1 CCV NOTES On Labor Law Review 2017

CCV NOTES FOR THE 2017 Labor Law Review
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TOPIC NO. 1
FUNDAMENTAL PRINCIPLES AND POLICIES
A. CONSTITUTIONAL PROVISIONS
What are the significant constitutional principles related to

Labor Law?
The following principles are noteworthy:
Under Article II (Declaration of Principles and State Policies):
a. Promotion of full employment, a rising standard of living, and an
improved quality of life for all.
b. Promotion of social justice in all phases of national development.
c. Full respect for human rights.
d. Vital role of the youth in nation-building.
e. Role of women in nation-building, and fundamental equality
before the law of women and men.
f. Indispensable role of the private sector,
g. Protection-to-labor clause: “Section 18. The State affirms
labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.
NOTE: Article II is merely a statement of principles and state policies. Its
provisions are not self-executing. They do not embody judicially
enforceable constitutional rights but guidelines for legislation. These broad
constitutional principles need legislative enactments to implement them.
The disregard of these provisions cannot give rise to a cause of
action in the courts. Consequently, no case can be filed based on
these principles. There must be enabling laws to implement
them.
Under Article III (Bill of Rights):
a. Due process and equal protection of the law.
b. Freedom of speech, of expression, or of the press, or the right of
the people peaceably to assemble and petition the government for
redress of grievances.
c. Right of the people to information on matters of public concern.
Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |1

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

a. Protection-to-Labor Clause: VERY IMPORTANT
Section 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
They shall be entitled to security
of tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of voluntary
modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.
What are the due process principles applicable in termination

of employment?
1. Constitutional due process is not applicable to termination of

employment. This means that the employee undergoing investigation
leading to his dismissal cannot invoke constitutional due process if and
when he is deprived of due process by the employer. This is so because
constitutional due process may only be invoked against the State or
government. However, after being dismissed, the employee who files an
illegal dismissal case may invoke constitutional due process in case he is
deprived of due process by the Labor Arbiter, the NLRC, or the Court of
Appeals since, this time, it is already the government which may be said to
have deprived him of due process.
2. At the company level investigation leading to an employee’s dismissal,
BOTH the following procedural due process must be complied with:
a. Statutory due process per 2004 Agabon doctrine which refers to
the due process provision in the Labor Code (Article 277[b]); AND
b. Contractual due process per 2013 Abbott Laboratories doctrine1
which refers to the due process prescribed by the employer itself in its
Company rules and regulations or Code of Discipline. Having prescribed
the due process itself, the employer is contractually bound to adhere to and
observe it.
Penalty for non-compliance with either or both statutory or
contractual due process - P30,000.00 indemnity in the form of nominal
damages.
Is assistance of counsel in termination cases mandatory and

indispensable?
NO, according to the 2011 case of Lopez v. Alturas Group of
Companies:2
Except:
(1) When the employee himself requests for counsel; or
(2) When he manifests that he wants a formal hearing on the charges
against him.
B. NEW CIVIL CODE

What is latest example of a labor case where Article 1700 of the
Civil Code was applied?
Article 1700 of the Civil Code provides:
“Art. 1700. The relations between capital and labor are not merely

contractual. They are so impressed with public interest that labor contracts
must yield to the common good. Therefore, such contracts are subject to the
special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar
subjects.”
2011 case of Leyte Geothermal Power Progressive Employees
Union-ALU-TUCP v. Philippine National Oil Company-Energy
Development Corporation, involving the issue of whether the members
of petitioner union are project employees or regular employees. It was
pronounced that Article 280 of the Labor Code, as worded, establishes that
the nature of the employment is determined by law, regardless of any
contract expressing otherwise. The supremacy of the law over the
nomenclature of the contract and the stipulations contained therein is to
bring to life the policy enshrined in the Constitution to "afford full
protection to labor." Thus, labor contracts are placed on a higher plane than
ordinary contracts; these are imbued with public interest and therefore
subject to the police power of the State. However, notwithstanding the
foregoing iterations, project employment contracts which fix the
employment for a specific project or undertaking remain valid under the
law. In the
case at bar, the records reveal that the officers and the members of
petitioner union signed employment contracts indicating the specific
project or phase of work for which they were hired, with a fixed period of
employment. As clearly shown by petitioner union’s own admission, both
parties had executed the contracts freely and voluntarily without force,
duress or acts tending to vitiate the workers’ consent. Thus, there is no
reason not to honor and give effect to the terms and conditions stipulated
therein.
How is Article 1702 of the Civil Code correlated with Article 4 of

the Labor Code?
Both Article 1702 of the Civil Code and Article 4 of the Labor Code speak of
the rule on interpretation and construction provisions of law and labor
contracts.
Article 1702 of the Civil Code provides:
“Article 1702. In case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living for the laborer.”

Article 4 of the Labor Code states:
“Article 4. Construction in Favor of Labor. – All doubts in the
implementation and interpretation of the provisions of this Code, including
its implementing rules and regulations, shall be resolved in favor of labor.”
Both articles above may be applied to doubts and ambiguities in:
(1) labor contracts such as an employment contract or a CBA; or
(2) evidence presented in labor cases.
C. THE LABOR CODE

What are the distinctions between Labor Relations and Labor
Standards?
“Labor standards law” is that part of labor law which prescribes the
minimum terms and conditions of employment which the employer is
required to grant to its employees.
“Labor relations law” is that part of labor law (Book V of the Labor Code)
which deals with unionism, collective bargaining, grievance machinery,
voluntary arbitration, strike, picketing and lockout.
1 Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz, G.R. No.

192571, July 23, 2013.
2 G.R. No. 191008, April 11, 2011, 647 SCRA 568.
3 G.R. No. 170351, March 30, 2011.
Labor relations and labor standards laws are not mutually exclusive.
They are complementary to, and closely interlinked with, each other. For
instance, the laws on collective bargaining, strikes and lockouts which are
covered by labor relations law necessarily relate to the laws on working
conditions found in Book III.
What is exclusive bargaining representative/agent?

“Exclusive bargaining representative” or “exclusive bargaining agent”
refers to a legitimate labor organization duly recognized or certified as
the sole and exclusive bargaining representative or agent of all the
employees in a bargaining unit.

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

issues to voluntary arbitration without the participation of the
bargaining union?
No, as held in the 2009 case of Tabigue v. International Copra
Export Corporation,1 where the Supreme Court clarified that an
individual employee or group of employees cannot be allowed to submit or
refer unsettled grievances for
voluntary arbitration without the participation of the bargaining
union/agent. The reason is that it is the bargaining union/agent which is a
party to the CBA which contains the provision on voluntary arbitration.
Being a party thereto, it cannot be disregarded when a grievable issue will
be submitted for voluntary arbitration.
In order to have legal standing, the individual members should be shown to
have been duly authorized to represent the bargaining union/agent.
What is the principle of co-determination?
The principle of co-determination refers to the right given to the employees

to participate in policy and decision-making processes that affect their
rights, benefits and welfare.
In PAL v. NLRC and PALEA,2 it was held that the formulation of a Code
of Discipline among employees is a shared responsibility of the employer
and the employees. It affirmed the decision of the NLRC which ordered that
the New Code of
Discipline should be reviewed and discussed with the union, particularly

the disputed provisions and that copies thereof be furnished each
employee.
Does the grant of the right of participation mean co-

management of business or intrusion into management
prerogatives?
No. This principle does not mean that workers should approve
management policies or decisions.
Manila Electric Company v. Quisumbing3 - the grant of this right is
not an intrusion into the employer’s management prerogative. The
mandate of the Constitution and the law is complied with when, for
instance, the union is allowed to have representatives in the employer’s
Safety Committee, Uniform Committee and other committees of similar
nature. Certainly, such participation by the union in the said committees is
not in the nature of a co-management control of the business of the
employer. What is granted therein is participation and representation.
Thus, there is no impairment of management prerogatives.
What is Labor-Management Council (LMC)?

The establishment of LMC is mandated under the said constitutional
principle of co-determination. This is the body where workers, through
their representatives, together with representatives of the employer, are
allowed to participate in policy and decision-making processes that affect
their rights, benefits and welfare.
What is the provision of the Labor Code enunciating

STATUTORY DUE PROCESS?
Article 277, paragraph (b) of the Labor Code enunciates the so-called
statutory due process.
------------oOo------------
1 G.R. No. 183335, Dec. 23, 2009.
2 G.R. No. 85985, Aug. 13, 1993.
3 G.R. No. 127598, Jan. 27, 1999, 302 SCRA 173, 213.

TOPIC NO. 2
RECRUITMENT AND PLACEMENT
A. RECRUITMENT OF LOCAL AND MIGRANT WORKERS
I. RECRUITMENT AND PLACEMENT FOR LOCAL

EMPLOYMENT
What is a “Private Recruitment and Placement Agency

(PRPA)”?
It refers to any individual, partnership, corporation or entity engaged in the
recruitment and placement of persons for local employment.
What are the qualifications of a PRPA for local employment?

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

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

No license shall be transferred, conveyed or assigned to any other person or
entity.
II. RECRUITMENT AND PLACEMENT FOR OVERSEAS

EMPLOYMENT
What are the laws relevant to overseas employment?

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

employment?
1. “Overseas Filipinos” refer to migrant workers, other Filipino
nationals and their dependents abroad.
2. “Overseas Filipino Worker or Migrant Worker” refers to a
person who is to be engaged, is engaged, or has been engaged in a
remunerated activity in a state of which he or she is not a citizen or on
board a vessel navigating the foreign seas other than a government
ship used for military or non-commercial purposes, or
on an installation located offshore or on the high seas. A “person
to be engaged in a remunerated activity” refers to an applicant
worker who has been promised or assured employment overseas.
What are the entities authorized to engage in recruitment and

placement of workers?
The following are authorized to engage in recruitment and placement of
workers:
a. Public employment offices;
b. Philippine Overseas Employment Administration (POEA);
c. Private recruitment entities;
d. Private employment agencies;
e. Shipping or manning agents or representatives;
f. Such other persons or entities as may be authorized by the DOLE

Secretary; and
g. Construction contractors.
LICENSING AND REGULATION FOR OVERSEAS

RECRUITMENT AND PLACEMENT
What are the qualifications of a recruiter for overseas

employment?
Only those who possess the following qualifications may be permitted to
engage in the business of recruitment and placement of overseas Filipino
workers:
1. Filipino citizens, partnerships or corporations at least seventy five
percent (75%) of the authorized capital stock of which is owned and
controlled by Filipino citizens;
2. A minimum capitalization of Two Million Pesos (P2,000,000.00)
in case of a single proprietorship or partnership and a minimum paid-up
capital of Two Million Pesos (P2,000,000.00) in case of a
corporation; Provided, that those with existing licenses shall, within four
(4) years from effectivity hereof, increase their capitalization or paid up
capital, as the case may be, to Two Million Pesos (P2,000,000.00) at the
rate of Two Hundred Fifty Thousand Pesos (P250,000.00) every year; and
3. Those not otherwise disqualified by law or other government regulations
to engage in the recruitment and placement of workers for overseas
employment.
What are the disqualifications?

The following are not qualified to engage in the business of recruitment
and placement of Filipino workers overseas:
a. Travel agencies and sales agencies of airline companies;
b. Officers or members of the Board of any corporation or members in a
partnership engaged in the business of a travel agency;
c. Corporations and partnerships, when any of its officers, members of the
board or partners, is also an officer, member of the board or partner of a
corporation or partnership engaged in the business of a travel agency;
d. Persons, partnerships or corporations which have derogatory records,
such as, but not limited to, the following:
Labor Law Review – Comm. Cecilio Alejandro C. Villanueva | 10

1) Those certified to have derogatory record or information by the NBI or by
the Anti-Illegal Recruitment Branch of the POEA;
2) Those against whom probable cause or prima facie finding of guilt for
illegal recruitment or other related cases exists;
3) Those convicted for illegal recruitment or other related cases and/or
crimes involving moral turpitude; and
4) Those agencies whose licenses have been previously revoked or cancelled
by the POEA for violation of R.A. No. 8042, the Labor Code (PD 442, as
amended), and their implementing rules and regulations.
All applicants for issuance/renewal of license shall be required to submit
clearances from the NBI and Anti-Illegal Recruitment Branch of the POEA,
including clearances for their respective officers and employees.
e. Any official or employee of the DOLE, POEA, Overseas Workers Welfare
Administration (OWWA), Department of Foreign Affairs (DFA) and other
government agencies directly involved in the implementation of R.A. No.
8042 and/or any of his/her relatives within the fourth (4th) civil degree of
consanguinity or affinity; and
f. Persons or partners, officers and directors of corporations whose licenses
have been previously cancelled or revoked for violation of recruitment laws.
What is the period of validity of license?

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

No. The license shall not be transferred, conveyed or assigned to any
person, partnership or corporation. It shall not be used directly or
indirectly by any person, partnership or corporation other than the one in
whose favor it was issued.

ILLEGAL RECRUITMENT
(Section 5, R.A. No. 10022)
Who may commit illegal recruitment?

Broadly, “illegal recruitment” may be committed by any person,
regardless of whether such person is a:
1. Non-licensee;
2. Non-holder of authority;
3. Licensee; or
4. Holder of authority.
Any person, whether a non-licensee, non-holder, licensee or
holder of authority, may be held liable for illegal recruitment.
Under R.A. No, 8042, as amended by R.A. No. 10022, license or
authority of the illegal recruiter is immaterial.
What constitutes illegal recruitment when committed by a

NON-LICENSEE or NON-HOLDER OF AUTHORITY?
Illegal recruitment, when undertaken by non-licensee or non-

holder of authority, shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring
workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not,
Provided, That any such non-licensee or non-holder who, in any manner,
offers or promises for a fee employment abroad to two or more
persons shall be deemed so engaged.
What constitutes illegal recruitment when committed by ANY

PERSON, whether a NON-LICENSEE, NONHOLDER OF
AUTHORITY or even by a LICENSEE or HOLDER OF
AUTHORITY?
(a) To charge or accept, directly or indirectly, any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary of
Labor and Employment, or to make a worker pay or acknowledge any

amount greater than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in
relation to recruitment or employment;
(c) To give any false notice, testimony, information or document or commit
any act of misrepresentation for the purpose of securing a license or
authority under the Labor Code, or for the purpose of documenting hired
workers with the POEA, which include the act of reprocessing workers
through a job order that pertains to non-existent work, work different from
the actual overseas work, or work with a different employer whether
registered or not with the POEA;
(d) To induce or attempt to induce a worker already employed to quit his
employment in order to offer him another unless the transfer is designed to
liberate a worker from oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or entity not to employ
any worker who has not applied for employment through his agency or who
has formed, joined or supported, or has contacted or is supported by any
union or workers' organization;
(f) To engage in the recruitment or placement of workers in jobs harmful to
public health or morality or to the dignity of the Republic of the
Philippines;
(g) To fail to submit reports on the status of employment, placement
vacancies, remittance of foreign exchange earnings, separation from jobs,
departures and such other matters or information as may be required by
the Secretary of Labor and Employment;
(h) To substitute or alter to the prejudice of the worker, employment
contracts approved and verified by the Department of Labor and
Employment from the time of actual signing thereof by the parties up to
and including the period of the expiration of the same without the approval
of the Department of Labor and Employment;
(i) For an officer or agent of a recruitment or placement agency to
become an officer or member of the Board of any corporation engaged in
travel agency or to be engaged directly or indirectly in the
management of travel agency;
(j) To withhold or deny travel documents from applicant workers before
departure for monetary or financial considerations, or for any other
reasons, other than those authorized under the Labor Code and its
implementing rules and regulations;

(k) Failure to actually deploy a contracted worker without valid reason as
determined by the Department of Labor and Employment;
(l) Failure to reimburse expenses incurred by the worker in connection with
his documentation and processing for purposes of deployment, in cases
where the deployment does not actually take place without the worker's
fault.
Illegal recruitment when committed by a syndicate or in large

scale shall be considered an offense involving economic
sabotage; and
(m) To allow a non-Filipino citizen to head or manage a licensed
recruitment/manning agency.”
PROHIBITED ACTIVITIES IN RELATION TO ILLEGAL

RECRUITMENT
What are the prohibited activities in connection with

recruitment for overseas employment?
Besides illegal recruitment, the law additionally provides that it shall also
be unlawful for any person or entity to commit the following prohibited
acts:
(1) Grant a LOAN to an overseas Filipino worker with interest
exceeding eight percent (8%) per annum, which will be used for
payment of legal and allowable placement fees and make the migrant
worker issue, either personally or through a guarantor or accommodation
party, post-dated checks in relation to the said loan;
(2) Impose a compulsory and exclusive arrangement whereby an overseas
Filipino worker is required to avail of a LOAN only from specifically
designated institutions, entities or persons;
(3) Refuse to condone or renegotiate a LOAN incurred by an overseas
Filipino worker after the latter's employment contract has been
prematurely terminated through no fault of his or her own;
Filipino worker is required to undergo HEALTH EXAMINATIONS
only from specifically designated medical clinics, institutions,

entities or persons, except in the case of a seafarer whose
medical examination cost is shouldered by the principal /
shipowner;
Filipino worker is required to undergo TRAINING, SEMINAR,
INSTRUCTION OR SCHOOLING of any kind only from
specifically designated institutions, entities or persons, except
for recommendatory trainings mandated by principals /
shipowners where the latter shoulder the cost of such trainings;
(6) For a SUSPENDED RECRUITMENT/MANNING AGENCY to engage
in any kind of recruitment activity including the processing of pending
workers' applications; and
(7) For a recruitment/manning agency or a foreign principal/employer to
pass on the overseas Filipino worker or deduct from his or her salary the
payment of the cost of INSURANCE fees, premium or other
insurance related charges, as provided under the compulsory worker's
INSURANCE coverage.
LICENSE VS. AUTHORITY

What is a “license” for overseas recruitment?
“License” refers to the document issued by the DOLE Secretary
authorizing a person, partnership or corporation to operate a private
recruitment or manning agency.
What is an “authority” for overseas employment?
“Authority” refers to the document issued by the DOLE Secretary
authorizing the officers, personnel, agents or representatives of a licensed
recruitment or manning agency to conduct recruitment and placement
activities in a place stated in the license or in a specified place.
ELEMENTS OF ILLEGAL RECRUITMENT

What are the elements of illegal recruitment?
The essential elements of illegal recruitment vary in accordance with the
following classifications:
(1) Simple illegal recruitment;
(2) When committed by a syndicate; or
(3) When committed in large scale.

When illegal recruitment is committed under either Nos. 2 or 3 above or
both, it is considered an offense involving economic sabotage.
SIMPLE ILLEGAL RECRUITMENT

What are the 2 elements of simple illegal recruitment?
(1) The offender has no valid license or authority required by law to
enable one to lawfully engage in recruitment and placement of workers;
and
(2) He undertakes either any activity within the meaning of “recruitment
and placement” defined under Article 13(b), (see above enumeration) or
any prohibited practices (see above enumeration) under Article 34 of
the Labor Code.
Can a recruiter be a natural or juridical person?

Yes.
What are some relevant principles on illegal recruitment?

1. Mere impression that a person could deploy workers overseas is
sufficient to constitute illegal recruitment. But if no such impression is
given, the accused should not be convicted for illegal recruitment.
2. Mere promise or offer of employment abroad amounts to recruitment.
3. There is no need to show that accused represented himself as a licensed
recruiter.
4. Referrals may constitute illegal recruitment.
5. It is illegal recruitment to induce applicants to part with their money
upon false misrepresentations and promises in assuring them that after
they paid the placement fee, jobs abroad were waiting for them and that
they would be deployed soon.
6. Recruitment whether done for profit or not is immaterial.
7. The act of receiving money far exceeding the amount as required by law
is not considered as “recruitment and placement” as this phrase is
contemplated under the law.
8. Actual receipt of fee is not an element of the crime of illegal recruitment.
9. Conduct of interviews amounts to illegal recruitment.
10. Absence of receipt is not essential to hold a person guilty of illegal
recruitment.

11. Conviction for illegal recruitment may be made on the strength of the
testimonies of the complainants.
12. Absence of documents evidencing the recruitment activities
strengthens, not weakens, the case for illegal recruitment.
13. Only one person recruited is sufficient to convict one for illegal
recruitment.
14. Non-prosecution of another suspect is immaterial.
15. Execution of affidavit of desistance affects only the civil liability but has
no effect on the criminal liability for illegal recruitment.
16. Defense of denial cannot prevail over positive identification. Positive
identification where categorical and consistent and not attended by any
showing of ill motive on the part of the eyewitnesses on the matter prevails
over alibi and denial.
Between the categorical statements of the prosecution witnesses, on the one
hand, and bare denials of the accused, on the other hand, the former must
prevail.
ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC

SABOTAGE
When is illegal recruitment considered a crime involving
economic sabotage?
1. when committed by a syndicate; or
2. when committed in large scale.
When is illegal recruitment committed by a syndicate?

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

The essential elements of the crime of illegal recruitment committed by a
syndicate are as follows:
1. There are at least three (3) persons who, conspiring and/or confederating
with one another, carried out any unlawful or illegal recruitment and
placement activities as defined under Article 13(b) or committed any
prohibited activities under Article 34 of the Labor Code; and
2. Said persons are not licensed or authorized to do so, either locally or

overseas.
The law does not require that the syndicate should recruit more
than one (1) person in order to constitute the crime of illegal
recruitment by a syndicate. Recruitment of one (1) person would
suffice to qualify the illegal recruitment act as having been
committed by a syndicate.
When is illegal recruitment considered in large scale?

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

As distinguished from illegal recruitment committed by a syndicate, illegal
recruitment in large scale may be committed by only one (1) person. What
is important as qualifying element is that there should be at least three (3)
victims of such illegal
recruitment, individually or as a group.
What are some relevant principles on illegal recruitment

involving economic sabotage?
1. The number of persons victimized is determinative of the crime. A
conviction for large scale illegal recruitment must be based on a finding in
each case of illegal recruitment of three (3) or more persons having been
recruited, whether individually or as a group.
2. Failure to prove at least 3 persons recruited makes the crime a case of
simple illegal recruitment.
3. There is no illegal recruitment in large scale based on several
informations filed by only one complainant.

4. The number of offenders is not material in illegal recruitment in large
scale.
5. Recruitment in large scale or by a syndicate is malum prohibitum and
not malum in se.
ILLEGAL RECRUITMENT VS. ESTAFA

Can a person be charged and convicted separately for illegal
recruitment and estafa involving one and the same act
of recruitment?
Yes. It is clear that conviction under the Labor Code does not preclude
conviction for estafa or other crimes under other laws.
Some relevant principles:

Same evidence to prove illegal recruitment may be used to prove estafa.
Conviction for both illegal recruitment and estafa, not double jeopardy.
NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY

AND FOREIGN EMPLOYER
What is the nature of the liability between local recruiter and

its foreign principal?
The nature of their liability is “solidary” or “joint and several” for any
and all claims arising out of the employment contract of OFWs.
Is the solidary liability of corporate officers with the

recruitment agency “automatic” in character?
No. In order to hold the officers of the agency solidarily liable, it is required
that there must be proof of their culpability therefor. Thus, it was held in
the 2013 case of Gagui v. Dejero,1 that while it is true that R.A. 8042 and
the Corporation Code provide for solidary liability, this liability must be so
stated in the decision sought to be implemented. Absent this express
statement, a corporate officer may not be impleaded and made to
personally answer for the liability of the corporation.

What are some relevant principles on the persons liable for
illegal recruitment?
1. Employees of a licensed recruitment agency may be held liable for illegal
recruitment as principal by direct participation, together with his employer,
if it is shown that he actively and consciously participated in illegal
recruitment.
2. Good faith and merely following orders of superiors are not valid
defenses of an employee.
3. A manager of a recruitment/manning agency is not a mere employee. As
such, he receives job applications, interviews applicants and informs them
of the agency’s requirement of payment of performance or cash bond prior
to the applicant’s deployment. As the crewing manager, he was at the
forefront of the company’s recruitment activities.
THEORY OF IMPUTED KNOWLEDGE

What is meant by this theory?
Knowledge of the agent is deemed knowledge of the principal but not
the other way around.
The theory of imputed knowledge is a rule that any information material to
the transaction, either possessed by the agent at the time of the transaction
or acquired by him before its completion, is deemed to be the knowledge of
the principal, at least insofar as the transaction is concerned, even though
the knowledge, in fact, is not communicated to the principal at all.
Sunace International Management Services, Inc. v. NLRC2 –

The High Court here has the opportunity to discuss the application of the
theory of imputed knowledge. The OFW (Divina), a domestic helper in
Taiwan, has extended her 12-month contract, after its expiration, for two
(2) more years after which she returned to the Philippines. It was
established by evidence that the extension was without the knowledge of
the local recruitment agency, petitioner Sunace. The Court of Appeals,
however, affirmed the Labor Arbiter’s and NLRC’s finding that Sunace
knew of and impliedly consented to the extension of Divina’s 2-year
contract. It went on to state that “It is undisputed that [Sunace] was
continually communicating with [Divina’s] foreign employer.”

It thus concluded that “[a]s agent of the foreign principal, ‘petitioner
cannot profess ignorance of such extension as obviously, the act of the
principal extending complainant (sic) employment contract necessarily
bound it.’”
In finding that the application by the CA of this theory of imputed
knowledge was misplaced, the High Court ruled that this theory ascribes
the knowledge of the agent, Sunace, to the principal, employer Xiong, not
the other way around. The knowledge of the principal-foreign employer
cannot, therefore, be imputed to its agent, Sunace. There being no
substantial proof that Sunace knew of and consented to be bound under the
2-year employment contract extension, it cannot be said to be privy thereto.
As such, Sunace and its owner cannot be held solidarily liable for any of
Divina’s claims arising from the 2-year employment extension. As the New
Civil Code provides: “Contracts take effect only between the parties, their
assigns, and heirs, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation or
by provision of law.”
1 G.R. No. 196036, Oct. 23, 2013.

2 G.R. No. 161757, Jan. 25, 2006.
PRE-TERMINATION OF CONTRACT OF MIGRANT WORKER

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

1. Indefinite period of employment of OFWs is not valid as it contravenes
the explicit provision of the POEA Rules and Regulations on fixed-period
employment.
2. OFWs do not become regular employees by reason of nature of work,
that is, that they are made to perform work that is usually necessary and
desirable in the usual business or trade of the employer. The exigencies of
their work
necessitate that they be employed on a contractual basis. This

notwithstanding the fact that they have rendered more than twenty (20)
years of service.
3. Regular employment does not result from the series of re-hiring of
OFWs.
4. The fixed-period employment of OFWs is not discriminatory against
them nor does it favor foreign employers. It is for the mutual interest of
both the seafarer and the employer why the employment status must be
contractual only or for a certain period of time. Seafarers spend most of
their time at sea and understandably, they cannot stay for a long and an
indefinite period of time at sea. Limited access to shore society during the
employment will have an adverse impact on the seafarer. The national,
cultural and lingual diversity among the crew during the contract of
employment is a reality that necessitates the limitation of its period.
5. The expiration of the employment contracts of OFWs marks its ending.
What is the effect of hiring a seafarer for overseas employment

but assigning him to local vessel?
As held in OSM Shipping Philippines, Inc. v. NLRC,1 the non-
deployment of the ship overseas did not affect the validity of the perfected
employment contract. After all, the decision to use the vessel for coastwise
shipping was made by petitioner only and did not bear the written
conformity of private respondent. A contract cannot be novated by the will
of only one party. The claim of petitioner that it processed the contract of
private respondent with the POEA only after he had started working
is also without merit. Petitioner cannot use its own misfeasance to defeat
his claim.
What is the effect of non-deployment of OFW to overseas

employment?
Petitioner-seafarer, in Santiago v. CF Sharp Crew Management,
Inc.2 was not deployed overseas despite the signing of a POEA-approved
employment contract. One of his contentions is that such failure to deploy
was an act designed to prevent him from attaining the status of a regular
employee. The Supreme Court, however, disagreed and ruled that
“seafarers are considered contractual employees and cannot be
considered as regular employees under the Labor Code. Their employment

is governed by the contracts they sign every time they are rehired and
their employment is terminated when the contract expires. The exigencies
of their work necessitate that they be employed on a contractual basis.”
What is doctrine of processual presumption?

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

of employment of OFWs?
Yes. In the absence of proof of applicable foreign law, OFWs are entitled to
due process in accordance with Philippine laws.
Is the Agabon doctrine applicable to OFWs who are dismissed

for cause but without due process?
Yes. The Agabon doctrine of awarding indemnity in the form of nominal
damages in cases of valid termination for just or authorized cause but
without procedural due process also applies to termination of OFWs.
Who has the burden of proof to show that the dismissal of the
OFW is legal?
Burden of proof devolves on both recruitment agency and its foreign
principal.
Are OFWs entitled to the reliefs under the Labor Code?

No. They are not entitled to such reliefs under Article 279 as reinstatement
or separation pay in lieu of reinstatement or full backwages.
1 G.R. No. 138193, March 5, 2003.
2 G.R. No. 162419, July 10, 2007.

What are the reliefs to which OFWs are entitled?
They are entitled to the reliefs provided under Section 10 of R.A. No.
8042, as amended, to wit:
(1) All salaries for the unexpired portion of the contract;
(2) Full reimbursement of placement fees and deductions made with
interest at twelve percent (12%) per annum.
In other words, all the reliefs available to an illegally dismissed OFW are
always monetary in nature. It must be noted that under the 2009 Serrano
doctrine, (Antonio M. Serrano v. Gallant Maritime Services,
Inc.,),1 An illegally dismissed OFW is now entitled to all the salaries for
the entire unexpired portion of their employment contracts,
irrespective of the stipulated term or duration thereof.
The underlined phrase in Section 10 below has been declared
unconstitutional in this case:
“In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant worker's salary, the worker shall be entitled to
the full reimbursement of his placement fee and the deductions made with
interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.”
However, R.A. No. 10022 (March 8, 2010), which amended R.A. No. 8042
(Migrant Workers and Overseas Filipinos Act of 1995), has replicated and
re-enacted the same unconstitutional provision exactly as above quoted.
The question is: was the unconstitutionality of the above-
underlined part of the provision cured by such replication or re-
enactment in the amendatory law?
The 2014 en banc case of Sameer Overseas Placement Agency, Inc.
v. Joy C. Cabiles, 2 answered this in the negative. The said provision
was thus declared still unconstitutional and null and void despite its
replication in R.A. No. 10022.
What are some principles in regard to monetary awards to

OFWs?
1. Monetary award to OFW is not in the nature of separation pay or

backwages but a form of indemnity.
2. Only salaries are to be included in the computation of the amount due for
the unexpired portion of the contract. Overtime, holiday and leave pay and
allowances are not included. However, this rule on exclusion of allowance
does not apply in case it is encapsulated in the basic salary clause.
3. Entitlement to overtime pay of OFWs. - As far as entitlement to

overtime pay is concerned, the correct criterion in determining whether or
not sailors are entitled to overtime pay is not whether they were on board
and cannot leave ship beyond the regular eight (8) working hours a day, but
whether they actually rendered service in excess of said number of hours.
An OFW is not entitled to overtime pay, even if guaranteed, if he failed to
present any evidence to prove that he rendered service in excess of the
regular eight (8) working hours a day.
4. In case of unauthorized deductions from OFW’s salary, he shall
be entitled to the full reimbursement of the deductions made with interest
at twelve percent (12%) per annum. This is in addition to the full
reimbursement of his placement fee with the same interest of twelve
percent (12%) per annum plus his salaries for the unexpired portion of his
employment contract if he is terminated without just, valid or authorized
cause as defined by law or contract.
CLAIMS FOR DISABILITY AND DEATH BENEFITS OF OFWs
Which/Who has jurisdiction over an OFW’s claims for

disability and death benefits?
a. The Labor Arbiters, NOT the SSS, have jurisdiction over claims for
disability, death and other benefits of OFWs.
b. Labor Arbiters have jurisdiction even if the case is filed by the heirs of
the deceased OFW.
Is the Labor Code’s concept of permanent total disability
similar to that of OFWs?
Yes. The concept of this kind of disability under Article 192 of the Labor
Code is applicable to them as reiterated lately in the 2013 case of Kestrel
Shipping Co., Inc. v. Munar.

What are the requisites for compensability of injury or illness
of seafarers?
1. It should be work-related; and
2. The injury or illness existed during the term of the seafarer’s
employment contract.
DIRECT HIRING
What is direct hiring?
“Direct Hiring” refers to the process of directly hiring workers by
employers for overseas employment as authorized by the DOLE Secretary
and processed by the POEA, including:
1. Those hired by international organizations;
2. Those hired by members of the diplomatic corps;
3. Name hires or workers who are able to secure overseas employment
opportunity with an employer without the assistance or participation of any
agency.
Does the POEA Administrator or the DOLE Secretary or DOLE

Regional Director have the power to issue closure order?
Yes. If upon preliminary examination or surveillance, the DOLE Secretary,
the POEA Administrator or DOLE Regional Director is satisfied that such
danger or exploitation exists, a written order may be issued for the closure
of the establishment being used for illegal recruitment activity.
1 G.R. No. 167614, March 24, 2009.
2 G.R. No. 170139, Aug. 05, 2014. The foreign employer alleged in this case
that respondent’s dismissal was due to inefficiency in her work and
negligence in her duties.
Does the DOLE Secretary have the power to issue warrant of

arrest and search and seizure orders?
No. Salazar v. Achacoso,1 declared that the exercise by the DOLE
Secretary of his twin powers to issue arrest warrant and search and seizure
orders provided under Article 38[c] of the Labor Code is
unconstitutional. Only regular courts can issue such orders.

REMITTANCE OF FOREIGN EXCHANGE EARNINGS
Is remittance of foreign exchange earnings by OFWs
mandatory?
Yes. It shall be mandatory for all Filipino workers abroad to remit a portion
of their foreign exchange earnings to their families, dependents, and/or
beneficiaries in the country in accordance with rules and regulations
prescribed by the DOLE Secretary. It should be made through the
Philippine banking system.
------------oOo------------
1 G.R. No. 81510, March 14, 1990.
TOPIC NO. 3
LABOR STANDARDS
A. HOURS OF WORK
1. COVERAGE/EXCLUSIONS
(Article 82, Labor Code)
Who are covered by the labor standards provisions of the Labor

Code?
Employees in all establishments, whether operated for profit or not, are
covered by the law on labor standards.
Who are excluded?
The following are excluded from the coverage of the law on labor standards:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Domestic workers or kasambahay and persons in the personal
service of another;
e. Workers paid by results;
f. Non-agricultural field personnel; and
g. Members of the family of the employer.
2. NORMAL HOURS OF WORK

What is the total normal hours of work per day?
Eight (8) hours daily.
What is overtime work?

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

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

“Flexible work arrangements” refer to alternative arrangements or
schedules other than the traditional or standard work hours, workdays and
workweek. The effectivity and implementation of any of the flexible work
arrangements should be temporary in nature.
Under R.A. No. 8972, otherwise known as “The Solo Parents’ Welfare Act
of 2000,” solo parents are allowed to work on a flexible schedule. The
phrase “flexible work schedule” is defined in the same law as the right
granted to a solo parent employee to vary his/her arrival and departure
time without affecting the core work hours as defined by the employer.
COMPRESSED WORK WEEK

What is compressed work week?
“Compressed Workweek” or “CWW” refers to a situation where the normal
workweek is reduced to less than six (6) days but the total number of work-
hours of 48 hours per week remains. The normal workday is increased to
more than eight (8) hours but not to exceed twelve (12) hours, without
corresponding overtime premium. This concept can be adjusted
accordingly in cases where the normal workweek of the firm is five (5) days.
What are the conditions for its validity?

The CWW scheme is undertaken as a result of an express and voluntary
agreement of majority of the covered employees or their duly

authorized representatives.
How should compensation be made under a valid CWW?
Unless there is a more favorable practice existing in the firm, work
beyond eight (8) hours will not be compensable by overtime
premium provided the total number of hours worked per day
shall not exceed twelve (12) hours. In any case, any work performed
beyond twelve (12) hours a day or forty-eight (48) hours a week shall be
subject to overtime pay.
MEAL BREAK
What is the rule on time-off for regular meal?
Every employer is required to give his employees, regardless of sex, not less
than one (1) hour (or 60 minutes) time-off for regular meals.
Is meal break compensable?

Being time-off, it is not compensable hours worked. In this case, the
employee is free to do anything he wants, except to work. If he is required,
however, to work while eating, he should be compensated therefor.
WAITING TIME
• What is covered by compensable working hours?
The following shall be considered as compensable hours worked:
a. All time during which an employee is required to be on duty or to be at
the employer’s premises or to be at a prescribed workplace; and
b. All time during which an employee is suffered or permitted to work.
• When is waiting time compensable?

Waiting time spent by an employee shall be considered as working time if
waiting is an integral part of his work or the employee is required or
engaged by the employer to wait. Time spent waiting for work is
compensable if it is spent “primarily for the benefit of the employer and
[its] business.”

OVERTIME WORK, OVERTIME PAY
• What are some basic principles on overtime work?
1. Work rendered after normal eight (8) hours of work is called “overtime
work.”
2. In computing overtime work, "regular wage" or "basic salary" means
"cash" wage only without deduction for facilities provided by the employer.
3. "Premium pay" means the additional compensation required by law for
work performed within eight (8) hours on non-working days, such as
regular holidays, special holidays and rest days.
4. "Overtime pay" means the additional compensation for work performed
beyond eight (8) hours.
5. Illustrations on how overtime is computed:
a. For overtime work performed on an ordinary day, the overtime
pay is plus 25% of the basic hourly rate.
b. For overtime work performed on a rest day or on a special day,
the overtime pay is plus 30% of the basic hourly rate which includes 30%
additional compensation as provided in Article 93 [a] of the Labor Code.
c. For overtime work performed on a rest day which falls on a
special day, the overtime pay is plus 30% of the basic hourly rate which
includes 50% additional compensation as provided in Article 93 [c] of the
Labor Code.
d. For overtime work performed on a regular holiday, the overtime
pay is plus 30% of the basic hourly rate which includes 100% additional
compensation as provided in Article 94 [b] of the Labor Code.
e. For overtime work performed on a rest day which falls on a
regular holiday, the overtime pay is plus 30% of the basic hourly rate
which includes 160% additional compensation.
• What is the distinction between PREMIUM PAY and

OVERTIME PAY?
“Premium pay” refers to the additional compensation required by law for
work performed within eight (8) hours on non-working days, such as
rest days and regular and special holidays.
“Overtime pay” refers to the additional compensation for work performed

beyond eight (8) hours a day. Every employee who is entitled to
premium pay is likewise entitled to the benefit of overtime pay.
What is built-in overtime pay?

In case the employment contract stipulates that the compensation includes
built-in overtime pay and the same is duly approved by the DOLE, the non-
payment by the employer of any overtime pay for overtime work is justified
and valid.
• What is emergency overtime work? (Article 89, Labor Code).
a. General rule.
The general rule remains that no employee may be compelled to render
overtime work against his will.
b. Exceptions when employee may be compelled to render
overtime work:
1. When the country is at war or when any other national or local
emergency has been declared by the National Assembly or the Chief
Executive;
2. When overtime work is necessary to prevent loss of life or property or in
case of imminent danger to public safety due to actual or impending
emergency in the locality caused by serious accident, fire, floods, typhoons,
earthquake, epidemic or other disasters or calamities;
3. When there is urgent work to be performed on machines, installations or
equipment, or in order to avoid serious loss or damage to the employer or
some other causes of similar nature;
4. When the work is necessary to prevent loss or damage to perishable
goods;
5. When the completion or continuation of work started before the 8th hour
is necessary to prevent serious
obstruction or prejudice to the business or operations of the employer; and
6. When overtime work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon.
May an employee validly refuse to render overtime work under

any of the afore-said circumstances?
No, When an employee refuses to render emergency overtime work under

any of the foregoing conditions, he may be dismissed on the ground of
insubordination or willful disobedience of the lawful order of the
employer.
Can overtime pay be waived?

NO. The right to claim overtime pay is not subject to a waiver. Such right is
governed by law and not merely by the agreement of the parties.
NIGHT WORK (R.A. NO. 10151),

NIGHT SHIFT DIFFERENTIAL (ARTICLE 86, LABOR CODE)
What is the new law on night work?

R.A. No. 10151 [JUNE 21, 2011].
a. Significance of the law.

R.A. No. 10151 has repealed Article 130 [Nightwork Prohibition] and
Article 131 [Exceptions] of the Labor Code and accordingly renumbered
the same articles. Additionally, it has inserted a new Chapter V of Title III
of Book III of the Labor Code entitled “Employment of Night Workers”
which addresses the issue on nightwork of all employees, including women
workers. Chapter V covers newly renumbered Articles 154 up to 161 of the
Labor Code.
b. Coverage of the law.
The law on nightwork applies not only to women but to all persons,
who shall be employed or permitted or suffered to work at night, except
those employed in agriculture, stock raising, fishing, maritime transport
and inland navigation, during a
period of not less than seven (7) consecutive hours, including the
interval from midnight to five o'clock in the morning, to be
determined by the DOLE Secretary, after consulting the workers’
representatives/labor organizations and employers.
c. Night worker, meaning.
"Night worker" means any employed person whose work covers the
period from 10 o'clock in the evening to 6 o'clock the following
morning provided that the worker performs no less than seven (7)

consecutive hours of work.
NIGHT SHIFT DIFFERENTIAL PAY

• How is it reckoned and computed?
Night shift differential is equivalent to 10% of employee's regular wage for
each hour of work performed between 10:00 p.m. and 6:00 a.m. of the
following day.
• What is the distinction between night shift differential pay
and overtime pay?
When the work of an employee falls at night time, the receipt of overtime
pay shall not preclude the right to receive night differential pay. The reason
is the payment of the night differential pay is for the work done during the
night; while the payment of the overtime pay is for work in excess of the
regular eight (8) working hours.
• How is Night Shift Differential Pay computed?

1. Where night shift (10 p.m. to 6 a.m.) work is regular work.
a. On an ordinary day: Plus 10% of the basic hourly rate or a total of
110% of the basic hourly rate.
b. On a rest day, special day or regular holiday: Plus 10% of the
regular hourly rate on a rest day, special day or regular holiday or a total of
110% of the regular hourly rate.
2. Where night shift (10 p.m. to 6 a.m.) work is overtime work.
a. On an ordinary day: Plus 10% of the overtime hourly rate on an
ordinary day or a total of 110% of the overtime hourly rate on an ordinary
day.
b. On a rest day or special day or regular holiday: Plus 10% of the
overtime hourly rate on a rest day or special day or regular holiday.
3. For overtime work in the night shift. Since overtime work is not
usually eight (8) hours, the compensation for overtime night shift work is
also computed on the basis of the hourly rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total
of 110% of 125% of basic hourly rate.
b. On a rest day or special day or regular holiday. Plus 10% of
130% of regular hourly rate on said days or a total of 110% of 130% of the
applicable regular hourly rate.

PART-TIME WORK
• What is part-time work?
“Part-time work” is “a single, regular or voluntary form of employment
with hours of work substantially shorter than those considered as normal in
the establishment.” A “part-time worker” is an employed person whose
normal hours of work are less than those of comparable full-time
workers.
Part-time work may take different forms depending on the agreed hours of
work in a day, the days of work in a week or other reference periods. In the
Philippines, however, the two most common and acceptable
forms are four (4) hours work per day and weekend work or two
(2) full days per week.
CONTRACT FOR PIECE WORK

(SEE CIVIL CODE)
• What is contract for piece work under the Civil Code?

By the contract for a piece of work, the contractor binds himself to execute
a piece of work for the employer, in consideration of a certain price or
compensation. The contractor may either employ only his labor or skill, or
also furnish the material.
B. WAGES
WAGE VS. SALARY

• What is the basic distinction between wage and salary?
The term “wage” is used to characterize the compensation paid for
manual skilled or unskilled labor. “Salary,” on the other hand, is used to
describe the compensation for higher or superior level of employment.
• What is the distinction in respect to execution, attachment or

garnishment?
In cases of execution, attachment or garnishment of the
compensation of an employee received from work issued by the court to

satisfy a judicially-determined obligation, a distinction should be made
whether such compensation is considered “wage” or “salary.” Under
Article 1708 of the Civil Code, if considered a “wage,” the employee’s
compensation shall not be subject to execution or attachment or
garnishment, except for debts incurred for food, shelter, clothing and
medical attendance.
If deemed a “salary,” such compensation is not exempt from execution or
attachment or garnishment. Thus, the salary, commission and other
remuneration received by a managerial employee (as distinguished from an
ordinary worker or laborer) cannot be considered wages. Salary is
understood to relate to a position or office, or the compensation given for
official or other service; while wage is the compensation for labor.
MINIMUM WAGE DEFINED

What are the attributes of wage?
“Wage” has the following attributes:
1. It is the remuneration or earnings, however designated, for work done or
to be done or for services rendered or to be rendered;
2. It is capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece or commission basis, or other method of
calculating the same;
3. It is payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done or for services
rendered or to be rendered; and
4. It includes the fair and reasonable value, as determined by the DOLE
Secretary, of board, lodging, or other facilities customarily furnished by the
employer to the employee. “Fair and reasonable value” shall not include
any profit to the employer or to any person affiliated with the employer.
• What is basic wage?

“Basic wage” means all the remuneration or earnings paid by an
employer to a worker for services rendered on normal working days and
hours but does not include cost-of-living allowances, profit-sharing
payments, premium payments, 13th month pay or other monetary benefits
which are not considered as part of or integrated into the regular salary of
the workers.

Further, as held in Honda Phils., Inc. v. Samahan ng Malayang
Manggagawa sa Honda, the following should be excluded from the
computation of “basic salary,” to wit: payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay and
premiums for work done on rest days and special holidays.
What is minimum wage?

The minimum wage rates prescribed by law shall be the basic cash
wages without deduction therefrom of whatever benefits, supplements or
allowances which the employees enjoy free of charge aside from the basic
pay.
• What is statutory minimum wage?

The term “statutory minimum wage” refers simply to the lowest basic
wage rate fixed by law that an employer can pay his workers.
• What is regional minimum wage rate?

The term “regional minimum wage rates” refers to the lowest basic
wage rates that an employer can pay his workers, as fixed by the
Regional Tripartite Wages and Productivity Boards (RTWPBs),
and which shall not be lower than the applicable statutory minimum wage
rates.
• What are included/excluded in the term “wage rate”?

The term "wage rates" includes cost-of-living allowances as fixed by
the RTWPB, but excludes other wage-related benefits such as overtime
pay, bonuses, night shift differential pay, holiday pay, premium pay, 13th
month pay, premium pay, leave benefits, among others.
Can COLA be integrated into the minimum wage?

Yes. The cost-of-living allowance (COLA) may be ordered integrated into
the minimum wage by the Regional Tripartite Wages and Productivity
Board (“RTWPB” or “Regional Board”).
• What is COLA?

COLA is not in the nature of an allowance intended to reimburse expenses
incurred by employees in the performance of their official functions. It is
not payment in consideration of the fulfillment of official duty. As defined,
“cost of living” refers to “the level of prices relating to a range of everyday
items” or “the cost of purchasing the goods and services which are included
in an accepted standard level of consumption.” Based on this premise,
COLA is a benefit intended to cover increases in the cost of living.
• What is the “NO WORK, NO PAY” principle?

The “no work, no pay” or “fair day’s wage for fair day’s labor”
means that if the worker does not work, he is generally not entitled to any
wage or pay. The exception is when it was the employer who unduly
prevented him from working despite his ableness, willingness and
readiness to work; or in cases where he is illegally locked out or illegally
suspended or illegally dismissed, or otherwise illegally prevented from
working, in which event, he should be entitled to his wage.
MINIMUM WAGE SETTING

• What is a Wage Order?
The term “Wage Order” refers to the order promulgated by the Regional
Board pursuant to its wage fixing authority.
When is it proper to issue a Wage Order?

Whenever conditions in the region so warrant, the Regional Board shall
investigate and study all pertinent facts and based on the prescribed
standards and criteria, shall proceed to determine whether a Wage Order
should be issued. Any such Wage Order shall take effect after fifteen (15)
days from its complete publication in at least one (1) newspaper of general
circulation in the region.
• What are the standards/criteria for minimum wage fixing?

In the determination of regional minimum wages, the Regional Board shall,
among other relevant factors, consider the following:
(1) Needs of workers and their families
1) Demand for living wages;

2) Wage adjustment vis-à-vis the consumer price index;
3) Cost of living and changes therein;
4) Needs of workers and their families;
5) Improvements in standards of living.
(2) Capacity to pay
1) Fair return on capital invested and capacity to pay of employers;
2) Productivity.
(3) Comparable wages and incomes
1) Prevailing wage levels.
(4) Requirements of economic and social development
1) Need to induce industries to invest in the countryside;
2) Effects on employment generation and family income;
3) Equitable distribution of income and wealth along the imperatives of
economic and social development.
• What are the methods of fixing the minimum wage rates?

There are two (2) methods, to wit:
1. “Floor-Wage” method which involves the fixing of a determinate
amount to be added to the prevailing statutory minimum wage rates. This
was applied in earlier wage orders; and
2. “Salary-Cap” or “Salary-Ceiling” method where the wage
adjustment is to be applied to employees receiving a certain denominated
salary ceiling. In other words, workers already being paid more than the
existing minimum wage (up to a certain amount stated in the Wage Order)
are also to be given a wage increase. The “Salary-Cap” or “Salary-Ceiling”
method is the preferred mode.
The distinction between the two (2) methods is best shown by way of an
illustration. Under the “Floor Wage Method,” it would be sufficient if the
Wage Order simply set P15.00 as the amount to be added to the prevailing
statutory minimum wage rates; while in the “Salary-Ceiling Method,” it
would be sufficient if the Wage Order states a specific salary, such as
P250.00, and only those earning below it shall be entitled to the wage
increase.
MINIMUM WAGE OF WORKERS PAID BY RESULTS

What are the minimum wage rates of workers paid by results?

According to Article 124 of the Labor Code:
“All workers paid by results, including those who are paid on piecework,
takay, pakyaw or task basis, shall receive not less than the prescribed
wage rates per eight (8) hours of work a day, or a proportion thereof for
working less than eight (8) hours.”
• Who are workers paid by results?

They are workers who are engaged on pakyao, piecework, task and other
non-time work. They are so called because they are paid not on the basis
of the time spent on their work but according to the quantity, quality or
kind of job and the consequent results thereof.
• What are the categories of workers paid by results?

Workers paid by results may be classified into:
a. Supervised workers; and
b. Unsupervised workers.
As the term clearly connotes, supervised workers are those whose
manner of work is under the control of the employer; while unsupervised
workers are those whose work is controlled more in the results than in the
manner or method of performing it.
The law does not make any categorical differentiation among the workers
paid by results. Thus, the workers may be on pakyao (sometimes spelled
“pakyaw”), takay or piece-rate or output basis. All of them are similar in
character in that they are all paid on the basis of the results of their work.
When the law does not distinguish, we should not distinguish.
WAGE RATE OF APPRENTICES AND LEARNERS

• What is the wage rate of apprentices and learners?
The wage rate of a learner or an apprentice is set at seventy-five
percent (75%) of the statutory minimum wage.
WAGE RATE OF PERSONS WITH DISABILITY (PWDs)

• What is the wage rate of PWD?
Under R.A. No. 7277, the wage rate of PWDs had been increased to and
fixed at 100% of the applicable minimum wage.

COMMISSIONS
• What is “commission”?
“Commission” is the recompense, compensation or reward of an
employee, agent, salesman, executor, trustee, receiver, factor, broker or
bailee, when the same is calculated as a percentage on the amount of
his transactions or on the profit of the principal.
• Is commission part of wage?

Commission may or may not be considered part of wage/salary depending
on the peculiar circumstances of a case and on the purpose for which the
determination is being made. For instance, the rule on the inclusion of
commissions for purposes of computing the separation pay may essentially
differ from the inclusionary rule thereof for purposes of computing the 13th
month pay.
• Is there a law which mandates the payment of commission?

None. According to Lagatic v. NLRC,1 there is no law which requires
employers to pay commissions.
• Is there a standard formula to compute commission?

None. There is no law which prescribes a method for computing
commission. The determination of the amount of commissions is the result
of collective bargaining negotiations, individual employment contracts or
established employer practice.
DEDUCTIONS FROM WAGES

• May employer deduct from wage of employees?
The general rule is that an employer, by himself or through his
representative, is prohibited from making any deductions from the
wages of his employees. The employer is not allowed to make unnecessary
deductions without the knowledge or authorization of the employees.
• Are there exceptions to this rule?

Yes.
(a) In cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by
him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to
check-off has been recognized by the employer or authorized in writing by
the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations
issued by the DOLE Secretary.
(d) Deductions for loss or damage under Article 114 of the Labor Code;
(e) Deductions made for agency fees from non-union members who
accept the benefits under the CBA negotiated
by the bargaining union. This form of deduction does not require the
written authorization of the non-bargaining union member concerned;
(f) Deductions for value of meal and other facilities;
(g) Deductions for premiums for SSS, PhilHealth, employees’
compensation and Pag-IBIG;
(h) Withholding tax mandated under the National Internal Revenue
Code (NIRC);
(i) Withholding of wages because of the employee’s debt to the employer
which is already due;
(j) Deductions made pursuant to a court judgment against the worker
under circumstances where the wages may be the subject of attachment or
execution but only for debts incurred for food, clothing, shelter and medical
attendance;
(k) When deductions from wages are ordered by the court;
1 G.R. No. 121004, Jan. 28, 1998.
NON-DIMINUTION OF BENEFITS
• What is the applicability of the non-diminution rule in Article

100 of the Labor Code?
Albeit Article 100 is clear that the principle of non-elimination and non-
diminution of benefits apply only to the benefits being enjoyed “at the time
of the promulgation” of the Labor Code, the Supreme Court has
consistently cited Article 100 as being

applicable even to benefits granted after said promulgation. It has, in fact,
been treated as the legal anchor for the declaration of the invalidity of so
many acts of employers deemed to have eliminated or diminished the
benefits of employees.
The 2014 case of Wesleyan University-Philippines v. Wesleyan
University-Philippines Faculty and Staff Association,1 succinctly
pointed out that the Non-Diminution Rule found in Article 100 of the
Labor Code explicitly prohibits employers from eliminating or reducing the
benefits received by their employees. This rule, however, applies only if the
benefit is based on any of the following:
(1) An express policy;
(2) A written contract; or
(3) A company practice.
There is not much controversy if the benefit involved is provided for under
Nos. 1 and 2 above. Thus, if it is expressly laid down in a written policy
unilaterally promulgated by the employer, the employer is duty-bound to
adhere and comply by its own policy. It cannot be allowed to renege from
its commitment as expressed in the policy.
If the benefit is granted under a written contract such as an employment
contract or a collective bargaining agreement (CBA), the employer is
likewise under legal compulsion to so comply therewith.
On No. 3 above, please see discussion below.
COMPANY PRACTICE
What is company practice?
Company practice is a custom or habit shown by an employer’s repeated,
habitual customary or succession of acts of similar kind by reason of which,
it gains the status of a company policy that can no longer be disturbed or
withdrawn.
To ripen into a company practice that is demandable as a matter of right,
the giving of the benefit should not be by reason of a strict legal or
contractual obligation but by reason of an act of liberality on the
part of the employer.
What are the criteria that may be used to determine existence of

company practice?

Since there is no hard and fast rule which may be used and applied in
determining whether a certain act of the employer may be considered as
having ripened into a practice, the following criteria may be used to
determine whether an act has ripened into a company practice:
(1) The act of the employer has been done for a considerable period of time;
(2) The act should be done consistently and intentionally; and
(3) The act should not be a product of erroneous interpretation or
construction of a doubtful or difficult question of law or provision in the
CBA.
(See the 2013 case of Vergara, Jr. v. Coca-Cola Bottlers Philippines,
Inc.2)
1. THE ACT OF THE EMPLOYER HAS BEEN DONE FOR A

CONSIDERABLE PERIOD OF TIME.
If done only once as in the case of Philippine Appliance Corporation
(Philacor) v. CA,3 where the CBA signing bonus was granted only once
during the 1997 CBA negotiation, the same cannot be considered as having
ripened into a company practice.
In the following cases, the act of the employer was declared company
practice because of the considerable period of time it has been practiced:
(a) Davao Fruits Corporation v. Associated Labor Unions.4 - The
act of the company of freely and continuously including in the computation
of the 13th month pay, items that were expressly excluded by law has lasted
for six (6) years, hence, was considered indicative of company practice.
(b) Sevilla Trading Company v. A. V. A. Semana.5 - The act of
including non-basic benefits such as paid leaves for unused sick leave and
vacation leave in the computation of the employees’ 13th month pay for at
least two (2) years was considered a company practice.
(c) The 2010 case of Central Azucarera de Tarlac v. Central
Azucarera de Tarlac Labor Union-NLU,6 also ruled as company
practice the act of petitioner of granting for thirty (30) years, its workers
the mandatory 13th month pay computed in accordance with the following
formula: Total Basic Annual Salary divided by twelve (12) and
Including in the computation of the Total Basic Annual Salary the
following: basic monthly salary; first eight (8) hours overtime pay on
Sunday and legal/special holiday; night premium pay; and vacation and
sick leaves for each year.

1 G.R. No. 181806, March 12, 2014.
2 G.R. No. 176985, April 1, 2013; See also Supreme Steel Corporation v.
Nagkakaisang Manggagawa ng Supreme Independent Union (NMS-IND-
APL), G.R. No. 185556, March 28, 2011, 646 SCRA 501, 527; TSPIC
Corporation v. TSPIC Employees Union (FFW), G.R. No. 163419, Feb. 13,
2008, 545 SCRA 215, 226.
3 G.R. No. 149434, June 3, 2004.
4 G.R. No. 85073, Aug. 24, 1993, 225 SCRA 562.
5 G.R. No. 152456, April 28, 2004, 438 SCRA 239.
6 G.R. No. 188949, July 26, 2010.
2. THE ACT SHOULD BE DONE CONSISTENTLY AND

INTENTIONALLY.
The following cases may be cited to illustrate this principle:
(a) Tiangco v. Leogardo, Jr.,1 where the employer has consistently been
granting fixed monthly emergency allowance to the employees from
November, 1976 but discontinued this practice effective February, 1980
insofar as non-working days are concerned based on the principle of “no
work, no pay.” The Supreme Court ruled that the discontinuance of said
benefit contravened Article 100 of the Labor Code which prohibits the
diminution of existing benefits.
3. THE ACT SHOULD NOT BE A PRODUCT OF ERRONEOUS

INTERPRETATION OR CONSTRUCTION OF A DOUBTFUL OR
DIFFICULT QUESTION OF LAW OR PROVISION IN THE CBA.
The general rule is that if it is a past error that is being corrected, no vested
right may be said to have arisen therefrom nor any diminution of benefit
may have resulted by virtue of the correction thereof. The error, however,
must be corrected immediately after its discovery; otherwise, the rule on
non-diminution of benefits would still apply.
The following cases would illuminate this principle:

(a) Globe Mackay Cable and Radio Corporation v. NLRC,2 where
the Supreme Court ruled on the proper computation of the cost-of-living
allowance (COLA) for monthly-paid employees. Petitioner corporation,
pursuant to Wage Order No. 6 (effective October 30, 1984), increased the

COLA of its monthly-paid employees by multiplying the P3.00 daily COLA
by 22 days which is the number of working days in the company. The union
disagreed with the computation, claiming that the daily COLA rate of P3.00
should be multiplied by 30 days which has been the practice of the
company for several years. The Supreme Court, however, upheld the
contention of the petitioner corporation. It held that the grant by the
employer of benefits through an erroneous application of the law due to
absence of clear administrative guidelines is not considered a voluntary act
which cannot be unilaterally discontinued.
(b) TSPIC Corp. v. TSPIC Employees Union [FFW],3 where the

Supreme Court reiterated the rule enunciated in Globe-Mackay, that an
erroneously granted benefit may be withdrawn without violating the
prohibition against non-diminution of benefits. No vested right accrued to
individual respondents when TSPIC corrected its error by crediting the
salary increase for the year 2001 against the salary increase granted under
Wage Order No. 8, all in accordance with the CBA. Hence, any amount
given to the employees in excess of what they were entitled to, as computed
above, may be legally deducted by TSPIC from the employees’ salaries. But
if the error does not proceed from the interpretation or construction of a
law or a provision in the CBA, the same may ripen into a company practice.
Example:
(a) Hinatuan Mining Corporation and/or the Manager v. NLRC,4
where the act of the employer in granting separation pay to resigning
employees, despite the fact that the Labor Code does not grant it, was
considered an established employer practice.
BONUS
What is the rule on its demandability and enforceability?
Bonus, as a general rule, is an amount granted and paid ex gratia to the
employee. It cannot be forced upon the employer who may not be obliged
to assume the onerous burden of granting bonuses or other benefits aside
from the employees’ basic salaries or wages. If there is no profit, there
should be no bonus. If profit is reduced, bonus should likewise be reduced,
absent any agreement making such bonus part of the compensation of the

employees.
• When is bonus demandable and enforceable?
It becomes demandable and enforceable:
(1) If it has ripened into a company practice;
(2) If it is granted as an additional compensation which the employer
agreed to give without any condition such as success of business or more
efficient or more productive operation, hence, it is deemed part of wage
or salary.
(3) When considered as part of the compensation and therefore
demandable and enforceable, the amount is usually fixed. If the
amount thereof is dependent upon the realization of profits, the bonus is
not demandable and enforceable.
FACILITIES VS. SUPPLEMENTS

What are facilities?
The term “facilities” includes articles or services for the benefit of the
employee or his family but does not include tools of the trade or articles
or services primarily for the benefit of the employer or necessary to the
conduct of the employer’s business. They are items of expense necessary for
the laborer’s and his family’s existence and subsistence which form part of
the wage and when furnished by the employer, are deductible therefrom,
since if they are not so furnished, the laborer would spend and pay for them
just the same.
1 G.R. No. L-57636, May 16, 1983, 122 SCRA 267; 207 Phil. 2235.
2 G.R. No. 74156, June 29, 1988, 163 SCRA 71.
3 G.R. No. 163419, Feb. 13, 2008.
4 G.R. No. 117394, Feb. 21, 1997.
• What are supplements?

The term “supplements” means extra remuneration or special privileges or
benefits given to or received by the laborers over and above their
ordinary earnings or wages.
• What are the distinctions between facilities and supplements?

The benefit or privilege given to the employee which constitutes an extra

remuneration over and above his basic or ordinary earning or wage is
supplement; and when said benefit or privilege is made part of the laborer’s
basic wage, it is a facility. The criterion is not so much with the kind of the
benefit or item (food, lodging, bonus or sick leave) given but its purpose.
Thus, free meals supplied by the ship operator to crew members, out of
necessity, cannot be considered as facilities but supplements which could
not be reduced having been given not as part of wages but as a necessary
matter in the maintenance of the health and efficiency of the crew during
the voyage.
• What is the rule on deductibility of facilities and supplements?

Facilities are deductible from wage but not supplements.
WAGE DISTORTION/RECTIFICATION
What is wage distortion?
“Wage distortion” contemplates a situation where an increase in prescribed
wage rates results in either of the following:
1. Elimination of the quantitative differences in the rates of wages or
salaries; or
2. Severe contraction of intentional quantitative differences in wage or
salary rates between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure
based on the following criteria:
a. Skills;
b. Length of service; or
c. Other logical bases of differentiation.
Wage distortion presupposes a classification of positions and ranking of
these positions at various levels. One visualizes a hierarchy of positions
with corresponding ranks basically in terms of wages and other
emoluments. Where a significant change occurs at the lowest level of
positions in terms of basic wage without a corresponding change in the
other level in the hierarchy of positions, negating as a result thereof the
distinction between one level of position from the next higher level, and
resulting in a parity between the lowest level and the next higher level or
rank, between new entrants and old hires, there exists a wage distortion.
xxx. The concept of wage distortion assumes an existing grouping or

classification of employees which establishes distinctions among such
employees on some relevant or legitimate basis. This classification is
reflected in a differing wage rate for each of the existing classes of
employees.
• What are the elements of wage distortion?

The four (4) elements of wage distortion are as follows:
(1) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a higher one;
(3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the
country.
Normally, a company has a wage structure or method of determining the
wages of its employees. In a problem dealing with “wage distortion,” the
basic assumption is that there exists a grouping or classification of
employees that establishes distinctions among them on some relevant or
legitimate bases.
Involved in the classification of employees are various factors such as the
degrees of responsibility, the skills and knowledge required, the
complexity of the job, or other logical basis of differentiation. The
differing wage rate for each of the existing classes of employees reflects this
classification.
• What is the formula for rectifying or resolving wage

distortion?
Following is the formula for the correction of wage distortion in the pay
scale structures:
Minimum Wage = % x Prescribed Increase = Distortion

Adjustment
Actual Salary
The above formula was held to be just and equitable.

DIVISOR TO DETERMINE DAILY RATE
• Who is a monthly-paid employee?
A “monthly-paid employee” is one who is paid his wage or salary for
every day of the month, including unworked rest days, special days or
regular holidays.
• Who is a daily-paid employee?
A “daily-paid employee” is one who is paid his wage or salary only on
the days he actually worked, except in cases of regular holidays wherein
he is paid his wage or salary even if he does not work during those days,
provided that he is present or on leave of absence with pay on the working
day immediately preceding the regular holidays.
• What are the factors/divisors in computing benefits and wage

deductions?
Equivalent daily rate (EDR), the basis for deductions for absences and for
computing overtime pay and other benefits.
Monthly Rate x 12
No. of Days Considered = Equivalent Daily Rate (EDR)
Paid in a Year
REST PERIODS
1. WEEKLY REST DAY
• What is the duration of weekly rest period?
It shall be the duty of every employer, whether operating for profit or not,
to provide each of his employees a rest period of not less than twenty-
four (24) consecutive hours after every six (6) consecutive
normal work days.
Is the employer’s prerogative to determine the rest period of its

employees subject to limitations?
Yes. The employer shall determine and schedule the weekly rest day of his
employees subject to CBA and to such rules and regulations as the DOLE
Secretary may provide. However, the employer shall respect the preference
of employees as to their weekly rest day when such preference is based on
religious grounds.

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

1. COVERAGE, EXCLUSIONS
• Who are covered by the law on holiday pay?
Generally, all employees are entitled to and covered by the law on holiday
pay.
• Who are excluded from its coverage?
The following are excluded:
a. Those of the government and any of the political subdivisions, including
government-owned and controlled corporations;
b. Those of retail and service establishments regularly employing less than
ten (10) workers;
c. Domestic workers or Kasambahays;
d. Persons in the personal service of another;

e. Managerial employees as defined in Book III of the Labor Code;
f. Field personnel and other employees whose time and performance is
unsupervised by the employer;
g. Those who are engaged on task or contract basis or purely commission
basis;
h. Those who are paid a fixed amount for performing work irrespective of
the time consumed in the performance thereof;
i. Other officers and members of the managerial staff;
j. Members of the family of the employer who are dependent on him for
support.
What are REGULAR and SPECIAL HOLIDAYS?
A. Regular Holidays
New Year’s Day - 1 January
Araw ng Kagitingan - 9 April
Maundy Thursday
Good Friday
Labor Day - 1 May
Independence Day - 12 June
National Heroes Day - 25 August (Last Monday of
August)
Bonifacio Day - 30 November
Christmas Day - 25 December
Rizal Day - 30 December
B. Special (Non-Working) Days

Chinese New Year
Black Saturday
Ninoy Aquino Day - 21 August
All Saints Day - 1 November
C. Special Holiday (for all schools)

EDSA Revolution
Anniversary – 25 February

Not included in the enumeration above on regular holidays are (1) Eid’l
Fitr and (2) Eidul Adha.
The reason is that proclamations declaring the observance of these national

holidays are issued after the approximate dates of the Islamic holidays have
been determined in accordance with the Islamic calendar (Hijra) or the
lunar calendar, or upon Islamic astronomical calculations, whichever is
possible or convenient.
To this end, the National Commission on Muslim Filipinos (NCMF) shall
inform the Office of the President on which days the holidays shall
respectively fall.
• What is the total number of regular holidays?

The total number of regular holidays is twelve (12) days per year. This is
important for purposes of reckoning certain divisors and computation of
employee benefits.
• What is premium pay for holidays and rest days?

“Premium pay” refers to the additional compensation required by law to
be paid for work performed within the regular eight (8) hours on non-
working days, such as rest days, regular and special holidays.
• How is premium pay for holidays computed?

a. Regular Holidays
• If the employee did not work, he/she shall be paid 100 % of his/her
salary for that day. Computation: (Daily rate + Cost of Living Allowance) x
100%. The COLA is included in the computation of holiday pay.
• If the employee worked, he/she shall be paid 200 % of his/her regular
salary for that day for the first eight hours. Computation: (Daily rate +
COLA) x 200%. The COLA is also included in computation of
holiday pay.
• If the employee worked in excess of eight hours (overtime work), he/she
shall be paid an additional 30 percent of his/her hourly rate on said day.
Computation: Hourly rate of the basic daily wage x 200% x 130% x number
of hours worked.

• If the employee worked during a regular holiday that also falls on
his/her rest day, he/she shall be paid an additional 30 % of his/her daily
rate of 200 %. Computation: (Daily rate + COLA) x 200%] + (30% [Daily
rate x 200%)].
• If the employee worked in excess of eight hours (overtime work) during a
regular holiday that also falls on his/her rest day, he/she shall be paid an
additional 30 % of his/her hourly rate on said day. Computation: (Hourly
rate of the basic daily wage x 200% x 130% x 130% x number of hours
worked);
b. Special (Non-Working) Days

• If the employee did not work, the “no work, no pay” principle shall
apply, unless there is a favorable company policy, practice, or CBA granting
payment on a special day.
• If the employee worked, he/she shall be paid an additional 30 % of
his/her daily rate on the first eight hours of work. Computation: [(Daily
rate x 130%) + COLA).
• If the employee worked in excess of eight hours (overtime work), he/she
shall be paid an additional 30 % of his/her hourly rate on said day.
Computation: (Hourly rate of the basic daily wage x 130% x 130% x number
of hours worked).
• If the employee worked during a special day that also falls on his/her
rest day, he/she shall be paid an additional 50% of his/her daily rate on the
first eight hours of work. Computation: [(Daily rate x 150%) + COLA].
• If the employee worked in excess of eight hours (overtime work) during a
special day that also falls on his/her rest day, he/she shall be paid an
additional 30 % of his/her hourly rate on said day. Computation: (Hourly
rate of the basic daily wage x 150% x 130% x number of hours worked).
c. Special Holiday for all schools

 For private establishments, 25 February 2014 is an ordinary workday
and no premium is required to be paid for work on said day.
 On the other hand, employees in private schools, whether academic or
administrative personnel, shall be paid in accordance with the rules for pay
on special (non-working) days as stated above.

What are the effects of absences on the computation of holiday
pay?
1. Employees on leave of absence with pay - entitled to holiday pay
when they are on leave of absence with pay.
2. Employees on leave of absence without pay on the day
immediately preceding the regular holiday – may not be paid the
required holiday pay if they have not worked on such regular holiday.
3. Employees on leave while on SSS or employee’s compensation
benefits - Employers should grant the same percentage of the holiday pay
as the benefit granted by competent authority in the form of employee’s
compensation or social security payment, whichever is higher, if they are
not reporting for work while on such
benefits.
4. When day preceding regular holiday is a non-working day or
scheduled rest day - should not be deemed to be on leave of absence on
that day, in which case, employees are entitled to the regular holiday pay if
they worked on the day immediately preceding the non-working day or rest
day.
2. HOLIDAY PAY/PREMIUM PAY OF TEACHERS, PIECE

WORKERS, TAKAY, SEASONAL WORKERS, SEAFARERS
Are private school teachers entitled to holiday pay during

semestral vacations? What about Christmas vacation”
No, as far as regular holidays during semestral vacations are
concerned.
Yes, as far as regular holidays during Christmas vacation are concerned.
Are hourly-paid teachers entitled to holiday pay?

A school is exempted from paying hourly-paid faculty members their pay
for regular holidays, whether the same be during the regular semesters of
the school year or during semestral, Christmas, or Holy Week vacations.
However, it is liable to pay the faculty members their regular hourly rate on
days declared as special holidays or if, for some reason, classes are called
off or shortened for the hours they are supposed to have taught, whether

extensions of class days be ordered or not; and in case of extensions, said
faculty members shall likewise be paid their hourly rates should they teach
during said extensions.
Are piece-workers, takay and others paid by results entitled to

holiday pay?
Yes. Where a covered employee is paid by results or output such as
payment on piece-work, his holiday pay should not be less than his
average daily earnings for the last seven (7) actual working days
preceding the regular holiday. In no case, however, should the holiday pay
be less than the applicable statutory minimum wage rate.
What are the distinctions between “supervised” and

“unsupervised” workers paid by results to determine their
entitlement to holiday pay?
The principal test to determine entitlement to holiday pay is whether the
employees’ time and performance of the work are “supervised” or
“unsupervised” by their employer. If supervised, the employee is
entitled to holiday pay. If unsupervised, he is not.
The distinctions between supervised and unsupervised workers paid by

results are as follows:
(1) Those whose time and performance are supervised by the employer.
Here, there is an element of control and supervision over the manner as to
how the work is to be performed. A piece-rate worker belongs to this
category especially if he performs his work in the company premises; and
(2) Those whose time and performance are unsupervised. Here, the
employer’s control is over the result of the work. Workers on pakyao and
takay basis belong to this group. Both classes of workers are paid per unit
accomplished. Piece-rate payment is generally practiced in garment
factories where work is done in the company premises, while payment on
pakyao and takay basis is commonly observed in the agricultural industry,
such as in sugar plantations where the work is performed in bulk or in
volumes, hence, difficult to quantify.

Are seasonal workers entitled to holiday pay?
Yes. Seasonal workers are entitled to holiday pay while working during the
season. They may not be paid the required regular holiday pay during off-
season where they are not at work.
Are seafarers entitled to holiday pay?
Yes. Any hours of work or duty including hours of watchkeeping performed
by the seafarer on designated rest days and holidays shall be paid rest day
or holiday pay.
• What are important principles on holiday pay?

In case of two (2) regular holidays falling on the same day, the worker
should be compensated as follows:
o If unworked – 200% for the two regular holidays;
o If worked – 200% for the two regular holidays plus premium of 100%
for work on that day.
“Monthly-paid” employees are not excluded from the coverage of holiday
pay.
LEAVES
1. SERVICE INCENTIVE LEAVE
• What is service incentive leave?

Every covered employee who has rendered at least one (1) year of service is
entitled to a yearly service incentive leave of five (5) days with pay.
The term “at least one year of service” should mean service within
twelve (12) months, whether continuous or broken, reckoned from the date
the employee started working, including authorized absences and paid
regular holidays, unless the number of working days in the establishment
as a matter of practice or policy, or that provided in the employment
contract, is less than twelve (12) months, in which case, said period should
be considered as one (1) year for the purpose of determining entitlement to
the service incentive leave benefit.

All employees are covered by the rule on service incentive leave except:
a. Those of the government and any of its political subdivisions, including
government-owned and controlled corporations;
b. Domestic workers or kasambahays;
c. Persons in the personal service of another;
d. Managerial employees as defined in Book III of the Labor Code;
e. Field personnel and other employees whose performance is unsupervised
by the employer;
f. Those who are engaged on task or contract basis, purely commission
basis, or those who are paid in a fixed amount for performing work
irrespective of the time consumed in the performance thereof;
g. Those who are already enjoying the benefit provided in the law;
h. Those enjoying vacation leave with pay of at least five (5) days;
i. Those employed in establishments regularly employing less than ten (10)
employees;
j. Other officers and members of the managerial staff; and
k. Members of the family of the employer who are dependent on him for
support.
• Are unavailed service incentive leaves commutable to cash?

Yes. The service incentive leave is commutable to its money equivalent if
not used or exhausted at the end of the year.
2. MATERNITY LEAVE
• What is maternity leave?

“Maternity leave” is the period of time which may be availed of by a woman
employee, married or unmarried, to undergo and recuperate from
childbirth, miscarriage or complete abortion during which she is
permitted to retain her rights and benefits flowing from her employment.
• What is the period of leave?

60 days – for normal delivery
78 days – for caesarian delivery
• What is the amount granted?

Daily maternity benefit equivalent to one hundred percent (100%) of her
average daily salary credit for sixty (60) days or seventy-eight (78) days
in case of caesarian delivery/
• What is the number of delivery or miscarriage covered?
The maternity benefits shall be paid only for the first four (4)
deliveries or miscarriages/
• Is an unmarried woman entitled to maternity leave benefit?

Yes. For as long as a woman is pregnant, she is entitled to maternity leave
benefit regardless of whether she is married or unmarried.
PATERNITY LEAVE
• What is paternity leave benefit?

“Paternity leave” covers a married male employee allowing him not to
report for work for seven (7) calendar days but continues to earn the
compensation therefor, on the condition that his spouse has delivered a
child or suffered miscarriage for purposes of enabling him to effectively
lend support to his wife in her period of recovery and/or in the nursing of
the newlyborn child.
“Delivery” includes childbirth or any miscarriage.
“Spouse” refers to the lawful wife. For this purpose, “lawful wife” refers
to a woman who is legally married to the male employee concerned.
“Cohabiting” refers to the obligation of the husband and wife to live
together.
• What is the covered total number of deliveries?
Every married employee in the private and public sectors is entitled to a
paternity leave of seven (7) calendar days with full pay for the first four
(4) deliveries of the legitimate spouse with whom he is cohabiting.
Paternity leave benefits are granted to the qualified employee after the
delivery by his wife, without prejudice to an employer allowing an employee

to avail of the benefit before or during the delivery, provided that the
total number of days should not exceed seven (7) calendar days for each
delivery.
Is an unavailed paternity leave benefit convertible to cash?

No. In the event that the paternity leave benefit is not availed of, said leave
shall not be convertible to cash.
PARENTAL LEAVE
(R.A. No. 8972)
• What is parental leave?
“Parental leave” is the leave benefit granted to a male or female solo
parent to enable him/her to perform parental duties and responsibilities
where physical presence is required.
• How many days may be availed of as parental leave?

The parental leave shall not be more than seven (7) working days every
year to a solo parent who has rendered service of at least one (1) year, to
enable him/her to perform parental duties and responsibilities where
his/her physical presence is required. This leave shall be non-cumulative.
It bears noting that this leave privilege is an additional leave benefit which
is separate and distinct from any other leave benefits provided under
existing laws or agreements.
• Who is a solo parent?

The term "solo parent" refers to any individual who falls under any of the
following categories:
(1) A woman who gives birth as a result of rape and other crimes against
chastity even without a final conviction of the offender: Provided, That the
mother keeps and raises the child;
(2) Parent left solo or alone with the responsibility of parenthood due to
death of spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the
spouse is detained or is serving sentence for a criminal conviction for at
least one (1) year;

physical and/or mental incapacity of spouse as certified by a public medical
practitioner;
legal separation or de facto separation from spouse for at least one (1) year,
as long as he/she is entrusted with the custody of the children;
declaration of nullity or annulment of marriage as decreed by a court or by
a church as long as he/she is entrusted with the custody of the children;
abandonment of spouse for at least one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his
child/children instead of having others care for them or give them up to a
welfare institution;
(9) Any other person who solely provides parental care and support to a
child or children;
(10) Any family member who assumes the responsibility of head of family
as a result of the death, abandonment,
disappearance or prolonged absence of the parents or solo parent.
• What is the effect of change of status of the solo parent?

A change in the status or circumstance of the parent claiming benefits
under this Act, such that he/she is no longer left alone with the
responsibility of parenthood, shall terminate his/her eligibility for these
benefits.
• Who are considered children under this law?

"Children" refer to those living with and dependent upon the solo parent
for support who are unmarried, unemployed and not more than eighteen
(18) years of age, or even over eighteen (18) years but are incapable of self-
support because of mental and/or physical defect/disability.
Is an unavailed parental leave convertible to cash?

No. In the event that the parental leave is not availed of, said leave shall
not be convertible to cash unless specifically agreed upon previously.

LEAVE FOR VICTIMS OF VIOLENCE AGAINST WOMEN AND
CHILDREN (R.A. No. 9262)
• What is this kind of leave?

This special leave is granted to a woman employee who is a victim under
this law. It is for a total of ten (10) days of paid leave of absence, in
addition to other paid leaves under the law. It is extendible when the
necessity arises as specified in the protection order. Its purpose is to enable
the woman employee to attend to the medical and legal concerns relative
to said law. This leave is not convertible to cash.
• What is the requirement for its entitlement?

At any time during the application of any protection order, investigation,
prosecution and/or trial of the criminal case, a victim of Violence Against
Women and their Children (VAWC) who is employed shall be entitled to
said paid leave of up to ten (10) days. The Punong Barangay/kagawad or
prosecutor or the Clerk of Court, as the case may be, shall issue a
certification at no cost to the woman that such an action is pending, and
this is all that is required for the employer to comply with the 10-
day paid leave.
SPECIAL LEAVE BENEFIT FOR WOMEN

• What is this special leave benefit [GYNECOLOGICAL
SURGERY LEAVE]?
A special leave benefit for women was granted under R.A. No. 9710,
otherwise known as “The Magna Carta of Women” [August 14, 2009].
Thus, any female employee in the public and private sector regardless of
age and civil status shall be entitled to a special leave of two (2) months
with full pay based on her gross monthly compensation subject to
existing laws, rules and regulations due to surgery caused by
gynecological disorders under the following terms and conditions:
1. She has rendered at least six (6) months continuous aggregate
employment service for the last twelve (12) months prior to surgery;
2. In the event that an extended leave is necessary, the female employee
may use her earned leave credits; and

3. This special leave shall be non-cumulative and non-convertible to
cash.
“Gynecological disorders” refer to disorders that would require surgical
procedures such as, but not limited to, dilatation and curettage and those
involving female reproductive organs such as the vagina, cervix, uterus,
fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a
competent physician. Gynecological surgeries shall also include
hysterectomy, ovariectomy, and mastectomy.
• Is this leave similar to maternity leave?
No. This leave should be distinguished from maternity leave benefit, a
separate and distinct benefit, which may be availed of in case of
childbirth, miscarriage or complete abortion.
A woman, therefore, may avail of this special leave benefit in case she
undergoes surgery caused by gynecological disorder and at the same time
maternity benefit as these two leaves are not mutually exclusive.
SERVICE CHARGE
• What are the kinds of establishment covered by the law on
service charge?
The rules on service charge apply only to establishments collecting service
charges, such as hotels, restaurants, lodging houses, night clubs, cocktail
lounges, massage clinics, bars, casinos and gambling houses, and similar
enterprises, including those entities operating primarily as private
subsidiaries of the government.
• Who are the employees covered by this law?

The same rules on service charges apply to all employees of covered
employers, regardless of their positions, designations or employment
status, and irrespective of the method by which their wages are paid except
those receiving more than P2,000.00 a month.
• Who are not covered?

Specifically excluded from coverage are employees who are receiving wages
of more than P2,000.00 a month. However, it must be pointed out that
the P2,000.00 ceiling is no longer realistic considering the applicable
minimum wages prevailing in the country. Hence, it must be disregarded.

• How is the service charge distributed?
a. Percentage of sharing.
All service charges collected by covered employers are required to be
distributed at the following rates:
1. 85% to be distributed equally among the covered employees; and
2. 15% to management to answer for losses and breakages and distribution
to employees receiving more than P2,000.00 a month, at the discretion of
the management.
b. Frequency of distribution.
The share of the employees referred to above should be distributed and
paid to them not less often than once every two (2) weeks or twice a month
at intervals not exceeding sixteen (16) days.
• Can the service charge be integrated into the wages of covered

employees?
Yes. In case the service charge is abolished, the share of covered employees
should be considered integrated in their wages, in accordance with Article
96 of the Labor Code. The basis of the amount to be integrated is the
average monthly share of each employee for the past twelve (12) months
immediately preceding the abolition or withdrawal of such charges.
What are some principles on service charge?

Tips and services charges are two different things. Tips are given by
customers voluntarily to waiters and other people who serve them out of
recognition of satisfactory or excellent service. There is no compulsion to
give tips under the law. The
same may not be said of service charges which are considered integral part
of the cost of the food, goods or services ordered by the customers.
 Service charges are not in the nature of profit share and,
therefore, cannot be deducted from wage.
THIRTEENTH MONTH PAY

Who are covered by the 13th month pay law?
Only rank-and-file employees, regardless of their designation or
employment status and irrespective of the method by which their wages are

paid, are entitled to the 13th month pay benefit. Managerial employees
are not entitled to 13th month pay.
What is the minimum period of service required in a calendar

year to be entitled to 13th month pay?
To be entitled to the 13th month pay benefit, it is imposed as a minimum
service requirement that the employee should have worked for at least
one (1) month during a calendar year.
 When should 13th month pay be paid?

It must be paid not later than December 24 of every year.
 Who are excluded from its coverage?

The following employers are not covered by the 13th month pay law:
1. The government and any of its political subdivisions, including
government-owned and controlled corporations, except those
corporations operating essentially as private subsidiaries of the
government.
2. Employers already paying their employees 13th month pay or more in a
calendar year or its equivalent at the time of the issuance of the Revised
Guidelines.
3. Employers of those who are paid on purely commission, boundary,
or task basis, and those who are paid a fixed amount for
performing a specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis,
in which case, the employer shall be covered by the Revised Guidelines
insofar as such workers are concerned. Workers paid on piece-rate
basis shall refer to those who are paid a standard amount for every piece or
unit of work produced that is more or less regularly replicated without
regard to the time spent in producing the same.
Are domestic workers or Kasambahays covered?

Yes. They are now covered under the Kasambahay Law.
Are extras, casuals and seasonal employees entitled to 13th

month pay?
Yes, they are entitled thereto.
Is 13th month pay part of wage?

13th month pay which is in the nature of additional income, is based
on wage but not part of wage.
What is the minimum amount of the 13th month pay?

The minimum 13th month pay should not be less than one-twelfth
(1/12) of the total basic salary earned by an employee within a
calendar year.
What is meant by “basic salary” or “basic wage”?

“Basic salary” or “basic wage” contemplates work within the normal eight
(8) working hours in a day. This means that the basic salary of an employee
for purposes of computing the 13th month pay should include all
remunerations or earnings paid by the employer for services rendered
during normal working hours.
For purposes of computing the 13th month pay, “basic salary” should be
interpreted to mean not the amount actually received by an employee, but
1/12 of their standard monthly wage multiplied by their length of service
within a given calendar year.
SEPARATION PAY
What are the separation pays expressly provided under the
Labor Code?
The Labor Code prescribes the payment of separation pay only in the
following four (4) situations:
(1) When termination is due to authorized causes:
(1) installation of labor-saving devices;
(2) redundancy;
(3) retrenchment; or
(4) closing or cessation of business operations; and
(5) disease.

What are separation pays provided in jurisprudence?
In accordance with jurisprudence, the following separation pay may be
cited:
(1) Separation pay in lieu of reinstatement; and
(2) Separation pay as financial assistance in cases where the dismissal
was held valid and legal but the employee is given financial assistance by
reason of long years of service, unblemished record, substantial justice, etc.
What is the prevailing doctrine regarding grant of financial

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

analogous causes.

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

Under this 2010 doctrine, as distinguished from just cause termination,
employees terminated due to authorized cause are not entitled to be
paid additional separation pay by way of financial assistance. The reason is
that the employer is only required under the law to pay his employees
separation pay in accordance with Article 283 of the Labor Code. That is all
that the law requires. The Court should refrain from adding more than what
the law requires, as the same is within the realm of the legislature.
RETIREMENT PAY
a. ELIGIBILITY
 Who are covered under the retirement pay law?
The following employees are eligible to avail of retirement benefits under
Article 287 of the Labor Code:
1. All employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their wages

are paid;
2. Part-time employees;
3. Employees of service and other job contractors;
4. Domestic helpers or persons in the personal service of
another;
3. Underground mine workers;
4. Employees of government-owned and/or controlled corporations
organized under the Corporation Code (without original charters).
 Who are excluded?

Article 287, as amended, does not apply to the following employees:
1. Employees of the national government and its political subdivisions,
including government-owned and/or controlled corporations, if they are
covered by the Civil Service Law and its regulations.
2. Employees of retail, service and agricultural establishments or
operations regularly employing not more than ten (10) employees. These
terms are defined as follows:
a. “Retail establishment” is one principally engaged in the sale of goods
to end-users for personal or household use. It shall lose its retail character
qualified for exemption if it is engaged in both retail and wholesale of
goods.
b. “Service establishment” is one principally engaged in the sale of
service to individuals for their own or household use and is generally
recognized as such.
c. “Agricultural establishment/operation” refers to an employer
which is engaged in agriculture. This term refers to all farming activities in
all branches and includes, among others, the cultivation and tillage of soil,
production, cultivation, growing and harvesting of any agricultural or
horticultural commodities, dairying, raising of livestock or poultry, the
culture of fish and other aquatic products in farms or ponds, and any
activities performed by a farmer or on a farm as an incident to, or in
conjunction with, such farming operations, but does not include the
manufacture and/or processing of sugar, coconut, abaca, tobacco,
pineapple, aquatic or other farm products.
 What is the optional and compulsory retirement age?

a. Under Article 287.
This article provides for two (2) types of retirement:
(1) Optional retirement upon reaching the age of sixty (60) years.
(2) Compulsory retirement upon reaching the age of sixty-five (65)
years.
It is the employee who exercises the option under No. 1 above.
b. Under retirement plan.
The optional and compulsory retirement schemes provided under Article
287 come into play only in the absence of a retirement plan or agreement
setting forth other forms of optional or compulsory retirement schemes.
Thus, if there is a retirement plan or agreement in an establishment
providing for an earlier or older age of retirement (but not beyond 65 which
has been declared the compulsory retirement age), the same shall be
controlling.
c. Retirement at an earlier age or after rendering certain period
of service.
Based on Article 287 the employers and employees are free to agree and
stipulate on the retirement age, either in a CBA or employment contract. It
is only in the absence of such agreement that the retirement age shall be
fixed by law, that is, in accordance with the optional and compulsory
retirement age prescribed under Article 287.
d. By mutual agreement, employers may be granted the sole and
exclusive prerogative to retire employees at an earlier age or
after rendering a certain period of service.
Cainta Catholic School v. Cainta Catholic School Employees
Union [CCSEU], where the Supreme Court upheld the exercise by the
school of its option to retire employees pursuant to the existing CBA where
it is provided that the school has the option to retire an employee
upon reaching the age limit of sixty (60) or after having rendered
at least twenty (20) years of service to the school, the last three
(3) years of which must be continuous. Hence, the termination of
employment of the employees, arising as it did from an exercise of a
management prerogative granted by the mutually-negotiated CBA between
the school and the union is valid.
e. To be valid, retirement at an earlier age must be voluntarily
consented to by the employee.
In Jaculbe v. Silliman University, the Supreme Court ruled that in

order for retirement at an earlier age to be valid, it must be shown that the
employee’s participation in the plan is voluntary. An employer is free to
impose a retirement age of less than 65 for as long as it has the employees’
consent. Stated conversely, employees are free to accept the employer’s
offer to lower the retirement age if they feel they can get a better deal with
the retirement plan presented by the employer.
 What is the minimum years of service required for

entitlement under the law?
Five (5) years is the minimum years of service that must be rendered by
the employee before he can avail of the retirement benefits upon reaching
optional or compulsory retirement age under Article 287.
 What is the retirement age of underground mine workers?

The optional retirement age of underground mine workers is 50 years of
age; while the compulsory retirement age is 60 years old.
 What is the minimum number of years of service required of

underground mine workers?
Minimum years of service is also 5 years.
 Are the retirement benefits of underground mine workers

similar to ordinary retirees?
Yes. In fact, other than the retirement age, all other requirements as well as
benefits provided in the law are applicable to underground mine workers.
AMOUNT OF RETIREMENT PAY

 What is retirement pay under the law?
a. One-half (½) month salary.
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee, upon reaching the
optional or compulsory retirement age specified in Article 287, shall be
entitled to retirement pay
equivalent to at least one-half (½) month salary for every year of service, a
fraction of at least six (6) months being considered as one (1) whole year.

b. Components of one-half (½) month salary.
For purposes of determining the minimum retirement pay due an employee
under Article 287, the term “one-half month salary” shall include all of
the following:
(1) Fifteen (15) days salary of the employee based on his latest salary
rate.
(2) The cash equivalent of five (5) days of service incentive leave;
(3) One-twelfth (1/12) of the 13th month pay due the employee; and
(4) All other benefits that the employer and employee may agree upon
that should be included in the computation of the employee’s retirement
pay.
c. “One-half (½) month salary” means 22.5 days.
“One-half [½] month salary” is equivalent to “22.5 days” arrived at
after adding 15 days plus 2.5 days representing one-twelfth [1/12] of the
13th month pay plus 5 days of service incentive leave.
 What are some principles on retirement benefits?

 1/12 of 13th month pay and 5 days of service incentive leave (SIL)
should not be included if the employee was not entitled to 13th month pay
and SIL during his employment.
Example: R & E Transport, Inc. v. Latag,1 where it was held that

employees who are not entitled to 13th month pay and SIL pay while still
working should not be paid the entire “22.5 days” but only the fifteen (15)
days salary. In other words, the additional 2.5 days representing one-
twelfth [1/12] of the 13th month pay and the five (5) days of SIL should not
be included as part of the retirement benefits.
The employee in this case was a taxi driver who was being paid on the
“boundary” system basis. It was undisputed that he was entitled to
retirement benefits after working for fourteen (14) years with R & E
Transport, Inc. However, he was not entitled to the 13th month pay since
Section 3 of the Rules and Regulations Implementing P.D. No. 851 exempts
from its coverage employers of those who are paid on purely boundary
basis. He was also not entitled to the 5-day service incentive leave pay
pursuant to the Rules to Implement the Labor Code which expressly
excepts field personnel and other employees whose performance is
unsupervised by the employer.

But in the 2010 case of Serrano v. Severino Santos Transit,2 which
involves a bus conductor (petitioner) who worked for 14 years for
respondent bus company which did not adopt any retirement scheme. It
was held herein that even if petitioner as bus conductor was paid on
commission basis, he falls within the coverage of R.A. 7641 (Retirement Pay
Law, now Article 287 of Labor Code). This means that his retirement pay
should include the cash equivalent of the 5-day SIL and 1/12 of the 13th
month pay for a total of 22.5 days. The affirmance by the Court of Appeals
of the reliance by the NLRC on R & E Transport case was held erroneous.
For purposes of applying the law on SIL as well as on retirement, there is a
difference between drivers paid under the “boundary system” and
conductors paid on commission basis. This is so because in practice, taxi
drivers do not receive fixed wages. They retain only those sums in excess of
the “boundary” or fee they pay to the owners or operators of the vehicles.
Conductors, on the other hand, are paid a certain percentage of the bus’
earnings for the day. It bears emphasis that under P.D. No. 851 and the SIL
Law, the exclusion from its coverage of workers who are paid on a purely
commission basis is only with respect to field personnel.
RETIREMENT BENEFITS OF WORKERS PAID BY RESULTS

• What are the retirement benefits of workers paid by results?
For covered workers who are paid by results and do not have a fixed
monthly rate, the basis for the determination of the salary for fifteen (15)
days shall be their average daily salary (ADS). The ADS is the average salary
for the last twelve (12) months reckoned from the date of their retirement,
divided by the number of actual working days in that particular period.
RETIREMENT BENEFITS OF PART-TIME WORKERS

• How should the retirement benefits of part-time workers be
computed?
Applying the principles under Article 287, as amended, the components of
retirement benefits of part-time workers may also be computed at least in
proportion to the salary and related benefits due them.
J. WOMEN WORKERS
a. PROVISIONS AGAINST DISCRIMINATION

• What are acts of discrimination under the Labor Code?
(a) Payment of a lesser compensation, including wage, salary or other form
of remuneration and fringe benefits, to a female employee as against a male
employee, for work of equal value; and
(b) Favoring a male employee over a female employee with respect to
promotion, training opportunities, study and scholarship grants solely on
account of their sexes.
• What are acts of discrimination under the Magna Carta of
Women?
R.A. No. 9710, otherwise known as “The Magna Carta of Women,” is a
comprehensive women’s human rights law that seeks to eliminate
discrimination against women by recognizing, protecting, fulfilling and
promoting the rights of Filipino women, especially those in marginalized
sector.
Based on the definition of the term “Discrimination Against Women”
in R.A. No. 9710, the following are considered discriminatory acts:
1. Any gender-based distinction, exclusion, or restriction which has the
effect or purpose of impairing or nullifying the recognition, enjoyment, or
exercise by women, irrespective of their marital status, on a basis of
equality of men and women, of human rights and fundamental freedoms in
the political, economic, social, cultural, civil or any other field;
2. Any act or omission, including by law, policy, administrative measure, or
practice, that directly or indirectly excludes or restricts women in the
recognition and promotion of their rights and their access to and enjoyment
of opportunities, benefits or privileges;
3. A measure or practice of general application that fails to provide for
mechanisms to offset or address sex or gender-based disadvantages or
limitations of women, as a result of which women are denied or restricted
in the recognition and protection of their rights and in their access to and
enjoyment of opportunities, benefits, or privileges; or women, more than
men, are shown to have suffered the greater adverse effects of those
measures or practices; and
4. Discrimination compounded by or intersecting with other grounds,
status, or condition, such as ethnicity, age, poverty or religion.
Additionally, women are guaranteed their right to decent work. The State
shall progressively realize and ensure decent work standards for women
that involve the creation of jobs of acceptable quality in conditions of

freedom, equity, security and
human dignity.
1 G.R. No. 155214, Feb. 13, 2004.
2 G.R. No. 187698, Aug. 9, 2010.
b. STIPULATION AGAINST MARRIAGE

• Is the prohibition against marriage valid?
Article 136 of the Labor Code considers as an unlawful act of the employer
to require as a condition for or continuation of employment that a woman
employee shall not get married or to stipulate expressly or tacitly that upon
getting married, a woman employee shall be deemed resigned or separated.
It is likewise an unlawful act of the employer, to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of
her marriage.
• What are the relevant pieces of jurisprudence on marriage?

1. Philippine Telegraph and Telephone Company v. NLRC.1 - It was
declared here that the company policy of not accepting or considering as
disqualified from work any woman worker who contracts marriage runs
afoul of the test of, and the right against, discrimination afforded all women
workers by our labor laws and by no less than the Constitution.
2. Star Paper Corp. v. Simbol, Comia and Estrella.2 - The following
policies were struck down as invalid for violating the standard of
reasonableness which is being followed in our jurisdiction, otherwise called
the “Reasonable Business Necessity Rule”:
“1. New applicants will not be allowed to be hired if in case he/she has [a]
relative, up to [the] 3rd degree of relationship, already employed by the
company.
“2. In case of two of our employees (both singles [sic], one male and
another female) developed a friendly relationship during the course of their
employment and then decided to get married, one of them should resign to
preserve the policy stated above.”
3. Duncan Association of Detailman-PTGWO v. Glaxo Welcome
Philippines, Inc.3 In this case, the prohibition against marriage

embodied in the following stipulation in the employment contract was held
as valid:
“10. You agree to disclose to management any existing or future
relationship you may have, either by consanguinity or affinity with co-
employees or employees of competing drug companies. Should it pose a
possible conflict of interest in management discretion, you agree to resign
voluntarily from the Company as a matter of Company policy.”
The Supreme Court ruled that the dismissal based on this stipulation in the
employment contract is a valid exercise of management prerogative. The
prohibition against personal or marital relationships with employees of
competitor companies upon its employees was held reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, the
employer only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.
c. PROHIBITED ACTS
• What are the prohibited acts against women under the Labor
Code?
Article 137 of the Labor Code and its implementing rule consider unlawful
the followings acts of the employer:
1. To discharge any woman employed by him for the purpose of
preventing such woman from enjoying maternity leave, facilities
and other benefits provided under the Labor Code;
2. To discharge such woman on account of her pregnancy, or while on
leave or in confinement due to her pregnancy;
3. To discharge or refuse the admission of such woman upon returning to
her work for fear that she may again be pregnant;
4. To discharge any woman or any other employee for having filed a
complaint or having testified or being about to testify under the
Labor Code; or
5. To require as a condition for or continuation of employment that a
woman employee shall not get married or to stipulate expressly or tacitly
that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely

by reason of marriage.
1 G.R. No. 118978, May 23, 1997, 272 SCRA 596, 605.
2 G.R. No. 164774, April 12, 2006.
3 G.R. No. 162994, Sept. 17, 2004.
d. ANTI-SEXUAL HARASSMENT ACT

(R.A. No. 7877)
• What are the 3 situations contemplated under this law?
R.A. No. 7877 declares sexual harassment unlawful only in three (3)
situations, namely:
(1) employment;
(2) education; and
(3) training environment.
• Can sexual harassment be committed also against a man?

Yes. Sexual harassment is not the sole domain of women as men may also
be subjected to the same despicable act. Said law does not limit the victim
of sexual harassment to women.
• Who are the persons who may be held liable for sexual
harassment?
Work, education or training-related sexual harassment is committed by any
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.
Further, any person who directs or induces another to commit any act of
sexual harassment as defined in the law, or who cooperates in the
commission thereof by another without which it would not have been
committed, shall also be held liable under the law.
• How is sexual harassment committed in a work-related or

employment environment?
In a work-related or employment environment, sexual harassment is
committed when:
1. The sexual favor is made a condition in the hiring or in the employment,
re-employment or continued employment of said individual or in granting
said individual favorable compensation, terms, conditions, promotions, or
privileges; or the refusal to grant the sexual favor results in limiting,
segregating or classifying the employee which in any way would
discriminate, deprive or diminish employment opportunities or otherwise
adversely affect said employee;
2. The above acts would impair the employee’s rights or privileges under
existing labor laws; or
3. The above acts would result in an intimidating, hostile, or offensive
environment for the employee.
• What are duties of the employer in regard to sexual

harassment complaints?
It is the duty of the employer to prevent or deter the commission of acts of
sexual harassment and to provide the procedures for the resolution or
prosecution of acts of sexual harassment. The employer or head of office is
required to:
1. promulgate appropriate rules and regulations, in consultation with and
jointly approved by the employees or students or trainees, through their
duly designated representatives, prescribing the procedure for the
investigation of sexual harassment cases and the administrative sanctions
therefor. The said rules and regulations issued shall include, among others,
guidelines on proper decorum in the workplace and educational or training
institutions.
2. create a committee on decorum and investigation of cases on sexual
harassment. The committee shall conduct meetings, as the case may be,
with officers and employees, teachers, instructors, professors, coaches,
trainors and students or trainees to increase understanding and prevent
incidents of sexual harassment. It shall also conduct the investigation of
alleged cases constituting sexual harassment.

K. EMPLOYMENT OF MINORS
(Labor Code and R.A. No. 7678, R.A. No. 9231)
• Who is a “child” or “working child”?

For legal purposes, the term “child” refers to any person less than
eighteen (18) years of age.
A “working child” refers to any child engaged as follows:
i. when the child is below eighteen (18) years of age, in work or economic
activity that is not “child labor;” and
ii. when the child below fifteen (15) years of age:
(a) in work where he/she is directly under the responsibility of his/her
parents or legal guardian and where only members of the child’s family are
employed; or
(b) in “public entertainment or information” which refers to artistic,
literary, and cultural performances for television show, radio program,
cinema or film, theater, commercial advertisement, public relations
activities or campaigns, print materials, internet, and other media.
• What are the working hours of a child?

The term “hours of work” includes (1) all time during which a child is
required to be at a prescribed workplace, and (2) all time during which a
child is suffered or permitted to work. Rest periods of short duration during
working hours shall be counted as hours worked.
The following hours of work shall be observed for any child allowed to
work under R.A. No. 9231 and its Implementing Rules:
(a) For a child below 15 years of age, the hours of work shall not be more
than twenty (20) hours per week, provided that the work shall not be more
than four (4) hours at any given day;
(b) For a child 15 years of age but below 18, the hours of work shall not
be more than eight (8) hours a day, and in no case beyond forty (40) hours
a week; and
(c) No child below 15 years of age shall be allowed to work between eight
(8) o’clock in the evening and six (6) o’clock in the morning of the following
day and no child 15 years of age but below 18 shall be allowed to work

between ten (10) o’clock in the evening and six (6) o’clock in the morning of
the following day.
What is the prohibition of employing minors in certain

undertakings and advertisements?
No child below 18 years of age is allowed to be employed as a model in
any advertisement directly or indirectly promoting alcoholic beverages,
intoxicating drinks, tobacco and its by-products, gambling or any form of
violence or pornography.
L. HOUSEHELPERS
(Labor Code as amended by R.A. No. 7655,
An Act Increasing the Minimum Wage of Househelpers; See also

– Household Service under the Civil Code) (NOTE: The above
provisions of the Labor Code on Househelpers cited in the 2014
Syllabus have already been repealed by R.A. No. 10361,
otherwise known as “Domestic Workers Act” or “Batas
Kasambahay” approved by President Benigno S. Aquino III on
January 18, 2013).
• What is the coverage of the Kasambahay Law?
R.A. No. 10361 applies to all domestic workers employed and working
within the country. It shall cover all parties to an employment contract for
the services of the following Kasambahay, whether on a live-in or live-out
arrangement, such as, but not limited to:
(a) General househelp;
(b) Yaya;
(c) Cook;
(d) Gardener;
(e) Laundry person; or
(f) Any person who regularly performs domestic work in one household on
an occupational basis.

The following are not covered:

(a) Service providers;
(b) Family drivers;
(c) Children under foster family arrangement; and
(d) Any other person who performs work occasionally or sporadically and
not on an occupational basis.
• Who is a domestic worker or kasambahay?

“Domestic worker” or “kasambahay” refers to any person engaged in
domestic work within an employment relationship, whether on a live-in or
live-out arrangement, such as, but not limited to, general househelp,
"yaya", cook, gardener, or laundry person, but shall exclude service
providers, family drivers, children who are under foster family
arrangement, or any person who performs domestic work only occasionally
or sporadically and not on an occupational basis.
This term shall not include children who are under foster family
arrangement which refers to children who are living with a family or
household of relative/s and are provided access to education and given an
allowance incidental to education, I.e., "baon", transportation, school
projects, and school activities.
Because of these new terminologies prescribed in the law, the use of the
term “househelper” may no longer be legally correct.
• Is the employment contract required to be in writing?

Yes. The employment contract must be in writing and should contain the
conditions set by law.
• What are the rights and privileges of a kasambahay?

The rights and privileges of the Kasambahay are as follows:
(a) Minimum wage;
(b) Other mandatory benefits, such as the daily and weekly rest periods,
service incentive leave, and 13th month pay;
(c) Freedom from employers' interference in the disposal of wages;
(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
(e) Standard of treatment;
(f) Board, lodging and medical attendance;
(g) Right to privacy;

(h) Access to outside communication;
(i) Access to education and training;
(j) Right to form, join, or assist labor organization;
(k) Right to be provided a copy of the employment contract;
(I) Right to certificate of employment;
(m) Right to terminate the employment; and
(n) Right to exercise their own religious beliefs and cultural practices.
The foregoing rights and privileges are discussed below.
What is the minimum wage of kasambahay?
Under the Kasambahay Law, the following are the minimum wages of
kasambahays:
(a) Two thousand five hundred pesos (P2,500.00) a month for those
employed in the National Capital Region (NCR);
(b) Two thousand pesos (P2,000.00) a month for those employed in
chartered cities and first class municipalities; and
(c) One thousand five hundred pesos (P1,500.00) a month for those
employed in other municipalities.
Are the minimum wages subject to review by the RTWPBs or

Regional Boards?
Yes. After one (1) year from the effectivity of the Kasambahay Law, and
periodically thereafter, the Regional Tripartite and Productivity Wage
Boards (RTPWBs) shall review, and if proper, determine and adjust the
minimum wage rates of domestic workers.”
What are some important principles on wage of kasambahay?

Frequency of payment of wages. - The wages of the Kasambahay shall
be paid at least once a month. This is so because the minimum wage rates
are on a monthly basis.
The equivalent minimum daily wage rate of the Kasambahay shall be
determined by dividing the applicable minimum monthly rate by thirty (30)
days.
The amount of the minimum wage depends on the geographical area
where the Kasambahay works.
Payment of wages:

1. To whom paid. - It should be made on time directly to the Kasambahay
to whom they are due in cash at least once a month.
2. Deductions, prohibition; when allowed. - The employer, unless
allowed by the Kasambahay through a written consent, shall make no
deductions from the wages other than that which is mandated by law such
as
for SSS, Philhealth or Pag-IBIG contributions.
3. Mode of payment. - It should be paid in cash and not by means of
promissory notes, vouchers, coupons, tokens, tickets, chits, or any object
other than the cash wage as provided for under this Act.
4. Pay slip. – The employer shall at all times provide the Kasambahay with
a copy of the pay slip containing the amount paid in cash every pay day, and
indicating all deductions made, if any. The copies of the pay slip shall be
kept by the employer for a period of three (3) years.
5. Prohibition on Interference in the disposal of wages. – It shall
be unlawful for the employer to interfere with the freedom of the
Kasambahay in the disposition of his/her wages, such as: (a) Forcing,
compelling, or obliging the Kasambahay to purchase merchandise,
commodities or other properties from the employer or from any other
person; or (b) Making use of any store or services of such employer or any
other person.
6. Prohibition against withholding of wages. – It shall be unlawful
for an employer, directly or indirectly, to withhold the wages of the
Kasambahay. If the Kasambahay leaves without any justifiable reason, any
unpaid salary for a period not exceeding fifteen (15) days shall be forfeited.
Likewise, the employer shall not induce
the Kasambahay to give up any part of the wages by force, stealth,
intimidation, threat or by any other means whatsoever.
• What are important terms and conditions of employment of

kasambahay?
The following is a rundown of the basic terms and conditions that should be
observed in the employment of a Kasambahay:
a. Employable age. - Children whose age is below 15 years are absolutely
prohibited to work as Kasambahay.
b. Normal daily hours of work. – Because R.A. No. 10361 does not
contain any provision on the number of normal hours of work that a

Kasambahay should render in a day but merely prescribes said daily rest
period of eight (8) hours per day, it may be concluded that the Kasambahay
should work for at least a total of sixteen (16) hours per day as normal
hours of work. However, it must be noted that the Labor Code does not
contain any provision on the normal hours of work of househelpers.
Article 1695 of the Civil Code, however, specifically provides that
househelpers shall not be required to work for more than ten (10)
hours a day. Since R.A. No. 10361, a special law, is the most recent piece
of legislation, it should prevail over the general provision of the Civil Code.
c. Normal daily hours of work for working child-kasambahay is
eight (8) hours per day.
d. 13th month pay. - The Kasambahay who has rendered at least one
(1) month of service is entitled to a 13th month pay which shall not be
less than one-twelfth (1/12) of his/her total basic salary earned in a
calendar year.
The 13th month pay shall be paid not later than December 24 of every year
or upon separation from employment.
e. Daily rest period. – The Kasambahay shall be entitled to an aggregate
daily rest period of eight (8) hours.
f. Weekly rest period. - The Kasambahay shall be entitled to at least
twenty-four (24) consecutive hours of rest in a week. The employer
and the Kasambahay shall agree in writing on the schedule of the weekly
rest day but the preference of the Kasambahay, when based on religious
grounds, shall be respected.
g. Service incentive leave. - A Kasambahay who has rendered at least
one (1) year of service shall be entitled to an annual service incentive leave
of at least five (5) days with pay. Any unused portion of said annual leave
shall not be cumulative or carried over to the succeeding years. Unused
leaves shall not be convertible to cash.
h. Social security benefits. - A Kasambahay who has rendered at least
one (1) month of service shall be covered by the Social Security System
(SSS), Employees Compensation Commission (ECC), Philippine Health
Insurance Corporation (PhilHealth), and Home Development Mutual Fund
or Pag-IBIG, and shall be entitled to all the benefits in accordance with
their respective policies, laws, rules and regulations.
i. Obligation of employer to register and enrol with SSS,
PhilHealth, and Pag-IBIG. - As employer of the Kasambahay, he/she

shall register himself/herself with, and enroll the latter as his/her employee
to the SSS, PhilHealth, and Pag-IBIG.
j. Deposits for loss or damage. - It shall be unlawful for the employer
or any other person to require a Kasambahay to make deposits from which
deductions shall be made for the reimbursement of loss or damage to tools,
materials, furniture and equipment in the household.
k. Standard of treatment. - The Kasambahay shall be treated with
respect by the employer or any member of the household. He/she shall not
be subjected to any kind of abuse, including repeated verbal or
psychological, nor be inflicted with any form of physical violence or
harassment or any act tending to degrade his/her dignity, as defined under
the Revised Penal Code, Violence Against Women and their Children Law
(R.A. No. 9262), Special Protection of Children Against Child Abuse,
Exploitation and Discrimination Act (R.A. No. 7610) as amended by R.A.
No. 9231, Anti-Trafficking in Persons Act of 2003 (R.A. No. 9208), and
other applicable laws.
l. Board, lodging and medical attendance. - The employer shall
provide for the basic necessities of the Kasambahay, to include the
following:
(1) At least three (3) adequate meals a day, taking into consideration the
Kasambahay's religious beliefs and cultural practices;
(2) Humane sleeping condition that respects the person's privacy for live-in
arrangement; and
(3) Appropriate rest and medical assistance in the form of first-aid
medicines, in case of illnesses and injuries sustained during service without
loss of benefits.
m. Opportunities for education and training. - The Kasambahay
shall be afforded the opportunity to finish basic education, which shall
consist of elementary and secondary education. He/she may be allowed
access to alternative learning
systems and, as far as practicable, higher education or technical vocational
education and training.
n. Membership in labor organization. - The Kasambahay shall have
the right to join a labor organization of his/her own choosing for
purposes of mutual aid and collective negotiation.
r. Health and safety. - The employer shall safeguard the safety and
health of the Kasambahay in accordance with the standards which the

DOLE shall develop through the Bureau of Working Conditions (BWC) and
the Occupational Safety and
Health Center (OSHC) within six (6) months from the promulgation of this
IRR. The said standards shall take into account the peculiar nature of
domestic work.
s. Prohibition on debt bondage. - It shall be unlawful for the employer
or any person acting on his/her behalf to place the Kasambahay under debt
bondage. “Debt bondage” refers to the rendering of service by the
Kasambahay as security or payment for a debt where the length and nature
of service is not clearly defined or when the value of the service is not
reasonably applied in the payment of the debt.
t. Assignment to non-household work. - The employer shall not
assign the Kasambahay to work, whether in full or part-time, in a
commercial, industrial or agricultural enterprise at a wage rate lower than
that provided for agricultural or nonagricultural workers.
If so assigned, the Kasambahay will no longer be treated as such
but as a regular employee of the establishment.
• What are the rules on termination of Kasambahay?

a. Pre-termination of employment. – The following rules shall be
observed:
(1) In case the duration of employment is specified in the contract, the
Kasambahay and the employer may mutually agree upon notice to
terminate the contract of employment before the expiration of its term.
(2) In case the duration is not determined by stipulation or by nature of
service, the employer or the Kasambahay may give notice to end the
employment relationship five (5) days before the intended termination of
employment.
b. Termination of employment initiated by the Kasambahay. -
The Kasambahay may terminate the employment relationship at any time
before the expiration of the contract for any of the following causes:
(1) Verbal or emotional abuse of the Kasambahay by the employer or any
member of the household;
(2) Inhuman treatment including physical abuse of the Kasambahay by the
employer or any member of the household;
(3) Commission of a crime or offense against the Kasambahay by the
employer or any member of the household;

(4) Violation by the employer of the terms and conditions of the
employment contract and other standards set forth in the law;
(5) Any disease prejudicial to the health of the Kasambahay, the employer,
or members of the household; and
(6) Other causes analogous to the foregoing.
If the Kasambahay leaves without cause, any unpaid salary due, not
exceeding the equivalent of 15 days work, shall be forfeited. In addition, the
employer may recover from the Kasambahay deployment expenses, if any,
if the services have been terminated within six (6) months from
employment.
c. Termination of employment initiated by the employer. - An
employer may terminate the employment of the Kasambahay at any time
before the expiration of the contract for any of the following causes:
(1) Misconduct or willful disobedience by the Kasambahay of the lawful
order of the employer in connection with the former's work;
(2) Gross or habitual neglect or inefficiency by the Kasambahay in the
performance of duties;
(3) Fraud or willful breach of the trust reposed by the employer on the
Kasambahay;
(4) Commission of a crime or offense by the Kasambahay against the
person of the employer or any immediate member of the employer's family;
(5) Violation by the Kasambahay of the terms and conditions of the
employment contract and other standards set forth under the law;
(6) Any disease prejudicial to the health of the Kasambahay, the employer,
or members of the household; and
(7) Other causes analogous to the foregoing.
If the employer dismissed the Kasambahay for reasons other than the
above, he/she shall pay the Kasambahay the earned compensation plus
indemnity in the amount equivalent to fifteen (15) days work.
d. Invalid ground for termination. - Pregnancy and marriage of the
Kasambahay are not valid grounds for termination of employment.
e. Employment Certification. - Upon the termination of employment,
the employer shall issue the Kasambahay, within five (5) days from request,
a certificate of employment indicating the nature, duration of the service
and work description.

M. EMPLOYMENT OF HOMEWORKERS
• What are important terms that should be noted in

employment of homeworkers?
a. “Industrial homeworker.” – It refers to a worker who is engaged in
industrial homework.
b. “Industrial homework.” – It refers to a system of production under
which work for an employer or contractor is carried out by a homeworker at
his/her home. Materials may or may not be furnished by the employer or
contractor. It differs from regular factory production principally in that, it
is a decentralized form of production where there is ordinarily very little
supervision or regulation of methods of work.
c. “Home.” - It means any nook, house, apartment or other premises used
regularly, in whole or in part, as a dwelling place, except those situated
within the premises or compound of an employer,
contractor/subcontractor and the work performed therein is under the
active or personal supervision by or for the latter.
d. “Field personnel.” – It refers to a non-agricultural employee who
regularly performs his duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.
e. “Employer.” – It refers to any natural or artificial person who, for his
own account or benefit, or on behalf of anyperson residing outside the
Philippines, directly or indirectly, or through any employee, agent,
contractor, subcontractor or any other person:
1. delivers or causes to be delivered any goods, articles or materials to be
processed or fabricated in or about a home and thereafter to be returned or
to be disposed of or distributed in accordance with his direction; or
2. sells any goods, articles or materials for the purpose of having such goods
or articles processed in or about a home and then repurchases them himself
or through another after such processing.
f. “Contractor” or “subcontractor.” - It refers to any person who, for
the account or benefit of an employer, delivers or causes to be delivered to a
homeworker, goods or articles to be processed in or about his home and
thereafter to be returned, disposed of or distributed in accordance with the
direction of the employer.
g. “Processing.” - It refers to manufacturing, fabricating, finishing,

repairing, altering, packing, wrapping or handling in any way connected
with the production or preparation of an article or material.
How is homework paid?

Immediately upon receipt of the finished goods or articles, the employer is
required to pay the homeworker or the contractor or subcontractor, as the
case may be, for the work performed less the corresponding homeworker’s
share of SSS, PhilHealth and ECC premium contributions which should be
remitted by the contractor or subcontractor or employer to the SSS
with the employer’s share. However, where payment is made to a
contractor or subcontractor, the homeworker should likewise be paid
immediately after the goods or articles have been collected from the
workers.
What are prohibited homeworks?

No homework shall be performed on the following:
1. Explosives, fireworks and articles of like character;
2. Drugs and poisons; and
3. Other articles, the processing of which requires exposure to toxic
substances.
N. APPRENTICES AND LEARNERS

What are the distinctions between learnership and
apprenticeship?
The following are the distinctions:
1. Practical training. Both learnership and apprenticeship involve
practical training on-the-job.
2. Training agreement. Learnership is governed by a learnership
agreement; while apprenticeship is governed by an apprenticeship
agreement.
2. Occupation. Learnership involves learnable occupations consisting of
semi-skilled and other industrial occupations which are non-
apprenticeable; while apprenticeship concerns apprenticeable occupations
or any trade, form of employment or occupation approved for
apprenticeship by the DOLE Secretary.
3. Theoretical instructions. Learnership may or may not be

supplemented by related theoretical instructions; while apprenticeship
should always be supplemented by related theoretical instructions.
4. Ratio of theoretical instructions and on-the-job training. For
both learnership and apprenticeship, the normal ratio is one hundred (100)
hours of theoretical instructions for every two thousand (2,000) hours of
practical or onthe-job training. Theoretical instruction time for occupations
requiring less than two thousand (2,000) hours for proficiency should be
computed on the basis of such ratio.
5. Competency-based system. Unlike in apprenticeship, it is required
in learnership that it be implemented based on the TESDA-approved
competency-based system.
6. Duration of training. Learnership involves practical training on the
job for a period not exceeding three (3) months; while apprenticeship
requires for proficiency, more than three (3) months but not over
six (6) months
of practical training on the job.
7. Qualifications. The law does not expressly mention any qualifications
for learners; while the following qualifications are required to be met by
apprentices under Article 59 of the Labor Code:
(a) Be at least fourteen (14) years of age;
(b) Possess vocational aptitude and capacity for appropriate tests; and
(c) Possess the ability to comprehend and follow oral and written
instructions.
8. Circumstances justifying hiring of trainees. Unlike in
apprenticeship, in learnership, the law, Article 74 of the Labor Code,
expressly prescribes the pre-requisites before learners may be validly
employed, to wit:
(a) When no experienced workers are available;
(b) The employment of learners is necessary to prevent curtailment of
employment opportunities; and
(c) The employment does not create unfair competition in terms of labor
costs or impair or lower working standards.
9. Limitation on the number of trainees. In learnership, a
participating enterprise is allowed to take in learners only up to a maximum
of twenty percent (20%) of its total regular workforce. No similar cap is
imposed in the case of apprenticeship.
10. Option to employ. In learnership, the enterprise is obliged to hire

the learner after the lapse of the learnership period; while in
apprenticeship, the enterprise is given only an “option” to hire the
apprentice as an employee.
11. Wage rate. The wage rate of a learner or an apprentice is set at
seventy-five percent (75%) of the statutory minimum wage.
O. PERSONS WITH DISABILITY

(R.A. No. 7277, as Amended by R.A. No. 9442)
• Who are persons with disability (PWDs)?

“Persons with Disability” are those suffering from restriction or
different abilities, as a result of a mental, physical or sensory impairment,
to perform an activity in the manner or within the range considered normal
for a human being.
• What is impairment?
“Impairment” refers to any loss, diminution or aberration of
psychological, physiological, or anatomical structure or function.
• What is disability?
“Disability” means (1) a physical or mental impairment that substantially
limits one or more psychological, physiological or anatomical functions of
an individual or activities of such individual; (2) a record of such an
impairment; or (3) being regarded as having such an impairment.
• What is handicap?
“Handicap” refers to a disadvantage for a given individual, resulting from
an impairment or a disability that limits or prevents the function or activity
that is considered normal given the age and sex of the individual.
b. RIGHTS OF PERSONS WITH DISABILITY

• What are the rights of PWDs?
Under the law, PWDs are entitled to equal opportunity for employment.
Consequently, no PWD shall be denied access to opportunities for suitable
employment. A qualified employee with disability shall be subject

to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or
allowances as a qualified able-bodied person.
• What is the wage rate of PWDs?
The wage rate of PWDs is 100% of the applicable minimum wage.
• What is the wage rate of PWD if hired as apprentice or
learner?
A PWD hired as an apprentice or learner shall be paid not less than
seventy-five percent (75%) of the applicable minimum wage.
c. PROHIBITION ON DISCRIMINATION AGAINST PERSONS

WITH DISABILITY
• What is the rule on discrimination against employment of
PWDs?
No entity, whether public or private, shall discriminate against a qualified
PWD by reason of disability in regard to job application procedures, the
hiring, promotion, or discharge of employees, employee compensation, job
training, and other terms, conditions and privileges of employment. The
following constitute acts of discrimination:
(a) Limiting, segregating or classifying a job applicant with disability in
such a manner that adversely affects his work opportunities;
(b) Using qualification standards, employment tests or other selection
criteria that screen out or tend to screen out a PWD unless such standards,
tests or other selection criteria are shown to be job-related for the position
in question and are consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration that:
(1) have the effect of discrimination on the basis of disability; or
(2) perpetuate the discrimination of others who are subject to common
administrative control.
(d) Providing less compensation, such as salary, wage or other forms of
remuneration and fringe benefits, to a qualified employee with disability,
by reason of his disability, than the amount to which a non-disabled person
performing the same work is entitled;
(e) Favoring a non-disabled employee over a qualified employee with
disability with respect to promotion, training opportunities, study and
scholarship grants, solely on account of the latter’s disability;
(f) Re-assigning or transferring an employee with a disability to a job or

position he cannot perform by reason of his disability;
(g) Dismissing or terminating the services of an employee with disability by
reason of his disability unless the employer can prove that he impairs the
satisfactory performance of the work involved to the prejudice of the
business entity; provided, however, that the employer first sought to
provide reasonable accommodations for persons with disability;
(h) Failing to select or administer in the most effective manner employment
tests which accurately reflect the skills, aptitude or other factor of the
applicant or employee with disability that such tests purports to measure,
rather than the impaired sensory, manual or speaking skills of such
applicant or employee, if any; and
(i) Excluding PWD from membership in labor unions or similar
organizations.
------------oOo------------
TOPIC NO. 4
TERMINATION OF EMPLOYMENT
A. EMPLOYER-EMPLOYEE RELATIONSHIP
1. Four-Fold Test
What is the 4-fold test of existence of employer-employee
relationship?
1. Selection and engagement of the employee;
2. Payment of wages or salaries;
3. Exercise of the power of dismissal; or
4. Exercise of the power to control the employee’s conduct.
These tests, however, are not fool-proof as they admit of exceptions.
The control test is the controlling test which means that the employer
controls or has reserved the right to control the employee not only as
to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished.
What is the 2-tiered test of employment relationship?

The two-tiered test enunciated in Francisco v. NLRC,1 is composed of:

(1) The putative employer’s power to control the employee with respect to the
means and methods by which the work is to be ccomplished[control test];
and
(2) The underlying economic realities of the activity or relationship [broader
economic reality test].2
Employment relationship under the control test is determined by asking
whether “the person for whom the services are performed reserves the right to
control not only the end to be achieved but also the manner and means to be
used in reaching such end.”3
The broader economic reality test calls for the determination of the nature
of the relationship based on the circumstances of the whole economic activity,
namely:
(1) The extent to which the services performed are an integral part of the
employer’s business;
(2) The extent of the worker’s investment in equipment and facilities;
(3) The nature and degree of control exercised by the employer;
(4) The worker’s 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.4
Under the economic reality test, the proper standard of economic

dependence is whether the worker is dependent on the alleged employer for his
continued employment in that line of business. 5 Following the broader economic
reality test, the Supreme Court found petitioner in Orozco v. The Fifth Division
of the Honorable Court of Appeals,6 who is a columnist in the Philippine Daily
Inquirer (PDI), not an employee of PDI but an independent contractor. Thus:
“Petitioner’s main occupation is not as a columnist for respondent but as a
women’s rights advocate working in various women’s organizations. Likewise,
she herself admits that she also contributes articles to other publications. Thus, it
cannot be said that petitioner was dependent on respondent PDI for her
continued employment in respondent’s line of business.
“The inevitable conclusion is that petitioner was not respondent PDI’s employee
but an independent contractor, engaged to do independent work.”

• Is it necessary to have a written contract of employment in
order to establish employer-employee relationship?
No. It may be an oral or written contract. A written contract is not
necessary for the creation and validity of the relationship.
The only exception is in the case of Kasambahay where it is

required that the contract of employment should be in writing.
1 G.R. No. 170087, Aug. 31, 2006.
2 Id.
3 Id.
4 Id.
5 Id.
6 G.R. No. 155207, April 29, 2005.
2. KINDS OF EMPLOYMENT
What are the general classifications of employment?

There are five (5) classifications of employment:
(a) Regular employees referring to those who have been “engaged to
perform activities which are usually necessary or desirable in the usual
business or trade of the employer”;
(b) Project employees referring to those “whose employment has been
fixed for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the
employee”;
(c) Seasonal employees referring to those who work or perform services
which are seasonal in nature, and the employment is for the duration of the
season;
(d) Casual employees referring to those who are not regular, project, or
seasonal employees;
(e) Fixed-term employees whose term is freely and voluntarily
determined by the employer and the employee.
a. PROBATIONARY EMPLOYMENT

How is probationary period, say, of 6 months computed?
The 6-month probationary period should be reckoned “from the date of
appointment up to the same calendar date of the 6th month
following.”
May probationary period be extended?
Yes, but only upon the mutual agreement by the employer and the
probationary employee.
What is the effect of allowing a probationary employee to
work beyond the probationary period?
He is considered a regular employee.
What is the effect if there is no written contract providing for

probationary employment?
If there is no written contract, the employee is considered a regular
employee from day one of his employment. And even if there is one, he is
deemed regular if there is no stipulation on probationary period.
What are the grounds to terminate probationary employment?

Under Article 281, a probationary employee may be terminated only on
three (3) grounds, to wit:
1. For a just cause; or
2. For authorized cause; or
3. When the probationary employee fails to qualify as a regular
employee in accordance with reasonable standards made known
by the employer to the employee at the start of the employment.
Is procedural due process required in termination of

probationary employment?
Yes, but only in the case of Numbers 1 and 2 above.
No, in the case of No. 3 above.
When should termination of probationary employment be

made?
Termination to be valid must be done prior to lapse of probationary
period. Termination a few days after lapse of probationary period cannot be

done without due process as he has already become a regular employee by
that time.
b. REGULAR EMPLOYMENT
How does one become a regular employee?
Under the Labor Code, regular employment may be attained in either of
three (3) ways, namely:
1. By nature of work. - The employment is deemed regular when the
employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer.
2. By period of service. - The employment is reckoned as regular when
the employee has rendered at least one (1) year of service, whether such
service is continuous or broken, with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
3. By probationary employment. - The employment is considered
regular when the employee is allowed to work after a probationary period.
Is the manner or method of paying wage material in

determining regularity of employment?
No. The manner and method of payment of wage or salary is immaterial to
the issue of whether the employee is regular or not.
c. PROJECT EMPLOYMENT
What is the litmus test of project employment?
The litmus test of project employment, as distinguished from regular
employment, is whether or not the project employees were assigned to
carry out a specific project or undertaking, the duration and scope
of which were specified at the time the employees were engaged
for that project.
A true project employee should be assigned to a project which begins and
ends at determined or determinable times and be informed thereof at the
time of hiring.
What are the indicators of project employment?

Either one or more of the following circumstances, among others, may be

considered as indicator/s that an employee is a project employee:
1. The duration of the specific/identified undertaking for which the
worker is engaged is reasonably determinable.
2. Such duration, as well as the specific work/service to be performed, are
defined in an employment agreement and is made clear to the employee at
the time of hiring.
3. The work/service performed by the employee is in connection with
the particular project or undertaking for which he is engaged.
4. The employee, while not employed and awaiting engagement, is
free to offer his services to any other employer.
5. A report of the termination of employment in the particular
project/undertaking is submitted to the DOLE Regional Office having
jurisdiction over the workplace, within thirty (30) days following the date of
his separation from work.
6. An undertaking in the employment contract by the employer to pay
completion bonus to the project employee as practiced by most
construction companies.
Is length of service material in determining validity of project

employment?
No. Length of service is not a controlling determinant of employment
tenure.
What are some principles on project employment?

1. Project employees should be informed of their status as such at inception
of the employment relationship.
2. There must be a written contract of project employment stating the
duration of the project employment as well as the particular work or service
to be performed. A written project employment contract is an indispensable
requirement.
3. Intervals in employment contracts indicate project employment.
4. Continuous, as opposed to intermittent, rehiring shows that employee is
regular.
5. “Project-to-project” basis of employment is valid.
On termination of project employment.
1. Project employees enjoy security of tenure only during the term of their

project employment.
2. Project employees have presumably become regular employees if they
are allowed to work beyond the completion of the project or any phase
thereof to which they were assigned or after the “day certain” which they
and their employer have mutually agreed for its completion. Having
become regular employees, they can no longer be terminated on the basis of
the completion of the project or any phase thereof to which they were
deployed.
d. SEASONAL EMPLOYMENT
Can a seasonal employee become a regular seasonal employee?
Yes, provided the following requisites are complied with:
1. The seasonal employee should perform work or services that are
seasonal in nature; and
2. They must have also been employed for more than one (1) season.
Can a regular seasonal worker file an illegal dismissal case in
the event he is not hired for the next season?
Yes. The reason is, being a regular seasonal employee, the employer should
re-hire him in the next season. During off-season, his employment is
deemed suspended and he is considered as being on leave of absence
without pay.
e. CASUAL EMPLOYMENT
What is the most important distinguishing feature of casual
employment?
The most important distinction is that the work or job for which he was
hired is merely incidental to the principal business of the employer and
such work or job is for a definite period made known to the employee at
the time of engagement.
When does a casual employee become regular?
Casual employee becomes regular after one year of service by operation of
law. The one (1) year period should be reckoned from the hiring date.
Repeated rehiring of a casual employee makes him a regular employee.
f. FIXED-TERM EMPLOYMENT
What are the requisites in order for fixed-term employment to

be valid?
The two (2) requisites or criteria for the validity of a fixed-term contract of
employment are as follows:
1. The fixed period of employment was knowingly and voluntarily
agreed upon by the 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.
Is fixed-term employment valid if the job is directly related to
the principal business of the employer?
Yes. Fixed-term employment is the only exception to the rule that one
becomes regular if he is made to perform activities directly related to the
principal business of the employer (Regularity by virtue of nature of
work)
When does a fixed-term employee become regular?
1. When he is allowed to work beyond the agreed fixed term.
2. When there are successive renewals of fixed-period contracts.
NOTE: The practice of hiring of employees on a uniformly fixed 5-month
basis and replacing them upon the expiration of their contracts with other
workers with the same employment status circumvents their right to
security of tenure.
3. JOB CONTRACTING
Is job contracting valid if the contractor-supplied employees
are engaged to perform not merely peripheral but core
jobs with the principal?
Yes, per the 2012 case of Digital Telecommunications Philippines,
Inc. v. Digitel Employees Union (DEU), where the Court recognized
the management prerogative to farm out any of its activities, regardless of
whether such activity is
peripheral or core in nature.
b. DEPARTMENT ORDER NO. 174 (Series of 2017)

c. DEPARTMENT CIRCULAR NO. 01-12
What is this issuance?
This was issued by the DOLE Secretary to clarify that Department Order
No. 18-A, Series of 2011, is not applicable to Business Processing
Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and
the Construction Industry because:
(1) BPOs and KPOs since these companies may hire employees in
accordance with applicable laws, and maintain these employees based on
business requirements, which may or may not be for different clients of the
BPOs at different periods
of the employees' employment.
(2) the Construction Industry because the licensing and the exercise of
regulatory powers over the construction industry are lodged with the
Philippine Contractors Accreditation Board (PCAB), which is under the
Construction Industry Authority of the Philippines (ClAP), and not with the
DOLE. Thus, the DOLE, through its regional offices, shall not require
contractors licensed by PCAB in the Construction Industry to register under
D.O. 18-A, Series of 2011. Moreover, findings of violation/s on labor
standards and occupational health and safety standards shall be
coordinated with PCAB for its appropriate action, including the possible
cancellation/suspension of the contractor’s license.
d. TRILATERAL RELATIONSHIP IN JOB CONTRACTING

What is meant by trilateral relationship?
As distinguished from employment contract which is “bilateral” in nature,
involving as it does only two (2) parties, namely: (1) the employer, and (2)
the employee, in legitimate job contracting, there are three (3) parties
involved, to wit:
1. The principal who decides to farm out a job, work or service to a
contractor;
2. The contractor who has the capacity to independently undertake the
performance of the job, work or service; and
3. The contractual workers engaged by the contractor to accomplish the
job, work or service.

e. EFFECTS OF LABOR-ONLY CONTRACTING LEGITIMATE JOB
CONTRACTING.
What are the requisites of legitimate job contracting?

(1) The contractor must be duly registered with the DOLE. If not
registered, the contractor is presumed a labor-only contractor.
(2) The contractor carries a distinct and independent business and
undertakes to perform the job, work or service on its own responsibility,
according to its own manner and method, and free from control
and direction of the principal in all matters connected with the
performance of the work except as to the results thereof;
(3) The contractor has substantial capital and/or investment in the
form of tools, equipment, machineries, work premises, and other materials
which are necessary in the conduct of the business; and
(4) The Service Agreement between principal and contractor should
ensure compliance with all the rights and benefits of workers under
Labor Laws such as labor and occupational safety and health standards,
free exercise of the right to self-organization, security of tenure, and social
and welfare benefits. Absence of any of the foregoing requisites makes it a
labor-only contracting arrangement.
What is the amount of substantial capital under the new Rules?

1. In the case of corporations, partnerships or cooperatives – paid-
up capital stocks/shares of at least P5 Million; or
2. In the case of single proprietorship - a net worth of at least P5
Million.
“Substantial capital” and “investment in tools, etc.” are two

separate requirements.
“Substantial capital” and “investment in tools, equipment, implements,
machineries and work premises” should be treated as two (2) distinct and
separate requirements in determining whether there is legitimate job
contracting arrangement.

May individuals engage in legitimate job contracting?
Yes. Legitimate job contracting may not only be engaged by corporation,
partnership or single proprietorship. Individuals may become legitimate
job contractors themselves for as long as they have SPECIAL SKILLS or
TALENTS.
Are individuals engaged as legitimate job contractors required

to fulfill the requisites of legitimate job contracting
as afore-described?
NO. They need not be registered as independent contractors with DOLE;
they need not have substantial capital. All that they are required is to have
their tools consisting of SPECIAL SKILLS or TALENTS.
What are examples of individuals as independent contractors?

1. Sonza v. ABS-CBN Broadcasting Corporation1 - TV and radio
talents and others with special talents and skills are not employees but
legitimate independent contractors.
2. Orozco v. The Fifth Division of the Honorable Court of
Appeals2 - A newspaper columnist is not an employee but an independent
contractor of the newspaper publishing the column.
3. Jose Mel Bernarte v. Philippine Basketball Association3 -
Basketball or soccer referee or umpire, an independent contractor.
4. Semblante and Pilar v. CA, Gallera de Mandaue, et al.4 - Cockpit
masiador and sentenciador are independent contractors.
5. Escasinas v. Shangri-la’s Mactan Island Resort5 - A doctor may be
engaged as an independent contractor.
Respondent hotel resort, pursuant to Article 157 of the Labor Code which
requires that an employer which employs more than 200 workers, should
“furnish” its employees with the services of a full-time registered nurse, a
part-time physician and dentist, and an emergency clinic, engaged the
services of respondent doctor who, in turn, hired petitioners as full-time
registered nurses. Petitioners contend that they are regular employees of
respondent hotel resort. The Supreme Court, in holding that respondent
doctor is an independent contractor and that petitioners are employees of
the doctor and not of respondent hotel resort, declared:
“Against the above-listed determinants, the Court holds that respondent

doctor is a legitimate independent contractor. That Shangri-la provides the
clinic premises and medical supplies for use of its employees and guests
does not necessarily prove that respondent doctor lacks substantial capital
and investment. Besides, the maintenance of a clinic and provision of
medical services to its employees is required under Art. 157, which are not
directly related to Shangri-la’s principal business - operation of hotels and
restaurants.
“As to payment of wages, respondent doctor is the one who underwrites the
following: salaries, SSS contributions and other benefits of the staff; group
life, group personal accident insurance and life/death insurance for the
staff with minimum benefit payable at 12 times the employee’s last drawn
salary, as well as value added taxes and withholding taxes, sourced from her
P60,000.00 monthly retainer fee and 70% share of the service charges
from Shangri-la’s guests who avail of the clinic services.
“With respect to the supervision and control of the nurses and clinic staff, it
is not disputed that a document, ‘Clinic Policies and Employee Manual’
claimed to have been prepared by respondent doctor exists, to which
petitioners gave their conformity and in which they acknowledged their co-
terminus employment status. It is thus presumed that said document, and
not the employee manual being followed by Shangri-la’s regular workers,
governs how they perform their respective tasks and responsibilities.
“Contrary to petitioners’ contention, the various office directives issued by
Shangri-la’s officers do not imply that it is Shangri-la’s management and
not respondent doctor who exercises control over them or that Shangri-la
has control over how the doctor and the nurses perform their work. The
letter addressed to respondent doctor dated February 7, 2003 from a
certain Tata L. Reyes giving instructions regarding the replenishment of
emergency kits is, at most, administrative in nature, related as it is to safety
matters; while the letter dated May 17, 2004 from Shangri-la’s Assistant
Financial Controller, Lotlot Dagat, forbidding the clinic from receiving cash
payments from the resort’s guests is a matter of financial policy in order to
ensure proper sharing of the proceeds, considering that Shangri-la and
respondent doctor share in the guests’ payments for medical services
rendered. In fine, as Shangri-la does not control how the work should be
performed by petitioners, it is not petitioners’ employer.”
1 G.R. No. 138051, June 10, 2004.
2 G.R. No. 155207, Aug. 13, 2008.

3 G.R. No. 192084, Sept. 14, 2011.
4 G.R. No. 196426, Aug. 15, 2011.
5 G.R. No. 178827, March 4, 2009.
LABOR-ONLY CONTRACTING.
When is there labor-only contracting?
(a) The contractor does not have substantial capital or investments in the
form of tools, equipment, machineries, work premises, among others, and
the employees recruited and placed are performing activities
which are usually necessary or desirable to the operation of the
company, or directly related to the main business of the
principal within a definite or predetermined period, regardless of
whether such job, work or service is to be performed or completed within or
outside the premises of the principal; OR
(b) The contractor does not exercise the right of control over the
performance of the work of the employee.
NOTE: Even if only one of the two (2) elements above is present, there is
labor-only contracting.
What are the effects of labor-only contracting?

1. The labor-only contractor will be treated as the agent or intermediary of
the principal. Since the act of an agent is the act of the principal,
representations made by the labor-only contractor to the employees will
bind the principal.
2. The principal will become the employer as if it directly employed the
workers supplied by the labor-only contractor to undertake the
subcontracted job or service. It will be responsible to them for all their
entitlements and benefits
under labor laws.
3. The principal and the labor-only contractor will be solidarily treated as
the direct employer.
4. The employees will become employees of the principal, subject to the
classifications of employees under Article 280 of the Labor Code.
What are the distinctions between legitimate job contracting

and labor-only contracting?

The chief distinctions between legitimate job contracting, on the one hand,
and the prohibited labor-only contracting, on the other, may be summed up
as follows:
1. In the former, no employer-employee relationship exists between the
contractual employees of the job contractor and the principal; while in the
latter, an employer-employee relationship is created by law between the
principal and the contractual employees supplied by the labor-only
contractor.
2. In the former, the principal is considered only an “indirect employer,” as
this term is understood under Article 107 of the Labor Code; while in the
latter, the principal is considered the “direct employer” of the contractual
employees in accordance with the last paragraph of Article 106 of the Labor
Code.
3. In the former, the joint and several obligation of the principal and the
legitimate job contractor is only for a limited purpose, that is, to ensure
that the employees are paid their wages. Other than this obligation of
paying the wages, the principal is not responsible for any claim made by the
contractual employees; while in the latter, the principal becomes jointly
and severally or solidarily liable with the labor-only contractor to the
latter’s employees in the same manner and extent that the principal is liable
to employees directly hired by him/her, as provided in Article 106 of the
Labor Code, as amended.
4. In the former, the legitimate job contractor undertakes to perform a
specific job for the principal; while in the latter, the labor-only contractor
merely provides, supplies, recruits and places the personnel to work for the
principal.
What are the prohibitions other than labor-only contracting?

Contracting out of jobs, works or services when not done in good
faith and not justified by the exigencies of the business such as
the following:
(1) Contracting out of jobs, works or services when the same results in the
termination or reduction of regular employees and reduction of work
hours or reduction or splitting of the bargaining unit.
(2) Contracting out of work with a "Cabo." "Cabo" refers to a person or
group of persons or to a labor group which, in the guise of a labor
organization, cooperative or any entity, supplies workers to an employer,

with or without any monetary or other consideration, whether in the
capacity of an agent of the employer or as an ostensible independent
contractor.
(3) Taking undue advantage of the economic situation or lack of bargaining
strength of the contractor's employees, or undermining their security of
tenure or basic rights, or circumventing the provisions of regular
employment, in any of the following instances:
(i) Requiring them to perform functions which are currently being
performed by the regular employees of the principal; and
(ii) Requiring them to sign, as a precondition to employment or continued
employment, an antedated resignation letter; a blank payroll; a waiver of
labor standards including minimum wages and social or welfare benefits;
or a quitclaim releasing the principal, contractor or from any liability as to
payment of future claims.
(4) Contracting out of a job, work or service through an in-house agency.
(5) Contracting out of a job, work or service that is necessary or desirable or
directly related to the business or operation of the principal by reason of a
strike or lockout whether actual or imminent.
(6) Contracting out of a job, work or service being performed by union
members when such will interfere with, restrain or coerce employees in the
exercise of their rights to self-organization as provided in Art. 248 (c) of the
(7) Repeated hiring of employees under an employment contract of short
duration or under a Service Agreement of short duration with the same or
different contractors, which circumvents the Labor Code provisions on
Security of Tenure.
(8) Requiring employees under a subcontracting arrangement to sign a
contract fixing the period of employment to a term shorter than the term of
the Service Agreement, unless the contract is divisible into phases for which
substantially different skills are required and this is made known to the
employee at the time of engagement.
(9) Refusal to provide a copy of the Service Agreement and the employment
contracts between the contractor and the employees deployed to work in
the bargaining unit of the principal's certified bargaining agent to the sole
and exclusive bargaining agent (SEBA).
(10) Engaging or maintaining by the principal of subcontracted employees
in excess of those provided for in the applicable Collective Bargaining

Agreement (CBA) or as set by the Industry Tripartite Council (ITC).
B. DISMISSAL FROM EMPLOYMENT
What is meant by two-fold due process requirement?

Dismissal of employees requires the observance of the two-fold due process
requisites, namely:
1. Substantive aspect which means that the dismissal must be for any of
the (1) just causes provided under Article 282 of the Labor Code or the
company rules and regulations promulgated by the employer; or (2)
authorized causes under Articles 283 and 284 thereof; and
2. Procedural aspect which means that the employee must be accorded
due process, the elements of which are notice and the opportunity to be
heard and to defend himself.
What is the distinction between JUST CAUSES and

AUTHORIZED CAUSES?
A dismissal based on a just cause means that the employee has
committed a wrongful act or omission; while a dismissal based on an
authorized cause means that there exists a ground which the law itself
allows or authorizes to be invoked to justify the termination of an employee
even if he has not committed any wrongful act or omission such as
installation of labor-saving devices, redundancy, retrenchment, closure or
cessation of business operations or disease.
1. JUST CAUSES
What are the just causes under the Labor Code?
The just causes in the Labor Code are found in the following provisions
thereof:
(1) Article 282 - (Termination by the Employer) which provides for the
following grounds:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by

his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representatives; and
(e) Other causes analogous to the foregoing.
(2) Article 264(a) - (Prohibited Activities) which provides for the
termination of the following: (a) Union officers who knowingly participate
in an illegal strike and therefore deemed to have lost their employment
status.
(b) Any employee, union officer or ordinary member who knowingly
participates in the commission of illegal acts during a strike (irrespective of
whether the strike is legal or illegal), is also deemed to have lost his
employment status.
(3) Article 263(g) - (National Interest Cases) where strikers who violate
orders, prohibitions and/or injunctions as are issued by the DOLE
Secretary or the NLRC, may be imposed immediate disciplinary action,
including dismissal or loss of employment status.
(4) Article 248(e) - (Union Security Clause) where violation of the union
security agreement in the CBA may result in termination of employment.
Under this clause, the bargaining union can demand from the employer the
dismissal of an employee who commits a breach of union security
arrangement, such as failure to join the union or to maintain his
membership in good standing therein. The same union can also demand
the dismissal of a member who commits an act of disloyalty against it, such
as when the member organizes a rival union.
What are just causes under jurisprudence?

In addition to the just causes mentioned in the Labor Code, just causes are
also found in prevailing jurisprudence. The following may be cited as just
causes in accordance with prevailing jurisprudence:
1. Violation of Company Rules and Regulations or Company Code of
Discipline.
2. Theft of property owned by a co-employee as distinguished from
company-owned property which is considered serious misconduct.
3. Incompetence, inefficiency or ineptitude.
4. Failure to attain work quota.

5. Failure to comply with weight standards of employer.
6. Attitude problem.
Is dismissal based on Company Code of Discipline or Company

Rules and Regulations illegal?
No.
In the 2013 case of Sampaguita Auto Transport Corporation v.
NLRC, the Supreme Court pronounced that the Court of Appeals erred in
ruling that the dismissal of private respondent, a bus driver of petitioner,
was illegal because the “grounds upon which petitioners based respondent’s
termination from employment, viz.: ‘hindi lahat ng schedule
nailalabas,’[‘]mababa ang revenue ng bus, laging kasama an[g] asawa sa
byahe’ and ‘maraming naririnig na kwento tungkol sa kanya, naguutos
ng conductor para kumita sa hindi magandang paraan[,]’ xxx are not
among those enumerated under Article 282 of the Labor Code as just
causes for termination of employment.” The irregularities or infractions
committed by private respondent in connection with his work as a bus
driver constitute serious misconduct or, at the very least, conduct
analogous to serious misconduct, under the above-cited Article 282 of the
Labor Code. The requirement in the company rules that: ‘3. to obey
traffic rules and regulations as well as the company policies. 4. to
ensure the safety of the riding public as well as the other vehicles
and motorist (sic)’ is so fundamental and so universal that any bus
driver is expected to satisfy the requirement whether or not he has been so
informed.
I. SERIOUS MISCONDUCT
1. REQUISITES.
For misconduct or improper behavior to be a just cause for dismissal, the
following requisites must concur:
1. It must be serious; and
2. It must relate to the performance of the employee’s duties; and
3. It must show that he has become unfit to continue working for the
employer.
All the above three (3) requisites must concur.

2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.
• Serious misconduct implies that it must be of such grave and aggravated
character and not merely trivial or unimportant.
• Simple or minor misconduct would not justify the termination of the
services of an employee.
• Possession or use of shabu or other drugs is a valid ground to terminate
employment.
• Immorality, as a general rule, is not a just ground to terminate
employment. The exception is when such immoral conduct is prejudicial or
detrimental to the interest of the employer.
• Immoral act committed beyond office hours is a valid ground to terminate
employment.
• Sexual intercourse inside company premises constitutes serious
misconduct.
• The act of a 30-year old lady teacher in falling in love with a 16-year old
student is not immoral.
• Fighting is a ground for termination but only the instigator or aggressor
and not the victim who was constrained to defend himself should be
dismissed.
• Challenging superiors to a fight is a just cause for termination.
• Assaulting another employee is a just cause for termination.
• Utterance of obscene, insulting or offensive words constitutes serious
misconduct.
• Gambling within company premises is a serious misconduct.
• Rendering service to business rival is a just cause to terminate
employment.
• Selling products of a competitor is a just cause for termination.
• Organizing a credit union by employees in a bank is a serious misconduct.
• Deceiving a customer for personal gain is a just cause for termination.
• Contracting work in competition with employer constitutes serious
misconduct.
• Intoxication which interferes with the employee’s work constitutes serious
misconduct.
• The act of a teacher in pressuring a colleague to change the failing grade of
a student is serious misconduct.
• Sexual harassment is a just ground to dismiss.

• Sleeping while on duty is a ground for termination.
• Dismissal is too harsh a penalty for eating while at work.
• Pilferage or theft of company-owned property is a just cause to terminate.
• Theft of funds or property not owned by employer is not a
ground to terminate.
• Act of falsification is a valid ground to terminate employment.
• Punching-in of time cards of other employees is a just cause for
termination.
II. INSUBORDINATION OR WILLFUL DISOBEDIENCE OF

LAWFUL ORDERS
1. REQUISITES.
One of the fundamental duties of an employee is to obey all reasonable
rules, orders and instructions of the employer. In order to validly invoke
this ground, the following requisites must be complied with, to wit:
1. The employee’s assailed conduct must have been willful or intentional,
the willfulness being characterized by a wrongful and perverse attitude; and
2. The order violated must be based on a reasonable and lawful company
rule, regulation or policy and made known to the employee and must
pertain to the duties for which he has been engaged to discharge.
2. SOME PRINCIPLES ON INSUBORDINATION.

Making false allegations in complaint does not constitute insubordination.
Failure to answer memo to explain constitutes willful disobedience.
Another notice is required in case of termination on the ground of failure
to answer memo to explain.
Refusal to undergo random drug testing constitutes both
serious misconduct and insubordination.
Refusal to render overtime to meet production deadline constitutes
insubordination.
 Refusal to comply with a lawful transfer constitutes insubordination.
III. GROSS AND HABITUAL NEGLECT OF DUTIES

1. REQUISITES.

The following are the requisites:
(1) There must be negligence which is gross and/or habitual in character;
and
(2) It must be work-related as would make him unfit to work for his
employer.
2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF
DUTIES.
Simple negligence is not sufficient to terminate employment.
The negligence must be gross in character which means absence of that
diligence that an ordinarily prudent man would use in his own affairs.
As a general rule, negligence must be both gross and habitual to be a
valid ground to dismiss.
Habituality may be disregarded if negligence is gross or the damage or loss
is substantial. “Habitual negligence” implies repeated failure to perform
one’s duties for a period of time, depending upon the circumstances.
Actual damage, loss or injury is not an essential requisite.
Gross negligence may result to loss of trust and confidence.
Absences, if authorized, cannot be cited as a ground to terminate
employment.
Tardiness or absenteeism, if not habitual, cannot be cited as a ground to
terminate employment.
Tardiness or absenteeism, if habitual, may be cited as a ground to
terminate employment.
Tardiness or absenteeism, if habitual, may be tantamount to serious
misconduct.
Absences or tardiness due to emergency, ailment or fortuitous event are
justified and may not be cited as just cause to terminate employment.
Unsatisfactory or poor performance, inefficiency and
incompetence are considered just causes for dismissal only if they
amount to gross and habitual neglect of duties.
IV. ABANDONMENT OF WORK

1. CONCEPT.
Abandonment is a form of neglect of duty; hence, a just cause for
termination of employment under Article 282 [b] of the Labor Code.

2. REQUISITES.
To constitute abandonment, two (2) elements must concur, namely:
1. The employee must have failed to report for work or must have been
absent without valid or justifiable reason; and
2. There must have been a clear intention on the part of the employee to
sever the employer-employee relationship manifested by some overt act.
3. SOME PRINCIPLES ON ABANDONMENT.

Mere absence is not enough to constitute abandonment.
Clear intention to sever employment relationship is necessary.
Due process in abandonment cases consists only of the service of 2
notices to the employee, viz.:
a. First notice directing the employee to explain why he should not be
declared as having abandoned his job; and
b. Second notice to inform him of the employer’s decision to dismiss him
on the ground of abandonment.
No hearing is required to validly dismiss an employee for abandonment.
Notices in abandonment cases must be sent to employee’s last known
address per record of the company. The employer need not look for
the employee’s current whereabouts.
Immediate filing of a complaint for illegal dismissal praying for
reinstatement negates abandonment.
Lapse of time between dismissal and filing of a case is not a material
indication of abandonment. Hence, lapse of 2 years and 5 months or 20
months or 9 months or 8 months before filing the complaint for illegal
dismissal is not an indication of
abandonment. Under the law, the employee has a 4-year prescriptive
period within which to institute his action for illegal dismissal.
Filing of a case to pre-empt investigation of the administrative case is
tantamount to abandonment.
When what is prayed for in the complaint is separation pay and

not reinstatement, the filing of complaint does not
negate abandonment.
It is abandonment when what is prayed for in the complaint is separation

pay and it was only in the position paper that reinstatement was prayed for.
Employment in another firm coinciding with the filing of complaint does
not indicate abandonment.
Offer of reinstatement by employer during proceedings before Labor
Arbiter and refusal by employee does not indicate abandonment but more
of a symptom of strained relations between the parties.
An employee may be absolved from the charge of abandonment of work
but adjudged guilty of AWOL. These two grounds are separate and distinct
from each other.
An employee who failed to report for work after the expiration of the duly
approved leave of absence is considered to have abandoned his job.
An employee who failed to comply with the order for his reinstatement is
deemed to have abandoned his work.
An employee who, after being transferred to a new assignment, did not
report for work anymore is deemed to have abandoned his job.
An employee who deliberately absented from work without leave or
permission from his employer for the purpose of looking for a job elsewhere
is deemed to have abandoned his work.
Imprisonment or detention by military does not constitute abandonment.
Absence to evade arrest is not a valid justification. To do so would be to
place an imprimatur on the employee’s attempt to derail the normal course
of the administration of justice.
V. FRAUD
1. REQUISITES.
The following are the requisites of this ground:
1. There must be an act, omission, or concealment;
2. The act, omission or concealment involves a breach of legal duty, trust, or
confidence justly reposed;
3. It must be committed against the employer or his/her representative;
and
4. It must be in connection with the employees' work.1
2. SOME PRINCIPLES ON FRAUD.

Failure to deposit collection constitutes fraud.
Lack of damage or losses is not necessary in fraud cases. The fact that the

employer did not suffer losses from the dishonesty of the dismissed
employee because of its timely discovery does not excuse the latter from
any culpability.
Lack of misappropriation or shortage is immaterial in case of
unauthorized encashment of personal checks by teller and cashier.
Restitution does not have absolutory effect.
VI. WILLFUL BREACH OF TRUST AND CONFIDENCE

1. REQUISITES.
For the doctrine of loss of trust and confidence to apply, the following
requisites must be satisfied:
(1) The employee holds a position of trust and confidence;
(2) There exists an act justifying the loss of trust and confidence, which
means that the act that betrays the employer’s trust must be real, i.e.,
founded on clearly established facts;
(3) The employee’s breach of the trust must be willful, i.e., it was done
intentionally, knowingly and purposely, without justifiable excuse; and
(4) The act must be in relation to his work which would render him unfit to
perform it.
2. GUIDELINES.
As a safeguard against employers who indiscriminately use “loss of trust
and confidence” to justify arbitrary dismissal of employees, the Supreme
Court, in addition to the above elements, came up with the following
guidelines for the application of the doctrine:
(1) The loss of confidence must not be simulated;
(2) It should not be used as a subterfuge for causes which are illegal,
improper or unjustified;
(3) It may not be arbitrarily asserted in the face of overwhelming evidence
to the contrary; and
(4) It must be genuine, not a mere afterthought, to justify earlier action
taken in bad faith.
The foregoing guidelines have been prescribed by the Supreme Court due to
the subjective nature of this ground which makes termination based on loss
of trust and confidence prone to abuse.

3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST
AND CONFIDENCE.
Employee’s position must be reposed with trust and confidence.
“Position of trust and confidence” is one where a person is entrusted with
confidence on delicate matters, or with the custody, handling, or care and
protection of the employer’s property.
Two (2) classes of positions of trust. The first class consists of
managerial employees or those who, by the nature of their position, are
entrusted with confidential and delicate matters and from whom greater
fidelity to duty is correspondingly
expected. They refer to those vested with the powers or prerogatives to lay
down and execute management policies and/or to hire, transfer suspend,
lay-off, recall, discharge, assign or discipline employees or to effectively
recommend such managerial actions. Their primary duty consists of the
management of the establishment in which they are employed or of a
department or a subdivision thereof.
The second class includes “cashiers, auditors, property custodians, or
those who, in the normal and routine exercise of their functions, regularly
handle significant amounts of [the employer’s] money or property.” They
are fiduciary rank-and-file employees who, though rank-and-file, are
routinely charged with the custody, handling or care and protection of the
employer's money or property, or entrusted with confidence on delicate
matters, and are thus classified as occupying positions of trust and
confidence.
1 Per latest DOLE Department Order No. 147-15, series of 2015, September
07, 2015.
Rules on termination of managerial and supervisory employees
different from those applicable to rank-and-file
employees. Thus, with respect to rank-and-file personnel, loss of trust
and confidence as a ground for valid dismissal requires proof of
involvement in the alleged events in question and that mere
uncorroborated assertions and accusations by the employer will not be
sufficient. But as regards a managerial employee, the mere existence of
a basis for believing that he has breached the trust of his employer would
suffice for his dismissal.

There must be “some basis” for the loss of trust and confidence which
means that there is reasonable ground to believe, if not to entertain the
moral conviction, that the concerned employee is responsible for the
misconduct and that the nature of his participation therein rendered him
absolutely unworthy of trust and confidence demanded by his position.
Dismissal due to feng shui mismatch is not a valid ground to lose trust and
confidence.
Command responsibility of managerial employees is a ground to
dismiss.
Confidential employee may be dismissed for loss of trust and confidence.
Grant of promotions and bonuses negates loss of trust and confidence.
Long years of service, absence of derogatory record and small amount
involved are deemed inconsequential insofar as loss of trust and confidence
is concerned.
Dropping of criminal charges or acquittal in a criminal case arising from
the same act does not affect the validity of dismissal based on loss of trust
and confidence.
Full restitution does not absolve employee of offense which resulted in the
loss of trust and confidence.
VII. COMMISSION OF CRIME OR OFFENSE

1. REQUISITES.
The following are the requisites for the valid invocation of this ground:
1. A crime or offense was committed by the employee;
2. It was committed against any of the following persons:
(a) His employer;
(b) Any immediate member of his employer’s family; or
(c) His employer’s duly authorized representative.
2. SOME PRINCIPLES ON THE COMMISSION OF CRIME OR
OFFENSE.
Because of its gravity, work-relation is not necessary. Neither is it
necessary to show that the commission of the criminal act would render the
employee unfit to perform his work for the employer.
VIII. OTHER ANALOGOUS CAUSES

1. ANALOGOUS CAUSES UNDER ESTABLISHED

JURISPRUDENCE.
The following may be cited as analogous causes:
1) Violation of company rules and regulations.
2) Theft of property owned by a co-employee, as distinguished from theft of
property owned by the employer.
3) Incompetence, inefficiency or ineptitude.
4) Failure to attain work quota.
5) Failure to comply with weight standards of employer.
6) “Attitude problem” is analogous to loss of trust and confidence.
IX. TERMINATION DUE TO ENFORCEMENT OF

UNION SECURITY CLAUSE
What is a union security clause?
The “union security clause” is a stipulation in a CBA which allows the
parties thereto to enter into an agreement requiring membership in the
exclusive collective bargaining agent which successfully negotiated said
CBA as a condition for continued employment with the exception of
employees who are already members of another union at the time of the
signing of the CBA.
What are the effects of application of this clause?

The following are the effects:
a. On members of the bargaining union/agent. They are not
allowed to resign or terminate their membership therefrom. Any member
of the bargaining agent who resigns or is expelled therefrom may be
recommended to the employer by the bargaining agent for termination of
his employment.
b. On non-members of the bargaining union/agent but members
of the minority union/s. They are not bound by the union security
clause if they are members of the minority or other unions at the time of the
signing of the CBA.
Hence, they cannot be compelled to resign from their union/s in order to
join the bargaining agent.
c. On non-members of the bargaining union/agent or of any
minority union/s. If not a member of the bargaining agent or any other
unions in the bargaining unit at the time of the signing of the CBA by

reason of the fact that he is
excepted from the coverage of the bargaining unit, the employee cannot be
compelled to join the bargaining agent.
d. On new employees hired after the signing of the CBA
containing the union security clause. They can be compelled to join
the bargaining agent. If they refuse, they can be recommended for
termination.
Is there an exception to this rule?

Yes. An employee cannot be compelled to join a union based on religious
ground. For example: members of the Iglesia ni Kristo (INK) cannot be
compelled to join a union; hence, they are not bound by the union security
doctrine.
What are the requisites in order to validly terminate

employees based on this clause?
(1) The union security clause is applicable;
(2) The bargaining union is requesting for the termination of employment
due to enforcement of the union security provision in the CBA; and
(3) There is sufficient evidence to support the union’s decision to expel the
employee from the union.
All the foregoing requisites should be complied with to justify the
termination of employment.
OTHER CAUSES PER DEPARTMENT ORDER NO. 147-15,

SERIES OF 2015 (07 SEPTEMBER 2015):1
An employee found positive for use of dangerous drugs shall be dealt
with administratively which shall be a ground for suspension or
termination.2
An employee shall not be terminated from work based on actual,
perceived or suspected HIV status.3
An employee shall not be terminated on basis of actual, perceived or
suspected Hepatitis B status.4
An employee who has or had Tuberculosis shall not be discriminated

against. He/she shall be entitled to work for as long as they are certified by
the company's accredited health provider as medically fit and shall be
restored to work as soon as his/her illness is controlled.5
An employee may also be terminated based on the grounds provided
for under the CBA.
2. AUTHORIZED CAUSES
What are the 2 classes of authorized cause termination?
Under the Labor Code, authorized causes are classified into two (2) classes,
namely:
(1) Business-related causes. – Referring to the grounds specifically
mentioned in Article 283 (298), to wit:
a. Installation of labor-saving device;
b. Redundancy;
c. Retrenchment;
d. Closure or cessation of business operations NOT due to serious business
losses or financial reverses; and
e. Closure or cessation of business operations due to serious business losses
and financial reverses.
(2) Health-related causes. – Referring to disease covered by Article
284 299 of the Labor Code.
What are the common requisites applicable to the authorized
causes under Article 283?
The following are the five (5) common requisites applicable to the ALL the
grounds under Article 283:
1. There is good faith in effecting the termination;
2. The termination is a matter of last resort, there being no other option
available to the employer after resorting to cost-cutting measures;
3. Two (2) separate written notices are served on both the affected
employees and the DOLE at least one (1) month prior to the intended
date of termination;
4. Separation pay is paid to the affected employees, to wit:
(a) If based on (1) installation of labor-saving device, or (2)
redundancy. - One (1) month pay or at least one (1) month pay for every
year of service, whichever is higher, a fraction of at least six (6) months
shall be considered as one (1) whole year.
(b) If based on (1) retrenchment, or (2) closure NOT due serious

business losses or financial reverses. – One (1) month pay or at least
one-half (½) month pay for every year of service, whichever is higher, a
fraction of at least six (6) months shall be considered as one (1) whole year.
(c) If closure is due to serious business losses or financial reverses, NO
separation pay is required to be paid.
(d) In case the CBA or company policy provides for a higher separation pay,
the same must be followed instead of the one provided in Article 283.
5. Fair and reasonable criteria in ascertaining what positions are to be
affected by the termination, such as, but not limited to: nature of work;
status of employment (whether casual, temporary or regular); experience;
efficiency; seniority; dependability; adaptability; flexibility; trainability; job
performance; discipline; and attitude towards work. Failure to follow fair
and reasonable criteria in selecting who to terminate would render the
termination invalid.
I. INSTALLATION OF LABOR-SAVING DEVICE
What are the additional requisites unique to this ground?

In addition to the five (5) common requisites above, the unique requisites
are as follows:
1. There must be introduction of machinery, equipment or other devices;
and
1 See Section 6 thereof. (Other Causes of Termination.) xxx
2 DOLE Department Order No. 53, Series of 2003 in relation to the IRR of
R.A. 9165.
3 DOLE Department Order No. 102, Series of 2010.
4 DOLE Department Advisory No.5, Series of 2010 Part III C1. par. c.
5 DOLE Department Order No. 75, Series of 2005.
2. The purpose for such introduction must be valid such as to save on cost,
enhance efficiency and other justifiable economic reasons.1
II. REDUNDANCY
What are the additional requisites unique to this ground?
The additional requisites are as follows:
1. There must be superfluous positions or services of employees;
2. The positions or services are in excess of what is reasonably demanded

by the actual requirements of the enterprise to operate in an economical
and efficient manner; and
3. There must be an adequate proof of redundancy such as but not limited
to the new staffing pattern, feasibility studies/proposal, on the viability of
the newly created positions, job description and the approval by the
management of the restructuring.2
III. RETRENCHMENT
What are the additional requisites unique to this ground?
Per latest issuance of the DOLE, 3 the following are the additional
requisites:
1. The retrenchment must be reasonably necessary and likely to prevent
business losses;
2. The losses, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably
imminent;
3. The expected or actual losses must be proved by sufficient and
convincing evidence;4 and
4. The retrenchment must be in good faith for the advancement of its
interest and not to defeat or circumvent the employees' right to security of
tenure.
This is the only statutory ground in Article 283 which requires this kind of
proof. The other grounds of closure or cessation of business operations may
be resorted to with or without losses.
What are some relevant principles on retrenchment?

The fact that there has been economic or other crisis besetting a particular
sector or the country as a whole is not sufficient justification for
retrenchment.
The phrase “retrenchment to prevent losses” means that
retrenchment must be undertaken by the employer before the losses
anticipated are actually sustained or realized. The employer need not keep
all his employees until after his losses
shall have materialized. Otherwise, the law could be vulnerable to attack as
undue taking of property for the benefit of another.
Best evidence of losses - financial statements audited by

independent auditors (not by internal auditors).
Best evidence of losses in a government-controlled corporation
- financial statements audited by COA.
Income tax returns, not valid since they are self-serving
documents.
Mere affidavit on alleged losses is not sufficient.
Retrenchment effected long after the business losses is not valid.
Profitable operations in the past do not affect the validity of retrenchment.
Retrenchment due to liquidity problem is not valid.
Sharp drop in income is not a ground to justify retrenchment. A mere
decline in gross income cannot in any manner be considered as serious
business losses. It should be substantial, sustained and real.
Litany of woes, in the absence of any solid evidence that they translated
into specific and substantial losses that would necessitate retrenchment,
will not suffice to justify retrenchment.
Rehiring of retrenched employees does not necessarily indicate illegality of
retrenchment.
In an enterprise which has several branches nationwide,
profitable operations in some of them will not affect the validity
of the retrenchment if overall, the financial condition thereof
reflects losses.
IV. CLOSURE OR CESSATION OF BUSINESS OPERATIONS
Can an employer close its business even if it is not suffering

from business losses?
Yes. In fact, closure involves two (2) situations:

(a) When NOT due to serious business losses or financial reverses; or
(b) When due to serious business losses or financial reverses
It is only in the first that payment of separation pay is required. No such

requirement is imposed in the second.
What are some relevant principles on closure?

Principle of closure under Article 283 applies in cases of both total and
partial closure or cessation of business operations. Management may
choose to close only a branch, a department, a plant, or a shop.
1 Per latest DOLE Department Order No. 147-15, series of 2015, September
07, 2015.
2 Id.
3 Id.
4 Balasabas v. NLRC, G.R. No. 85286, August 24,1992; Central Azucarerra
dela Carlota v. NLRC, G.R. No. 100092, December 29, 1995.
Closure of department or section and hiring of workers supplied by

independent contractor as replacements is valid.
Relocation of business may amount to cessation of operations.
Closure of business to merge or consolidate with another or to sell or
dispose all of its assets, held valid.
Audited financial statements necessary only in closure due to
losses.
V. DISEASE
1. THE DEOFERIO DOCTRINE ON THE REQUISITES.
Disease is one of the authorized causes to terminate employment. In the
2014 case of Deoferio v. Intel Technology Philippines, Inc.,1 the
Supreme Court divided into two the requisites that must be complied with
before termination of employment due to disease may be justified, namely:
(1) Substantive requisites; and
(2) Procedural requisites.
1.1. THE DEOFERIO RULE ON SUBSTANTIVE REQUISITES.
The following are the three (3) substantive requisites:
(1) An employee has been found to be suffering from any disease;
(2) His continued employment is prohibited by law or prejudicial to his
health, as well as to the health of his co-employees; and
(3) A competent public health authority issues a medical certificate 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.2
1.2. THE DEOFERIO RULE ON PROCEDURAL REQUISITES.

Deoferio, finally pronounced the rule that the employer must furnish the
employee two (2) written notices in terminations due to disease, namely:
(1) The notice to apprise the employee of the ground for which his dismissal
is sought; and
(2) The notice informing the employee of his dismissal, to be issued after
the employee has been given reasonable opportunity to answer and to be
heard on his defense.
Due process in termination due to disease is similar to due
process for just cause termination but different from authorized
cause termination under Article 298 [283].
From these perspectives, it was held in Deoferio that the CA erred in not
finding that the NLRC gravely abused its discretion when it ruled that the
twin-notice requirement does not apply to Article 284 (Disease) of the
Labor Code. This conclusion is totally devoid of any legal basis; its ruling is
wholly unsupported by law and jurisprudence. In other words, the NLRC’s
unprecedented, whimsical and arbitrary ruling, which the CA erroneously
affirmed, amounted to a jurisdictional error.
2. THE FUJI RULE – THE EMPLOYEE SHOULD BE GIVEN THE

CHANCE TO PRESENT COUNTERVAILING MEDICAL
CERTIFICATES.
Subsequent to Deoferio, another 2014 case, Fuji Television Network,
Inc. v. Arlene S. Espiritu,3 has further expounded on the due process
requirement in termination due to disease, this time by categorically
specifying the right of the ailing employee to present countervailing
evidence in the form of medical certificates to prove that his dismissal due
to disease is not proper and therefore illegal.
Respondent Arlene was petitioner’s news correspondent/producer “tasked
to report Philippine news to Fuji through its Manila Bureau field office.”
She was successively given yearly fixed-term employment contracts until
she was diagnosed with lung cancer sometime in January 2009 when the
Chief of News Agency of Fuji informed her “that the company will have a
problem renewing her contract” since it would be difficult for her to
perform her job. She, however, “insisted that she was still fit to work as
certified by her attending physician.” Subsequently, Arlene and Fuji signed
a non-renewal contract where it was stipulated that her contract would no
longer be renewed after its expiration on May 31, 2009 and that the parties

release each other from liabilities and responsibilities under the
employment contract. Arlene received her unpaid salaries and bonuses but
she affixed her signature on the non-renewal contract with the initials
“U.P.” for “under protest.” The day after Arlene signed the non-renewal
contract, she filed a complaint for illegal dismissal and attorney’s fees with
the Labor Arbiter, alleging that she was forced to sign the non-renewal
contract when Fuji came to know of her illness and that Fuji withheld her
salaries and other benefits for March and April 2009 when she refused to
sign. Arlene claimed that she was left with no other recourse but to sign the
non-renewal contract, and it was only upon signing that she was given her
salaries and bonuses, in addition to separation pay equivalent to 4 years.
The Supreme Court declared respondent Arlene as having been
constructively dismissed. It was likewise held here that respondent was not
afforded due process, thus:
“There is no evidence showing that Arlene was accorded due process. After
informing her employer of her lung cancer, she was not given the
chance to present medical certificates. Fuji immediately concluded
that Arlene could no longer perform her duties because of chemotherapy. It
did not ask her how her condition would affect her work. Neither did it
suggest for her to take a leave, even though she was entitled to sick leaves.
Worse, it did not present any certificate from a competent public health
authority. What Fuji did was to inform her that her contract would no
longer be renewed, and when she did not agree, her salary was withheld.
Thus, the Court of Appeals correctly upheld the finding of the National
Labor Relations Commission that for failure of Fuji to comply with due
process, Arlene was illegally dismissed.”
1 G.R. No. 202996, June 18, 2014.

2 Per Deoferio v. Intel Technology Philippines, Inc., supra.
3 Fuji Television Network, Inc. v. Arlene S. Espiritu, G.R. Nos. 204944-45,
Dec. 03, 2014.
What are some salient points to consider under this ground?

If the disease or ailment can be cured within the period of six (6) months
with proper medical treatment, the employer should not terminate the
employee but merely ask him to take a leave of absence. The employer

should reinstate him to his former position immediately upon the
restoration of his normal health.
In case the employee unreasonably refuses to submit to medical
examination or treatment upon being requested to do so, the employer may
terminate his services on the ground of insubordination or willful
disobedience of lawful order.
A medical certificate issued by a company’s own physician is not
an acceptable certificate for purposes of terminating an employment based
on Article 284, it having been issued not by a “competent public health
authority,” the person referred to in the law.
A “competent public health authority” refers to a government
doctor whose medical specialization pertains to the disease
being suffered by the employee. For instance, if the employee suffers
from tuberculosis, the medical certificate should be issued by a
government-employed pulmonologist who is competent to make an opinion
thereon. If the employee has cardiac symptoms, the competent physician in
this case would be a cardiologist.
The medical certificate should be procured by the employer and
not by the employee.
3. DUE PROCESS
(a) Twin-Notice Requirement
(b) Hearing; Meaning of Opportunity to be Heard
What is the latest rule on due process?

Due process means compliance with both STATUTORY due
process and CONTRACTUAL due process.
CONSTITUTIONAL due process is not applicable (Per Agabon
doctrine).
Statutory due process refers to the one prescribed in the Labor Code
(Article 277[b]); while contractual due process refers to the one
prescribed in the Company Rules and Regulations (Per Abbott
Laboratories doctrine).
Contractual due process was enunciated in the 2013 en banc ruling in
Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz.1 Thus,
it is now required that in addition to compliance with the statutory due

process, the employer should still comply with the due process procedure
prescribed in its own company rules. The employer’s failure to observe
its own company-prescribed due process will make it liable to pay an
indemnity in the form of nominal damages, the amount of which is
equivalent to the P30,000.00 awarded under the Agabon doctrine.
Are the twin-notice requirement and hearing required in all

cases of termination?
No. The two-notice requirement and hearing are required only in case of
just cause termination in the following order:
1. Service of first written notice;
2. Conduct of hearing; and
3. Service of second written notice.
What is the King of Kings Transport doctrine on just cause
procedural due process?
Based on this doctrine which was enunciated in King of Kings
Transport, Inc. v. Mamac,2 the following requirements should be
complied with in just cause termination:
(1) First written notice.
The first written notice to be served on the employee should:
a) Contain the specific causes or grounds for termination against him;
b) Contain a directive that the employee is given the opportunity to submit
his written explanation within the reasonable period of FIVE (5)
CALENDAR DAYS from receipt of the notice:
1) to enable him to prepare adequately for his defense;
2) to study the accusation against him;
3) to consult a union official or lawyer;
4) to gather data and evidence; and
5) to decide on the defenses he will raise against the complaint.
c) Contain a detailed narration of the facts and circumstances that will
serve as basis for the charge against the employee. This is required in order
to enable him to intelligently prepare his explanation and defenses. A
general description of the charge will not suffice.
d) Specifically mention which company rules, if any, are violated and/or
which among the grounds under Article 282 is being charged against the
employee.
(2) Hearing required,

After serving the first notice, the employer should schedule and conduct a
hearing or conference wherein the employee will be given the
opportunity to:
1) explain and clarify his defenses to the charge/s against him;
2) present evidence in support of his defenses; and
3) rebut the evidence presented against him by the management.
1 G.R. No. 192571, July 23, 2013.

2 G.R. No. 166208, June 29, 2007.
During the hearing or conference, the employee is given the chance to

defend himself personally, with the assistance of a representative or
counsel of his choice. Moreover, this conference or hearing could be used
by the parties as an opportunity to come to an amicable settlement.
(3) Second written notice.
After determining that termination of employment is justified, the
employer shall serve the employees a written notice of termination
indicating that:
1) all circumstances involving the charge/s against the employee have been
considered; and
2) grounds have been established to justify the severance of his
employment.
What is the Perez doctrine on hearing?

The Perez doctrine enunciates the new guiding principle on the hearing
requirement. It has interpreted the term “ample opportunity to be
heard” as follows:
(a) “Ample opportunity to be heard” means any meaningful
opportunity (verbal or written) given to the employee to answer the charges
against him and submit evidence in support of his defense, whether in a
hearing, conference or some other fair, just and reasonable way.
(b) A formal hearing or conference is no longer mandatory. It
becomes mandatory only under any of the following circumstances:
(1) When requested by the employee in writing; or
(2) When substantial evidentiary disputes exist; or
(3) When a company rule or practice requires it; or

(4) When similar circumstances justify it.
(c) the “ample opportunity to be heard” standard in the Labor Code
prevails over the “hearing or conference” requirement in its
Implementing Rules and Regulations. This is how the Supreme Court
resolved the conflict in the following provisions of the Labor Code and its
implementing rules:
The Perez doctrine is now the prevailing rule as shown by a catena of cases
which cited it after its promulgation.
Are the twin-notice requirement and hearing applicable to

authorized cause termination?
No. Due process in authorized cause termination is deemed complied with
upon the separate and simultaneous service of a written notice of the
intended termination to both:
(1) the employee to be terminated; and
(2) the appropriate DOLE Regional Office, at least one (1) month before
the intended date of the termination specifying the ground/s therefor and
the undertaking to pay the separation pay required under Article 283 of the
Labor Code.
For obvious reason, hearing is not required.
Are the twin-notice requirement and hearing applicable to an

abandonment case which is a just cause to terminate
employment?
No. Although considered as a just cause to terminate employment, the due
process requirement is different. No hearing is required (since the
employee has already abandoned his job) but the following notices should
be complied with:
1) First notice asking the employee to explain why he should not be
declared as having abandoned his job; and
2) Second notice informing him of the employer’s decision to dismiss him
on the ground of abandonment.
What are some notable principles on the hearing requirement?

If employee does not answer, hearing should still proceed.
Outright termination violates due process.
Investigation still required even if incident was witnessed by many.
Meeting, dialogue, consultation or interview is not the hearing required by
law. It may not be a substitute for the actual holding of a hearing.
Prior consultation with union is not part of the due process requirement.
Cross-examination or confrontation of witnesses is not necessary in
company investigations.
Co-conspirator’s confession is not sufficient to merit dismissal.
What are the instances where hearing is not required?

Hearing is not required in the following cases:
1. Termination of project, seasonal, casual or fixed-term
employment.
2. Termination of probationary employment on the ground of
failure of the probationary employee to qualify as a regular
employee in accordance with reasonable standards made known
to him at the start of the employment.
3. Termination due to abandonment of work.
4. Termination due to authorized causes under Article 283 (installation
of labor-saving device, redundancy, retrenchment or closure of business or
cessation of operations). In such cases, there are no allegations which the
employees should refute and defend themselves from.
5. Termination due to disease under Article 284.
6. Termination by the employee (resignation) under Article 285.
7. Termination after 6 months of bona-fide suspension of operation under
Article 286. For purposes of satisfying due process, what is required is
simply that the notices provided under Article 283 be served to both the
affected employees and the DOLE at least one (1) month before the
termination becomes effective.
8. Termination due to retirement under Article 287.
9. Termination due to closure or stoppage of work by government
authorities when non-compliance with the law or implementing rules and
regulations poses grave and imminent danger to the health and safety of
workers in the workplace.
10. Termination of employee who has admitted his guilt for the offense
charged.

What are the seven (7) standard situations in termination
cases?
The rules on termination of employment in the Labor Code and pertinent
jurisprudence are applicable to seven (7) different situations, namely:
1. The dismissal was for a just cause under Article 282, for an authorized
cause under Article 283, or for health reasons under Article 284, and due
process was observed – This termination is LEGAL.
2. The dismissal was without a just or authorized cause but due process was
observed – This termination is ILLEGAL.
3. The dismissal was without a just or authorized cause and due process
was not observed – This termination is ILLEGAL.
4. The dismissal was for a just or authorized cause but due process was not
observed – This termination is LEGAL.
5. The dismissal was for a non-existent cause – This termination is
ILLEGAL.
6. The dismissal was not supported by any evidence of termination – This
termination is NEITHER LEGAL NOR ILLEGAL as there is no
dismissal to speak of. Reinstatement is ordered not as a relief for illegal
dismissal but on equitable ground.
7. The dismissal was brought about by the implementation of a law – This
termination is LEGAL.
C. RELIEFS FOR ILLEGAL DISMISSAL

1. RELIEFS UNDER ARTICLE 279 OF THE LABOR CODE.
Under this article, an illegally dismissed employee is entitled to the
following reliefs:
(1) Reinstatement without loss of seniority rights and other privileges;
(2) Full backwages, inclusive of regular allowances; and
(3) Other benefits or their monetary equivalent.
2. OTHER RELIEFS NOT FOUND IN ARTICLE 279 BUT

AWARDED IN ILLEGAL DISMISSAL CASES PER
JURISPRUDENCE.
The following reliefs that are awarded in illegal dismissal cases are missing
in Article 279:

(1) Award of separation pay in lieu of reinstatement.
(2) Award of penalty in the form of nominal damages in case of
termination due to just or authorized cause but without observance of
procedural due process.
(3) Reliefs to illegally dismissed employee whose employment is for a fixed
period. The proper relief is only the payment of the employee’s salaries
corresponding to the unexpired portion of the employment contract.
(4) Award of damages and attorney’s fees.
(5) Award of financial assistance in cases where the employee’s
dismissal is declared legal but because of long years of service, and other
considerations, financial assistance is awarded.
(6) Imposition of legal interest on separation pay, backwages and
other monetary awards.
1. REINSTATEMENT
a. REINSTATEMENT PENDING APPEAL

Is reinstatement pending appeal solely applicable to

reinstatement ordered by the Labor Arbiter?
Yes. Reinstatement is self-executory or immediately executory only if it is
ordered by the Labor Arbiter. This means that the employee ordered
reinstated need not file any motion for the issuance of writ of execution to
enforce reinstatement.
The employer, in fact, is required to manifest within 10 days from his
receipt of the order of reinstatement which of the two (2) options he is
taking:
(1) To reinstate the employee to his former position or to a substantially
equivalent position; or
(2) To reinstate him in the payroll, which means the employee need not
report for work but only for the purpose ofgetting his wage.
There is no way the employer can disregard the reinstatement order.
Posting of a bond does not stay the execution of immediate reinstatement.
In contrast, if ordered by the NLRC, on appeal, or the Court of Appeals,
under a Rule 65 certiorari petition, or even by the Supreme Court,

reinstatement is not immediately executory. This means that the employee
reinstated should still file a motion for issuance of writ of execution to
enforce the reinstatement.
Are there instances where writ of execution of Labor Arbiter’s
reinstatement order is still required?
Yes, under the 2011 NLRC Rules of Procedure, there are two (2) instances
when a writ of execution should still be issued immediately by the Labor
Arbiter to implement his order of reinstatement, even pending appeal, viz.:
(1) When the employer disobeys the Rules-prescribed directive to submit a
report of compliance within ten (10) calendar days from receipt of the
decision; or
(2) When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy
the reinstatement wages as they accrue until actual reinstatement or
reversal of the order of reinstatement.
The employee need not file a motion for the issuance of the writ of
execution since the Labor Arbiter shall thereafter motu proprio issue the
writ. Employer may be cited for contempt for his refusal to comply with the
order of reinstatement. Employer is liable to pay the salaries for the period
that the employee was ordered reinstated pending appeal even if his
dismissal is later finally found to be legal on appeal.
What are some relevant principles on reinstatement pending

appeal?
The Labor Arbiter cannot exercise option of employer by choosing payroll
reinstatement pending appeal.
If the former position is already filled up, the employee ordered reinstated
under Article 223 should be admitted back to work in a substantially
equivalent position.
Reinstatement to a position lower in rank is not proper.
Reinstatement cannot be refused on the basis of the employment
elsewhere of the employee ordered reinstated.
The failure of the illegally dismissed employee who was ordered reinstated
to report back to work does not give the employer the right to remove him,
especially when there is a reasonable explanation for his failure.
No reinstatement pending appeal should be made when antipathy and
antagonism exist.

If reinstatement is not stated in the Labor Arbiter’s decision (neither in the
dispositive portion nor in the text thereof), reinstatement is not warranted.
b. SEPARATION PAY IN LIEU OF REINSTATEMENT

Is separation pay applicable only to reinstatement as an
alternative remedy?
Yes. Separation pay, as a substitute remedy, is only proper for
reinstatement but not for backwages.
This remedy is not found in the Labor Code but is granted in case
reinstatement is no longer possible or feasible, such as when any of the
following circumstances exists:
(1) Where the continued relationship between the employer and the
employee is no longer viable due to the strained relations and antagonism
between them (Doctrine of Strained Relations).
(2) When reinstatement proves impossible, impracticable, not feasible or
unwarranted for varied reasons and thus hardly in the best interest of the
parties such as:
(a) Where the employee has already been replaced permanently as when his
position has already been taken over by a regular employee and there is no
substantially equivalent position to which he may be reinstated.
(b) Where the dismissed employee’s position is no longer available at the
time of reinstatement for reasons not attributable to the fault of the
employer.
(c) When there has been long lapse or passage of time that the employee
was out of employer’s employ from the date of the dismissal to the final
resolution of the case or because of the realities of the situation.
(d) By reason of the injury suffered by the employee.
(e) The employee has already reached retirement age under a Retirement
Plan.
(f) When the illegally dismissed employees are over-age or beyond the
compulsory retirement age and their reinstatement would unjustly
prejudice their employer.
(3) Where the employee decides not to be reinstated as when he does not
pray for reinstatement in his complaint or position paper but asked for
separation pay instead.
(4) When reinstatement is rendered moot and academic due to supervening
events, such as:

(a) Death of the illegally dismissed employee.
(b) Declaration of insolvency of the employer by the court.
(c) Fire which gutted the employer’s establishment and resulted in its total
destruction.
(d) In case the establishment where the employee is to be reinstated has
closed or ceased operations.
(5) To prevent further delay in the execution of the decision to the prejudice
of private respondent.
(6) Other circumstances such as (a) when reinstatement is inimical to the
employer’s interest; (b) reinstatement does not serve the best interests of
the parties involved; (c) the employer is prejudiced by the workers’
continued employment; or (d) that it will not serve any prudent purpose as
when supervening facts transpired which made
execution unjust or inequitable.
What is the amount of separation pay in lieu of reinstatement?

Per prevailing jurisprudence, the following are the components of
separation pay in lieu of reinstatement>
(1) The amount equivalent to at least one (1) month salary or to one (1)
month salary for every year of service, whichever is higher, a fraction of at
least six (6) months being considered as one (1) whole year.
(2) Allowances that the employee has been receiving on a regular basis.
What is the period covered?
From start of employment up to the date of finality of decision except when
the employer has ceased its operation earlier, in which case, the same
should be computed up to the date of closure.
What is the salary rate to be used in computing it?
The salary rate prevailing at the end of the period of putative service
should be the basis for computation which refers to the period of
imputed service for which the employee is entitled to backwages.
What are some important principles on separation pay in lieu
of reinstatement?
1. Award of separation pay and backwages are not inconsistent with each
other. Hence, both may be awarded to an illegally dismissed employee. The
payment of separation pay is in addition to payment of backwages.
2. Reinstatement cannot be granted when what is prayed for by employee is
separation pay in lieu thereof.

BACKWAGES
What is the Bustamante doctrine?

In 1996, the Supreme Court changed the rule on the reckoning of
backwages. It announced a new doctrine in the case of Bustamante v.
NLRC,1 which is now known as the Bustamante doctrine. Under this
rule, the term “full backwages” should
mean exactly that, i.e., without deducting from backwages the earnings
derived elsewhere by the concerned employee during the period of his
illegal dismissal.
What are the components of backwages?
The components of backwages are as follows:
1. Salaries or wages computed on the basis of the wage rate level at the
time of the illegal dismissal and not in accordance with the latest,
current wage level of the employee’s position.
2. Allowances and other benefits regularly granted to and received by
the employee should be made part of backwages.
What are some principles on backwages?
Salary increases during period of unemployment are not
included as component in the computation of backwages.
Dismissed employee’s ability to earn is irrelevant in the award of
backwages.
In case reinstatement is ordered, full backwages should be reckoned
from the time the compensation was withheld (which, as a rule, is from the
time of illegal dismissal) up to the time of reinstatement, whether actual or
in the payroll.
If separation pay is ordered in lieu of reinstatement, full
backwages should be computed from the time of illegal dismissal until the
finality of the decision. The justification is that along with the finality of
the Supreme Court’s decision, the issue on the illegality of the dismissal is
finally laid to rest.
 If the illegally dismissed employee has reached the optional
retirement age of 60 years, his backwages should only cover the time
when he was illegally dismissed up to the time when he reached 60 years.
Under Article 287, 60 years is the optional retirement age.
 If the employee has reached 65 years of age or beyond, his full

backwages should be computed only up to said age. The contention of the
employer that backwages should be reckoned only up to age 60 cannot be
sustained.
If employer has already ceased operations, full backwages should be
computed only up to the date of the closure. To allow the computation of
the backwages to be based on a period beyond that would be an injustice to
the employer.
Any amount received during payroll reinstatement is deductible
from backwages.
LIMITED BACKWAGES
When is the award of backwages limited?
(1) When the dismissal is deemed too harsh a penalty;
(2) When the employer acted in good faith; or
(3) Where there is no evidence that the employer dismissed the employee.
Thus, the backwages will not be granted in full but limited to 1 year, 2 years
or 5 years.
PREVENTIVE SUSPENSION
 When is preventive suspension proper to be imposed?
Preventive suspension may be legally imposed against an errant employee
only while he is undergoing an investigation for certain serious offenses.
Consequently, its purpose is to prevent him from causing harm or injury to
the company as well as to his fellow employees. It is justified only in
cases where the employee’s continued presence in the company
premises during the investigation poses a serious and imminent
threat to the life or property of the employer or of the employee’s
co-workers. Without this threat, preventive suspension is not
proper.
 What are some relevant principles in preventive suspension?
 Preventive suspension is not a penalty. Preventive suspension, by
itself, does not signify that the company has already adjudged the employee
guilty of the charges for which she was asked to answer and explain.
 Preventive suspension is neither equivalent nor tantamount to
dismissal.
 If the basis of the preventive suspension is the employee’s absences and

tardiness, the imposition of preventive suspension on him is not justified as
his presence in the company premises does not pose any such serious or
imminent threat to the life or property of the employer or of the employee’s
co-workers simply “by incurring repeated
absences and tardiness.”
 Preventive suspension does not mean that due process may be
disregarded.
 Preventive suspension should only be for a maximum period of thirty
(30) days. After the lapse of the 30-day period, the employer is required to
reinstate the worker to his former position or to a substantially equivalent
position.
1 G.R. No. 111651, Nov. 28, 1996, 265 SCRA 61.
During the 30-day preventive suspension, the worker is not entitled to his
wages and other benefits. However, if the employer decides, for a justifiable
reason, to extend the period of preventive suspension beyond said 30-day
period, he is obligated to pay the wages and other benefits due the worker
during said period of extension. In such a case, the worker is not bound to
reimburse the amount paid to him during the extension if the employer
decides to dismiss him after the completion of the investigation.
 Extension of period must be justified. During the 30-day period of
preventive suspension, the employer is expected to conduct and finish the
investigation of the employee’s administrative case. The period of thirty
(30) days may only be extended if the employer failed to complete the
hearing or investigation within said period due to justifiable grounds. No
extension thereof can be made based on whimsical, capricious or
unreasonable grounds.
 Preventive suspension lasting longer than 30 days, without the benefit
of valid extension, amounts to constructive dismissal.
 Indefinite preventive suspension amounts to constructive dismissal.
CONSTRUCTIVE DISMISSAL
 When is there constructive dismissal?
Constructive dismissal contemplates any of the following situations:
1) An involuntary resignation resorted to when continued employment

is rendered impossible, unreasonable or unlikely;
2) A demotion in rank and/or a diminution in pay; or
3) A clear discrimination, insensibility or disdain by an employer
which becomes unbearable to the employee that it could foreclose any
choice by him except to forego his continued employment.
 What is the test of constructive dismissal?
The test of constructive dismissal is whether a reasonable person in the
employee’s position would have felt compelled to give up his position under
the circumstances. It is an act amounting to dismissal but made to appear
as if it were not. In fact, the employee who is constructively dismissed may
be allowed to keep on coming to work. Constructive dismissal is, therefore,
a dismissal in disguise. The law recognizes and resolves this situation in
favor of the employees in order to protect their rights and interests from the
coercive acts of the employer.
 What are examples of constructive dismissal or forced

resignation?
 Denying to the workers entry to their work area and placing them on
shifts “not by weeks but almost by month” by reducing their workweek to
three days.
 Barring the employees from entering the premises whenever they would
report for work in the morning without any justifiable reason, and they
were made to wait for a certain employee who would arrive in the office at
around noon, after they had waited for a long time and had left.
 Sending to an employee a notice of indefinite suspension which is
tantamount to dismissal.
 Imposing indefinite preventive suspension without actually conducting
any investigation.
 Changing the employee’s status from regular to casual constitutes
constructive dismissal.
 Preventing the employee from reporting for work by ordering the guards
not to let her in. This is clear notice of dismissal.
------------oOo------------
TOPIC NO. 5

MANAGEMENT PREROGATIVES
 What are management prerogatives?
Management prerogatives are granted to the employer to regulate every
aspect of their business, generally without restraint in accordance with
their own discretion and judgment. This privilege is inherent in the
right of employers to control and manage their enterprise
effectively. Such aspects of employment include hiring, work
assignments, working methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations,
transfer of employees, lay-off of workers and the discipline, dismissal and
recall of workers.
 What are the limitations to the exercise of these

prerogatives?
1. Limitations imposed by:
a) law;
b) CBA;
c) employment contract;
d) employer policy;
e) employer practice; and
f) general principles of fair play and justice.
2. It is subject to police power.
3. Its exercise should be without abuse of discretion.
4. It should be done in good faith and with due regard to the rights of labor.
A. DISCIPLINE
 What are the components of the right to discipline?
The right or prerogative to discipline covers the following:
1) Right to discipline;
2) Right to dismiss;
3) Right to determine who to punish;
4) Right to promulgate rules and regulations;
5) Right to impose penalty; proportionality rule;
6) Right to choose which penalty to impose; and
7) Right to impose heavier penalty than what the company rules prescribe.

B. TRANSFER OF EMPLOYEES
 What are the various kinds of transfer?
a. Two (2) kinds of transfer. - A transfer means a movement:
1. From one position to another of equivalent rank, level or salary, without
a break in the service; or
2. From one office to another within the same business establishment.
 What are salient points to consider in transfer?
 The exercise of the prerogative to transfer or assign employees from one
office or area of operation to another is valid provided there is no
demotion in rank or diminution of salary, benefits and other
privileges. The transfer should not be motivated by discrimination or
made in bad faith or effected as a form of punishment or demotion without
sufficient cause.
 Commitment made by the employee like a salesman in the
employment contract to be re-assigned anywhere in the
Philippines is binding on him.
 Even if the employee is performing well in his present
assignment, management may reassign him to a new post.
 The transfer of an employee may constitute constructive dismissal
when:
1) When the transfer is unreasonable, inconvenient or prejudicial to the
employee;
2) When the transfer involves a demotion in rank or diminution of salaries,
benefits and other privileges; and
3) When the employer performs a clear act of discrimination, insensibility,
or disdain towards the employee, which forecloses any choice by the latter
except to forego his continued employment.
 The refusal of an employee to be transferred may be held justified if
there is a showing that the transfer was directed by the employer under
questionable circumstances. For instance, the transfer of employees
during the height of their union’s concerted activities in the
company where they were active participants is illegal.
 An employee who refuses to be transferred, when such
transfer is valid, is guilty of insubordination or willful
disobedience of a lawful order of an employer under Article 282 of
the Labor Code.

 Refusal to transfer due to parental obligations, additional
expenses, inconvenience, hardship and anguish is not valid. An
employee could not validly refuse lawful orders to transfer based
on these grounds.
 Refusal to transfer to overseas assignment is valid.
 Refusal to transfer consequent to promotion is valid.
 Transfer to avoid conflict of interest is valid.
 A transfer from one position to another occasioned by the abolition of
the position is valid.
C. PRODUCTIVITY STANDARD
 How may productivity standards be imposed?
The employer has the prerogative to prescribe the standards of productivity
which the employees should comply. The productivity standards may be
used by the employer as:
1. an incentive scheme; and/or
2. a disciplinary scheme.
As an incentive scheme, employees who surpass the productivity
standards or quota are usually given additional benefits.
As a disciplinary scheme, employees may be sanctioned or dismissed for
failure to meet the productivity standards or quota.
 Illustrative cases:
In the 2014 case of International School Manila v. International
School Alliance of Educators (ISAE),1 the teacher was held guilty of
gross inefficiency meriting her dismissal on the basis of the Court’s finding
that she failed to measure up to the standards set by the school in teaching
Filipino classes.
In the 2012 case of Reyes-Rayel v. Philippine Luen Thai Holdings
Corp.,2 the validity of the dismissal of petitioner who was the Corporate
Human Resources (CHR) Director for Manufacturing of respondent
company, on the ground of inefficiency and ineptitude, was affirmed on the
basis of the Court’s finding that petitioner, on two occasions, gave wrong
information regarding issues on leave and holiday pay which generated
confusion among employees in the computation of salaries and wages.
In another 2012 case, Realda v. New Age Graphics, Inc.,3 petitioner, a
machine operator of respondent company, was dismissed on the ground,
among others, of inefficiency. In affirming the validity of his dismissal, the

Supreme Court reasoned:
“xxx (T)he petitioner’s failure to observe Graphics, Inc.’s work standards

constitutes inefficiency that is a valid cause for dismissal. Failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due
to inefficiency may constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas, either by
failing to complete the same within the allotted reasonable period, or by
producing unsatisfactory results.”
D. GRANT OF BONUS
See discussion on this under Topic III (Labor Standards) above.
E. CHANGE OF WORKING HOURS
What is the extent of the exercise of this prerogative?

Employers have the freedom and prerogative, according to their discretion
and best judgment, to regulate and control the time when workers should
report for work and perform their respective functions.
Manila Jockey Club Employees Labor Union – PTGWO, v. Manila
Jockey Club, Inc.4 - The validity of the exercise of the same prerogative
to change the working hours was affirmed in this case. It was found that
while Section 1, Article IV of the CBA provides for a 7-hour work schedule
from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from
Mondays to Saturdays, Section 2, Article XI thereof expressly reserves to
respondent the prerogative to change existing methods or facilities and to
change the schedules of work. Consequently, the hours of work of regular
monthly-paid employees were changed from the original 9:00 a.m. to 5:00
p.m. schedule to 1:00 p.m. to 8:00 p.m. when horse races are held, that is,
every Tuesday and Thursday. The 9:00 a.m. to 5:00 p.m. schedule for non-
race days was, however, retained. Respondent, as employer, cited the
change in the program of horse races as reason for the adjustment of the
work schedule. It rationalized that when the CBA was
signed, the horse races started at 10:00 a.m. When the races were moved to
2:00 p.m., there was no other choice for management but to change the

work schedule as there was no work to be done in the morning. Evidently,
the adjustment in the work schedule is justified.
F. RULES ON MARRIAGE BETWEEN EMPLOYEES OF

COMPETITOR-EMPLOYERS
What is the best illustrative case of this prerogative?
Duncan Association of Detailman-PTGWO v. Glaxo Welcome
Philippines, Inc.5 - The contract of employment in this case expressly
prohibited an employee from having a relationship with an employee of a
competitor company. It provides:
“10. You agree to disclose to management any existing or future
relationship you may have, either by consanguinity or affinity with co-
employees or employees of competing drug companies. Should it pose a
possible conflict of interest in management discretion, you agree to resign
voluntarily from the Company as a matter of Company policy.”
The Supreme Court ruled that this stipulation is a valid exercise of
management prerogative. The prohibition against personal or marital
relationships with employees of competitor-companies upon its employees
is reasonable under the circumstances because relationships of that nature
might compromise the interests of the company. In laying down the
assailed company policy, the employer only aims to protect its interests
against the possibility that a competitor company will gain access to its
trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information.
1 G.R. No. 167286, Feb. 5, 2014.
2 G.R. No. 174893, July 11, 2012.
3 G.R. No. 192190, April 25, 2012.
4 G.R. No. 167760, March 7, 2007.
5 G.R. No. 162994, Sept. 17, 2004.
G. POST-EMPLOYMENT BAN
Is a non-compete clause valid?
Yes. The employer and the employee are free to stipulate in an employment
contract prohibiting the employee within a certain period from and after
the termination of his employment, from:
(1) starting a similar business, profession or trade; or

(2) working in an entity that is engaged in a similar business that might
compete with the employer.
The non-compete clause is agreed upon to prevent the possibility that upon
an employee’s termination or resignation, he might start a business or work
for a competitor with the full competitive advantage of knowing and
exploiting confidential and sensitive information, trade secrets, marketing
plans, customer/client lists, business practices, upcoming products, etc.,
which he acquired and gained from his employment with the former
employer. Contracts which prohibit an employee from engaging in business
in competition with the employer are not necessarily void for being in
restraint of trade.
What are the requisites in order for a non-compete clause to be

valid?
A non-compete clause is not necessarily void for being in restraint of trade
as long as there are reasonable limitations as to time, trade, and
place.
Example:
The non-compete clause (called “Non-Involvement Provision”) in the 2007
case of Daisy B. Tiu v. Platinum Plans Philippines, Inc., provides as
follows:
“8. NON-INVOLVEMENT PROVISION – The EMPLOYEE further
undertakes that during his/her engagement with EMPLOYER and in case
of separation from the Company, whether voluntary or for cause, he/she
shall not, for the next TWO (2) years thereafter, engage in or be involved
with any corporation, association or entity, whether directly or indirectly,
engaged in the same business or belonging to the same pre-need industry
as the EMPLOYER. Any breach of the foregoing provision shall render the
EMPLOYEE liable to the EMPLOYER in the amount of One Hundred
Thousand Pesos (P100,000.00) for and as liquidated damages.”
Starting on January 1, 1993, petitioner worked for respondent as Senior
Assistant Vice-President and Territorial Operations Head in charge of its
Hongkong and Asean operations under a 5-year contract of employment
containing the aforequoted clause. On September 16, 1995, petitioner
stopped reporting for work. In November 1995, she became the Vice
President for Sales of Professional Pension Plans, Inc., a corporation
engaged also in the pre-need industry. Consequently, respondent sued

petitioner for damages before the RTC of Pasig City. Respondent alleged,
among others, that petitioner’s employment with Professional Pension
Plans, Inc. violated the above-quoted non-involvement clause in her
contract of
employment. Respondent thus prayed for P100,000 as compensatory
damages; P200,000 as moral damages; P100,000 as exemplary damages;
and 25% of the total amount due plus P1,000 per counsel’s court
appearance, as attorney’s fees. Petitioner countered that the non-
involvement clause was unenforceable for being against public order or
public policy:
First, the restraint imposed was much greater than what was necessary to
afford respondent a fair and reasonable protection. Petitioner contended
that the transfer to a rival company was an accepted practice in the pre-
need industry. Since the products
sold by the companies were more or less the same, there was nothing
peculiar or unique to protect. Second, respondent did not invest in
petitioner’s training or improvement. At the time petitioner was recruited,
she already possessed the knowledge and expertise required in the pre-need
industry and respondent benefited tremendously from it. Third, a strict
application of the noninvolvement clause would amount to a deprivation of
petitioner’s right to engage in the only work she knew.
In upholding the validity of the non-involvement clause, the trial
court ruled that a contract in restraint of trade is valid provided
that there is a limitation upon either time or place. In the case of
the pre-need industry, the trial court found the two-year
restriction to be valid and reasonable.
On appeal, the Court of Appeals affirmed the trial court’s ruling. It
reasoned that petitioner entered into the contract on her own will and
volition. Thus, she bound herself to fulfill not only what was expressly
stipulated in the contract, but also all its
consequences that were not against good faith, usage, and law. The
appellate court also ruled that the stipulation prohibiting non-employment
for two years was valid and enforceable considering the nature of
respondent’s business.
In affirming the validity of the Non-Involvement Clause, the Supreme Court
ratiocinated as follows:
“xxx a non-involvement clause is not necessarily void for being in

restraint of trade as long as there are reasonable limitations as
to time, trade, and place.“In this case, the non-involvement clause
has a time limit: two years from the time petitioner’s
employment with respondent ends. It is also limited as to trade,
since it only prohibits petitioner from engaging in any pre-need
business akin to respondent’s. It is limited as to place since the
prohibition covers only Hongkong and Asean operations. “More
significantly, since petitioner was the Senior Assistant Vice-President and
Territorial Operations Head in charge of respondent’s Hongkong and Asean
operations, she had been privy to confidential and highly sensitive
marketing strategies of respondent’s business. To allow her to engage in a
rival business soon after she leaves would make respondent’s trade secrets
vulnerable especially in a highly competitive marketing environment. In
sum, we find the non-involvement clause not contrary to public
welfare and not greater than is necessary to afford a fair and
reasonable protection to respondent.
“Thus, as held by the trial court and the Court of Appeals, petitioner is
bound to pay respondent P100,000 as liquidated damages. While we
have equitably reduced liquidated damages in certain cases, we cannot do
so in this case, since it appears that even from the start, petitioner had not
shown the least intention to fulfill the non-involvement clause in good
faith.”
------------oOo------------
TOPIC NO. 6
SOCIAL WELFARE LEGISLATION

A. SSS LAW
(R.A. No. 8282)
 Who are covered employers?
a. An employer or any person who uses the services of another person in
business, trade, industry or any undertaking.
b. A social, civic, professional, charitable and other non-profit organizations
which hire the services of employees are considered “employers.”
c. A foreign government, international organization or its wholly-owned
instrumentality such as an embassy in the Philippines, may enter into an

administrative agreement with the SSS for the coverage of its Filipino
employees.
 Who are compulsorily covered employees?
a. A private employee, whether permanent, temporary or provisional, who
is not over 60 years old.
b. A domestic worker or kasambahay who has rendered at least one (1)
month of service.
c. A Filipino seafarer upon the signing of the standard contract of
employment between the seafarer and the manning agency which, together
with the foreign ship owner, act as employers.
d. An employee of a foreign government, international organization or their
wholly-owned instrumentality based in the Philippines, which entered into
an administrative agreement with the SSS for the coverage of its Filipino
workers.
e. The parent, spouse or child below 21 years old of the owner of a single
proprietorship business.
 Are self-employed persons covered?
Yes. A self-employed person, regardless of trade, business or occupation,
with an income of at least P1,000 a month and not over 60 years old,
should register with the SSS. Included, but not limited to, are the following
self-employed persons:
a. Self-employed professionals;
b. Business partners, single proprietors and board directors;
c. Actors, actresses, directors, scriptwriters and news reporters who are not
under an employer-employee relationship;
d. Professional athletes, coaches, trainers and jockeys;
e. Farmers and fisherfolks; and
f. Workers in the informal sector such as cigarette vendors, watch-your-car
boys, hospitality girls, among others.
Unless otherwise specified, all provisions of the law, R.A. No. 8282,
applicable to covered employees shall also be applicable to the covered self-
employed persons.
A self-employed person shall be both employee and employer at the same
time.
 Who may be covered voluntarily?
1. Separated Members
A member who is separated from employment or ceased to be self-

employed/OFW/non-working spouse and would like to continue
contributing.
2. Overseas Filipino Workers (OFWs)
A Filipino recruited in the Philippines by a foreign-based employer for
employment abroad or one who legitimately entered a foreign country (i.e.,
tourist, student) and is eventually employed.
3. Non-working spouses of SSS members
A person legally married to a currently employed and actively paying SSS
member who devotes full time in the management of household and family
affairs may be covered on a voluntary basis, provided there is the approval
of the working spouse. The person should never have been a member of the
SSS. The contributions will be based on 50 percent (50%) of the working
spouse’s last posted monthly salary credit but in no case shall it be lower
than P1,000.
 What is the effective date of coverage?
For compulsory coverage:
1. For employer - Compulsory coverage of the employer shall take effect
on the first day of his operation or on the first day he hires employee/s. The
employer is given only 30 days from the date of employment of employee to
report the person for coverage to the SSS.
2. For employee - Compulsory coverage of the employee shall take effect
on the first day of his employment.
3. For self-employed - The compulsory coverage of the self-employed
person shall take effect upon his registration with the SSS or upon payment
of the first valid contribution, in case of initial coverage.
For voluntary coverage:
1. For an OFW – upon first payment of contribution, in case of initial
coverage.
2. For a non-working spouse – upon first payment of contribution.
3. For a separated member – on the month he/she resumed payment of
contribution.
 Who are excluded employers?
Government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by the
Government with original charters.
 Who are excluded employees?
Workers whose employment or service falls under any of the following

circumstances are not covered:
(1) Employment purely casual and not for the purpose of occupation or
business of the employer;
(2) Service performed on or in connection with an alien vessel by an
employee if he is employed when such vessel is outside the Philippines;
(3) Service performed in the employ of the Philippine Government or
instrumentality or agency thereof;
(4) Service performed in the employ of a foreign government or
international organization, or their wholly-owned instrumentality:
Provided, however, That this exemption notwithstanding, any foreign
government, international organization or their wholly-owned
instrumentality employing workers in the Philippines or employing
Filipinos outside of the Philippines, may enter into an agreement with the
Philippine Government for the inclusion of such employees in the SSS
except those already covered by their respective civil service retirement
systems: Provided, further, That the terms of such agreement shall
conform with the provisions of R.A. No. 8282 on coverage and amount of
payment of contributions and benefits: Provided, finally, That the
provisions of this Act shall be supplementary to any such agreement; and
(5) Such other services performed by temporary and other employees which
may be excluded by regulation of the Social Security Commission.
Employees of bona-fide independent contractors shall not be deemed
employees of the employer engaging the service of said contractors.
 What are the classifications of benefits?
The SSS benefits may be classified into two (2) as follows:
(a) Social security benefits:
1) Sickness
2) Maternity
3) Retirement
4) Disability
5) Death and funeral.
(b) Employees’ compensation benefits.
 Who are primary beneficiaries?
The following are primary beneficiaries:
1. The dependent spouse until he or she remarries;
2. The dependent legitimate, legitimated or legally adopted, and
illegitimate children who are not yet 21 years of age.

The dependent illegitimate children shall be entitled to 50% of the
share of the legitimate, legitimated or legally adopted children. However, in
the absence of the dependent legitimate, legitimated children of the
member, his/her dependent illegitimate children shall be entitled to
100% of the benefits
 Who are secondary beneficiaries?
The following are secondary beneficiaries:
1. The dependent parents, in the absence of the primary beneficiaries.
2. Any other person designated by the member as his/her secondary
beneficiary, in the absence of all the foregoing primary beneficiaries and
dependent parents.
B. GSIS LAW
(R.A. No. 8291)Who are compulsorily required to become
members of the GSIS?
1. All government personnel, whether elective or appointive, irrespective of
status of appointment, provided they are receiving fixed monthly
compensation and have not reached the mandatory retirement age of 65
years, are compulsorily covered as members of the GSIS and shall be
required to pay contributions.
2. However, employees who have reached the retirement age of 65 or more
shall also be covered, subject to the following rules:
An employee who is already beyond the mandatory retirement age of 65
shall be compulsorily covered and be required to pay both the life and
retirement premiums under the following situations:
a. An elective official who at the time of election to public office is below
65 years of age and will be 65 years or more at the end of his term of office,
including the period/s of his re-election to public office thereafter without
interruption.
b. Appointive officials who, before reaching the mandatory age of 65, are
appointed to government position by the President of the Republic of the
Philippines and shall remain in government service at age beyond 65.
c. Contractual employees including casuals and other employees with
an employee-government agency relationship are also compulsorily
covered, provided they are receiving fixed monthly compensation and
rendering the required number of working hours for the month.
 What are the classes of membership in the GSIS?

Membership in the GSIS is classified either by type or status of
membership.
 As to type of members, there are regular and special members:
(a) Regular Members – are those employed by the government of the
Republic of the Philippines, national or local, legislative bodies,
government-owned and controlled corporations (GOCC) with original
charters, government financial institutions (GFIs), except uniformed
personnel of the Armed Forces of the Philippines, the Philippine
National Police, Bureau of Jail Management and Penology (BJMP) and
Bureau of Fire Protection (BFP), who are required by law to remit regular
monthly contributions to the GSIS.
(b) Special Members – are constitutional commissioners, members of
the judiciary, including those with equivalent ranks, who are required by
law to remit regular monthly contributions for life insurance policies to the
GSIS in order to answer for their life insurance benefits defined under RA
8291.
 As to status of membership, there are active and inactive members.
(a) Active member – refers to a member of the GSIS, whether regular or
special, who is still in the government service and together with the
government agency to which he belongs, is required to pay the monthly
contribution.
(b) Inactive member – a member who is separated from the service
either by resignation, retirement, disability, dismissal from the service,
retrenchment or, who is deemed retired from the service under this Act.
 When does membership become effective?
The effective date of membership shall be the date of the member’s
assumption to duty on his original appointment or election to public office.
 What is the effect of separation from the service?
A member separated from the service shall continue to be a member, and
shall be entitled to whatever benefits he has qualified to in the event of any
contingency compensable under the GSIS Law.
 Who are excluded from the compulsory coverage of the GSIS
Law?
The following employees are excluded from compulsory coverage:
(a) Uniformed personnel of the Armed Forces of the Philippines (AFP),
Philippine National Police (PNP), Bureau of Fire Protection (BFP) and
Bureau of Jail Management and Penology (BJMP);

(b) Barangay and Sanggunian Officials who are not receiving fixed
monthly compensation;
(c) Contractual Employees who are not receiving fixed monthly
compensation; and
(d) Employees who do not have monthly regular hours of work and are not
receiving fixed monthly compensation.
 What are the kinds of benefits under the GSIS Law?
The following are the benefits under the GSIS Law:
(a) Compulsory Life Insurance Benefits under the Life Endowment Policy
(LEP)
(b) Compulsory Life Insurance Benefits under the Enhanced Life Policy
(ELP)
(c) Retirement Benefits
(d) Separation Benefit
(e) Unemployment Benefit
(f) Disability Benefits
(g) Survivorship Benefits
(h) Funeral Benefits
 Who are beneficiaries under the GSIS Law?
There are two (2) kinds of beneficiaries under the GSIS Law as follows:
1. Primary beneficiaries — The legal dependent spouse until he/she
remarries and the dependent children.
2. Secondary beneficiaries — The dependent parents and, subject to
the restrictions on dependent children, the legitimate descendants.
 Who are dependents under the GSIS Law?
Dependents shall be the following:
(a) the legitimate spouse dependent for support upon the member or
pensioner;
(b) the legitimate, legitimated, legally adopted child, including the
illegitimate child, who is unmarried, not gainfully employed, not over the
age of majority, or is over the age of majority but incapacitated and
incapable of self-support due to a mental or physical defect acquired prior
to age of majority; and
(c) the parents dependent upon the member for support.
Gainful Occupation — Any productive activity that provided the member
with income at least equal to the minimum compensation of government

employees.
C. LIMITED PORTABILITY LAW

(R.A. No. 7699)
 What is limited portability scheme?
R.A. No. 7699 was enacted to enable those from the private sector who
transfer to the government service or from the government sector to the
private sector to combine their years of service and contributions which
have been credited with the SSS or GSIS, as the case may be, to satisfy the
required number of years of service for entitlement to the benefits under
the applicable laws.
 What is totalization?
The term “totalization” refers to the process of adding up the periods of
creditable services or contributions under each of the Systems, SSS or GSIS,
for the purpose of eligibility and computation of benefits.
What is portability?
On the other hand, the term “portability” refers to the transfer of funds for
the account and benefit of a worker who transfers from one system to the
other.
 How are benefits computed?
All services rendered or contributions paid by a member personally and
those that were paid by the employers to either System shall be considered
in the computation of benefits which may be claimed from either or both
Systems. However, the amount of benefits to be paid by one System shall be
in proportion to the services rendered or periods of contributions made to
that System.
“Benefits” refer to the following:
1. Old-age benefit;
2. Disability benefit;
3. Survivorship benefit;
4. Sickness benefit;
5. Medicare benefit, provided that the member shall claim said benefit
from the System where he was last a member; and
6. Such other benefits common to both Systems that may be availed of
through totalization.
 When does totalization apply?
a. if a worker is not qualified for any benefits from both Systems; or

b. if a worker in the public sector is not qualified for any benefits from the
GSIS; or
c. if a worker in the private sector is not qualified for any benefits from the
SSS.
For purposes of computation of benefits, totalization applies in all cases so
that the contributions made by the workermember in both Systems shall
provide maximum benefits which otherwise will not be available. In no case
shall the contribution be lost or forfeited.
 What is the effect if worker is not qualified after totalization?
If after totalization, the worker-member still does not qualify for any
benefit as listed in the law, the member will then get whatever benefits
correspond to his/her contributions in either or both Systems.
 What is the effect if worker qualifies for benefits in both
Systems?
If a worker qualifies for benefits in both Systems, totalization shall not
apply.
D. EMPLOYEE’S COMPENSATION
COVERAGE AND WHEN COMPENSABLE
 What is the State Insurance Fund [SIF]?
The State Insurance Fund (SIF) is built up by the contributions of
employers based on the salaries of their employees as provided under the
Labor Code.
There are two (2) separate and distinct State Insurance Funds: one
established under the SSS for private sector employees; and the other,
under the GSIS for public sector employees. The management and
investment of the Funds are done separately and distinctly by the SSS and
the GSIS. It is used exclusively for payment of the employees’ compensation
benefits and no amount thereof is authorized to be used for any other
purpose.
What are the agencies involved in the implementation of the
Employees Compensation Program (ECP)?
There are three (3) agencies involved in the implementation of the
Employees’ Compensation Program (ECP). These are: (1) The Employees’
Compensation Commission (ECC) which is mandated to initiate,
rationalize and coordinate policies of the ECP and to review appealed cases
from (2) the Government Service Insurance System (GSIS) and (3)

the Social Security System (SSS), the administering agencies of the
ECP.
Who are covered by the ECP?
a. General coverage. – The following shall be covered by the Employees’
Compensation Program (ECP):
1. All employers;
2. Every employee not over sixty (60) years of age;
3. An employee over 60 years of age who had been paying contributions to
the System (GSIS/SSS) prior to age sixty (60) and has not been
compulsorily retired; and
4. Any employee who is coverable by both the GSIS and SSS and should be
compulsorily covered by both Systems.
b. Sectors of employees covered by the ECP. - The following sectors
are covered under the ECP:
1. All public sector employees including those of government-owned
and/or controlled corporations and local government units covered by the
GSIS;
2. All private sector employees covered by the SSS; and
3. Overseas Filipino workers (OFWs), namely:
a. Filipino seafarers compulsorily covered under the SSS.
b. Land-based contract workers provided that their employer, natural or
juridical, is engaged in any trade, industry or business undertaking in the
Philippines; otherwise, they shall not be covered by the ECP.
 When is the start of coverage of employees under the ECP?
The coverage under the ECP of employees in the private and public sectors
starts on the first day of their employment.
 What are the benefits under the ECP?
The following are the benefits provided under the Labor Code:
a. Medical Benefits
b. Disability Benefits
1. Temporary total disability
2. Permanent total disability
3. Permanent partial disability
c. Death Benefit
d. Funeral Benefit
------------oOo------------

TOPIC NO. 7
LABOR RELATIONS LAW

A. RIGHT TO SELF-ORGANIZATION
1. WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE
BARGAINING
Who are eligible to join, form or assist a labor organization for
purposes of collective bargaining?
In the private sector:
1. All persons employed in commercial, industrial and agricultural
enterprises;
2. Employees of government-owned and/or controlled corporations
without original charters established under the Corporation Code;
3. Employees of religious, charitable, medical or educational institutions,
whether operating for profit or not;
4. Front-line managers, commonly known as supervisory employees [See
discussion below];
5. Alien employees [See discussion below];
6. Working children [See discussion below];
7. Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
9. Employees of legitimate contractors not with the principals but with the
contractors
 In the public sector:
All rank-and-file employees of all branches, subdivisions,
instrumentalities, and agencies of government, including government-
owned and/or controlled corporations with original charters, can form, join
or assist employees’ organizations of their own choosing.
 Are front-line managers or supervisors eligible to join, form
or assist a labor organization?
Yes, but only among themselves. They cannot join a rank-and-file union.
 Is mixed membership of supervisors and rank-and-file union
in one union a ground to cancel its registration?
No. In case there is mixed membership of supervisors and rank-and-file
employees in one union, the new rule enunciated in Article 245-A of the

Labor Code, unlike in the old law, is that it cannot be invoked as a ground
for the cancellation of the registration of the union. The employees so
improperly included are automatically deemed removed from the list of
members of said union. In other words, their removal from the said list is
by operation of law.
Do alien employees have the right to join a labor organization?

No, except if the following requisites are complied with:
(1) He should have a valid working permit issued by the DOLE; and
(2) He is a national of a country which grants the same or similar rights to
Filipino workers or which has ratified either ILO Convention No. 87 or ILO
Convention No. 98, as certified by the Philippine Department of Foreign
Affairs (DFA).
Do members of cooperatives have the right to join, form or
assist a labor organization?
No, because they are co-owners of the cooperative.
What about employees of a cooperative?
Yes, because they have employer-employee relationship with the
cooperative.
What about members who are at the same time employees of
the cooperative?
No, because the prohibition covers employees of the cooperative who are at
the same time members thereof.
But employee-members of a cooperative may withdraw as members of the
cooperative for purposes of joining a labor union.
Can employees of job contractors join, form or assist a labor
organization?
Yes, but not for the purpose of collective bargaining with the principal but
with their direct employer– the job contractor.
Are self-employed persons allowed to join, form or assist a
labor organization?
Yes, for their mutual aid and protection but not for collective bargaining
purposes since they have no employers but themselves.
This rule applies as well to ambulant, intermittent and other workers,
rural workers and those without any definite employers. The reason for

this rule is that these persons have no employers with whom they can
collectively bargain.
(a) WHO CANNOT FORM, JOIN OR ASSIST LABOR

RGANIZATIONS
1. PERSONS NOT ALLOWED TO FORM, JOIN OR ASSIST LABOR

ORGANIZATIONS.
a. In the private sector.
1. Top and middle level managerial employees; and
2. Confidential employees.
b. In the public sector.
The following are not eligible to form employees’ organizations:
1. High-level employees whose functions are normally considered as policy-
making or managerial or whose duties are of a highly confidential nature;
2. Members of the Armed Forces of the Philippines;
3. Police officers;
4. Policemen;
5. Firemen; and
6. Jail guards.
Are managerial employees allowed unionize?
There are 3 types of managerial employees:
1. Top Management
2. Middle Management
3. First-Line Management (also called supervisory level)
The first two above are absolutely prohibited; but the third are allowed
but only among themselves.
 Are confidential employees allowed to join, form or assist a
labor organization?
No, under the confidential employee rule.
“Confidential employees” are those who meet the following criteria:
(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate, determine, and effectuate
management policies specifically in the field of labor relations.
The two (2) criteria are cumulative and both must be met if an employee is

to be considered a “confidential employee” that would deprive him of
his right to form, join or assist a labor organization.
 What are some principles on the right to self-organization?

a. Some principles on the right to self-organization.
 Any employee, whether employed for a definite period or not, shall,
beginning on the first day of his service, be eligible for membership in any
labor organization.
 Right to join a union cannot be made subject of a CBA stipulation.
2. BARGAINING UNIT
What is a bargaining unit?
A “bargaining unit” refers to a group of employees sharing mutual interests
within a given employer unit, comprised of all or less than all of the entire
body of employees in the employer unit or any specific occupational or
geographical grouping within such employer unit. It may also refer to the
group or cluster of jobs or positions within the employer’s establishment
that supports the labor organization which is applying for registration.
(a) TEST TO DETERMINE THE CONSTITUENCY OF AN

APPROPRIATE BARGAINING UNIT
 What are the four tests to determine appropriate bargaining
unit?
Based on jurisprudence, there are certain tests which may be used in
determining the appropriate collective bargaining unit, to wit:
(1) Community or mutuality of interest doctrine;
(2) Globe doctrine or will of the members;
(3) Collective bargaining history doctrine; and
(4) Employment status doctrine.
1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.

Under this doctrine, the employees sought to be represented by the
collective bargaining agent must have community or mutuality of interest
in terms of employment and working conditions as evinced by the type of
work they perform. It is characterized by similarity of employment status,

same duties and responsibilities and substantially similar compensation
and working conditions.
St. James School of Quezon City v. Samahang Manggagawa sa St.
James School of Quezon City.1 -
Respondent union sought to represent the rank-and-file employees
(consisting of the motor pool, construction and transportation employees)
of petitioner-school’s Tandang Sora campus. Petitioner-school opposed it
by contending that the bargaining unit should not only be composed of said
employees but must include administrative, teaching and office personnel
in its five (5) campuses. The Supreme Court disagreed with said contention.
The motor pool, construction and transportation employees of
the Tandang Sora campus had 149 qualified voters at the time of the
certification election, hence, it was ruled that the 149 qualified voters
should be used to determine the existence of a quorum during the election.
Since a majority or 84 out of the 149 qualified voters cast their votes, a
quorum existed during the certification election. The computation of the
quorum should be based on the rank-and-file motor pool, construction and
transportation employees of the Tandang Sora campus and not on all
the employees in petitioner’s five (5) campuses. Moreover, the
administrative, teaching and office personnel are not members of the
union. They do not belong to the bargaining unit that the union seeks to
represent.
1 G.R. No. 151326, Nov. 23, 2005.
2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe
doctrine because this principle was first enunciated in the United States
case of Globe Machine and Stamping Co.,1 where it was ruled, in
defining the appropriate bargaining unit, that in a case where the
company’s production workers can be considered either as a single
bargaining unit appropriate for purposes of collective bargaining or as three
(3) separate and distinct bargaining units, the determining factor is the
desire of the workers themselves. Consequently, a certification election
should be held separately to choose which representative union will be
chosen by the workers.
International School Alliance of Educators [ISAE] v.

Quisumbing.2 - The Supreme Court ruled here that foreign hired teachers
do not belong to the bargaining unit of the local-hires because the former
have not indicated their intention to be
grouped with the latter for purposes of collective bargaining. Moreover, the
collective bargaining history of the school also shows that these groups
were always treated separately.
3. COLLECTIVE BARGAINING HISTORY DOCTRINE.

This principle puts premium to the prior collective bargaining history and
affinity of the employees in determining the appropriate bargaining unit.
However, the existence of a prior collective bargaining history has been
held as neither decisive nor conclusive in the determination of what
constitutes an appropriate bargaining unit.
National Association of Free Trade Unions v. Mainit Lumber
Development Company Workers Union.3 - It was ruled here that
there is mutuality of interest among the workers in the sawmill division and
logging division as to justify their formation of a single bargaining unit.
This holds true despite the history of said two divisions being treated as
separate units and notwithstanding their geographical distance from each
other.
4. EMPLOYMENT STATUS DOCTRINE.

The determination of the appropriate bargaining unit based on the
employment status of the employees is considered an acceptable mode. For
instance, casual employees and those employed on a day-to-day basis,
according to the Supreme Court in Philippine Land-Air-Sea Labor
Union v. CIR, 4 do not have the mutuality or community of interest with
regular and permanent employees. Hence, their inclusion in the bargaining
unit composed of the latter is not justified. Confidential employees, by the
very nature of their functions, assist and act in a confidential capacity to, or
have access to confidential matters of, persons who exercise managerial
functions in the field of labor relations. As such, the rationale behind the
ineligibility of managerial employees to form, assist or join a labor union
equally applies to them. Hence, they cannot be allowed to be included in
the rank-and-file employees’ bargaining unit. The rationale for this
inhibition is that if these managerial employees would belong to or be

affiliated with a union, the latter might not be assured of their loyalty to the
union in view of evident conflict of interest. The union can also become
company-dominated with the presence of managerial employees in its
membership.
3. BARGAINING AGENT
What is an exclusive bargaining agent?
The term “exclusive bargaining representative” or “exclusive bargaining
agent” refers to a legitimate labor union duly recognized or certified as the
sole and exclusive bargaining representative or agent of all the employees
in a bargaining unit.
What are the modes of determining the sole and exclusive
bargaining agent?
The following are the modes:
1. Voluntary recognition;
2. Certification election;
3. Consent election;
4. Run-off election;
5. Re-run election.
(a) VOLUNTARY RECOGNITION

 What is voluntary recognition?
“Voluntary recognition” refers to the process by which a legitimate labor
union is voluntarily recognized by the employer as the exclusive bargaining
representative or agent in a bargaining unit and reported as such with the
Regional Office in accordance with the Rules to Implement the Labor Code.
 When is voluntary recognition proper?
Voluntary recognition is proper only in cases where there is only one
legitimate labor organization existing and operating in a bargaining unit. It
cannot be done in case there are two or more unions in contention.
1 3 NLRB 294 (1937).
2 G.R. No. 128845, June 1, 2000.
3 G.R. No. 79526, Dec. 21, 1990.
4 G.R. No. L-14656, Nov. 29, 1960.
CERTIFICATION ELECTION
 What is certification election?

“Certification election” refers to the process of determining through secret
ballot the sole and exclusive bargaining agent of the employees in an
appropriate bargaining unit for purposes of collective bargaining or
negotiations.
 Who may file a petition for certification election?
The petition may be filed by:
1. A legitimate labor organization which may be:
(a) an independent union; or
(b) a national union or federation which has already issued a charter
certificate to its local chapter participating in the certification election; or
(c) a local chapter which has been issued a charter certificate by the
national union or federation.
2. An employer, when requested by a labor organization to bargain
collectively and its majority status is in doubt.
 What are the rules prohibiting the filing of petition for
certification election (bar rules)?
a. General rule.
The general rule is that in the absence of a CBA duly registered in
accordance with Article 231 of the Labor Code, a petition for certification
election may be filed at any time.
b. Bar rules.
No certification election may be held under the following rules:
1. Certification year bar rule;
2. Negotiations bar rule;
3. Bargaining deadlock bar rule; or
4. Contract bar rule.
1. CERTIFICATION YEAR BAR RULE.

Under this rule, a petition for certification election may not be filed within
one (1) year:
1. from the date the fact of voluntary recognition has been entered; or
2. from the date a valid certification, consent, run-off or re-run election has
been conducted within the bargaining unit.
2. NEGOTIATIONS BAR RULE.

Under this rule, no petition for certification election should be entertained

while the sole and exclusive bargaining agent and the employer have
commenced and sustained negotiations in good faith within the period of
one (1) year from the date of a valid certification, consent, run-off or re-run
election or from the date of voluntary recognition. Once the CBA
negotiations have commenced and while the parties are in the process of
negotiating the terms and conditions of the CBA, no challenging union is
allowed to file a petition for certification election that would disturb the
process and
unduly forestall the early conclusion of the agreement.
3. BARGAINING DEADLOCK BAR RULE.

Under this rule, a petition for certification election may not be entertained
when a bargaining deadlock to which an incumbent or certified bargaining
agent is a party has been submitted to conciliation or arbitration or has
become the subject of a valid notice of strike or lockout.
Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] v.
Trajano. - The bargaining deadlock-bar rule was not applied here because
for more than four (4) years after it was certified as the exclusive bargaining
agent of all the rank-and-file employees, it did not take any action to legally
compel the employer to comply with its duty to bargain collectively, hence,
no CBA was executed. Neither did it file any unfair labor practice suit
against the employer nor did it initiate a strike against the latter. Under the
circumstances, a certification election may be validly ordered and held.
4. CONTRACT BAR RULE.

Under this rule, a petition for certification election may not be filed when a
CBA between the employer and a duly recognized or certified bargaining
agent has been registered with the Bureau of Labor Relations (BLR) in
accordance with the Labor Code. Where the CBA is duly registered, a
petition for certification election may be filed only within the 60-day
freedom period prior to its expiry. The purpose of this rule is to ensure
stability in the relationship of the workers and the employer by preventing
frequent modifications of any CBA earlier entered into by them in good
faith and for the stipulated original period.
When contract bar rule does not apply.
The contract-bar rule does not apply in the following cases:

1. Where there is an automatic renewal provision in the CBA but prior to
the date when such automatic renewal became effective, the employer
seasonably filed a manifestation with the Bureau of Labor Relations of its
intention to terminate the said agreement if and when it is established that
the bargaining agent does not represent anymore the majority of the
workers in the bargaining unit.
2. Where the CBA, despite its due registration, is found in appropriate
proceedings that: (a) it contains provisions lower than the standards fixed
by law; or (b) the documents supporting its registration are falsified,
fraudulent or tainted with misrepresentation.
3. Where the CBA does not foster industrial stability, such as contracts
where the identity of the representative is in doubt since the employer
extended direct recognition to the union and concluded a CBA therewith
less than one (1) year from the time a certification election was conducted
where the “no union” vote won. This situation obtains in a case where the
company entered into a CBA with the union when its status as exclusive
bargaining agent of the employees has not been established yet.
4. Where the CBA was registered before or during the last sixty (60) days of
a subsisting agreement or during the pendency of a representation case. It
is well-settled that the 60-day freedom period based on the original CBA
should not be affected by any amendment, extension or renewal of the CBA
for purposes of certification election.
 What are the requisites for the validity of the petition for
certification election?
The following requisites should concur:
1. The union should be legitimate which means that it is duly registered
and listed in the registry of legitimate labor unions of the BLR or that its
legal personality has not been revoked or cancelled with finality.
2. In case of organized establishments, the petition for certification
election is filed during (and not before or after) the 60-day
freedom period of a duly registered CBA.
3. In case of organized establishments, the petition complied with the
25% written support of the members of the bargaining unit.
4. The petition is filed not in violation of any of the four (4) bar rules [See
above discussion thereof].

 What are the two (2) kinds of majorities?
The process of certification election requires two (2) kinds of majority
votes, viz.:
1. Number of votes required for the validity of the process of
certification election itself. In order to have a valid certification
election, at least a majority of all eligible voters in the appropriate
bargaining unit must have cast their votes.
2. Number of votes required to be certified as the collective
bargaining agent. To be certified as the sole and exclusive bargaining
agent, the union should obtain a majority of the valid votes cast.
 What are some pertinent principles on certification election?
 The pendency of a petition to cancel the certificate of registration of a
union participating in a certification election does not stay the conduct
thereof.
 The pendency of an unfair labor practice case filed against a labor
organization participating in the certification election does not stay the
holding thereof.
 Direct certification as a method of selecting the exclusive bargaining
agent of the employees is not allowed. This is because the conduct of a
certification election is still necessary in order to arrive in a manner
definitive and certain concerning the choice of the labor organization to
represent the workers in a collective bargaining unit.
 The “No Union” vote is always one of the choices in a certification
election. Where majority of the valid votes cast results in “No Union”
obtaining the majority, the Med-Arbiter shall declare such fact in the order.
 Only persons who have direct employment relationship with the
employer may vote in the certification election, regardless of their period of
employment.
CERTIFICATION ELECTION IN AN UNORGANIZED

ESTABLISHMENT
What is meant by “unorganized establishment”?
As distinguished from “organized establishment,” an “unorganized
establishment” is an employer entity where there is no recognized or
certified collective bargaining union or agent.

A company or an employer-entity, however, may still be considered an
unorganized establishment even if there are unions in existence therein for
as long as not one of them is duly certified as the sole and exclusive
bargaining representative of the employees in the particular bargaining unit
it seeks to operate and represent.
Further, a company remains unorganized even if there is a duly recognized
or certified bargaining agent for rank-and-file employees, for purposes of
the petition for certification election filed by supervisors. The reason is that
the bargaining unit composed of supervisors is separate and distinct from
the unionized bargaining unit of rank-and-file employees. Hence, being
unorganized, the 25% required minimum support of employees within the
bargaining unit of the supervisors need not be complied with.
 How should certification election be conducted in an

unorganized establishment?
In case of a petition filed by a legitimate organization involving an
unorganized establishment, the Med-Arbiter is required to immediately
order the conduct of a certification election upon filing of a petition for
certification election by a legitimate
labor organization.
CERTIFICATION ELECTION IN AN ORGANIZED

ESTABLISHMENT
 What are the requisites for the conduct of a certification
election in an organized establishment?
The Med-Arbiter is required to automatically order the conduct of a
certification election by secret ballot in an organized establishment as soon
as the following requisites are fully met:
1. That a petition questioning the majority status of the incumbent
bargaining agent is filed before the DOLE within the 60-day freedom
period;
2. That such petition is verified; and
3. That the petition is supported by the written consent of at least twenty-
five percent (25%) of all the employees in the bargaining unit.
RUN-OFF ELECTION

 What is run-off election?
A “run-off election” refers to an election between the labor unions
receiving the two (2) highest number of votes in a certification election or
consent election with three (3) or more choices, where such a certification
election or consent election results in none of the three (3) or more choices
receiving the majority of the valid votes cast, provided that the total
number of votes for all contending unions is at least fifty percent (50%) of
the number of votes cast.
RE-RUN ELECTION
 When should a re-run election be conducted?
A re-run election may be justified if certain irregularities have been
committed during the conduct of the certification election such as, inter
alia, disenfranchisement of the voters, lack of secrecy in the
voting, fraud or bribery, in which case, the certification election should
be invalidated. Such invalidation would necessitate the conduct of a re-run
election among the contending unions to determine the true will and desire
of the employee-electorates.
CONSENT ELECTION
 What is consent election?
A “consent election” refers to the process of determining through secret
ballot the sole and exclusive representative of the employees in an
appropriate bargaining unit for purposes of collective bargaining and
negotiation. It is voluntarily agreed upon by the parties, with or without the
intervention of the DOLE.
 What is the distinction between consent election and

certification election?
A consent election is one mutually agreed upon by the parties, with or
without the intervention of the DOLE, its purpose being merely to
determine the issue of majority representation of all the workers in an
appropriate collective bargaining unit; while a certification election is
one which is ordered by the DOLE. The purpose for both electoral exercise
is the same, i.e., to determine the sole and exclusive bargaining agent of all
the employees in an appropriate bargaining unit for the purpose of

collective bargaining. From the very nature of consent election, it is a
separate and distinct process from certification election and has nothing to
do with the import and effect of the latter.
 Can the parties agree to the conduct of consent election even

during the pendency of certification election?
Yes. In fact, the Med-Arbiter is required to determine if the contending
labor unions are willing to submit themselves to a consent election. And if
they do, the Med-Arbiter should conduct consent election instead of
certification election.
AFFILIATION AND DISAFFILIATION OF THE LOCAL UNION

FROM THE MOTHER UNION
1. AFFILIATION.
a. Mother union.
In relation to an affiliate, the federation or national union is commonly
known as the “mother union.” This term is not found in law but
oftentimes, the Supreme Court uses this term to describe a federation or a
national union.
b. Affiliate.
An “affiliate” refers to:
(1) An independent union affiliated with a federation or a national
union; or
(2) A local chapter which has been subsequently granted independent
registration but did not disaffiliate from the federation or national union
which created it.
c. A chartered local/local chapter, not an affiliate.
Based on the above definition and description, technically, a local chapter
created through the mode of chartering by a mother union under Article
234-A of the Labor Code, cannot be properly called an “affiliate” if it has
not acquired any independent registration of its own.
d. Purpose of affiliation.
The purpose is to further strengthen the collective bargaining leverage of
the affiliate. No doubt, the purpose of affiliation by a local union with a
mother union (federation or national union) is to increase by collective

action its bargaining power in respect of the terms and conditions of labor.
e. Contract of agency.
The mother union, acting for and in behalf of its affiliate, has the status of
an agent while the local union remains the principal – the basic unit of
the association free to serve the common interest of all its members subject
only to the restraints imposed by the constitution and by-laws of the
association.
f. Some principles on affiliation.
 Independent legal personality of an affiliate union is not affected by
affiliation.
 Affiliate union becomes subject of the rules of the federation or national
union.
 The appendage of the acronym of the federation or national union after
the name of the affiliate union in the registration with the DOLE does not
change the principal-agent relationship between them. Such inclusion of
the acronym is merely to indicate that the local union is affiliated with the
federation or national union at the time of the
registration. It does not mean that the affiliate union cannot independently
stand on its own.
 The fact that it was the federation which negotiated the CBA
does not make it the principal and the affiliate or local union
which it represents, the agent.
 In case of illegal strike, the local union, not the mother union,
is liable for damages.
2. DISAFFILIATION.
a. Right to disaffiliate.
The right of the affiliate union to disaffiliate from its mother federation or
national union is a constitutionally-guaranteed right which may be invoked
by the former at any time. It is axiomatic that an affiliate union is a separate
and voluntary association free to serve the interest of all its members -
consistent with the freedom of association guaranteed in the Constitution.
b. Disaffiliation of independently-registered union and local
chapter, distinguished.
The disaffiliation of an independently-registered union does not affect its
legitimate status as a labor organization.

However, the same thing may not be said of a local chapter which has no
independent registration since its creation was effected pursuant to the
charter certificate issued to it by the federation or national union. Once a
local chapter disaffiliates from the
federation or national union which created it, it ceases to be entitled to the
rights and privileges granted to a legitimate labor organization. Hence, it
cannot, by itself, file a petition for certification election.
c. Some principles on disaffiliation.
 Disaffiliation does not divest an affiliate union of its legal personality.
 Disaffiliation of an affiliate union is not an act of disloyalty.
 Disaffiliation for purposes of forming a new union does not terminate
the status of the members thereof as employees of the company. By said act
of disaffiliation, the employees who are members of the local union did not
form a new union but merely exercised their right to register their local
union. The local union is free to disaffiliate
from its mother union.
 Disaffiliation should be approved by the majority of the union
members.
 Disaffiliation terminates the right to check-off federation dues. The
obligation to check-off federation dues is terminated with the valid
disaffiliation of the affiliate union from the federation with which it was
previously affiliated.
 Disaffiliation does not affect the CBA. It does not operate to amend it or
change the administration of the contract.
 Disaffiliating from the federation and entering into a CBA with the
employer does not constitute an unfair labor practice.
 Disaffiliation is not a violation of the union security clause.
(i) SUBSTITUTIONARY DOCTRINE

1. CHANGE OF BARGAINING REPRESENTATIVE DURING THE
LIFE OF A CBA.
It simply refers to the substitution of the bargaining agent by a newly
certified agent which defeated in in the certification election. As new
bargaining agent, it is duty-bound to respect the existing CBA but it can
renegotiate for new terms and conditions therein.
2. EFFECT OF SUBSTITUTIONARY DOCTRINE ON THE
DEPOSED UNION’S PERSONAL UNDERTAKINGS.

In case of change of bargaining agent under the substitutionary doctrine,
the new bargaining agent is not bound by the personal undertakings of
the deposed union like the “no strike, no lockout” clause in a CBA which is
the personal undertaking
of the bargaining agent which negotiated it.
3. SOME PRINCIPLES ON SUBSTITUTIONARY DOCTRINE.
 The substitutionary doctrine cannot be invoked to subvert an existing
CBA, in derogation of the principle of freedom of contract. The substitution
of a bargaining agent cannot be allowed if the purpose is to subvert an
existing CBA freely entered into by the parties. Such act cannot be
sanctioned in law or in equity as it is in derogation of the principle
underlying the freedom of contract and good faith in contractual relations.
 The substitutionary doctrine is applicable also to a situation where the
local union, which was created through the process of chartering by the
mother union, disaffiliates from the latter after it secured an independent
registration. The local union will thus be substituted to that of the
federation which negotiated the CBA as in Elisco-Elirol Labor Union
[NAFLU] v. Noriel, where petitioner union was created through the
mode of chartering by the National Federation of Labor Unions (NAFLU)
and later, it secured its independent registration with the BLR and
disaffiliated with NAFLU by virtue of a resolution by its general
membership.
(b) UNION DUES AND SPECIAL ASSESSMENTS

1. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL
ASSESSMENTS.
The following requisites must concur in order for union dues and special
assessments for the union’s incidental expenses, attorney’s fees and
representation expenses to be valid, namely:
(a) Authorization by a written resolution of the majority of all the
members at a general membership meeting duly called for the
purpose;
(b) Secretary’s record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by
the employees concerned.

3. ASSESSMENT FOR ATTORNEY’S FEES, NEGOTIATION FEES
AND SIMILAR CHARGES.
The rule is that no such attorney’s fees, negotiation fees or similar charges
of any kind arising from the negotiation or conclusion of the CBA shall be
imposed on any individual member of the contracting union. Such fees
may be charged only against the union funds in an amount to be
agreed upon by the parties. Any contract, agreement or arrangement of
any sort to the contrary is deemed null and void. Clearly, what is
prohibited is the payment of attorney’s fees when it is effected
through forced contributions from the workers from their own
funds as distinguished from the union funds.
4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.

“Check-off” means a method of deducting from the employee’s pay at
prescribed periods, any amount due for fees, fines or assessments. It is a
process or device whereby the employer, on agreement with the union
recognized as the proper bargaining representative, or on prior
authorization from its employees, deducts union dues and assessments
from the latter’s wages and remits them directly to the union.
5. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN

REQUIRED.
The law strictly prohibits the check-off from any amount due an employee
who is a member of the union, of any union dues, special assessment,
attorney’s fees, negotiation fees or any other extraordinary fees other than
for mandatory activities under the Labor Code, without the individual
written authorization duly signed by the employee. Such authorization
must specifically state the amount, purpose and beneficiary of the
deduction. The purpose of the individual written authorization is to protect
the employees from unwarranted practices that diminish their
compensation without their knowledge or consent.
6. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN NOT

REQUIRED.
In the following cases, individual written authorization is not required:

a. Assessment from non-members of the bargaining agent of “agency
fees” which should be equivalent to the dues and other fees paid by
members of the recognized bargaining agent, if such non-members accept
the benefits under the CBA.
b. Deductions for fees for mandatory activities such as labor
relations seminars and labor education activities.
c. Deductions for withholding tax mandated under the National
Internal Revenue Code.
e. Deductions for withholding of wages because of employee’s debt to the
employer which is already due.
f. Deductions made pursuant to a judgment against the worker under
circumstances where the wages may be the subject of attachment or
execution but only for debts incurred for food, clothing, shelter
and medical attendance.
g. Deductions from wages ordered by the court.
h. Deductions authorized by law such as for premiums for
PhilHealth, SSS, Pag-IBIG, employees’ compensation and the
like.
(c) AGENCY FEES

(i) REQUISITES FOR ASSESSMENT
1. NATURE OF AGENCY FEE - NEITHER CONTRACTUAL NOR
STATUTORY BUT QUASI-CONTRACTUAL.
The bargaining agent which successfully negotiated the CBA with the
employer is given the right to collect a reasonable fee, called “agency fee”
from its non-members - who are employees covered by the bargaining unit
being represented by the bargaining agent - in case they accept the
benefits under the CBA. It is called “agency fees” because by availing of the
benefits of the CBA, they, in effect, recognize and accept the bargaining
union as their “agent” as well.
2. A NON-BARGAINING UNION MEMBER HAS THE RIGHT TO
ACCEPT OR NOT THE BENEFITS OF THE CBA.
There is no law that compels a non-bargaining union member to accept the
benefits provided in the CBA. He has the freedom to choose between
accepting and rejecting the CBA itself by not accepting any of the benefits
flowing therefrom.
Consequently, if a non-bargaining union member does not accept or refuses

to avail of the CBA-based benefits, he is not under any obligation to pay the
“agency fees” since, in effect, he does not give recognition to the status of
the bargaining union as his agent.
3. LIMITATION ON THE AMOUNT OF AGENCY FEE.
The bargaining union cannot capriciously fix the amount of agency fees it
may collect from its non-members. Article 248(e) of the Labor Code
expressly sets forth the limitation in fixing the amount of the agency fees,
thus:
(1) It should be reasonable in amount; and
(2) It should be equivalent to the dues and other fees paid by members of
the recognized collective bargaining agent.
Thus, any agency fee collected in excess of this limitation is a nullity.
4. NON-MEMBERS OF THE CERTIFIED BARGAINING AGENT
NEED NOT BECOME MEMBERS THEREOF.
The employees who are not members of the certified bargaining agent
which successfully concluded the CBA are not required to become members
of the latter. Their acceptance of the benefits flowing from the CBA and
their act of paying the
agency fees do not make them members thereof.
5. CHECK-OFF OF AGENCY FEES.
“Check-off” of agency fees is a process or device whereby the employer,
upon agreement with the bargaining union, deducts agency fees from the
wages of non-bargaining union members who avail of the benefits from the
CBA and remits them
directly to the bargaining union.
6. ACCRUAL OF RIGHT OF BARGAINING UNION TO DEMAND

CHECK-OFF OF AGENCY FEES.
The right of the bargaining union to demand check-off of agency fees
accrues from the moment the non-bargaining union member accepts and
receives the benefits from the CBA. This is the operative fact that would
trigger such liability.
7. NO INDIVIDUAL WRITTEN AUTHORIZATION BY NON-

BARGAINING UNION MEMBERS REQUIRED.
To effect the check-off of agency fees, no individual written authorization

from the non-bargaining union members who accept the benefits resulting
from the CBA is necessary.
8. EMPLOYER’S DUTY TO CHECK-OFF AGENCY FEES.
It is the duty of the employer to deduct or “check-off” the sum equivalent to
the amount of agency fees from the non-bargaining union members' wages
for direct remittance to the bargaining union.”
10. MINORITY UNION CANNOT DEMAND FROM THE

EMPLOYER TO GRANT IT THE RIGHT TO CHECK-OFF OF
UNION DUES AND ASSESSMENTS FROM THEIR MEMBERS.
The obligation on the part of the employer to undertake the duty to check-
off union dues and special assessments holds and applies only to the
bargaining agent and not to any other union/s (called “Minority Union/s”).
B. RIGHT TO COLLECTIVE BARGAINING DUTY TO BARGAIN

COLLECTIVELY
1. MEANING OF DUTY TO BARGAIN COLLECTIVELY.
The “duty to bargain collectively” means the performance of a mutual
obligation to meet and convene promptly and expeditiously in
good faith for the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms and
conditions of employment, including proposals for adjusting any
grievances or questions arising under such agreement and executing a
contract incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to make any
concession.
The duty does not compel any party to agree blindly to a proposal
nor to make concession. While the law imposes on both the employer
and the bargaining union the mutual duty to bargain collectively, the
employer is not under any legal obligation to initiate collective bargaining
negotiations.
2. TWO (2) SITUATIONS CONTEMPLATED.

The duty to bargain collectively involves two (2) situations, namely:
1. Duty to bargain collectively in the absence of a CBA under Article 251
of the Labor Code.

2. Duty to bargain collectively when there is an existing CBA under
Article 253 of the Labor Code.
DUTY TO BARGAIN COLLECTIVELY WHEN THERE IS

ABSENCE OF A CBA
1. HOW DUTY SHOULD BE DISCHARGED WHEN THERE IS NO
CBA YET.
The duty to bargain collectively when there has yet been no CBA in the
bargaining unit where the bargaining agent seeks to operate should be
complied with in the following order:
First, in accordance with any agreement or voluntary arrangement
between the employer and the bargaining agent
providing for a more expeditious manner of collective bargaining; and
Secondly, in its absence, in accordance with the provisions of the Labor
Code, referring to Article 250 thereof which lays down the procedure in
collective bargaining.
DUTY TO BARGAIN COLLECTIVELY WHEN THERE IS A CBA

1. CONCEPT.
When there is a CBA, the duty to bargain collectively shall mean that
neither party shall terminate nor modify such agreement during its lifetime.
However, either party can serve a written notice to terminate or modify the
agreement at least sixty (60) days prior to its expiration date. It shall
be the duty of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during
the 60-day period and/or until a new agreement is reached by
the parties.
2. FREEDOM PERIOD.
The last sixty (60) days of the 5-year lifetime of a CBA immediately prior to
its expiration is called the “freedom period.”
It is denominated as such because it is the only time when the law allows
the parties to freely serve a notice to terminate, alter or modify the existing
CBA. It is also the time when the majority status of the bargaining agent
may be challenged by another union
by filing the appropriate petition for certification election.
3. AUTOMATIC RENEWAL CLAUSE.

a. Automatic renewal clause deemed incorporated in all CBAs.
Pending the renewal of the CBA, the parties are bound to keep the status
quo and to treat the terms and conditions embodied therein still in full
force and effect during the 60-day freedom period and/or until a new
agreement is negotiated and ultimately concluded and reached by the
parties. This principle is otherwise known as the “automatic renewal
clause” which is mandated by law and therefore deemed incorporated in all
CBAs.
For its part, the employer cannot discontinue the grant of the benefits
embodied in the CBA which just expired as it is duty-bound to maintain the
status quo by continuing to give the same benefits until a renewal thereof is
reached by the parties.
On the part of the union, it has to observe and continue to abide by its
undertakings and commitments under the expired CBA until the same is
renewed.
4. KIOK LOY DOCTRINE.

This doctrine is based on the ruling In Kiok Loy v. NLRC, 1 where the
petitioner, Sweden Ice Cream Plant, refused to submit any counter-
proposal to the CBA proposed by its employees’ certified bargaining agent.
The High Court ruled that the employer had thereby lost its right to bargain
the terms and conditions of the CBA. Thus, the CBA proposed by the union
was imposed lock, stock and barrel on the erring company.
The Kiok Loy case epitomizes the classic case of negotiating a CBA in bad
faith consisting of the employer’s refusal to bargain with the collective
bargaining agent by ignoring all notices for negotiations and requests for
counter-proposals. Such refusal to send a counter-proposal to the union
and to bargain on the economic terms of the CBA constitutes an unfair
labor practice under Article 248(g) of the Labor Code.
2. COLLECTIVE BARGAINING AGREEMENT (CBA)

1. CBA.
A “Collective Bargaining Agreement” or “CBA” for short, refers to the
negotiated contract between a duly recognized or certified exclusive
bargaining agent of workers and their employer, concerning wages, hours
of work and all other terms and conditions of employment in the

appropriate bargaining unit, including mandatory provisions for grievances
and arbitration machineries. It is executed not only upon the request of the
exclusive bargaining representative but also by the employer.
2. ESSENTIAL REQUISITES OF COLLECTIVE BARGAINING.

Prior to any collective bargaining negotiations between the employer and
the bargaining union, the following requisites must first be satisfied:
1. Employer-employee relationship must exist between the employer
and the members of the bargaining unit being represented by the
bargaining agent;
2. The bargaining agent must have the majority support of the
members of the bargaining unit established through the modes
sanctioned by law; and
3. A lawful demand to bargain is made in accordance with law.
3. SOME PRINCIPLES ON CBA.

 CBA is the law between the parties during its lifetime and thus
must be complied with in good faith.
 Being the law between the parties, any violation thereof can
be subject of redress in court.
Non-impairment of obligations of contract. A contract is the law
between the parties and courts have no choice but to enforce such contract
so long as it is not contrary to law, morals, good customs or public policy.
Otherwise, courts would be interfering with the freedom of contract of the
parties.
 CBA is not an ordinary contract as it is impressed with public interest.
Automatic Incorporation Clause – law is presumed part of the CBA.
The benefits derived from the CBA and the law are separate and
distinct from each other.
 Workers are allowed to negotiate wage increases separately
and distinctly from legislated wage increases. The parties may
validly agree in the CBA to reduce wages and benefits of
employees provided such reduction does not go below the
minimum standards.

Ratification of the CBA by majority of all the workers in the bargaining
unit makes the same binding on all employees therein.
Employees entitled to CBA benefits. The following are entitled to the
benefits of the CBA:
(1) Members of the bargaining union;
(2) Non-members of the bargaining union but are members of the
bargaining unit;
(3) Members of the minority union/s who paid agency fees to the
bargaining union; and
(4) Employees hired after the expiration of the CBA.
 Pendency of a petition for cancellation of union registration is

not a prejudicial question before CBA negotiation may proceed.
 CBA should be construed liberally. If the terms of a CBA are clear
and there is no doubt as to the intention of the contracting parties, the
literal meaning of its stipulation shall prevail.
(a) MANDATORY PROVISIONS OF CBA

1. MANDATORY STIPULATIONS OF THE CBA.
The Syllabus mentions 4 provisions that are mandatorily required to be
stated in the CBA, to wit:
1. Grievance Procedure;
2. Voluntary Arbitration;
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC).
If these provisions are not reflected in the CBA, its registration will be
denied by the BLR.
1 G.R.No. L-54334, Jan. 22, 1986, 141 SCRA 179, 188.
(i) GRIEVANCE PROCEDURE

1. “GRIEVANCE” OR “GRIEVABLE ISSUE”.
A “grievance” or “grievable issue” is any question raised by either the
employer or the union regarding any of the following issues or

controversies:
1. The interpretation or implementation of the CBA;
2. The interpretation or enforcement of company personnel policies; or
3. Any claim by either party that the other party is violating any provisions
of the CBA or company personnel policies.
In order to be grievable, the violations of the CBA should be ordinary
and not gross in character; otherwise, they shall be considered as unfair
labor practice (ULP).
Gross violation of the CBA is defined as flagrant and/or malicious
refusal by a party thereto to comply with the economic
provisions thereof. If what is violated, therefore, is a non-economic or a
political provision of the CBA, the same shall not be considered as unfair
labor practice and may thus be processed as a grievable issue in accordance
with and following the grievance machinery laid down in the CBA.
2. GRIEVANCE MACHINERY.
“Grievance machinery” refers to the mechanism for the adjustment and
resolution of grievances arising from the interpretation or implementation
of a CBA and those arising from the interpretation or enforcement of
company personnel policies.
3. GRIEVANCE PROCEDURE.
“Grievance procedure” refers to the internal rules of procedure
established by the parties in their CBA with voluntary arbitration as the
terminal step, which are intended to resolve all issues arising from the
implementation and interpretation of their collective agreement. It is that
part of the CBA which provides for a peaceful way of settling differences
and misunderstanding between the parties.
The terms “grievance procedure” and “grievance machinery” may
be used interchangeably.
(ii) VOLUNTARY ARBITRATION

1. VOLUNTARY ARBITRATION.
“Voluntary arbitration” refers to the mode of settling labor-
management disputes in which the parties select a competent, trained and
impartial third person who is tasked to decide on the merits of the case and
whose decision is final and executory.

2. VOLUNTARY ARBITRATOR.
A “Voluntary Arbitrator” refers to any person who has been mutually
named or designated by the parties to the CBA – the employer and the
bargaining agent - to hear and decide the issues between them.
A Voluntary Arbitrator is not an employee, functionary or part of the
government or of the Department of Labor and Employment, but he is
authorized to render arbitration services provided under labor laws.
(iii) “NO STRIKE, NO LOCKOUT” CLAUSE

1. SIGNIFICANCE OF THE CLAUSE.
A “No Strike, No Lockout” clause in the CBA is an expression of the
firm commitment of the parties thereto that, on the part of the union, it will
not mount a strike during the effectivity of the CBA, and on the part of the
employer, that it will not stage a lockout during the lifetime thereof.
This clause may be invoked by an employer only when the strike is
economic in nature or one which is conducted to force wage or other
concessions from the employer that are not mandated to be granted by the
law itself. It does not bar strikes grounded on unfair labor practices.
This is so because it is presumed that all economic issues between the
employer and the bargaining agent are deemed resolved with the signing of
the CBA.
The same rule also applies in case of lockout. The said clause may only be
invoked by the union in case the ground for the lockout is economic in
nature but it may not be so cited if the ground is unfair labor practice
committed by the union.
2. EFFECT OF VIOLATION OF THE CLAUSE.

A strike conducted in violation of this clause is illegal.
(iv) LABOR-MANAGEMENT COUNCIL

1. CREATION OF LMC, CONSTITUTIONALLY AND LEGALLY
JUSTIFIED.
The Labor-Management Council (LMC) whose creation is mandated under
the Labor Code, is meant to implement the constitutionally mandated
right of workers to participate in policy and decision-making
processes of the establishment

where they are employed insofar as said processes will directly affect their
rights, benefits and welfare. This is the body that implements the
policy of co-determination in the Constitution.
The LMC is mandated to be created in both organized and unorganized
establishments.
2. SELECTION OF REPRESENTATIVES TO LMC.
In organized establishments, the workers’ representatives to the
committee or council should be nominated by the exclusive bargaining
representative.
In establishments where no legitimate labor organization exists,
the workers’ representative should be elected directly by the employees at
large.
3. LABOR-MANAGEMENT COUNCIL (LMC) VS. GRIEVANCE
MACHINERY (GM).
To avoid confusion and possible major legal complication, a clear
distinction line should be drawn between LMC and GM. The following may
be cited:
1. Constitutional origin. – The creation of the LMC is based on the
constitutional grant to workers of the right to participate in policy and
decision-making processes under the 1st paragraph, Section 3, Article
XIII of the 1987 Constitution, thus:
“It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law. They shall be entitled to security
of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting
their rights and benefits as may be provided by law.”
The creation of a GM, on the other hand, is based on a different
constitutional provision, the 2nd paragraph, Section 3, Article XIII of the
1987 Constitution, which provides as follows:
“The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes
in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.”
2. Legal anchor. - The creation of LMC is provided under Article 255 of
the Labor Code; while the formation of a GM is mandated under Article
260 of the same Code.

3. Compulsory provision in the CBA. - Both LMC and GM are
compulsorily required to be embodied in the CBA in order for it to be
considered a valid agreement.
4. Purpose for creation. - The LMC is created for the purpose of
affording workers the right to participate in policy and decision-making
processes in matters affecting their rights, benefits and welfare; while that
of the GM is to resolve disputes and
grievances arising from such policies or decisions or more specifically, to
adjust and resolve grievances arising from (1) the interpretation or
implementation of the CBA or (2) the interpretation or enforcement of
company personnel policies.
5. Nature of functions. - The LMC is in the nature of a preventive
mechanism meant to prevent and avoid disputes or grievances by co-
determining the proper policies that should be implemented by the
employer in respect of the workers’ rights, benefits and welfare; while a GM
is an adjudicatory mechanism which is set into motion only when a dispute
or grievance occurs.
6. Nature of cognizable issues. – The LMC performs non-adversarial
and non-adjudicatory tasks as it concerns itself only with policy
formulations and decisions affecting the workers’ rights, benefits and
welfare and not violations or transgressions of any policy, rule or
regulation; while that of the GM is adversarial and adjudicatory in
character since its jurisdiction is confined to resolving and deciding
disputes and grievances between management and the workers arising
from violations or transgressions of existing policies, rules or regulations.
In other words, the LMC does not resolve grievable or contentious issues;
the GM does.
A case illustrative of this principle is the 2011 case of Cirtek Employees
Labor Union-Federation of Free Workers v. Cirtek Electronics,
Inc. The CBA negotiation between petitioner union and respondent
company was deadlocked resulting in the staging of a strike by the former.
The DOLE Secretary assumed jurisdiction over the labor dispute but before
he could rule on the controversy, respondent created a Labor-Management
Council (LMC) through which it concluded with the remaining officers of
petitioner a Memorandum of Agreement (MOA) providing for daily wage
increases of P6.00 per day effective January 1, 2004 and P9.00 per day
effective January 1, 2005. Petitioner submitted the MOA to the DOLE

Secretary, alleging that the remaining officers signed the MOA under
respondent’s assurance that should the Secretary order a higher award of
wage increase, respondent would comply.
Respecting the MOA, petitioner posits that it was “surreptitiously entered
into [in] bad faith,” it having been forged without the assistance of the
Federation of Free Workers or counsel, adding that respondent could have
waited for the Secretary’s resolution of the pending CBA deadlock or that
the MOA could have been concluded before representatives of the DOLE
Secretary. As found by the DOLE Secretary, the MOA came about as a
result of the constitution, at respondent's behest, of the LMC which, he
reminded the parties, should not be used as an avenue for bargaining but
for the purpose of affording workers to participate in policy and decision-
making. Hence, the agreements embodied in the MOA were not the proper
subject of the LMC deliberation or procedure but of CBA negotiations and,
therefore, deserving little weight.
7. Composition. - The representatives of the workers to the LMC may or
may not be nominated by the recognized or certified bargaining agent,
depending on whether the establishment is organized or unorganized.
Thus, in organized establishments, the workers’ representatives to the
LMC should be nominated by the exclusive bargaining agent. In
establishments where no legitimate labor organization exists,
the workers’ representatives should be elected directly by the employees of
the establishment at large; while those in the GM are nominated solely by
the bargaining agent.
(b) DURATION OF CBA

(i) FOR ECONOMIC PROVISIONS
(ii) FOR NON-ECONOMIC PROVISIONS
1. TERMS OF A CBA.
The terms of a CBA are classified into two (2), viz.:
(a) Representation aspect – 5 years which is the lifetime of a CBA;
(b) All other provisions – Subject to renegotiation after first 3 years
of the 5-year lifetime of CBA.
2. REPRESENTATION ASPECT.
The phrase “representation aspect” in Article 253-A of the Labor Code

refers to the identity and majority status of the bargaining agent that
successfully negotiated the CBA as the exclusive bargaining representative
of the employees in the appropriate bargaining unit concerned.
The 5-year representation status of the incumbent exclusive bargaining
agent should be reckoned from the effectivity of the CBA. This means that
no petition for certification election questioning its majority status may be
entertained during the lifetime of the CBA except within the 60-day
freedom period immediately preceding the expiry date of the 5-year term.
 Suspension of CBA for a period longer than 5 years, held
valid.
The case of Rivera v. Espiritu,1 is in point. It was held here that the
suspension of the CBA between PAL and PALEA for ten (10) years in order
to resolve the strike is not violative of the Constitution or the law. This is so
because the right to free collective bargaining includes the right to suspend
it. There is nothing in Article 253-A which prohibits the parties from
waiving or suspending the mandatory timetables and agreeing on the
remedies to enforce the same.
Article 253-A has a two-fold purpose. One is to promote industrial stability
and predictability. Inasmuch as the agreement sought to promote industrial
peace at PAL during its rehabilitation, said agreement satisfies the first
purpose of Article 253-A. The other is to assign specific timetables wherein
negotiations become a matter of right and requirement. Nothing in Article
253-A prohibits the parties from waiving or suspending the mandatory
timetables and agreeing on the remedies to enforce the same. The
suspension agreement is a valid exercise of the freedom to contract. Under
the principle of inviolability of contracts guaranteed by the Constitution,
the contract must be upheld. The agreement afforded full protection to
labor; promoted the shared responsibility between workers and employers;
and exercised the voluntary modes in settling disputes, including
conciliation to foster industrial peace.
3. RE-NEGOTIATION OF ALL PROVISIONS OTHER THAN THE

REPRESENTATION ASPECT OF THE CBA SHOULD BE MADE
AFTER FIRST 3 YEARS FROM EFFECTIVITY.
Considering that the five (5) year period is quite long during which the
economic situations of the parties may have already changed, Article 253-A
recognizes the need for the parties to re-assess and re-negotiate all the

provisions of the CBA, except its representation aspect, after the lapse of
the first three (3) years of its 5-year lifetime. Such re-negotiation, however,
should only pertain to the terms and conditions of the parties’ relationship
for the last remaining two (2) years of the CBA’s 5-year term. This re-
negotiation process may be invoked by any of the parties as a matter of
right.
4. “ALL OTHER PROVISIONS,” REFER TO BOTH ECONOMIC

AND NON-ECONOMIC PROVISIONS.
The phrase “all other provisions” mentioned in Article 253-A simply refers
to all the provisions of the CBA irrespective of whether they are
economic or non-economic in nature. The only item excepted
therefrom is the representation status of the incumbent exclusive
bargaining agent which may only be questioned during the 60-day freedom
period.
5. RETROACTIVITY OF THE CBA.
The application of the rules on retroactivity depends on any of the following
two (2) situations:
(a) When the CBA is voluntarily concluded by the parties; or
(b) When the CBA is concluded through arbitral award.
6. RULE WHEN VOLUNTARILY CONCLUDED BY THE PARTIES
IN THE NEGOTIATING TABLE.
(a) The effectivity of the CBA shall retroact to the day immediately after the
date of expiry of the old CBA in case the new CBA is concluded and entered
into within six (6) months from the said expiry date.
(b) If the new CBA is entered into beyond six (6) months from the
expiry date of the old CBA, the parties are given the right to negotiate
the duration of the retroactivity thereof.
7. RULE ON RETROACTIVITY IN CASE OF CONCLUSION OF
CBA THROUGH ARBITRAL AWARD.
a. No law on retroactivity in case of CBA arbitral awards.
The law is silent as to the retroactivity of a CBA secured through arbitral
award or that granted not by virtue of the mutual agreement of the parties
but by intervention of the government.
b. Variations in the application of the retroactivity rule.
The rule laid down by the Supreme Court in cases involving this particular
issue of retroactivity varies from case to case. Basically, the rule, based on

jurisprudence, may be restated in the following manner:
(1) Prospectivity rule;
(2) Retroactivity rule which makes the CBA retroactively effective to:
(a) the date of the expiration of the previous CBA; and
(b) the first day after the six-month period following the expiration of the
last day of the CBA.
(iii) FREEDOM PERIOD
1. 60-DAY FREEDOM PERIOD.
When there is an existing CBA, the parties thereto are bound to observe the
terms and conditions therein set forth until its expiration. Neither party is
allowed to terminate nor modify such agreement during its lifetime. The
only time the parties are allowed to terminate or modify the agreement is
within the so-called “freedom period” of at least sixty (60) days prior to its
expiration date by serving a notice to that effect.”
1 G.R. No. 135547, Jan. 23, 2002.
2. REASON IT IS CALLED “FREEDOM PERIOD.”

The last 60 days of the 5-year lifetime of a CBA immediately prior to its
expiration is called the “freedom period” because:
(a) it is the only time when the law allows the parties to freely serve a notice
to terminate, alter or modify the existing CBA; and
(b) it is also the time when the majority status of the bargaining agent may
be challenged by another union by filing the appropriate petition for
certification election.
3. RULE ON FILING OF CERTIFICATION ELECTION VIS-À-VIS
FREEDOM PERIOD.
In a petition involving an organized establishment or enterprise where the
majority status of the incumbent collective bargaining union is questioned
by a legitimate labor organization, the Med-Arbiter shall immediately order
the conduct of a certification election if the petition is filed during the last
sixty (60) days of the CBA. Any petition filed before or after the 60-
day freedom period shall be dismissed outright.
The 60-day freedom period based on the original collective
bargaining agreement shall not be affected by any amendment,
extension or renewal of the CBA for purposes of certification
election.

4. AUTOMATIC RENEWAL CLAUSE.
A petition for certification election challenging the majority status of the
existing bargaining agent should be filed within – and not before or after -
said 60-day freedom period. Upon the expiration of the said period and no
petition for certification election is filed by a challenging union, the
employer is duty-bound to continue to recognize the majority status of the
incumbent bargaining agent. Negotiation for a new CBA may even
validly commence between the incumbent bargaining agent and
the employer during the 60-day freedom period if no challenge
to the bargaining agent’s majority status is posed by another
union.
3. UNION SECURITY
1. NATURE AND PURPOSE OF UNION SECURITY CLAUSE.
The “union security clause” allows the parties thereto to enter into an
agreement requiring compulsory membership in the bargaining
agent which successfully negotiated said CBA as a condition for
continued employment with the exception of employees who are
already members of another union at the time of the signing of the CBA.
“Union security” is a generic term which is applied to and comprehends
“closed shop,” “union shop,” “maintenance of membership” or any other
form of agreement which imposes upon the employees the obligation to
acquire or retain union membership as a condition to their continued
employment. In other words, the purpose of a union security
arrangement is to guarantee the continued existence of the
union through enforced membership for the benefit of the
workers.
Without this clause, the existence of the union is always subject to
uncertainty as its members may resign anytime resulting in the decimation
of its ranks. The union becomes gradually weakened and increasingly
vulnerable to company machinations. In this security clause lies the
strength of the union during the enforcement of the CBA. It is this clause
that provides labor with substantial power in collective bargaining.
2. THE RIGHT NOT TO JOIN A UNION IS NOT ABSOLUTE

SINCE IT MAY BE RESTRICTED.

The right of an employee not to join a union is not absolute and must give
way to the collective good of all members of the bargaining unit. When
certain employees are obliged to join a particular union as a requisite for
continued employment, as in the case of a union security clause, this
condition is a valid restriction on the freedom or right not to join any labor
organization because it is in favor of unionism.
3. UNION SECURITY CLAUSE DOES NOT VIOLATE

CONSTITUTIONAL RIGHT TO FREEDOM OF ASSOCIATION.
A union security clause in a CBA is not a violation or a restriction of the
employee’s right to freedom of association guaranteed by the Constitution.
Labor, being the weaker in economic power and resources than capital,
deserves protection that is actually substantial and material.
4. EMPLOYEES EXEMPTED FROM COVERAGE OF UNION

SECURITY CLAUSE.
All employees in the bargaining unit covered by a Union Security Clause in
their CBA with the employer are subject to its terms. However, under law
and established jurisprudence, the following kinds of employees are
exempted from its coverage, namely:
1. Employees who, at the time the union security agreement takes effect, are
bona-fide members of a religious organization which prohibits
its members from joining labor unions on religious grounds;
2. Employees who are already members of a union other than the
bargaining agent at the time the union security agreement took effect;
3. Confidential employees who are excluded from the rank-and-file or
supervisory bargaining unit;
4. Supervisory employees who are excluded from becoming members of the
rank-and-file union and vice-versa; and
5. Employees excluded from the union security clause by express
terms of the agreement.
(a) UNION SECURITY CLAUSES: CLOSED SHOP, UNION SHOP,

MAINTENANCE OF MEMBERSHIP SHOP, ETC.

1. CLASSIFICATION OF UNION SECURITY ARRANGEMENTS.
Generally, a union security clause may take the form of:
1. Closed-shop agreement;
2. Maintenance of membership agreement;
3. Union shop agreement;
4. Modified union shop agreement;
5. Exclusive bargaining agreement;
6. Bargaining for members only agreement;
7. Agency shop agreement; or
8. Preferential hiring agreement.
 Modification of arrangements.
The above classification admits of certain modified types which the parties
may agree upon in the CBA depending on the peculiar requirements of the
situation.
2. CLOSED-SHOP AGREEMENT.
A “closed-shop” may be defined as a scheme in which, by agreement
between the employer and its employees through their bargaining
union/agent, no person may be employed unless he or she is, becomes, and,
for the duration of the agreement, remains a member in good standing of
the bargaining union. Basically, this kind of agreement stipulates the
undertaking by the employer not to hire or employ any person who is not a
member of the bargaining union. Once employed, it is required that the
said person should remain a member of the bargaining union in good
standing as a condition for continued employment, at least during the
whole duration of the CBA.
3. MAINTENANCE OF MEMBERSHIP AGREEMENT.

There is “maintenance of membership agreement” when employees,
who are union members as of the effective date of the agreement, or who
thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred
out of the bargaining unit, or the agreement is terminated. Its role is to
protect the union’s current membership. By its express terms, it covers and

renders continued union membership compulsory for: (1) those who were
already union members at the time the CBA was signed; and (2) the new
employees who will become regular during the life of the CBA.
4. UNION SHOP AGREEMENT.

There is “union shop” when all new regular employees are required
to join the union within a certain period as a condition for their
continued employment. Its role is to compel the membership of those who
are not yet union members. Under this scheme, the employer is given the
freedom to hire and employ any person who is not a member of the
bargaining agent. Once such person becomes an employee, he is required to
become a member of the bargaining agent and to remain as such member
in good standing for the whole period of the effectivity of the CBA as a
condition for his continued employment.
5. MODIFIED UNION SHOP AGREEMENT.

Employees under this arrangement who are not union members at the time
of the signing or execution of the CBA are not required to join the
bargaining union. However, any and all workers hired or employed
after the signing or execution of the CBA are required to join the
bargaining union.
6. EXCLUSIVE BARGAINING AGENT AGREEMENT.

The union which negotiated and concluded the CBA with management is
considered and recognized as the sole and exclusive bargaining agent of all
the covered employees in the bargaining unit, whether they be members or
not of the said agent.
7. BARGAINING FOR MEMBERS ONLY AGREEMENT.

Under this arrangement, the union which negotiated and concluded the
CBA with management is recognized as the bargaining agent only for its
own members.
8. AGENCY SHOP AGREEMENT.

Under this scheme, there is no requirement for non-members of the

bargaining agent to become its members. However, it is required that such
non-union members should pay to the bargaining agent an agency fee as a
condition for their continued employment.
9. PREFERENTIAL HIRING AGREEMENT.

It is the principal feature of this arrangement that the employer gives
preference in hiring to the members of the bargaining agent under equal
circumstances and qualifications. Once hired or employed, they are
required to maintain their membership in good standing in the bargaining
agent for the duration of the CBA as a condition for their continued
employment.
10. DISMISSAL DUE TO VIOLATION OF UNION SECURITY

CLAUSE.
a. Requisites for valid termination based on union security
clause.
The following are the requisites that the employer should comply prior to
terminating the employment of an employee by virtue of the enforcement of
the union security clause:
(1) The union security clause is applicable;
(2) The union is requesting for the enforcement of the union security
provision in the CBA; and
(3) There is sufficient evidence to support the union’s decision to expel the
employee from the union.
The foregoing requisites constitute a just cause for terminating an
employee based on the CBA’s union security provision.
b. The due process afforded by the union prior to expulsion is
different from the due process required prior to termination of
employment.
The distinction is not hard to comprehend. The due process afforded by the
union is meant solely and exclusively to address the issue of validity of the
termination of the membership of the employee in the union; while that
required of the employer is aimed at addressing the issue of validity of the
employee’s termination of employment. Hence, it is complete error on the
part of the employer to adopt as its own due process what has been earlier
afforded by the union to the erring employee without conducting its own

independent and separate due process.
Thus, in declaring the illegality of the dismissal of petitioner in Cariño v.
NLRC,1 the Supreme Court noted in regard to the involvement of the
company in his dismissal, that the company, upon being formally advised
in writing of the expulsion of petitioner Cariño from the union, in turn
simply issued a termination letter to Cariño, the termination being made
effective the very next day. The Company should have given petitioner
Cariño an opportunity to explain his side of the controversy with the union.
Notwithstanding the union security clause in the CBA, the company should
have reasonably satisfied itself by its own inquiry that the union had not
been merely acting arbitrarily and capriciously in impeaching and expelling
petitioner Cariño. Had the company taken the trouble to investigate the
acts and proceedings of the union, it could have very easily determined that
the union had acted arbitrarily in impeaching and expelling from its ranks
petitioner Cariño.
11. SOME PRINCIPLES ON TERMINATION DUE TO VIOLATION

OF UNION SECURITY CLAUSE.
 Employer is obligated to act upon being demanded by the union to
terminate the employment of its errant members.
 Members of the minority union cannot be compelled to join
the bargaining union. The union security clause therefore does not
cover employees who are members of the union/s other than the bargaining
union. Not being so covered, they cannot be dismissed for violation of said
clause.
 The employer has the right to be reimbursed for payment of any
claims arising out of dismissals demanded by the union under the union
security clause. Such right of reimbursement may be invoked:
(1) By express provision in the CBA to that effect; or
(2) By securing it through judicial directive.
(b) CHECK-OFF; UNION DUES, AGENCY FEES

1. CHECK-OFF OF AGENCY FEE, DIFFERENT FROM CHECK-
OFF OF UNION DUES AND ASSESSMENTS.
Check-off of agency fee does not require the execution by the non-
bargaining union members of individual written authorizations; while

such is an indispensable requisite for check-off of union dues and
special assessments from members
of the bargaining union.
4. UNFAIR LABOR PRACTICE IN COLLECTIVE BARGAINING

(a) BARGAINING IN BAD FAITH
1. BASIC PRINCIPLES.
It is essential that the employer and the employees should both act in good
faith.
Where an employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty to
bargain collectively.
2. MAKING A PROMISE DURING THE CBA NEGOTIATIONS,
NOT AN INDICATION OF BAD FAITH.
Promises made by management during the CBA negotiations may not be
considered an indication of bad faith or a scheme of feigning to undertake
the negotiation proceedings through empty promises.
3. ADAMANT STANCE RESULTING IN AN IMPASSE, NOT AN
INDICIUM OF BAD FAITH.
The adamant insistence on a bargaining position to the point where the
negotiations reach an impasse does not establish bad faith. Neither can bad
faith be inferred from a party’s insistence on the inclusion of a particular
substantive provision unless it concerns trivial matters or is obviously
intolerable.
4. PARTIES HAVE NO OBLIGATION TO PRECIPITATELY
AGREE TO THE PROPOSALS OF EACH OTHER.
While the law makes it an obligation for the employer and the employees to
bargain collectively with each other, such compulsion does not include the
commitment to precipitately accept or agree to the proposals of the other.
All it contemplates is
that both parties should approach the negotiation with an open mind and
make reasonable effort to reach a common ground of agreement.
5. ALLEGATIONS OF BAD FAITH WIPED OUT WITH THE
SIGNING OF THE CBA.
With the execution of the CBA, bad faith bargaining can no longer be
imputed upon any of the parties thereto. All provisions in the CBA are
supposed to have been jointly and voluntarily incorporated therein by the

parties. The CBA is proof enough that the company exerted reasonable
effort at good faith bargaining.
1 G.R. No. 91086, May 8, 1990, 185 SCRA 177.
(b) REFUSAL TO BARGAIN

1. FAILURE OR REFUSAL OF MANAGEMENT TO GIVE
COUNTER-PROPOSALS TO THE UNION’S DEMANDS.
The failure of the employer to submit its counter-proposals to the
demands of the bargaining union does not, by itself, constitute refusal to
bargain. However, it is different if the employer refuses to submit an
answer or reply to the written bargaining proposals of the certified
bargaining union. In this case, unfair labor practice is committed.
In General Milling Corporation v. CA,1 the Supreme Court found the
petitioner guilty of unfair labor practice for refusing to send a counter-
proposal to the union and to bargain anew on the economic terms of the
CBA.
Similarly, in the earlier case of Colegio de San Juan de Letran v.
Association of Employees and Faculty of Letran,2 the petitioner
school was declared guilty of unfair labor practice when it failed to make
a timely reply to the proposals of the certified bargaining union
more than a month after the same were submitted to it. In
explaining its failure to reply, the school merely offered the feeble excuse
that its Board of Trustees had not yet convened to discuss the matter.
Clearly, its actuation showed a lack of sincere desire to negotiate the CBA
thereby rendering it guilty of unfair labor practice.
2. REFUSAL OF A PARTY TO SIGN THE CBA.

A party to a fully-concluded CBA may be compelled to sign it, especially if
said refusal to sign is the only remaining hitch to its being implemented.
Such refusal is considered an unfair labor practice.
(c) INDIVIDUAL BARGAINING

1. EMPLOYER’S ACT OF NEGOTIATING WITH UNION
MEMBERS INDIVIDUALLY, A ULP.

To negotiate or attempt to negotiate with individual workers rather than
with the certified bargaining agent is an unfair labor practice.
In Insular Life Assurance Co., Ltd., Employees Association-NATU
v. Insular Life Assurance Co., Ltd.,3 respondent company, through its
president, sent two (2) sets of letters to the individual strikers during the
strike. The first contained promises of benefits to the employees in order to
entice them to return to work; while the second contained threats to obtain
replacements for the striking employees in the event they did not report for
work on June 2, 1958. The respondents contend that the sending of the
letters constituted a legitimate exercise of their freedom of speech. The
Supreme Court, however, disagreed. The said letters were directed to the
striking employees individually - by registered special delivery mail at that -
without being coursed through the unions which were representing the
employees in collective bargaining. Moreover, the sending of these letters is
not protected by the free speech provision of the Constitution. The free
speech protection under the Constitution is inapplicable where the
expression of opinion by the employer or his agent contains a promise of
benefit or threats or reprisal.
2. UNION CANNOT VALIDLY BARGAIN IN BEHALF OF ITS

MEMBERS ONLY.
Respondent union in Philippine Diamond Hotel and Resort, Inc.
[Manila Diamond Hotel] v. Manila Diamond Hotel Employees
Union,4 insists that it could validly bargain in behalf of “its members”
only. The Supreme Court, however, ruled that the same would only
“fragment the employees” of petitioner. What respondent union will
be achieving is to divide the employees, more particularly, the rank-and-file
employees of petitioner hotel. The other workers who are not members are
at a serious disadvantage, because if the same shall be allowed, employees
who are non-union members will be economically impaired and will not be
able to negotiate their terms and conditions of work, thus defeating the very
essence and reason of collective bargaining which is an effective safeguard
against the evil schemes of employers in terms and conditions of work.
Petitioner’s refusal to bargain then with respondent cannot be
considered an unfair labor practice to justify the staging of the
strike.

(d) BLUE-SKY BARGAINING
1. CONCEPT.
“Blue-sky bargaining” means making exaggerated or unreasonable
proposals. This kind of unfair labor practice act may only be committed by
the bargaining union.
(e) SURFACE BARGAINING
1. CONCEPT.
“Surface bargaining” is defined as “going through the motions of
negotiating” without any legal intent to reach an agreement. This kind of
unfair labor practice may only be committed by the employer.
1 G.R. No. 146728, Feb. 11, 2004.

2 G.R. No. 141471, Sept. 18, 2000.
3 G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.
4 G.R. No. 158075, June 30, 2006.
5. UNFAIR LABOR PRACTICE

(ULP)
(a) NATURE OF ULP
1. WHEN AN ACT CONSTITUTES ULP.

At the outset, it must be clarified that not all unfair acts constitute
ULPs. While an act or decision of an employer or a union may be unfair,
certainly not every unfair act or decision thereof may constitute ULP as
defined and enumerated under the law.
The act complained of as ULP must have a proximate and causal
connection with any of the following 3 rights:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the technical
signification of the term “unfair labor practice.”
2. THE ONLY ULP WHICH MAY OR MAY NOT BE RELATED TO
THE EXERCISE OF THE RIGHT TO SELFORGANIZATION AND
COLLECTIVE BARGAINING.

The only ULP which is the exception as it may or may not relate to the
exercise of the right to self-organization and collective bargaining is the act
described under Article 248 [f], i.e., to dismiss, discharge or
otherwise prejudice or discriminate against an employee for
having given or being about to give testimony under the Labor
Code.
3. LABOR CODE PROVISIONS ON ULP.
Under the Labor Code, there are only five (5) provisions related to ULP, to
wit:
1. Article 247 which describes the concept of ULPs and prescribes the
procedure for their prosecution;
2. Article 248 which enumerates the ULPs that may be committed by
employers;
3. Article 249 which enumerates the ULPs that may be committed by
labor organizations;
4. Article 261 which considers violations of the CBA as no longer ULPs
unless the same are gross in character which means flagrant and/or
malicious refusal to comply with the economic provisions thereof.
5. Article 263 [c] which refers to union-busting, a form of ULP, involving
the dismissal from employment of union officers duly elected in accordance
with the union constitution and by-laws, where the existence of the union is
threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP.
A ULP may be committed by an employer or by a labor organization. Article
248 describes the ULPs that may be committed by an employer; while
Article 249 enumerates those which may be committed by a labor
organization.
On the part of the employer, only the officers and agents of corporations,
associations or partnerships who have actually participated in or authorized
or ratified ULPs are criminally liable.
On the part of the union, only the officers, members of governing boards,
representatives or agents or members of labor associations or organizations
who have actually participated in or authorized or ratified the ULPs are
criminally liable.
5. ELEMENTS OF ULP.
Before an employer or labor organization may be said to have committed
ULP, the following elements must concur:

1. There should exist an employer-employee relationship between the
offended party and the offender; and
2. The act complained of must be expressly mentioned and defined in
the Labor Code as an unfair labor practice.
Absent one of the elements aforementioned will not make the act an unfair
labor practice.
6. ASPECTS OF ULP.
Under Article 247, a ULP has two (2) aspects, namely:
1. Civil aspect; and
2. Criminal aspect.
The civil aspect of an unfair labor practice includes claims for actual, moral
and exemplary damages, attorney’s fees and other affirmative reliefs.
Generally, these civil claims should be asserted in the labor case before
the Labor Arbiters who have original and exclusive jurisdiction over
unfair labor practices. The criminal aspect, on the other hand, can only be
asserted before the regular court.
(b) ULP OF EMPLOYERS
I. INTERFERENCE WITH, RESTRAINT OR COERCION OF
EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELF-
ORGANIZATION
1. TEST OF INTERFERENCE, RESTRAINT OR COERCION.

The terms “interfere,” “restrain” and “coerce” are very broad that any act of
management that may reasonably tend to have an influence or effect on the
exercise by the employees of their right to self-organize may fall within
their meaning and coverage. According to the Supreme Court in Insular
Life Assurance Co., Ltd., Employees Association-NATU v. Insular
Life Assurance Co., Ltd.,1 the test of whether an employer has interfered
with or restrained or coerced employees within the meaning of the law is
whether the employer has engaged in conduct which may reasonably tend
to interfere with the free exercise of the employees’ rights. It is not
necessary that there be direct evidence that any employee was in fact
intimidated or coerced by the statements or threats of the employer if there
is a reasonable inference that the anti-union conduct of the employer does
have an adverse effect on the exercise of the right to self-organization and
collective bargaining.

2. TOTALITY OF CONDUCT DOCTRINE.
In ascertaining whether the act of the employer constitutes interference
with, restraint or coercion of the employees’ exercise of their right to self-
organization and collective bargaining, the “totality of conduct doctrine”
may be applied.
The totality of conduct doctrine means that expressions of opinion by an
employer, though innocent in themselves, may be held to constitute an
unfair labor practice because of the circumstances under which they were
uttered, the history of the particular employer’s labor relations or anti-
union bias or because of their connection with an established collateral plan
of coercion or interference. An expression which may be permissibly
uttered by one employer, might, in the mouth of a more hostile
employer, be deemed improper and consequently actionable as an unfair
labor practice. The past conduct of the employer and like considerations,
coupled with an intimate connection between the employer’s action and the
union affiliation or activities of the particular employee or employees taken
as a whole, may raise a suspicion as to the motivation for the employer’s
conduct. The failure of the employer to ascribe a valid reason therefor may
justify an inference that his unexplained conduct in respect of the particular
employee or employees was inspired by the latter’s union membership and
activities.
3. INTERFERENCE IN THE EMPLOYEE’S RIGHT TO SELF-

ORGANIZATION.
a. Interference is always ULP.
The judicial dictum is that any act of interference by the employer in the
exercise by employees of their right to self-organization constitutes an
unfair labor practice. This is the very core of ULP.
In Hacienda Fatima v. National Federation of Sugarcane
Workers – Food and General Trade,2 the Supreme Court upheld the
factual findings of the NLRC and the Court of Appeals that from the
employer’s refusal to bargain to its acts of economic inducements resulting
in the promotion of those who withdrew from the union, the use of armed
guards to prevent the organizers to come in, and the dismissal of union
officials and members, one cannot but conclude that the employer did not
want a union in its hacienda - a clear interference in the right of the

workers to self-organization. Hence, the employer was held guilty of unfair
labor practice.
b. Formation of a union is never a valid ground to dismiss.
c. It is ULP to dismiss a union officer or an employee for his
union activities.
II. YELLOW DOG CONTRACT

1. WHAT IS A YELLOW DOG CONTRACT?
It is one which exacts from workers as a condition of employment that they
shall not join or belong to a labor organization, or attempt to
organize one during their period of employment or that they
shall withdraw therefrom in case they are already members of a
labor organization.
2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.
A typical yellow dog contract embodies the following stipulations:
(1) A representation by the employee that he is not a member of a
labor organization;
(2) A promise by the employee that he will not join a union; and
(3) A promise by the employee that upon joining a labor
organization, he will quit his employment.
The act of the employer in imposing such a condition constitutes unfair
labor practice under Article 248(b) of the Labor Code. Such stipulation in
the contract is null and void.
III. CONTRACTING OUT OF SERVICES AND FUNCTIONS

1. GENERAL RULE.
As a general rule, the act of an employer in having work or certain services
or functions being performed by union members contracted out is not per
se an unfair labor practice. This is so because contracting-out of a job, work
or service is clearly an exercise by the employer of its business judgment
and its inherent management rights and prerogatives. Hiring of workers is
within the employer’s inherent freedom to regulate its business and is a
valid exercise of its management prerogative subject only to special laws
and agreements on the matter and the fair standards of justice. The
employer cannot be denied the faculty of promoting efficiency and attaining
economy by a study of what units are essential for its operation. It has the

ultimate right to determine whether services should be performed by its
personnel or contracted to outside agencies.
1 G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.
2 G.R. No. 149440, Jan. 28, 2003.
2. WHEN CONTRACTING-OUT BECOMES ULP.

It is only when the contracting out of a job, work or service being performed
by union members will interfere with, restrain or coerce employees in the
exercise of their right to self-organization that it shall constitute an unfair
labor practice. Thus, it is not unfair labor practice to contract out work for
reasons of business decline, inadequacy of facilities and
equipment, reduction of cost and similar reasonable grounds.
IV. COMPANY UNION

1. COMPANY INITIATED, DOMINATED OR ASSISTED UNION.
Paragraph [d] of Article 248 considers it an unfair labor practice to initiate,
dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial
or other support to it or its organizers or
supporters. Such union is called “company union” as its formation,
function or administration has been assisted by any act defined as unfair
labor practice under the Labor Code.
V. DISCRIMINATION
1. COVERAGE OF PROHIBITION.
What is prohibited as unfair labor practice under the law is to discriminate
in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor
organization.
4. MATERIALITY OF PURPOSE OF ALLEGED

DISCRIMINATORY ACT.
In Manila Pencil Co., Inc. v. CIR,1 it was ruled that even assuming that
business conditions justify the dismissal of employees, it is an unfair
labor practice of employer to dismiss permanently only union

members and not non-unionists.
In Manila Railroad Co. v. Kapisanan ng mga Manggagawa sa
Manila Railroad Co.,2 the non-regularization of long-time
employees because of their affiliation with the union while new
employees were immediately regularized was declared an act of
discrimination.
VI. FILING OF CHARGES OR GIVING OF TESTIMONY

1. CONCEPT.
Under paragraph [f] of Article 248 of the Labor Code, it is an unfair labor
practice for an employer to dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or being about to give
testimony under the Labor Code.
2. THE ONLY ULP NOT REQUIRED TO BE RELATED TO
EMPLOYEE’S EXERCISE OF THE RIGHT TO
SELFORGANIZATION AND COLLECTIVE BARGAINING.
It must be underscored that Article 248(f) is the only unfair labor practice
that need not be related to the exercise by the employees of their right to
self-organization and collective bargaining.
In Itogon-Suyoc Mines, Inc. v. Baldo,3 it was declared that an unfair
labor practice was committed by the employer when it dismissed the
worker who had testified in the hearing of a certification election case
despite its prior request for the employee not to testify in the said
proceeding accompanied with a promise of being reinstated if he followed
said request.
VII. CBA-RELATED ULPs

1. THREE (3) CBA-RELATED ULPs.
Article 248 enunciates three (3) CBA-related unfair labor practices, to wit:
1. To violate the duty to bargain collectively as prescribed in the
Labor Code.
2. To pay negotiation or attorney’s fees to the union or its
officers or agents as part of the settlement of any issue in
collective bargaining or any other dispute.
3. To violate a collective bargaining agreement.

VII-A. PAYMENT OF NEGOTIATION AND ATTORNEY’S FEES
1. WHEN PAYMENT CONSIDERED ULP.
Article 248(h) of the Labor Code considers as an unfair labor practice the
act of the employer in paying negotiation fees or attorney’s fees to the union
or its officers or agents as part of the settlement of any issue in collective
bargaining or any other dispute.
1 G.R. No. L-16903, Aug. 31, 1965, 14 SCRA 955.
2 G.R. No. L-19728, July 30, 1964.
3 G.R. No. L-17739, Dec. 24, 1964.
VII-B. VIOLATION OF THE CBA

1. CORRELATION.
Article 248(i) of the Labor Code should be read in relation to Article 261
thereof. Under Article 261, as amended, violations of a CBA, except those
which are gross in character, shall no longer be treated as an unfair labor
practice and shall be resolved as grievances under the CBA. Gross
violations of CBA shall mean flagrant and/or malicious refusal to comply
with the economic provisions of such agreement.
2. CASE LAW.
The act of the employer in refusing to implement the negotiated wage
increase stipulated in the CBA, which increase is intended to be distinct and
separate from any other benefits or privileges that may be forthcoming to
the employees, is an unfair
labor practice. Refusal for a considerable number of years to give salary
adjustments according to the improved salary scales in the CBA is an unfair
labor practice.
ULP OF LABOR ORGANIZATIONS
I. RESTRAINT AND COERCION OF EMPLOYEES IN THE

EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR
COERCE EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO
SELF-ORGANIZE.

Under Article 249(a), it is ULP for a labor organization, its officers, agents
or representatives to restrain or coerce employees in the exercise of their
right to self-organization. Compared to similar provision of Article 248(a)
of the Labor Code, notably lacking is the use of the word “interfere” in the
exercise of the employees’ right to self-organize. The significance in the
omission of this term lies in the grant of unrestricted license to the labor
organization, its officers, agents or representatives to interfere with the
exercise by the employees of their right to self-organization. Such
interference is not unlawful since without it, no labor organization can be
formed as the act of recruiting and convincing the employees is definitely
an act of interference.
II. DISCRIMINATION
1. CONCEPT.
Under Article 249(b), it is ULP for a labor organization, its officers, agents
or representatives to cause or attempt to cause an employer to discriminate
against an employee, including discrimination against an employee with
respect to whom
membership in such organization has been denied, or to terminate an
employee on any ground other than the usual terms and conditions under
which membership or continuation of membership is made available to
other members.
III. DUTY OF UNION TO BARGAIN COLLECTIVELY

1. CONCEPT.
Under Article 249(c), it is ULP for a duly certified sole and exclusive
bargaining union, its officers, agents or representatives to refuse or violate
the duty to bargain collectively with the employer. This is the counterpart
provision of Article 248(g) respecting the violation by the employer of its
duty to bargain collectively.
2. PURPOSE.
The obvious purpose of the law is to ensure that the union will negotiate
with management in good faith and for the purpose of concluding a
mutually beneficial agreement regarding the terms and conditions of their
employment relationship.

IV. ANTI-FEATHERBEDDING DOCTRINE
1. CONCEPT.
Under Article 249(d), it is ULP for a labor organization, its officers, agents
or representatives to cause or attempt to cause an employer to pay or
deliver or agree to pay or deliver any money or other things of value, in the
nature of an exaction, for services which are not performed or not to be
performed, including the demand for fee for union negotiations.
This practice of the union is commonly known as “featherbedding” as it
unduly and unnecessarily maintains or increases the number of employees
used or the amount of time consumed to work on a specific job. This is done
by the employees to unduly secure their jobs in the face of technological
advances or as required by minimum health and safety standards, among
other justifications. These featherbedding practices have been found to be
wasteful and without legitimate justifications.
2. DEMAND FOR PAYMENT OF STANDBY SERVICES.

A union commits an unfair labor practice under this provision by causing or
attempting to cause an employer to pay or agree to pay for standby services.
Payments for “standing-by,” or for the substantial equivalent of “standing-
by,” are not payments for “services performed” within the meaning of the
law. When an employer received a bona-fide offer of competent
performance of relevant services, it remains for the employer, through free
and fair negotiation, to determine whether such offer should be accepted
and what compensation should be paid for the work done.
V. DEMAND OR ACCEPTANCE OF NEGOTIATION FEES OR

ATTORNEY’S FEES
1. CONCEPT.
Under Article 249(e), it is ULP for a labor organization, its officers, agents
or representatives to ask for or accept negotiation fees or attorney’s fees
from employers as part of the settlement of any issue in collective
bargaining or any other dispute.
VI. VIOLATION OF THE CBA

1. CONCEPT.

Under Article 249(f), it is ULP for a labor organization, its officers, agents
or representatives to violate a CBA.
2. COUNTERPART PROVISION.
This is the counterpart provision of Article 248(i) regarding the employer’s
act of violating a CBA. But it must be noted that under Article 261 of the
Labor Code, violation of the CBA is generally considered merely a grievable
issue. It becomes an
unfair labor practice only if the violation is gross in character which means
that there is flagrant and/or malicious refusal to comply with the economic
(as distinguished from non-economic) stipulations in the CBA. This
principle applies not only to the employer but to the labor organization as
well.
VII. CRIMINAL LIABILITY FOR ULPs OF LABOR

ORGANIZATION
1. PERSONS LIABLE.
Article 249 is explicit in its provision on who should be held liable for ULPs
committed by labor organizations. It states that only the officers, members
of governing boards, representatives or agents or members of labor
associations or organizations who have actually participated in, authorized
or ratified unfair labor practices shall be held criminally liable.
C. RIGHT TO PEACEFUL CONCERTED ACTIVITIES
1. FORMS OF CONCERTED ACTIVITIES

1. FORMS OF CONCERTED ACTIVITIES.
There are three (3) forms of concerted activities, namely:
1. Strike;
2. Lockout; and
3. Picketing.
2. STRIKE.
“Strike” means any temporary stoppage of work by the concerted action of
the employees as a result of an industrial or labor dispute.
b. Forms and classification of strikes.

A strike may be classified:
1. As to nature:
a. Legal strike - one called for a valid purpose and conducted through
means allowed by law.
b. Illegal strike - one staged for a purpose not recognized by law or, if for a
valid purpose, it is conducted through means not sanctioned by law.
c. Economic strike - one declared to demand higher wages, overtime pay,
holiday pay, vacation pay, etc. It is one which is declared for the purpose of
forcing wage or other concessions from the employer for which he is not
required by law to grant.
d. Unfair labor practice (ULP) or political strike - one called to protest
against the employer’s unfair labor practices enumerated in Article 248 of
the Labor Code, including gross violation of the CBA under Article 261 and
unionbusting under Article 263(c) of the Labor Code.
e. Slowdown strike - one staged without the workers quitting their work
but by merely slackening or reducing their normal work output. It is also
called “a strike on the installment plan.”
f. Mass leaves - One where the employees simultaneously filed leaves of
absence based on various reasons such as, inter alia, vacation and sick
leaves.
g. Wildcat strike - one declared and staged without the majority
approval of the recognized bargaining agent.
h. Sitdown strike - one where the workers stop working but do not leave
their place of work.
i. Overtime boycott – one involving the act of the workers in refusing to
render overtime work in violation of the CBA, resorted to as a means to
coerce the employer to yield to their demands.
j. Boycott of products – one which involves the concerted refusal to
patronize an employer's goods or services and to persuade others to a like
refusal.
k. Attempts to damage, destroy or sabotage plant equipment and facilities
and similar activities;
l. The sporting by the workers of closely cropped hair or cleanly
shaven heads after their union filed a notice of strike as a result
of a CBA deadlock is a form of illegal strike.1
2. As to coverage:
a. General strike – one which covers and extends over a whole province or

country. In this kind of strike, the employees of various companies and
industries cease to work in sympathy with striking workers of another
company. It is also resorted to for the purpose of putting pressure on the
government to enact certain labor-related measures such as mandated
wage increases or to cease from implementing a law which workers
consider inimical to their interest. It is also mounted for purposes of
paralyzing or crippling the entire economic dispensation.
b. Particular strike – one which covers a particular establishment or
employer or one industry involving one union or federation.
3. As to purpose:
a. Economic strike.
b. Unfair labor practice strike or political strike.
4. As to the nature of the strikers’ action:
a. Partial strike – one which consists of unannounced work stoppages such
as slowdowns, walkouts or unauthorized extension of rest periods.
b. Sit-down strike.
c. Slowdown strike.
5. As to the extent of the interest of strikers:
a. Primary strike – refers to a strike conducted by the workers against their
employer, involving a labor dispute directly affecting them.
b. Secondary strike - refers to a strike staged by the workers of an employer
involving an issue which does not directly concern or affect their
relationship but rather, by some circumstances affecting the workers such
as when the employer persists to deal with a third person against whom the
workers have an existing grievance. Workers stage this kind of strike to
secure the economic assistance of their employer to force the third person
to yield to the union on the issues involving it and said third person.
c. Sympathy strike - refers to a strike where the strikers have no demands
or grievances or labor dispute of their own against their employer but
nonetheless stage the strike for the purpose of aiding, directly or indirectly,
other strikers in other establishments or companies, without necessarily
having any direct relation to the advancement of the strikers’ interest. This
is patently an illegal strike. An example of a sympathy strike is the “welga
ng bayan” where workers refuse to render work to join a general strike
which does not involve a labor or industrial dispute between the strikers
and the employer struck against but it is staged in pursuit of certain ends

such as reduction in the electric power rates, increase in the legislated
wages, etc.
3. LOCKOUT.
“Lockout” means the temporary refusal by an employer to furnish work as a
result of an industrial or labor dispute.
It consists of the following:
1. Shutdowns;
2. Mass retrenchment and dismissals initiated by the employer.
3. The employer’s act of excluding employees who are union members.
4. PICKETING.
“Picketing” is the act of workers in peacefully marching to and fro before an
establishment involved in a labor dispute generally accompanied by the
carrying and display of signs, placards and banners intended to inform the
public about the dispute.
2. WHO MAY DECLARE A STRIKE OR LOCKOUT?

1. WHO MAY DECLARE A STRIKE?
a. Proper party.
Only a legitimate labor organization may declare a strike. For obvious
reason, the employer cannot.
1 National Union of Workers in the Hotel, Restaurant and Allied Industries
[NUWHRAIN-APL-IUF] Dusit Hotel Nikko Chapter v. The Honorable CA,
G.R. Nos. 163942 and 166295, Nov. 11, 2008.
b. Basic requirements.
As to the personality of the union, the following requirements should be
shown before a strike may be validly declared and staged:
a. The union should be legitimate. A strike conducted by a union which
has not been shown to be a legitimate labor organization is illegal.
b. In organized establishment where there is a certified bargaining

agent, only the recognized or certified collective bargaining union can
validly stage a strike. A minority union cannot stage a strike. A

strike conducted by a minority union is patently illegal because
no labor dispute which will justify the conduct of a strike may
exist between the employer and a minority union. To permit the
union’s picketing activities would be to flaunt at the will of the majority.
c. In unorganized establishment where there is no certified

bargaining agent, any legitimate labor organization in the
establishment may declare a strike but only on the ground of unfair
labor practice. The only other ground of bargaining deadlock cannot be
invoked in support of a strike in an unorganized establishment for the
simple reason that no CBA can be negotiated and concluded absent such
recognized or certified collective bargaining agent. In this situation, the
existence of a bargaining deadlock is an impossibility.
2. WHO MAY DECLARE A LOCKOUT?

a. Proper party.
Only the employer can declare and stage a lockout. For obvious reason, no
union can.
b. Grounds.
The employer may declare a lockout based on any of the two (2) grounds
that may similarly be invoked by the union in staging a strike, i.e., (1)
bargaining deadlock; and/or (2) unfair labor practice.
3. WHO MAY STAGE A PICKET?

Although not mentioned in the syllabus, it is important to discuss this
point. Distinctively, in case of picketing, the absence of employment
relationship between the employer and the picketers or some of
them does not affect its validity. Picketing, if peacefully carried
out, cannot be prohibited even in the absence of employer-
employee relationship. Example: A picket conducted by the employees
with the participation of militant groups like Bayan, Gabriela, etc. will not
make the picket illegal.
3. REQUISITES FOR A VALID STRIKE

1. REQUISITES FOR A VALID STRIKE.
a. Procedural but mandatory requisites.
In accordance with Article 263 and pertinent prevailing jurisprudence, a
strike, in order to be valid and legal, must conform to the following
procedural requisites:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of strike must be filed with the NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least
twenty-four (24) hours prior to the taking of the strike vote by secret
balloting, informing said office of the decision to conduct a strike vote, and
the date, place, and time thereof;
4th requisite - A strike vote must be taken where a majority of the
members of the union obtained by secret ballot in a meeting called for the
purpose, must approve it;
5th requisite - A strike vote report should be submitted to the NCMB-
DOLE at least seven (7) days before the intended date of the strike;
6th requisite - Except in cases of union-busting, the cooling-off period of
15 days, in case of unfair labor practices of the employer, or 30 days, in case
of collective bargaining deadlock, should be fully observed; and
7th requisite - The 7-day waiting period/strike ban reckoned after the
submission of the strike vote report to the NCMB-DOLE should also be
fully observed in all cases.
All the foregoing requisites, although procedural in nature, are
mandatory and failure of the union to comply with any of them would
render the strike illegal.
I. FIRST REQUISITE:
EXISTENCE OF VALID AND FACTUAL GROUND/S
1. VALID GROUNDS.
The law recognizes only 2 grounds in support of a valid strike, viz.:
1. Collective bargaining deadlock (Economic Strike); and/or
2. Unfair labor practice (Political Strike).
A strike not based on any of these two grounds is illegal.
2. SOME PRINCIPLES ON THE FIRST REQUISITE.

 Violation of CBA, except when gross, is not an unfair labor practice,
hence, may not be cited as ground for a valid strike. Ordinary violation of a
CBA is no longer treated as an unfair labor practice but as a mere grievance
which should be processed through the grievance machinery and voluntary
arbitration.
 Inter-union or intra-union dispute is not a valid ground.
 Violation of labor standards is not a valid ground.
 Wage distortion is not a valid ground.
II. SECOND REQUISITE:

FILING OF A NOTICE OF STRIKE
1. NOTICE OF STRIKE.
No labor organization shall declare a strike without first having filed a
notice of strike.
III. THIRD REQUISITE:

SERVICE OF A 24-HOUR PRIOR NOTICE
In the 2005 case of Capitol Medical Center, Inc. v. NLRC, it was
imposed as additional requisite that a 24-hour notice must be served to the
NCMB-DOLE prior to the taking of the strike vote by secret balloting,
informing it of the union’s decision to
conduct a strike vote as well as the date, place, and time thereof.
IV. FOURTH REQUISITE:

CONDUCT OF A STRIKE VOTE
1. MAJORITY APPROVAL OF THE STRIKE.
No labor organization shall declare a strike without the necessary strike
vote first having been obtained and reported to the NCMB-DOLE.
A decision to declare a strike must be approved by a majority of the total
union membership in the bargaining unit concerned, obtained by secret
ballot in meetings or referenda called for that purpose. This process is
called “strike vote balloting.”
2. PURPOSE.
The purpose of a strike vote is to ensure that the decision to strike broadly

rests with the majority of the union members in general and not with a
mere minority.
3. DURATION OF THE VALIDITY OF THE MAJORITY
APPROVAL OF A STRIKE.
The majority decision to stage a strike is valid for the duration of the
dispute based on substantially the same grounds considered when the
strike vote was taken.
V. FIFTH REQUISITE:
SUBMISSION OF THE STRIKE VOTE TO NCMB-DOLE
1. PURPOSE FOR REQUIRING A STRIKE VOTE REPORT.
The evident intention of the law in mandatorily requiring the submission of
the strike vote report is to afford the NCMB of opportunity to verify the
truth and veracity of the majority vote by the union members in support of
the intended strike.
2. WHEN TO SUBMIT THE STRIKE VOTE REPORT.
The strike vote report should be submitted to the NCMB-DOLE at least
seven (7) days before the actual staging of the intended strike, subject to
the observance of the cooling-off periods provided under the law.
VI. SIXTH REQUISITE:

OBSERVANCE OF THE COOLING-OFF PERIOD
1. GENERAL RULE.
The cooling-off periods provided under the law before the intended date of
the actual mounting of the strike are as follows:
1. In case of bargaining deadlock, the cooling-off period is thirty (30)
days from the filing of the notice of strike; or
2. In case of unfair labor practice, the cooling-off period is fifteen (15)
days from the filing of the notice of strike.
2. EXCEPTION: IN CASE OF UNION-BUSTING.

In case of dismissal from employment of union officers (not ordinary
members) duly elected in accordance with the union constitution and by-
laws which may constitute union-busting because the existence of the
union is threatened by reason of such dismissal, the 15-day cooling-off
period does not apply and the union may take action immediately after

the strike vote is conducted and the results thereof duly submitted to the
regional branch of the NCMB.
In cases of union-busting, only the 15-day cooling-off period need not be
observed; all the other requisites must be fully complied with.
3. RECKONING OF THE COOLING-OFF PERIODS.

The start of the cooling-off periods should be reckoned from the time the
notice of strike is filed with the NCMB-DOLE, a copy thereof having been
served on the other party concerned.
4. PURPOSE OF THE COOLING-OFF PERIODS.
The purpose of the cooling-off periods is to provide an opportunity for
mediation and conciliation of the dispute by the NCMB-DOLE with the end
in view of amicably settling it.
VII. SEVENTH REQUISITE:

7-DAY WAITING PERIOD OR STRIKE BAN
1. PURPOSE OF THE 7-DAY WAITING PERIOD OR STRIKE BAN.
The seven (7) day waiting period is intended to give the NCMB-DOLE an
opportunity to verify whether the projected strike really carries the
approval of the majority of the union members.
2. WAITING PERIOD/STRIKE BAN VS. COOLING-OFF PERIOD.

The 7-day waiting period or strike ban is a distinct and separate
requirement from the cooling-off period prescribed by law. The latter
cannot be substituted for the former and vice-versa.
The cooling-off period is counted from the time of the filing of the notice of
strike. The 7-day waiting period/strike ban, on the other hand, is reckoned
from the time the strike vote report is submitted to the NCMB-DOLE.
Consequently, a strike is illegal for failure to comply with the prescribed
mandatory cooling-off period and the 7-day waiting period/strike ban after
the submission of the report on the strike vote.
3. BOTH MUST BE COMPLIED WITH SEPARATELY AND

DISTINCTLY FROM EACH OTHER.
The requirements of cooling-off period and 7-day waiting period/strike ban

must both be complied with. The labor union may take the strike vote and
report the same to the NCMB-DOLE within the statutory cooling-off
period. In this case, the 7-day waiting period/strike ban should be counted
from the day following the expiration of the cooling-off period. A contrary
view would certainly defeat and render nugatory the salutary purposes
behind the distinct requirements of cooling-off period and the waiting
period/strike ban.
The NCMB Primer on Strike, Picketing and Lockout,1 issued by the NCMB,
the agency of government directly tasked with the implementation and
enforcement of this particular legal provision and requirement, is very clear
on this point, thus:
“In the event the result of the strike/lockout vote ballot is filed
within the cooling-off period, the 7-day requirement shall be
counted from the day following the expiration of the cooling-off
period.”2
In other words, the seven (7) days should be added to the cooling-off period
of fifteen (15) days, in case of unfair labor practice, or thirty (30) days, in
case of collective bargaining deadlock and it is only after the lapse of the
total number of days after adding the two (2) periods that the
strike/lockout may be lawfully and validly staged.
While there was no categorical declaration on this point, the Supreme
Court, in holding in the 2010 case of Phimco Industries, Inc. v.
Phimco Industries Labor Association (PILA),3 that respondents
fully satisfied the legal procedural requirements, noted that the strike
notice grounded on collective bargaining deadlock was filed on March 9,
1995. Consequently, the 30-day cooling-off period would have lapsed on
April 9, 1995. The strike vote was reached on March 16, 1995 and the
notification thereof was filed with the DOLE on March 17, 1995 or well
within the cooling-off period. Based on the said rule in the NCMB Primer,
the strike could only be validly staged starting from April 17, 1995 and
onwards, i.e., after the lapse of 7 days from April 9, 1995. Hence, since the
actual strike was launched only on April 25, 1995, there was clearly full
compliance with the requisites.
Example: In a case where the notice of strike grounded on ULP is filed on
October 1, 2015, and the strike vote is taken within the cooling-off period,
say, on October 5, 2015 and the strike vote report showing majority support
for the intended strike is submitted to the NCMB-DOLE the following day,

October 6, 2015, the question is when can the union legally stage the strike?
Following the above principle, the answer obviously is on October 24,
2015 or any day thereafter. This is so because the 15-day cooling-off period
for ULP expires on October 16 and adding the 7-day strike ban which
“should be counted from the day following the expiration of the cooling-off
period,” the 7th day would be on October 23, 2015. Obviously, the strike
cannot be conducted on the 7th day but rather after the lapse thereof;
hence, it is only on October 24, 2015 and onwards that the union may
lawfully conduct the strike.
4. SOME PRINCIPLES ON COOLING-OFF PERIOD AND 7-DAY

WAITING PERIOD.
 Deficiency of even one (1) day of the cooling-off period and 7-day strike
ban is fatal.
 One-day strike without complying with the 7-day strike ban is illegal.
4. REQUISITES FOR A VALID LOCKOUT
1. SUBSTANTIALLY SIMILAR REQUISITES AS IN STRIKE.
With a slight, insignificant variation, the procedural but mandatory
requisites for a valid strike discussed above are substantially similar to
those applicable for valid lockout. For purposes of ease and clarity, the
same are presented as follows:
 1st requisite - It must be based on a valid and factual ground;
 2nd requisite - A notice of lockout must be filed with the NCMB-
DOLE;
 3rd requisite - A notice must be served to the NCMB-DOLE at least
twenty-four (24) hours prior to the taking of the lockout vote by secret
balloting, informing said office of the decision to conduct a lockout vote,
and the date, place, and time thereof;
4th requisite - A lockout vote must be taken where a majority of the
members of the Board of Directors of the corporation or association or of
the partners in a partnership obtained by secret ballot in a meeting called
for the purpose, must approve it;
5th requisite - A lockout vote report should be submitted to the NCMB-
DOLE at least seven (7) days before the intended date of the lockout;
 6th requisite - The cooling-off period of 15 days, in case of unfair labor
practices of the labor organization, or 30 days, in case of collective
bargaining deadlock, should be fully observed; and

 7th requisite - The 7-day waiting period/lockout ban reckoned after
the submission of the lockout vote report to the NCMB-DOLE should also
be fully observed
1 2nd Edition, December 1995.
2 No. 6 thereof.
3 G.R. No. 170830, Aug. 11, 2010.in all cases.
5. REQUISITES FOR LAWFUL PICKETING

1. THE REQUISITES FOR A VALID STRIKE ARE NOT
APPLICABLE TO PICKETING.
The seven (7) requisites for a valid strike discussed above do not apply to
picketing.
2. REQUISITES FOR LAWFUL PICKETING.
The most singular requirement to make picketing valid and legal is that it
should be peacefully conducted.
Based on the foregoing provision, the requisites may be summed up as
follows:
1. The picket should be peacefully carried out;
2. There should be no act of violence, coercion or intimidation attendant
thereto;
3. The ingress to (entrance) or egress from (exit) the company premises
should not be obstructed; and
4. Public thoroughfares should not be impeded.
3. RIGHT TO PICKET IS PROTECTED BY THE CONSTITUTION

AND THE LAW.
Unlike a strike which is guaranteed under the Constitutional provision on
the right of workers to conduct peaceful concerted activities under Section
3, Article XIII thereof, the right to picket is guaranteed under the
freedom of speech and of expression and to peaceably assemble
to air grievances under Section 4, Article III (Bill of Rights) thereof.
4. EFFECT OF THE USE OF FOUL LANGUAGE DURING THE

CONDUCT OF THE PICKET.
In the event the picketers employ discourteous and impolite language in

their picket, such may not result in, or give rise to, libel or action for
damages.
5. PICKETING VS. STRIKE.

(a) To strike is to withhold or to stop work by the concerted action of
employees as a result of an industrial or labor dispute. The work stoppage
may be accompanied by picketing by the striking employees outside of the
company compound.
(b) While a strike focuses on stoppage of work, picketing focuses on
publicizing the labor dispute and its incidents to inform the public of what
is happening in the company being picketed.
(c) A picket simply means to march to and fro in front of the employer’s
premises, usually accompanied by the display of placards and other signs
making known the facts involved in a labor dispute. It is but one strike
activity separate and different from the actual stoppage of work.
Phimco Industries, Inc. v. Phimco Industries Labor Association
(PILA).1 - While the right of employees to publicize their dispute falls
within the protection of freedom of expression and the right to peaceably
assemble to air grievances, these rights are by no means absolute.
Protected picketing does not extend to blocking ingress to and
egress from the company premises. That the picket was moving,
was peaceful and was not attended by actual violence may not
free it from taints of illegality if the picket effectively blocked
entry to and exit from the company premises.
6. WHEN PICKET CONSIDERED A STRIKE.

In distinguishing between a picket and a strike, the totality of the
circumstances obtaining in a case should be taken into account.
Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola
Bottlers Phils., Inc.2 - Petitioners contend that what they conducted was
a mere picketing and not a strike. In disagreeing to this contention, the
High Court emphasized that it is not an issue in this case that there was a
labor dispute between the parties as petitioners had notified the respondent
of their intention to stage a strike, and not merely to picket. Petitioners’
insistence to stage a strike is evident in the fact that an amended
notice of strike was filed even as respondent moved to dismiss the first

notice. The basic elements of a strike are present in this case: 106 members
of petitioner Union, whose respective applications for leave of absence on
September 21, 1999 were disapproved, opted not to report for work on said
date, and gathered in front of the company premises to hold a mass protest
action. Petitioners deliberately absented themselves and instead wore red
ribbons and carried placards with slogans such as:
“YES KAMI SA STRIKE,” “PROTESTA KAMI,” “SAHOD, KARAPATAN NG
MANGGAGAWA IPAGLABAN,” “CBA-’WAG BABOYIN,” “STOP UNION
BUSTING.” They marched to and fro in front of the company’s premises
during working hours. Thus, petitioners engaged in a concerted activity
which already affected the company’s operations. The mass concerted
activity obviously constitutes a strike. Moreover, the bare fact that
petitioners were given a Mayor’s permit is not conclusive evidence that
their action/activity did not amount to a strike. The Mayor’s description of
what activities petitioners were allowed to conduct is inconsequential. To
repeat, what is definitive of whether the action staged by petitioners is a
strike and not merely a picket is the totality of the circumstances
surrounding the situation.
1 G.R. No. 170830, Aug. 11, 2010.
2 G.R. Nos. 164302-03, Jan. 24, 2007.
Petitioner union in the 2011 case of Leyte Geothermal Power

Progressive Employees Union-ALU-TUCP v. Philippine National
Oil Company – Energy Development Corporation,1 contends that
there was no stoppage of work; hence, they did not strike. Euphemistically,
petitioner union avers that it “only engaged in picketing,” and maintains
that “without any work stoppage, [its officers and members] only engaged
in xxx protest activity.” The Supreme Court, however, ruled that it was a
strike and not picketing or protest activity that petitioner union staged. It
found the following circumstances in support of such finding:
(1) Petitioner union filed a Notice of Strike on December 28, 1998 with the
DOLE grounded on respondent’s purported unfair labor practices, i.e.,
“refusal to bargain collectively, union busting and mass termination.” On
even date, petitioner Union declared and staged a strike.
(2) The DOLE Secretary intervened and issued a Return-to-Work Order
dated January 4, 1999, certifying the labor dispute to the NLRC for

compulsory arbitration. The Order indicated the following facts: (1) filing of
the notice of strike; (2) staging of the strike and taking control over
respondent’s facilities of its Leyte Geothermal Project on the same day
petitioner union filed the notice of strike; (3) attempts by the NCMB to
forge a mutually acceptable solution proved futile; (4) in the meantime, the
strike continued with no settlement in sight placing in jeopardy the supply
of much needed power supply in the Luzon and Visayas grids.
(3) Petitioner union itself, in its pleadings, used the word “strike.”
(4) Petitioner union’s asseverations are belied by the factual findings of the
NLRC, as affirmed by the CA thus: “The failure to comply with the
mandatory requisites for the conduct of strike is both admitted and clearly
shown on record. Hence, it is undisputed that no strike vote was conducted;
likewise, the cooling-off period was not observed and that the 7-day strike
ban after the submission of the strike vote was not complied with since
there was no strike vote taken.”
In fine, petitioner union’s bare contention that it did not hold a strike
cannot trump the factual findings of the NLRC that petitioner union indeed
struck against respondent. In fact, and more importantly, petitioner union
failed to comply with the requirements set by law prior to holding a strike.
6. ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY

OR CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC
FOR COMPULSORY ARBITRATION
1. WHEN DOLE SECRETARY MAY ASSUME OR CERTIFY A

LABOR DISPUTE.
Article 263(g) of the Labor Code provides that when in the opinion of
the DOLE Secretary, the labor dispute causes or will likely to
cause a strike or lockout in an industry indispensable to the
national interest, he is empowered to
do either of 2 things:
1. He may assume jurisdiction over the labor dispute and decide it
himself; or
2. He may certify it to the NLRC for compulsory arbitration, in which case,
it will be the NLRC which shall hear and decide it.
This power may be exercised by the DOLE Secretary even before the

actual staging of a strike or lockout since Article 263(g) does not
require the existence of a strike or lockout but only of a labor dispute
involving national interest.
2. WHAT CONSTITUTES A NATIONAL INTEREST CASE?

The Labor Code vests in the DOLE Secretary the discretion to determine
what industries are indispensable to the national interest. Accordingly,
upon the determination by the DOLE Secretary that such industry is
indispensable to the national interest, he has authority to assume
jurisdiction over the labor dispute in the said industry or certify it to the
NLRC for compulsory arbitration.
Past issuances of the DOLE Secretary have not made nor attempted to
mention specifically what the industries indispensable to the national
interest are. It was only in Department Order No. 40-H-13, Series of 2013,
that certain industries were specifically named, thus:
“Section 16. Industries Indispensable to the National Interest. –
For the guidance of the workers and employers in the filing of petition for
assumption of jurisdiction, the following industries/services are hereby
recognized as deemed indispensable to the national interest:
a. Hospital sector;
b. Electric power industry;
c. Water supply services, to exclude small water supply services
such as bottling and refilling stations;
d. Air traffic control; and
e. Such other industries as may be recommended by the National
Tripartite Industrial Peace Council (TIPC).”
Obviously, the above enumerated industries are not exclusive as other
industries may be considered indispensable to the national interest based
on the appreciation and discretion of the DOLE Secretary or as may be
recommended by TIPC.
3. DIFFERENT RULE ON STRIKES AND LOCKOUTS IN

HOSPITALS, CLINICS AND MEDICAL INSTITUTIONS.
As a general rule, strikes and lockouts in hospitals, clinics and similar
medical institutions should be avoided.
In case a strike or lockout is staged, it shall be the duty of the striking union

or locking-out employer to provide and maintain an effective skeletal
workforce of medical and other health personnel whose movement and
services shall be unhampered and unrestricted as are necessary to insure
the proper and adequate protection of the life and health of its patients,
most especially emergency cases, for the duration of the strike or lockout.
The DOLE Secretary may immediately assume, within twenty four (24)
hours from knowledge of the occurrence of such a strike or lockout,
jurisdiction over the same or certify it to the NLRC for compulsory
arbitration.
1 G.R. No. 170351, March 30, 2011.
4. SOME PRINCIPLES ON ASSUMPTION/CERTIFICATION

POWER OF THE DOLE SECRETARY.
 Prior notice and hearing are not required in the issuance of the
assumption or certification order.
 The DOLE Secretary may seek the assistance of law enforcement
agencies like the Philippine National Police to ensure compliance with the
provision thereof as well as with such orders as he may issue to enforce the
same.
5. RETURN-TO-WORK ORDER.
a. It is always part of assumption/certification order even if not
expressly stated therein.
The moment the DOLE Secretary assumes jurisdiction over a labor dispute
involving national interest or certifies it to the NLRC for compulsory
arbitration, such assumption or certification has the effect of automatically
enjoining the intended or impending strike or, if one has already been
commenced, of automatically prohibiting its continuation. The mere
issuance of an assumption or certification order automatically carries with
it a return-to-work order, even if the directive to return to work is not
expressly stated therein. It is thus not necessary for the DOLE Secretary to
issue another order directing the strikers to return to work.
It is error therefore for striking workers to continue with their strike
alleging absence of a return-to-work order since Article 263(g) is clear that
once an assumption/certification order is issued, strikes are enjoined or, if
one has already taken place, all strikers should immediately return to work.

b. Nature of return-to-work order.
Return-to-work order is compulsory and immediately executory
in character. It should be strictly complied with by the parties even
during the pendency of any petition questioning its validity in order to
maintain the status quo while the
determination is being made. Filing of a motion for reconsideration
does not affect the enforcement of a return-to-work order which
is immediately executory.
c. Some principles on return-to-work order.
The issue of legality of strike is immaterial in enforcing the return-to-
work order.
Upon assumption or certification, the parties should revert to the status
quo ante litem which refers to the state of things as it was before the
labor dispute or the state of affairs existing at the time of the filing of the
case. It is the last actual, peaceful and uncontested status that preceded the
actual controversy.
To implement the return-to-work order, the norm is actual
reinstatement. However, payroll reinstatement in lieu of actual
reinstatement may properly be resorted to when special circumstances
exist that render actual reinstatement impracticable or otherwise not
conducive to attaining the purposes of the law.
Example:
University of Sto. Tomas v. NLRC, where the teachers ordered to
return to work could not be given back their academic assignments since
the return-to-work order of the DOLE Secretary was issued in the middle of
the first semester of the academic year. The Supreme Court affirmed the
validity of the payroll reinstatement order of the NLRC and ruled that the
NLRC did not commit grave abuse of discretion in providing for the
alternative remedy of payroll reinstatement. It observed that the NLRC was
only trying its best to work out a satisfactory ad hoc solution to a festering
and serious problem.
7. NATURE OF ASSUMPTION ORDER OR CERTIFICATION

ORDER

1. A POLICE POWER MEASURE.
The power to issue assumption or certification orders is an extraordinary
authority granted to the President and to his alter ego, the DOLE
Secretary, the exercise of which should be strictly limited to national
interest cases. It is in the nature of a police power measure. This is
done for the promotion of the common good considering that a prolonged
strike or lockout can be inimical to the national economy.
8. EFFECT OF DEFIANCE OF ASSUMPTION OR CERTIFICATION

ORDERS
1. DEFIANCE OF THE ORDER, A VALID GROUND TO DISMISS.

The defiance by the union, its officers and members of the Labor Secretary's
assumption of jurisdiction or certification order constitutes a valid ground
for dismissal.
The following are the justifications:
1. A strike that is undertaken after the issuance by the DOLE Secretary of an
assumption or certification order becomes a prohibited activity and thus
illegal. The defiant striking union officers and members, as a result, are
deemed to have lost their employment status for having knowingly
participated in an illegal strike.
2. From the moment a worker defies a return-to-work order, he is deemed
to have abandoned his job.
3. By so defying, the workers have forfeited their right to be
readmitted to work.
2. ALL DEFIANT STRIKERS, REGARDLESS OF WHETHER

THEY ARE OFFICERS OR ORDINARY MEMBERS, ARE DEEMED
DISMISSED.
Once the DOLE Secretary assumes jurisdiction over a labor dispute or
certifies it to the NLRC for compulsory arbitration, such jurisdiction should
not be interfered with by the application of the coercive processes of a strike
or lockout. Any defiance thereof is a valid ground for the loss of
employment status.

3. PERIOD OF DEFIANCE OF THE RETURN-TO-WORK ORDER,
NOT MATERIAL.
The length of time within which the return-to-work order was defied by the
strikers is not significant in determining their liability for the legal
consequences thereof. The following cases are illustrative of this rule:
a. University of San Agustin Employees’ Union-FFW v. The CA.1 -
The period of defiance was less than nine (9) hours from 8:45 a.m. to
5:25 p.m. on September 19, 2003.
b. Federation of Free Workers v. Inciong. 2 - The period of defiance
was only nine (9) days.
4. SOME PRINCIPLES ON DEFIANCE OF THE

ASSUMPTION/CERTIFICATION ORDER.
The assumption/certification order may be served at any time of the
day or night.
No practice of giving 24 hours to strikers within which to return
to work. There is no law or jurisprudence recognizing this practice.
The defiant strikers could be validly replaced.
The refusal to acknowledge receipt of the assumption
/certification orders and other processes is an apparent attempt to
frustrate the ends of justice, hence, invalid. The union cannot be allowed to
thwart the efficacy of the said orders issued in the national interest through
the simple expediency of refusing to acknowledge receipt thereof.
9. ILLEGAL STRIKE
1. WHEN IS A STRIKE CONSIDERED ILLEGAL?
A strike is illegal if it is declared and staged:

1) Without complying with the procedural but mandatory requisites
(See 7 requisites above).
2) For unlawful purpose such as to compel the dismissal of an employee
or to force recognition of the union or for trivial and puerile purpose or to
circumvent contracts and judicial orders.

3) Based on non-strikeable or invalid grounds such as:
a) Inter-union or intra-union disputes.
b) Simple violation of CBA in contrast to gross violation thereof which is
deemed ULP.
c) Violation of labor standards.
d) Legislated wage orders (wage distortion).
4) Without first having bargained collectively.

5) In violation of the “no strike, no lockout” clause in the CBA.
6) Without submitting the issues to the grievance machinery or voluntary
arbitration or failing to exhaust the steps provided therein.
7) While conciliation and mediation proceeding is on-going at the NCMB.
8) Based on issues already brought to voluntary or compulsory arbitration.
9) During the pendency of a case involving the same ground/s cited in the
notice of strike.
10) In defiance of an assumption or certification or return-to-work order.
11) In violation of a temporary restraining order or an injunction order.
12) After the conversion of the notice of strike into a preventive mediation
case.
13) Against the prohibition by law.
14) By a minority union.
15) By an illegitimate union.
16) By dismissed employees.
17) In violation of the company code of conduct which prohibits “inciting or
participating in riots, disorders, alleged strikes or concerted actions
detrimental to [Toyota’s] interest,” The penalty for which is dismissal.
18) As protest rallies in front of government offices such as in the
following cases:
Toyota Motor Phils. Corp. Workers Association [TMPCWA] v.
NLRC,3 where the Supreme Court ruled that the protest rallies staged by
the employees from February 21 to 23, 2001 in front of the offices of the
Bureau of Labor Relations (BLR) and the DOLE Secretary constitute illegal
strike and not legitimate exercise of their right to peaceably assemble and
petition the government for redress of grievances. It was illegal for having
been undertaken without satisfying the mandatory pre-requisites for a valid
strike under Article 263 of the Labor Code.
The ruling in Toyota was cited in Solidbank Corporation v. Gamier, 4

as basis in declaring the protest action of the employees of petitioner
Solidbank which was staged in front of the Office of the DOLE Secretary in
Intramuros, Manila, as constitutive of illegal strike since it paralyzed the
operations of the bank. The protest action in this case was conducted
because of the CBA deadlock.
19) As welga ng bayan which is in the nature of a general strike as well
as an extended sympathy strike.
1 G.R. No. 169632, March 28, 2006.
2 G.R. No. L-49983, April 20, 1992.
3 G.R. Nos. 158786 &158789, Oct. 19, 2007.
4 G.R. No. 159460, Nov. 15, 2010.
(a) LIABILITY OF UNION OFFICERS

(b) LIABILITY OF ORDINARY WORKERS
These two topics will be discussed jointly because of their close

interrelation.
1. PARTICIPATION IN LAWFUL STRIKE.
An employee who participates in a lawful strike is not deemed to have
abandoned his employment. Such participation should not constitute
sufficient ground for the termination of his employment even if a
replacement has already been hired by the
employer during such lawful strike.
2. PARTICIPATION IN ILLEGAL STRIKE.

a. Distinction in the liability between union officers and ordinary
union members.
1. Union officers.
The mere finding or declaration of illegality of the strike will result in
the termination of all union officers who knowingly participated in the
illegal strike. Unlike ordinary members, it is not required, for purposes of
termination, that the officers should commit an illegal act during the strike.
However, absent any showing that the employees are union officers, they
cannot be dismissed based solely on the illegality of the strike.
To illustrate how the “knowing participation” of union officers may be
ascertained and established, the following factors were taken into account

in another 2011 case, Abaria v. NLRC,1 which led to the declaration that
they knowingly participated in the illegal strike:
(1) Their persistence in holding picketing activities despite the declaration
by the NCMB that their union was not duly registered as a legitimate labor
organization and notwithstanding the letter from the federation’s legal
counsel informing them that their acts constituted disloyalty to the national
federation; and
(2) Their filing of the notice of strike and conducting a strike vote despite
the fact that their union has no legal personality to negotiate with their
employer for collective bargaining purposes.
2. Ordinary union members.

The mere finding or declaration of illegality of a strike will not result in
termination of ordinary union members. For an ordinary union member to
suffer termination, it must be shown by clear evidence that he has
committed illegal acts during the strike.
b. Reason for the distinction.

The reason for this distinction is that the union officers have the duty to
guide their members to respect the law. If instead of doing so, the officers
urged the members to violate the law and defy the duly constituted
authorities, their dismissal from the service is a just penalty or sanction for
their unlawful act. Their responsibility as main players in an illegal strike is
greater than that of the ordinary union members and, therefore, limiting
the penalty of dismissal only to the former for their participation in an
illegal strike is in order.
c. Some principles on illegality of a strike.

 The fact that the employees are signatories to the CBA does not in itself
sufficiently establish their status as union officers during the illegal strike.
Neither were their active roles during the bargaining negotiations be
considered as evidence of their being union officers.
 Only the union officers during the period of illegal strike are
liable. If the employees acted as union officers after the strike, they may
not be held liable and, therefore, could not be terminated in their capacity
as such.

 Shop stewards are union officers. Hence, they should be
terminated upon the declaration of the illegality of the strike.
 Union officers may be dismissed despite the fact that the
illegal strike was staged only for 1 day or even for less than 10
hours. This holds true in cases of defiance of the assumption/ certification
order issued in national interest cases.
If the dispositive portion of the decision failed to mention the
names of union officers, resort should be made to the text of the
decision.
No wholesale dismissal of strikers allowed. The employer cannot
just unceremoniously dismiss a hundred of its employees in the absence of
clear and convincing proof that these people were indeed guilty of the acts
charged and then, afterwards, go to court to seek validation of the dismissal
it whimsically executed. That certainly cannot be allowed.
3. PARTICIPATION IN THE COMMISSION OF ILLEGAL ACTS

DURING A STRIKE.
a. Legality or illegality of strike, immaterial.
As far as liability for commission of illegal acts during the strike is
concerned, the issue of legality or illegality of the strike is irrelevant. As
long as the union officer or member commits an illegal act in the
course of the strike, be it legal or illegal, his employment can be
validly terminated.
b. Meaning of “illegal acts.”
The term “illegal acts” under Article 264(a) may encompass a number of
acts that violate existing labor or criminal laws, such as the following:
(1) Violation of Article 264(e) of the Labor Code which provides that “[n]o
person engaged in picketing shall commit
any act of violence, coercion or intimidation or obstruct the free ingress to
or egress from the employer’s premises
for lawful purposes, or obstruct public thoroughfares.”
(2) Commission of crimes and other unlawful acts in carrying out the strike.
(3) Violation of any order, prohibition, or injunction issued by the DOLE
Secretary or NLRC in connection with the assumption of jurisdiction or
certification order under Article 263(g) of the Labor Code.
This enumeration is not exclusive as jurisprudence abounds where the term

“illegal acts” has been interpreted and construed to cover other breaches of
existing laws.
Liability for illegal acts should be determined on an individual
basis. For this purpose, the individual identity of the union members
who participated in the commission of illegal acts may be proved thru
affidavits and photographs. Simply referring to them as “strikers,”
or “complainants in this case” is not enough to justify their
dismissal.
1 G.R. Nos. 154113, 187778, 187861 & 196156, Dec. 7, 2011, 661 SCRA 686.
d. Some principles on commission of illegal acts in the course of

the strike.
 Only members who are identified as having participated in the
commission of illegal acts are liable. Those who did not participate
should not be blamed therefor.
 To effectively hold ordinary union members liable, those who
participated in the commission of illegal acts must not only be
identified but the specific illegal acts they each committed should
be described with particularity.
 If violence was committed by both employer and employees, the same
cannot be cited as a ground to declare the strike illegal.
(c) LIABILITY OF EMPLOYER

I. LIABILITY OF EMPLOYER IN CASE OF STRIKE
1. LIABILITY FOR REINSTATEMENT OF STRIKERS.
a. Reinstatement, when proper.
Reinstatement (without backwages) of ordinary rank-and-file union
members who did not participate in the commission of illegal acts
during the conduct of the illegal strike may be ordered.
b. No reinstatement for strikers who committed illegal acts.
The strikers who committed illegal acts during and in the course of a
strike may be terminated. They are not entitled to be reinstated.
Additionally, they may be held criminally liable therefor.
c. Strikers who failed to return to work forfeit reinstatement.
Strikers who failed to report for work without proper justification and
despite the order reinstating them to their job are deemed to have forfeited

their right to reinstatement.
d. Employer who fails to reinstate strikers who were ordered
reinstated by the Labor Arbiter is liable to pay them backwages
reckoned from Labor Arbiter’s issuance of the reinstatement
order up to its reversal by the NLRC.
2. SEPARATION PAY IN LIEU OF REINSTATEMENT IN STRIKE

CASES.
a. Separation pay in lieu of reinstatement, when proper.
In strike cases, the award of separation pay in lieu of reinstatement is
proper only when the strikers did not participate in the commission of
illegal acts in the course thereof.
3. BACKWAGES IN STRIKE CASES.

a. If the strike is illegal, no backwages should be paid.
Thus, in the case of Arellano University Employees and Workers
Union v. CA,1 where the strike was declared illegal, petitioner-union
members who were found not to have participated in the commission of
illegal acts during the strike were ordered reinstated to their former
positions but without backwages. If reinstatement is no longer possible,
they should receive separation pay of one (1) month for every year of service
in accordance with existing jurisprudence. With respect to the union
officers, their mere participation in the illegal strike warrants their
dismissal.
(d) WAIVER OF ILLEGALITY OF STRIKE

1. VOLUNTARY REINSTATEMENT CONSTITUTES A WAIVER OF
THE ILLEGALITY OF THE STRIKE.
In Citizens Labor Union v. Standard Vacuum Oil Co.,2 the act of the
employer in inviting the workers to return to their posts without making
any reference to the pending case involving the issue of the illegality of the
strike or imposing any condition or alteration of the terms of their
employment was deemed a waiver of its right to consider the strikers as
wrongdoers.
More so in this case when such invitation was accepted by the strikers. By
said act, the parties may be said to have both abandoned their original

positions and come to a virtual compromise to resume unconditionally
their former relations.
1 G.R. No. 139940, Sept. 19, 2006.
2 G.R. No. L-7478, May 6, 1955.
10. INJUNCTIONS
I. INJUNCTION IN PICKETING, STRIKE OR LOCKOUT CASES

1. PROHIBITION ON INJUNCTION AGAINST THE CONDUCT OF
STRIKES AND LOCKOUTS.
As a general rule, strikes and lockouts that are validly declared enjoy the
protection of the law and cannot be enjoined unless illegal acts are
committed or threatened to be committed in the course thereof. In the case
of strikes, this policy applies even if the strike appears to be illegal in
nature. The rationale for this policy is the protection extended to the right
to strike under the Constitution and the law. It is basically treated as a
weapon that the law guarantees to employees for the advancement of their
interest and for their protection.
2. EXCEPTIONS WHEN THE STRIKE ITSELF MAY BE

ENJOINED.
However, in some cases, injunctions issued to enjoin the conduct of the
strike itself and not only the commission of illegal or prohibited acts in the
course thereof, were held to be valid.
For instance, in San Miguel Corporation v. NLRC,1 the Supreme Court
ruled that injunction may be issued not only against the commission of
illegal acts in the course of the strike but against the strike itself because the
notice of strike filed by the union has been converted into a preventive
mediation case. Having been so converted, a strike can no longer be
staged based on said notice. Upon such conversion, the legal effect is that
there is no more notice of strike to speak of.
In the earlier case of San Miguel Corporation v. NLRC,2 the Supreme
Court ruled that the NLRC committed grave abuse of discretion when it
denied the petition for injunction to restrain the union from declaring a
strike based on non-strikeable grounds.

3. REGULAR COURTS ARE PROHIBITED FROM ISSUING
INJUNCTION AGAINST STRIKES OR LOCKOUT.
The cases cited above involve the issuance of restraining order or injunction
by the NLRC pursuant to the exercise of its injunctive power. In contrast,
regular courts are absolutely prohibited to grant any injunctive relief in
cases of strikes or lockouts.
II. INJUNCTION IN PICKETING CASES

1. PROHIBITION ON INJUNCTION AGAINST PEACEFUL
PICKETING.
As a general rule, injunction cannot be issued against the conduct of
picketing by the workers. Under our constitutional set up, picketing is
considered part of the freedom of speech duly guaranteed by the
Constitution. However, excepted from this legal proscription are the
situations mentioned below.
2. EXCEPTIONS.
Under the following circumstances, picketing may be enjoined by the
NLRC:
(1) Where picketing is carried out through the use of illegal means;
(2) Where picketing involves the use of violence and other illegal acts;
(3) Where picketing affects the rights of third parties and injunction
becomes necessary to protect such rights.
(b) “INNOCENT BYSTANDER RULE”

1. WHEN INJUNCTION ON PICKETING IS ALLOWED
THROUGH THE REGULAR COURTS AND NOT THROUGH THE
NLRC.
In situations where the picket affects not only the employer but also the
business operations of other establishments owned by third parties, an
injunction may be secured by the latter from the regular courts to enjoin
the picket under the
“Innocent Bystander Rule.” Under this rule, the third-party employers
or “innocent bystanders” who have no employer-employee relationship
with the picketing strikers, may apply for injunction with the regular
courts (not with the NLRC) to enjoin the conduct of the picket.

Because of the absence of such employer-employee relationship, the NLRC
cannot entertain such application for injunction from “innocent
bystanders.” Only the employer of the picketers can apply for injunctive
relief from the NLRC.
------------oOo------------
1 G.R. No. 119293, June 10, 2003.
2 G.R. No. 99266, March 2, 1999, 304 SCRA 1.
TOPIC NO. 8
PROCEDURE AND JURISDICTION

PRELIMINARY CONSIDERATIONS ON PROCEDURE AND
JURISDICTION
1. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.

The existence of employer-employee relationship between the parties-
litigants, or a reasonable causal connection to such relationship is a
jurisdictional pre-requisite for the exercise of jurisdiction over a labor
dispute by the Labor Arbiters or any other labor tribunals.
2. THE CAUSE OF ACTION MUST ARISE FROM THE

EMPLOYER-EMPLOYEE RELATIONSHIP.
Even if there is employer-employee relationship, if the cause of action did
not arise out of or was not incurred in connection with the employer-
employee relationship, Labor Arbiters and other labor tribunals have no
jurisdiction thereover.
Actions between employers and employees where the employer-employee
relationship is merely incidental are within the exclusive original
jurisdiction of the regular courts.
3. REASONABLE CAUSAL CONNECTION RULE – THE RULE IN

CASE OF CONFLICT OF JURISDICTION BETWEEN
LABOR COURT AND REGULAR COURT.
Under this rule, if there is a reasonable causal connection between the
claim asserted and the employer-employee relations, then the case is within

the jurisdiction of labor courts. In the absence of such nexus, it is the
regular courts that have jurisdiction.
4. THE POWER TO DETERMINE EXISTENCE OF EMPLOYMENT

RELATIONSHIP.
Under labor laws, it is not only the Labor Arbiters and the NLRC
who/which are vested with the power to determine the existence of
employer-employee relationship.
The following have also the power to make similar determination:
(1) The DOLE Secretary and the DOLE Regional Directors, to the
exclusion of the Labor Arbiter and the NLRC;
(2) The Med-Arbiter;
(3) The Social Security Commission (SSC).
5. IN CASES FILED BY OFWs, LABOR ARBITERS MAY

EXERCISE JURISDICTION EVEN ABSENT THE EMPLOYMENT
RELATIONSHIP.
In Santiago v. CF Sharp Crew Management, Inc.,1 it was held that a
seafarer who has already signed a POEA-approved employment contract
but was not deployed overseas and, therefore, there is no employer-
employee relationship, may file his monetary claims case with the Labor
Arbiter. This is because the jurisdiction of Labor Arbiters is not limited to
claims arising from employer-employee relationships. Under Section 10 of
R. A. No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995), as
amended, the Labor Arbiter may exercise jurisdiction over the claims of
OFWs arising out of an employer-employee relationship or by virtue of
any law or contract involving Filipino workers for overseas
deployment, including claims for actual, moral, exemplary and other
forms of damage. (See also the 2012 case of Bright Maritime
Corporation v. Fantonial2).
6. LABOR ARBITERS HAVE JURISDICTION EVEN IF THE CASE

IS FILED BY THE HEIRS OF THE OFW.
This was the ruling in Medline Management, Inc. v. Roslinda.3 As
heirs, the wife and son of Juliano Roslinda, the deceased OFW, have the
personality to file the claim for death compensation, reimbursement of

medical expenses, damages and attorney's fees before the Labor Arbiter of
the NLRC.
7. LABOR DISPUTES, NOT SUBJECT TO BARANGAY
CONCILIATION.
Labor cases are not subject to the conciliation proceedings prescribed
under P.D. No. 1508 requiring the submission of disputes before the
Barangay Lupong Tagapayapa prior to their filing with the court or other
government offices. Instead of simplifying labor proceedings designed at
expeditious settlement or referral to the proper courts or offices to decide
them finally, the conciliation of the issues before the Barangay Lupong
Tagapayapa would only duplicate the conciliation proceedings and unduly
delay the disposition of labor cases.
A. LABOR ARBITER
1. THE LABOR ARBITER.
The Labor Arbiter is an official in the Arbitration Branch of the National
Labor Relations Commission (NLRC) who hears and decides cases falling
under his original and exclusive jurisdiction as provided by law.
2. LABOR ARBITERS HAVE NO INJUNCTIVE POWER; ONLY

THE COMMISSION (NLRC) HAS THIS POWER.
Previously, Labor Arbiters are possessed of injunctive power. This grant of
injunctive power, however, was deleted in recent NLRC Rules. The Labor
Arbiter thus has no more injunctive power. Only the Commission (NLRC)
has that power.
1 G.R. No. 162419, July 10, 2007.
2 G.R. No. 165935, Feb. 8, 2012.
3 G.R. No. 168715, Sept. 15, 2010.
1. JURISDICTION
1. NATURE OF JURISDICTION OF LABOR ARBITERS -
ORIGINAL AND EXCLUSIVE.
The jurisdiction conferred by Article 217 upon the Labor Arbiters is both
original and exclusive, meaning, no other officers or tribunals can take
cognizance of, or hear and decide, any of the cases therein enumerated.

2. EXCEPTIONS TO THE ORIGINAL AND EXCLUSIVE
JURISDICTION OF LABOR ARBITERS.
The following cases are the exceptions when the Labor Arbiters may not
exercise their original and exclusive jurisdiction:
1. In assumed cases. When the DOLE Secretary or the President exercises
his power under Article 263(g) of the Labor Code to assume jurisdiction
over national interest cases and decide them himself.
2. In certified cases. When the NLRC exercises its power of compulsory
arbitration over similar national interest cases that are certified to it by the
DOLE Secretary pursuant to the exercise by the latter of his certification
power under the same Article 263(g).
3. In cases arising from CBA. - When cases arise from the interpretation
or implementation of collective bargaining agreements and from the
interpretation or enforcement of company personnel policies which shall be
disposed of by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration, as may be provided in said
agreements.
4. In cases submitted for voluntary arbitration. - When the parties
agree to submit the case to voluntary arbitration before a Voluntary
Arbitrator or panel of Voluntary Arbitrators who, under Articles 261 and
262 of the Labor Code, are also possessed of original and exclusive
jurisdiction to hear and decide cases mutually submitted to them by the
parties for arbitration and adjudication.
3. RUNDOWN OF ALL CASES FALLING UNDER THE

JURISDICTION OF THE LABOR ARBITERS.
More particularly, Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide the following cases involving all workers,
whether agricultural or non-agricultural:
1. Under Article 217 of the Labor Code:
(a) Unfair labor practice cases;
(b) Termination disputes (Illegal dismissal cases);
(c) Money claims exceeding P5,000.00.
(d) Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations; and
(e) Cases involving the legality of strikes and lockouts.

NOTE: Claims for employees compensation, SSS, Philhealth (Medicare)
and maternity benefits do not fall under the jurisdiction of the Labor
Arbiter because these fall under the jurisdiction of other government
agencies.
2. Under Article 124 of the Labor Code, as amended by R.A. No.

6727:
Disputes involving legislated wage increases and wage distortion in
unorganized establishments not voluntarily settled by the parties
pursuant to R.A. No. 6727.
3. Under Article 128(b) of the Labor Code, as amended by R.A.

No. 7730:
Contested cases under the exception clause in Article 128(b) of the Labor
Code.
4. Under Article 227 of the Labor Code:
Enforcement of compromise agreements when there is non-
compliance by any of the parties thereto, pursuant to Article 227 of the
Labor Code.
5. Under Article 262-A of the Labor Code:
Issuance of writ of execution to enforce decisions of Voluntary
Arbitrators or panel of Voluntary Arbitrators, in case of their
absence or incapacity, for any reason.
6. Under Section 10 of R.A. No. 8042, as amended by R.A. No.
10022:
Money claims of OFWs arising out of employer-employee relationship or
by virtue of any law or contract, including claims death and disability
benefits and for actual, moral, exemplary and other forms of damages.
7. Other cases as may be provided by law.
I. JURISDICTION OVER UNFAIR LABOR PRACTICE CASES

1. SOME PRINCIPLES ON JURISDICTION OVER ULPs.
The Labor Arbiter has jurisdiction over all ULPs whether committed by the
employers or the labor organizations.

The Labor Arbiter has jurisdiction only over the civil aspect of ULP, the
criminal aspect being lodged with the regular courts.
II. JURISDICTION OVER ILLEGAL DISMISSAL CASES

1. SOME PRINCIPLES ON JURISDICTION OVER TERMINATION
CASES.
The validity of the exercise of jurisdiction by Labor Arbiters over illegal
dismissal cases is not dependent on the kind or nature of the
ground cited in support of the dismissal; hence, whether the
dismissal is for just cause or authorized cause, it is of no
consequence.
In case of conflict of jurisdiction between Labor Arbiter and the
Voluntary Arbitrator over termination cases, the former’s
jurisdiction shall prevail for the following reasons:
(1) Termination of employment is not a grievable issue that must be
submitted to the grievance machinery or voluntary arbitration for
adjudication. The jurisdiction thereover remains within the original and
exclusive ambit of the Labor Arbiter and not of the Voluntary Arbitrator.
(2) Even if the CBA provides that termination disputes are grievable, the
same is merely discretionary on the part of the parties thereto.
(3) Once there is actual termination, jurisdiction is conferred upon Labor
Arbiters by operation of law.
(4) Interpretation of CBA and enforcement of company personnel policies
are merely corollary to an illegal dismissal case.
(5) Article 217 is deemed written into the CBA being an intrinsic part
thereof.
In other words, the Voluntary Arbitrator will only have jurisdiction over
illegal dismissal cases when there is express agreement of the parties
to the CBA, i.e., the employer and the bargaining agent, to submit
the termination case to voluntary arbitration. Absent the mutual express
agreement of the parties, Voluntary Arbitrator cannot acquire jurisdiction
over termination cases.
The express agreement must be stated in the CBA or there must be
enough evidence on record unmistakably showing that the parties have
agreed to resort to voluntary arbitration.

III. JURISDICTION OVER MONEY CLAIMS CASES
1. CLASSIFICATION OF MONEY CLAIMS.
Money claims falling within the original and exclusive jurisdiction of the
Labor Arbiters may be classified as follows:
1. Any money claim, regardless of amount, when asserted in an
illegal dismissal case (hence, accompanied with a claim for
reinstatement). Here, the money claim is but an accompanying remedy
subordinated to the principal cause of action, i.e., illegal dismissal; or
2. Any money claim exceeding the amount of P5,000.00 per
claimant.
If the amount does not exceed P5,000.00, it is, under Article 129, the DOLE
Regional Director has jurisdiction to take cognizance thereof.
3. SOME PRINCIPLES ON JURISDICTION OVER MONEY

CLAIMS.
Award of statutory benefits even if not prayed for is valid.
Claim for notarial fees by a lawyer employed by a company is within the
jurisdiction of the Labor Arbiter.
(a) VERSUS REGIONAL DIRECTOR

1. LABOR ARBITERS HAVE NO JURISDICTION OVER SMALL
MONEY CLAIMS LODGED UNDER ARTICLE 129.
As earlier emphasized, under Article 129 of the Labor Code, DOLE Regional
Directors have jurisdiction over claims amounting to P5,000 or below,
provided the following requisites concur:
1. The claim must arise from employer-employee relationship;
2. The claimant does not seek reinstatement; and
3. The aggregate money claim of each employee does not exceed
P5,000.00.
2. IN INSPECTION OF ESTABLISHMENT CASES UNDER

ARTICLE 128, DOLE REGIONAL DIRECTORS HAVE
JURISDICTION REGARDLESS OF WHETHER OR NOT THE
TOTAL AMOUNT OF CLAIMS PER EMPLOYEE EXCEEDS
P5,000.00.

a. Requisites.
For the valid exercise by the DOLE Secretary or any of his duly authorized
representatives (DOLE Regional Directors) of the visitorial and
enforcement powers provided under Article 128(b), the following requisites
should concur:
(1) The employer-employee relationship should still exist;
(2) The findings in question were made in the course of inspection by labor
inspectors; and
(3) The employees have not yet initiated any claim or complaint with the
DOLE Regional Director under Article 129, or the Labor Arbiter under
Article 217.
3. HOWEVER, JURISDICTION OVER CONTESTED CASES

UNDER THE EXCEPTION CLAUSE IN ARTICLE 128(b) OF THE
LABOR CODE INVOLVING INSPECTION OF ESTABLISHMENTS
BELONGS TO THE LABOR ARBITERS AND NOT TO DOLE
REGIONAL DIRECTORS.
a. Relation of paragraph (b) of Article 128 to the jurisdiction of
Labor Arbiters.
The Labor Arbiters have jurisdiction over contested cases under the
exception clause in Article 128(b). which states:
“xxx. The Secretary or his duly authorized representatives shall issue writs
of execution to the appropriate authority for the enforcement of their
orders, except in cases where the employer contests the findings of the
labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of
inspection.”
In interpreting the afore-quoted provision of the exception clause, three (3)
elements must concur to divest the Regional Directors or their
representatives of jurisdiction thereunder, to wit:
(a) That the employer contests the findings of the labor
regulations officer and raises issues thereon;
(b) That in order to resolve such issues, there is a need to
examine evidentiary matters; and
(c) That such matters are not verifiable in the normal course of
inspection.
The 2009 case of Meteoro v. Creative Creatures, Inc.,1 best illustrates

the application of the exception clause. Here, it was held that the Court of
Appeals aptly applied the “exception clause” because at the earliest
opportunity, respondent company registered its objection to the findings of
the labor inspector on the ground that there was no employer-employee
relationship between petitioners and respondent company. The labor
inspector, in fact, noted in his report that “respondent alleged that
petitioners were contractual workers and/or independent and talent
workers without control or supervision and also supplied with tools and
apparatus pertaining to their job.” In its position paper, respondent again
insisted that petitioners were not its employees. It then questioned the
Regional Director’s jurisdiction to entertain the matter before it, primarily
because of the absence of an employer-employee relationship. Finally, it
raised the same arguments before the Secretary of Labor and the appellate
court. It is, therefore, clear that respondent contested and continues to
contest the findings and conclusions of the labor inspector. To resolve the
issue raised by respondent, that is, the existence of an employer-employee
relationship, there is a need to examine evidentiary matters.
IV. JURISDICTION OVER CLAIMS FOR DAMAGES
1. LABOR ARBITERS HAVE JURISDICTION OVER CLAIMS FOR

DAMAGES.
It is now a well-settled rule that claims for damages as well as attorney’s
fees in labor cases are cognizable by the Labor Arbiters, to the exclusion of
all other courts. Rulings to the contrary are deemed abandoned or modified
accordingly.
2. CLAIMS FOR DAMAGES OF OVERSEAS FILIPINO WORKERS

(OFWs).
Claims for actual, moral, exemplary and other forms of damages that may
be lodged by overseas Filipino workers are cognizable by the Labor
Arbiters.
V. JURISDICTION OVER LEGALITY OF STRIKES AND

LOCKOUTS JURISDICTIONAL INTERPLAY IN STRIKE OR
LOCKOUT CASES
1. A STRIKE OR LOCKOUT IS CROSS-JURISDICTIONAL IN

NATURE.
Based on the pertinent provisions of the Labor Code, below is an outline of
the interplay in jurisdiction among them.
1. Filing of a notice of strike or lockout with NCMB. - A union which
intends to stage a strike or an employer which desires to mount a lockout
should file a notice of strike or notice of lockout, as the case may be, with
the NCMB and not with any other office. It must be noted, however, that
the NCMB, per Tabigue v. International Copra Export
Corporation,2 is not a quasi-judicial body; hence, the Conciliators-
Mediators of the NCMB do not have any decision-making power.
They cannot issue decisions to resolve the issues raised in the notice of
strike or lockout. Their role is confined solely to the conciliation and
mediation of the said issues, although they can suggest to the parties that
they submit their dispute to voluntary arbitration through the Voluntary
Arbitrators accredited by the NCMB.
2. Filing of a complaint to declare the illegality of the strike or

lockout with the Labor Arbiter or Voluntary Arbitrator or panel
of Voluntary Arbitrator. - In case a party wants to have the strike or
lockout declared illegal, a complaint should be filed either with the Labor
Arbiter under Article 217(a)(5) of the Labor Code or, upon mutual
agreement of the parties, with the Voluntary Arbitrator or panel of
Voluntary Arbitrators under Article 262 of the same Code. The issue of
illegality of the strike or lockout cannot be resolved by the Conciliators-
Mediators of the NCMB as earlier pointed out and discussed.
3. Filing of an injunction petition with the Commission (NLRC). -

In case illegal acts violative of Article 264 are committed in the course of
the strike or lockout, a party may file a petition for injunction directly with
the Commission (NLRC)
under Article 218(e) of the Labor Code for purposes of securing a
temporary restraining order (TRO) and injunction. The Labor Arbiters or

Voluntary Arbitrators are not possessed of any injunctive power under the
Labor Code. In other words, the aggrieved
party, despite the pendency of the case for the declaration of the illegality of
the strike or lockout with the Labor Arbiter or Voluntary Arbitrator, as the
case may be, may directly go to the Commission to secure the injunctive
relief.
4. Assumption of jurisdiction by the DOLE Secretary. – Under

Article 263(g) of the Labor Code, the DOLE Secretary has the power to
assume jurisdiction over labor disputes which, in his opinion, may cause or
likely to cause a strike or lockout in industries indispensable to the national
interest (so-called “national interest” cases). Once he makes the
assumption, he shall decide all the issues related to the labor dispute
himself, to the exclusion of all other labor authorities.
5. Certification of the labor dispute to the NLRC. - Under the same

provision of Article 263(g) of the Labor Code, the DOLE Secretary has the
option of not assuming jurisdiction over the labor dispute in national
interest cases. Instead, he may certify it to the NLRC for compulsory
arbitration, in which case, it will be the NLRC which shall hear and decide
all the issues subject of the certification order.
In case at the time of the said assumption or certification, there is a pending
case before the Labor Arbiter or Voluntary Arbitrator on the issue of
illegality of the strike or lockout, the same shall be deemed subsumed in the
assumed or certified case.
Resultantly, it is no longer the Labor Arbiter or the Voluntary Arbitrator
who should decide the said case but the DOLE Secretary, in the case of
assumed cases, or the NLRC, in the case of certified cases.
6. Assumption of jurisdiction over a national interest case by the

President. - The President of the Philippines is
not precluded from intervening in a national interest case by exercising
himself the powers of his alter ego, the DOLE Secretary, granted under
Article 263(g) by assuming jurisdiction over the same for purposes of
settling or terminating it.
1 G.R. No. 171275, July 13, 2009.

2 G.R. No. 183335, Dec. 23, 2009; See also Hotel Employees Union-NFL v.
Waterfront Insular Hotel Davao, G.R. Nos. 174040-41, Sept. 22, 2010.
7. Submission of a national interest case to voluntary arbitration.

- Despite the pendency of the assumed or
certified national interest case, the parties are allowed to submit any issues
raised therein to voluntary arbitration at any stage of the proceeding, by
virtue of Article 263(h) which provides that “(b)efore or at any stage of the
compulsory arbitration process, the parties may opt to submit their
dispute to voluntary arbitration.”
The foregoing interplay explains why Article 263(i) makes specific
reference to the President of the Philippines, the Secretary of Labor and
Employment, the Commission (NLRC) or the Voluntary Arbitrator in
connection with the law on strike, lockout and picketing embodied in
Article 263. The only labor official not so mentioned therein but who has a
significant role to play in the interaction of labor officials and tribunals in
strike or lockout cases, is the Labor Arbiter. This is understandable in the
light of the separate express grant of jurisdiction to the Labor Arbiters
under Article 217(a)(5) as above discussed.
VI. JURISDICTION OVER CASES INVOLVING

LEGISLATED WAGE INCREASES AND WAGE DISTORTION
1. CASES IN ORGANIZED ESTABLISHMENTS.
Jurisdiction is with the Voluntary Arbitrator.
2. CASES IN UNORGANIZED ESTABLISHMENTS.
Jurisdiction is with Labor Arbiter.
VII. JURISDICTION OVER ENFORCEMENT OR ANNULMENT

OF COMPROMISE AGREEMENTS
1. LEGAL BASIS.
Article 227 clearly embodies the following provisions on compromise
agreements:
“Article 227. Compromise Agreements. - Any compromise settlement,
including those involving labor standard laws, voluntarily agreed upon by
the parties with the assistance of the Bureau or the regional office of the
Department of Labor, shall be final and binding upon the parties. The

National Labor Relations Commission or any court shall not
assume jurisdiction over issues involved therein except in case of
non-compliance thereof or if there is prima facie evidence that
the settlement was obtained through fraud, misrepresentation,
or coercion.”
Clear from the foregoing provision that, although the compromise
agreement may have been entered into by the parties before the Bureau of
Labor Relations (BLR) or the DOLE Regional Office, it is the Labor Arbiter
who has jurisdiction to take cognizance of the following issues related
thereto, to the exclusion of the BLR and the DOLE Regional Directors:
(1) To enforce the compromise agreement in case of non-compliance
therewith by any of the parties thereto; or
(2) To nullify it if there is prima facie evidence that the settlement was
obtained through fraud, misrepresentation, or coercion.
VIII. JURISDICTION OVER EXECUTION AND ENFORCEMENT

OF DECISIONS OF VOLUNTARY ARBITRATORS
1. DECISIONS OF VOLUNTARY ARBITRATORS.

Article 262-A of the Labor Code prescribes the procedures that Voluntary
Arbitrators or panel of Voluntary Arbitrators should follow in adjudicating
cases filed before them. Once a decision has been rendered in a case and
subsequently becomes final and executory, it may be enforced through the
writ of execution issued by the same Voluntary Arbitrator or panel of
Voluntary Arbitrators who rendered it, addressed to and requiring certain
public officers to execute the final decision, order or award.
2. LABOR ARBITERS MAY ISSUE THE WRIT OF EXECUTION.
In situations, however, where the Voluntary Arbitrator or the panel of
Voluntary Arbitrators who rendered the decision is absent or incapacitated
for any reason, Article 262-A grants jurisdiction to any Labor Arbiter in the
region where the winning party
resides, to take cognizance of a motion for the issuance of the writ of
execution filed by such party and accordingly issue such writ addressed to
and requiring the public officers mentioned above to execute the final
decision, order or award of the Voluntary

Arbitrator or panel of Voluntary Arbitrators.
IX. JURISDICTION OVER CASES OF OVERSEAS FILIPINO

WORKERS (OFWs)
1. LABOR ARBITERS HAVE JURISDICTION OVER ALL MONEY

CLAIMS OF OFWs.
All claims of OFWs with a sign of peso are cognizable by the Labor Arbiters,
including claims for disability and death benefits.
2. EXCEPTION: VOLUNTARY ARBITRATORS HAVE
JURISDICTION OVER MONEY CLAIMS IF THERE EXISTS A
CBA.
If there is a CBA between the foreign employer and the bargaining union of
the OFWs, the jurisdiction over monetary claims of OFWs belongs to the
Voluntary Arbitrator and not to the Labor Arbiter.
3. OFW-RELATED CASES OVER WHICH THE POEA, AND NOT
THE LABOR ARBITERS, HAS JURISDICTION.
The Philippine Overseas Employment Administration (POEA) has original
and exclusive jurisdiction to hear and decide:
(a) All cases which are administrative in character, involving or arising out
of violation of rules and regulations relating to licensing and registration of
recruitment and employment agencies or entities, including refund of fees
collected from workers and violation of the conditions for the issuance of
license to recruit workers.
(b) Disciplinary action cases and other special cases which are
administrative in character, involving employers, principals, contracting
partners and Filipino migrant workers.
No. 1 above covers recruitment violations or violations of conditions of
license; while No. 2 above involves (a) disciplinary action cases against
foreign principals or employers, and (b) disciplinary action cases against
land-based OFWs and seafarers.
X. OTHER ISSUES OVER WHICH LABOR ARBITERS HAVE

JURISDICTION
1. JURISDICTION OVER CERTAIN ISSUES AS PROVIDED IN
JURISPRUDENCE.

In accordance with well-entrenched jurisprudence, the issues, claims or
cases of the following fall under the jurisdiction of the Labor Arbiters:
(a) Employees in government-owned and/or controlled corporations
without original charters;
(b) Domestic workers or kasambahay;
(c) Employees of cooperatives;
(d) Counter-claims of employers against employees.
JURISDICTION OVER CASES OF DOMESTIC WORKERS OR
KASAMBAHAY
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdiction if the amount of the claim exceeds
P5,000.00; otherwise, the jurisdiction is vested with the DOLE Regional
Director under Article 129 of the Labor Code.
Incidentally, it is no longer legally correct to use the term “domestic
servant” or “househelper” in reference to a person who performs domestic
work. Under R.A. No. 10361, “domestic servant” or “househelper” should
now be referred to as “domestic worker” or “kasambahay.”
JURISDICTION OVER CASES OF EMPLOYEES OF

COOPERATIVES
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdiction only over monetary claims and illegal
dismissal cases involving employees of cooperatives but not the claims or
termination of membership of members thereof. Cooperatives organized
under R.A. No. 6938,
are composed of members; hence, issues on the termination of their
membership with the cooperative do not fall within the jurisdiction of the
Labor Arbiters.
Perpetual Help Credit Cooperative, Inc. v. Faburada. - Petitioner in
this case contends that the Labor Arbiter has no jurisdiction to take
cognizance of the complaint of private respondents who are not members
but employees of the cooperative.
The Supreme Court ruled that there is no evidence that private respondents
are members of petitioner cooperative and even if they are, the dispute is
about payment of wages, overtime pay, rest day and termination of
employment. Under Article 217 of the
Labor Code, these disputes are within the original and exclusive jurisdiction

of the Labor Arbiters.
In the 2010 case of San Miguel Corp. v. Semillano,1 petitioner asserts
that the present case is outside the jurisdiction of the labor tribunals
because respondent Vicente Semillano is a member of the Alilgilan Multi-
Purpose Coop (AMPCO), not an employee of petitioner SMC. Petitioner is
of the position that the instant dispute is intra-cooperative in nature falling
within the jurisdiction of the Arbitration Committee of the Cooperative
Development Authority. AMPCO was contracted by petitioner to supply it
with workers to perform the task of segregating bottles, removing dirt
therefrom, filing them in designated places, loading and unloading the
bottles to and from the delivery trucks, and to perform other tasks as may
be ordered by SMC’s officers. Semillano, together with the other
respondents, filed the complaint for regularization with petitioner SMC,
contending that AMPCO was a mere labor-only contractor. The High Court
declared in this case that AMPCO was a labor-only contractor and
consequently pronounced that all the respondents, including Semillano,
were regular employees of petitioner. On this issue of jurisdiction, the High
Court held that the Labor Arbiter has jurisdiction because precisely,
Semillano has joined the others in filing this complaint because it is his
position that petitioner SMC is his true employer and liable for all his
claims under the Labor Code.
JURISDICTION OVER COUNTER-CLAIMS OF EMPLOYERS

1. EMPLOYERS MAY ASSERT COUNTER-CLAIMS AGAINST
EMPLOYEES FILED BY THE LATTER BEFORE THE LABOR
ARBITERS.
Almost all labor cases decided by labor courts involve claims asserted by
the workers. The question that may be propounded is whether the
employers can assert counter-claims against their employees before the
Labor Arbiters. The Supreme Court answered this poser in the affirmative.
Bañez v. Hon. Valdevilla.2 - The jurisdiction of Labor Arbiters and the
NLRC is comprehensive enough to include claims for all forms of damages
“arising from the employer-employee relations.” By this clause, Article 217
should apply with equal force to the claim of an employer for actual
damages against its dismissed employee, where the basis for the claim
arises from or is necessarily connected with the fact of termination, and
should be entered as a counter-claim in the illegal dismissal case. This is in

accord with paragraph 6 of Article 217(a), which covers “all other claims,
arising from employer-employee relations.”
But such counter-claim, being a factual issue, must be asserted before the
Labor Arbiter; otherwise, it can no longer be passed upon by a reviewing
court.
XI. ISSUES AND CASES OVER WHICH LABOR ARBITERS HAVE

NO JURISDICTION
1. LABOR ARBITERS HAVE NO JURISDICTION OVER CERTAIN

ISSUES AND CASES.
The following issues or cases do not fall under the jurisdiction of Labor
Arbiters:
(a) Claims for damages arising from breach of a non-compete clause and
other post-employment prohibitions;
(b) Claims for payment of cash advances, car, appliance and other
loans of employees;
(c) Dismissal of corporate officers and their monetary claims;
(d) Cases involving entities immune from suit;
(e) Cases falling under the doctrine of forum non conveniens;
(f) Constitutionality of CBA provisions.
1 G.R. No. 164257, July 5, 2010.
2 G.R. No. 128024, May 9, 2000, 331 SCRA 584.
XI-A. CLAIMS FOR DAMAGES ARISING FROM BREACH OF

NON-COMPETE CLAUSE AND OTHER POST-EMPLOYMENT
PROHIBITIONS
1. JURISDICTION IS LODGED WITH THE REGULAR COURTS.

In case of violation of the non-compete clause and similar post-
employment bans or prohibitions, the employer can assert his claim for
damages against the erring employee with the regular courts and not with
the labor courts.

XI-B. EMPLOYER’S CLAIMS FOR CASH ADVANCES, CAR,
APPLIANCE AND OTHER PERSONAL LOANS OF EMPLOYEES
1. LABOR ARBITERS HAVE NO JURISDICTION.

With respect to resolving issues involving loans availed of by employees
from their employers, it has been the consistent ruling of the Supreme
Court that the Labor Arbiters have no jurisdiction thereover but the regular
courts.
Where the claim to the principal relief sought is to be resolved not by
reference to the Labor Code or other labor relations statute or a collective
bargaining agreement but by the general civil law, the jurisdiction over
the dispute belongs to the regular courts of justice and not to the Labor
Arbiter and the NLRC. In such situations, resolutions of the dispute
requires expertise, not in labor management relations nor in wage
structures and other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall outside the area
of competence or expertise ordinarily ascribed to Labor Arbiters and the
NLRC and the rationale for granting jurisdiction over such claims to these
agencies disappears.”
The following loans may be cited:
a. Cash loans/advances are in the nature of simple collection of a sum of
money brought by the employer, as creditor, against the employee, as
debtor. The fact that they were employer and employee at the time of the
transaction does not negate the civil jurisdiction of the trial court. The case
does not involve adjudication of a labor dispute but recovery of a sum of
money based on our civil laws on obligation and contract.
b. Car loans such as those granted to sales or medical representatives by
reason of the nature of their work. The employer’s demand for payment of
the employees’ amortizations on their car loans, or, in the alternative, the
return of the cars to the company, is not a labor, but a civil, dispute. It
involves debtor-creditor relations, rather than employee-employer
relations.
c. Appliance loans concern the enforcement of a loan agreement
involving debtor-creditor relations founded on contract and do not in any
way concern employee relations. As such it should be enforced through a
separate civil action in the regular courts and not before the Labor Arbiter.
d. Loans from retirement fund also involve the same principle as

above; hence, collection therefor may only be made through the regular
courts and not through the Labor Arbiter or any labor tribunal.
XI-C. DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS
1. LABOR ARBITERS HAVE NO JURISDICTION.

The dismissal of a director or corporate officer is an intra-corporate dispute
cognizable by the Regional Trial Court and not by the Labor Arbiter.
2. MATLING DOCTRINE.
Under this doctrine,1 the following rules should be observed:
(1) The dismissal of regular employees falls under the jurisdiction of
Labor Arbiters; while that of corporate officers falls within the
jurisdiction of the regular courts.
(2) The term “corporate officers” refers only to those expressly
mentioned in the Corporation Code and By-Laws; all other officers not so
mentioned therein are deemed employees.
(3) Corporate officers are elected or appointed by the directors or
stockholders, and those who are given that character either by the
Corporation Code or by the corporation’s by-laws.
(4) The Corporation Code specifically mentions only the following
corporate officers, to wit: president, secretary
and treasurer and such other officers as may be provided for in the by-
laws.
(5) The Board of Directors can no longer create corporate offices
because the power of the Board of Directors to create a
corporate office cannot be delegated. Therefore, the term
“corporate officers” should only refer to the above and to no other. A
different interpretation can easily leave the way open for the Board of
Directors to circumvent the constitutionally guaranteed security of tenure
of the employee by the expedientinclusion in the By-Laws of an enabling
clause on the creation of just any corporate officer position.
(6) Distinction between a corporate officer and an employee. - An
“office” is created by the charter of the corporation and the “corporate
officer” is elected by the directors or stockholders. On the other hand, an
“employee” occupies no office and generally is employed not by the action
of the directors or stockholders but by

the managing officer of the corporation who also determines the
compensation to be paid to such employee.
(7) Because of the Matling doctrine, the rulings in Tabang and Nacpil,
are no longer controlling because they are “too sweeping and do not accord
with reason, justice, and fair play.”1 Enunciated in the 2010 case of Matling
Industrial and Commercial Corp. v. Ricardo R. Coros, G.R. No. 157802, Oct.
13, 2010. This case is an appeal via petition for
review on certiorari. The petitioners challenge the decision of the CA which
sustained the ruling of the NLRC to the effect that the Labor Arbiter had
jurisdiction because the respondent, its Vice President for Finance and
Administration, was not a corporate officer of petitioner Matling.
(8) The status of an employee as director and stockholder does
not automatically convert his dismissal into an intra-corporate
dispute.
(9) Two (2) elements to determine whether a dispute is intra-
corporate or not.
(a) The status or relationship of the parties (Relationship test); and
(b) The nature of the question that is the subject of their controversy.
(Nature of controversy test).
In the absence of any one of these factors, the RTC will not have
jurisdiction.
(10) The criteria do not depend on the services performed but on

the manner of creation of the office.
In Matling, respondent Corros was supposedly at once an employee, a
stockholder, and a Director of Matling. The circumstances surrounding his
appointment to office must be fully considered to determine whether the
dismissal constituted an intra-corporate controversy or a labor termination
dispute. It must also be considered whether his status as Director and
stockholder had any relation at all to his appointment and subsequent
dismissal as Vice President for Finance and Administration.
Obviously enough, the respondent was not appointed as Vice President for
Finance and Administration because of his being a stockholder or Director
of Matling. He had started working for Matling on September 8, 1966, and
had been employed continuously for 33 years until his termination on April
17, 2000. His first work as a bookkeeper and his climb in 1987 to his last
position as Vice President for Finance and Administration had been

gradual but steady. Even though he might have become a stockholder of
Matling in 1992, his promotion to the position of Vice President for Finance
and Administration in 1987 was by virtue of the length of quality service he
had rendered as an employee of Matling. His subsequent acquisition of the
status of Director/stockholder had no relation to his promotion. Besides,
his status of Director/stockholder was unaffected by his dismissal from
employment as Vice President for Finance and Administration.
3. SIGNIFICANT CASES DECIDED BASED ON THE MATLING
DOCTRINE.
a. Cosare v. Broadcom Asia, Inc., (2014)
In this 2014 case, the Supreme Court ruled that the Labor Arbiter, not the
regular courts, has original jurisdiction over the illegal dismissal case filed
by petitioner Cosare who was an incorporator of respondent Broadcom and
was holding the position of Assistant Vice President for Sales (AVP for
Sales) and Head of the Technical Coordination at the time of his
termination. The following justifications were cited in support of this
ruling:
(1) The mere fact that a person was a stockholder and an officer of the
company at the time the subject controversy
developed does not necessarily make the case an intra-corporate dispute.
(2) A person, although an officer of the company, is not necessarily a
corporate officer thereof.
(3) General Information Sheet (GIS) submitted to SEC neither governs nor
establishes the nature of office.
(4) The Nature of the Controversy Test: The mere fact that a person was a
stockholder at the time of the filing of the illegal dismissal case does not
make the action an intra-corporate dispute.
b. Other cases:
(1) Barba v. Liceo de Cagayan University (2012);
(2) Marc II Marketing, Inc. and Lucila V. Joson v. Alfredo M.
Joson (2011);
(3) Real v. Sangu Philippines, Inc. (2011).
XI-D. LABOR CASES INVOLVING ENTITIES IMMUNE FROM

SUIT
1. IMMUNE ENTITIES CANNOT BE SUED FOR LABOR LAW
VIOLATIONS.

In this jurisdiction, the generally accepted principles of international law
are recognized and adopted as part of the law of the land. Immunity of a
State and international organizations from suit is one of these universally
recognized principles. It is on this basis that Labor Arbiters or other labor
tribunals have no jurisdiction over immune entities.
2. ILLUSTRATIVE CASE.
In Department of Foreign Affairs v. NLRC,1 involving an illegal
dismissal case filed against the Asian Development Bank (ADB), it was
ruled that said entity enjoys immunity from legal process of every form and
therefore the suit against it cannot prosper. And this immunity extends to
its officers who also enjoy immunity in respect of all acts performed by
them in their official capacity. The Charter and the Headquarters
Agreement granting these immunities and privileges to the ADB are treat
covenants and commitments voluntarily assumed by the Philippine
government which must be respected.
3. EXCEPTION TO THE RULE.

There is an exception to the immunity rule as exemplified by the case of
United States v. Hon. Rodrigo,2 where it was held that when the
function of the foreign entity otherwise immune from suit partakes of the
nature of a proprietary activity, such as the restaurant services offered at
John Hay Air Station undertaken by the United States Government as a
commercial activity for profit and not in its governmental capacity, the case
for illegal dismissal filed by a Filipino cook working therein is well within
the jurisdiction of Philippine courts. The reason is that by entering into the
employment contract with the cook in the discharge of its proprietary
functions, it impliedly divested itself of its sovereign immunity from suit.
1 G.R. No. 113191, Sept. 18, 1996, 262 SCRA 39, 43-44.
2 G.R. No. 79470, Feb. 26, 1990, 182 SCRA 644, 660.
4. ESTOPPEL DOES NOT CONFER JURISDICTION OVER AN

IMMUNE ENTITY.
An entity immune from suit cannot be estopped from claiming such
diplomatic immunity since estoppel does not operate to confer jurisdiction

to a tribunal that has none over a cause of action.
XI-E. DOCTRINE OF FORUM NON CONVENIENS

1. REQUISITES.
This doctrine is an international law principle which has been applied to
labor cases. The following are the requisites for its applicability:
(1) That the Philippine court is one to which the parties may conveniently
resort;
(2) That the Philippine court is in a position to make an intelligent decision
as to the law and the facts; and
(3) That the Philippine court has or is likely to have power to enforce its
decision.
2. APPLICATION TO LABOR CASES.

a. Case where doctrine was rejected.
Petitioners’ invocation of this principle was rejected in Pacific
Consultants International Asia, Inc. v. Schonfeld.1 Petitioners’
insistence was based on the fact that respondent is a Canadian citizen and
was a repatriate. In so rejecting petitioners’ contention, the Supreme Court
cited the following reasons that do not warrant the application of the said
principle: (1) the Labor Code does not include forum non
conveniens as a ground for the dismissal of the complaint; and
(2) the propriety of dismissing a case based on this principle
requires a factual determination; hence, it is properly
considered as a defense.
b. Case where doctrine was applied.

This doctrine was applied in the case of The Manila Hotel Corp. and
Manila Hotel International Limited v. NLRC,2 where private
respondent Marcelo Santos was an overseas worker employed as a printer
in a printing press in the Sultanate of Oman when he was directly hired by
the Palace Hotel, Beijing, People’s Republic of China to work in its print
shop. This hotel was being managed by the Manila Hotel International Ltd.,
a foreign entity registered under the laws of Hong Kong. Later, he
was terminated due to retrenchment occasioned by business reverses
brought about by the political upheaval in China (referring to the

Tiananmen Square incident) which severely affected the hotel’s operations.
In holding that the NLRC was a seriously inconvenient forum, the Supreme
Court noted that the main aspects of the case transpired in two foreign
jurisdictions and the case involves purely foreign elements. The only link
that the Philippines has with the case is that the private respondent
employee (Marcelo Santos) is a Filipino citizen. The Palace Hotel and
MHICL are foreign corporations. Consequently, not all cases involving
Filipino citizens can be tried here. Respondent employee was hired
directly by the Beijing Palace Hotel, a foreign employer, through
correspondence sent to him while he was working at the Sultanate of
Oman. He was hired without the intervention of the POEA or any
authorized recruitment agency of the government.
Hence, the NLRC is an inconvenient forum given that all the incidents of
the case - from the time of recruitment, to employment to dismissal -
occurred outside the Philippines. The inconvenience is compounded by the
fact that the proper defendants, the Palace Hotel and MHICL, are not
nationals of the Philippines. Neither are they “doing business in the
Philippines.” Likewise, the main witnesses, Mr. Shmidt (General Manager
of the Palace Hotel) and Mr. Henk (Palace Hotel’s Manager) are non-
residents of the Philippines.
Neither can an intelligent decision be made as to the law governing the
employment contract as such was perfected in foreign soil. This calls to fore
the application of the principle of lex loci contractus (the law of the place
where the contract was made). It must be noted that the employment
contract was not perfected in the Philippines. Private respondent employee
signified his acceptance thereof by writing a letter while he was in the
Sultanate of Oman. This letter was sent to the Palace Hotel in the People’s
Republic of China. Neither can the NLRC determine the facts surrounding
the alleged illegal dismissal as all acts complained of took place in Beijing,
People’s Republic of China. The NLRC was not in a position to determine
whether the Tiananmen Square incident truly adversely affected the
operations of the Palace Hotel as to justify respondent employee’s
retrenchment.
Even assuming that a proper decision could be reached by the NLRC, such
would not have any binding effect against the employer, the Palace Hotel,
which is a corporation incorporated under the laws of China and was not
even served with summons. Jurisdiction over its person was not acquired.

This is not to say that Philippine courts and agencies have no power to solve
controversies involving foreign employers. Neither could it be said that the
Supreme Court does not have power over an employment contract executed
in a foreign country. If the respondent employee were an “overseas contract
worker”, a Philippine forum, specifically the POEA, not the NLRC, would
protect him. He is not an “overseas contract worker”, a fact which he admits
with conviction.
XI-F. CONSTITUTIONALITY OF LABOR CONTRACT

STIPULATIONS
1. THE HALAGUEÑA DOCTRINE.

In Halagueńa v. Philippine Airlines, Inc.,3 it was pronounced that it is
not the Labor Arbiter but the regular court which has jurisdiction to rule on
the constitutionality of labor contracts such as a CBA. Petitioners were
female flight attendants of respondent Philippine Airlines (PAL) and are
members of the Flight Attendants and Stewards Association of the
Philippines (FASAP), the sole and exclusive bargaining representative of
the flight attendants, flight stewards and pursers of respondent.
The July 11, 2001 CBA between PAL and FASAP provides that the
compulsory retirement for female flight attendants is fifty-five (55) and
sixty (60) for their male counterpart. Claiming that said CBA provision is
discriminatory against them, petitioners filed against respondent a Special
Civil Action for Declaratory Relief with Prayer for the Issuance of
Temporary Restraining Order and Writ of Preliminary Injunction with the
Regional Trial Court (RTC) of Makati City.
In ruling that the RTC has jurisdiction, the Supreme Court cited the
following reasons:
(1) The case is an ordinary civil action, hence, beyond the jurisdiction of
labor tribunals.
(2) The said issue cannot be resolved solely by applying the Labor Code.
Rather, it requires the application of the Constitution, labor statutes, law on
contracts and the Convention on the Elimination of All Forms of
Discrimination Against Women (CEDAW). The power to apply and
interpret the constitution and CEDAW is within the jurisdiction of trial
courts, a court of general jurisdiction.

(3) Not every controversy or money claim by an employee against the
employer or vice-versa is within the exclusive jurisdiction of the Labor
Arbiter. Actions between employees and employer where the employer-
employee relationship is merely incidental and the cause of action proceeds
from a different source of obligation are within the exclusive jurisdiction of
the regular courts. Here, the employer-employee relationship between the
parties is merely incidental and the cause of action ultimately arose from
different sources of obligation, i.e., the Constitution and CEDAW.
1 G.R. No. 166920, Feb. 19, 2007.
2 G.R. No. 120077, Oct. 13, 2000.
3 G.R. No. 172013, Oct. 2, 2009.
2. REINSTATEMENT PENDING APPEAL
1. PIONEER TEXTURIZING DOCTRINE: REINSTATEMENT

ASPECT OF LABOR ARBITER’S DECISION, IMMEDIATELY
EXECUTORY EVEN PENDING APPEAL; NO WRIT OF
EXECUTION REQUIRED.
According to the Pioneer Texturizing doctrine, an order of reinstatement
issued by the Labor Arbiter under Article 223 of the Labor Code is self-
executory or immediately executory even pending appeal. This means that
the perfection of an appeal shall stay the execution of the decision of the
Labor Arbiter except execution of the reinstatement pending appeal.
2. REINSTATEMENT PENDING APPEAL, APPLICABLE ONLY TO

THE REINSTATEMENT ORDER ISSUED BY THE LABOR
ARBITER; WRIT OF EXECUTION REQUIRED WHEN
REINSTATEMENT IS ORDERED BY NLRC ON APPEAL, OR
SUBSEQUENTLY BY THE COURT OF APPEALS OR SUPREME
COURT, AS THE CASE MAY BE.
By way of distinction, the rule on reinstatement pending appeal applies
only to the order of reinstatement issued by the Labor Arbiter and to no
other. This means that if the reinstatement order is issued by the NLRC on
appeal, or by the Court of Appeals or by the Supreme Court, there is a need
to secure a writ of execution from the Labor Arbiter of origin to enforce the
reinstatement of the employee whose dismissal is declared illegal.

3. TWO (2) OPTIONS OF EMPLOYER.
To implement the reinstatement aspect of a Labor Arbiter’s decision, there
are only two (2) options available to the employer, to wit:
1. Actual reinstatement. - The employee should be reinstated to his
position which he occupies prior to his illegal dismissal under the same
terms and conditions prevailing prior to his dismissal or separation or, if no
longer available, to a substantially-equivalent position; or
2. Payroll reinstatement. – The employee should be reinstated in the
payroll of the company without requiring him to report back to his work.
4. DUTY OF EMPLOYER TO NOTIFY EMPLOYEE ORDERED

REINSTATED.
It is required that in case the decision of the Labor Arbiter includes an
order of reinstatement, it should contain:
(a) A statement that the reinstatement aspect is immediately executory; and
(b) A directive for the employer to submit a report of compliance within ten
(10) calendar days from receipt of the said decision.
Disobedience of this directive clearly denotes a refusal to reinstate. The
employee need not file a motion for the issuance of the writ of execution
since the Labor Arbiter is mandated thereafter to motu proprio issue the
writ. With the new rules in place, there is hardly any difficulty in
determining the employer’s intransigence in immediately complying with
the order.
5. INSTANCES WHEN WRIT OF EXECUTION OF LABOR

ARBITER’S REINSTATEMENT ORDER STILL REQUIRED.
Under the 2011 NLRC Rules of Procedure, there are two (2) instances when
a writ of execution should still be issued immediately by the Labor Arbiter
to implement his order of reinstatement, even pending appeal, viz.:
(1) When the employer disobeys the prescribed directive to submit a
report of compliance within ten (10) calendar days from receipt of the
decision; or
(2) When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy
the reinstatement wages as they accrue until actual reinstatement or
reversal of the order of reinstatement.

6. SOME PRINCIPLES ON REINSTATEMENT PENDING
APPEAL.
 Employer has no way of staying execution of immediate
reinstatement. He cannot post bond to prevent its execution.
 Reinstatement pending appeal applies to all kinds of illegal
dismissal cases, regardless of the grounds thereof.
 Reinstatement pending appeal does not apply when the dismissal
is legal but reinstatement is ordered for some reasons like equity
and compassionate justice.
 The failure of employee ordered reinstated pending appeal to report
back to work as directed by the employer does not give the employer the
right to remove him, especially when there is a reasonable explanation for
his failure.
 When former position is already filled up, the employee ordered
reinstated pending appeal should be reinstated to a substantially
equivalent position.
 Reinstatement to a position lower in rank is not proper.
 In case of two successive dismissals, the order of reinstatement pending
appeal under Article 223 issued in the first case shall apply only to the first
case and should not affect the second dismissal. According to Sevilla v.
NLRC, the Labor Arbiter was correct in denying the third motion for
reinstatement filed by the petitioner because what she should have filed
was a new complaint based on the second dismissal. The second dismissal
gave rise to a new cause of action. Inasmuch as no new complaint was filed,
the Labor Arbiter could not have ruled on the legality of the second
dismissal.
 Reinstatement pending appeal is not affected by the reinstated
employee’s employment elsewhere.
 Effect of grant of achievement award during reinstatement
pending appeal.
In the 2014 case of Garza v. Coca-Cola Bottlers Philippines, Inc.,1 it
was pronounced that the act of respondent CCBPI in giving an award of a
Certificate of Achievement to petitioner for his exemplary sales
performance during his reinstatement ordered by the Labor Arbiter, while
respondent’s appeal with the NLRC was still pending, constitutes
recognition of petitioner’s abilities and accomplishments. It indicates that

he is a responsible, trustworthy and hardworking employee of CCBPI. It
constitutes adequate proof weighing in his favor.
3. REQUIREMENTS TO PERFECT APPEAL TO NLRC
I. APPEAL IN GENERAL
1. APPEAL, MEANING AND NATURE.
The term “appeal” refers to the elevation by an aggrieved party to an
agency vested with appellate authority of any decision, resolution or order
disposing the principal issues of a case rendered by an agency vested with
original jurisdiction, undertaken by filing a memorandum of appeal.
2. SOME PRINCIPLES ON APPEAL.

 Appeals under Article 223 apply only to appeals from the Labor
Arbiter’s decisions, awards or orders to the Commission (NLRC).
 There is no appeal from the decisions, orders or awards of the NLRC.
Clearly, therefore, Article 223 of the Labor Code is not the proper basis for
elevating the case to the Court of Appeals or to the Supreme Court. The
proper remedy from the decisions, awards or orders of the NLRC to the
Court of Appeals is a Rule 65 petition for certiorari and from the Court of
Appeals to the Supreme Court, a Rule 45 petition for review on certiorari.
 Appeal from the NLRC to the DOLE Secretary and to the
President had long been abolished.
 Appeal is not a constitutional right but a mere statutory privilege.
Hence, parties who seek to avail of it must comply with the statutes or rules
allowing it.
 A motion for reconsideration is unavailing as a remedy against a
decision of the Labor Arbiter. The Labor Arbiter should treat the said
motion as an appeal to the NLRC.
 A “Petition for Relief” should be treated as appeal.
 Affirmative relief is not available to a party who failed to
appeal. A party who does not appeal from a decision of a court cannot
obtain affirmative relief other than the ones granted in the appealed
decision.

3. GROUNDS FOR APPEAL TO THE COMMISSION (NLRC).
The appeal to the NLRC may be entertained only on any of the following
grounds:
a. If there is a prima facie evidence of abuse of discretion on the part of
the Labor Arbiter;
b. If the decision, order or award was secured through fraud or coercion,
including graft and corruption;
c. If made purely on questions of law; and/or
d. If serious errors in the findings of fact are raised which, if not corrected,
would cause grave or irreparable damage or injury to the appellant.
 NLRC has certiorari power.
The first ground above regarding prima facie evidence of abuse of
discretion on the part of the Labor Arbiter is actually an exercise of
certiorari power by the NLRC. The case of Triad Security & Allied
Services, Inc. v. Ortega,2 expressly recognized this certiorari power of
the NLRC. Clearly, according to the 2012 case of Auza, Jr. v. MOL
Philippines, Inc.,3 the NLRC is possessed of the power to rectify any
abuse of discretion committed by the Labor Arbiter.
II. PERFECTION OF APPEAL

1. EFFECT OF PERFECTION OF APPEAL ON EXECUTION.
To reiterate, the perfection of an appeal shall stay the execution of the
decision of the Labor Arbiter except execution for reinstatement pending
appeal.
2. PERFECTION OF APPEAL, MANDATORY AND
JURISDICTIONAL.
The perfection of appeal within the period and in the manner prescribed by
law is jurisdictional and non-compliance with the legal requirements is
fatal and has the effect of rendering the judgment final and executory,
hence, unappealable.
3. REQUISITES.
The requisites for perfection of appeal to the NLRC are as follows:
(1) Observance of the reglementary period;
(2) Payment of appeal and legal research fee;

(3) Filing of a Memorandum of Appeal;
(4) Proof of service to the other party; and
(5) Posting of cash, property or surety bond, in case of monetary
awards.
The foregoing are discussed below.
1 G.R. No. 180972, Jan. 20, 2014.

2 G.R. No. 160871, Feb. 6, 2006.
3 G.R. No. 175481, Nov. 21, 2012.
III. REGLEMENTARY PERIOD

1. TWO (2) KINDS OF REGLEMENTARY PERIOD.
The reglementary period depends on where the appeal comes from, viz.:
1. Ten (10) calendar days – in the case of appeals from decisions of the
Labor Arbiters under Article 223 of the Labor Code; and
2. Five (5) calendar days – in the case of appeals from decisions of the
DOLE Regional Director under Article 129 of the Labor Code.
Calendar days and not working days.
The shortened period of ten (10) days fixed by Article 223 contemplates
calendar days and not working days. The same holds true in the case of
the 5-day reglementary period under Article 129 of the Labor Code.
Consequently, Saturdays, Sundays and legal holidays are
included in reckoning and computing the reglementary period.
2. EXCEPTIONS TO THE 10-CALENDAR DAY OR 5-CALENDAR
DAY REGLEMENTARY PERIOD RULE.
The following are the specific instances where the rules on the reckoning of
the reglementary period have not been strictly observed:
1) 10th day (or 5th day) falling on a Saturday, Sunday or holiday, in which
case, the appeal may be filed in the next working day.
2) Reliance on erroneous notice of decision as when the notice expressly
states “working days” and not “calendar days.”
3) Appeal from decisions of Labor Arbiters in direct contempt cases – five
(5) calendar days.
4) Filing of petition for extraordinary remedies from orders or
resolutions of Labor Arbiters or on third party claims – ten (10)
calendar days.

5) When NLRC exercises its power to “correct, amend, or waive any error,
defect or irregularity whether in substance or form” in the exercise of its
appellate jurisdiction, as provided under Article 218(c) of the Labor Code,
in which case, the late filing of the appeal is excused.
6) When technical rules are disregarded under Article 221.
7) When there are some compelling reasons that justify the allowance of the
appeal despite its late filing such as when it is granted in the interest of
substantial justice.
3. SOME PRINCIPLES ON REGLEMENTARY PERIOD.

 The reglementary period is mandatory and not a “mere technicality.”
 The failure to appeal within the reglementary period renders
the judgment appealed from final and executory by operation of law.
Consequently, the prevailing party is entitled, as a matter of right, to a writ
of execution and the issuance thereof becomes a ministerial duty which
may be compelled through the remedy of mandamus.
 The date of receipt of decisions, resolutions or orders by the parties is
of no moment. For purposes of appeal, the reglementary period shall be
counted from receipt of such decisions, resolutions, or orders by the
counsel or representative of record.
 Miscomputation of the reglementary period will not forestall the finality
of the judgment. It is in the interest of everyone that the date when
judgments become final and executory should remain fixed and
ascertainable.
 Date of mailing by registered mail of the appeal memorandum
is the date of its filing.
 Motion for extension of time to perfect an appeal is not allowed. This
kind of motion is a prohibited pleading.
 Motion for extension of time to file the memorandum of appeal is not
allowed.
 Motion for extension of time to file appeal bond is not allowed.
IV. APPEAL FEE AND LEGAL RESEARCH FEE

1. PAYMENT OF APPEAL FEE AND LEGAL RESEARCH FEE,
MANDATORY AND JURISDICTIONAL.
The payment by the appellant of the prevailing appeal fee and legal

research fee is both mandatory and jurisdictional. An appeal is
perfected only when there is proof of payment of the appeal fee. It is by no
means a mere technicality. If not paid, the running of the reglementary
period for perfecting an appeal will not be tolled.
V. MEMORANDUM OF APPEAL
1. REQUISITES.
The requisites for a valid Memorandum of Appeal are as follows:
1. The Memorandum of Appeal should be verified by the appellant himself
in accordance with the Rules of Court, as amended;
2. It should be presented in three (3) legibly typewritten or printed copies;
3. It shall state the grounds relied upon and the arguments in support
thereof, including the relief prayed for;
4. It shall contain a statement of the date the appellant received the
appealed decision, award or order; and
5. It shall be accompanied by:
(i) proof of payment of the required appeal fee and legal research fee;
(ii) posting of a cash or surety bond (in case of monetary awards); and
(iii) proof of service upon the other party.
2. REQUIREMENTS NOT JURISDICTIONAL.

The aforesaid requirements that should be complied with in a
Memorandum of Appeal are merely a rundown of the contents of the
required appeal memorandum to be submitted by the appellant. They are
not jurisdictional requirements.
3. SOME PRINCIPLES ON MEMORANDUM OF APPEAL.

 Mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the period for
perfecting an appeal.
 Memorandum of appeal is not similar to motion for reconsideration.
 Lack of verification in a memorandum of appeal is not a fatal
defect. It may easily be corrected by requiring an oath.
 An appeal will be dismissed if signed only by an unauthorized
representative.
 Only complainants who signed the memorandum of appeal

are deemed to have appealed the Labor Arbiter’s decision. The
prevailing doctrine in labor cases is that a party who has not appealed
cannot obtain from the appellate court any affirmative relief other than
those granted, if any, in the decision of the lower tribunal.
VI. PROOF OF SERVICE TO ADVERSE PARTY

1. FAILURE TO SERVE COPY TO ADVERSE PARTY, NOT FATAL.
While it is required that in all cases, the appellant shall furnish a copy of
the Memorandum of Appeal to the other party (appellee), non-compliance
therewith, however, will not be an obstacle to the perfection of the appeal;
nor will it amount to a jurisdictional defect on the NLRC’s taking
cognizance thereof.
VII. POSTING OF BOND

1. WHEN POSTING OF BOND REQUIRED.
Only in case the decision of the Labor Arbiter or the DOLE Regional
Director (under Article 129 of the Labor Code) involves a monetary
award, that an appeal by the employer may be perfected only upon the
posting of a bond, which shall either be in the form of (1) cash deposit,
(2) surety bond or (3) property bond, equivalent in amount to the
monetary award, but excluding the amount of damages (moral and
exemplary) and attorney’s fees. In other words, only monetary
awards (such as unpaid wages, backwages, separation pay, 13th
month pay, etc.) are required to be covered by the bond. Moral
and exemplary damages and attorney’s fees are excluded.
2. SOME PRINCIPLES ON POSTING OF BOND.

 Posting of bond is mandatory and jurisdictional.
 The cash or surety bond required for the perfection of appeal
should be posted within the reglementary period. If a party failed
to perfect his appeal by the non-payment of the appeal bond within the 10-
calendar day period provided by law, the decision of the Labor Arbiter
becomes final and executory upon the expiration of the said period.
 In case the employer failed to post a bond to perfect its
appeal, the remedy of the employee is to file a motion to dismiss
the appeal and not a petition for mandamus for the issuance of a

writ of execution.
 Surety bond must be issued by a reputable bonding company duly
accredited by the Commission (NLRC) or the Supreme Court.
 The bond shall be valid and effective from the date of deposit or posting,
until the case is finally decided, resolved or terminated, or the award
satisfied.
 Posting of a bank guarantee or bank certification is not
sufficient compliance with the bond requirement. It is not
equivalent to nor can be considered compliance with the cash, surety or
property bond.
 Cooperatives are not exempted from posting bond.
 Government is exempt from posting of bond; government-owned
and/or controlled corporations, however, are not exempt therefrom.
 Bond is not required for the NLRC to entertain a motion for
reconsideration. An appeal bond is required only for the perfection of an
appeal of a Labor Arbiter’s decision involving a monetary award.
 Bond is not required to file a Rule 65 petition for certiorari.
3. JUSTIFICATIONS FOR NON-POSTING OF BOND.

 No monetary award, no bond required. The rule is clear that
when the judgment of the Labor Arbiter does not involve any monetary
award, no appeal bond is necessary.
 There is no duty to post a bond if the monetary award is not
specified in the decision. The Labor Arbiter’s decision or order should
state the amount awarded. If the amount of the monetary award is not
contained or fixed in the judgment, the
appeal bond is not required to be posted.
 In case of conflict between the body and the fallo of the
decision, the latter should prevail.
VII-A. RULE ON REDUCTION OF APPEAL BOND

1. REQUISITES WHEN THE AMOUNT OF APPEAL BOND MAY
BE REDUCED.
(1) The motion should be filed within the reglementary period;
(2) The motion to reduce bond should be based on meritorious grounds;
and

(3) The motion should be accompanied by a partial bond, the amount of
which should be reasonable in relation to the monetary awards.
2. THE MCBURNIE DOCTRINE: NEW GUIDELINES FOR FILING

AND ACCEPTANCE OF MOTIONS TO REDUCE BOND.
The 2013 en banc decision rendered in the case of Andrew James
Mcburnie v. Eulalio Ganzon,1 has enunciated the following guidelines
that must be observed in the matter of the filing and acceptance of motions
to reduce appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC
Rules of Procedure:
(a) The filing of a motion to reduce appeal bond shall be entertained by the
NLRC subject to the following conditions:
(1) there is meritorious ground; and (2) a bond in a reasonable amount is
posted;
(b) For purposes of compliance with condition no. (2) above, a motion shall
be accompanied by the posting of a provisional cash or surety bond
equivalent to ten percent (10%) of the monetary award subject of the
appeal, exclusive of damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to suspend the
running of the 10-day reglementary period
to perfect an appeal from the Labor Arbiter’s decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to reduce
bond and determine the final amount of bond that shall be posted by the
appellant, still in accordance with the standards of meritorious grounds
and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce bond, or
requires a bond that exceeds the amount of the provisional bond, the
appellant shall be given a fresh period of ten (10) days from notice of the
NLRC order within which to perfect the appeal by posting the required
appeal bond.
This Mcburnie ruling has completely overhauled the rules on motion to
reduce bond. Before its advent, the issue of what amount to post by way of
partial or provisional bond has continued to hound the party litigants and
the courts. Now, the fixing of “ten percent (10%) of the monetary award
subject of the appeal, exclusive of damages and attorney's fees” as the
“reasonable amount” that should be posted has completely eradicated any
and all controversies thereon. In other words, no more motion for

reduction of bond accompanied by said 10% requirement would be denied
outright on the ground of insufficiency or inadequacy of the partial or
provisional bond. What is left for the determination by the NLRC, using its
sound judgment and discretion, are only the issues of (1) the reasonable
final amount of the bond; and (2) what constitute “meritorious grounds.”
This determination is important since “in all cases, the reduction of the
appeal bond shall be justified by meritorious grounds and accompanied by
the posting of the required appeal bond in a reasonable amount.”2
The rule set in McBurnie was clarified3 by the Court in the consolidated
cases of Sara Lee Philippines v. Ermilinda Macatlang.4 Thus, while
McBurnie has effectively addressed the preliminary amount of the bond to
be posted in order to toll the running of the period to appeal, there is no
hard and fast rule in determining whether the additional bond to be posted
is reasonable in relation to the judgment award. In this case of Sara Lee,
petitioner companies5 were held liable by the Labor Arbiter for the illegal
dismissal of 5,984 employees with accompanying award of separation pay
and other monetary benefits amounting to P3,453,664,710.86. Petitioner
companies filed their Notice of Appeal with Motion to Reduce Appeal Bond
and To Admit Reduced Amount with the NLRC. They asked the NLRC to
reduce the appeal bond to P1 Million each on the grounds that it is
impossible for any insurance company to cover such huge amount and that,
in requiring them to post in full the appeal bond, it would be tantamount to
denying them their right to appeal. In light of the impossibility for any
surety company to cover the appeal bond and the huge economic losses
which the companies and their employees might suffer if the P3.45 Billion
bond is sustained, the NLRC granted the reduction of the appeal bond. The
NLRC issued an Order dated 31 March 2006 directing petitioner
corporations to post an additional P4.5 Million bond, bringing the total
posted bond to P9 Million. The Court of Appeals, however, reversed and set
aside the said 31 March 2006 NLRC Resolution and deemed it reasonable
under the circumstances of the case to order the posting of an additional
appeal bond of P1 Billion. Considering the peculiar circumstances in Sara
Lee, the Court has to determine what is the reasonable amount of appeal
bond. The fact was underscored that the amount of 10% of the award is not
a permissible bond but is only such amount that shall be deemed
reasonable in the meantime that the appellant’s motion is pending
resolution by the NLRC. The actual reasonable amount yet to be

determined is necessarily a bigger amount. In an effort to strike a balance
between the constitutional obligation of the state to afford protection to
labor, on the one hand, and the opportunity afforded to the employer to
appeal, on the other, it considered the appeal bond in the amount of P725M
which is equivalent to 25% of the monetary award sufficient to perfect the
appeal, viz.:
“We sustain the Court of Appeals in so far as it increases the amount of the
required appeal bond. But we deem it reasonable to reduce the amount of
the appeal bond to P725 Million. This directive already considers that the
award if not illegal, is extraordinarily huge and that no insurance company
would be willing to issue a bond for such big money. The amount of P725
Million is approximately 25% of the basis above calculated. It is a balancing
of the constitutional obligation of the state to afford protection to labor
which, specific to this case, is assurance that in case of affirmance of the
award, recovery is not negated; and on the other end of the spectrum, the
opportunity of the employer to appeal.
“By reducing the amount of the appeal bond in this case, the employees
would still be assured of at least substantial compensation, in case a
judgment award is affirmed. On the other hand, management will not be
effectively denied of its statutory privilege of appeal.”
In line with Sara Lee and the objective that the appeal on the merits to be
threshed out soonest by the NLRC, the Court, in the 2015 case of Balite v.
SS Ventures International, Inc.,6 held that the appeal bond of
P100,000.00 posted by the respondent company for the total monetary
award of P490,308.00, which is equivalent to around 20% thereof, is
sufficient to perfect the appeal. With the employer's demonstrated good
faith in filing the motion to reduce the bond on demonstrable grounds
coupled with the posting of the appeal bond in the requested amount, as
well as the filing of the memorandum of appeal, the right of the employer to
appeal must be upheld. This is in recognition of the importance of the
remedy of appeal, which is an essential part of our judicial system and the
need to ensure that every party litigant is given the amplest opportunity for
the proper and just disposition of his cause freed from the constraints of
technicalities.
1 G.R. Nos. 178034, 178117, 186984 and 186985, Oct. 17, 2013.
2 Andrew James Mcburnie v. Eulalio Ganzon, G.R. Nos. 178034, 178117,
186984 and 186985, Oct. 17, 2013.

3 The fact of clarification was pronounced in Balite v. SS Ventures
International, Inc., G.R. No. 195109, Feb. 4, 2015.
4 G.R. Nos. 180147-180150, 180319 and 180685, June 4, 2014.
5 This case is a consolidation of 6 cases involving several corporations,
namely: Sara Lee Philippines, Inc. (SLPI), Aris Philippines, Inc. (Aris), Sara
Lee Corporation (SLC) and Fashion Accessories Philippines, Inc. (FAPI).
6 G.R. No. 195109, Feb. 4, 2015.
B. NATIONAL LABOR RELATIONS COMMISSION (NLRC)
1. NATURE.
The NLRC is an administrative quasi-judicial body. It is an agency attached
to the DOLE solely for program and policy coordination only. It is in
charge of deciding labor cases through compulsory arbitration.
2. COMPOSITION OF THE NLRC.
The NLRC is composed of a Chairman and twenty-three (23) members
called “Commissioners.” The NLRC has tripartite composition. Eight
(8) members thereof should be chosen only from among the nominees of
the workers sector and another eight (8) from the employers sector.
The Chairman and the seven (7) remaining members shall come from the
public sector, with the latter to be chosen preferably from among the
incumbent Labor Arbiters.
3. COMMISSION EN BANC.
The Commission sits en banc only for the following purposes:
(1) To promulgate rules and regulations governing the hearing and
disposition of cases before any of its divisions and regional branches; and
(2) To formulate policies affecting its administration and operations.
The NLRC does not sit en banc to hear and decide cases. The en
banc has no adjudicatory power. The Commission exercises its
adjudicatory and all other powers, functions, and duties through
its eight (8) Divisions.
4. NLRC’S EIGHT (8) DIVISIONS.
The NLRC is divided into eight (8) divisions, each one is comprised of three
(3) members. Each Division shall consist of one (1) member from the public
sector who shall act as its Presiding Commissioner and one (1) member
each from the workers and employers sectors, respectively.

The various Divisions of the Commission have exclusive
appellate jurisdiction over cases within their respective
territorial jurisdictions.
1. JURISDICTION
1. TWO (2) KINDS OF JURISDICTION.
The NLRC exercises two (2) kinds of jurisdiction:
1. Exclusive original jurisdiction; and
2. Exclusive appellate jurisdiction.
2. EXCLUSIVE ORIGINAL JURISDICTION.
The NLRC exercises exclusive and original jurisdiction over the following
cases:
a. Petition for injunction in ordinary labor disputes to enjoin or
restrain any actual or threatened commission of any or all prohibited or
unlawful acts or to require the performance of a particular act in any labor
dispute which, if not restrained or performed forthwith, may cause grave or
irreparable damage to any party.
b. Petition for injunction in strikes or lockouts under Article 264 of
the Labor Code.
c. Certified cases which refer to labor disputes causing or likely to cause a
strike or lockout in an industry indispensable to the national interest,
certified to it by the Secretary of Labor and Employment for compulsory
arbitration by virtue of Article 263(g) of the Labor Code.
d. Petition to annul or modify the order or resolution (including those
issued during execution proceedings) of the Labor Arbiter.
3. EXCLUSIVE APPELLATE JURISDICTION.
The NLRC exercises exclusive appellate jurisdiction over the following:
a. All cases decided by the Labor Arbiters.
b. Cases decided by the DOLE Regional Directors or hearing officers
involving small money claims under Article 129 of the Labor Code.
c. Contempt cases decided by the Labor Arbiters.
2. EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER

OF REINSTATEMENT
1. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN

EMPLOYEE WAS ACTUALLY REINSTATED.
The BERGONIO Rule:
Bergonio, Jr. v. South East Asian Airlines, April 21, 2014.
After reversal of Labor Arbiter’s decision, the employer’s duty to reinstate
the dismissed employee in the actual service or in the payroll is effectively
terminated. The employee, in turn, is not required to return the wages that
he had received prior to the reversal of the LA’s decision.
EMPLOYEE WAS REINSTATED IN THE PAYROLL.
The GENUINO Doctrine:
Marilou S. Genuino v. NLRC, Citibank, N.A., Dec. 4, 2007.
The Refund Doctrine in Genuino no longer applies, per Garcia Doctrine.
The WENPHIL Rule: (The prevailing rule)
Wenphil Corporation v. Abing, April 7, 2014.
The period for computing the backwages due to the dismissed employees
during the period of appeal should END on the date that a higher court (in
this case the CA) reversed the labor arbitration ruling of illegal dismissal.”

EMPLOYEE WAS NEITHER REINSTATED TO HIS
FORMER POSITION OR IN THE PAYROLL.
Entitlement to reinstatement salaries/wages, allowances and
benefits under the following doctrines:
(1) ROQUERO doctrine; and
(2) GARCIA doctrine.
Roquero v. Philippine Air Lines, Inc., April 22, 2003.
Garcia v. Philippine Airlines, Inc., Jan. 20, 2009 (En Banc).
3.1. ENTITLEMENT TO REINSTATEMENT WAGES.

From the moment an employee is ordered reinstated by the Labor Arbiter
on the basis of the finding that his dismissal is illegal, up to the time that an
appellate tribunal like the NLRC, Court of Appeals and Supreme Court, as
the case may be, reverses the said finding, the employee is generally
entitled to his so-called “reinstatement wages.” The issue of entitlement
to this benefit has been the subject of several doctrinal rulings now known
as follows:

(1) Roquero doctrine; and
(3) Garcia doctrine.
3.1.1. ROQUERO DOCTRINE.

The Roquero doctrine, enunciates the rule that in cases where an employee
is ordered reinstated by the Labor Arbiter and the employer fails or refuses
to obey the reinstatement order but initiates an appeal, the employer’s
success in having the decision of the Labor Arbiter’s decision reversed on
appeal will not exculpate him from the liability to pay the reinstatement
wages of the employee reckoned and computed from the time the employee
was ordered reinstated by the Labor Arbiter until the date of its reversal on
appeal.
In this case of Roquero, the dismissal of petitioners Roquero and Pabayo
was held valid by the Labor Arbiter. On appeal to the NLRC, the Labor
Arbiter’s decision was reversed and consequently, petitioners were ordered
reinstated. They did not appeal from that decision of the NLRC but filed a
motion for the issuance of a writ of execution of the order of reinstatement.
The Labor Arbiter granted the motion but respondent PAL refused to
comply with the said order on the ground that it has filed a Petition for
Review before the Supreme Court. Subsequently, the CA reversed the
decision of the NLRC and ruled that the dismissal of petitioners was valid.
The Supreme Court later affirmed the CA’s decision but it held that the
unjustified refusal by PAL to reinstate Roquero who, unlike Pabayo, has not
amicably settled his case, entitles him to the payment of his reinstatement
wages effective from the time PAL failed to reinstate him despite the
issuance of the writ of execution. Thus, it was mandatory for PAL to
actually reinstate Roquero or reinstate him in the payroll. Having failed to
do so, the former must pay the latter the salaries he is entitled to, as if he
was reinstated, from the time of the decision of the NLRC until the finality
of the decision of the Supreme Court.
Following Roquero, it is now the norm that even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on
the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until its reversal by the NLRC, or the
Court of Appeals or the Supreme Court, as the case may be. If the employee
has been reinstated during the appeal period and such reinstatement order
is subsequently reversed on appeal with finality, the employee is not

required to reimburse whatever salaries he has received for he is entitled to
such, more so if he actually rendered services during the said period.
3.1.2. GARCIA DOCTRINE.

a. Modification of the Roquero and Genuino doctrines.
The Roquero and Genuino doctrines have been modified by the Garcia
doctrine. In this case, while respondent Philippine Airlines (PAL) was
undergoing rehabilitation receivership, an illegal dismissal case was filed by
petitioners against respondent PAL which was decided by the Labor Arbiter
in their favor thus ordering PAL to, inter alia, immediately comply with the
reinstatement aspect of the decision. On appeal, the NLRC reversed the
ruling of the Labor Arbiter and held that their dismissal was valid. The
issue of whether petitioners may collect their reinstatement wages during
the period between the Labor Arbiter’s order of reinstatement pending
appeal and the NLRC decision overturning that of the Labor Arbiter, now
that respondent PAL has terminated and exited from rehabilitation
proceedings, was resolved in the negative by the Supreme Court.
The following ratiocinations were cited:
(1) Re: modification of the Genuino doctrine. - The “refund
doctrine” in Genuino should no longer be observed because it easily
demonstrates how a favorable decision by the Labor Arbiter could harm,
more than help, a dismissed employee. The employee, to make both ends
meet, would necessarily have to use up the salaries received during the
pendency of the appeal, only to end up having to refund the sum in case of a
final unfavorable decision. It is mirage of a stopgap leading the employee to
a risky cliff of insolvency. Further, the Genuino ruling not only disregards
the social justice principles behind the rule, but also institutes a scheme
unduly favorable to management. Under such scheme, the salaries
dispensed pendente lite merely serve as a bond posted in installment by the
employer. For in the event of a reversal of the Labor Arbiter’s decision
ordering reinstatement, the employer gets back the same amount without
having to spend ordinarily for bond premiums. This circumvents, if not
directly contradicts, the proscription that the “posting of a bond [even a
cash bond] by the employer shall not stay the execution for reinstatement.”
(2) Re: modification of the Roquero doctrine. – The Roquero
doctrine was reaffirmed but with the modification that “[a]fter the Labor
Arbiter’s decision is reversed by a higher tribunal, the employee may be

barred from collecting the accrued wages, if it is shown that the delay in
enforcing the reinstatement pending appeal was without fault on the part of
the employer.”
b. Two-fold test under the Garcia doctrine.

Under Garcia, the test to determine the liability of the employer (who did
not reinstate the employee pending appeal) to pay the wages of the
dismissed employee covering the period from the time he was ordered
reinstated by the Labor Arbiter to the reversal of the Labor Arbiter’s
decision either by the NLRC, the Court of Appeals or the High Court, is
two-fold, to wit:
(1) There must be actual delay or the fact that the order of reinstatement
pending appeal was not executed prior to its reversal; and
(2) The delay must not be due to the employer’s unjustified act or omission.
If the delay is due to the employer’s unjustified refusal, the employer may
still be required to pay the salaries notwithstanding the reversal of the
Labor Arbiter’s decision.
In Garcia, there was actual delay in reinstating petitioners but respondent
PAL was justified in not complying with the reinstatement order of the
Labor Arbiter because during the pendency of the illegal dismissal case, the
SEC placed respondent PAL under an Interim Rehabilitation Receiver who,
after the Labor Arbiter rendered his decision, was replaced with a
Permanent Rehabilitation Receiver. It is settled that upon appointment by
the SEC of a rehabilitation receiver, all actions for claims before
any court, tribunal or board against the corporation shall ipso jure be
suspended. Resultantly, respondent PAL’s “failure to exercise the
alternative options of actual reinstatement and payroll reinstatement was
thus justified. Such being the case, respondent’s obligation to pay the
salaries pending appeal, as the normal effect of the non-exercise of the
options, did not attach.”
c. Cases decided after the promulgation of the Garcia doctrine.

Subsequent to Garcia, some of the cases decided in accordance with this
doctrine are as follows:
(1) College of the Immaculate Conception v. NLRC (2010);
(2) Islriz Trading v. Capada (2011);

(3) Pfizer, Inc. v. Velasco (2011); and
(4) C. Alcantara & Sons, Inc. v. CA (2012).
2. RECKONING OF THE PERIOD COVERED BY ACCRUED

REINSTATEMENT WAGES.
To clarify, employees ordered reinstated by the Labor Arbiter are entitled to
accrued reinstatement wages only from the time the employer
received a copy of the Labor Arbiter’s decision declaring the
employees’ termination illegal and ordering their reinstatement up to the
date of the decision of the appellate tribunal overturning that of
the Labor Arbiter. It is not accurate therefore to state that such
entitlement commences “from the moment the reinstatement order was
issued up to the date when the same was reversed by a higher court
without fear of refunding what he had received.”
4. SOME PRINCIPLES ON REINSTATEMENT WAGES.

Employer is not liable to pay any reinstatement backwages if reinstatement
is ordered not by the Labor Arbiter but by the NLRC on appeal and it was
not executed by writ and its finding of illegal dismissal is later reversed by
the Court of Appeals and/or Supreme Court.
Payroll-reinstated employee is entitled not only to reinstatement wages but
also to other benefits during the period of payroll reinstatement
until the illegal dismissal case is reversed by a higher tribunal.
Award of additional backwages and other benefits from the time the Labor
Arbiter ordered reinstatement until actual or payroll reinstatement is
proper and valid.
3. REMEDIES
1. EXTRAORDINARY REMEDIES.
a. Nature.
The power of the Commission (NLRC) to grant extraordinary remedies
mentioned in No. 3 above is not provided in the Labor Code or in any other
laws. It is a newly created remedy which saw light for the first time under
Rule XII of the 2011 NLRC Rules of Procedure. Past NLRC Rules did not

provide therefor. Since this is a recent newly minted remedy, there has yet
been no decision by the Supreme Court dwelling on its validity.
What is clear though is that this remedy is not equivalent to nor a substitute
for appeal. It is directed against “orders” or “resolutions” issued by the
Labor Arbiter in the course of the proceedings before him where the
remedy of appeal is not available. Notably, the remedy of appeal is available
only against the main decision of a case. But orders or resolutions issued
prior to the rendition of the decision in the main as well as orders or
resolutions issued thereafter, specifically during the execution stage, are
subject of this rule on extraordinary remedies.
b. Grounds.
The petition filed under this Rule may be entertained only on any of the
following grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the
Labor Arbiter;
(b) If serious errors in the findings of facts are raised which, if not
corrected, would cause grave or irreparable damage or injury to the
petitioner;
(c) If a party by fraud, accident, mistake or excusable negligence has been
prevented from taking an appeal;
(d) If made purely on questions of law; or
(e) If the order or resolution will cause injustice if not rectified.
c. Initiation through verified petition.

To secure these extraordinary remedies, a party aggrieved by any order or
resolution of the Labor Arbiter including those issued during execution
proceedings may file a verified petition to annul or modify such order or
resolution. The petition may be accompanied by an application for the
issuance of a temporary restraining order and/or writ of preliminary or
permanent injunction to enjoin the Labor Arbiter, or any person acting
under his/her authority, to desist from enforcing said resolution or
order.
4. CERTIFIED CASES
1. CERTIFIED LABOR DISPUTES.
“Certified labor disputes” are national interest cases certified by the DOLE

Secretary to the Commission (NLRC) for compulsory arbitration under
Article 263(g) of the Labor Code.
2. EFFECTS OF CERTIFICATION OF LABOR DISPUTES.
The certification of a labor dispute to the NLRC has the following effects:
(1) On intended or impending strike or lockout. - Upon certification,
the intended or impending strike or lockout is automatically enjoined,
notwithstanding the filing of any motion for reconsideration of the
certification order or the non-resolution of any such motion which may
have been duly submitted to the DOLE Secretary.
(2) On actual strike or lockout. - If a work stoppage has already taken
place at the time of the certification, all striking or locked out employees
shall immediately return to work and the employer shall immediately
resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout.
(3) On cases already filed or may be filed. - All cases between the
same parties, except where the certification order specifies otherwise the
issues submitted for arbitration which are already filed or may be filed, and
are relevant to or are proper incidents of the certified case, shall be
considered subsumed or absorbed by the certified case, and shall be
decided by the appropriate Division of the Commission.
(4) On other pending cases. - The parties to a certified case, under pain
of contempt, shall inform their counsels and the Division concerned of all
cases pending with the Regional Arbitration Branches and the Voluntary
Arbitrators relative or incident to the certified case before it.
(5) On which Division should take cognizance of the certified case
in case entity has several workplaces in different regions. -
Whenever a certified labor dispute involves a business entity with several
workplaces located in different regions, the Division having territorial
jurisdiction over the principal office of the company shall acquire
jurisdiction to decide such labor dispute; unless the certification order
provides otherwise.
Same effect of certification to the NLRC as in cases assumed

directly by DOLE Secretary.
The effects described above are also applicable when the DOLE Secretary
directly assumes jurisdiction over a labor dispute affecting industries
imbued with national interest and decides it himself.

C. BUREAU OF LABOR RELATIONS
– MED-ARBITERS
1. MED-ARBITER OR MEDIATOR-ARBITER.
“Med-Arbiter” or “Mediator-Arbiter” refers to an officer in the
Regional Office or in the BLR authorized to hear and decide representation
cases, inter-union or intra-union disputes and other related labor relations
disputes, except cancellation of union registration cases.
Some principles on Med-Arbiter.
 Injunctive power. The Med-Arbiter is possessed of the power to issue
temporary restraining order and the writ of injunction in appropriate cases.
 Contempt power. The Med-Arbiter has contempt power.
 Factual findings of Med-Arbiters are accorded great respect.
They are binding if they are supported by substantial evidence and there
exists no capricious exercise of judgment warranting reversal by certiorari.
 Execution of decisions, orders or awards of Med-Arbiters.
The Med-Arbiter may, upon his own initiative or on motion of any
interested party, issue a writ of execution on a judgment within five (5)
years from the date it becomes final and executory, requiring the Sheriff or
a duly deputized officer to execute or enforce the same.
1. JURISDICTION
(ORIGINAL AND APPELLATE)
I. CASES FALLING UNDER THE JURISDICTION OF THE MED-

ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR, IN
GENERAL
1. INTRODUCTION.
For purposes of clarity in the otherwise labyrinthine issue of jurisdiction
and procedure in the BLR, there is a need to cite first the cases over which
the following officials have their respective jurisdictions:
(1) Mediator-Arbiter (Med-Arbiter);
(2) DOLE Regional Director; and
(3) BLR Director.
The Mediator-Arbiter and the DOLE Regional Director exercise

original and exclusive jurisdiction over specified cases mentioned below.
For his part, the BLR Director exercises not only appellate but original
jurisdiction over some particular cases.
2. CASES COVERED.
There are three (3) general classifications of the cases covered by
the jurisdiction of said officials, to wit:
(a) Inter-union disputes;
(b) Intra-union disputes; and
(c) Other related labor relations disputes.
I-A. INTER-UNION OR INTRA-UNION DISPUTES

1. INTER-UNION OR REPRESENTATION DISPUTES.
An “inter-union dispute” or “representation dispute” is one occurring or
carried on between or among unions. It refers to a case involving a
petition for certification election filed by a duly registered labor
organization which is seeking to be recognized as the sole and exclusive
bargaining agent of the rank-and-file employees or supervisory employees,
as the case may be, in the appropriate bargaining unit of a company, firm or
establishment. Broadly, an “inter-union dispute” refers to any conflict
between and among legitimate labor unions involving representation
questions for purposes of collective bargaining or to any other conflict or
dispute between legitimate labor unions.
2. INTRA-UNION OR INTERNAL UNION DISPUTES.

An “intra-union dispute” or “internal union dispute” refers to a conflict
within or inside a labor union. It is any conflict between and among union
members, including grievances arising from any violation of the rights and
conditions of membership, violation of or disagreement over any provision
of the union’s constitution and by-laws or disputes arising from chartering
or affiliation of a union. It refers to a case involving the control, supervision
and management of the internal affairs of a duly registered labor union
such as those relating to specific violations of the union’s constitution and
by-laws. A complaint for any violation of the constitution and by-laws and
the rights and conditions of union membership under Article 241 of the

Labor Code, may be filed in the Regional Office where the union is
domiciled.
3. RUNDOWN OF INTER-UNION/INTRA-UNION CASES.

The following is a rundown of all possible inter-union/intra-union disputes:
1) Inter-union disputes:
(a) Validity/invalidity of voluntary recognition, certification election,
consent election, run-off election or re-run election;
(b) Such other disputes or conflicts involving the rights to self-organization,
union membership and collective bargaining between and among
legitimate labor organizations.
2) Intra-union disputes:
(a) Conduct or nullification of election of officers of unions and
workers' association;
(b) Audit or accounts examination of union or workers'
association funds;
(c) Deregistration of collective bargaining agreements;
(d) Validity/invalidity of union affiliation or disaffiliation;
(e) Validity/invalidity of acceptance/non-acceptance for union
membership;
(f) Opposition to application for union or CBA registration;
(g) Violations of or disagreements over any provision of the Constitution
and By-Laws of a union or workers' association;
(h) Disagreements over chartering or registration of labor organizations or
the registration of collective bargaining agreements;
(i) Violations of the rights and conditions of membership in a union or
workers' association;
(j) Violations of the rights of legitimate labor organizations, except
interpretation of CBAs;
(k) Validity/Invalidity of impeachment/expulsion/suspension or any
disciplinary action meted against any officer and member, including those
arising from non-compliance with the reportorial requirement;
(l) Such other disputes or conflicts involving the rights to self-organization,
union membership and collective bargaining between and among members
of a union or workers’ association.

1-B. OTHER RELATED LABOR RELATIONS DISPUTES
1. MEANING OF “RELATED LABOR RELATIONS DISPUTES.”
“Related labor relations dispute” refers to any conflict between a labor
union and the employer or any individual, entity or group that is not a labor
union or workers’ association.
2. COVERAGE OF RELATED LABOR RELATIONS DISPUTES

NOT OTHERWISE COVERED BY ARTICLE 217.
(a) Any conflict between:
(1) a labor union and the employer, or
(2) a labor union and a group that is not a labor organization; or
(3) a labor union and an individual who is not a member of such union;
(b) Cancellation of registration of unions and workers associations filed by
individuals other than its members, or group that is not a labor
organization; and
(c) A petition for interpleader involving labor relations.
“Interpleader” refers to a proceeding brought by a party against two or
more parties with conflicting claims, compelling the claimants to litigate
between and among themselves their respective rights to the claim, thereby
relieving the party so filing from suits they may otherwise bring against it.
II. ORIGINAL AND EXCLUSIVE JURISDICTION OF MED-

ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR
Having known the various cases afore-described, a discussion of the
respective jurisdictions of the Med-Arbiters, DOLE Directors and BLR
Director over these cases may now be made with greater clarity.
1. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE MED-
ARBITERS.
The cases falling under the original and exclusive jurisdiction of the Med-
Arbiters are as follows:
(a) Inter-union disputes, also known as representation/certification
election conflicts;
(b) Intra-union disputes;
(c) Other related labor relations disputes; and
(d) Contempt cases.

Excepted from their jurisdiction is cancellation of union registration
cases which are cognizable by the DOLE Regional Directors.
2. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DOLE

REGIONAL DIRECTORS.
The cases falling under the original and exclusive jurisdiction of the DOLE
Regional Directors are as follows:
(1) Petitions for cancellation of registration of independent unions,
local chapters and workers’ associations;
(2) Petitions for deregistration of CBAs;
(3) Request for examination of books of accounts of said labor
organizations under Article 274 of the Labor Code.
On No. 3 [Examination of Books of Accounts] above, there is a need to
point out that although by nature, this is an intra-union dispute, the rules
treat this separately from those applicable to intra-union disputes and vest
jurisdiction thereover in the DOLE Regional Directors and not in the Med-
Arbiters.
The case in point is La Tondena Workers Union vs. Secretary of
Labor. Intra-union conflicts such as examinations of accounts are under
the jurisdiction of the BLR. However, the Rules of Procedure on Mediation-
Arbitration purposely and expressly separated or distinguished
examinations of union accounts from the genus of intra-union conflicts and
provided a different procedure for the resolution of the same. Original
jurisdiction over complaints for examinations of union accounts is vested in
the Regional Director and appellate jurisdiction over decisions of the
former is lodged with the BLR. This is apparent from Sections 3 and 4, Rule
II of the Med-Arbitration Rules. Contrast these two sections from Section 2
and Section 5 of the same Rules. Section 2 expressly vests upon Med-
Arbiters original and exclusive jurisdiction to hear and decide, inter alia, all
other inter-union or internal union disputes. Section 5 states that the
decisions of the Med-Arbiter shall be appealable to the DOLE Secretary.
These are the provisions consistent with Section 5 of Rule VIII of the
Implementing Rules of the Labor Code.
3. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE BLR

DIRECTOR.

At the outset, it must be stressed that reference in the law and pertinent
rules to “BLR”, as far as the issue of jurisdiction is concerned, should
rightfully mean “BLR Director.”
The BLR Director, therefore, as head of the agency, has the original and
exclusive jurisdiction over the following:
(1) Complaints and petitions involving the registration or cancellation of
registration of federations, national unions, industry unions, trade
union centers and their local chapters, affiliates and member
organizations;
(2) Request for examination of books of accounts of said labor
organizations (federations, national unions, industry unions and
trade union centers) under Article 274 of the Labor Code;
(3) Intra-union disputes involving said labor organizations
(federations, national unions, industry unions and trade union
centers); and
(4) Contempt cases.
As far as No. 3 [Intra-Union Disputes] above is concerned, the 2010 case of
Atty. Montaño v. Atty. Verceles,1 is relevant. Petitioner here claimed
that under the Implementing Rules, it is the Regional Director of the DOLE
and not the BLR who
has jurisdiction over intra-union disputes involving federations which, in
this case, pertains to the election protests in connection with the election of
officers of the federation (Federation of Free Workers [FFW]). In finding no
merit in petitioner’s contention, the High Court pointed out that Article 226
of the Labor Code clearly provides that the BLR and the Regional Directors
of DOLE have concurrent jurisdiction over inter-union and intra-union
disputes. Such disputes include the conduct or nullification of election of
union and workers’ association officers. There is, thus, no doubt as to the
BLR’s jurisdiction over the instant dispute involving member-unions of a
federation arising from disagreement over the provisions of the federation’s
constitution and by-laws. It agreed with the following observation of the
BLR:
“Rule XVI lays down the decentralized intra-union dispute settlement
mechanism. Section 1 states that any complaint in this regard ‘shall be filed
in the Regional Office where the union is domiciled.’ The concept of
domicile in labor relations regulation is equivalent to the place where the
union seeks to operate or has established a geographical presence for

purposes of collective bargaining or for dealing with employers concerning
terms and conditions of employment.
“The matter of venue becomes problematic when the intra-union dispute
involves a federation, because the geographical presence of a federation
may encompass more than one administrative region. Pursuant to its
authority under Article 226, this Bureau exercises original jurisdiction over
intra-union disputes involving federations. It is well-settled that FFW,
having local unions all over the country, operates in more than one
administrative region. Therefore, this Bureau maintains original and
exclusive jurisdiction over disputes arising from any violation of or
disagreement over any provision of its constitution and bylaws.”
1 G.R. No. 168583, July 26, 2010.
II. APPELLATE JURISDICTION OF THE BLR DIRECTOR
1. CASES FALLING UNDER THE APPELLATE JURISDICTION OF

THE BLR DIRECTOR.
The BLR Director exercises exclusive appellate jurisdiction over the
following cases:
(a) All decisions of the Med-Arbiters in (1) intra-union disputes, and (2)
other related labor relations disputes.
NOTE: Decisions in inter-union disputes or representation/certification
election conflicts, are NOT appealable to the BLR Director but directly to
the DOLE Secretary. [See discussion below].
(b) All decisions originating from the DOLE Regional Directors in the cases
falling under their original jurisdiction as enumerated above.
2. APPELLATE JURISDICTION OVER MED-ARBITER’S

DECISIONS IN INTER-UNION DISPUTES OR CERTIFICATION
ELECTION CASES IS LODGED WITH THE DOLE SECRETARY
AND NOT WITH THE BLR DIRECTOR.
To reiterate, decisions of Med-Arbiters in certification election cases or
inter-union disputes are appealable not to the BLR Director but directly
to the DOLE Secretary by virtue of Article 259 of the Labor Code.

It must be noted that the rule on appeal in certification election cases in
unorganized establishments is different from that of organized
establishments.
(a) Rule on appeal in unorganized establishments. - The order
granting the conduct of a certification election in an unorganized
establishment is not subject to appeal. Any issue arising from its conduct
or from its results is proper subject of a protest. Appeal may only be
made to the DOLE Secretary in case of denial of the petition within ten
(10) days from receipt of the decision of denial.
(b) Rule on appeal in organized establishments. - The order
granting the conduct of a certification election in an organized
establishment and the decision dismissing or denying the petition may
be appealed to the DOLE Secretary within ten (10) days from receipt
thereof.
3. APPEALS AND REMEDIES FROM DECISIONS OF THE BLR

DIRECTOR.
a. Jurisdictional distinctions.
The distinctions pointed out above between the respective jurisdictions of
the DOLE Regional Directors, Med-Arbiters and the BLR Director find
significance in determining which of the cases may be appealed to the BLR
Director and those that may be appealed to the DOLE Secretary. Thus, the
rule may be stated as follows:
(1) Decisions in cases cognizable by the BLR Director in the exercise of
his original and exclusive jurisdiction are appealable to the DOLE
Secretary;
(2) Decisions in cases cognizable by the Med-Arbiters in their original
and exclusive jurisdiction are appealable to the BLR Director with the
single exception of decisions in certification election or inter-union
disputes which, as earlier emphasized, are directly appealable to the DOLE
Secretary as mandated under Article 259 of the Labor Code; and
(3) Decisions in cases cognizable by the DOLE Regional Directors in
their original and exclusive jurisdiction are appealable to the BLR
Director.
b. Remedies.
(1) On No. 1 above. – The decision rendered by the DOLE Secretary in
his appellate jurisdiction may be elevated to the Court of Appeals by way

of Rule 65 petition for certiorari.
(2) On Nos. 2 and 3 above. - The decisions rendered by the BLR
Director in his appellate jurisdiction may be elevated directly to the
Court of Appeals by way of Rule 65 petition for certiorari. It cannot be
appealed to the DOLE Secretary because they were rendered by the BLR
Director in the exercise of his appellate jurisdiction.
Simply stated, another appeal to the DOLE Secretary is not allowed under
the situations contemplated in Nos. 2 and 3 above, the decisions being
final and executory.
4. EXAMPLES OF SPECIFIC CASES.

a. APPEALS FROM DENIAL OF APPLICATION FOR
REGISTRATION AND CANCELLATION OF REGISTRATION
OF LABOR ORGANIZATIONS.
For purposes of appeal, the issue of union registration involves two (2)
situations, to wit:
(1) Denial of application for union registration; and
(2) Revocation or cancellation of union registration.
On denial of application for union registration.
(1) If the denial is made by the Regional Office in cases involving
application for registration of independent unions, local chapters and
workers’ associations, the same may be appealed to the BLR Director;
or
(2) If the denial is made by the BLR Director in cases involving
federations, national unions, industry unions and trade union
centers, the same is appealable to the DOLE Secretary.
On revocation or cancellation of union registration.
(1) If decision is rendered by the Regional Director. - The decision
of the Regional Director in the cases over which he has original
jurisdiction, may be appealed to the BLR Director by any of the parties
within ten (10) days from receipt thereof, copy furnished the opposing
party.
(2) If decision is rendered by the BLR Director. - The decision of the
BLR Director, in the exercise of his original jurisdiction, may be appealed
to the DOLE Secretary by any party within the same period of ten (10) days,
copy furnished the opposing party.

5. EXCEPTION WHEN DOLE SECRETARY MAY ENTERTAIN
APPEAL DIRECTLY FROM THE DOLE REGIONAL
DIRECTOR’S DECISION WITHOUT PASSING THROUGH THE
BLR DIRECTOR.
The Heritage Hotel Manila v. National Union of Workers in the
Hotel, Restaurant and Allied Industries-Heritage Hotel Manila
Supervisors Chapter (NUWHRAIN-HHMSC).1 In this 2011 case, the
Supreme Court allowed a deviation from the standing rule on the appellate
jurisdiction of the BLR Director over a decision of the DOLE Regional
Director when the BLR Director inhibited himself from taking cognizance
of the appeal from the decision of the DOLE Regional Director because he
was a former counsel of respondent. The DOLE Secretary may thus legally
assume jurisdiction over an appeal from the decision of the DOLE Regional
Director in the event that the BLR Director inhibits himself from the case.
In the absence of the BLR Director, there is no person more
competent to resolve the appeal than the DOLE Secretary. Thus,
jurisdiction remained with the BLR despite the BLR Director’s inhibition.
When the DOLE Secretary resolved the appeal, she merely stepped into the
shoes of the BLR Director and performed a function that the latter could
not himself perform. She did so pursuant to her power of supervision and
control over the BLR.
III. ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs

In addition to the afore-mentioned controversies over which they have
concurrent original and exclusive jurisdiction, the BLR and the Labor
Relations Divisions (LRDs) in the DOLE Regional Offices likewise have
concurrent jurisdiction over the following administrative functions:
1. Registration of labor unions;
2. Keeping of registry of labor unions;
3. Maintenance and custody of the files of Collective Bargaining
Agreements (CBAs) and other related agreements.
4. Records of settlement of labor disputes; and
5. Copies of orders and decisions of Voluntary Arbitrators.
It must be noted that it is the registration of the labor
organization with the BLR and not with the Securities and
Exchange Commission (SEC) which makes it a legitimate labor

organization with rights and privileges granted
under the Labor Code.
D. NATIONAL CONCILIATION AND MEDIATION BOARD

(NCMB)
1. NATURE OF PROCEEDINGS
1. NCMB IS NOT A QUASI-JUDICIAL AGENCY.
NCMB is not a quasi-judicial agency, according to the 2009 case of
Tabigue v. International Copra Export Corporation.2
“Quasi-judicial function” is a term which applies to the action,
discretion, etc. of public administrative officers or bodies, who are required
to investigate facts or ascertain the existence of facts, hold hearings, and
draw conclusions from them
as a basis for their official action and to exercise discretion of a judicial
nature.
2. NOT BEING A QUASI-JUDICIAL AGENCY, NCMB’S RULINGS
CANNOT BE ELEVATED TO, AND COGNIZABLE BY, THE
COURT OF APPEALS.
Rule 43 of the Rules of Court applies only to awards, judgments, final
orders or resolutions of or authorized by any quasi-judicial agency in
the exercise of its quasi-judicial functions. Hence, NCMB’s decision, not
having been rendered by a quasi-judicial body, cannot be elevated to the
Court of Appeals under said rule.
2. CONCILIATION VS. MEDIATION

1. CONCILIATION AND MEDIATION, MEANING.
Both the terms “conciliation” and “mediation” refer to a process whereby a
third person usually called Conciliator (in case of conciliation) or Mediator
(in case of mediation), intervenes in a dispute involving two or more
conflicting parties for the purpose of reconciling their differences or
persuading them into adjusting or settling their dispute. The Conciliator or
Mediator normally does not make or render any decision, his role being
confined to the functions afore-described.
1 G.R. No. 178296, Jan. 12, 2011.
2 G.R. No. 183335, Dec. 23, 2009.

3. DISTINCTION BETWEEN CONCILIATION AND MEDIATION.
Generally, there are no marked distinctions between conciliation and
mediation. The reason is that In both cases, a
neutral third party (called Conciliator or Mediator) is tasked to assist
two or more opposing parties in finding appropriate resolution to a dispute.
In the NCMB, the hearing officer is called Conciliator-Mediator. There
is no separate classification between conciliators and mediators. When the
Conciliator-Mediator performs his task, he does not make any distinction
when he is acting
as Conciliator or as Mediator.
In other jurisdictions, the principal distinction between
conciliation and mediation lies on the extent of the power and
authority granted to the neutral third party.
In mediation, the Mediator normally facilitates a deliberation or
discussion of the issues between the parties. He may or may not offer any
opinions on the strength and weaknesses of each party's positions and
arguments. Thus, mediation may be classified into two, namely:
1. Facilitative Mediation where the Mediator does not make or offer any
opinion; or
2. Evaluative Mediation where the Mediator offers an opinion which is
not binding on the parties.
It bears stressing, however, that regardless of which of the 2 methods above
is chosen, the Mediator is not empowered to impose his will on the parties.
In conciliation, the Conciliator is given more power and authority in that
he may not only offer an opinion on the issues at hand but may actually
make a binding opinion thereon provided the parties stipulate in advance
to this effect. His opinion is based on the facts and the law involved in the
controversy before him.
It may thus be observed that conciliation is more formal than mediation
in the sense that the Conciliator’s opinion, unlike the Mediator’s, may be
binding on the parties, although it may be merely temporary in character.
3. PREVENTIVE MEDIATION
1. PREVENTIVE MEDIATION AS A REMEDY.
“Preventive mediation,” as a remedy, is not found in the Labor Code. But
under the law which created the NCMB, it is expressly stated that one of its

functions is to provide preventive mediation to disputing parties.
The term “preventive mediation case” refers to the potential or brewing
labor dispute which is the subject of a formal or informal request for
conciliation and mediation assistance sought by either or both parties in
order to remedy, contain or prevent
its degeneration into a full blown dispute through amicable settlement.
2. HOW TO INITIATE PREVENTIVE MEDIATION.
Preventive mediation proceeding may be initiated in two (2) ways:
(1) By filing a notice or request of preventive mediation, as
distinguished from a notice of strike/lockout; or
(2) By conversion of the notice of strike/lockout into a preventive
mediation case.
3. AUTHORITY TO CONVERT A NOTICE OF STRIKE/LOCKOUT
INTO A PREVENTIVE MEDIATION CASE.
The NCMB has the authority to convert a notice of strike/lockout filed by
the union/employer into a preventive mediation case under any of the
following circumstances:
1. When the issues raised in the notice of strike/lockout are not strikeable
in character.
2. When the party which filed the notice of strike/lockout voluntarily
asks for the conversion.
3. When both parties to a labor dispute mutually agree to have it subjected
to preventive mediation proceeding.
Such authority is in pursuance of the NCMB’s duty to exert all efforts at
mediation and conciliation to enable the parties to settle their dispute
amicably and in line with the State policy of favoring voluntary modes of
settling labor disputes.
4. CONVERSION OF A NOTICE OF STRIKE OR NOTICE OF
LOCKOUT INTO A PREVENTIVE MEDIATION CASE RESULTS
IN ITS DISMISSAL.
Once the notice of strike is converted into a preventive mediation case, the
notice is deemed dropped from the dockets as if no notice of strike has been
filed. Since there is no more notice of strike to speak about, any strike
subsequently staged by the union after the conversion is deemed not to
have complied with the requirements of a valid strike and therefore illegal.
The same rule applies in the case of lockout by an employer.
5. RELEVANT CASES.

A case in point is Philippine Airlines, Inc. v. Secretary of Labor and
Employment,1 where the strike was declared illegal for lack of a valid
notice of strike in view of the NCMB’s conversion of said notice into a
preventive mediation case.
It is clear, according to San Miguel Corporation v. NLRC,2 that the
moment the NCMB orders the preventive mediation in a strike case, the
union thereupon loses the notice of strike it had filed. Consequently, if it
still defiantly proceeds with the strike while mediation is on-going, the
strike is illegal.
1 G.R. No. 88210, Jan. 23, 1991, 193 SCRA 223.

2 G.R. No. 119293, June 10, 2003.
E. DOLE REGIONAL DIRECTORS
1. JURISDICTION
1. JURISDICTION OF THE DOLE REGIONAL DIRECTORS.
The DOLE Regional Directors have original and exclusive jurisdiction over
the following cases:
(a) Labor standards enforcement cases under Article 128;
(b) Small money claims cases arising from labor standards violations in the
amount not exceeding P5,000.00 and not accompanied with a claim for
reinstatement under Article 129;
(c) Occupational safety and health violations;
(d) Registration of unions and cancellation thereof, cases filed against
unions and other labor relations related cases;
(e) Complaints against private recruitment and placement agencies
(PRPAs) for local employment; and
(f) Cases submitted to them for voluntary arbitration in their capacity as
Ex-Officio Voluntary Arbitrators (EVAs) under Department Order
No. 83-07, Series of 2007.
I. LABOR STANDARDS ENFORCEMENT CASES

1. SUBJECT OF THE VISITORIAL AND ENFORCEMENT
POWERS: THE ESTABLISHMENT AND NOT THE EMPLOYEES

THEREIN.
The subject of the visitorial and enforcement powers granted to the DOLE
Secretary or his duly authorized representatives under Article 128 is the
establishment which is under inspection and not the employees
thereof.
Consequently, any awards granted are not confined to employees who
signed the complaint inspection but are equally applicable to all those
who were employed by the establishment concerned at the time
the complaint was filed, even if they were not signatories
thereto. The reason is that the visitorial and enforcement powers
are relevant to, and may be exercised over, establishments, not
over individual employees thereof, to determine compliance by
such establishments with labor standards laws. Necessarily, in
case of an award from such violation by the establishment,
all its existing employees should be benefited thereby. It must be
stressed, however, that such award should not apply to those who resigned,
retired or ceased to be employees at the time the complaint was filed.
2. ORIGINAL JURISDICTION.
The DOLE Regional Directors exercise original jurisdiction over the
following:
(a) Cases involving inspection of establishments to determine compliance
with labor standards (Visitorial Power); and (b) Cases involving issuance
of compliance orders and writs of execution (Enforcement Power).
3. VISITORIAL POWER OF REGIONAL DIRECTORS UNDER
ARTICLE 128(a).
Pursuant to their visitorial power under Article 128(a), the DOLE Regional
Directors shall have:
(a) access to employer’s records and premises at any time of the day or
night, whenever work is being undertaken therein; and
(b) the right:
(1) to copy from said records;
(2) to question any employee and investigate any fact, condition or matter
which may be necessary to determine violations or which may aid in the
enforcement of the Labor Code and of any labor law, wage order, or rules
and regulations issued pursuant thereto.

4. ENFORCEMENT POWER OF REGIONAL DIRECTORS UNDER
ARTICLE 128(b).
The statutory basis of the authority of the DOLE Regional Directors to
administer and enforce labor standards is found in Article 128(b) of the
Pursuant thereto, the DOLE Regional Director, in cases where the
employer-employee relationship still exists, shall have the power:
a. to issue compliance orders to give effect to the labor standards
provisions of the Labor Code and other labor legislations based on the
findings of labor employment and enforcement officers or industrial safety
engineers made in the course of inspection.
b. to issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests
the findings of the labor employment and enforcement officer and raises
issues supported by documentary proofs which were not considered in the
course of inspection, in which case, the contested case shall fall under the
jurisdiction of the Labor Arbiter to whom it should be endorsed by the
Regional Director.
c. to order stoppage of work or suspension of operations of any unit
or department of an establishment when non-compliance with the law or
implementing rules and regulations poses grave and imminent danger to
the health and safety of workers in the workplace. Within 24 hours, a
hearing shall be conducted to determine whether an order for the stoppage
of work or suspension of operations shall be lifted or not. In case the
violation is attributable to the fault of the employer, he shall pay the
employees concerned their salaries or wages during the period of such
stoppage of work or suspension of operation.
d. to require employers, by appropriate regulations, to keep and maintain
such employment records as may be necessary in aid of his visitorial
and enforcement powers under the Labor Code.
II. SMALL MONEY CLAIMS CASES

1. JURISDICTION OVER CLAIMS NOT EXCEEDING P5,000.
The DOLE Regional Director has original jurisdiction over small money
claims cases arising from labor standards violations in the amount not
exceeding P5,000.00 and not accompanied with a claim for reinstatement

under Article 129 of the Labor Code.
Article 129 contemplates the recovery of wages and other monetary claims
and benefits, including legal interest, owing to an employee or domestic
worker or kasambahay, arising from employer-employee relations provided
the claim does not exceed P5,000.00.
2. REQUISITES FOR THE VALID EXERCISE OF JURISDICTION
BY DOLE REGIONAL DIRECTORS UNDER ARTICLE 129.
The following requisites must all concur, to wit:
(1) The claim is presented by an employee or domestic worker or
kasambahay;
(2) The claimant, no longer being employed, does not seek reinstatement;
and
(3) The aggregate money claim of the employee or domestic worker or
kasambahay does not exceed P5,000.00.
In the absence of any of the aforesaid three (3) requisites, the Labor
Arbiters have original and exclusive jurisdiction over all claims
arising from employer-employee relations, other than claims for employees’
compensation, social security, PhilHealth and maternity benefits.
III. CASES SUBMITTED TO REGIONAL DIRECTORS AND

ASSISTANT REGIONAL DIRECTORS FOR VOLUNTARY
ARBITRATION IN THEIR CAPACITY AS EX-OFFICIO
VOLUNTARY ARBITRATORS (EVAs)
1. JURISDICTION.
As EVAs, the DOLE Regional Directors and their Assistants have
jurisdiction over the following cases:
(a) All grievances arising from the interpretation or implementation of the
CBA;
(b) All grievances arising from the interpretation or enforcement of
company personnel policies which remain unresolved after exhaustion of
the grievance procedure;
(c) Cases referred to them by the DOLE Secretary under the DOLE’s
Administrative Intervention for Dispute
Avoidance (AIDA) initiative (provided under DOLE Circular No. 1, Series
of 2006); and

(d) Upon agreement of the parties, any other labor dispute may be
submitted to the EVAs for voluntary arbitration.
F. DOLE SECRETARY
1. POWERS OF THE DOLE SECRETARY.
The DOLE Secretary, being the head of the Department of Labor and
Employment, is possessed of a number of powers, some of which are
mentioned in the syllabus, to wit:
1. Visitorial and enforcement powers;
2. Power to suspend/effects of termination;
3. Assumption of jurisdiction;
4. Appellate jurisdiction; and
5. Voluntary arbitration powers.
1. VISITORIAL AND ENFORCEMENT POWERS

1. THREE (3) KINDS OF POWER UNDER ARTICLE 128.
Article 128 of the Labor Code, as amended, basically enunciates the three
(3) kinds of power which the DOLE Secretary and/or the Regional
Directors, his duly authorized representatives, may exercise in connection
with the administration and enforcement of the labor standards provisions
of the Labor Code and of any labor law, wage order or rules and regulations
issued pursuant thereto.
The three (3) kinds of power are as follows:
1) Visitorial power:
2) Enforcement power: and
3) Appellate power or power of review.
2. WHO EXERCISE THE POWERS.

Nos. 1 and 2 above are exercised under the original jurisdiction of the
DOLE Regional Directors.
This has been earlier discussed under the separate topic of “VII.
PROCEDURE AND JURISDICTION, E. DOLE Regional
Directors, 1. Jurisdiction”, supra. Hence, the same will no longer be
touched under the instant topical discussion.
The appellate power in No. 3 above may only be exercised by the DOLE

Secretary in respect to any decision, order or award issued by the DOLE
Regional Directors.
3. NATURE OF THE VISITORIAL AND ENFORCEMENT

POWERS.
The visitorial and enforcement powers granted to the DOLE Secretary and
the DOLE Regional Directors who are his duly authorized representatives,
are quasi-judicial in nature.
4. IT IS THE REGIONAL DIRECTORS WHO HAVE ORIGINAL

JURISDICTION TO EXERCISE THE VISITORIAL AND
ENFORCEMENT POWERS UNDER ARTICLES 37, 128 AND 274.
In the instances contemplated under Articles 37, 128 and 274, it is the
DOLE Regional Directors, the DOLE Secretary’s duly authorized
representatives commonly referred to in these three (3) articles, who have
the original jurisdiction to exercise the visitorial power granted therein.
5. THE ROLE OF THE DOLE SECRETARY IN THE EXERCISE OF

VISITORIAL AND ENFORCEMENT POWERS IS APPELLATE IN
NATURE.
It is clear from the above disquisition that the original jurisdiction over
the exercise of the visitorial and enforcement powers belongs to the DOLE
Regional Directors, as the duly authorized representatives of the DOLE
Secretary.
The role of the DOLE Secretary is confined to the exercise of his appellate
jurisdiction over the decisions, orders and awards of the DOLE Regional
Directors in cases brought before them for adjudication under Articles 128
and 274.
2. POWER TO SUSPEND EFFECTS OF TERMINATION

1. GROUNDS.
The DOLE Secretary may suspend the effects of termination pending
resolution of the dispute in the event of a prima facie finding by the
appropriate official of the DOLE before whom the dispute is pending that:

1. the termination may cause a serious labor dispute; and/or
2. the termination is in implementation of a mass lay-off.
2. RATIONALE FOR SUSPENDING THE EFFECTS OF

TERMINATION.
The obvious purpose behind this rule is to bring the parties back to the
status quo ante litem, that is, their state of relationship prior to the
termination. In this way, the workers will be litigating the issue of the
validity or legality of their termination on more or less equal footing with
the employer since they will be immediately reinstated and accordingly not
be deprived of their wages while the litigation is on-going.
3. REINSTATEMENT PENDING RESOLUTION OF THE

TERMINATION DISPUTE.
Suspension of the effects of termination will necessarily result in the
immediate reinstatement of the terminated employees. An order of
reinstatement pending resolution of the case may thus be issued by the
DOLE Secretary pursuant to this power.
4. DISTINGUISHED FROM DOLE SECRETARY’S POWER OF

ASSUMPTION OR CERTIFICATION IN NATIONAL INTEREST
CASES.
a. Different power of the DOLE Secretary.
This power of the DOLE Secretary granted under Article 277(b) should be
distinguished from his power to assume or certify labor disputes involving
industries indispensable to the national interest under Article 263(g). The
following distinctions may be cited:
First, the exercise of the power to suspend the effects of termination
involves only the issue of termination of employment which may cause a
serious labor dispute or is in implementation of a mass lay-off; while the
power to assume or certify labor disputes is applicable to all labor disputes,
irrespective of the grounds therefor, provided such labor disputes will cause
or likely to cause strikes or lockouts in industries indispensable to the
national interest.
Second, the former requires the conduct of preliminary determination of
the existence of prima facie evidence that the termination may cause a

serious labor dispute or is in implementation of a mass lay-off to be
conducted by the appropriate official of the DOLE before whom the
termination dispute is pending; while the latter does not require such
preliminary prima facie determination. In fact, prior notice and hearing are
not required before the DOLE Secretary may issue an assumption or
certification order.
Third, the “serious labor dispute” contemplated under the former may or
may not involve a strike or lockout; while the labor dispute referred to in
the latter will cause or likely to cause a strike or lockout.
Fourth, the former may be exercised in cases of termination of
employment for as long as any of the two (2) grounds mentioned in Article
277(b) exists, irrespective of the nature of the business of the employer;
while the latter may only be exercised in industries indispensable to the
national interest.
Fifth, the remedy under the former is immediate reinstatement pending
resolution of the termination case; while in the latter, the remedy is the
automatic return to work of the strikers or locked-out employees, if the
strike or lock-out is on-going at the time of the issuance of the
assumption/certification order or the enjoining of the strike or lockout, if
one has not taken place, pending the resolution of the issues raised in the
notice of strike or lockout.
3. ASSUMPTION OF JURISDICTION
The DOLE Secretary is granted under Article 263(g) of the Labor Code, the
extraordinary police power of assuming jurisdiction over a labor dispute
which, in his opinion, will cause or likely to cause a strike or lockout in an
industry indispensable to the national interest, or the so-called “national
interest” cases. Alternatively, he may certify the labor dispute to the
NLRC for compulsory arbitration.
4. APPELLATE JURISDICTION
I. VARIOUS APPEALS TO THE DOLE SECRETARY

UNDER THE LABOR CODE AND APPLICABLE RULES
1. OFFICES FROM WHICH APPEALS MAY ORIGINATE.
Appeals to the DOLE Secretary may originate from any of the following

offices:
(1) DOLE Regional Directors;
(2) Med-Arbiters;
(3) Director of the Bureau of Labor Relations (BLR); and
(4) Philippine Overseas Employment Administration (POEA).
2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.

The following decisions, awards or orders are not appealable to the Office of
the DOLE Secretary:
(1) Those rendered by Labor Arbiters that are appealable to the
Commission (NLRC) which has exclusive appellate jurisdiction thereover;
(2) Those rendered by the Commission (NLRC) since they can be elevated
directly to the CA by way of a Rule 65 certiorari petition;
(3) Those rendered by the BLR Director in the exercise of his appellate
jurisdiction since they can be brought directly to the CA under Rule 65
certiorari petition;
(4) Those rendered by DOLE Regional Directors under Article 129 of the
Labor Code since they are appealable to the NLRC;
(5) Those issued by DOLE Regional Directors in their capacity as Ex-Officio
Voluntary Arbitrators (EVAs) since they can be brought directly to the CA
under Rule 43 of the Rules of Court; and
(6) Those rendered by Voluntary Arbitrators which are appealable directly
to the CA under Rule 43 of the Rules of Court.
II. APPEALS FROM DOLE REGIONAL DIRECTORS

1. CASES APPEALABLE TO DOLE SECRETARY.
Not all decisions, awards or orders rendered by the DOLE Regional
Directors are appealable to the DOLE Secretary.
Only those issued in the following cases are so appealable:
(a) Labor standards enforcement cases under Article 128;
(b) Occupational safety and health violations; and
(c) Complaints against private recruitment and placement agencies
(PRPAs) for local employment.
2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.
As earlier pointed out, the following cases decided by the DOLE Regional
Directors are not appealable to the DOLE Secretary but to some other

agencies/tribunals indicated below:
(a) Decisions in small money claims cases arising from labor standards
violations in the amount not exceeding P5,000.00 and not accompanied
with a claim for reinstatement under Article 129 are appealable to the
NLRC;
(b) Decisions in cases submitted to DOLE Regional Directors for voluntary
arbitration in their capacity as Ex-Officio Voluntary Arbitrators (EVAs)
under Department Order No. 83-07, Series of 2007 may be elevated
directly to the Court of Appeals by way of a Rule 43 petition. This is so
because the DOLE Regional Directors, in so deciding,
are acting as Voluntary Arbitrators; hence, what should apply are the rules
on appeal applicable to voluntary arbitration.
III. APPEALS FROM DECISIONS OF

MEDIATORS-ARBITERS (MED-ARBITERS) AND BLR
DIRECTOR
(NOTE: The discussion of this sub-topic is presented alongside
the comments on the topic of “VIII. PROCEDURE AND
JURISDICTION, C. Bureau of Labor Relations – Med-Arbiters, 1.
Jurisdiction (Original and Appellate)”, supra)
V. APPEALS FROM DECISIONS OF POEA

1. CASES APPEALABLE TO THE DOLE SECRETARY.
The decisions in the following cases rendered by the Philippine Overseas
Employment Administration (POEA) in its original jurisdiction are
appealable to the DOLE Secretary:
(a) Recruitment violations and other related cases. - All cases which
are administrative in character, involving or arising out of violation of rules
and regulations relating to licensing and registration of recruitment and
employment agencies or entities, including refund of fees collected from
workers and violation of the conditions for the issuance of license to recruit
workers.
(b) Disciplinary action cases and other special cases which are
administrative in character, involving employers, principals, contracting
partners and Filipino migrant workers.
It must be noted that the POEA ceased to have any jurisdiction over

money claims of OFWs, or those arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers
for overseas deployment including claims for actual, moral, exemplary and
other forms of damages. The jurisdiction over these claims was transferred
to the Labor Arbiters of the NLRC by virtue of Section 10 of R.A. No. 8042,
as amended. Hence, appeals therefrom may be instituted to the
Commission (NLRC).
5. VOLUNTARY ARBITRATION POWERS

1. AIDA.
a. New rule on voluntary arbitration by the DOLE Secretary.
A new form of dispute settlement by the DOLE Secretary was introduced by
DOLE Circular No. 1, Series of 2006.
Called Administrative Intervention for Dispute Avoidance
(AIDA), this is a new administrative procedure for the voluntary
settlement of labor disputes in line with the objectives of R.A. No. 9285,
Executive Order No. 523 and the mandate of the DOLE to promote
industrial peace.
b. Nature of administrative intervention by DOLE Secretary.
This recourse is separate from the established dispute resolution modes of
mediation, conciliation and arbitration under the Labor Code, and is an
alternative to other voluntary modes of dispute resolution such as the
voluntary submission of a dispute to the Regional Director for mediation, to
the NCMB for preventive mediation, or to the intervention of a regional or
local tripartite peace council for the same purpose.
c. Parties who may request for DOLE Secretary’s intervention.
Either or both the employer and the certified collective bargaining agent (or
the representative of the employees where there is no certified bargaining
agent) may voluntarily bring to the Office of the DOLE Secretary, through a
Request for Intervention, any potential or ongoing dispute defined
below.
d. Potential or on-going dispute.
A potential or on-going dispute refers to:
(a) a live and active dispute;
(b) that may lead to a strike or lockout or to massive labor unrest; and
(c) is not the subject of any complaint or notice of strike or lockout at the
time a Request for Intervention is made.

2. VOLUNTARY ARBITRATION BY DOLE SECRETARY.
If the intervention through AIDA fails, either or both parties may avail
themselves of the remedies provided under the Labor Code. Alternatively,
the parties may submit their dispute to the Office of the DOLE Secretary for
voluntary arbitration. Such voluntary arbitration should be limited to the
issues defined in the parties' submission to voluntary arbitration agreement
and should be decided on the basis of the parties' position papers and
submitted evidence. The Office of the DOLE Secretary is mandated to
resolve the dispute within sixty (60) days from the parties' submission of
the dispute for resolution.
3. DOES THE DOLE SECRETARY ASSUME THE ROLE OF
VOLUNTARY ARBITRATOR ONCE HE ASSUMES
JURISDICTION OVER A LABOR DISPUTE?
In the 2014 case of Philtranco Service Enterprises, Inc. v.
Philtranco Workers Union-Association of Genuine Labor
Organizations (PWU-AGLO),1 this poser was answered in the negative.
A notice of strike was filed by respondent union which, after failure of
conciliation and mediation by the NCMB, was referred by the Conciliator-
Mediator to the Office of the DOLE Secretary who thereby assumed
jurisdiction over the labor dispute. The case was resolved by the Acting
DOLE Secretary in favor of respondent union. A motion for reconsideration
was filed by petitioner company. The DOLE Secretary, however, declined to
rule on the motion citing a DOLE regulation, applicable to voluntary
arbitration, which provided that the Voluntary Arbitrators’ decisions,
orders, resolutions or awards shall not be the subject of motions for
reconsideration. The DOLE Secretary took the position that when he
assumed jurisdiction over the labor dispute, he was acting as a Voluntary
Arbitrator. Petitioner subsequently filed a Rule 65 certiorari petition with
the CA. The CA, however, dismissed petitioner company’s Rule 65
certiorari petition on the ground, among others, that the decision of the
DOLE Secretary, having been rendered by him in his capacity as Voluntary
Arbitrator, is not subject to a Rule 65 certiorari petition but to a Rule 43
petition for review which properly covers decisions of Voluntary
Arbitrators.
Before the Supreme Court, petitioner asserted that, contrary to the CA’s
ruling, the case is not a simple voluntary arbitration case. The character of
the case, which involves an impending strike by petitioner’s employees; the

nature of petitioner’s business as a public transportation company, which is
imbued with public interest; the merits of its case; and the assumption of
jurisdiction by the DOLE Secretary – all these circumstances removed the
case from the coverage of Article 262, and instead placed it under Article
263, of the Labor Code. For its part, respondent union argued that the
DOLE Secretary decided the assumed case in his capacity as Voluntary
Arbitrator; thus, his decision, being that of a Voluntary Arbitrator, is only
assailable via a petition for review under Rule 43.
The Supreme Court, however, pronounced that:
“It cannot be said that in taking cognizance of NCMB-NCR CASE No. NS-
02-028-07, the Secretary of Labor did so in a limited capacity, i.e., as a
voluntary arbitrator. The fact is undeniable that by referring the case to the
Secretary of Labor, Conciliator-Mediator Aglibut conceded that the case fell
within the coverage of Article 263 of the Labor Code; the impending strike
in Philtranco, a public transportation company whose business is imbued
with public interest, required that the Secretary of Labor assume
jurisdiction over the case, which he in fact did. By assuming jurisdiction
over the case, the provisions of Article 263 became applicable, any
representation to the contrary or that he is deciding the case in his capacity
as a voluntary arbitrator notwithstanding.”
Consequently, the Supreme Court reversed and set aside the CA ruling and
reinstated the case and directed the CA “to resolve the same with deliberate
dispatch.”
Although this case involves a decision of the DOLE Secretary, the principle
enunciated herein equally applies to the NLRC.
1 G.R. No. 180962, Feb. 26, 2014.
G. GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION

1. SUBJECT MATTER OF GRIEVANCE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A “grievance” or “grievable issue” is any question raised by either the
employer or the union regarding any of the following issues or
controversies:
1. The interpretation or application of the CBA;
2. The interpretation or enforcement of company personnel policies; or

3. Violation of any provisions of the CBA or company personnel
policies.
2. VALIDITY AND BINDING EFFECT OF DECISIONS OF

GRIEVANCE COMMITTEE.
A member of the bargaining union who brought his grievable issue for
resolution by the Grievance Committee is bound by whatever disposition
the latter may render thereon.
ELEVATION OF GRIEVANCE TO VOLUNTARY ARBITRATION
1. UNRESOLVED GRIEVANCES.
All grievances submitted to the grievance machinery which are not settled
within seven (7) calendar days from the date of their submission for
resolution should automatically be referred to voluntary arbitration
prescribed in the CBA. The various internal procedural steps or stages of
resolving grievances under the grievance machinery in a CBA should be
fully exhausted before resort to voluntary arbitration may be made. The 7-
calendar day period is usually reckoned from the date of their submission
for resolution to the last step of the internal grievance machinery. Simply
stated, only after exhausting all the internal procedures and only after the
lapse of this period that unsettled or unadjusted grievances should
automatically be referred to voluntary arbitration enunciated in the CBA.
2. A PARTY IS NOT ALLOWED TO GO DIRECTLY TO COURT IN

DISREGARD OF VOLUNTARY ARBITRATION AFTER
DECISION IS RENDERED BY GRIEVANCE COMMITTEE.
Before a party is allowed to seek the intervention of the court, it is a
precondition that he should have availed of all the means of administrative
processes afforded him. Hence, if a remedy within the administrative
machinery can still be resorted to by giving the administrative officer
concerned every opportunity to decide on a matter that comes within his
jurisdiction, then such remedy should be exhausted first before the court’s
judicial power can be sought. The premature invocation of the court’s
judicial intervention is fatal to one’s cause of action.” Indeed, the
underlying principle of the rule on exhaustion of administrative
remedies rests on the presumption that when the administrative body, or
grievance machinery, is afforded a chance to pass upon the matter, it will
decide the same correctly.

2. VOLUNTARY ARBITRATOR
1. VOLUNTARY ARBITRATION.
“Voluntary arbitration” refers to the mode of settling labor-management
disputes in which the parties select a competent, trained and impartial
third person who is tasked to decide on the merits of the case and whose
decision is final and executory. It is a third-party settlement of a labor
dispute involving the mutual consent by the representatives of the
employer and the labor union involved in a labor dispute to submit their
case for arbitration.
2. VOLUNTARY ARBITRATOR.
a. Who is a Voluntary Arbitrator?
A “Voluntary Arbitrator” refers to:
(1) any person who has been accredited by the National Conciliation and
Mediation Board (“NCMB” or “Board”) as such; or
(2) any person named or designated in the CBA by the parties as their
Voluntary Arbitrator; or
(3) one chosen by the parties with or without the assistance of the NCMB,
pursuant to a selection procedure agreed upon in the CBA; or
(4) one appointed by the NCMB in case either of the parties to the CBA
refuses to submit to voluntary arbitration.
This term includes a panel of Voluntary Arbitrators.
3. VOLUNTARY ARBITRATOR ACTS IN QUASI-JUDICIAL

CAPACITY.
Although not a part of a government unit or a personnel of the Department
of Labor and Employment, a Voluntary Arbitrator, by the nature of his
functions, acts in a quasi-judicial capacity. He is a means by which
government acts, or by which a certain government act or function is
performed. He performs a state function pursuant to a governmental power
delegated to him under the Labor Code. The landmark case of Luzon
Development Bank v. Association of Luzon Development Bank
Employees,1 clearly declared that a Voluntary Arbitrator,
whether acting solely or in a panel, enjoys in law the status of a
quasi-judicial agency.
1 G.R. No. 120319, Oct. 6, 1995.

(a) JURISDICTION
1. ORIGINAL AND EXCLUSIVE JURISDICTION.
a. In general.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
exclusive and original jurisdiction over the following cases:
(1) Unresolved grievances arising from the interpretation or
implementation of the collective bargaining agreement (CBA).
(2) Unresolved grievances arising from the interpretation or enforcement
of company personnel policies.
(3) Violations of the CBA which are not gross in character.
(4) Other labor disputes, including unfair labor practices and bargaining
deadlocks, upon agreement of the parties.
(5) National interest cases.
(6) Wage distortion issues arising from the application of any wage orders
in organized establishments.
(7) Unresolved grievances arising from the interpretation and
implementation of the Productivity Incentive Programs under R.A. No.
6971.
b. Rights disputes.
Nos. 1, 2 and 3 above, which are provided for under Article 261 of the
Labor Code, are commonly known as “rights disputes.” This kind of
disputes contemplates the existence of a CBA already concluded or, at any
rate, a situation in which no effort is made to bring about a formal change
in its terms or to create a new one. The dispute relates either to the
meaning or proper application of a particular provision therein with
reference to a specific situation or to an omitted case. In the latter event,
the claim is founded upon some incident of the employment relation or
asserted one, independent of those covered by the collective agreement. In
either case, the claim is to rights accrued and not merely to new ones
created for the future.
c. Interest disputes.
Bargaining deadlocks are often referred to as “interest disputes.” This
kind of disputes relates to disputes over the formation of collective
agreements or efforts to secure them. They arise where there is no such
agreement or where it is sought to change the terms of one and therefore

the issue is not whether an existing agreement controls the controversy.
They look to the acquisition of rights for the future, not to assertion of
rights claimed to have vested in the past.
I.
III. JURISDICTION OVER OTHER LABOR DISPUTES
Under Article 262 of the Labor Code, upon agreement of the parties, the
Voluntary Arbitrator or panel of Voluntary Arbitrators may also hear and
decide all other labor disputes, including unfair labor practices
and bargaining deadlocks.
For this purpose, before or at any stage of the compulsory arbitration

process, parties to a labor dispute may agree to submit their case to
voluntary arbitration.
IV. JURISDICTION OVER NATIONAL INTEREST CASES

Article 263(g) of the Labor Code which involves the DOLE Secretary’s
power of assumption of jurisdiction or certification to the NLRC of labor
disputes affecting industries indispensable to the national interest, also
provides that “[b]efore or at any stage of the compulsory
arbitration process, the parties may opt to submit their dispute
to voluntary arbitration.”
This means that even if the case has already been assumed by the DOLE
Secretary or certified to the NLRC for compulsory arbitration, or even
during its pendency therewith, the parties thereto may still withdraw the
case from the DOLE Secretary or NLRC, as the case may be, and submit it
to a Voluntary Arbitrator for voluntary arbitration purposes.
V. JURISDICTION OVER WAGE DISTORTION CASES

 Jurisdiction over wage distortion cases depends on whether
the establishment is organized or unorganized.
In organized establishments, the employer and the union are required
to negotiate to correct the wage distortion.
Any dispute arising from such wage distortion should be resolved through
the grievance procedure under the CBA and if it remains unresolved,

through voluntary arbitration.
In unorganized establishments, where there are no CBAs or
recognized or certified collective bargaining unions, the jurisdiction is with
the Labor Arbiter.
VI. EXERCISE OF JURISDICTION

1. HOW VOLUNTARY ARBITRATOR ACQUIRES JURISDICTION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall exercise
jurisdiction over a specific case only under the following:
(1) Upon receipt of a Submission Agreement duly signed by both
parties;
(2) Upon receipt of a Notice to Arbitrate when there is refusal to
arbitrate by one party;
(3) Upon receipt of an appointment or designation as Voluntary
Arbitrator by the NCMB (Board) in either of the following circumstances:
(3.1.) In the event that the parties failed to select a Voluntary Arbitrator; or
(3.2.) In the absence of a named Voluntary Arbitrator in the CBA and the
party upon whom the Notice to Arbitrate is served does not favorably reply
within seven (7) days from receipt of such notice.
2. HOW INITIATED.
Based on the foregoing discussion, an arbitration may be initiated either by
way of:
(1) A Submission Agreement; or
(2) A Demand or Notice to Arbitrate invoking the arbitration clause in the
CBA; or
(3) An Appointment from the NCMB.
A “Submission Agreement” refers to a written agreement by the parties
submitting their case for arbitration, containing a statement of the issues,
the name of their chosen Voluntary Arbitrator and a stipulation and an
undertaking to abide by and comply with the resolution that may be
rendered therein, including the cost of arbitration.
A “Notice to Arbitrate” refers to a formal demand made by one party to the
other for the arbitration of a particular dispute in the event of refusal by
one party in a CBA to submit the same to arbitration

3. SOME PRINCIPLES.
1) Cases cognizable by Voluntary Arbitrators in their original
jurisdiction but filed with Labor Arbiters, DOLE Regional Offices
or NCMB should be disposed of by referring them to the Voluntary
Arbitrators or panel of Voluntary Arbitrators mutually chosen by the
parties.
2) Cases cognizable by Voluntary Arbitrators but filed with
regular courts should be dismissed.
3) THE WELL-ENTRENCHED RULE IS THAT WHEN A CASE

DOES NOT INVOLVE THE PARTIES TO A CBA – THE
EMPLOYER AND THE BARGAINING UNION - IT IS NOT
SUBJECT TO VOLUNTARY ARBITRATION. While individual or
group of employees, without the participation of the union, are
granted the right to bring grievance directly to the employer,
they cannot submit the same grievance, if unresolved by the
employer, for voluntary arbitration without the union’s approval
and participation. The reason is that it is the union which is the
party to the CBA, and not the individual or group of employees. -
This rule was lately affirmed in the 2009 case of Tabigue v.
International Copra Export Corporation. Pursuant to Article 260 of
the Labor Code, the parties to a CBA shall name or designate their
respective representatives to the grievance machinery and if the grievance
is unsettled in that level, it shall automatically be referred to the voluntary
arbitrators designated in advance by parties to a CBA. Consequently only
disputes involving the union and the company shall be referred
to the grievance machinery or voluntary arbitrators.”
(b) PROCEDURE EXECUTION PROCEEDINGS IN VOLUNTARY

ARBITRATION CASES
1. PROCEDURAL RULES IN THE ENFORCEMENT OF WRIT OF

EXECUTION.
In the enforcement of a writ of execution, the Sheriff or other authorized
officer should be guided by the Procedural Guidelines in the Execution of

Voluntary Arbitration Awards/Decisions. These Guidelines should be
followed in the execution of
the awards or decision of Voluntary Arbitrators or panel of Voluntary
Arbitrators. Other rules that may be pertinently observed and followed are
the following:
(1) 2012 NLRC Sheriffs’ Manual on Execution of Judgment;
(2) Memorandum of Agreement between the NLRC and the NCMB dated
July 26, 1996; and
(3) Revised Rules of Court, as amended, in the absence of applicable rules.
2. EXECUTION MOTU PROPRIO OR UPON MERE MOTION
WITHIN FIVE (5) YEARS FROM FINALITY OF DECISION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators may, motu
proprio or on motion of any interested party, issue a writ of execution on a
judgment within five (5) years from the date it becomes final and executory.
3. WHEN LABOR ARBITER MAY ISSUE THE WRIT OF

EXECUTION.
In case the Voluntary Arbitrator or panel of Voluntary Arbitrators who
rendered and issued the decision, order or award is, for any reason, absent
or incapacitated, the Labor Arbiter in the region where the movant
resides, may issue the writ of execution. But unlike the Voluntary
Arbitrator or panel of Voluntary Arbitrators who issued the decision, order
or award, the Labor Arbiter cannot issue such writ motu proprio but only
upon motion of any interested party.
4. PERSONS WHO MAY ENFORCE THE WRIT OF EXECUTION.

Any of the following persons may be required to enforce the writ of
execution:
(1) The Sheriff of the Commission (NLRC);
(2) A duly deputized officer;
(3) A Special Sheriff;
(4) The Sheriff of the regular courts; or
(5) Any public official whom the parties may designate in the submission
agreement to execute the final decision, order or award.
(c) REMEDIES

1. RELIEFS AND REMEDIES THAT MAY BE GRANTED BY
VOLUNTARY ARBITRATORS.
Besides the procedural remedies discussed above, the Voluntary Arbitrator
or panel of Voluntary Arbitrators may grant the same reliefs and remedies
granted by Labor Arbiters under Article 279 of the Labor Code, such as:
(1) In illegal dismissal cases:
(a) Actual reinstatement;
(b) Separation pay in lieu of reinstatement, in case reinstatement becomes
impossible, non-feasible or impractical;
(c) Full backwages;
(d) Moral and exemplary damages; and
(e) Attorney’s fees.
(2) Monetary awards in monetary claims cases in which case, the
decision should specify the amount granted and the formula used in the
computation thereof.
H. COURT OF APPEALS
1. RULE 65, RULES OF COURT
1. RULE 65 PETITION FOR CERTIORARI, THE ONLY MODE OF
ELEVATING A LABOR CASE TO THE COURT OF
APPEALS.
The only mode by which a labor case decided by any of the following labor
authorities/tribunals may reach the Court of Appeals is through a Rule 65
petition for certiorari.
(a) the DOLE Secretary;
(b) the Commission (NLRC); and
(c) the Director of the Bureau of Labor Relations (BLR) in cases decided by
him in his appellate jurisdiction (as distinguished from those he decides
in his original jurisdiction which are appealable to the DOLE Secretary).
The remedy of ordinary appeal to the Court of Appeals is not available
from their decisions, orders or awards. The reason for this rule is that their
decisions, orders or awards are final and executory and therefore
inappealable.
2. THE ONLY EXCEPTION.

The only exception to the foregoing rule is in the case of decisions, orders or

awards issued by the Voluntary Arbitrator or panel of Voluntary
Arbitrators which may be elevated to the Court of Appeals by way of an
ordinary appeal under a Rule 43 petition for review.
3. FILING OF MOTION FOR RECONSIDERATION OF THE

DECISION OF THE DOLE SECRETARY, THE COMMISSION
(NLRC) OR THE BLR DIRECTOR, A PRE-REQUISITE TO FILING
OF RULE 65 PETITION FOR CERTIORARI.
The rule on the filing of a Motion for Reconsideration of the decision of the
DOLE Secretary, the NLRC and the BLR Director is mandatory and
jurisdictional. Failure to comply therewith would result in the dismissal
of the Rule 65 certiorari petition. Jurisprudence abounds enunciating the
rule that a motion for reconsideration is a pre-requisite for the filing of a
special civil action for certiorari.
The reason for this rule is that in labor cases, a motion for
reconsideration is the plain and adequate remedy from an
adverse decision of the DOLE Secretary, the NLRC and the BLR
Director.
 THE PHILTRANCO DOCTRINE: a motion for reconsideration
should be filed even though it is not required or even prohibited
by the concerned government office. This was the rule enunciated in
the 2014 case of Philtranco Service Enterprises, Inc. v. Philtranco
Workers Union-Association of Genuine Labor Organizations
(PWUAGLO).1 Thus, while a government office may prohibit altogether
the filing of a motion for reconsideration with respect to its decisions or
orders, the fact remains that certiorari inherently requires the filing of a
motion for reconsideration which is the tangible representation of the
opportunity given to the office to correct itself. Unless it is filed, there could
be no occasion to rectify. Worse, the remedy of certiorari would be
unavailing. Simply put, regardless of the proscription against the filing of a
motion for reconsideration, the same may be filed on the assumption that
rectification of the decision or order must be obtained and before a petition
for certiorari may be instituted.
4. CERTIORARI PETITION MAY BE FILED EVEN IF THE

DECISION OF THE DOLE SECRETARY, THE COMMISSION

(NLRC), OR THE BLR DIRECTOR HAS ALREADY BECOME
FINAL AND EXECUTORY.
This rule applies to the decisions rendered by the DOLE Secretary, the
NLRC or the BLR Director (in cases which he decided in his appellate
jurisdiction). If the CA grants the petition and nullifies their decisions on
the ground of grave abuse of discretion amounting to excess or lack of
jurisdiction, such decisions are, in contemplation of law, null and void ab
initio; hence, they never became final and executory.
JUDICIAL REVIEW OF DECISIONS OF VOLUNTARY

ARBITRATORS
1. DECISIONS, FINAL AND EXECUTORY.
As a general rule, decisions or awards of Voluntary Arbitrators are final,
inappealable and executory after ten (10) calendar days from receipt of a
copy thereof by the parties.
2. ORDINARY APPEAL UNDER RULE 43 OF THE 1997 RULES
OF CIVIL PROCEDURE – VOLUNTARY ARBITRATORS ARE OF
THE SAME LEVEL AS RTC JUDGES.
Being a quasi-judicial agency, the decisions and awards of a Voluntary
Arbitrator are appealable by way of a petition for review to the Court of
Appeals under Revised Administrative Circular No. 1-95 which provides
for a uniform procedure for appellate review of all adjudications of quasi-
judicial entities and which is now embodied in Section 1, Rule 43 of the
1997 Rules of Civil Procedure.
The ruling in Luzon Development Bank v. Association of Luzon
Development Bank Employees,2 in effect, equates the decisions or
awards of the Voluntary Arbitrator to those of the Regional Trial Court
(RTC). Hence, in a petition for certiorari from the awards or decisions of
the Voluntary Arbitrator, the Court of Appeals has concurrent jurisdiction
with the Supreme Court. Although this case involves a decision of the
DOLE Secretary, the principle enunciated herein equally applies to the
NLRC.
In Alcantara, Jr. v. CA,1 it was held that Luzon Development Bank is
still a good law.
1 G.R. No. 180962, Feb. 26, 2014.
2 G.R. No. 120319, October 6, 1995.

3. PERIOD OF APPEAL – 15 DAYS.
Rule 43 of the Rules of Court requires that the petition for review to be
taken to the Court of Appeals should be filed within fifteen (15) days from
notice of the award, judgment or final order or resolution of the Voluntary
Arbitrator.
I. SUPREME COURT
1. RULE 45, RULES OF COURT

1. RULE 45 PETITION FOR REVIEW ON CERTIORARI, THE
ONLY MODE BY WHICH A LABOR CASE MAY REACH THE
SUPREME COURT.
Since the Court of Appeals has jurisdiction over the petition for certiorari
under Rule 65 that may be filed before it from the decisions of the NLRC or
the DOLE Secretary or the BLR Director (in cases decided by him in his
appellate jurisdiction), any alleged errors committed by it in the exercise of
its jurisdiction would be errors of judgment which are reviewable by means
of a timely appeal to the Supreme Court and not by a special civil action of
certiorari.
If the aggrieved party fails to do so within the reglementary period and the
decision accordingly becomes final and executory, he cannot avail himself
of the writ of certiorari, his predicament being the effect of his deliberate
inaction. A petition for certiorari under Rule 65 cannot be a
substitute for a lost appeal under Rule 45; hence, it should be
dismissed.
2. THE NEYPES DOCTRINE (FRESH PERIOD RULE) - FRESH

PERIOD FROM DENIAL OF MOTION FOR RECONSIDERATION.
In the 2013 case of Elizabeth Gagui v. Dejero,2 petitioner successively
filed two Motions for Reconsideration of the CA’s decision but both were
denied. Petitioner elevated the case to the Supreme Court under Rule 45. In
their comment, respondents alleged that the instant petition had been filed
15 days after the prescriptive period of appeal under Section 2, Rule 45 of
the Rules of Court. In her reply, petitioner countered that she has a fresh
period of 15 days from the date she received the Resolution of the CA to file

the instant Rule 45 petition. In affirming the contention of petitioner, the
Supreme Court cited the en banc ruling in the case of Neypes v. CA3
which standardized the appeal periods, thus:
“To standardize the appeal periods provided in the Rules and to afford
litigants fair opportunity to appeal their cases, the Court deems it practical
to allow a fresh period of 15 days within which to file the notice of appeal in
the Regional Trial Court, counted from receipt of the order dismissing a
motion for a new trial or motion for reconsideration.
“Henceforth, this ‘fresh period rule’ shall also apply to Rule 40 governing
appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule
42 on petitions for review from the Regional Trial Courts to the Court of
Appeals; Rule 43 on appeals from quasi-judicial agencies to the
Court of Appeals and Rule 45 governing appeals by certiorari to
the Supreme Court. The new rule aims to regiment or make the appeal
period uniform, to be counted from receipt of the order denying the motion
for new trial, motion for reconsideration (whether full or partial) or any
final order or resolution.”
Consequently, since petitioner in Gagui received the CA Resolution denying
her two Motions for Reconsideration only on 16 March 2011, she had
another 15 days within which to file her Petition, or until 31 March 2011.
This Petition, filed on 30 March 2011, fell within the prescribed 15-day
period.
J. PRESCRIPTION OF ACTIONS
1. MONEY CLAIMS CASES.
a. Prescriptive period is three (3) years under Article 291 of the
Labor Code. - The prescriptive period of all money claims and benefits
arising from employer-employee relations is 3 years from the time the
cause of action accrued; otherwise, they shall be forever barred.
b. All other money claims of workers prescribe in 3 years. - Article
291 contemplates all money claims arising from employer-employee
relationship, including:
1. Money claims arising from the CBA.
2. Incremental proceeds from tuition increases.
3. Money claims of Overseas Filipino Workers (OFWs).
Note must be made that in the 2010 case of Southeastern Shipping v.
Navarra, Jr.,4 the 1-year prescriptive period in Section 28 of

POEA-SEC was declared null and void. The reason is that Article 291
of the Labor Code is the law governing the prescription of money claims of
seafarers, a class of overseas contract workers. This law prevails over said
Section 28.
2. ILLEGAL DISMISSAL CASES.

a. Legal basis is not Article 291 of the Labor Code but Article 1146
of the Civil Code. - The 3-year prescriptive \ period in Article 291 solely
applies to money claims but not to illegal dismissal cases which are not in
the nature of money claims. The prescriptive period of illegal dismissal
cases is 4 years under Article 1146 of the Civil Code.
3. UNFAIR LABOR PRACTICE (ULP) CASES.

a. Prescriptive period of ULP cases is 1 year (Article 290, Labor
Code). - The prescriptive period for all complaints involving unfair labor
practices is one (1) year from the time the acts complained of were
committed; otherwise, they shall be forever barred.
1 G.R. No. 143397, Aug. 6, 2002.

2 G.R. No. 196036, Oct. 23, 2013.
3 G.R. No. 141524, Sept. 14, 2005.
4 G.R. No. 167678, June 22, 2010.
b. Pre-requisite for prosecution of criminal cases. - Before a

criminal action for ULP may be filed, it is a condition sine qua non that a
final judgment finding that an unfair labor practice act was committed by
the respondent should first be secured or obtained in the labor case
initiated before the Labor Arbiter or the Voluntary Arbitrator, as the case
may be. Final judgment is one that finally disposes of the action or
proceeding. For instance, if the remedy of appeal is available but no appeal
is made, then, the judgment is deemed final and executory. If an appeal is
made, then the final judgment rendered by the last tribunal, say the
Supreme Court, to which the case was elevated should be the reckoning
factor.
c. Interruption of prescriptive period of offenses. - As far as ULP
cases are concerned, the running of the one (1) year prescriptive period is

interrupted during the pendency of the labor proceeding.
d. Evidentiary value of the final judgment in the labor case. - In
ULP cases, the final judgment in the labor case cannot be presented as
evidence of the facts proven therein or as evidence of the guilt of the
respondent therein. Its evidentiary or probative value is confined merely in
proving the fact of compliance with the condition sine qua non prescribed
by law, i.e., that a final judgment has been secured in the labor proceeding
finding that an unfair labor practice act was in fact committed by the
respondent.
4. OFFENSES PENALIZED UNDER THE LABOR CODE AND ITS

IMPLEMENTING RULES AND REGULATIONS (IRR).
a. Prescriptive period is 3 years (Article 290, Labor Code). - The
prescriptive period of all criminal offenses penalized under the Labor Code
and the Rules to Implement the Labor Code is three (3) years from the time
of commission thereof.
b. Consequence of non-compliance with prescriptive period
under Article 290. - Failure to initiate or file the criminal action or
complaint within the prescriptive period shall forever bar such action.
c. Illegal dismissal is not an “offense” under Article 290. - The act
of the employer in dismissing an employee without cause, although a
violation of the Labor Code and its implementing rules, does not amount to
an “offense” as this term is understood and contemplated under Article
290.
5. ILLEGAL RECRUITMENT CASES.

a. Simple illegal recruitment cases. – The prescriptive period is five
(5) years.
b. Illegal recruitment cases involving economic sabotage. – The
prescriptive period is twenty (20) years.
6. ACTIONS INVOLVING UNION FUNDS.

A complaint or petition for audit or examination of funds and books of
accounts prescribes within three (3) years:
(a) from the date of submission of the annual financial report to the DOLE;
or

(b) from the date the same should have been submitted as required by law,
whichever comes earlier. It should be noted, however, that this provision on
the prescriptive period applies only to a legitimate labor organization which
has submitted the financial report required under the Labor Code.
7. CLAIMS FOR SSS BENEFITS.

a. Action against employer.
The right to institute the necessary action against the employer for non-
remittance of contributions may be commenced within twenty (20)
years:
(1) from the time the delinquency is known; or
(2) from the time the assessment is made by the SSS; or
(3) from the time the benefit accrues, as the case may be.
b. Action for disability claims.
The prescriptive period in the filing of disability benefit claim is ten (10)
years from the date of occurrence of disability.
8. CLAIMS FOR GSIS BENEFITS.
Claims for benefits, except for life and retirement, prescribe after four
(4) years from the date of contingency.
------------oOo------------

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CCV NOTES FOR THE 2017 Labor Law Review

What are the significant constitutional principles related to

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |1

Under Article XIII (Social Justice and Human Rights):

What are the due process principles applicable in termination

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |2

Is assistance of counsel in termination cases mandatory and

B. NEW CIVIL CODE

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |3

How is Article 1702 of the Civil Code correlated with Article 4 of

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |4

C. THE LABOR CODE

1 Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz, G.R. No.

What is exclusive bargaining representative/agent?

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |5

Can individual employee or group of employees bring grievable

What is the principle of co-determination?

The principle of co-determination refers to the right given to the employees

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |6

Does the grant of the right of participation mean co-

What is Labor-Management Council (LMC)?

What is the provision of the Labor Code enunciating

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |7

RECRUITMENT AND PLACEMENT

A. RECRUITMENT OF LOCAL AND MIGRANT WORKERS

I. RECRUITMENT AND PLACEMENT FOR LOCAL

What is a “Private Recruitment and Placement Agency

What are the qualifications of a PRPA for local employment?

What is the period of validity of the license?

Is the license transferable to other persons or entities?

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |8

II. RECRUITMENT AND PLACEMENT FOR OVERSEAS

What are the laws relevant to overseas employment?

What are the important terms related to overseas

What are the entities authorized to engage in recruitment and

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva |9

LICENSING AND REGULATION FOR OVERSEAS

What are the qualifications of a recruiter for overseas

What are the disqualifications?

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva | 10

What is the period of validity of license?

Can a license be transferred?

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva | 11

Who may commit illegal recruitment?

What constitutes illegal recruitment when committed by a

Illegal recruitment, when undertaken by non-licensee or non-

What constitutes illegal recruitment when committed by ANY

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva | 12

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva | 13

Illegal recruitment when committed by a syndicate or in large

PROHIBITED ACTIVITIES IN RELATION TO ILLEGAL

What are the prohibited activities in connection with

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva | 14

LICENSE VS. AUTHORITY

ELEMENTS OF ILLEGAL RECRUITMENT

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva | 15

SIMPLE ILLEGAL RECRUITMENT

Can a recruiter be a natural or juridical person?

What are some relevant principles on illegal recruitment?

Labor Law Review – Comm. Cecilio Alejandro C. Villanueva | 16

ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC

When is illegal recruitment committed by a syndicate?