activities under Article 34 of the Labor Code; (2) the accused has not
complied with the guidelines issued by the Secretary of Labor and Employment, particularly with
respect to the securing of a 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. These elements are present in this case. Ramon promised the complainants
employment and assured them placement overseas. Furthermore, Ramon did not have the license or
authority to recruit persons for overseas work. Neither did his employer, the World Pack Travel and
Tours possess such license or authority. (People of the Philippines vs. Rose Dujua, G.R. Nos.
149014-16, February 5, 2004)
a. ABC Agency sent A and other Filipinos to Singapore. They were welcomed by Mr. X,
owner of Set-up Agency. They were informed that theyll be working as fisherman with a
monthly salary of US$200. Thereafter they boarded a vessel. While in the vessel they were
treated in an inhumane manner. So they decided to leave the vessel. Upon return, they asked
ABC to pay their salaries, but instead of acceding to their demand, ABC required them to
surrender their passport, promising them that it will procure job for them. They filed complaint
for non-payment of wages. ABC contended that Mr. X is total stranger to it, and that it cannot
be held liable because no employment contract between them and the Set-up Agency had
been approved by the POEA. Decide.
ABC is liable for the claim of A and others. It is clear that they applied in the office of ABC and were
able to secure employment through the said agency. And evidence shows that ABC had a hand or
participated in the recruitment and deployment of the petitioner.
Also, ABC failed to comply with the Rules and Regulation of the POEA, which make it susceptible
for cancellation of license as provided in Sec. 2 Rule I Book IV of POEA Rules and Regulations.
(Hornales vs. NLRC, September 10, 2001)
Jason is a monthly-paid employee of Vincents Electronics Corporation. Jason claims
underpayment of monthly salaries, citing Sec. 2, Rule IV of Book III which provides that
Employees who are uniformly paid by the month, irrespective of the number of working days
therein, with a salary of not less than the statutory or established minimum wage shall be paid
for all days in the month whether worked or not xxx. Is Jason correct in claiming that said
section in the Implementing Rules of Book III entitles him to pay for unworked days?
NO. The basic rule in this jurisdiction is no work, no pay. The right to be paid for unworked days
is generally limited to the legal holidays in a year. Jasons claim is based on a mistaken notion that
Sec. 2, Rule IV of Book III gave rise to a right to be paid for unworked days beyond the legal holidays.
In effect, Jason is demanding that he be given pay for Sundays, unworked half of Saturdays and other
days when he do not work at all. His line of reasoning is not only a violation of the no work, no pay
principle, it also gives rise to an invidious classification, a violation of the equal protection clause.
Sustaining Jasons argument will make monthly-paid employees a privileged class who are paid even
if they do not work. (Carpio Odango, et al. vs. NLRC, G.R. No. 147420, June 10, 2004)
7K Corporation and Universal Janitorial and Allied Services entered into a service contract
whereby Universal bound itself to provide 7K Corp. with drivers at the rate of P4,637.00 per
driver a month. The service contract provided that: The Contractor [Universal] shall continue
to be the employer of the workers assigned to the clients [petitioners] premises and shall
assume all responsibilities of an employer as provided for under the Labor Code of the
Philippines, and shall be solely responsible to its employees for labor laws, rules and
regulations, particularly those relating to minimum wage, overtime pay, holiday pay, thirteenth
month pay and similar labor standards. . . The Contractor shall exercise in full its power of
control and supervision over the workers assigned. The Contractor shall monitor the conduct
of its workers in their working conditions.
Rene A. Corona and Alex B. Catingan (drivers provided by Universal) filed separate
complaints for illegal dismissal, payment of salary differentials, unpaid overtime, and
reinstatement with backwages, against Universal (direct employer) and/or 7k Corp (indirect
employer) before the Labor Arbiter due to discrepancies in the overtime paid to them by the
accounting department of 7K Corp. Universal refused to accept its solidary liability (with 7K
Corp.). Universal argued that it is not a labor-only contractor because there is nothing on
record which shows that it does not have substantial capital or investment in the form of tools,
equipment, machineries, and the like. Is Universals defense tenable?
Such contention is incorrect. The presumption is that a contractor is a labor-only contractor
unless such contractor overcomes the burden of proving that it has substantial capital, investment,
tools and the like. The employees, in this case, private respondents, should not be expected to prove
the negative fact that the contractor does not have substantial capital, investment and tools to engage
in job-contracting. Since neither 7K Corp. nor Universal was able to adduce evidence that Universal
had any substantial capital, investment or assets to perform the work contracted for, the presumption
that Universal is a labor-only contractor stands. (7K Corp. vs. NLRC, G.R. No. 148490, November
22, 2006)
PC engaged the services of LFI to render security services at its offices. LFI, in turn,
deployed its security guards at its premises. According to PC, it religiously complied with the
terms of the contract with LFI. Later, PC terminated its contract with LFI, having found the
latters services unsatisfactory. LFI also terminated the security guards assigned at PCs
premises. Thereupon, the dismissed security guards filed a complaint for illegal dismissal,
underpayment of wages, nonpayment of overtime pay, rest day and holiday premium pay,
service incentive leave and 13th month pay against LFI and PC. PC denied liability, alleging that
it has paid the guards compensation with LFI. May PC be held liable for the security guards

monetary claims?
YES. PCs liability is joint and several with LFI pursuant to Articles 106, 107, and 109 of the Labor
Code. In this case, when PC contracted with LFI for security services, PC became an indirect
employer of the security guards. Following Article 106, when the agency as a contractor failed to pay
the guards, the corporation as principal becomes jointly and severally liable for the guards wages. PC
cannot evade its liability by claiming that it had religiously paid the compensation of the guards with
LFI as stipulated in the contract. (Mariveles Shipyard Corp. vs. Court of Appeals, G.R. No.
144134, November 11, 2003)
Eligio Pablo, an employee of Cirineo Bowling Plaza, filed a complaint with the DOLE
requesting the investigation and inspection of the said establishment for labor law violations
such as underpayment of wages, nonpayment of 13 th month pay, nonpayment of rest day pay,
overtime pay, holiday pay, and service incentive leave pay. Cirineo Bowling alleges that DOLE
has no jurisdiction over the employees claims where the aggregate amount of the claims of
each employee exceeds P5,000.00; and that the Labor Arbiter has jurisdiction over all other
claims arising from employer-employee relations, including those in domestic or household
service, involving an amount exceeding P5,000.00, whether or not accompanied with a claim
for reinstatement. Is the bowling plaza correct in its argument?
Cirineo Bowling Plazas contention cannot stand as the Regional Director has jurisdiction over the
employees claims. Pursuant to Sec. 1 of R.A. No. 7730 which amended Article 128(b) of the Labor
Code, the Secretary of Labor and Employment or his duly authorized representative, in the exercise of
their visitorial and enforcement power, are now authorized to issue compliance orders to give effect to
the labor standard provisions of the Labor Code and other labor legislation based on the findings of
labor employment and enforcement officers made in the course of inspection, without any restriction
with respect to the jurisdictional amount of P5,000.00 provided under Article 129 of the Labor Code.
(Cirineo Bowling Plaza, Inc. vs. Court of Appeals, et al., G.R. No. 146572, January 14, 2005)
The RTWPB of Region X issued a Wage Order which mandated a P7 increase in the
minimum daily wage of all workers and employees in the private sector in the said region
receiving a daily wage of not more than P130 per day and an additional P10 allowance per day.
Nasipit Lumber Company filed an application for exemption from compliance with the said
order claiming that it is a distressed establishment whose paid-up capital has been impaired
by at least 25%. The RTWPB granted the company full exemption from compliance for a period
of one year. After such period, the company filed an extension of such exemption for another
year, citing continuing business decline. May such extension be extended?
NO. Section 7 of the NWPC Revised Guidelines on Exemption provides that the maximum period
of exemption that can be accorded to a qualified applicant is only for one year from the effectivity of
the wage order. This non-extendible one-year period of exemption is to afford protection to workers
who may be unfairly affected by the deleterious effect of a prolonged exemption which is not in accord
with the very purpose of the issuance of wage order. (Nasipit Lumber Company vs. National
Wages and Productivity Commission, G.R. No. 128296, September 8, 2003)
SMC Quarry Workers Union-February Six Movement (FSM) filed a petition for certification
election, alleging that it is a legitimate labor organization that seeks to represent the regular
rank-and-file workers at the Titan Megabags Industrial Corporation. The corporation opposed
the petition contending that the members of the union are not its employees but of Stitchers
Multi-Purpose Cooperative (SMC), an independent contractor. The Med-Arbiter ordered the
conduct of the certification election. On appeal, the Secretary of DOLE affirmed the Med-
Arbiters order authorizing the certification election. The corporations motion for
reconsideration was denied by the Secretary of Dole for being filed late. On a petition for
certiorari filed with the Court of Appeals, the corporation contends that the Secretary of DOLE
committed grave abuse of discretion in authorizing the certification election. The Court of
Appeals set aside the resolution of the Secretary of DOLE and disallowed the conduct of the
certification election.
May the Court of Appeals set aside the final and executory resolution of the Secretary of
(a) Does the employer have the locus standi to question the certification election
of its employees?
(a) NO. Under Article 259 of the Labor Code, any party to a certification election
may appeal the order of the Med-Arbiter directly to the Secretary of Labor who
shall decide the same within fifteen (15) calendar days. Sec. 15, Rule XI, Book V
of the Omnibus Rules Implementing the Labor Code provides that the decision or
resolution of the Secretary of DOLE on appeal shall be final and executory. Upon
finality of the decision of the Secretary, the entire records of the case shall be
remanded to the office of origin for implementation of the decision, unless
restrained by the appropriate court.
In National Federation of Labor vs. Laguesma, the Supreme Court held that the remedy of an
aggrieved party in a decision or resolution of the Secretary of DOLE is to timely file a motion for
reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a
special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. And without a
motion for reconsideration seasonably filed within the ten-day reglementary period, the questioned
decision or resolution of the Secretary becomes final and executory. Consequently, the merits of the
case can no longer be reviewed to determine if the Secretary could be faulted for grave abuse of
discretion. The employers failure to file its motion for reconsideration on time is jurisdictional and fatal
to its cause. It has, in effect, rendered final and executory the resolution of the Secretary of DOLE.
(b) NO. Even if there was no procedural flaw on the part of the employer, the Court
of Appeals still should have denied the employers petition for certiorari. In
certification elections, the employer is a bystander, it has no right or material
interest to assail the certification election. Thus, when a petition for certification
election is filed by a legitimate labor organization, it is good policy of the
employer not to have any participation or partisan interest in the choice of the
bargaining representative. While employers may rightfully be notified or informed
of petitions of such nature, they should not, however, be considered parties thereto
with an inalienable right to oppose it. (SMC Quarry 2 Workers Union-February
Six Movement vs. Titan Megabags Industrial Corp., G.R. No. 150761, May 19,
2004; employer as bystander rule, R.A. 9481)
Eduardo is an employee of Standard Chartered Bank, where he worked as a Compensation
and Benefits Manager. However, barely a month after his employment, Eduardo resigned from
his post to rejoin his former employer. He did not comply with the 30-day notice rule and his
resignation was so abrupt that it disrupted plans already in the pipeline. As a result, the bank
incurred expenses in carrying out contracts which it already executed with its clients. Eduardo
never complied with the banks demand of reimbursing the latter for the expenses it incurred
on his account.
The bank filed a complaint against Eduardo with the RTC of Makati City for actual, moral
and exemplary damages. Eduardo moved to dismiss the complaint on the ground that the
action for damages is within the exclusive jurisdiction of the Labor Arbiter. Is the contention of
Eduardo correct?
NO. Not every controversy or money claim by an employee against the employer or vice-versa is
within the exclusive jurisdiction of the Labor Arbiter. A money claim by a worker against the employer
or vice-versa is within the exclusive jurisdiction of the Labor Arbiter only if there is a reasonable
causal connection between the claim asserted and employer-employee relation. In the case given,
the bank did not ask for any relief under the Labor Code, it seeks to recover damages agreed upon in
the contract as redress for Eduardos breach of his contractual obligation. Such cause of action is
within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts.
(Eviota vs. CA, G.R. No. 152121, July 29, 2003; Kawachi vs. del Quero, G.R. No. 163768, March
27, 2007)
A was employed by XYZ Corporation. He was assigned to perform the duties of a salesman.
In many instances, it was shown that he deviated from certain company rules with the consent
of his supervisor. Due to the several complaints against him, his service was terminated for
loss of trust and confidence on the ground of willful disobedience. Thus, A filed for illegal
dismissal. Was the dismissal of X proper?
NO. As actions were actually done in good faith, being in compliance with the instructions of his
supervisor. Where a violation of company policy or breach of company rules and regulations was
found to have been tolerated by management, then the same could not serve as a basis for
termination. There must be a showing that the employees acts were inimical to the interest of the
employer. (Coca-Cola Bottlers Philippines, Inc. vs. Dominic E. Vital, G.R. No. 154384,
September 13, 2004)
City Trucking employed Antonio as a helper mechanic and part of the maintenance staff.
Antonios duties included buying spare parts, picking up repaired parts from machine shops,
and assisting other employees performing maintenance or repair work on the dump trucks
owned by City Trucking. His working hours were from 8:00 a.m. to 5:00 p.m., Mondays to
Sundays with a salary of One Hundred Fifty Pesos (P150.00) a day. The landfill wherein
Antonio was regularly assigned had been closed down. Antonio was informed by the company
secretary a few days later that his employment was terminated. Thus, he stopped going to
work and asked from petitioner a Certificate of Employment. Antonio thereafter filed a
complaint for illegal dismissal with the Labor Arbiter. City Trucking now argues that Antonios
dismissal was justified as his intention to abandon work can be gleaned from his history of
absenteeism and his request for a Certificate of Employment. Whether or not respondent
abandoned his employment, and hence was not illegally dismissed by petitioners.
No. Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It is one form of neglect of duty, hence, a just cause for termination of employment by
the employer. Mere absence does not equate to abandonment. To constitute abandonment, there
must be a concurrence of: (1) the failure to report for work or absence without valid or justifiable
reason; (2) a deliberate intent of the employee to leave his work permanently; and (3) overt act/s from
which it may be inferred that the employee had no more intention to resume his work. This burden of
proving that there was a deliberate and unjustified refusal on the part of the employee to resume his
employment without any intention of returning rests on the employer.
Absenteeism per se is not an overt act which would prove an unequivocal intent on the part of the
employee to discontinue employment. In the case at bar, respondent was able to explain his alleged
Respondents request for a Certificate of Employment does not show that he abandoned his work.
Respondent requested for the issuance of the Certificate of Employment after he has been told that
his services have already been terminated. Getting a Certificate of Employment is normal. To contend
that it is evidence of abandonment is non sequitur. (City Trucking, Inc. vs. Balajadia, G.R. No.
160769, August 9, 2006)
Arsenio was employed as a security guard by Bolinao Security Inc. (BSI) and was assigned
at the United States Agency for International Development (USAID). While on duty, Arsenio was
shot by another guard when he informed the latter that he is being investigated in the alleged
illegal lotto betting within the company premises.
Arsenio then filed with BSI an application for one month leave of absence as well as
sickness benefits. BSI approved the one month leave of absence but rejected his claim for
benefits. This prompted Arsenio to file with the SSS an application for sickness/medical
benefits. However, he found out that BSI failed to remit to the SSS its monthly contributions,
hence he reported the matter to the SSS.
Arsenio was reprimanded by BSIs officer-in-charge, telling him not to report for work and
that his name would be dropped from the rolls. Arsenio filed a complaint for illegal dismissal
and non-payment of wages and other benefits, with a prayer for reinstatement. BSI sent a letter
to Arsenio declaring him absent without leave. Arsenio contends that he could not report for
work due to the pendency of his complaint with the Labor Arbiter.
As the Labor Arbiter, how would you decide the controversy?
Arsenios dismissal from the service was without justifiable cause and without notice and hearing
as required by the Labor Code and its Implementing rules. There is no showing of a clear, valid and
legal cause which justifies Arsenios removal from employment. Neither did BSI serve two written
notices to Arsenio prior to his termination from employment. Clearly, this is a case of illegal dismissal.
It is a settled doctrine that the employer has the burden of proving the lawfulness of his employees
dismissal. The Implementing Rules of the Labor Code provide that no worker shall be dismissed
except for a just or authorized cause provided by law and after due process. This provision has two

the legality of the act of dismissal, that is, dismissal based on the grounds provided by Article
282 of the Labor Code, and
the legality in the manner of dismissal.
The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the
manner of dismissal is dismissal without due process.
Arsenio, who was illegally dismissed, is entitled to reinstatement without loss of seniority rights and
other privileges as well as to his full backwages, inclusive of allowances, and to other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. (Bolinao Security and Investigation Service, Inc. vs. Arsenio M.
Toston, G.R. No. 139135, January 29, 2004; Loadstar Shipping Co., Inc. et al. vs. Romeo
Mesano, G.R. No. 138956, August 7, 2003)
Sometime in 1958, Jaculbe began working for Siliman University Medical Center as a nurse.
Later the University informed Jaculbe that she was approaching her 35th year of service with
the university and was due for automatic retirement on November 18, 1993, at which time she
would be 57 years old. This was pursuant to a retirement plan imposed by the university
sometime in 1970 for its employees which provided that its members could be automatically
retired upon reaching the age of 65 or after 35 years of uninterrupted service to the
university. Rule III of the plan, on membership, stated:
All full-time Filipino employees of the University will automatically become
members of the Plan, provided, however, that those who have retired from the
University, even if rehired, are no longer eligible for membership in the Plan xxx
Jaculbe insisted that the compulsory retirement under the plan was tantamount to a
dismissal and pleaded with respondent to be allowed to work until the age of 60 because this
was the minimum age at which she could qualify for SSS pension. The University was firm in
its decision citing company policy.
(a)Whether or not respondents retirement plan imposing automatic retirement after 35
years of service contravened the security of tenure clause in the 1987 Constitution and the
Labor Code.
(b) Whether or not respondent committed illegal dismissal by retiring petitioner solely by
reason of such provision in its retirement plan.
(a.) Yes. Retirement plans allowing employers to retire employees who are less than the
compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty of security of
tenure. Article 287 of the Labor Code provides:
ART. 287.RetirementAny employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract
By its express language, Article 287 of the Labor Code permits employers and employees to fix the
applicable retirement age at below 60 years. However, the Court finds that the plan runs afoul of the
constitutional guaranty of security of tenure contained in Article XIII, also known as the provision on
Social Justice and Human Rights. A perusal of the rules and regulations of the plan shows that
participation therein was not voluntary at all. In fact, the only way she could have ceased to be a
member thereof was if she stopped working for respondent altogether. Moreover, retirement plan
came into being in 1970 18 or 12 years after petitioner started working for respondent. In short, it was
not part of the terms of employment to which petitioner agreed when she started working for
respondent. Retirement is the result of a bilateral act of the parties, a voluntary agreement between
the employer and the employee whereby the latter, after reaching a certain age agrees to sever his or
her employment with the former. In this case, no agreement, collective or otherwise, cited to justify the
latters imposition of the early retirement age in its retirement plan.
(b.) Yes. As already stated, an employer is free to impose a retirement age less than 65 for as long
as it has the employees consent. Stated conversely, employees are free to accept the employers
offer to lower the retirement age if they feel they can get a better deal with the retirement plan
presented by the employer. Thus, having terminated petitioner solely on the basis of a provision of a
retirement plan which was not freely assented to by her, respondent was guilty of illegal dismissal.
(Jaculbe vs. Siliman University, G.R. No. 156934 March 16, 2007)
The National Steel Corporation embarked on 2 major projects: the five-Year Expansion
Program and the Integrated Steel Mill Project. Consequently, it employed and trained several
employees for the project. One of them was Divina, who was appointed as researcher. She was
later on promoted as a senior researcher at the corporations research department.
Subsequently, the corporation adopted an organizational streamlining program and issued a
memorandum announcing the retrenchment of several workers. Divina was terminated and
was paid separation benefits at the rate of two months basic salary per year of service,
having rendered twelve (12) years of service. In addition, she received her leave credits, 13 th
month pay, uniform and rice subsidy differential. After being paid her separation benefits, she
executed and signed a Release and Quitclaim. Three years after, she field with the Labor
Arbiter a complaint for payment of retirement benefits against the corporation.
Is Divina entitled to retirement benefits? Discuss fully.
NO. In the facts given, it was not mentioned that there is a provision in the parties CBA authorizing
payment of retirement benefits in addition to retrenchment pay and there is no indication that Divina
was forced or duped into signing the Release and Quitclaim. Also, if Divina has not yet reached the
retirement age, she is not entitled to retirement benefits under Art. 287 of the Labor Code.
While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to
be benefited, however, such interpretation cannot be made in this case in the light of the clear lack of
consensual and statutory basis of the grant of retirement benefits to petitioner. (Divina S. Lopez vs.
National Steel Corporation, G.R. No. 149674, February 16, 2004)
Sime Darby Pilipinas, Inc. employed Alfredo and Henry as truck driver for its Recapping
Department in Marikina. After years of service, Sime Darby informed Alfredo and Henry that
due to the insufficiency of available jobs in its recapping operations, it had decided to
retrench the excess personnel based on the last in, first out principle. The two were among
those terminated and were given separation pays. Both Alfredo and Henry also executed
quitclaims. Months later, the two filed a case for illegal dismissal against Sime Darby claiming
that they signed the quitclaims under protest.
Are the quitclaims separately executed by Alfredo and Henry valid?
NO. It bears stressing that the law looks with disfavor on quitclaims and releases by employees
who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade
their legal responsibilities and frustrate just claims of employees. In Lopez Sugar Corporation v.
Federation of Free Workers, it was ruled that acceptance of those benefits would not amount to
estoppel. In exceptional cases, however, the Supreme Court has given effect to quitclaim executed by
employees if the employer is able to prove the following requisites: (1) the employee executes a deed
of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the
consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law,
public order, public policy, morals or good customs or prejudicial to a third person with a right
recognized by law. (Sime Darby Pilipinas, Inc., et al. vs. Alfredo Arguilla, et al., G.R. No. 143542,
June 8, 2006)
Star Garments employed Goma, et al. as sewer, assistant cutter, assistant supervisor and
driver. Years later, Star Garments ceased its business operation allegedly due to serious
financial losses resulting in the termination of Goma, et al.s services. Later, however, the
same owners/corporators of Star Garments set up Moon Garments Manufacturing. Goma, et al.
decided to file a case of illegal dismissal against its former employer, Star Garments and its
owners. Will the case prosper?
YES. First, the condition of business losses is normally shown by audited financial documents, like
yearly balance sheets and profit and loss statements as well as annual income tax returns. The facts
provided failed to indicate that necessary financial documents were presented by the
owners/employers to substantiate its claim for closing down Star Garments. The owners of Star
Garments also failed to refute Goma, et al.s allegation that they established another garment
manufacturing company, Moon Garments Manufacturing, immediately after Star Garments ceased its
business operations. Second, records also show that the employers failed to comply with the one-
month notice requirement. They did not serve Goma et al. and the DOLE with written notices of
termination within one month prior thereto as required under Article 283. (Stanley Garments
Specialist, et al. vs. George Gomez, et al., G.R. No. 154818, August 11, 2005; Espina vs. Court
of Appeals, G.R. No. 164582, March 28, 2007)

XYZ Bank Employees Association filed a complaint against XYZ Bank for wrongful
diminution of benefits. It alleged that the bank had been providing for a mid-year bonus and a
Christmas bonus both equivalent to one-month basic pay since 1971. Upon the effectivity of
P.D. 851 which granted the 13th month pay, the bank started giving its employees a one-month
basic pay as mid-year bonus, one-month basic pay as Christmas bonus and one-month
equivalent pay as 13th month pay. In 2000, the bank was placed under conservatorship and by
a resolution of the Monetary Board, the bank only gave the 13 th month pay mandated by law
and it no longer gave the employees the traditional mid-year and Christmas bonus. May the
XYZ Bank, under the circumstances, be compelled to continue paying its employees the
traditional mid-year and Christmas bonuses in addition to the 13 th month pay?
The bank cannot be compelled to pay it employees the mid-year and Christmas bonuses. A bonus
is an amount granted and paid to an employee for his industry and loyalty which contributed to the
success of the employers business and made possible the realization of profits. The granting of a
bonus is a management prerogative, something given in addition to what is ordinarily received by or
strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when
it is made part of the wage, salary or compensation of the employee. However, an employer cannot
be forced to distribute bonuses which it can no longer afford to pay. To hold otherwise would be to
penalize the employer for his past generosity. In such a depressed financial condition, the bank
cannot be legally compelled to continue paying the same amount of bonuses to its employees as this
would defeat the reason for the conservatorship. (Producers Bank of the Philippines vs. NLRC,
G.R. No. 100701, March 28, 2001)
Menardo owned a riceland which was cultivated by Eugenio. Pursuant to PD No. 27,
Eugenio became the beneficiary of the Land Transfer Program and was awarded Certificate of
Land Transfer over the said landholding. Eugenio died. Ronald, Eugenios heir who cultivated
the land, abandoned the same without turning over the landowners share of the agricultural
harvest. Menardo forcibly entered the riceland and cultivated the same over the objection of
Eugenios heirs. Menardo claimed that because of the pending payment of the amortizations
by Eugenios heirs, he should still be considered the owner of the riceland. Who should be
entitled to possess the landholding?
Eugenio, the original beneficiary, was awarded a Certificate of Land Transfer over the land
pursuant to PD No. 27. Therefore, for all intents and purposes, he is the acknowledged owner of the
contested land.
In case of non-payment, the amortizations due shall be paid by the farmers cooperative in which
the defaulting tenant-farmer is a member, with the cooperative having a right of recourse against the
farmer. PD No. 27 proscribes reversion of the landholding to the owner since it is explicitly provided
that title to land acquired pursuant to this Decree or the Land Reform Program of the Government
shall not be transferable except by the hereditary succession or to the Government in accordance with
the provisions of this Decree, the Code of Agrarian Reform and other existing laws and regulations.
(Del Castillo vs. Orciga, G.R. No. 153850, August 31, 2006)

Questions and Answers
What are the qualifying circumstances that would make illegal recruitment as an offense
involving economic sabotage? What is the prescriptive period of illegal recruitment cases?
The circumstances that would qualify illegal recruitment as an offense involving economic
sabotage are the following: (1) when illegal recruitment is committed by a SYNDICATE, i.e., if it is
carried out by three (3) or more persons conspiring or confederating with one another; or (2) when
illegal recruitment is committed in LARGE SCALE, i.e., if it is committed against three (3) or more
persons individually or as a group. (RA 8042, Sec. 6)
Under R.A. 8042, the prescriptive period of illegal recruitment cases is five (5) years; however,
when it involves economic sabotage, it prescribes in twenty (20) years (Sec. 12).
Is the absence of money given as consideration fatal for conviction in an illegal recruitment
NO. It can be gleaned from the language of Article 13 (b) of the Labor Code that the act of
recruitment may be for profit or not. It is sufficient that the accused promises or offers for a fee
employment to warrant conviction for illegal recruitment. Receipts to show proof of payment are not
indispensable in proving the guilt of the accused beyond reasonable doubt. (People vs. Jamilosa, G.
R. No. 169076, January 23, 2007)
May an employee of a corporation engaged in illegal recruitment be held liable as principal,
together with his employer?
YES. An employee of a company or 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. Settled is the rule that the existence of the corporate entity does not shield from
prosecution the corporate agent who knowingly and intentionally causes the corporation to commit a
crime. The culpability of the employee hinges on his knowledge of the offense and his active
participation in its commission. Where it is shown that the employee was merely acting under the
direction of his superiors and was unaware that his acts constituted a crime, he may not be held
criminally liable for an act done for and in behalf of his employer. (People vs. Corpuz, G.R. No.
148198, October 1, 2003)
Explain the principle of A Fair Days Wage For A Fair Days Labor
The age-old rule governing the relation between labor and capital, or management and employee
of a fair days wage for a fair days labor remains as the basic factor in determining employees
wages. If there is no work performed by the employee there can be no wage or pay unless, of course,
the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed,
or otherwise illegally prevented from working. (Aklan Electric Cooperative Inc. v. NLRC, G.R. No.
121439, January 25, 2000)
What is the Equal pay for equal work principle?
Persons who work with substantially equal qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries. (International School Alliance of Educators v.
Quisumbing, et al., G.R. No. 128845, June, 1, 2000)
May an employer withhold the employees wages and benefits as lien for expenses incurred
in training abroad?
NO. Article 116 of the Labor Code, provides, It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the wages (and benefits) 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.
Thus, an employer cannot simply refuse to pay the wages or benefits of its employee because he
has either defaulted in paying a loan guaranteed by his employer; or violated their memorandum of
agreement; or failed to render an accounting of his employers property. For legal compensation to
take place, the requirements set forth in Articles 1278 and 1279 of the Civil Code must be present.
(Special Steel Products, Inc v. Villareal, G.R. No. 143304, July 8, 2004)
What is the effect of appeal on a wage order?
The filing of the appeal does not serve to stay the wage order unless the party appealing such
order shall file with the NWPC an undertaking with a surety or sureties satisfactory to the Commission
for payment to the employees affected by the order of the corresponding increase, in the event such
order is affirmed. (Art. 123, Labor Code)
Explain the doctrine of double indemnity.
Double indemnity is the payment to a concerned employee of the prescribed increases or
adjustments in the wage rate which was not paid by an employer in an amount equivalent to twice the
unpaid benefits owing to such employee. (DOLE Department Order No. 10, May 4, 1998)
Araw ng Kagitingan and Good Friday are among the 10 paid regular holidays under Article
94 of the Labor Code. How much will an employee receive when both holidays fall on the same
The employee will receive 200% of his regular daily wage when both regular holidays fall on the
same day and he does not work. The law provides that he shall receive his regular daily wage for
each regular holiday. The employee will receive 100% for Araw ng Kagitingan and 100% for Good
Friday. If he works on that day, he is entitled to 300% of his regular daily wage; otherwise there would
be a diminution of benefits. (Asian Transmission Corp. vs. Court of Appeals, G.R. No. 144664,
March 15, 2004)
May an employer exempt himself from paying the minimum wage on account of his inability
to pay?
NO. The employer cannot exempt himself from paying minimum wages because of the poor
financial condition of the company. The payment of minimum wages is not dependent on the
employers ability to pay. (De Racho vs. Municipality of Iligan, G.R. No. L-23542, January 2, 1968)
What is a Red Circle Rate?
Red Circle Rate allowance is an amount, not included in the basic salary that is granted by the
company to an employee who is promoted to a higher position grade but whose actual basic salary at
the time of the promotion already exceeds the maximum salary for the position to which he or she is
promoted. It applies only to specific individuals whose salary levels are unique with respect to their
new and higher positions. (Manila Electric Company (MERALCO) v. Quisumbing, G.R. No. 127598,
January 27, 1999)
What is wage distortion? What are its elements?
Wage distortion is 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 differentiation.
Wage distortion has four elements, namely:
1. An existing hierarchy of positions with corresponding salary rates;
2. A significant change in the salary rate of a lower pay class without a concomitant
increase in the salary rate of a higher one;
3. The elimination of the distinction between the two levels (Note: For a distortion to
exist, the law does not require an elimination or total abrogation of quantitative
wage or salary difference); and
4. The existence of the distortion in the same region of the country. (Bankard
Employees Union-Workers Alliance Trade Unions vs. NLRC, G.R. No. 140689,
February 17, 2004)
Discuss the doctrine on the economic reality of the relations of parties test with respect
to the existence of employer-employee relationship.
In certain cases where the control test is not sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a relationship where several positions have been
held by the worker, the better approach would be to adopt a two-tiered test involving: (1) the putative
employers power to control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the activity or
Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services performed
are an integral part of the employers business; (2) the extent of the workers investment in equipment
and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers
opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the
success of the claimed independent enterprise; (6) the permanency and duration of the relationship
between the worker and the employer; and (7) the degree of dependency of the worker upon the
employer for his continued employment in that line of business. (Francisco vs. NLRC, GR No.
170087, August 31, 2006)
May an employer reduce workdays or resort to a compressed work week? Should he be
required to pay wages even on those unworked days?
An employer may reduce workdays to prevent serious business losses due to causes outside his
control, such as when there is substantial slump in the demand of his goods or services or when there
is lack of raw materials. Since the reduction of workdays is resorted to as a cost-saving device, it
would be unfair to require the employer to pay wages and cost-of-living allowance even on days taken
off from the work week. (DOLEs Explanatory Bulletin on the Effects of Reduction of Workdays on
Wages/Living Allowances, July 23, 1985) For a compressed work week scheme to be valid, the
following must be met: (1) it must be expressly and voluntarily supported by majority of the employees
affected; (2) if work is hazardous, a certification is needed from an accredited safety organization or
the firms safety committee that work beyond 8 hours is within the limits or levels of exposure set by
DOLEs occupational safety and health standards; and (3) the DOLE is duly notified. (DOLE Advisory
No. 02, Series of 2004)
Is service incentive leave convertible to its cash equivalent?
YES. The service incentive leave is commutable to its money equivalent if not used or exhausted
at the end of the year based on the salary rate at the date of commutation. (Sec. 5, Rule V, Book III,
Rules Implementing the Labor Code)
Are non-Muslims entitled to Muslim Holiday pay?
YES. While Art. 3(3) of the Code of Muslim Laws provides that the provisions of the Code shall be
applicable only to Muslims, there should be no distinction between Muslims and non-Muslims as
regard the payment of benefits of Muslim Holidays. Otherwise, Muslims throughout the Philippines are
also not entitled to holiday pays on Christian Holidays as declared by law as regular holidays (San
Miguel Corp. v. CA, G.R. No. 146775, January 30, 2002)
What is the scope of visitorial-enforcement power under Article 128 of the Labor Code?
The visitorial and investigatory power under Article 128(a) is broad enough to cover any fact,
condition or matter related to the enforcement not only of the Labor Code but of any labor law. Such
power is likewise unlimited by the amount of monetary liability involved. (Azucena, 2007) Pursuant to
R.A. No. 7730, the jurisdictional limitations imposed by Article 129 on the visitorial and enforcement
powers of the Regional office under Article 128 have been repealed. (Cirineo Bowling Plaza v.
Gsensing, G.R. No. 146572, January 14, 2005)
What is an all-inclusive salary agreement? Is it illegal?
Otherwise known as base pay with integrated overtime pay or composite/package pay, it is a
stipulation between the employer and the employee where the latters regular or basic salary already
includes the overtime pay, such that when the employee actually works overtime, he cannot claim
overtime pay.
It is not per se illegal. There should be an express agreement to that effect. Such agreement must
appear in the manner required by law on how overtime compensation must be determined. For it is
necessary to have a clear and definite delineation between an employees regular and overtime
compensation to thwart violation of the labor standards provisions of the Labor Code (Damasco vs.
NLRC, GR No. 115755, December 4, 2000).
The following are its requisites to be valid:
1. Clear written agreement knowingly and fully entered into by the employee; and
2. The mathematical result which shows that the agreed legal wage rate and the overtime
pay, computed separately are equal to or higher than the separate amount legally due.
What is an in-house agency?
Similarly prohibited under the law is the operation of an in-house agency whereby a contractor or
subcontractor is engaged in the supply of labor which:
1. Is owned, managed or controlled by the principal; and
2. Operates solely for the principal owning, managing, or controlling it.
Is misappropriation of funds a valid ground to terminate the services of an employee even if
the funds were fully restituted?
YES. Misappropriation of company funds, although the shortages had been fully restituted, is a
valid ground to terminate the services of an employee for loss of trust and confidence. The
encashment of personal checks and private use of such funds by a Finance Director, who as such
officer is in charge of the custody, handling, care and protection of his employers fund, albeit for short
periods of time, are contrary to the fiduciary nature of his duties. An employer cannot be compelled to
retain an employee who is guilty of act inimical to the interests of the employer (Santos vs. San
Miguel Corporation, G.R. No. 149416. March 14, 2003).
What is the reasonable causal connection rule?
Under the reasonable causal connection rule, if there is a reasonable causal connection between
the claim asserted and the employer-employee relations, then the case is within the jurisdiction of our
labor courts. In the absence of such nexus, it is the regular courts that have jurisdiction (Kawachi v
del Quero, G.R. No. 163768, March 27, 2007).
Under what conditions may the Secretary of Labor or his duly authorized representative
inquire into the financial activities of legitimate labor organizations?
In Art. 274, the Secretary of Labor or his duly authorized representative is empowered to inquire
into the financial activities of legitimate labor organizations and to examine their books of accounts
and other records upon the filing of a complaint under oath and duly supported by the written consent
of at least 20% of the total membership of the labor organization concerned and to examine their
books of accounts and other records.
Financial Transactions of Labor Organizations: Article 241 (Rights and Conditions of Membership
in a Labor Organization) and Article 274 (Visitorial Power of the Secretary of Labor) reconciled

ART. 241 ART. 274

WHEN APPLICABLE When there is a violation of any When there is a complaint filed to

of the rights and conditions of inquire into the financial activities
membership. of legitimate labor organizations.

PURPOSE For the cancellation of union For insurance that the labor
registration or expulsion of union organization complies with the
officers. law and for prosecution of any
violations of the law and the
union constitution and by-laws.

WHO FILES THE At least 30% of the members of A complaint under oath and duly
COMPLAINT the union or any member or supported by the written consent
members specially concerned. of at least 20% of the total
membership of the labor
organization concerned shall be

LIMITATION None. The inquiry or examination

cannot be conducted during:
the 60-day freedom period, nor
within thirty (30) days
immediately preceding the date
of election of union officers.
JURISDICTION Bureau of Labor Relations. Secretary of DOLE.

What is tripartism? What is the binding effect of an agreement entered into in a tripartite
Tripartism in labor relations is the policy of the State enunciated by consulting with representatives
of workers and employers in the consideration and adoption of voluntary codes of principles designed
to promote industrial peace based on social justice or to align labor movement relations with priorities
in economic and social development.
The codes of principles adopted at tripatite conferences are voluntary. They do not have a legal
binding effect on workers and employers. But because these codes are considered and adopted by
representatives of workers and employers, they are likely to be complied with voluntarily by the
workers and employers.
It should not bind unions and employers organizations which were not represented in the tripartite
conference because they were not parties or signatories to any agreement arrived at in the
What is the Doctrine of Union Monopoly?
It means that once a union is chosen as the collective bargaining agent of an appropriate
bargaining unit through Certification election, it alone, can collectively bargain with management to the
exclusion of other competing unions.
In what cases does the Secretary of Labor have jurisdiction in labor relations cases?
In injunction cases under Art. 263 on industries indispensable to national interest and under Art.
274 on power of the Secretary to inquire into the financial activities of legitimate labor organizations
upon a complaint under oath and written consent of at least twenty percent (20%) of the total
membership of the labor organization concerned.
Give the jurisdiction of Regional Directors.
Under Art. 274, the Secretary of Labor may exercise his visitorial powers through the Regional and
Bureau Directors in the following cases:

1. Inquire into financial activities of legitimate labor organizations;
2. Examine their books of accounts and other records to determine compliance or non-
compliance with the law; and
3. Prosecute any violations of the law and the unions constitution and by-laws. (D.O. 40-03)
He also has jurisdiction over cases involving recovery of wages and other monetary claims and
benefits, including legal interest provided that: (1) the claim is presented by an employee or person
employed in domestic or household service, or house helper, (2) the claim arises from employer-
employee relations, (3) the claimant does not seek reinstatement and the aggregate money claim of
each employee or house helper does not exceed P5,000.
What is the remedy if you think the bond required on appeal is too high?
File a Motion to Reduce Bond. While such motion is pending, the Labor Arbiter will not yet forward
the case to the NLRC, hence, he still has control over the case. If granted, the failure to file the
reduced bond together with the appeal makes the decision of the Labor Arbiter final and executory.
What are the exceptions to the rule that only the NLRC can only resolve issues which are
brought to it upon appeal?
1. Ground not assigned as errors but affecting the jurisdiction of the court;
2. Matters not assigned as errors but are evidently plain or clerical error within the contemplation
of law ;
3. Matters not assigned as errors on appeal but consideration of which is necessary in arriving
at a just decision and complete resolution of the case to serve the ends of justice;
4. Matters not assigned as errors on appeal but are raised in the trial court and are matters of
record having some bearing on the issues submitted which the parties failed to raise or which the
lower court ignored;
5. Matters not assigned as errors on appeal but closely related to an appealed error, and lastly
6. Matters not assigned as errors on appeal but upon which the determination of a question
properly assigned is dependent.
7. Before one can go to the Court of Appeals from the NLRC, it is necessary to first file Motion
for Reconsideration to allow the NLRC to rectify its own error.
What is the Substitutionary Doctrine?
The substitutionary doctrine provides that the employees cannot revoke the validly executed
collective bargaining contract with their employer by the simple expedient of changing their bargaining
agent. The employees, through their new bargaining agent, cannot renege on their collective
bargaining contracts except of course to negotiate with management for the shortening thereof.
What are the rights of a legitimate labor organization? Give at least three (3).
The following are some of the rights of a legitimate labor organization:
1. To act as a representative of its members for the purpose of collective bargaining;
2. To be certified as the exclusive representative of all employees in an appropriate
collective bargaining unit for purposes of collective bargaining;
3. To be furnished by the employer, upon written request, with the annual audited financial
statements including balance sheet an the profit and loss statement, within 30 calendar
days from the date of the receipt of request, after the union has been duly recognized by
the employer or certified as the sole and exclusive bargaining unit, or 60 calendar days
before the expiration of the existing CBA, or during the collective bargaining negotiation;
4. To own property, real or personal, for the use an benefit of the labor organization and its
5. To sue and be sued in its registered name; and
6. To undertake all other activities designed to benefit the organization and its members,
including cooperative, housing welfare and other projects not contrary to law (Art. 242,
Labor Code).
What requisites must a union comply with before it can validly impose special assessments
against its members for incidental expenses, attorneys fees, representation expenses and the
The Labor Code in Art. 241(n) provides that no special assessments or other extraordinary fees
may be levied upon members of a labor organization unless authorized by a written resolution of a
majority of all the members at a general membership meeting duly called for the purpose. Also, as
provided in the case of ABS-CBN Employees Supervisors Union vs. ABS-CBN Broadcasting
Corp., and Union Officers, G.R. No. 128690, March 11, 1999, the Supreme Court ruled that the
following are the requisites:
1. Authorization by a written resolution of the majority of all the members at the
general membership meeting duly called for the purpose;
2. Secretarys record of the minutes of the meeting;
3. Individual written authorization for check-off duly signed by the employee
concerned. (See also Gabriel vs. Secretary of Labor, G.R. No. 115949,
March 16, 2000)
Do government employees have the right to self-organization? If yes, what is the extent of
such right?
As a general rule, government employees have the right to self-organization. The governing law on
this matter is Executive Order No. 180. The government employees covered by E.O. No. 180 are
employees of all branches, subdivisions, instrumentalities, agencies of the government including
government owned and controlled corporations with original charters except:
1. Members of the Armed Forces;
2. Police Officers and Policemen
3. Firemen
4. Jail Guards
High-level employees or employees whose functions are normally considered as:
1. policy making;
2. managerial; or
3. confidential
shall not be eligible to join the organization of rank and file employees.
Government employees in government owned and controlled corporations incorporated under the
Corporation Code are excluded from the application of E.O. no. 180 and are therefore governed by
the Labor Code, hence, the enjoy the right to self-organization in the same manner as private
All employees covered by E.O. No. 180
1. can form, join, assist employees organization of their own choosing for the furtherance
and protection of their interest;
2. can form in conjunction with appropriate government authorities for the furtherance and
protection of their own interests:
3. labor-management committees
4. work councils
5. other workers participation schemes

1. Excluded from the negotiation are the terms and conditions of employment that are fixed
by law.
2. While government employees are allowed under the 1987 Constitution to organize and
join unions of their choice, there is yet no law permitting them to strike (Republic of
the Philippines vs. Court of Appeals 180 SCRA 428). The prohibition extends to
mass actions, whole day assemblies and other unauthorized stoppage of or absence from
work (Secretary of Education, Culture and Sports vs. Court of Appeals, 342
SCRA 40).
What is the Globe Doctrine?
The Globe Doctrine, which was first enunciated in the Globe Machine case, basically states that
the desires of the employees are relevant to the determination of the appropriate bargaining unit. In
cases where considerations are evenly balanced, it is the desire of the men themselves which
becomes the determining factor in the determination of the appropriate bargaining unit for the
purposes of collective bargaining.
What are considered as mandatory subjects of CBA?
The mandatory subjects of the CBA are those which refer to wages, hours, and other term and
conditions of employment. They are statutory or mandatory proposals and includes:
1. Wages and other types of compensation
2. Vacation and holidays
3. Bonuses
4. Pensions and retirement plans
5. Seniority
6. Transfer
7. Lay-offs
8. Employee workloads
9. Work rules and regulations
10. Rent of company houses
11. Union security arrangements
12. Grievance Machinery and Arbitration
What are the procedural conditions of collective bargaining?
1. Possession of the status of majority representation of the employees representative in
accordance with any of the means of selection or designation provided for in the Labor
2. Proof of majority representation; and
3. A Demand to Bargain under Art. 250, par. A of the Labor Code (Loy v. NLRC, G.R. No.
54334, January 22, 1986).
Differentiate between Single-enterprise bargaining vs. Multi-employer bargaining.
Single-enterprise bargaining refers to free collective bargaining or one which allow the parties to
devise their bargaining rules. Multi-employer bargaining, on the other hand, is bargaining which takes
place in the national, industry, or enterprise level, where negotiations are centralized or held in a
national level.
What is the Zipper clause?
The zipper clause is a stipulation in the CBA indicating that issues that could have been negotiated
upon but not contained in the CBA cannot be raised for negotiations when the CBA is already in
What is meant by bad faith bargaining?
In the case of Kiok Loy vs. NLRC, G.R. No. L-54334, it was held that collective bargaining,
designed to stabilize the relation between labor and management for the purpose of industrial peace,
is a mutual responsibility between labor and management. It is a legal obligation, so much so that Art.
249 (now 248) of the Labor code makes it 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 for
wages, hours of work, and other terms of employment. Hence, any violation of this duty is bargaining
in bad faith. In this similar case, the failure of the employer to make a counter proposal, when
considered in relation to the entire bargaining process, indicated bad faith bargaining.
What is a signing bonus?
The signing bonus is a grant which is given by the management as a sign of goodwill because of
what was generated due to a very smooth negotiation.
What is boulwarism?
Boulwarism is a form of bad-faith bargaining where the employer makes a firm, fair offer with a
take-it-or-leave it approach, which emphasizes both the powerlessness and uselessness of the Union
to its members, and one which pictures the company as true defender of the employees interests,
further denigrating the union and sharply curbing the companys ability to change its own position.
One of the central tenets of the Boulware approach is that the product or firm, fair offer must be
marked vigorously to the employees, to convince them that the company, and not the union, is their
true representative (NLRB vs. General Electric, 418f 2d 736, [1970]).
What is surface bargaining?
Surface bargaining is going through the motions of negotiating without any legal intent to reach an
agreement (Standard Chartered Bank Employees Union vs. Confessor, G.R. No. 114974,
[2004]). It is a sophisticated pretense of negotiations in the form of apparent bargaining. Surface
bargaining does not satisfy the statutory duty to bargain as collective bargaining requires more than
willingness to talk with the union. An employers proposals which could not be offered with any
reasonable expectation that they would be accepted by the union constitute surface bargaining.
What is blue-sky bargaining?
Blue-sky bargaining means exaggerated or unreasonable proposals (Sloane and Witney, Labor
Relations, 7th Ed., 1991, p. 195). For it to be considered unfair labor practice, there must be
proof that the demands made by the union were exaggerated or unreasonable.
What is a strike? Are the cooling off period and the seven day strike ban mandatory?
The term strike shall comprise not only concerted work stoppage, but also slowdowns, mass
leaves, sit-downs, attempts to damage, destroy or sabotage plant equipment and facilities and similar
YES. Under RA 6715, the requirements of filing a notice of strike, strike vote, and notice given to
the DOLE are mandatory in nature (Samahang Manggagawa ng Sulpicio Lines vs. Sulpicio
Lines. G.R. No. 140992. March 25, 2004).
What are the requisites of a valid strike/lockout?
1. Lawful purpose, economic or ULP;
2. Lawful means; and

3. Compliance with procedural requirements of notice, cooling off period and strike vote.
In the exercise of the Secretary of Labors power to assume jurisdiction, may he determine
the retroactivity of the parties CBA?
YES. The authority of the Secretary of Labor to assume jurisdiction carries with it the power to
determine the retroactivity of the parties CBA. It is well settled that the authority of the Secretary of
Labor to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to national interest includes and extends to all questions and controversies
arising therefrom. The power is plenary and discretionary in nature to enable him to effectively and
efficiently dispose of the primary dispute (LMG Chemicals Corp. vs. Secretary of Department
of Labor, G.R. No. 127422, April 17, 2001).
What is the conversion theory?
A completely lawful strike may sometimes become unlawful in the course of the strike. Conversion
exists when an economic strike turns into a ULP strike. For instance, there was a deadlock in
bargaining, then compliance with all the requisites for a lawful strike and during such time,
widespread, and pervasive threats, violence and intimidation occurred. The strike becomes an ULP
strike instead of just an economic strike.
Are strikers entitled to strike duration pay?
As a general rule, NO. Workers are supposed to be paid only for work performed. A fair days
wage for a fair days labor. Hence in economic strikes, strikers are not entitled to backwages. In ULP
Strike, however, backwages is discretionary on the part of the court. If allowed, it is necessary that: (a)
the strike is legal, (b) there is unconditional offer to return to work, and (c) the strikers were refused
Is the right to picketing present even if there is no strike?
YES. Picketing can exist and be conducted even if there is no strike in the same way that a strike
can be mounted without picketing. Picketing is part of freedom of speech and such constitutional right
cannot be bargained away through contracts.
Can labor standards cases be the subject of a strike?
NO. The only lawful purposes of a strike are economic strike and ULP strike.
What is the Innocent bystander rule?
The innocent bystander rule states that third parties who have nothing to do with the strike, and
which has no existing employer-employee relations with the strikers, but are adversely affected by the
strike may resort to an action filed with the regular courts in the form of an injunction to restrain the
strikers from causing damage to their operations.
What is the position of the Labor Code with respect to Injunction?
The Labor Code prohibits injunction except:
1) Art. 263(g), injunction issued by the Secretary of Labor in industries affecting national interest,
2) Art 218 on the five grounds when injunctive relief may issue
(a) unlawful acts are being committed,
(b) such acts will cause grave irreparable damage to complainant,
(c) that greater injury will be inflicted by the denial of relief than the granting thereof,
(d) that there is no adequate remedy at law,
(e) that public officers are unable or unwilling to furnish adequate protection.
How should wage distortion be resolved in case: (a) there is a CBA, and (b) there is no
1. According to Art. 124 of the Labor Code, in case there is a collective bargaining agreement, a
dispute arising from wage distortions shall be resolved through the grievance machinery provided in
the CBA, if it remains unresolved, through voluntary arbitration.
2. If there is no collective bargaining agreement, the employers and workers shall endeavor to
correct such distortions. Any dispute arising therefrom shall be settled through the NCMB and if it
remains unresolved after 10 calendar days of conciliation, then the dispute is referred to the
appropriate branch of the NLRC.
Are probationary employees entitled to security of tenure?
YES. It is settled that while probationary employees do not enjoy permanent status, they are
entitled to the constitutional protection of security of tenure. Their employment may not only be
terminated for just cause or when they fail to qualify as regular employees in accordance with
reasonable standards made known to them by their employer at the time of the engagement, and
after due process. Being in the nature of a trial period, the essence of probationary period of
employment fundamentally lies in the purpose or objective sought to be attained by both the employer
and the employees during the said period (Cebu Marine Beach Resort vs. NLRC. G.R. No.
143252. October 23, 2003).
When will a transfer amount to constructive dismissal of the employee?
A transfer amounts to constructive dismissal when the transfer is unreasonable, unlikely,
inconvenient, impossible, or prejudicial to the employee, as in this case. It is defined as an involuntary
resignation resorted when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to the employee. In constructive dismissal, the employer has the burden of proving the
transfer and demotion of an employee are for just and legal grounds (Philippine Industrial
Security Agency Corp. vs. Aguinaldo, G.R. No. 149974, June 15, 2005).
What is the certification year-bar rule?
The certification year-bar rule provides that a petition for certification election may not be filed
within one (1) year from: (1) the date of a valid certification, consent, or run-off election, or (2) from the
date of voluntary recognition.
What is bargaining-deadlock rule?
Under the bargaining deadlock-bar rule, neither may a representation question be entertained if:
1. Before the filing of a petition for certification election, the duly recognized or certified
union has commenced negotiations with the employer within the one-year period from the
date of valid certification, consent, or run-off election or from date of voluntary recognition;
2. 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 valid notice of
strike or lockout.
What is a contract-bar rule? What are the exceptions to the contract-bar rule?
Under the contract-bar rule, the Bureau of Labor Relations 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.
The exceptions to the contract-bar rule are as follows:
1. During the 60-day freedom period;

2. When the CBA is not registered with the BLR or DOLE Regional Offices;
3. When the CBA, although registered, contains provisions lower than the standards fixed by
4. When the documents supporting its registration are falsified, fraudulent, or tainted with
5. When the collective bargaining agreement is not complete as it does not contain any of
the requisite provision which the law requires;
6. When the collective bargaining agreement was entered into prior to the 60-day freedom
7. When there is a schism in the union resulting in an industrial dispute wherein the
collective bargaining agreement can no longer foster industrial peace.
What is freedom period?
Freedom period is the last sixty (60) days of the lifetime of a collective bargaining agreement
immediately prior to its expiration. It is so called because it is the only time when the law allows the
parties to serve notice to terminate, alter, or modify the existing agreement. It is also the time when
the majority status of the bargaining union or agent may be challenged by another union by filing
appropriate petition for certification election.
Distinguish between redundancy and retrenchment.
Redundancy and retrenchment are not synonymous but are distinct and separate grounds under
Art 283.
Redundancy exists when the services of an employee are in excess of what is required by an
enterprise. Retrenchment, on the other hand, is one of those economic grounds for dismissing
employees and is resorted to primarily to avoid or minimize business losses (Atlantic Gulf vs.
NLRC, G.R. No. 127516, [1999]).
What is the effect of the dual nature of an unfair labor practice complaint?
An unfair labor practice case is both administrative and criminal in nature. Unfair labor practice is
not anymore just an administrative proceeding. It is at the same time a criminal offense. However, it is
necessary under the law that there must first be a finding that the employer or the union is guilty of
unfair labor practice which judgment is already final and executory before an information for ULP as a
criminal offense can be filed. So it is still a prerequisite to go through administrative proceedings
before criminal proceedings.
What is the prescriptive period for illegal dismissal?
Four (4) years from the time the cause of action accrues. Although there is no specific provision in
the Labor Code which says so, the Supreme Court said that this is a violation of property rights as
ones profession or vocation is a property, and violation of property rights prescribe in 4 years. Money
claims like backwages, etc. on the other hand, prescribe in 3 years.
What is a runaway shop?
A runaway shop is defined as an industrial plant moved by its owners from one location to
another to escape union labor regulations or state laws, but the term is also used to describe a plant
removed to a new location in order to discriminate against employees at the old plant because of their
union activities. A runaway shop in this sense, is a relocation motivated by anti-union animus rather
than for business reasons (Complex Electronics Employees Association vs. NLRC, 310
SCRA 403, [1999]).
What is the One Union-One Company policy?
As a general rule, there should only be one union in one employer unit. The proliferation of unions
in one employer unit should be discouraged unless there are compelling reasons which would deny a
certain class of employees the right to self-organization (Philtranco Service Enterprises vs.
BLR, 174 SCRA 388, [1989]).
What is the so-called HOLDOVER PRINCIPLE in a CBA?
In the case of New Pacific Timber vs. NLRC, the Court had the occasion to rule that Article 253
and 253-A mandate the 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 prior to the expiration of the old
CBA and/or until a new agreement is reached by the parties. Consequently, the automatic renewal
clause provided by the law, which is deemed incorporated in all CBAs provides the reason why the
new CBA can only be given a prospective effect. Thus, employees hired after the stipulated term of a
CBA are entitled to the benefits provided thereunder. To exclude them would constitute undue
discrimination and deprive them of monetary benefits they would otherwise be entitled to under a new
collective bargaining contract to which they would have been parties.
Is a No Strike, No Lockout clause in a CBA valid?
YES. No Strike, No Lockout clause in the CBA is a valid stipulation but may be invoked only by
employer 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. It would be
inapplicable to prevent a strike which is grounded on unfair labor practice. (Panay Electric
Company, Inc. vs. NLRC, 248 SCRA 688, 1995)
What is a union recognition strike?
A union recognition strike is calculated to compel the employer to recognize ones union and not
the other contending group, as the employees bargaining representative despite the striking unions
doubtful majority status to merit voluntary recognition and lack of formal certification as the exclusive
representative in the bargaining unit.
Is the pari delicto rule applicable in strikes and lockouts?
YES. When the parties are in pari delictothe employees having staged an illegal strike and the
employer having declared an illegal lockoutsuch situation warrants the restoration of the status quo
ante and bringing back the parties to their respective positions before the illegal strike and illegal
lockout through the reinstatement, without backwages, of the dismissed employees. (Philippine
Inter-Fashion, Inc. vs. NLRC, G.R. No. 59847, October 18, 1982)
What do you understand by improved offer balloting?
A strike may be an economic strike, namely, it is a strike caused by the deadlock at the bargaining
table. A deadlock may arise because the offer of the employer, e.g., its offer of a 20% across-the-
board increase in wages and salaries, was not accepted by the Union who wanted a 50% increase.
After considering the matter, the employer may improve its offer, e;g., it offers a 35% increase.
This improved offer of the employer may be submitted to the union members on or before the 30 th
day of the strike. The secret balloting that will determine whether the majority of the union members
accept the improved offer of the employer is the so-called improved offer ballot.
In case it is a lockout, and not a strike, what may be the subject matter of a secret balloting, this
time among the members of the Board Directors of the employer, may be the reduced offer of the
union, i.e., instead of asking for 50% across the board increase in wages and salaries, it may reduce
its demand to 25%.
May an employer validly enforce a company policy against its employees prohibiting them
from marrying another employee of a competitor company?
YES. An employment contract providing for a disclosure to management of any existing or future
relationship with a competitor company is valid exercise of management prerogatives. A companys

policy prohibiting an employee from having a relationship with an employee of a competitor company
is a valid exercise of management prerogative. The company has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and information from
competitors. (Duncan Association of Detailman-PTGWO, et al. vs. Glaxo Wellcome Philippines,
Inc., G.R. No. 162994, September 17, 2004)
Is a refusal of a promotion a just and authorized cause for dismissal?
NO. An employee cannot be promoted, even if merely as a result of a transfer, without his consent.
A transfer that results in promotion or demotion, advancement or reduction or a transfer that aims to
lure the employee away from his permanent position cannot be done without the employees consent.
There is no law that compels an employee to accept a promotion for the reason that a promotion is in
the nature of a gift or reward, which a person has a right to refuse. Hence, the exercise by the
employee of the right to refuse a promotion cannot be considered in law as insubordination, or willful
disobedience of a lawful order of the employer. (PT & T Corp. vs. CA, G.R. No. 152057, September
29, 2003)
Will the non-observance of the two-notice rule nullify the dismissal of an employee based
on just causes?
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must
give the employee two written notices and a hearing or opportunity to be heard if requested by the
employee before terminating the employment: a notice specifying the grounds for which dismissal is
sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice
of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283
and 284, the employer must give the employee and the Department of Labor and Employment written
notices 30 days prior to the effectivity of his separation. From the foregoing rules, four possible
situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for
an authorized cause under Article 283, or for health reasons under Article 284, and due process was
observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is
for just or authorized cause but due process was not observed. (Jenny and Virgilio Agabon vs.
NLRC, Riviera Home Improvements, Inc. et al, G.R. No. 158693, November 17, 2004)
What is the degree of proof needed in disciplining or dismissing an employee?
Substantial proof is sufficient as basis for the imposition of any disciplinary action upon the
employee. The standard of substantial evidence is satisfied where the employer, as in this case, has
reasonable ground to believe that the employee is responsible for the misconduct and his participation
therein renders him unworthy of trust and confidence demanded by his position. (Edgardo D.
Millares, vs. PLDT and Ambrosio Hugo, G.R. No. 154078, May 6, 2005)
Give the consequences of a finding that an employee has been illegally dismissed.
Firstly, the employee becomes entitled to reinstatement to his former position without loss of
seniority rights and secondly, the payment of backwages corresponding to the period from his illegal
dismissal up to actual reinstatement.
Reinstatement restores the employee who was unjustly dismissed to the position from which he
was removed, to his status quo ante dismissal, while the grant of backwages allows the same
employee to recover from the employer that which he had lost by way of wages as a result of his
dismissal. (Tomas Claudio Memorial College, Inc. vs. CA, G.R. No. 152568, February 16, 2004)
What is the totality of infractions doctrine?
It is the totality, not the compartmentalization of company infractions that the employee had
consistently committed, which justifies the penalty of dismissal. (Manila Electric Company vs.
NLRC, 263 SCRA 531, [1996]) Where the employee has been found to have repeatedly incurred
several suspensions or warnings on account of violations of company rules and regulations, the law
warrants their dismissal as it is akin to habitual delinquency. (Villeno vs. NLRC, 251 SCRA 494,
What is the Last in, First Out rule?
LIFO rule applies to termination of employment in the line of work. What is contemplated in the
LIFO rule is that when there are two or more employees occupying the same position in the company
affected by the retrenchment program, the last one employed will necessarily be the first to go. (Maya
Farms Employees Organization vs. NLRC, 239 SCRA 508, 1994)
Can an award of separation pay be partially executed before the termination of the trial of
the illegal dismissal case, which was remanded to the voluntary arbitrator?
NO. The Supreme Court has ruled that the award of separation pay cannot be executed before the
trial is terminated since to do so would be to preempt the proceedings before the voluntary arbitrator.
It is worth to note that the case is one of illegal dismissal and the affirmance of the award of
separation pay would be tantamount to a judicial declaration that the complainant was indeed illegally
dismissed. (Unicraft Industries International Corp. vs. Court of Appeals, 16 January 2002)
What is the test in determining whether an employee is a project employee?
The principal test in determining whether an employee is a project employee is whether he/she is
assigned to carry out a specific project or undertaking, the duration and scope of which are specified
at the time the employee is engaged in the project, or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season. A true project employee
should be assigned to a project, which begins and ends at determined or determinable times, and be
informed thereof at the time of hiring. In the instant case, the Court noted that petitioner failed to
provide proof that respondents were informed of the fact that the latter were to be assigned to a
specific project or undertaking at the time of hiring. (Olongapo Maintenance Services, Inc. vs.
Chantengco, et al, G.R. No. 156146, June 21, 2007)
State the respective coverages of (a) the Social Security Law; and (b) the Revised
Government Service Insurance System Act.
Coverage of SSS (Sec. 9, RA 8282) shall be compulsory upon all employees not over sixty
years of age and their employers.
Filipinos recruited in the Philippines by foreign-based employers for employment abroad may be
covered by the SSS on a voluntary basis.
Coverage in the SSS shall be compulsory upon all self-employed persons earning P1,800 or more
per annum.
Membership in the GSIS (Art.3, RA 8291) shall be compulsory for all permanent employees
below 60 years of age upon appointment to permanent status, and for all elective officials for
the duration of their tenure.
Any person, whether elected or appointed, in the service of an employer is a covered employee if
he receives compensation for such service.
Distinguish clearly but briefly between social security and union security.
Social security is the protection given by social insurance programs such as the programs of the
SSS, GSIS and PHIC undertaken pursuant to their respective charters, including the employees
compensation program provided for in the Labor Code. The aforesaid programs provide income
benefits and/or medical care when contingencies like sickness, (also maternity in the case of SSS),
disability, death, or retirement, including in the case of GSIS, separation and unemployment benefits.
On the other hand, union security refers to a clause in a CBA whereby the employer agrees to
employ or continue in employment only workers who are members of the exclusive collective
bargaining representative of the employees of said employer in a bargaining unit.
Who may be liable for sexual harassment?
Work, education or training-related sexual harassment is committed by any employer, employee,
manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other
person who, having authority, influence or moral ascendancy over another in a work or training or
education environment, demands, requests or otherwise requires any sexual favor from another,
regardless of whether the demand, request or requirement for submission is accepted by the object of
said act. (Sec. 3, RA 7877)
Distinguish Christmas bonus from 13th month pay.
In general terms, we may distinguish the term Christmas bonus from 13th month pay thus:
a. 13th month pay is mandatory and shall be received by all employees who have
worked at least one month within a calendar year, and who receive a monthly pay
of more than P1,000 and is thus demandable; a bonus, being an act of liberality or
a gift from the employer cannot be demanded unless certain conditions apply.
b. The law provides for what shall comprise the 13th month pay; a bonus depends
fully on the generosity (or the absence of such) of the employer.
c. All classes of employees (regular, probationary, piece rate, contractual, etc.) are
entitled to the 13th month pay; an employer may provide conditions as to who
shall be entitled to various classes of bonuses.
d. The 13th month pay shall be paid on or before December 24; the Christmas
bonuses and/or other forms of bonuses may be released at any time upon the
discretion of the employer/management.
There are however instances when a bonus, even though clearly an act of generosity on the part
of the employer, may become demandable. In instances where the granting of a bonus have already
become a long-standing practice or policy, the employer can no longer withdraw and to do so is
tantamount to a diminution of benefits. This is prohibited under the Labor Code. (Producers Bank of
the Philippines vs. NLRC, G.R. No. 100701, March 28, 2001)
What is a 14th month pay?
There is no law mandating the payment of 14 th month pay. It is, therefore, in the nature of a bonus
which may not be imposed upon the employer. It is a gratuity to which the recipient has no right to
make a demand. (Kamaya Point Hotel vs. NLRC, et al., G.R. No. 75289, August 31, 1989)
Are maternity leave benefits included in the computation of 13th month pay?
Maternity leave benefits like other benefits granted by the SSS, are granted to employees in lieu of
wages and, therefore, may not be included in computing the employees 13 th month pay for the
calendar year.
Are voluntary or self-employed members of the SSS entitled to maternity leave benefits?
Voluntary or self-employed members are not entitled to the maternity leave benefits because to be
entitled thereto, corresponding maternity contributions should be paid by the employers. Voluntary or
self-employed members have no employers so they do not have maternity contributions.

Case Doctrines
Preliminary Title
Social justice is 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. Social justice means the promotion of the welfare of all people, the adoption by the
government of measures calculated to ensure economic stability of all the component elements of the
society through the maintenance of proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally justifiable or
extra-constitutionally, through the exercise of powers underlying the existence of all governments, on
the time-honored principle of salus populi est suprema lex. (Calalang vs. Williams, 70 Phil 726,
In carrying out and interpreting the Labor Codes provisions and its implementing regulations, the
workingmans welfare should be the primordial and paramount consideration. This kind of
interpretation gives meaning and substance to the liberal and compassionate spirit of the law as
provided for in Article 4 of the Labor Code, as amended, which states that all doubts in the
implementation and interpretation of the provisions of the Labor Code including its implementing rules
and regulations shall be resolved in favor labor, as well as the Constitutional mandate that the State
shall afford full protection to labor and promote full employment opportunities for all (PLDT vs.
NLRC, 276 SCRA 1 [1997]).
However, the law, in protecting the rights of the laborer, authorizes neither oppression nor self-
destruction of the employer (Colgate Palmolive Philippines, Inc. vs. Ople, 163 SCRA 323,

Book One: Pre-Employment

Rule on premature termination of employment contract
Section 10, RA 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of
1995, applies to all overseas contract workers dismissed on or after its effectivity on 15 July 1995.
Section 10 provides, In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his
placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired
portion of the employment contract or for three (3) months for every year of the unexpired term
whichever is less. Sec. 10 clearly reveals that the choice of which amount to award an illegally
dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his
employment contract or three (3) months salary for every year of the unexpired term, whichever is
less, comes into play ONLY when the employment contract concerned has a term of at least one (1)
year or more (Marsaman Manning Agency, Inc. vs. NLRC, 313 SCRA 88, [1999]).
Absence of receipts evidencing payment, not fatal to prosecutions case for illegal recruitment
The absence of receipts to evidence payment to an indictee in a criminal case for illegal
recruitment does not warrant an acquittal of the accused, and it is not necessarily fatal to the
prosecutions cause. As long as the prosecution is able to establish through credible testimonial
evidence that the accused has involved himself in an act of illegal recruitment, a conviction for the
offense can very well be justified (People vs. Saley, 291 SCRA 715 [1998]; People vs.
Jamilosa, G.R. No. 169076, January 23, 2007).
Conviction for both illegal recruitment and estafa
A person may be charged and convicted for both illegal recruitment and estafa provided the
elements of the crime are present (People vs. Calonzo, G.R. No. 115150-55, [1996]). The
reason for this is that illegal recruitment is a malum prohibitum, whereas estafa is malum in se,
meaning that the criminal intent of the accused is not necessary for conviction in the former, but is
required in the latter (People vs. Saulo, 344 SCRA 605, [2000]).

Book Two: Human Resources Development
It is mandated that apprenticeship agreements entered into by the employer and apprentice shall
be entered only in accordance with the apprenticeship program duly approved by the Minister of
Labor and Employment. Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is, therefore, a condition sine qua non before an apprenticeship agreement
can be validly entered into (Nitto Enterprises vs. NLRC, 248 SCRA 654, [1995]).

Book Three: Conditions of Employment

Employer-Employee Relationship
Determining existence of employer-employee relationship
The law, in defining the contractual relationship between an employer and an employee, does so,
not necessarily or exclusively upon the terms of their written or oral contract, but also on the basis of
the nature of the work the employee has been called upon to perform (Paguio vs. NLRC, 403
SCRA 190, [2003]).
Four-fold Test
In determining whether a given set of circumstances constitute or exhibit an employer-employee
relationship, the accepted rule is that the elements or circumstances relating to the following matters
shall be examined and considered:
the selection and engagement of the employees
the payment of wages
the power of dismissal; and
the power to control the employees conduct.
Of the above, control of the employees conduct is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employer-employee relationship (Great
Pacific Life Assurance Corp. vs. NLRC, 187 SCRA 694, 1990; Coca-Cola Bottlers (Phils.),
Inc., et al. vs. Climaco, GR No. 146881, February 5, 200?).
Not every form of control will have the effect of establishing an employer-employee
Not every form of control will have the effect of establishing the employer-employee relationship.
The line should be drawn between 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, and
those that control or fix the methodology and bind or restrict the party hired to the use of such means.
The first, which aim only to promote the result, create no employer-employee relationship unlike the
second, which address both the result and the means used to achieve it and hence, employer
employee relationship exists (Insular Life Assurance Co. Ltd. vs. NLRC, 179 SCRA 459,

Cases where employer-employee relationship exists:

1. Jeepney drivers on boundary system (NLU vs. Dinglasan, 98 Phil 649
2. Drivers or helpers of salesmen are employees of the Company (Alhambra
Industries vs. CIR, 355 SCRA 553, [1999]);
3. Handicraft workers on pakyaw system (Dy Keh Beng vs. Intl Labor, 90
SCRA 161, [1979]);
4. In-house lawyer as distinguished from an outside retainer (Hydro
Resources Contractors Corp. vs. Pagalilauan, 172 SCRA 399 [1989]);
5. University professors and instructors (FEU vs. CIR, 5 SCRA 1082,
6. Tailors, seamstresses, servers, basters, plantsadoras paid on piece-rate
basis (Makati Haberdashery vs. NLRC, 179 SCRA 448, [1989]); and
7. Musicians who were engaged by musical director for background music in
making movies (LVN Pictures vs. Phil. Musicians Guild, 1 SCRA 132,
8. Truck drivers of a packaging factory paid on a per trip basis (Chavez vs. NLRC, G.R.
No. 146530, January 17, 2005)

Cases where there is no employer-employee relationship:

1. Insurance company vis--vis commission agents (Insular Life vs. NLRC,
179 SCRA 459, [1989]);
2. Farmworkers are not employees of the sugar central (Victorias Milling
Co., Inc. vs. NLRC, 262 SCRA 623, [1996]);
3. Working scholars are not employees of the schools (Filamer vs. IAC, 212
SCRA 637, [1992]);
4. Company vs. collecting agents on commission basis (Singer Sewing
Machine vs. Drilon, 193 SCRA 270, [1991]);
5. Softdrinks company vs. independent contractors selling softdrinks (Mafinco
vs. Ople, 70 SCRA 139, [1976]); and
6. Shoe shine boys (Besa vs. Trajano, 146 SCRA 501, [1986]).
Difference between an employee and independent contractor
Of the four elements of the employer-employee relationship, the control test is the most
important. Compared to an employee, an independent contractor is one who carries on a distinct and
independent business and undertakes to perform the job, work, or service on its own account and
under its owns responsibility according to its own manner and method, free from the control and
direction of the principal in all matters connected with the performance of the work except as to the
results thereof. Hence, while an independent contractor enjoys independence and freedom from the
control and supervision of his principal, an employee is subject to the employers power to control the
means and methods by which the employees work is to be performed and accomplished (Tan vs.
Lagrama, 387 SCRA 393, [2002]).
Wages distinguished from salary
The term wages as distinguished from salary applies to the compensation for manual labor,
skilled or unskilled, paid at stated times, and measured by the day, week, month, or season, while
salary denotes a higher degree of employment, or a superior grade of services, and implies a
position of office. Article 1708 of the Civil Code used the word wages and not salary in relation to
laborer when it declared what are to be exempted from attachment and execution ( Gaa vs. Court
of Appeals, 140 SCRA 304, [1985]).
Labor-Only Contracting and Job Contracting
Labor-only contracting distinguished from job contracting
The distinction between Articles 106 and 107 lies in the fact that Article 106 deals with labor-only
contracting. Here, by operation of law, the contractor is merely considered as an agent of the
employer who is deemed responsible to the workers to the same extent as if the latter were directly
employed by him. On the other hand, Article 107 deals with job-contracting. In the later situation,
while the contractor himself is the direct employer of the employees, the employer is deemed, by
operation of law, as an indirect employer (Baguio vs. NLRC, 202 SCRA 465, [1991]).
Permissible job contracting or subcontracting
Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees
to put out or farm out with a contractor or subcontractor the performance or completion of a specific
job, work or service within a definite or predetermined period, regardless of whether such job, work or
service is to be performed or completed within or outside the premises of the principal (Vinoya vs.
NLRC, 324 SCRA 469, [2000]).
Effect of a finding that a contractor is a labor-only contractor
A finding that a contractor is a labor-only contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the labor-only
contractor (Associated Anglo-American Tobacco Corp. vs. Clave, 189 SCRA 127, [1990]). 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 manner and extent as if the latter were directly employed by
him (Sandoval Shipyards, Inc., et. al. vs. Prisco Pepito, et. al., 359 SCRA 555, [2001];
Manila Water Company v. Pea, July 8, 2004).
Liability of principal in legitimate job contracting vis--vis employees of job contractor
In legitimate job contracting, the law creates an employer-employee relationship for a limited
purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes
jointly and severally liable with the job contractor only for the payment of the employees wages
whenever the contractor fails to pay the same. Other than that, the principal employer is not
responsible for any claim made by the employees (San Miguel Corporation vs. MAERC
Integrated Services, Inc., et. al., 405 SCRA 579, [2003]).
Worker Preference in Case of Bankruptcy
Preferential right of employees may be invoked only during bankruptcy or liquidation
It is clear from the wording of the law that the preferential right accorded to employees and
workers under Article 110 may be invoked only during bankruptcy or judicial liquidation proceedings
against the employer. The rationale for making such application contingent upon the institution of
bankruptcy or judicial liquidation proceedings against the employer is premised upon the very nature
of a preferential right of credit. Such preferential right of credit attains significance only after the
properties of the debtor has been inventoried and liquidated, and the claims held by his various
creditors has been established (Development Bank of the Philippines vs. Secretary of Labor,
179 SCRA 630, [1989]).
Wages under Article 110 may be regarded as embracing within its scope severance pay or
termination pay or separation pay
For the specific purposes of Article 110 and in the context of insolvency, termination or separation
pay is reasonably regarded as forming part of the remuneration or other monetary benefits accruing to
employees or workers by reason of their having previously rendered services to their employer; as
such, they fall within the scope of remuneration or earningsfor services rendered or to be
rendered, under the definition of wage (Republic vs. Peralta, G.R. No. L-56568, 150 SCRA 37,
Claims for unpaid wages not classified as specially preferred credits
Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for
unpaid wages either upon all of the properties or upon any particular property owned by their
employer. Claims for unpaid wages do not therefore fall at all within the category of specially preferred
claims established under Articles 2241 and 2242 of the Civil code, except to the extent that such
claims for unpaid wages are already covered by Article 2241, number 6 (ibid.).

Book Five: Labor Relations

Jurisdiction of Labor Arbiters
Jurisdiction in ULP Cases
Under Art. 247 of the Labor Code, the civil aspects of all cases involving unfair labor practices,
which may include claims for damages and other affirmative relief, shall be under the jurisdiction of
Labor Arbiters. The claimed injury as a consequence of tort allegedly committed under Art. 1314 of
the Civil Code does not necessarily give the court jurisdiction to try the damage suit. Jurisdiction is
conferred by law and not necessarily by the nature of the action. Civil controversies are not the
exclusive domain of courts (National Union of Bank Employees vs. Judge Alfredo Lazaro, G.
R. No. 56431, [1988]).
Jurisdiction over claims for damages
Money claims of workers over which the Labor Arbiter has original and exclusive jurisdiction are
comprehensive enough to include claims for moral damages of a dismissed employee against his
employer (Suario vs. BPI, G. R. No. 50459, [1989]).
Jurisdiction in the absence of employer-employee relationship
A labor dispute as defined in Article 212 (1) of the Labor Code 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
While it is SanMigs submission that no employer-employee relationship exists between itself, on
the one hand, and the contractual workers of Lipercon and DRite on the other, a labor dispute can
nevertheless exist regardless of whether the disputants stand in the proximate relationship of
employer and employee (Article 212 [1], Labor Code, supra) provided the controversy
concerns, among others, the terms and conditions of employment or a change or arrangement
thereof (ibid.). Put differently, and as defined by law, the existence of a labor dispute is not negatived
by the fact that the plaintiffs and defendants do not stand in the proximate relation of employer and
employee. (San Miguel Corporation Employees Union-PTGWO vs. Bersamira, G.R. No.
87700, June 13, 1990).
Jurisdiction over money-claim-underpayment of retirement benefits
The Labor Arbiter has no jurisdiction to hear and decide petitioner's money-claim-underpayment
of retirement benefits, as the controversy between the parties involved an issue arising from the
interpretation or implementation of a provision of the collective bargaining agreement. The Voluntary
Arbitrator or Panel of Voluntary Arbitrators has original and exclusive jurisdiction over the controversy
under Article 261 of the Labor Code, and not the Labor Arbiter.
Parenthetically, the original and exclusive jurisdiction of the Labor Arbiter under Article 217 (c), for
money claims is limited only to those arising from statutes or contracts other than a Collective
Bargaining Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and
exclusive jurisdiction over money claims arising from the interpretation or implementation of the
Collective Bargaining Agreement and, those arising from the interpretation or enforcement of
company personnel policies, under Article 261. (San Jose vs. NLRC, G.R. No. 121227, August 17,

NLRC makes injunction only an ancillary remedy in ordinary labor disputes

Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its
divisions to issue writs of injunction, while Rule XI of the New Rules of Procedure of the NLRC makes
injunction only an ancillary remedy in ordinary labor disputes such as the one brought by the
petitioner. (Pondoc vs. NLRC, G.R. No. 116347, October 3, 1996)

Issuance of an ex parte temporary restraining order in a labor dispute

The issuance of an ex parte temporary restraining order in a labor dispute is not per se prohibited.
Its issuance, however, should be characterized by care and caution for the law requires that it be
clearly justified by considerations of extreme necessity, i.e., when the commission of unlawful acts is
causing substantial and irreparable injury to company properties and the company is, for the moment,
bereft of an adequate remedy at law. (Bisig ng Manggagawa sa Concrete Aggregates vs. NLRC,
G.R. NO. 105090, September 16, 1993)

Technical Rules Not Binding and Prior Resort to Amicable Settlement

Rule on venue of labor disputes, permissive

The question of venue essentially pertains to the trial and relates more to the convenience of the
parties rather than upon the substance and merits of the case. It underscored the fact that the
permissive rules underlying provisions on venue are intended to assure convenience for the plaintiff
and his witnesses and to promote the ends of justice. With more reason does the principle find
applicability in cases involving labor and management because of the doctrine well-entrenched in our
jurisdiction that the State shall afford full protection to labor. The Court held that the rule on venue was
merely permissive.
The worker, being the economically-disadvantaged party - whether as complainant/petitioner or
as respondent, as the case may be, the nearest governmental machinery to settle the dispute must be
placed at his immediate disposal, and the other party is not to be given the choice of another
competent agency sitting in another place as this will unduly burden the former. In fact, even in cases
where venue has been stipulated by the parties, this Court has not hesitated to set aside the same if it
would lead to a situation so grossly inconvenient to one party as to virtually negate his claim. (Dayag
vs. Canizares, G.R. No. 124193, March 6, 1998)
Modicum of admissibility in labor cases
Not only must there be evidence to support a finding or conclusion, but evidence must be
substantial. Substantial evidence is more than a mere scintilla. It means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion (Gelmart Industries vs.
Leogardo, Jr., G. R. No. 70544, [1987]).
Waiver of Compromise Agreement
The minority members cannot be bound by the return-to-work agreement. The waiver of the
money claims is a personal right, i.e., a right that must be personally exercised. For a waiver thereof
to be legally effective, the individual consent or ratification of the workers or employees involved must
be shown. Neither the officers nor the majority of the union had any authority to waive the accrued
rights pertaining to the dissenting minority members (General Rubber vs. Drilon, G. R. No.
76988, [1989]).
Quitclaims cannot bar an employee to demand benefits to which he is legally entitled;
exception: res judicata
Jurisprudence exists to the effect that a deed of release or quitclaim cannot bar an employee from
demanding benefits to which he is legally entitled; that quitclaims and or complete releases executed
by the employees do not estop them from pursuing their claim arising from the unfair labor practice of
the employer; and that employees who received their separation pay are not barred from contesting
the legality of their dismissal and that the acceptance of those benefits would not amount to
estoppels. But based on the facts of non-questioning the decision which became final and executory,
the quitclaim absolutely relieved and forever released and discharged respondent, its successors and
assigns, of any and all claims and liabilities whatsoever insofar as their past salaries, termination pay,
overtime pay and other privileges accorded them by law. (Olacao vs. NLRC, G.R. No. 81390,
August 29, 1989)

Perfection of appeal
The perfection of an appeal within the statutory or reglementary period is not only mandatory but
also jurisdictional and failure to do so renders the questioned decision final and executory, thus
depriving the appellate court of jurisdiction to alter the final judgment much less to entertain the
appeal (Asuncion vs. NLRC, G. R. No. 109311, [1997]).
Period to appeal from the Labor Arbiter is 10-calendar days
The shortened period of ten (10) days fixed by Art. 223 contemplates calendar days and not
working days. It is precisely in the interest of labor that labor cases be promptly, if not peremptorily,
disposed of (Vir-jen Shipping and Marine Services vs. NLRC, G. R. No. 58011-12, [1982]).
Execution over property owned by judgment debtor; remedies of third-party claimant
A third party whose property has been levied upon by a sheriff to enforce a decision against a
judgment debtor is afforded with several alternative remedies to protect its interests. The third party
may avail himself of the alternative remedies cumulatively, and one will not preclude the third party
from availing himself of the other alternative remedies in the event he failed in the remedy first availed
of. Thus, a third party may avail of the following alternative remedies:
File a third-party claim with the sheriff or the Labor Arbiter, and
If the third party claim is denied, the third party may appeal the denial to the NLRC.
Even if a third party claim was denied, a third party may still file the appropriate action with a
competent court to recover ownership of the property illegally seized by the sheriff through Rule 39 of
the Revised Rules of Court (Yupangco Cotton vs. Court of Appeals, G.R. No. 126322,
Notice of appeal with property bond instead of cash bond in exceptional circumstances
Lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive
means by which an employer's appeal may be perfected. The requirement is intended to discourage
employers from using an appeal to delay, or even evade, their obligation to satisfy their employees'
just and lawful claims. Considering, however, that the current policy is not to strictly follow technical
rules but rather to take into account the spirit and intention of the Labor Code, it would be prudent for
us to look into the merits of the case, especially since petitioner disputes the allegation that private
respondent was illegally dismissed. (UERM Memorial Medical Center vs. NLRC, G.R. No. 110419,
March 3, 1997)

Doctrine of estoppel in appeals: exception

A party who failed to appeal from a decision of the labor arbiter to the National Labor Relations
Commission within the ten (10) day reglementary period can still participate in a separate appeal
timely interposed by the adverse party by filing a motion for reconsideration of a decision of the NLRC
on such appeal. (Sadol vs. Pilipinas Kao, Inc., G.R. No. 87530, June 13, 1990)

Bureau of Labor Relations
Valid compromise and Quitclaims
The law looks with disfavor upon quitclaims and releases by employees who are inveigled or
pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities.
On the other hand, there are legitimate waivers that represent a voluntary settlement of a laborers
claims that should be respected by the courts as the law between parties.
Dire necessity is not an acceptable ground for annulling the releases, especially since it has not
been shown that employees had been forced to execute them. It has not even been proven that the
considerations for the quitclaims were unconscionably low and that the petitioners had been tricked
into accepting them. Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the
parties and may not later be disowned simply because of a change of mind. It is only when there is
clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of
settlement are unquestionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for quitclaim is credible and reasonable,
the transaction must be recognized as a valid and binding undertaking (Veloso and Liguaton vs.
DOLE, Noahs Ark, G. R. No. 87297, [1991]).
Recognition by the BLR not a ministerial duty
After a labor organization had filed the necessary papers and documents for registration, it
becomes mandatory for the BLR to check if the requirements under Art. 234 have been sedulously
complied with. If its application for registration is vitiated by falsification and serious irregularities,
especially those appearing on the face of the application and supporting documents, a labor
organization should be denied recognition as a legitimate labor organization (Progressive
Development Corp.-Pizza Hut vs. Laguesma, G. R. No. 115077, [1997]).
Registration and Cancellation
When the local union withdrew from the old federation to join a new federation, it was merely
exercising its primary right to self-organization for the effective enhancement and protection of
common interests. In the absence of enforceable provisions in the federations constitution preventing
disaffiliation of a local union, a local may sever its relationship with its parent (Tropical Hut
Employees Union vs. Tropical Hut, G. R. Nos. L-43495-99, [1990]).
Local union is the principal, federation the agent
Although the federation was designated as the sole bargaining agent in the check-off authorization
form, this simply means that it was acting for and in behalf of its affiliate. The federation possessed
the status of an agent while the local union remained the basic principal union which entered into
contract with the respondent company. When the local union disaffiliated from the mother federation,
the former did not lose its legal personality as the bargaining union (Elisco-Elirol Labor Union vs.
Noriel, G. R. No. L-41955, [1977]).
When to disaffiliate
While it is true that a local union is free to serve the interest of all its members and enjoys freedom
to disaffiliate, such right to disaffiliate may be exercised and is thus considered a protected labor
activity only when warranted by circumstances. Generally, a labor-union may disaffiliate from the
mother union to form a local or independent union only during the 60-day freedom period immediately
preceding the expiration of the CBA (Tanduay Distillery v. NLRC, 149 SCRA 470, 1987).
But even before the onset of the freedom period (and despite the closed-shop provision in the CBA
between the mother union and management) disaffiliation may be carried out, but such disaffiliation
must be effected by a majority of the members in the bargaining unit (Associated Workers vs.
NLRC, G.R. No. 87266-69, [1990]).
Dissafiliation; effect on existing CBA; the Substitutionary Doctrine
The CBA continues to bind the members of the new or disaffiliated and independent union up to
the CBAs expiration date (Associated Workers Union v. NLRC, G. R. No. 87266-69, [1990]).

Disaffiliation: claims of local unions are preferred

The 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. Policy considerations dictate that in weighing the claims of a local union as against those of
a national federation, those of the former must be preferred. Parenthetically though, the desires of the
mother federation to protect its locals are not altogether to be shunned. It will however be to err
greatly against the Constitution if the desires of the federation would be favored over those of its
members. That, at any rate, is the policy of the law. For if it were otherwise, instead of protection,
there would be disregard and neglect of the lowly workingmen. (Philippine Skylanders, Inc. vs.
NLRC, G.R. No. 127374, January 31, 2002)

Rights of Legitimate Labor Organizations

Employee-Members of a Cooperative
An employee of such a cooperative who is a member and co-owner thereof cannot invoke the right
to collective bargaining, for certainly an owner cannot bargain with himself or his co-owners (San
Jose Electric Service v. Ministry of Labor, G.R. No. 77231, [1989]).
Members of Religious Sect
The free exercise of religious profession or belief is superior to contract rights. In case of conflict,
the latter must yield to the former (Victoriano vs. Elizalde Rope Workers Union, G.R. No. L-
25246, [1974]).
The Courts decision in Victoriano vs. Elizalde upholding the right of members of the Iglesia ni
Kristo sect not to join a labor union for being contrary to their religious belief, does not bar the
members of that sect from forming their own union (Kapatiran sa Meat and Canning Division
vs. BLR Director, G.R. No. L-82914, [1988]).
Government Employees
The Rules and Regulations implementing EO 180 explicitly provide that since the terms and
conditions of employment in the government, including any political subdivision or instrumentality
thereof and government-owned and -controlled corporations with original charters are governed by
law, the employees therein shall not strike for purposes of securing changes thereof ( Arizala et al.,
vs. CA, G.R. Nos. L-43633-34, [1990]).
Confidential Employees
Art. 245 of the Labor Code does not directly prohibit confidential employees from engaging in
union activities. However, under the doctrine of necessary implication, the disqualification of
managerial employees equally applies to confidential employees. The confidential-employee rule
justifies the exclusion of confidential employees because in the normal course of their duties, they
become aware of management policies relating to labor relations. It must be stressed, however, that
when the employee does not have access to confidential labor relations information, there is no legal
prohibition against confidential employees from forming, assisting, or joining a union (Sugbuanon
Rural Bank vs. Laguesma, G. R. No. 116194, [2000]).
Right to Self-Organization
Existence of employer-employee relationship is necessary
Existence of employer-employee relationship is essential for the determination of whether or not
one may exercise right of self-organization for purposes of collective bargaining. It is a condition sine
qua non for a bargaining unit that it be composed of employees, failing which affects the legality of the
union itself and means the ineligibility of union members to present a petition for certification election,
as well as to vote therein (La Suerte Cigar & Cigarette Factory vs. Director of BLR, 123
SCRS 679, [1983]).
Who may unionize for purposes of collective bargaining negotiations
General Rule: Any employee may be eligible to join and be a member of a labor union, beginning
on his first day of service, whether employed for a definite period or not (UST Faculty Union vs.
Bitonio, 318 SCRA 185, [1999]).
Test to determine the constituency of a bargaining unit
The community or mutuality of interests test has provided the standard in determining the proper
constituency of a collective bargaining unit.
However, where the employer operates two enterprises engaged in two different kinds of business
(e.g., garment factory and cinema), the employees may be separated into two (2) distinct bargaining
units for purposes of the certification election. This is so because the employees in the two
businesses do not share commonality of interest as the work they perform are different from each
other (Cruzvale, Inc. vs. Laguesma, 238 SCRA 389, [1994]).
Certification Election
Role of employer in certification election
General Rule: The employer is not a party in a certification election, which activity is the sole
concern of the workers.
Exception: Where the employer has to file a petition for certification election pursuant to Art. 258 of
the Labor code because it was requested to bargain collectively. Even then, it becomes a neutral
bystander (Asian Design and Mfg. Corp. vs. Calleja, 174 SCRA 477, [1989]).
Petition to cancel/revoke registration is not a prejudicial question to petition for certification
An order to hold a certification election is proper despite the pendency of the petition for
cancellation of the registration certificate of the union. The rationale for this is that at the time the
union filed its petition, it still had the legal personality to perform such act absent an order directing the
cancellation (Pepsi-Cola Products Phils. vs. Secretary of Labor, 312 SCRA 104, [1995]).
Jurisdiction in determining employer-employee relationship in certification election cases
The Med-Arbiter or the Secretary of Labor has the authority to determine the existence of an
employer-employee relationship between the parties in a petition for certification election (M.Y. San
Biscuits, Inc. vs. Laguesma, 196 SCRA 256, [1991]).
However, the decision of the Med-Arbiter or the Secretary of Labor in this regard will not constitute
res judicata in an illegal dismissal case, i.e., the principle of bar by prior judgment will not apply
(Manila Golf and Country Club, Inc. vs. IAC, 237 SCRA 207, [1994]).
Unfair Labor Practice
Test to determine whether or not an employer is guilty of ULP
The test of whether an employer has interfered with and coerced employees within the meaning of
Art. 248(a) of the Labor Code is whether the employer has engaged in conduct which it may
reasonably be said tends to interfere with the free exercise of employees rights to self-organization
and it is not necessary that there be direct evidence that any employee was in fact intimidated or
coerced by statements of threats of the employer if there is a reasonable inference that anti-union
conduct of the employer has an adverse effect on self-organization and collective bargaining (Insular
Life Assurance Co. Ltd., Employees Association-NATU vs. Insurance Life Assurance Co.,
Ltd., 37 SCRA 244, [1971]).
Agency fee instead of union membership
The employees who are benefiting from the CBA, without being members of bargaining union may
be required to pay agency fee. The collection of agency fees in an amount equivalent to union dues
and fees is recognized by Art. 248 (e). A written authorization from the non-union employee is not
required. The employees acceptance of benefits from a collective bargaining agreement justifies the
deduction of agency fees from his pay and the unions entitlement thereto (Holy Cross of Davao
College vs. Joaquin, et al., G.R. No. 11007, [1996]).
ULP of labor organizations
Unions are not entitled to arbitrarily exclude qualified applicants for membership, and a closed-
shop provision would not justify the employer in discharging, or a union in insisting upon the discharge
of, an employee whom the union thus refuses to admit to membership, without any reasonable ground
therefore. Needless to say, if said unions may be compelled to admit new members, who have the
requisite qualifications, with more reason may the law and the courts exercise the coercive power
when the employee involved is a long standing union member, who, owing to provocations of union
officers, was impelled to tender his resignation, which he forthwith withdrew or revoked (Salunga vs.
CIR, 21 SCRA 216, [1967]).
Union security clause
Union Security clauses are also governed by law and by principles of justice, fair play, and legality.
Union security clauses cannot be used by union officials against an employer, much less their own
members, except with a high sense of responsibility, fairness, prudence, and judiciousness. A union
member may not be expelled from her union, and consequently from her job, for personal or
impetuous reasons or for causes foreign to the closed-shop agreement and in a manner characterized
by arbitrariness and whimsicality (Manila Mandarin Employees Union vs. NLRC, 154 SCRA
368, [1987]).
Collective Bargaining
The CBA is the law between the contracting parties and compliance therewith is mandated by the
express policy of the law (Marcopper Mining Corp. vs. NLRC, 255 SCRA 322, [1996]).
Collective Bargaining Agreements are unenforceable against persons not parties thereto (E.
Razon vs. Secretary of Labor, 222 SCRA 1, [1993]).
The fundamental factors in determining the appropriate collective bargaining unit are: (1) will of the
employees (Globe Doctrine); (2) affinity and unity of the employees interest, such as substantial
similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual
Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status (San
Miguel Corporation vs. Laguesma, 236 SCRA 595, 1994).
Collective bargaining, designed to stabilize the relation between labor and management for the
purpose of industrial peace, is a mutual responsibility between labor and management. It is a legal
obligation, so much so that Art. 249 (now 248) of the Labor code makes it 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 for wages, hours of work, and other terms of employment ( Kiok Loy vs.
NLRC, G.R. No. L-54334, [1986]).
The employer, by its refusal to bargain, is guilty of violating the duty to bargain collectively in good
faith. Hence, the Unions draft CBA proposal may unilaterally be imposed upon the employer as the
collective bargaining agreement to govern their relationship (Divine Word vs. Secretary of Labor,
213 SCRA 759, [1992]).
Although a CBA has expired, it continues to have legal effects as between the parties until a new
CBA has been entered into (Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-
Confessor, 241 SCRA 294, [1995]).
Strikes and Lockouts
Good faith no longer a defense if no procedural compliance for valid strike
A unions claim of good faith is not a valid excuse to dispense with the procedural steps for a lawful
strike. The Supreme Courts previous rulings in Peoples Industrial and Commercial Employees &
Workers Organization vs. PICC did not rule that procedural requirements can be dispensed with, even
if the Union believed in good faith that ULP was being committed. The good faith defense invoked in
the Philippine Metal Foundries vs. CIR case had been decided in 1979, but with the enactment of RA
6715, compliance with the procedural requirements for the validity of a strike is now mandatory
(Grand Boulevard Hotel vs. Genuine Labor Organizations in Hotel Restaurant & Allied
Industries, G.R. No. 153664, [2003]).
Lawful means in conducting strike
A strike though valid may be declared invalid where the means employed are illegal (Association
of Independent Unions in the Philippines vs. NLRC, 305 SCRA 219, [1999]).
Seven-day strike ban
The seven-day strike ban starts from the day after the results of the strike vote is submitted to the
Department of Labor. In computing the period for the seven-day strike ban, the first day shall be
excluded and the last day included. A deficiency of one-day from the mandatory seven-day strike ban
is a fatal defect which renders the strike illegalstrict adherence to the mandate of the law is required
as substantial compliance with a mandatory provision will not suffice (CCBPI Postmix Workers
Union vs. NLRC, 299 SCRA 410, [1998]).
Compensation of striking workers
The union members who were merely instigated to participate in the illegal strike should be treated
differently from their leaders. Part of the benign consideration for labor is the policy of reinstating rank-
and-file workers who were merely misled in supporting illegal strikes. Nonetheless, these reinstated
workers shall not be entitled to backwages as they should not be compensated for services skipped
during the illegal strike (Lapanday Workers Union vs. NLRC, 248 SCRA 97, [1995]).

Return-to-work order: compulsory

The return-to-work order is not a matter of option or voluntariness but an obligation so that the
operations of the company can be resumed to continue serving the public and promoting its interest;
thus, such return can be compelled and non-compliance therewith may result to certain sanctions

such as forfeiture of employment. (Sarmiento vs. Tuico, G.R. No. L-75271-73, June 27, 1988)
Requisites for a valid lockout
All the requisites for a valid strike likewise apply for a lockout to be valid. Thus, it must be for a
lawful purpose, undertaken through lawful means, and in compliance with the procedural
requirements of law such as: notice of lockout, cooling-off period, taking and filing of lockout vote, and
seven-day lockout ban (Association of Independent Unions in the Philippines vs. NLRC,
305 SCRA 219, [1999]).
Assumption of Jurisdiction by the Secretary of Labor
The Secretary of Labor is not precluded from assuming jurisdiction over a labor dispute in a vital
industry even if there is no notice of strike or a formal complaint. He need not wait for a notice of strike
or a formal complaint about a strike already in progress before he could exercise the powers given to
him by law to avoid the strikes, picketing or lockouts contemplated in the grant of power (Saulog
Transit vs. Lazaro, 128 SCRA 591, [1984]).
While termination by reason of an illegal strike requires hearing, replacement by reason of violation
of a return-to-work order does not need one (Free Telephone Workers Union vs. PLDT, 113
SCRA 663, 678, [1982]).
The authority of the Secretary of Labor to assume jurisdiction in accordance with Art. 263g of the
Labor Code necessarily includes and extends to all questions and controversies arising from the labor
dispute, including cases over which the labor arbiter has exclusive jurisdiction (International
Pharmaceuticals, Inc. vs. Secretary of Labor, 205 SCRA 59, [1992]).

Book Six: Post-Employment

By law, an employee who is unjustly dismissed is entitled to reinstatement, among others. The
mere fact that the complaint did not pray for reinstatement will not prejudice the employee, because
technicalities of law and procedure are frowned upon in labor proceedings (General Baptist
College vs. NLRC, 219 SCRA 549, [1993]).
Regular Employment
Test in determining regular employment; reasonable connection rule
The primary standard of determining a 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 test is whether the former is usually necessary or desirable in 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 ( De Leon
vs. NLRC, 176 SCRA 615, [1989]).
Repeated rehiring and the continuing need for the employees services are sufficient evidence of
the necessity and indispensability of his services to the employers business or trade (Baguio
Country Club Corporation vs. NLRC, 206 SCRA 643, [1992]).
Casual Employment
Attaining status of regular employment
The status of regular employment attaches to the casual employee on the day immediately after
the end of his first year of service (Philippine Geothermal, Inc. vs. NLRC, 189 SCRA 211,
Seafarers are contractual employees
It is clear that seafarers are considered contractual employees. Their employment is governed by
the contracts they sign every time they are rehired and their employment is terminated when the
contract expires. Their employment is contractually fixed for a certain period of time. They fall under
the exception of Article 280 whose employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is
for the duration of the season (Millares, et. al. vs. NLRC, 385 SCRA 306, [2002]).

Project Employment
Principal test for determining project employees
The principal test for determining whether particular 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 (ALU-TUCP vs.
NLRC, 234 SCRA 678, [1994]).
Report of termination of project employees compulsory
Throughout the duration of the workers employment, there should have been filed as many
reports of termination as there were projects actually finished, if it were true that he was only a project
worker. Failure of the company to comply with this simple, but nonetheless compulsory, requirement is
proof that the worker is not a project employee (Aurora Land Projects Corp. vs. NLRC, 266
SCRA 48, [1997]).
Project employees entitlement to separation pay
After the termination of employment of the project employees, the company need not pay them
any separation pay. Pursuant to the provision of Policy Instructions No. 20, project employees are not
entitled to separation pay if they are terminated as a result of the completion of the project or any
phase thereof in which they have been employed (ibid.).
However, the project employees would be entitled to separation pay if the projects they are
working on have not yet been completed when their services were terminated (De Ocampo, Jr. vs.
NLRC, 186 SCRA 360, [1990]).
Attaining status of regular employment
Where the employment of project employees is extended after the supposed project had been
finished, the employees are removed from the scope of project employees and they shall be
considered regular employees (Phesco, Inc. vs. NLRC, 239 SCRA 446, [1994]).
Although the work to be performed is only for a specific project or seasonal, where a person thus
engaged has been performing the job for at least one year, even if the performance is not continuous
or is merely intermittent, the law deems the repeated and continuing need for its performance as
being sufficient to indicate the necessity or desirability of that activity to the business or trade of the
employer. The employment of such person is also then deemed to be regular with respect to such
activity and while such activity exists (Magsalin, et. al. vs. National Organization of Working
Men, et. al., 403 SCRA 199, [2003]).
Seasonal Employment
Seasonal workers who work for more than one season are deemed to have acquired regular
employment. The fact that workers do not work continuously for one whole year but only for the
duration of the season does not detract from considering them in regular employment. Seasonal
workers who are called to work from time to time and are temporarily laid off during off-season are not
separated from service in said period, but merely considered on leave until re-employed (Hacienda
Fatima, Inc. vs. National Federation of Sugarcane Workers, 518 SCRA 396, [2003]).
Fixed-Term or Fixed-Period Employment
Insert fabella Criteria for a fixed term employment contracts so that the same will not
circumvent security of tenure
The Supreme Court set down two criteria under which fixed contracts of employment cannot be
said to be in circumvention of security of tenure, to wit:
1. the fixed period of employment was knowingly and voluntarily agreed upon by the parties,
without any force, duress or improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent; or
2. it satisfactorily appears that the employer and employee dealt with each other on more or
less equal terms with no moral dominance whatever being exercised by the former on the
latter (Philippine National Oil Company-Energy Development Corp. vs. NLRC,
220 SCRA 695, [1993]).
Probationary Employment
Probationary period of employment; general rule and exception

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, 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, et. al. vs. Leogardo and General Telephone Directory
Co., 131 SCRA 151, [1984]).
Standards should be made known to employee at the at the start of engagement
In all cases involving employees on probationary status, 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 ( A.M.
Oreta & Co., Inc. vs. NLRC, 176 SCRA 218, [1989]).
Security of tenure during the probationary period
During the probationary period, the employee enjoys security of tenure. Except for just cause as
provided by law or under the employment contract, a probationary employee cannot be terminated. A
probationary employee may be terminated on two grounds: (a) for just cause; or (b) when he fails to
qualify as regular employee in accordance with reasonable standards made known by the employer to
the employee at the time of his engagement (Biboso vs. Victorias Milling, 76 SCRA 250,
Extension of probationary period
The employer and the employee may, by agreement, extend the probationary period of
employment beyond six (6) months as provided in Article 281 of the Labor Code. By voluntarily
agreeing to such an extension, the employee waived any benefit attaching to the completion of the
period if he still failed to make the grade during the period of extension ( Mariwasa Manufacturing,
Inc. vs. Leogardo, 169 SCRA 465, [1989]).
Double or successive probation not allowed
The evil sought to be prevented is to discourage scheming employers from using the system of
double or successive probation to circumvent the mandate of the law on regularization and make it
easier for them to dismiss their employees even after they have already passed probation (Holiday
Inn Manila vs. NLRC, 226 SCRA 417, [1993]).
Termination by Employer
Exercise of management prerogative
The discipline of employees is a management prerogative. If this prerogative is exercised in good
faith for the advancement of employers interest and not for the purpose of defeating the rights of the
employees by law or contract, the court will uphold it (SMB Sales Force Union vs Ople, 170
SCRA 25, [1989]).
Refusing promotion, not considered willful disobedience or insubordination
There is no law that compels an employee to accept a promotion for the reason that a promotion is
in the nature of a gift or reward, which a person has the right to refuse. Hence, the exercise by the
employee of the right to refuse a promotion cannot be considered in law as insubordination, or willful
disobedience of a lawful order to the employer.
Filing of complaint for illegal dismissal negates theory of abandonment
The filing of the complaint for illegal dismissal is inconsistent with the charge of abandonment, for
an employee who take steps to protest his dismissal cannot by logic be said to have abandoned his
work (Kams Intl, Inc. vs. NLRC, 315 SCRA 316, [1999]).
However, the rule that abandonment of work is inconsistent with the filing of a complaint for illegal
dismissal has no application where the complainant does not pray for reinstatement and asks for
separation pay instead. The rule applies only where complainant seeks reinstatement as a relief (Jo,
et al. vs. NLRC, 324 SCRA 437, [2000]).
Employees entitlement to separation pay when terminated on the ground of closure or
cessation of operations of an establishment
Where closure is due to serious business losses, no separation pay is required (North Davao
Mining Corp. vs. NLRC, 254 SCRA 721, [1996]).
Where closure is not due to serious business losses, workers are entitled to separation pay (Phil.

Tobacco Flue-Curing and Redrying Corp. vs. NLRC, 300 SCRA 37, [1998]).
Where closure was due to an act of the government to benefit the workers, the workers are not
entitled to separation pay (National Federation of Labor vs. NLRC, 327 SCRA 158, [2000]).
Illegality in the manner of dismissal (dismissal without due process).
The Supreme Court has apparently abandoned the Serrano ruling and reverted to the Wenphil
ruling, in so far as it ruled that in cases where there was substantial evidence proving just cause BUT
that due process was not followed, the termination will be upheld but the employer will be penalized
the amount of P30,000. The Supreme Court stated that it would not be right to order either
reinstatement of the dismissed employee or payment of backwages to the employee. But for failing to
comply with the procedure prescribed by law in terminating the services of an employee, the employer
should be made liable for payment of separation pay. (Agabon vs. NLRC, G.R. No. 158693,
If the dismissal is based on a just cause under Article 282 but the employer failed to comply with
the notice requirement, the sanction to be imposed upon him should be tempered because the
dismissal process was, in effect, initiated by an act imputable to the employee; If the dismissal is
based on an authorized cause under Article 283 but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the dismissal process was initiated by the
employers exercise of his management prerogative (Jaka Food Processing Corporation vs.
Darwin Pacot et al., G.R. No. 151378, [2005]).
Termination by Employee
Voluntary resignation
Voluntary resignation, once accepted, cannot be withdrawn without the consent of the employer
(Intertrod Maritime, Inc. vs. NLRC, 198 SCRA 318, [1991]).
An employee who voluntarily resigns is not entitled to separation pay unless stipulated in an
employment contract or CBA or sanctioned by established employer practice or policy (Alfaro vs.
Court of Appeals, 363 SCRA 799, [2001]).
Constructive dismissal
There may be constructive dismissal if an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it could foreclose any choice by
him except to forego his continued employment (Hyatt Taxi Services, Inc. vs. Catinoy, 359
SCRA 686, [2001]).
After 30-day period of preventive suspension, the employee must be reinstated to his former
position because suspension beyond this maximum period amounts to constructive dismissal (ibid.).
Employment Not Deemed Terminated
Suspension of operations
Article 286 of the Labor Code is clearthere is termination of employment when an otherwise
bona fide suspension of work exceeds six (6) months. The cessation of employment for more than six
(6) months was patent and the employer has the burden of proving that the termination was for a just
or authorized cause (Mayon Hotel and Restaurant, et al. vs. Rolando Adana, et al., G.R. No.
157634, [2005]).
Floating status
The floating status of an employee should last only for a legally prescribed period of time. When
the floating status of an employee lasts for more than six (6) months, he may be considered to have
been constructively dismissed from service. Thus, he is entitled to the corresponding benefits for
separation (Agro Commercial Security Services Agency, Inc. vs. NLRC, 175 SCRA 790,
Retirement From Service
There are three kinds of retirement schemes. The first type is compulsory and contributory in
character. The second type is one set up by agreement between the employer and the employees in
collective bargaining agreements or other agreements between them. The third type is one that is
voluntarily given by the employer, expressly as in an announced company policy or impliedly as in a
failure to contest the employees claim for retirement benefits. An employee who is retired pursuant to
a bona fide retirement plan or in accordance with the applicable individual or collective agreement or
established employer policy shall be entitled to all the retirement benefits provided therein (Marilyn

Odchimar Gerlach vs. Reuters Limited, Phils., G.R. No. 148542, [2005]).
Management Prerogative
The free will of management to conduct its own affairs to achieve its purpose cannot be denied
(San Miguel Brewery Sales Force Union vs. Ople, 170 SCRA 25, [1989]). Except as limited
by special laws, an employer is free to regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place and
manner of work, tools to be used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal
and recall of work (NLU vs. Insular La Yebana Co., 2 SCRA 924, [1961]).
Discipline of employees
Although the employer has the prerogative to discipline or dismiss its employee, such prerogative
cannot 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 vs. Court of
Appeals, 325 SCRA 331, [2000]).
Transfer of employees
As a general rule, the employer has the inherent right to transfer or assign an employee in the
pursuance of its legitimate business interest subject only to the condition that it be not motivated by
discrimination or bad faith (PT&T vs. Laplana, 199 SCRA 485, 1991).
Abolition of positions
Management is at liberty, absent any malice on its part, to abolish positions which it deems no
longer necessary (Great Pacific Life Assurance Corp. vs. NLRC, 188 SCRA 139, [1990]).
However, in the exercise of this management prerogative, adequate proof must be shown that the
abolished positions were unnecessary (Golden Thread Knitting vs. NLRC, 304 SCRA 568,
Granting of bonus
The granting of bonus is a management prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient. A bonus is not demandable and enforceable
obligation, except when it is made part of the wage, salary or compensation of the employee. But the
employer cannot be forced to distribute bonuses when it can no longer afford to pay. To hold
otherwise would be to penalize employer for his past generosity (Producers Bank of the
Philippines vs. NLRC, 355 SCRA 489, [2001]).
Employment contracts providing for disclosure of marriages
A companys policy prohibiting an employee from having a relationship with an employee of a
competitor company is a valid exercise of management prerogative. The company has a right to
guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs
and information from competitors (Duncan Association of Detailman-PTGWO, et al. vs. Glaxo
Wellcome Philippines, Inc., G.R. No. 162994, [2004]).

Book Seven: Transitory and Final Provisions

Burden of proving payment of monetary claims
With respect to labor cases, the burden of proving payment of monetary claims rests on the
employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and
other similar documentswhich will show that overtime, differentials, service incentive leave and
other claims of workers have been paidare not in the possession of the worker but in the custody
and absolute control of the employer (G & M (Phils.), Inc. vs. Willie Batomalaque, G.R. No.
151849, [2005]).
Persons liable in illegal dismissal when committed by other than natural person
In labor cases, corporate directors and officers are solidarily liable with the corporation for the
termination of employment of corporate employees committed with malice or bad faith. The ruling
applies in a case where a corporate officer acts with malice or bad faith in suspending an employee.
Whether or not the petitioner acted with malice or bad faith in ordering the suspension of the
respondent is a question of fact submitted by the parties to the Labor Arbiter for resolution (Conrado
Tan vs. Restituto Timbal, Jr., [2004]).

Social Legislation
Social Security Act of 1997 (R.A. 8282)
The Social Security Act was enacted pursuant to the policy of the government to develop,
establish gradually and perfect a social security system which shall be suitable to the needs of the
laborers throughout the Philippines, and shall provide protection against the hazards of disability,
sickness, old age and death. It provides for compulsory coverage of all employees not over sixty
years of age and their employers. Well-settled is the rule that the mandatory coverage of Republic Act
No. 1161, as amended, is premised on the existence of an employer-employee relationship, the
essential elements of which are: (a) selection and engagement of the employee; (b) payment of
wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods
by which the work is to be accomplished, with the power of control being the most determinative
factor. All employees, regardless of tenure, would qualify for compulsory membership in the SSS,
except those classes of employees contemplated in Section 8(j) of the Social Security Act (Reynaldo
Cano Chua, doing business under the name and style Prime Mover Construction
Development vs. Court of Appeals, et. al., G.R. No. 125837, [2004]).
Government Service Insurance Act of 1997 (R.A. 8291)
Exemption should be liberally construed in favor of the pensioner. Pension in this case is a bounty
flowing from the graciousness of the Government intended to reward past services and, at the same
time, to provide the pensioner with the means with which to support himself and his family. Unless
otherwise clearly provided, the pension should inure wholly to the benefit of the pensioner
(Government Service Insurance System vs. Commission on Audit, G.R. No. 138381,
13th Month Pay (P.D. 851)
Commissions forming part of the basic salary in computing 13th month pay
The salesmens commission, comprising a pre-determined percent of the selling price of the goods
by each salesman, were properly included in the term basic salary for purposes of computing the
13th month pay (Philippine Duplicators, Inc. vs. NLRC, 241 SCRA 380, [1995]).
The medical representatives were not salesmen because they did not effect any sale of article at
all. The additional payments which the medical representatives received were not in fact commissions
but rather partook of the nature of profit-sharing bonuses. Hence, the so-called commissions did not
form part of the basic salary and were not included in the computation of the 13 th month pay (Boie-
Takeda Chemicals, Inc. vs. Dela Serna, 228 SCRA 329, [1993]).

Tally of Frequently Asked Questions (1990-2007)
E YEARS Y L 1994 1 8
Absorption 1997 1
of 1994 1 1 2001 3
Employees 2002 2
Anti-Child 2002 1 Barangay
Abuse Act 2004 1 2 Conciliation 1994 1 2
; prior resort 2007 1
Anti-Sexual 2000 2
Harassment 2003 2 7
Act 2004 1 Bargaining 1991 1
2005 1 Unit 1993 2 7
2006 1 1998 1
1999 1
Appearance 2007 1 1
2007 2
before the
commission Benefits of
a non-union 2005 1 1
Appellate Period of
Jurisdiction Appeal to 1 6
NLRC: 1 Bonus 1995 1
1990 1 2002 1 3
Voluntary 1 2003 1
Arbitrator 2 Cancellation
: 1993 of 2004 1 1
Secretary Certificate
of Labor: of
1992 Registration
Bureau of of
Labor Recruitment
Relations: Agencies;
2001 grounds
CARL 1991 3 3
Arbiter to Casual vs.
NLRC: Regular 1998 1 2
2001 Employmen 2007 1
Assumption 1992 1
of 1994 2 9 Certification 1990 2
Jurisdiction 1997 1 Election 1991 2 14
by the 1998 1 1992 2
Secretary of 1999 1 1993 1
Labor 2003 1 2000 1
2004 2 2001 1
2003 1
Attorneys 1993 2
2004 1
Fees 2001 3 6
2005 1
2007 1
2006 2
Check-off 1991 1 1
Renewal 1999 1 1

Classificatio Closed 1991 1
n of labor 1995 1 2 Shop 1995 1 5
statutes 2006 1 Agreement 1997 1
1999 1
2004 1
Collective 1991 1
Bargaining 1992 1 9
1995 1
2001 1
2002 1
Procedura 1
l 1
condition 1
s to 1
ent of
Company 2004 1 1
Work Week 2005 1 1
e 1993 1 3
Agreement 2007 2
Compulsory 1991 1
Arbitration 1995 1 2
Confidential 1994 1
employees 1995 1 2
Consent 2006 1 1
Constructiv 1996 1
e Dismissal 2004 1 2
Constitution 1993 1
al 1995 1 7
Provisions 1998 1
related to 2000 1
Labor 2003 1
2004 1
2007 1 coverage
Contempt as Employees
punishment 1999 1 1 Cost of 1997 1 1
for refusal Living
to execute Allowance
judgment ECC 1993 1
Contract benefits and 1994 1 3
Bar Rule vs. 1999 1 1 State 1995 1
Deadlock Insurance
Bar Rule Fund
Contracting 1994 1 Expulsion
out of 1999 1 4 of member 2002 1 1
Services 2000 1 from union;
2001 1 grounds
Contractual 1991 1 Field 1992 1 1
Employees 2002 1 3 Personnel
2005 1 Floating 1999 1
Criminal Status 2004 1 2
Complaint 1993 1 1 Fringe 1990 1 1
vs. benefits
ve Grievance 1994 1
Complaint Machinery 1995 1 2
on unfair GSIS; 1991 1
labor coverage, 1996 1 6
practice beneficiarie 1997 1
Damages s 1999 1
claimed by 2001 1 1 2004 1
an illegally 2005 1
dismissed Handicappe 1998 1
employee d Workers 2000 1 3
Disaffiliatio 1994 1 1 2006 1
n Holiday Pay 1991 1
Domestic 1997 1 7
and 2000 1 3 2002 3
Homeworke 2007 2 2004 1
rs 2005 1
Employer- 1991 1 Illegal 1990 2
Employee 1996 2 11 Dismissal 1991 2 10
Relationship 1997 1 1995 1
1998 1 2001 2
1999 1 2002 2
2000 1 2004 1
2001 1 Illegal 1991 1
2002 1 Recruitment 2002 2 7
2005 1 2005 1
2006 1 2006 1
Employees 2007 2
Compensati 1997 1 1 Indemnity
on Act; for failure to 1997 1 1
terminate Jurisdiction 1991 1
properly of Sec. of 1992 1 8
Industry Labor 1994 1
Indispensabl 2004 1 1 2001 1
e to 2004 1
National Inquire 1
Interest into 1
Financial 1
Injunction 1992 1 Activities
1993 1 3 of
2000 1 Unions:
Internationa 1999
l agencies; 1994 1 1 2001
exemption Condition
from s before
coverage examinati
Interpretatio 1993 1 on is
n in favor of 1995 1 4 ordered:
Labor 2004 1 1999
2006 1 Jurisdiction 1993 1
Intra- 1996 1 of Voluntary 1997 1 3
corporate 1997 1 2 Arbitrators 2003 1
Controversy Labor-only 1990 1
Jurisdiction 1996 1 contracting; 1991 1 12
of BLR 2005 1 2 Job 1992 1
contracting; 1994 2
Jurisdiction 1991 1 Independent 1997 1
of Labor 1992 1 9 contractor; 2000 1
Arbiter 1993 1 Liability of 2001 1
1994 1 Indirect 2002 2
1995 2 employer 2004 1
1996 1 2005 1
1999 1
2001 1 Labor
Standards 1997 1 1
Jurisdiction vs. Labor
of Med- 1996 1 1 Relations
Jurisdiction 1990 1 dispute; 1991 1 1
of NLRC; 1995 1 4 definition
NLRC vs. 2004 1
RTC En banc 1 Labor
Resolutio Legislation 1995 1 1
n: vs. Social
1993 Legislation

Jurisdiction 1991 1 Labor 1995 1

of Regional 1994 1 3 Statutes; 2003 1 2
Director 1993 1 Classificatio
Jurisdiction 1990 1
of Regular 1995 1 3 Liability of 1991 1
Courts 2001 1 Employer 1997 1 2
for Illegal
Lockout 1995 1 Non-
2004 1 2 transferabili 1998 1 1
Managemen 1992 1 ty of
t 1993 1 7 recruitment
Prerogative 1994 2 licenses
2001 1 Overtime 1991 1
2004 1 Pay 1992 1 8
2005 1 1993 1
Managerial 1994 1 1997 1
vs. 1995 1 6 2002 1
Supervisory 1996 1 2003 1
employees; 2002 1 2004 1
rights of 2003 1 2005 1
managerial 2004 1 Paternity 2002 1
employees Leave 2005 1 2
Mandatory Picketing; 2000 1
Subjects of 1996 1 1 when lawful 2004 1 2
Collective Piercing the
Bargaining Veil of 1999 1 1
Maternity 2000 1 1 Corporate
Benefits Fiction
Maternity 2005 1 Perfection
Leave 2007 1 2 of Appeal; 1993 1 2
Migrant 2004 1 Posting of 2001 1
Workers Act 2005 1 2 Appeal
Minors; 2002 1
employment 2004 1 4 Preference 1992 1
2006 1 of Credits to 1999 1 3
2007 1 Employees 2003 1
Money Prescriptive Illegal
Claims of 1998 1 1 Periods Dismissal 1 9
workers, : 1
how 1991 1
computed 1994 2
1997 1
Moral and 2002 1
exemplary 2001 1 1 Appeal to 1
damages to NLRC: 1
employees 1990
Non- 2006 1 1 2001
diminution SSS
of benefits claim:
Non- 2001
resident 1995 1 1 Action for
Aliens; reinstate
employment ment:
Night Shift 1997 1
Differential 2002 1 2 Preventive
Pay Suspension 2002 1 1

Privileged 2007 1 1 Probationar 1993 1
communicat y 1998 1 4
ion Employmen 2001 1
proceedings t 2006 1
before labor

Prohibited 1992 1 1 Retroactivit 1994 1
Activities y of CBA 2001 1 2
Prohibition provisions
against 1995 1 1 Return-to- 1994 1
Marriage Work Order 1996 1 4
Project 1993 1 1997 1
Employmen 1994 1 7 1998 1
t 1996 1 Rights of
1998 1 Employees 1995 1 1
2002 1 pending
2005 2 appeal to
Quitclaim 1992 1 NLRC
and Release 1994 1 3 Right to 1999 1
1999 1 Self- Aliens: 1 5
Reduction organization 2000 1
of 2003 1 1 Governm 1
Personnel; ent Ees 1
one-month vs.
notice rule Private
Relief from 1996
Illegal 1991 1 1 Confident
Dismissal ial
Religion as employee
grounds for 2005 1 1 s:
termination 2002
Reinstateme 1990 1 Service
nt 1991 1 9 establish
1993 2 ments:
1995 2 2002
1999 1 Salary vs. 1994 1 1
2002 1 Wage
2007 1 Seafarers;
Rest-day 2002 1 1 contract of 2002 1 1
Pay employment
Retirement 1994 1 for a
Pay 2001 1 2 definite
Retirement 2005 1
Benefits Exemptio 1 2 Security of 1991 1
n from Tenure 1992 1 5
benefits: 1993 1
2001 1994 1
2004 1
compulsory 2001 1 2 Separation 1991 1
2007 1 Pay 1992 1 6
1996 1
Retirement 2007 1 1 1997 1
of miners 2001 1
Retroactivit 2002 1
y of Arbitral 1994 1 1 Sick and
Vacation 1997 1 1 of
Leave Strike; 1992 1
Slowdown 1998 1 1 requisites 1994 1 7
Special 1993 1 1997 1
Assessment 2001 1 3 2000 1
2002 1 2004 2
2007 1
SSS Non-
remittanc 1 15 Strike; 1994 1
e of 1 effects of 1995 1 4
contributi 1 illegal strike 1997 1
on: 1 2003 1
1990 1 Strike;
Compulso 1 sympathy 2004 1 1
ry 1 strike vs.
Coverage: 1 general
1991 1 strike
1993 1 Strike Area; 1991 1 1
1995 1 definition
1997 1
1999 1 Strike 1992 1 1
2000 1 breaker
2002 1 Strike;
2003 dismissal of 2003 1 1
Beneficia union
ries: officers and
1988 members
1992 Strike; 2000 1 1
Benefits: walkout
Definition Substitution 1994 1
of ary Doctrine 2000 1 2
Employer Termination 1990 1
/Employe of 1997 1 8
e: Employmen 1998 1
1992 t; 1999 1
Actions Authorized 2000 1
against causes 2002 1
Employer 2003 1
: 2004 1
2001 Termination
Probabilit of 1990 1 1
y Employmen
Provision t, Cessation
s: of
2005 Operations
State 1994 1 or Business
Insurance 1995 1 3 Losses
Fund 1997 1 Termination
Strained of 2004 3 3
Relationship 1991 1 2 Employmen
s; doctrine 1993 1 t; Disease

Termination t; Willful 1999 1
of 2001 3 3 Disobedienc 2003 1
Employmen e
t; 13th Month 1994 1
Retrenchme Pay 1998 1 3
nt vs. 2004 1
Two-notice 1990 1
Termination Rule 1994 1 4
of 1991 1 2 1998 1
Employmen 2001 1 1999 1
t; Loss of
Confidence ULP 1990 1
1991 2 9
Termination 1992 1 1992 2
of 1993 1 4 1996 1
Employmen 1995 1 1997 1
t; Just 2004 1 2004 1
causes 2005 1
Termination Undertime
of 1994 1 1 not offset by 1992 1 2
Employmen Overtime 2003 1
t, Just
Causes; Union;
substantive acquisition 2003 1 1
and of legal
procedural personality
requirement Union dues 1997 1 1
s Union;
Termination employees 2002 1 1
of 1993 1 1 of a
Employmen cooperative
t; effect of Union;
filing expulsion 1991 1 1
criminal and review
complaint by company
Termination 1994 2 Union;
of 1996 1 6 members 1998 1 1
Employmen 1997 1 and
t; 1998 1 admission
Substantive 1999 1
vs. Union; 1999 1 1
Procedural representati
Requiremen on
ts Union;
Termination supervisory 1999 1 1
of 1995 1 2 v. rank-and-
Employmen 1996 1 file
t; Serious employees
Misconduct Union 1997 1
Termination 1992 1 security 1999 1 3
of 1993 1 5 clause 2004 1
Employmen 1995 1 Visitorial
and 1993 1 2
Enforcemen 1996 1
t Powers of
a Regional
Voluntary 1994 1
Resignation 1999 1 2
Wage 1997 1
Distortion 2002 1 2
Waiver of 1996 1 1
Weekly Rest 1998 1 1
Womens 1995 1
Rights 1998 1 3
under the 2000 1
Labor Code
Workers 1992 1
Preference 1995 1 3
in case of 2003 1
Working 1993 1
while on 1994 1 3
Call 2004 1

That in all things God may be glorified.