1

LABOR LAW AND SOCIAL LEGISLATION

Introduction

Q: What is labor?
A: It is the exertion by human beings of physical or mental efforts, or both,
towards the production of goods and services.

Q: What is labor law?

A: The law governing the rights and duties of the employer and employees with
respect to:

1. The terms and conditions of employment and

2. Labor disputes arising from collective bargaining (CB) respecting such terms
and conditions.

Q: What is the purpose of labor legislation?

A: Labor legislation is an exercise of police power. The purpose of labor
legislation is to regulate the relations between employers (Ers) and employees
(Ees) respecting the terms and conditions of employment, either by providing for
certain standards or for a legal framework within which better terms and
conditions of work could be negotiated through CB. It is intended to correct the
injustices inherent in Er‐Ee relationship. (2006 Bar Question)

Q: What are the classifications of labor law?

A:

1. Labor standards – The minimum terms and conditions of employment

prescribed by existing laws, rules and regulations relating to wages, hours
of work, cost‐of‐living allowance and other monetary and welfare benefits.
(Batong Buhay Gold Mines, Inc. v. Dela Serna, G.R. No. 86963, August
6,1999) e.g. 13th month pay

2. Labor relations – Defines and regulates the status, rights and duties, and
the institutional mechanisms, that govern the individual and collective
interactions of Ers, Ees, or their representatives. It is concerned with the
stabilization of relations of Er and Ees and seek to forestall (syn. prevent)
and adjust the differences between them by the encouragement of
collective bargaining and the settlement of labor disputes through
conciliation, mediation and arbitration. e.g. Additional allowance pursuant
to CBA

3. Social legislation – It includes laws that provide particular kinds of

protection or benefits to society or segments thereof in furtherance of social
justice.
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e.g. GSIS Law, SSS Law, Philhealth benefits

Q: Is there any distinction between labor legislation and social

legislation? Explain.
A: Labor legislation is sometimes distinguished from social legislation by the
former referring to labor statutes, like Labor Relations Law and Labor
Standards, and the latter to Social Security Laws. Labor legislation focuses on
the rights of the worker in the workplace.

Social legislation is a broad term and may include not only laws that give social
security protection, but also those that help the worker secure housing and basic
necessities. The Comprehensive Agrarian Reform Law could also be considered a
social legislation. All labor laws are social legislation, but not all social legislation
is labor law. (1994 Bar Question)

Q: What are the sources of labor laws?

A:

1. Labor Code and other related special legislation

2. Contract
3. Collective Bargaining Agreement
4. Past practices
5. Company policies

I. FUNDAMENTAL PRINCIPLES AND POLICIES

A.CONSTITUTIONAL PROVISIONS

(CONSTITUTIONAL MANDATES WITH REGARD LABOR LAWS)

1. ARTICLE II, SECTIONS 9, 10, 11, 13, 14, 18, 20.

Section 9. The State shall promote a just and dynamic social order that will
ensure the prosperity and independence of the nation and free the people from
poverty through policies that provide adequate social services, promote full
employment, a rising standard of living, and an improved quality of life for all.

Section 10. The State shall promote social justice in all phases of national
development.

Section 11. The State values the dignity of every human person and guarantees
full respect for human rights.
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Section 13. The State recognizes the vital role of the youth in nation-building
and shall promote and protect their physical, moral, spiritual, intellectual, and
social well-being. It shall inculcate in the youth patriotism and nationalism, and
encourage their involvement in public and civic affairs.

Section 14. The State recognizes the role of women in nation-building, and shall
ensure the fundamental equality before the law of women and men.

Section 18. The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.

Section 20. The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments.

2. ARTICLE III, SECTIONS 1, 4, 7, 8, 10, 16, 18(2)

Section 1. No person shall be deprived of life, liberty, or property without due

process of law, nor shall any person be denied the equal protection of the laws.

Section 4. No law shall be passed abridging the freedom of speech, of

expression, or of the press, or the right of the people peaceably to assemble and
petition the government for redress of grievances.

Section 7. The right of the people to information on matters of public concern

shall be recognized. Access to official records, and to documents and papers
pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the citizen,
subject to such limitations as may be provided by law.

Section 8. The right of the people, including those employed in the public and
private sectors, to form unions, associations, or societies for purposes not
contrary to law shall not be abridged.

Section 10. No law impairing the obligation of contracts shall be passed.

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

Section 18 (2) No involuntary servitude in any form shall exist except as a

punishment for a crime whereof the party shall have been duly convicted.
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3. ARTICLE XIII, SECTIONS 1, 2, 3, 13, 14.

Section 1. The Congress shall give highest priority to the enactment of

measures that protect and enhance the right of all the people to human dignity,
reduce social, economic, and political inequalities, and remove cultural inequities
by equitably diffusing wealth and political power for the common good.

To this end, the State shall regulate the acquisition, ownership, use, and
disposition of property and its increments.

Section 2. The promotion of social justice shall include the commitment to create
economic opportunities based on freedom of initiative and self-reliance.

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.

Section 13. The State shall establish a special agency for disabled person for
their rehabilitation, self-development, and self-reliance, and their integration into
the mainstream of society.

Section 14. The State shall protect working women by providing safe and
healthful working conditions, taking into account their maternal functions, and
such facilities and opportunities that will enhance their welfare and enable them
to realize their full potential in the service of the nation.

Q: What is the State policy on labor as found in the constitution (Sec. 3,

Art. XIII)?
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A:

Afford full protection to labor

1. Promote full employment

2. Ensure equal work opportunities regardless of sex, race, or creed
3. Assure the rights of workers to self organization, security of tenure, just
and humane conditions of work, participate in policy and decision‐making
processes affecting their right and benefits
4. Regulate the relations between workers and employers

Q: What are the basic rights of workers guaranteed by the Constitution

(Sec. 3, Art. XIII)?
A:

1. Security of tenure
2. Receive a living wage
3. Humane working conditions
4. Share in the fruits of production
5. Organize themselves
6. Conduct collective bargaining or negotiation with management
7. Engage in peaceful concerted activities including strike
8. Participate in policy and decision making processes

Q: What is the principle of non‐oppression?

A: The principle mandates capital and labor not to act oppressively against each
other or impair the interest and convenience of the public. The protection to labor
clause in the Constitution is not designed to oppress or destroy capital. (Capili v.
NLRC, G.R. No. 117378, Mar. 26, 1997)

Some Bar Questions to Give Hints How the Foregoing Provisions are
Used:

Constitutional Provisions on Labor (1998)

What are the salient features of the protection to labor provision of the
Constitution? [5%]
SUGGESTED ANSWER:
The salient features of the Protection to Labor provision of the Constitution
(Article XIII. Section 3) are as follows:

1. Extent of Protection - Full protection to labor;

2. Coverage of Protection - Local and overseas, organized and unorganized;
3. Employment Policy - Full employment and equality of employment
opportunities for all;
5. Guarantees
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a. Unionism and Method of Determination Conditions of Employment -

Right of all workers to self-organization, collective bargaining and
negotiations.
b. Concerted Activities - Right to engage in peaceful concerted
activities, including the right to strike in accordance with law.
c. Working Conditions - Right to security of tenure, humane conditions
of work and a living wage.
d. Decision Making Processes - Right to participate hi policy and
decision making processes affecting their rights and benefits as way
to provided by law.
6. Share in Fruits of production – Recognition of right of labor to its just share in
fruits of production.

ANOTHER SUGGESTED ANSWER:

 The Constitution (In Article XIII, Section 3) provides that the State shall afford
protection to labor, local and overseas, organized and unorganized.

 The State shall afford protection to labor by promoting full employment and
equality of employment opportunities for all.

 Workers are entitled to security of tenure, humane conditions of work and a

living wage.

 The State shall guarantee the right of all workers to self organization,
collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike, in accordance with law.

 Workers shall also participate in policy and decision making processes

affecting their rights and benefits as may be provided by law.

 The State shall promote the principle of shared responsibility between

workers and employers and the preferential use of voluntary modes in
settling labor disputes, including conciliation, and shall enforce mutual
compliance therewith to foster industrial peace.

 The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns on investments, and to
expansion and growth.

Interpretation of Labor Laws; Liberal Approach (2006)

What is the concept of liberal approach in interpreting the Labor Code and its
Implementing Rules and Regulations in favor of labor? (2.5%)
SUGGESTED ANSWER:
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The workers' welfare should be the paramount consideration in interpreting

the Labor Code and its Implementing Rules and Regulations. This is rooted in the
Constitutional mandate to afford full protection to labor. Article 4 of the Labor
Code provides that "all doubts in the implementation and interpretation of the
provisions of the Labor Code including its implementing rules and regulations
shall be resolved in favor of labor" (PLOT v. NLRC, G.R No. 111933, July
23,1997). It underscores the policy of social justice to accommodate the interests
of the working class on the humane justification that those who have less in life
shall have more in law (PAL v. Santos, G.R. No. 77875, February 4, 1993).

Rights of Employer/Employee (1996)

2) What are the rights of an employer and an employee?
SUGGESTED ANSWER:
The Constitution in Art. XIII, Section 3 provides for the following rights of
employers and employees:

A. Employers Right to a reasonable return on investments, and to expansion and

growth.

1. To a just share in the fruits of production;

2. Right to self organization, collective bargaining and negotiations and
peaceful concerted activities, including the right to strike in accordance
with law;
3. To security of tenure, humane conditions of work, and a living wage; and
4. To participate in policy and decision-making processes affecting their
rights and benefits as may be provided by law.
ALTERNATIVE ANSWER:
In an employer-employee relationship, it is the right of the employer to use the
services of an employee who is under his (employer's) orders as regards the
employment. On the other hand, it is the right of the employee to receive
compensation for the services he renders for the employer.

B. CIVIL CODE

1. ARTICLE 19.

Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good
faith.

2. ARTICLE 1700
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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.

3. 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.

C. LABOR CODE

1. ARTICLE 3.

Declaration of basic policy. The State shall afford protection to labor,

promote full employment, ensure equal work opportunities regardless of sex,
race or creed and regulate the relations between workers and employers. The
State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work.

2. 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.

3. ARTICLE 166

Policy. The State shall promote and develop a tax-exempt employees’

compensation program whereby employees and their dependents, in the event of
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work-connected disability or death, may promptly secure adequate income

benefit and medical related benefits.

4. ARTICLE 211

Declaration of Policy.

It is the policy of the State:

To promote and emphasize the primacy of free collective bargaining and

negotiations, including voluntary arbitration, mediation and conciliation, as
modes of settling labor or industrial disputes;

To promote free trade unionism as an instrument for the enhancement of

democracy and the promotion of social justice and development;

To foster the free and voluntary organization of a strong and united labor
movement;

To promote the enlightenment of workers concerning their rights and obligations

as union members and as employees;

To provide an adequate administrative machinery for the expeditious settlement

of labor or industrial disputes;

To ensure a stable but dynamic and just industrial peace; and

To ensure the participation of workers in decision and policy-making processes

affecting their rights, duties and welfare.

To encourage a truly democratic method of regulating the relations between the

employers and employees by means of agreements freely entered into through
collective bargaining, no court or administrative agency or official shall have the
power to set or fix wages, rates of pay, hours of work or other terms and
conditions of employment, except as otherwise provided under this Code. (As
amended by Section 3, Republic Act No. 6715, March 21, 1989)

5. Article 212
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Definitions.

"Commission" means the National Labor Relations Commission or any of its

divisions, as the case may be, as provided under this Code.

"Bureau" means the Bureau of Labor Relations and/or the Labor Relations
Divisions in the regional offices established under Presidential Decree No. 1, in
the Department of Labor.

"Board" means the National Conciliation and Mediation Board established under
Executive Order No. 126.

"Council" means the Tripartite Voluntary Arbitration Advisory Council established

under Executive Order No. 126, as amended.

"Employer" includes any person acting in the interest of an employer, directly or

indirectly. The term shall not include any labor organization or any of its officers
or agents except when acting as employer.

"Employee" includes any person in the employ of an employer. The term shall not
be limited to the employees of a particular employer, unless the Code so
explicitly states. It shall include any individual whose work has ceased as a
result of or in connection with any current labor dispute or because of any unfair
labor practice if he has not obtained any other substantially equivalent and
regular employment.

"Labor organization" means any union or association of employees which exists

in whole or in part for the purpose of collective bargaining or of dealing with
employers concerning terms and conditions of employment.

"Legitimate labor organization" means any labor organization duly registered

with the Department of Labor and Employment, and includes any branch or local
thereof.

"Company union" means any labor organization whose formation, function or

administration has been assisted by any act defined as unfair labor practice by
this Code.

"Bargaining representative" means a legitimate labor organization whether or not

employed by the employer.

"Unfair labor practice" means any unfair labor practice as expressly defined by
the Code.

"Labor dispute" includes any controversy or matter concerning terms and

conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing or arranging the terms and conditions
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of employment, regardless of whether the disputants stand in the proximate

relation of employer and employee.

"Managerial employee" is one who is vested with the powers or prerogatives to

lay down and execute management policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees. Supervisory employees
are those who, in the interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not merely routinary or
clerical in nature but requires the use of independent judgment. All employees
not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book.

"Voluntary Arbitrator" means any person accredited by the Board as such or any
person named or designated in the Collective Bargaining Agreement by the
parties to act as their Voluntary Arbitrator, or one chosen with or without the
assistance of the National Conciliation and Mediation Board, pursuant to a
selection procedure agreed upon in the Collective Bargaining Agreement, or any
official that may be authorized by the Secretary of Labor and Employment to act
as Voluntary Arbitrator upon the written request and agreement of the parties to
a labor dispute.

"Strike" means any temporary stoppage of work by the concerted action of

employees as a result of an industrial or labor dispute.

"Lockout" means any temporary refusal of an employer to furnish work as a

result of an industrial or labor dispute.

"Internal union dispute" includes all disputes or grievances arising from any
violation of or disagreement over any provision of the constitution and by laws of
a union, including any violation of the rights and conditions of union membership
provided for in this Code.

"Strike-breaker" means any person who obstructs, impedes, or interferes with by

force, violence, coercion, threats, or intimidation any peaceful picketing affecting
wages, hours or conditions of work or in the exercise of the right of self-
organization or collective bargaining.

"Strike area" means the establishment, warehouses, depots, plants or offices,

including the sites or premises used as runaway shops, of the employer struck
against, as well as the immediate vicinity actually used by picketing strikers in
moving to and fro before all points of entrance to and exit from said
establishment. (As amended by Section 4, Republic Act No. 6715, March 21,
1989)

6. ARTICLE 255
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Exclusive bargaining representation and workers’ participation in

policy and decision-making. The labor organization designated or selected by
the majority of the employees in an appropriate collective bargaining unit shall
be the exclusive representative of the employees in such unit for the purpose of
collective bargaining. However, an individual employee or group of employees
shall have the right at any time to present grievances to their employer.

Any provision of law to the contrary notwithstanding, workers shall have the
right, subject to such rules and regulations as the Secretary of Labor and
Employment may promulgate, to participate in policy and decision-making
processes of the establishment where they are employed insofar as said
processes will directly affect their rights, benefits and welfare. For this purpose,
workers and employers may form labor-management councils: Provided, That
the representatives of the workers in such labor-management councils shall be
elected by at least the majority of all employees in said establishment. (As
amended by Section 22, Republic Act No. 6715, March 21, 1989)

Article 256. Representation issue in organized establishments. In organized

establishments, when a verified petition questioning the majority status of the
incumbent bargaining agent is filed before the Department of Labor and
Employment within the sixty-day period before the expiration of the collective
bargaining agreement, the Med-Arbiter shall automatically order an election by
secret ballot when the verified petition is supported by the written consent of at
least twenty-five percent (25%) of all the employees in the bargaining unit to
ascertain the will of the employees in the appropriate bargaining unit. To have a
valid election, at least a majority of all eligible voters in the unit must have cast
their votes. The labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all the workers in the unit. When an
election which provides for three or more choices results in no choice receiving a
majority of the valid votes cast, a run-off election shall be conducted between the
labor unions receiving the two highest number of votes: Provided, that the total
number of votes for all contending unions is at least fifty percent (50%) of the
number of votes cast.

At the expiration of the freedom period, the employer shall continue to recognize
the majority status of the incumbent bargaining agent where no petition for
certification election is filed. (As amended by Section 23, Republic Act No. 6715,
March 21, 1989)

7. ARTICLE 277

Miscellaneous provisions.
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All unions are authorized to collect reasonable membership fees, union dues,
assessments and fines and other contributions for labor education and research,
mutual death and hospitalization benefits, welfare fund, strike fund and credit
and cooperative undertakings. (As amended by Section 33, Republic Act No.
6715, March 21, 1989)

Subject to the constitutional right of workers to security of tenure and their right
to be protected against dismissal except for a just and authorized cause and
without prejudice to the requirement of notice under Article 283 of this Code, the
employer shall furnish the worker whose employment is sought to be terminated
a written notice containing a statement of the causes for termination and shall
afford the latter ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires in accordance with company
rules and regulations promulgated pursuant to guidelines set by the Department
of Labor and Employment. Any decision taken by the employer shall be without
prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor
Relations Commission. The burden of proving that the termination was for a
valid or authorized cause shall rest on the employer. The Secretary of the
Department of Labor and Employment may suspend the effects of the
termination pending resolution of the dispute in the event of a prima facie finding
by the appropriate official of the Department of Labor and Employment before
whom such dispute is pending that the termination may cause a serious labor
dispute or is in implementation of a mass lay-off. (As amended by Section 33,
Republic Act No. 6715, March 21, 1989)

Any employee, whether employed for a definite period or not, shall, beginning on
his first day of service, be considered as an employee for purposes of
membership in any labor union. (As amended by Section 33, Republic Act No.
6715)

No docket fee shall be assessed in labor standards disputes. In all other

disputes, docket fees may be assessed against the filing party, provided that in
bargaining deadlock, such fees shall be shared equally by the negotiating
parties.

The Minister of Labor and Employment and the Minister of the Budget shall
cause to be created or reclassified in accordance with law such positions as may
be necessary to carry out the objectives of this Code and cause the upgrading of
the salaries of the personnel involved in the Labor Relations System of the
Ministry. Funds needed for this purpose shall be provided out of the Special
Activities Fund appropriated by Batas Pambansa Blg. 80 and from annual
appropriations thereafter. (Incorporated by Batas Pambansa Bilang 130, August
21, 1981)

A special Voluntary Arbitration Fund is hereby established in the Board to

subsidize the cost of voluntary arbitration in cases involving the interpretation
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and implementation of the Collective Bargaining Agreement, including the

Arbitrator’s fees, and for such other related purposes to promote and develop
voluntary arbitration. The Board shall administer the Special Voluntary
Arbitration Fund in accordance with the guidelines it may adopt upon the
recommendation of the Council, which guidelines shall be subject to the approval
of the Secretary of Labor and Employment. Continuing funds needed for this
purpose in the initial yearly amount of fifteen million pesos (P15,000,000.00)
shall be provided in the 1989 annual general appropriations acts.

The amount of subsidy in appropriate cases shall be determined by the Board in

accordance with established guidelines issued by it upon the recommendation of
the Council.

The Fund shall also be utilized for the operation of the Council, the training and
education of Voluntary Arbitrators, and the Voluntary Arbitration Program. (As
amended by Section 33, Republic Act No. 6715, March 21, 1989)

The Ministry shall help promote and gradually develop, with the agreement of
labor organizations and employers, labor-management cooperation programs at
appropriate levels of the enterprise based on the shared responsibility and
mutual respect in order to ensure industrial peace and improvement in
productivity, working conditions and the quality of working life. (Incorporated by
Batas Pambansa Bilang 130, August 21, 1981)

In establishments where no legitimate labor organization exists, labor-

management committees may be formed voluntarily by workers and employers
for the purpose of promoting industrial peace. The Department of Labor and
Employment shall endeavor to enlighten and educate the workers and employers
on their rights and responsibilities through labor education with emphasis on the
policy thrusts of this Code. (As amended by Section 33, Republic Act No. 6715,
March 21, 1989)

To ensure speedy labor justice, the periods provided in this Code within which
decisions or resolutions of labor relations cases or matters should be rendered
shall be mandatory. For this purpose, a case or matter shall be deemed
submitted for decision or resolution upon the filing of the last pleading or
memorandum required by the rules of the Commission or by the Commission
itself, or the Labor Arbiter, or the Director of the Bureau of Labor Relations or
Med-Arbiter, or the Regional Director.

Upon expiration of the corresponding period, a certification stating why a

decision or resolution has not been rendered within the said period shall be
issued forthwith by the Chairman of the Commission, the Executive Labor
Arbiter, or the Director of the Bureau of Labor Relations or Med-Arbiter, or the
Regional Director, as the case may be, and a copy thereof served upon the
parties.
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Despite the expiration of the applicable mandatory period, the aforesaid officials
shall, without prejudice to any liability which may have been incurred as a
consequence thereof, see to it that the case or matter shall be decided or resolved
without any further delay. (Incorporated by Section 33, Republic Act No. 6715,
March 21, 1989)

Q: What is the aim of labor laws?

A: The justification of labor laws is social justice. Social justice is “neither
communism, nor despotism, nor atomism, nor anarchy,” but the humanization of
laws and the equalization of social and economic force by the State so that
justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people,
the adoption by the government of measures calculated to insure economic
stability of all the competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of the members of the
community, constitutionally, through the adoption of measures legally justifiable,
or extra‐constitutionally, through the exercise of powers underlying the existence
of all governments on the time‐honored principle of salus populi est suprema lex.
(Calalang v. Williams, G.R. No. 47800, Dec. 2, 1940)

Q: What is “compassionate justice”?

A: It is disregarding rigid rules and giving due weight to all equities of the case.
e.g: Employee validly dismissed may still be given severance pay.

Q: How should doubts in the implementation and interpretation of the

Labor Code (LC) and its Implementing Rules and Regulations (IRR) be
resolved?
A: They should be resolved in favor of labor.

Q: What is the concept of liberal approach in interpreting the LC and its

IRR?
A: The workers' welfare should be the paramount consideration in interpreting
the LC and its IRR. This is rooted in the constitutional mandate to afford full
protection to labor. (PLDT v. NLRC, G.R. No. 111933, July 23, 1997). It
underscores the policy of social justice to accommodate the interests of the
working class on the humane justification that those who have less in life shall
have more in law. (PAL v. Santos, G.R. No. 77875, Feb. 4, 1993). (2006 Bar
Question)

Q: Art. 4 of the LC provides that in case of doubt in the implementation and

interpretation of the provisions of the LC and its IRR, the doubt shall be resolved
in favor of labor. Art. 1702 of the Civil Code also provides that in case of doubt,
all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living of the laborer.
Mica‐Mara Company assails the validity of these statutes on the ground that
they violate its constitutional right to equal protection of the laws. Is the
contention of Mica Mara Company tenable? Discuss fully.
 16

A: No, the Constitution provides that the State shall afford full protection to labor.
Furthermore, the State affirms labor as a primary economic force. It shall protect
the rights of workers and promote their welfare. (1998 Bar Question)

Art. 3. Declaration of Basic Policy

Q: What is the policy of the State as regards labor as found in the Labor
Code (Art. 12)?
A:
1. Promote and maintain a State of full employment through improved
manpower training, allocation and utilization;
2. Protect every citizen desiring to work locally or overseas by securing for him
the best possible terms and conditions of employment;
3. Facilitate a free choice of available employment by persons seeking work in
conformity with the national interest;
4. Facilitate and regulate the movement of workers in conformity with the
national interest;
5. Regulate the employment of aliens, including the establishment of a
registration and/or work permit system;
6. Strengthen the network of public employment offices and rationalize the
participation of the private sector in the recruitment and placement of
workers, locally and overseas, to serve national development objectives;
7. Ensure careful selection of Filipino workers for overseas employment in order
to protect the good name of the Philippines abroad.

Q: What are the reasons for affording greater protection to employees?

A:

1. Greater supply than demand for labor; and

2. Need for employment by labor comes from vital and desperate necessity.
(Sanchez v. Harry Lyons Construction Inc., G.R. L‐2779, Oct. 18, 1950)

Q: Are all labor disputes resolved in favor of labor?

A: No. The law also recognizes that management has rights which are also
entitled to respect and enforcement in the interest of fair play. (St. Lukes Medical
Center Ees Ass’n v. NLRC, G.R. No. 162053, Mar. 7, 2007)

Rules and Regulations

Q: Who is given the “rule‐making power”?

A: The Department of Labor and other gov’t agencies charged with the
administration and enforcement of the Labor Code or any of its parts shall
promulgate the necessary implementing rules and regulations. Such rules and
regulations shall become effective 15 days after announcement of their adoption
in newspapers of general circulation.
 17

Q: What are the limitations to the “rule‐making power” given to the Secretary of
Labor and Employment and other gov’t agencies?
A: It must:

1. Be issued under the authority of the law

2. Not be contrary to law and the Constitution

Art. 6. Applicability

Q: To whom shall all rights and benefits under the LC apply?

A: GR: All rights and benefits granted to workers under the LC shall apply alike
to all workers, whether agricultural or non‐agricultural.

XPN:
1. Government employees (Ees)
2. Ees of government corporations created by special or original charter
3. Foreign governments
4. International agencies
5. Corporate officers/ intra‐corporate disputes which fall under P.D. 902‐A and
now fall under the jurisdiction of the regular courts pursuant to the Securities
Regulation Code (SRC).
6. Local water district except where NLRC’s jurisdiction is invoked.
7. As may otherwise be provided by the LC

Q: What is the test in determining whether a GOCC is subject to the Civil

Service Law?
A: It is determined by the manner of their creation. Gov’t corporations that are
created by special (original) charter from Congress are subject to Civil Service
rules, while those incorporated under the General Corporation Law are covered
by the LC.

Q: Who is an agricultural/farm worker?

A:

1. One employed in an agricultural or farm enterprise,

2. Performs tasks which are directly related to agricultural activities of the Er,
and
3. Any activities performed by a farmer as an incident to farming operations.

Declaration of Policy

Q: What are the policy objectives of our labor relations law?

A: The state aims to promote:

1. Free collective bargaining (CB) and negotiations, including voluntary

arbitration, mediation and conciliation as modes of settling labor or industrial
disputes;
 18

2. Free trade unionism;

3. Free and voluntary organization of a strong and united labor movement;
4. Enlightenment of workers concerning their rights and obligations as union
members and as Ees;
5. Adequate administrative machinery for the expeditious settlement of labor or
industrial disputes;
6. Stable but dynamic and just industrial peace;
7. Participation of workers in the decision‐making processes affecting their
rights, duties and welfare;
8. Truly democratic method of regulating the relations between the Ers and Ees
by means of agreements freely entered into through CB, no court or
administrative agency or official shall have the power to set or fix wages,
rates of pay, hours of work or other terms and conditions of employment,
except as otherwise provided under the LC.

Definitions

Q: Who is an employer (Er)?

A: Any person acting in the interest of an Er, directly or indirectly. The term does
not include a labor organization (LO) or any of its officers and agents, except
when acting as an Er. (Art.212[e])

An Er is defined as any person or entity that employs the services of others; one
for whom work and who pays their wages or salaries; any person acting in the
interest of an Er; refers to the enterprise where the LO operates or seeks to
operate. (Sec.1[s], Rule I, Book V, IRR)

Q: When is a labor organization deemed an Er?

A: When it is acting as such in relation to persons rendering services under hire,

particularly in connection with its activities for profit or gain.

Note: The mere fact that respondent is a labor union does not mean that it
cannot be considered an Er for persons who work for it. Much less should it be
exempted from labor laws. (Bautista v. Inciong, G.R. No. L‐52824, Mar. 16, 1988)

Q: Who is an employee (Ee)?

A:

1. Any person in the employ of the Er

2. Any individual whose work has ceased as a result of or in connection with
any current labor dispute or because of any unfair labor practice if he has not
obtained any other substantially equivalent and regular employment
3. One who has been dismissed from work but the legality of dismissal is being
contested in a forum of appropriate jurisdiction. (D.O. No. 40‐03, Mar. 15,
2003)
 19

Note: The term shall not be limited to the Ees of a particular Er unless the LC
explicitly states.

Any Ee, whether employed for a definite period or not, shall, beginning on the
first day of service, be considered an Ee for purposes of membership in any labor
union. (Art. 277[c], LC)

Q: What is a labor dispute?

A: Includes any controversy or matter concerning:

1. Terms and conditions of employment, or

2. The association or representation of persons in negotiating, fixing,
maintaining, changing or arranging the terms and conditions of employment
3. Regardless of whether the disputants stand in the proximate relation of Er
and Ee. (Art.212[l])

Q: What are the tests on whether a controversy falls within the

definition of a labor dispute?

A:

1. As to nature – It depends on whether the dispute arises from Er‐Ee

relationship, although disputants need not be proximately “Er” or “Ee” of
another.
2. As to subject matter – The test depends on whether it concerns terms or
conditions of employment or association or representation of persons in
negotiating, fixing, maintaining or changing terms or conditions of
employment.

Q: What are the kinds of labor disputes?

A:

1. Labor standard disputes

a. Compensation – E.g. Underpayment of minimum wage; stringent

output quota; illegal pay deductions
b. Benefits – E.g. Non‐payment of holiday pay, OT pay or other benefits
c. Working Conditions – E.g. Unrectified work hazards

2. Labor relations disputes

a. Organizational right disputes/ULP – E.g. Coercion, restraint or

interference in unionization efforts; reprisal or discrimination due to
union activities; company unionism; ULP, strike or lockout; union
members’ complaint against union officers
 20

b. Representation disputes – E.g. Uncertainty as to which is the

majority union; determination of appropriate CB unit; contests for
recognition by different sets of officers in the same union
c. Bargaining disputes – E.g. Refusal to bargain; bargaining in bad
faith; bargaining deadlock; economic strike or lockout
d. Contract administration or personnel policy disputes – E.g. Non‐
compliance with CBA provision (ULP if gross non compliance with
economic provisions); disregard of grievance machinery; non
observance of unwarranted use of union security clause; illegal or
unreasonable personnel management policies; violation of no‐
strike/no‐lockout agreement
e. Employment tenure disputes – E.g. Non‐regularization of Ees; non‐
absorption of labor only contracting staff; illegal termination; non‐
issuance of employment contract

Q: Who are the parties to a dispute?

1. Primary parties are the Er, Ees and the union.

2. Secondary parties are the voluntary arbitrator, agencies of DOLE, NLRC,
Secretary of Labor and the Office of the President.

Q: What is an inter‐union dispute?

A: Any conflict between and among legitimate labor unions involving
representation questions for the purposes of CB or to any other conflict or dispute
between legitimate labor unions.

Q: What is an intra‐union dispute?

A: Any conflict between and among union members, 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 from
chartering or affiliation of union.

Q: What are rights disputes?

A: They are claims for violations of a specific right arising from a contract, i.e.
CBA or company policies.

Q: What are interest disputes?

A: They involve questions on “what should be included in the CBA”. Strictly

speaking, the parties may choose a voluntary arbitrator to decide on the terms
and conditions of employment, but this is impracticable because it will be a value
judgment of the arbitrators and not of the parties.

Q: What are contract–negotiation disputes?

A: These are disputes as to the terms of the CBA.

 21

Q: What are contract–interpretation disputes?

A: These are disputes arising under an existing CBA, involving such matters as
the interpretation and application of the contract, or alleged violation of its
provisions.

Exclusive Bargaining Representation (EBR) and Worker’s Participation in

Policy and Decision Making

Q: Who shall be the bargaining representative of the Employees for

purposes of collective bargaining?
A: The Labor Organization designated or selected by the majority of the
employees in an appropriate collective bargaining unit shall be the exclusive
representative of the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group of employees shall have
the right at any time to present grievances to their employer. (As amended by
Sec. 22, R.A. No. 6715, Mar. 15, 1989)

Q: What is the extent of the worker’s right to participate in policy and decision‐
making processes in a company?
A: Such right refers not only to formulation of corporate programs and policies
but also to participation in grievance procedures and voluntary modes of settling
disputes.

Q: Explain the extent of the workers’ right to participate in policy and decision‐
making process as provided under Art. XIII, Sec. 13 of the 1987 Constitution.
Does it include membership in the Board of Directors of a corporation?
A: No. In Manila Electric Company v. Quisumbing, G.R. No. 127598, January 27,
1999, the SC recognized the right of the union to participate in policy formulation
and decision making process on matters affecting the Union members’ rights,
duties and welfare. However, the SC held that such participation of the union in
committees of Er Meralco is not in the nature of a co‐management control of the
business of Meralco. Impliedly, therefore, workers’ participatory right in policy
and decision‐making processes does not include the right to put a union member
in the Corporation’s Board of Directors. (2008 Bar Question)

Q: May an Er solicit questions, suggestions and complaints from Ees

even though the Ees are represented by a union?
A: Yes, provided:

1. The CB representative executes an agreement waiving the right to be present

on any occasion when Ee grievances are being adjusted by the Er; and
2. Er acts strictly within the terms of his waiver agreement.

Q: The hotel union filed a Notice of Strike with the NCMB due to ULP against the
Diamond Hotel who refused to bargain with it. The hotel advised the union that
 22

since it was not certified by the DOLE as the exclusive bargaining agent, it could
not be recognized as such. Whether the Union may bargain collectively?
A: No. Art. 255 of the LC declares that only the labor organization designated or
selected by the majority of the Ees in an appropriate collective bargaining (CB)
unit is the exclusive representative of the employees (Ees) in such unit for the
purpose of CB. The union is admittedly not the exclusive representative of the
majority of the Ees of the hotel, hence, it could not demand from the hotel the
right to bargain collectively in their behalf. (Manila Diamond Hotel v. Manila
Diamond Hotel Ees Union, G.R. No. 158075, June 30, 2006)

Q: Are probationary Ees allowed to vote at the time of the certification

elections?
A: Yes. Under Art. 255 of the LC the “labor organization designated or selected
by the majority of the Ees in an appropriate bargaining unit shall be the
exclusive representative of the Ees in such unit for purposes of CB.” CB covers
all aspects of the employment relation and the resultant CBA negotiated by the
certified union binds all Ees in the bargaining unit. Hence, all rank and file Ees,
probationary or permanent, have a substantial interest in the selection of the
bargaining representative. The LC makes no distinction as to their employment
status as basis for eligibility in supporting the petition for certification election.
The law refers to "all" the Ees in the bargaining unit. All they need to be eligible
to support the petition is to belong to the "bargaining unit." The provision in the
CBA disqualifying probationary Ees from voting cannot override the
constitutionally‐protected right of workers to self‐organization, as well as the
provisions of the LC and its implementing rules on certification elections and
jurisprudence. A law is read into, and forms part of, a contract. Provisions in a
contract are valid only if they are not contrary to law, morals, good customs,
public order or public policy. (NUWHRAIN‐MPHC v. SLE, G.R. No. 181531, July
31, 2009)

II. RECRUITMENT AND PLACEMENT

A. RECRUITMENT OF LOCAL AND MIGRANT WORKERS

Q: Who is a worker?
A: Any member of the labor force, whether employed or unemployed. (Art. 13 [a],
LC)

Q: What are the essential elements in determining whether one is

engaged in recruitment/placement?
A: It must be shown that:
 23

1. The accused gave the complainant the distinct impression that she had the
power or ability to send the complainant for work,
2. Such that the latter was convinced to part with his money in order to be so
employed. (People v. Goce, G.R. No. 113161, Aug. 29, 1995)

Q: What is the rule in recruitment and placement?

A: GR: No person or entity other than the public employment offices, shall
engage in the recruitment and placement of workers

XPN:
1. Construction contractors if authorized by the DOLE and Construction Industry
Authority
2. Other persons or entities as may be authorized by the SLE
3. Members of the diplomatic corps (but hiring must go through POEA)
4. Public employment offices
5. Private recruitment offices
6. Private employment agencies
7. POEA
8. Shipping or manning agents or representatives
9. Name hirees

Q: Who are name hires?

A: They are individual workers who are able to secure contracts for overseas
employment on their own efforts and representations without the assistance or
participation of any agency. Their hiring, nonetheless, shall pass through the
POEA for processing purposes. (Part III, Rule III, POEA Rules Governing Overseas
Employment as amended in 2002)

Q: What is a private employment agency?

A: Any person or entity engaged in the recruitment and placement of workers for
a fee which is charged, directly or indirectly, from the workers or employers or
both.

Q: What is a private recruitment agency?

A: It is any person or association engaged in the recruitment and placement of
workers without charging any fee, directly or indirectly, from the workers or
employers.

Q: Who is a seaman?
A: Any person employed in a vessel engaged in maritime navigation.

Q: What is overseas employment?

A: It is employment of a worker outside the Philippines.

Q: Who is an overseas Filipino worker (OFW)?

 24

A: 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; to be used interchangeably with migrant worker. (Sec.2, R.A. 10022
amending R.A. 8042)

Q: Who is an emigrant?
A: Any person, worker or otherwise, who emigrates to a foreign country by virtue
of an immigrant visa or resident permit or its equivalent in the country of
destination.

Q: Concerned Filipino contract workers in the Middle East reported to the DFA
that XYZ, a private recruitment and placement agency, is covertly transporting
extremists to terrorist training camps abroad. Intelligence agencies of the gov’t
allegedly confirmed the report. Upon being alerted by the DFA, the DOLE issued
orders cancelling the licenses of XYZ, and imposing an immediate travel ban on
its recruits for the Middle East. XYZ appealed to the Office of the President to
reverse and set aside the DOLE orders, citing damages from loss of employment
of its recruits, and violations of due process including lack of notice and hearing
by DOLE. The DOLE in its answer claimed the existence of an emergency in the
Middle East which required prompt measures to protect the life and limb of
OFWs from a clear and present danger posed by the ongoing war against
terrorism. Should the DOLE orders be upheld or set aside?
A:

1. The DOLE order cancelling the licenses of XYZ is void because a report that
an agency is covertly transporting extremists is not a valid ground for
cancellation of a Certificate of Registration and there is failure of due process
as no hearing was conducted prior to the cancellation.

1. The DOLE order imposing the travel ban is valid because it is a valid exercise
of police power to protect the national interest (Sec. 3, Art. XIII, Constitution on
full protection to labor safety of workers) and on the rule making authority of
the SLE. (Art. 5, LC; Phil. Ass’n. of Service Exporters v. Drilon, G.R. No. 81958,
June 30, 1988). (2004 Bar Question)

Q: Who are the persons prohibited from engaging the business of

recruiting migrant workers?
A:

1. Unlawful for any official or Ee of the:

a. DOLE
b. POEA
c. Overseas Workers Welfare Administration (OWWA)
d. DFA
e. Other gov’t agencies involved in the implementation of this Act
 25

2. Their relatives within the 4th civil degree of consanguinity or affinity, to

engage, directly or indirectly in the business of recruiting migrant workers.
(Sec. 8, R.A. 8042)

1. ILLEGAL RECRUITMENT (SEC. 5, R. A. NO. 10022)

Section 5, R. A. No. 10022. Section 6 of Republic Act No. 8042, as amended, is

hereby amended to read as follows:

SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when undertaken
by non-licensee or non-holder of authority contemplated under Article 13(f) of
Presidential Decree No. 442, as amended, otherwise known as the Labor Code of
the Philippines: Provided, That any such non-licensee or non-holder who, in any
manner, offers or promises for a fee employment abroad to two or more persons
shall be deemed so engaged. It shall likewise include the following acts, whether
committed by any person, whether a non-licensee, non-holder, licensee or holder
of authority:

(a) To charge or accept directly or indirectly any amount greater

than that specified in the schedule of allowable fees prescribed by
the Secretary of Labor and Employment, or to make a worker pay or
acknowledge any amount greater than that actually received by him
as a loan or advance;

(b) To furnish or publish any false notice or information or

document in relation to recruitment or employment;

(c) To give any false notice, testimony, information or document or

commit any act of misrepresentation for the purpose of securing a
license or authority under the Labor Code, or for the purpose of
documenting hired workers with the POEA, which include the act of
reprocessing workers through a job order that pertains to
nonexistent work, work different from the actual overseas work, or
work with a different employer whether registered or not with the
POEA;

(d) To include or attempt to induce a worker already employed to

quit his employment in order to offer him another unless the transfer
is designed to liberate a worker from oppressive terms and
conditions of employment;
 26

(e) To influence or attempt to influence any person or entity not to

employ any worker who has not applied for employment through his
agency or who has formed, joined or supported, or has contacted or
is supported by any union or workers' organization;

(f) To engage in the recruitment or placement of workers in jobs

harmful to public health or morality or to the dignity of the Republic
of the Philippines;

(h) To fail to submit reports on the status of employment,

placement vacancies, remittance of foreign exchange earnings,
separation from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and
Employment;

(i) To substitute or alter to the prejudice of the worker,

employment contracts approved and verified by the Department of
Labor and Employment from the time of actual signing thereof by the
parties up to and including the period of the expiration of the same
without the approval of the Department of Labor and Employment;

(j) For an officer or agent of a recruitment or placement agency to

become an officer or member of the Board of any corporation
engaged in travel agency or to be engaged directly or indirectly in
the management of travel agency;

(k) To withhold or deny travel documents from applicant workers

before departure for monetary or financial considerations, or for any
other reasons, other than those authorized under the Labor Code
and its implementing rules and regulations;

(l) Failure to actually deploy a contracted worker without valid

reason as determined by the Department of Labor and Employment;

(m) Failure to reimburse expenses incurred by the worker in

connection with his documentation and processing for purposes of
deployment, in cases where the deployment does not actually take
place without the worker's fault. Illegal recruitment when committed
by a syndicate or in large scale shall be considered an offense
involving economic sabotage; and

(n) To allow a non-Filipino citizen to head or manage a licensed

recruitment/manning agency.

Illegal recruitment is deemed committed by a syndicate if carried out by a

group of three (3) or more persons conspiring or confederating with one another.
 27

It is deemed committed in large scale if committed against three (3) or more

persons individually or as a group.

In addition to the acts enumerated above, it shall also be unlawful for any
person or entity to commit the following prohibited acts:

(1) Grant a loan to an overseas Filipino worker with interest

exceeding eight percent (8%) per annum, which will be used for
payment of legal and allowable placement fees and make the
migrant worker issue, either personally or through a guarantor or
accommodation party, postdated checks in relation to the said loan;

(2) Impose a compulsory and exclusive arrangement whereby an

overseas Filipino worker is required to avail of a loan only from
specifically designated institutions, entities or persons;

(3) Refuse to condone or renegotiate a loan incurred by an

overseas Filipino worker after the latter's employment contract has
been prematurely terminated through no fault of his or her own;

(4) Impose a compulsory and exclusive arrangement whereby an

overseas Filipino worker is required to undergo health examinations
only from specifically designated medical clinics, institutions,
entities or persons, except in the case of a seafarer whose medical
examination cost is shouldered by the principal/shipowner;

(5) Impose a compulsory and exclusive arrangement whereby an

overseas Filipino worker is required to undergo training, seminar,
instruction or schooling of any kind only from specifically designated
institutions, entities or persons, except fpr recommendatory trainings
mandated by principals/shipowners where the latter shoulder the
cost of such trainings;

(6) For a suspended recruitment/manning agency to engage in

any kind of recruitment activity including the processing of pending
workers' applications; and

(7) For a recruitment/manning agency or a foreign

principal/employer to pass on the overseas Filipino worker or
deduct from his or her salary the payment of the cost of insurance
fees, premium or other insurance related charges, as provided under
the compulsory worker's insurance coverage.

The persons criminally liable for the above offenses are the principals,
accomplices and accessories. In case of juridical persons, the officers having
ownership, control, management or direction of their business who are
 28

responsible for the commission of the offense and the responsible

employees/agents thereof shall be liable.

In the filing of cases for illegal recruitment or any of the prohibited acts under
this section, the Secretary of Labor and Employment, the POEA Administrator or
their duly authorized representatives, or any aggrieved person may initiate the
corresponding criminal action with the appropriate office. For this purpose, the
affidavits and testimonies of operatives or personnel from the Department of
Labor and Employment, POEA and other law enforcement agencies who
witnessed the acts constituting the offense shall be sufficient to prosecute the
accused.

In the prosecution of offenses punishable under this section, the public

prosecutors of the Department of Justice shall collaborate with the anti-illegal
recruitment branch of the POEA and, in certain cases, allow the POEA lawyers to
take the lead in the prosecution. The POEA lawyers who act as prosecutors in
such cases shall be entitled to receive additional allowances as may be
determined by the POEA Administrator.

The filing of an offense punishable under this Act shall be without prejudice to
the filing of cases punishable under other existing laws, rules or regulations.

NOTES:
-------------------------------------------------------
Examinee’s Notes: A careful scrutiny of the provision is needed here.

PARAGRAPH 1

Paragraph 1 and its sub-paragraphs lay down the definition of illegal

recruitment:

Illegal recruitment - shall mean any act of canvassing, enlisting,

contracting, transporting, utilizing, hiring, or procuring workers and includes
referring, contract services, promising or advertising for employment abroad,
whether for profit or not, when undertaken by non-licensee or non-holder of
authority.

- illegal recruitment shall likewise shall likewise include the following acts,
whether committed by any person, whether a non-licensee, non-holder, licensee
or holder of authority (Thus, even a licensee or a holder of authority may commit
or may be held guilty of illegal recruitment):

(a) To charge or accept directly or indirectly any amount greater than

that specified in the schedule of allowable fees prescribed by the Secretary
 29

of Labor and Employment, or to make a worker pay or acknowledge any

amount greater than that actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in

relation to recruitment or employment;

(c) To give any false notice, testimony, information or document or

commit any act of misrepresentation for the purpose of securing a license
or authority under the Labor Code, or for the purpose of documenting hired
workers with the POEA, which include the act of reprocessing workers
through a job order that pertains to nonexistent work, work different from
the actual overseas work, or work with a different employer whether
registered or not with the POEA;

(d) To include or attempt to induce a worker already employed to quit

his employment in order to offer him another unless the transfer is
designed to liberate a worker from oppressive terms and conditions of
employment;

(e) To influence or attempt to influence any person or entity not to

employ any worker who has not applied for employment through his
agency or who has formed, joined or supported, or has contacted or is
supported by any union or workers' organization;

(f) To engage in the recruitment or placement of workers in jobs harmful

to public health or morality or to the dignity of the Republic of the
Philippines;

(h) To fail to submit reports on the status of employment, placement

vacancies, remittance of foreign exchange earnings, separation from jobs,
departures and such other matters or information as may be required by
the Secretary of Labor and Employment;

(i) To substitute or alter to the prejudice of the worker, employment

contracts approved and verified by the Department of Labor and
Employment from the time of actual signing thereof by the parties up to
and including the period of the expiration of the same without the approval
of the Department of Labor and Employment;

(j) For an officer or agent of a recruitment or placement agency to

become an officer or member of the Board of any corporation engaged in
travel agency or to be engaged directly or indirectly in the management of
travel agency;
(k) To withhold or deny travel documents from applicant workers before
departure for monetary or financial considerations, or for any other
reasons, other than those authorized under the Labor Code and its
implementing rules and regulations;
 30

(l) Failure to actually deploy a contracted worker without valid reason

as determined by the Department of Labor and Employment;

(m) Failure to reimburse expenses incurred by the worker in connection

with his documentation and processing for purposes of deployment, in
cases where the deployment does not actually take place without the
worker's fault. Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving economic sabotage;
and

(n) To allow a non-Filipino citizen to head or manage a licensed

recruitment/manning agency.

The above are the definitions of illegal recruitment. Now, you can read in
Paragraph 1 the following:

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 engaged in illegal recruitment.

This sentence is explained by the Supreme Court in the 1986 case of People v.
Panis:

FACTS: Four separate criminal complaints were filed against

Abug for operating a fee-charging agency without first securing
a license. Abug filed a motion to quash alleging that the
informations did not charge an offense as he was charged with
illegally recruiting only one person in each of the four
informations. Abug claimed there would be illegal recruitment
only when two or more persons in any manner were promised
or offered any employment for a fee.
HELD: The Court ruled that the number of persons is not an
essential ingredient of the act of recruitment and placement of
workers. As we see it, the proviso was intended neither to
impose a condition on the basic rule nor to provide an exception
thereto but merely to create a presumption. The presumption is
that the individual or entity is engaged in recruitment and
placement whenever he or it is dealing with two or more
persons to whom, in consideration of a fee, an offer or promise
of employment is made in the course of the “canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring
workers.” The number of person dealt with is not an essential
ingredient of the act of recruitment and placement of workers.
Any of the acts mentioned will constitute recruitment and
placement even if only one prospective worker is involved. The
proviso merely lays down a rule of evidence that where a fee is
 31

collected in consideration of a promise or offer of employment to

two or more prospective workers, the individual or entity
dealing with them shall be deemed to be engaged in the act of
recruitment and placement. The words “shall be deemed”
create that presumption.

PARAGRAPH 2

Paragraph 2 states:

Illegal recruitment is deemed committed by a syndicate if

carried out by a group of three (3) or more persons conspiring or
confederating with one another. It is deemed committed in large
scale if committed against three (3) or more persons
individually or as a group.

When Illegal Recruitment Is Considered as an Offense Involving

Economic Sabotage

Illegal recruitment when committed by a syndicate shall be considered an

offense involving economic sabotage. Illegal recruitment is deemed committed by
a syndicate if carried out by a group of three (3) or more persons conspiring or
confederating with one another.

Illegal recruitment when committed in large scale shall be considered an

offense involving economic sabotage. It is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.

PARAGRAPH 3

It is the Examinee’s perception that those enumerated under Paragraph 3 are

not included among those acts that constitute illegal recruitment under
Paragraph 1. They are merely referred by the provision as prohibited acts. They
are unlawful like those that constitute illegal recruitment. Let us read Paragraph
3:

In addition to the acts enumerated above, it shall also be

unlawful for any person or entity to commit the following prohibited
acts:

(1) Grant a loan to an overseas Filipino worker with

interest exceeding eight percent (8%) per annum, which will be
used for payment of legal and allowable placement fees and
 32

make the migrant worker issue, either personally or through a

guarantor or accommodation party, postdated checks in
relation to the said loan;

(2) Impose a compulsory and exclusive arrangement

whereby an overseas Filipino worker is required to avail of a
loan only from specifically designated institutions, entities or
persons;

(3) Refuse to condone or renegotiate a loan incurred by an

overseas Filipino worker after the latter's employment contract
has been prematurely terminated through no fault of his or
her own;

(4) Impose a compulsory and exclusive arrangement

whereby an overseas Filipino worker is required to undergo
health examinations only from specifically designated medical
clinics, institutions, entities or persons, except in the case of a
seafarer whose medical examination cost is shouldered by the
principal/shipowner;

(5) Impose a compulsory and exclusive arrangement

whereby an overseas Filipino worker is required to undergo
training, seminar, instruction or schooling of any kind only
from specifically designated institutions, entities or persons,
except fpr recommendatory trainings mandated by
principals/shipowners where the latter shoulder the cost of
such trainings;

(6) For a suspended recruitment/manning agency to

engage in any kind of recruitment activity including the
processing of pending workers' applications; and

(7) For a recruitment/manning agency or a foreign

principal/employer to pass on the overseas Filipino worker or
deduct from his or her salary the payment of the cost of
insurance fees, premium or other insurance related charges,
as provided under the compulsory worker's insurance
coverage.

PARAGRAPH 4

Paragraph 4 says: “The persons criminally liable for the above offenses are
the principals, accomplices and accessories. In case of juridical persons, the
officers having ownership, control, management or direction of their business
 33

who are responsible for the commission of the offense and the responsible
employees/agents thereof shall be liable.”

Meaning of Par. 4:

The offenses referred to here are:

1. Simple illegal recruitment under Par. 1,

2. illegal recruitment that is considered as an offense involving economic
sabotage, and
3. those prohibited acts under Par. 3.

The persons criminally liable (or persons that are responsible as termed by
the IRR) for these offenses are principals, accomplices and accessories. In case
of juridical persons, the officers having ownership, control, management or
direction of their business who are responsible for the commission of the offense
and the responsible employees/agents thereof shall be liable.”

PARAGRAPH 5

In the filing of cases for illegal recruitment or any of the prohibited acts under
this section, --

1. the Secretary of Labor and Employment,

2. the POEA Administrator or their duly authorized representatives, or
3. any aggrieved person

may initiate the corresponding criminal action with the appropriate office. For
this purpose, the affidavits and testimonies of operatives or personnel from the
Department of Labor and Employment, POEA and other law enforcement
agencies who witnessed the acts constituting the offense shall be sufficient to
prosecute the accused.

PARAGRAPH 6

In the prosecution of offenses punishable under this section, the public

prosecutors of the Department of Justice shall collaborate with the anti-illegal
recruitment branch of the POEA and, in certain cases, allow the POEA lawyers to
take the lead in the prosecution. The POEA lawyers who act as prosecutors in
such cases shall be entitled to receive additional allowances as may be
determined by the POEA Administrator.
 34

PARAGRAPH 7

The filing of an offense punishable under this Act shall be without prejudice to
the filing of cases punishable under other existing laws, rules or regulations.

PENALTIES

Now that we are finished with discussing Sec. 6, we study the corresponding
penalties of the offenses provided therein. The provision on penalties may be
found in Section 7 of Republic Act No. 8042, as amended by R. A. No. 10022. It
says:

SEC. 7. Penalties. -

(a) Any person found guilty of illegal recruitment shall suffer the
penalty of imprisonment of not less than twelve (12) years and one
(1) day but not more than twenty (20) years and a fine of not less
than One million pesos (P1,000,000.00) nor more than Two million
pesos (P2,000,000.00).

(b) The penalty of life imprisonment and a fine of not less than Two
million pesos (P2,000,000.00) nor more than Five million pesos
(P5,000,000.00) shall be imposed if illegal recruitment constitutes
economic sabotage as defined therein.

Provided, however, That the maximum penalty shall be imposed if

the person illegally recruited is less than eighteen (18) years of age
or committed by a non-licensee or non-holder of authority.

(c) Any person found guilty of any of the prohibited acts shall suffer
the penalty of imprisonment of not less than six (6) years and one (1)
day but not more than twelve (12) years and a fine of not less than
Five hundred thousand pesos (P500,000.00) nor more than One
million pesos (P1,000,000.00).

If the offender is an alien, he or she shall, in addition to the penalties herein

prescribed, be deported without further proceedings.

In every case, conviction shall cause and carry the automatic revocation of the
license or registration of the recruitment/manning agency, lending institutions,
training school or medical clinic.

Venue

A criminal action arising from illegal recruitment as defined under this Rule
shall be filed with the Regional Trial Court of the province or city where the
 35

offense was committed or where the offended party actually resides at the time
of the commission of the offense; Provided, that the court where the criminal
action is first filed shall acquire jurisdiction to the exclusion of other courts.
(OMNIBUS RULES AND REGULATIONS IMPLEMENTING THE MIGRANT
WORKERS AND OVERSEAS FILIPINOS ACT OF 1995, AS AMENDED BY
REPUBLIC ACT NO. 10022)

Examinee’s Notes Ends Here

--------------------------------------------------------

A) LICENSE V. AUTHORITY

What is a license?
License means a document issued by the Department of Labor and
Employment authorizing a person or entity to operate a private employment
agency.

What is an Authority?
Authority means a document issued by the Department of Labor and
Employment authorizing a person or association to engage in recruitment and
placement activities as a private recruitment entity.

Q: Who is a non‐licensee / non‐holder of authority?

A: Any person, corporation or entity:

1. Which has not been issued a valid license or authority to engage in

recruitment and placement by the Secretary of Labor and Employment (SLE)
or
2. Whose license or authority has been suspended, revoked or cancelled by the
POEA or the SLE

Q: Is the license or authority transferable?

A: No, they are non‐transferable. (Art. 29)

Article 29. Non-transferability of license or authority. No

license or authority shall be used directly or indirectly by any
person other than the one in whose favor it was issued or at
any place other than that stated in the license or authority be
transferred, conveyed or assigned to any other person or
entity. Any transfer of business address, appointment or
designation of any agent or representative including the
establishment of additional offices anywhere shall be subject
to the prior approval of the Department of Labor.
 36

Q: A Recruitment and Placement Agency declared voluntary bankruptcy. Among

its assets is its license to engage in business. Is the license of the bankrupt
agency an asset which can be sold in public auction by the liquidator?
A: No, because of the non‐transferability of the license to engage in recruitment
and placement. The LC (Art. 29) provides that no license to engage in recruitment
and placement shall be used directly or indirectly by any person other than the
one in whose favor it was issued nor may such license be transferred, conveyed
or assigned to any other person or entity. It may be noted that the grant of a
license is a governmental act by the DOLE based on personal qualifications, and
citizenship and capitalization requirements. (Arts.27‐28, LC). (1998 Bar
Question)

Note: Change of ownership or relationship of a single proprietorship licensed to

engage in overseas employment shall cause the automatic revocation of the
license.

B) ESSENTIAL ELEMENTS OF ILLEGAL RECRUITMENT

(already discussed)

Q: Larry Domingo was accused of the crime of illegal recruitment. He argued that
he issued no receipt or document in which he acknowledged as having received
any money for the promised jobs. Hence, he should be free him from liability.
Was Larry engaged in recruitment activities?
A: Yes. Even if at the time Larry was promising employment no cash was given
to him, he is still considered as having been engaged in recruitment activities,
since the law provides that the act of recruitment may be for profit or not. It
suffices that Larry promised or offered employment for a fee to the complaining
witnesses to warrant his conviction for illegal recruitment. (People v. Domingo,
G.R. No. 181475, April 7, 2009, J. Carpio‐ Morales)

C) SIMPLE ILLEGAL RECRUITMENT

Q: When is there simple illegal recruitment?

A: It is considered simple illegal recruitment when it involves less than three (3)
victims or recruiters.

D) ILLEGAL RECRUITMENT IN LARGE SCALE

(Already discussed)

It is deemed committed in large scale if committed against three (3) or more

persons individually or as a group.
 37

Q: While her application for renewal of her license to recruit workers for overseas
employment was still pending Maryrose Ganda recruited Alma and her 3 sisters,
Ana, Joan, and Mavic, for employment as housemates in Saudi Arabia. Maryrose
represented to the sisters that she had a license to recruit workers for overseas
employment and demanded and received P30,000.00 from each of them for her
services. However, her application for the renewal of her license was denied,
and consequently failed to employ the 4 sisters in Saudi Arabia. The sisters
charged Maryrose with large scale illegal recruitment. Testifying in her defense,
she declared that she acted in good faith because she believed that her
application for the renewal of her license would be approved. She adduced in
evidence the Affidavits of Desistance which the four private complainants had
executed after the prosecution rested its case. In the said affidavits, they
acknowledge receipt of the refund by Maryrose of the total amount of
P120,000.00 and indicated that they were no longer interested to pursue the
case against her. Resolve the case with reasons.
A: Illegal recruitment is defined by law as any recruitment activities undertaken
by non‐licenses or non‐holders of authority. (People v. Senoron, G.R. No. 119160,
Jan. 30,1997) And it is large scale illegal recruitment when the offense is
committed against 3 or more persons, individually or as a group. (Art. 38[b], LC)
In view of the above, Maryrose is guilty of large scale illegal recruitment. Her
defense of good faith and the affidavits of desistance as well as the refund given
will not save her because R.A. No. 8042 is a special law, and illegal recruitment
is malum prohibitum. (People v. Saulo, G.R. No. 125903, Nov. 15, 2000). (2005
Bar Question)

Q: How does one prove illegal recruitment?

A: It must be shown that the accused gave the distinct impression that he had
the power or ability to send complainants abroad for work such that the latter
were convinced to part with their money in order to be deployed.

E) ILLEGAL RECRUITMENT AS ECONOMIC SABOTAGE

(already discussed)

Q: When is illegal recruitment considered as economic sabotage?

A: When it is committed:

1. By a syndicate – carried out by 3 or more persons conspiring/confederating

with one another or
2. In large scale – committed against 3 or more persons individually or as a
group. (Sec. 6, 10022)

F) ILLEGAL RECRUITMENT V. ESTAFA

 38

Q: Distinguish Illegal Recruitment from Estafa

ILLEGAL RECRUITMENT ESTAFA

Malum prohibitum, thus: Malum in se, thus:
1. Criminal intent is NOT 1. criminal intent is necessary
necessary 2. crime which involves moral
2. it is a crime which involves turpitude
moral turpitude

It is not required that it be shown that Accused defrauded another by abuse

the recruiter wrongfully represented of confidence, or by means of deceit
himself as a licensed recruiter

NOTE: It is enough that the victims NOTE: It is essential that the false
were deceived as they relied on the statement or fraudulent representation
misrepresentation and scheme that constitutes the very cause or the only
caused them to entrust their money in motive which induces the complainant
exchange of what they later to part with the thing of value.
discovered was a vain hope of
obtaining employment abroad.
Illegal recruitment and estafa cases may be filed simultaneously or separately.
The filing of charges for illegal recruitment does not bar the filing of estafa, and
vice versa.
Double jeopardy will not set

Q: Sometime in the month of March 1997, in the City of Las Piñas, Bugo by
means of false pretenses and fraudulent representation convinced Dado to give
the amount of P 120,000.00 for processing of his papers so that he can be
deployed to Japan. Dado later on found out that Bugo had misappropriated,
misapplied and converted the money to her own personal use and benefit. Can
Dado file the cases of illegal recruitment and estafa simultaneously?
A: Yes, illegal recruitment and estafa cases may be filed simultaneously or
separately. The filing of charges for illegal recruitment does not bar the filing of
estafa, and vice versa. Bugo’s acquittal in the illegal recruitment case does not
prove that she is not guilty of estafa. Illegal recruitment and estafa are entirely
different offenses and neither one necessarily includes or is necessarily included
in the other. A person who is convicted of illegal recruitment may, in addition, be
convicted of estafa under Article 315, par. 2(a) of the RPC. In the same manner, a
person acquitted of illegal recruitment may be held liable for estafa. Double
jeopardy will not set in because illegal recruitment is malum prohibitum, in
which there is no necessity to prove criminal intent, whereas estafa is malum in
se, in the prosecution of which, proof of criminal intent is necessary. (Sy v.
People, G.R. No. 183879, April 14, 2010)

G) LIABILITIES
(i) LIABILITIES OF LOCAL RECRUITMENT AGENCY
 39

(SUPPLY2)

(ii) FOREIGN EMPLOYER

A) THEORY OF IMPUTED KNOWLEDGE

Q: What is the theory of imputed knowledge?

A: A rule in insurance law 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 so
far as the transaction is concerned, even though in fact the knowledge is not
communicated to the principal at all. (Leonor v. Filipinas Compania, 48 OG 243)

Q: Sunace International Management Services (Sunace), deployed to Taiwan

Montehermozo as a domestic helper under a 12‐month contract effective Feb. 1,
1997. The deployment was with the assistance of a Taiwanese broker, Edmund
Wang, President of Jet Crown International Co., Ltd. After her 12‐month contract
expired on Feb. 1, 1998, Montehermozo continued working for her Taiwanese
employer for two more years, after which she returned to the Philippines on Feb.
4, 2000. Shortly after her return she file before the NLRC against Sunace, one
Perez, the Taiwanese broker, and the employer‐foreign principal alleging that she
was jailed for three months and that she was underpaid. Should Sunace be held
liable for the underpayment for the additional two years that she worked for her
Taiwanese employer under the theory of imputed knowledge?
A: No, the theory of imputed knowledge ascribes the knowledge of the agent,
Sunace, to the principal Taiwanese employer, 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, it and its owner cannot be held solidarily liable for and of
Montehermozo’s claims arising from the 2‐year employment extension. (Sunace
v. NLRC, G.R. No. 161757, Jan. 25, 2006)

(iii) SOLIDARY LIABILITY

Q: What is the liability of the private employment agency and the

principal or foreign‐based employer?
A: They are jointly and severally liable for any violation of the recruitment
agreement and the contracts of employment.
Note: This joint and solidary liability imposed by law against recruitment
agencies and foreign Ers is meant to assure the aggrieved worker of immediate
and sufficient payment of what is due him. If the recruitment/placement agency
 40

is a juridical being, the corporate officers and directors and partners as the case
may be, shall themselves be jointly and solidarily liable with the corporation or
partnership for the claims and damages. (Becmen Service Exporter and
Promotion v. Cuaresma, G.R. Nos. 182978‐79, April 7, 2009)

Money Claims

SEC. 10. Money Claims. - Notwithstanding any provision of law to the

contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC)
shall have the original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after the filing of the complaint, the claims arising out
of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damage. Consistent with this mandate, the
NLRC shall endeavor to update and keep abreast with the developments in the
global services industry.

The liability of the principal/employer and the recruitment/placement agency

for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to de filed
by the recruitment/placement agency, as provided by law, shall be answerable
for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the aforesaid claims and
damages.

Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution, amendment
or modification made locally or in a foreign country of the said contract.

Any compromise/amicable settlement or voluntary agreement on money

claims inclusive of damages under this section shall be paid within thirty (30)
days from approval of the settlement by the appropriate authority. (R. A. 8042,
as amended by R. A. 10022)

H) PRE-TERMINATION OF CONTRACT OF MIGRANT WORKER

SERRANO V. GALLANT MARITIME SERVICES, INC.

March 24, 2009/Austria-Martinez, J.

EN BANC
 41

 Termination of Overseas Employment without Just, Valid or

Authorized cause

FACTS:

Antonio Serrano was hired by Gallant Maritime Services, Inc. and Marlow
Navigation Co., Ltd. (respondents) under a Philippine Overseas Employment
Administration (POEA)-approved Contract of Employment with the following
terms and conditions:

Duration of contract 12 months

Position Chief Officer
Basic monthly salary US$1,400.00
Hours of work 48.0 hours per week
Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month5

On March 19, 1998, the date of his departure, petitioner Serrano was
constrained to accept a downgraded employment contract for the position of
Second Officer with a monthly salary of US$1,000.00, upon the assurance and
representation of respondents that he would be made Chief Officer by the end of
April 1998.

Respondents did not deliver on their promise to make petitioner Chief Officer.
Hence, petitioner refused to stay on as Second Officer and was repatriated to the
Philippines on May 26, 1998.

Petitioner's employment contract was for a period of 12 months or from March

19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26,
1998, he had served only two (2) months and seven (7) days of his contract,
leaving an unexpired portion of nine (9) months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint against respondents
for constructive dismissal and for payment of his money claims.

The LA rendered a decision declaring the dismissal of petitioner illegal and

awarding him monetary benefits representing the complainant’s salary for
three (3) months of the unexpired portion of the aforesaid contract of
employment.

In awarding petitioner a lump-sum salary for 3 months, the LA based his

computation on the salary period of three months only -- rather than the entire
unexpired portion of nine months and 23 days of petitioner's employment
 42

contract. The Labor Arbiter based its ruling on the 5th paragraph of Section 10,
Republic Act (R.A.) No. 8042, to wit:

Sec. 10. Money Claims. - In case of termination of overseas

employment without just, valid or authorized cause as defined
by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve
percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.

Respondents appealed to the National Labor Relations Commission (NLRC) to

question the finding of the LA that petitioner was illegally dismissed. The NLRC
rendered a decision.

Petitioner Serrano filed a Motion for Partial Reconsideration before the NLRC,
but this time he questioned the constitutionality of the clause “or for three (3)
months for every year of the unexpired term, whichever is less”.

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th
paragraph of Section 10, Republic Act (R.A.) No. 8042, to wit:

Sec. 10. Money Claims. - In case of termination of overseas

employment without just, valid or authorized cause as defined
by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve
percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.

does not magnify the contributions of overseas Filipino workers (OFWs) to

national development, but exacerbates the hardships borne by them by unduly
limiting their entitlement in case of illegal dismissal to their lump-sum salary
either for the unexpired portion of their employment contract "or for three months
for every year of the unexpired term, whichever is less" (subject clause).
Petitioner claims that the last clause violates the OFWs' constitutional rights in
that it impairs the terms of their contract, deprives them of equal protection and
denies them due process.

The NLRC denied the motion.

 43

Petitioner Serrano filed a Petition for Certiorari with the CA, reiterating the
constitutional challenge against the subject clause.

ISSUES:

1. Did Serrano seasonably raise the issue of constitutionality of the 5th

paragraph of Section 10, Republic Act (R.A.) No. 8042 considering that it was
raised only in a partial reconsideration before the NLRC?

2. How would you compute the monetary benefits that must be awarded to
Serrano? State your basis.

HELD:

1. Yes. Although the issue of constitutionality was raised only in the motion
for partial reconsideration of Serrano before the NLRC, it was, nonetheless,
deemed seasonably raised because it is the Court of Appeals which has the
competence to resolve the constitutional issue and not such labor tribunal. The
foremost function of the NLRC is merely to administer and enforce R. A. No. 8042
and not to inquire into the validity of its provisions.

2. The law provides that in case of termination of overseas employment

without just, valid or authorized cause, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his employment contract.
Since Serrano, a seaman, was illegally dismissed he is entitled to that
reimbursement of his placement fee with the aforestated interest, plus his
salaries for the unexpired portion of his employment contract consisting of nine
months and 23 days computed at the rate of US$1,400.00 per month. The
decision of the Labor Arbiter awarding his salaries for only three months finds
no basis as the last clause of the 5th paragraph of Section 10 of Republic Act
(R.A.) No. 8042 is unconstitutional.

FURTHER DISCUSSIONS:

Judicial Review of the Acts of Co-Equals

When the Court is called upon to exercise its power of judicial review of the
acts of its co-equals, such as the Congress, it does so only when these conditions
obtain:
 44

(1) that there is an actual case or controversy involving a conflict of rights

susceptible of judicial determination;
(2) that the constitutional question is raised by a proper party and at the
earliest opportunity; and
(3) that the constitutional question is the very lis mota of the case.

Without a doubt, there exists in this case an actual controversy directly

involving petitioner who is personally aggrieved that the labor tribunals and the
CA computed his monetary award based on the salary period of three months
only as provided under the subject clause.

The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity
entails the interposition of the issue in the pleadings before a competent court,
such that, if the issue is not raised in the pleadings before that competent court,
it cannot be considered at the trial and, if not considered in the trial, it cannot be
considered on appeal. Records disclose that the issue on the constitutionality of
the subject clause was first raised, not in petitioner's appeal with the NLRC, but
in his Motion for Partial Reconsideration with said labor tribunal, and reiterated
in his Petition for Certiorari before the CA. Nonetheless, the issue is deemed
seasonably raised because it is not the NLRC but the CA which has the
competence to resolve the constitutional issue. The NLRC is a labor tribunal that
merely performs a quasi-judicial function – its function in the present case is
limited to determining questions of fact to which the legislative policy of R.A. No.
8042 is to be applied and to resolving such questions in accordance with the
standards laid down by the law itself; thus, its foremost function is to administer
and enforce R.A. No. 8042, and not to inquire into the validity of its provisions.
The CA, on the other hand, is vested with the power of judicial review or the
power to declare unconstitutional a law or a provision thereof, such as the
subject clause. Petitioner's interposition of the constitutional issue before the CA
was undoubtedly seasonable. The CA was therefore remiss in failing to take up
the issue in its decision.

The third condition that the constitutional issue be critical to the resolution of
the case likewise obtains because the monetary claim of petitioner to his lump-
sum salary for the entire unexpired portion of his 12-month employment contract,
and not just for a period of three months, strikes at the very core of the subject
clause.

Thus, the stage is all set for the determination of the constitutionality of the
subject clause.
 45

Does the subject clause violate Section 10, Article III of the Constitution
on non-impairment of contracts?

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the
stipulations in his contract on the term of his employment and the fixed salary
package he will receive is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted
have only a prospective operation, and cannot affect acts or contracts already
perfected; however, as to laws already in existence, their provisions are read
into contracts and deemed a part thereof. Thus, the non-impairment clause
under Section 10, Article II is limited in application to laws about to be enacted
that would in any way derogate from existing acts or contracts by enlarging,
abridging or in any manner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995
preceded the execution of the employment contract between petitioner and
respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly
the subject clause, impaired the employment contract of the parties. Rather,
when the parties executed their 1998 employment contract, they were deemed to
have incorporated into it all the provisions of R.A. No. 8042.

But even if the Court were to disregard the timeline, the subject clause may
not be declared unconstitutional on the ground that it impinges on the
impairment clause, for the law was enacted in the exercise of the police power of
the State to regulate a business, profession or calling, particularly the
recruitment and deployment of OFWs, with the noble end in view of ensuring
respect for the dignity and well-being of OFWs wherever they may be employed.
Police power legislations adopted by the State to promote the health, morals,
peace, education, good order, safety, and general welfare of the people are
generally applicable not only to future contracts but even to those already in
existence, for all private contracts must yield to the superior and legitimate
measures taken by the State to promote public welfare.
 46

Does the subject clause violate Section 1, Article III of the Constitution,
and Section 18, Article II and Section 3, Article XIII on labor as a
protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property

without due process of law nor shall any person be denied the
equal protection of the law.

Section 18, Article II and Section 3, Article XIII accord all members of the labor
sector, without distinction as to place of deployment, full protection of their rights
and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional

provisions translate to economic security and parity: all monetary benefits
should be equally enjoyed by workers of similar category, while all monetary
obligations should be borne by them in equal degree; none should be denied the
protection of the laws which is enjoyed by, or spared the burden imposed on,
others in like circumstances.

Such rights are not absolute but subject to the inherent power of Congress to
incorporate a system of classification into its legislation; however, to be valid, the
classification must comply with these requirements:

1) it is based on substantial distinctions;

2) it is germane to the purposes of the law;

3) it is not limited to existing conditions only; and

4) it applies equally to all members of the class.

There are three levels of scrutiny at which the Court reviews the
constitutionality of a classification embodied in a law:

a) the deferential or rational basis scrutiny in which the challenged classification

needs only be shown to be rationally related to serving a legitimate state
interest;
 47

b) the middle-tier or intermediate scrutiny in which the government must show

that the challenged classification serves an important state interest and that the
classification is at least substantially related to serving that interest; and

c) strict judicial scrutiny in which a legislative classification which impermissibly

interferes with the exercise of a fundamental right or operates to the peculiar
disadvantage of a suspect class is presumed unconstitutional, and the burden is
upon the government to prove that the classification is necessary to achieve a
compelling state interest and that it is the least restrictive means to protect
such interest.

Under American jurisprudence, strict judicial scrutiny is triggered by suspect

classifications based on race or gender but not when the classification is drawn
along income categories.

It is different in the Philippine setting. In Central Bank (now Bangko Sentral

ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, the
constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas
(BSP), a government financial institution (GFI), was challenged for maintaining its
rank-and-file employees under the Salary Standardization Law (SSL), even when
the rank-and-file employees of other GFIs had been exempted from the SSL by
their respective charters. Finding that the disputed provision contained a suspect
classification based on salary grade, the Court deliberately employed the
standard of strict judicial scrutiny in its review of the constitutionality of said
provision. More significantly, it was in this case that the Court revealed the
broad outlines of its judicial philosophy, to wit:

Congress retains its wide discretion in providing for a valid

classification, and its policies should be accorded recognition
and respect by the courts of justice except when they run afoul
of the Constitution. The deference stops where the
classification violates a fundamental right, or prejudices
persons accorded special protection by the Constitution.
When these violations arise, this Court must discharge its
primary role as the vanguard of constitutional guaranties, and
require a stricter and more exacting adherence to constitutional
limitations. Rational basis should not suffice.

Our present Constitution has gone further in guaranteeing

vital social and economic rights to marginalized groups of
society, including labor. Under the policy of social justice, the
law bends over backward to accommodate the interests of the
 48

working class on the humane justification that those with less

privilege in life should have more in law. And the obligation to
afford protection to labor is incumbent not only on the
legislative and executive branches but also on the judiciary to
translate this pledge into a living reality. Social justice calls for
the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated.

Under most circumstances, the Court will exercise judicial

restraint in deciding questions of constitutionality, recognizing
the broad discretion given to Congress in exercising its
legislative power. Judicial scrutiny would be based on the
"rational basis" test, and the legislative discretion would be
given deferential treatment.

But if the challenge to the statute is premised on the denial

of a fundamental right, or the perpetuation of prejudice
against persons favored by the Constitution with special
protection, judicial scrutiny ought to be more strict. A
weak and watered down view would call for the abdication of
this Court’s solemn duty to strike down any law repugnant to
the Constitution and the rights it enshrines. This is true
whether the actor committing the unconstitutional act is a
private person or the government itself or one of its
instrumentalities. Oppressive acts will be struck down
regardless of the character or nature of the actor.

In the case at bar, the challenged proviso operates on the

basis of the salary grade or officer-employee status. It is akin
to a distinction based on economic class and status, with the
higher grades as recipients of a benefit specifically withheld
from the lower grades. Officers of the BSP now receive higher
compensation packages that are competitive with the industry,
while the poorer, low-salaried employees are limited to the
rates prescribed by the SSL. The implications are quite
disturbing: BSP rank-and-file employees are paid the strictly
regimented rates of the SSL while employees higher in rank -
possessing higher and better education and opportunities for
career advancement - are given higher compensation packages
to entice them to stay. Considering that majority, if not all, the
 49

rank-and-file employees consist of people whose status and

rank in life are less and limited, especially in terms of job
marketability, it is they - and not the officers - who have the
real economic and financial need for the adjustment. This is in
accord with the policy of the Constitution "to free the people
from poverty, provide adequate social services, extend to them
a decent standard of living, and improve the quality of life for
all." Any act of Congress that runs counter to this constitutional
desideratum deserves strict scrutiny by this Court before it can
pass muster.

Imbued with the same sense of "obligation to afford protection to labor," the
Court in the present case also employs the standard of strict judicial scrutiny, for
it perceives in the subject clause a suspect classification prejudicial to OFWs.

Upon cursory reading, the subject clause appears facially neutral, for it
applies to all OFWs. However, a closer examination reveals that the subject
clause has a discriminatory intent against, and an invidious impact on, OFWs at
two levels:

First, OFWs with employment contracts of less than one year

vis-à-vis OFWs with employment contracts of one year or more;

Second, among OFWs with employment contracts of more than

one year; and

Third, OFWs vis-à-vis local workers with fixed-period

employment;

OFWs with employment contracts of less than one year vis-à-vis OFWs
with employment contracts of one year or more

In Marsaman, the OFW involved was illegally dismissed two months into his
10-month contract, but was awarded his salaries for the remaining 8 months
and 6 days of his contract.

The Marsaman interpretation of Section 10(5) has since been adopted in the
following cases:

Case Title Contract Period of Unexpired Period Applied

Period Service Period in the
Computation of
 50

the Monetary
Award
Skippers v. 6 months 2 months 4 months 4 months
Maguad
Centennial 9 months 4 months 5 months 5 months
Transmarine
v. dela Cruz
Talidano v. 12 months 3 months 9 months 3 months
Falcon
Univan v. CA 12 months 3 months 9 months 3 months
Oriental v. CA 12 months more than 2 10 months 3 months
months
PCL v. NLRC 12 months more than 2 more or less 9 3 months
months months
Olarte v. 12 months 21 days 11 months and 3 months
Nayona 9 days
JSS v.Ferrer 12 months 16 days 11 months and 3 months
24 days
Pentagon v. 12 months 9 months 2 months and 2 months and 23
Adelantar and 7 days 23 days days
Phil. Employ 12 months 10 months 2 months Unexpired
v. Paramio, et portion
al.
Flourish 2 years 26 days 23 months and 6 months or 3
Maritime v. 4 days months for each
Almanzor year of contract
Athenna 1 year, 10 1 month 1 year, 9 6 months or 3
Manpower v. months months and 28 months for each
Villanos and 28 days year of contract
days

As the foregoing matrix readily shows, the subject clause classifies OFWs into
two categories. The first category includes OFWs with fixed-period employment
contracts of less than one year; in case of illegal dismissal, they are entitled to
their salaries for the entire unexpired portion of their contract. The second
category consists of OFWs with fixed-period employment contracts of one year or
more; in case of illegal dismissal, they are entitled to monetary award equivalent
to only 3 months of the unexpired portion of their contracts.

The disparity in the treatment of these two groups cannot be discounted. In

Skippers, the respondent OFW worked for only 2 months out of his 6-month
contract, but was awarded his salaries for the remaining 4 months. In contrast,
the respondent OFWs in Oriental and PCL who had also worked for about 2
months out of their 12-month contracts were awarded their salaries for only 3
months of the unexpired portion of their contracts. Even the OFWs involved in
 51

Talidano and Univan who hadworked for a longer period of 3 months out of their
12-month contracts before being illegally dismissed were awarded their salaries
for only 3 months.

To illustrate the disparity even more vividly, the Court assumes a

hypothetical OFW-A with an employment contract of 10 months at a monthly
salary rate of US$1,000.00 and a hypothetical OFW-B with an employment
contract of 15 months with the same monthly salary rate of US$1,000.00. Both
commenced work on the same day and under the same employer, and were
illegally dismissed after one month of work. Under the subject clause, OFW-A
will be entitled to US$9,000.00, equivalent to his salaries for the remaining 9
months of his contract, whereas OFW-B will be entitled to only US$3,000.00,
equivalent to his salaries for 3 months of the unexpired portion of his contract,
instead of US$14,000.00 for the unexpired portion of 14 months of his contract,
as the US$3,000.00 is the lesser amount.

The disparity becomes more aggravating when the Court takes into account
jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14,
1995, illegally dismissed OFWs, no matter how long the period of their
employment contracts, were entitled to their salaries for the entire unexpired
portions of their contracts. The matrix below speaks for itself:

Case Title Contract Period of Unexpired Period Applied in

Period Service Period the Computation
of the Monetary
Award
ATCI v. CA, et 2 years 2 months 22 months 22 months
al.
Phil. 2 years 7 days 23 months 23 months and 23
Integrated v. and 23 days days
NLRC
JGB v. NLC 2 years 9 months 15 months 15 months
Agoy v. NLRC 2 years 2 months 22 months 22 months
EDI v. NLRC, 2 years 5 months 19 months 19 months
et al.102
Barros v. 12 months 4 months 8 months 8 months
NLRC, et
al.103
Philippine 12 months 6 months 5 months 5 months and 18
Transmarine and 22 and 18 days days
v. Carilla104 days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods
or the unexpired portions thereof, were treated alike in terms of the computation
 52

of their monetary benefits in case of illegal dismissal. Their claims were

subjected to a uniform rule of computation: their basic salaries multiplied by the
entire unexpired portion of their employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a

differentiated rule of computation of the money claims of illegally dismissed
OFWs based on their employment periods, in the process singling out one
category whose contracts have an unexpired portion of one year or more and
subjecting them to the peculiar disadvantage of having their monetary awards
limited to their salaries for 3 months or for the unexpired portion thereof,
whichever is less, but all the while sparing the other category from such
prejudice, simply because the latter's unexpired contracts fall short of one year.

Among OFWs With Employment Contracts of More Than One Year

Upon closer examination of the terminology employed in the subject clause,

the Court now has misgivings (syn.: doubts, uncertainties) on the accuracy of the
Marsaman interpretation.

The Court notes that the subject clause "or for three (3) months for every year
of the unexpired term, whichever is less" contains the qualifying phrases "every
year" and "unexpired term." By its ordinary meaning, the word "term" means a
limited or definite extent of time. Corollarily, that "every year" is but part of an
"unexpired term" is significant in many ways: first, the unexpired term must be
at least one year, for if it were any shorter, there would be no occasion for such
unexpired term to be measured by every year; and second, the original term
must be more than one year, for otherwise, whatever would be the unexpired
term thereof will not reach even a year. Consequently, the more decisive factor in
the determination of when the subject clause "for three (3) months for every year
of the unexpired term, whichever is less" shall apply is not the length of the
original contract period as held in Marsaman, but the length of the unexpired
portion of the contract period -- the subject clause applies in cases when the
unexpired portion of the contract period is at least one year, which arithmetically
requires that the original contract period be more than one year.

Viewed in that light, the subject clause creates a sub-layer of discrimination

among OFWs whose contract periods are for more than one year: those who are
illegally dismissed with less than one year left in their contracts shall be entitled
to their salaries for the entire unexpired portion thereof, while those who are
illegally dismissed with one year or more remaining in their contracts shall be
covered by the subject clause, and their monetary benefits limited to their
salaries for three months only.
 53

To concretely illustrate the application of the foregoing interpretation of the

subject clause, the Court assumes hypothetical OFW-C and OFW-D, who each
have a 24-month contract at a salary rate of US$1,000.00 per month. OFW-C is
illegally dismissed on the 12th month, and OFW-D, on the 13th month.
Considering that there is at least 12 months remaining in the contract period of
OFW-C, the subject clause applies to the computation of the latter's monetary
benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total
salaries for the 12 months unexpired portion of the contract, but to the lesser
amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month
unexpired term of the contract. On the other hand, OFW-D is spared from the
effects of the subject clause, for there are only 11 months left in the latter's
contract period. Thus, OFW-D will be entitled to US$11,000.00, which is
equivalent to his/her total salaries for the entire 11-month unexpired portion.

OFWs vis-à-vis Local Workers With Fixed-Period Employment

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term
employment who were illegally discharged were treated alike in terms of the
computation of their money claims: they were uniformly entitled to their salaries
for the entire unexpired portions of their contracts. But with the enactment of
R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed
OFWs with an unexpired portion of one year or more in their employment
contract have since been differently treated in that their money claims are
subject to a 3-month cap, whereas no such limitation is imposed on local workers
with fixed-term employment.

The Court concludes that the subject clause contains a suspect classification
in that, in the computation of the monetary benefits of fixed-term employees who
are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an
unexpired portion of one year or more in their contracts, but none on the claims of
other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar
disadvantage.

There being a suspect classification involving a vulnerable sector protected by

the Constitution, the Court now subjects the classification to a strict judicial
scrutiny, and determines whether it serves a compelling state interest through
the least restrictive means.

What constitutes compelling state interest is measured by the scale of rights

and powers arrayed in the Constitution and calibrated by history. It is akin to
the paramount interest of the state for which some individual liberties must give
 54

way, such as the public interest in safeguarding health or maintaining medical

standards, or in maintaining access to information on matters of public concern.

In the present case, the Court dug deep into the records but found no
compelling state interest that the subject clause may possibly serve.

The OSG defends the subject clause as a police power measure "designed to
protect the employment of Filipino seafarers overseas. By limiting the liability to
three months, Filipino seafarers have better chance of getting hired by foreign
employers." The limitation also protects the interest of local placement agencies,
which otherwise may be made to shoulder millions of pesos in "termination pay."

The OSG explained further:

Often, placement agencies, their liability being solidary,

shoulder the payment of money claims in the event that
jurisdiction over the foreign employer is not acquired by the
court or if the foreign employer reneges on its obligation. Hence,
placement agencies that are in good faith and which fulfill their
obligations are unnecessarily penalized for the acts of the
foreign employer. To protect them and to promote their
continued helpful contribution in deploying Filipino migrant
workers, liability for money are reduced under Section 10 of RA
8042.

This measure redounds to the benefit of the migrant

workers whose welfare the government seeks to promote. The
survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and
are employed under decent and humane conditions.

However, nowhere in the Comment or Memorandum does the OSG cite the
source of its perception of the state interest sought to be served by the subject
clause.

In fine, the Government has failed to discharge its burden of proving the
existence of a compelling state interest that would justify the perpetuation of the
discrimination against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose of the subject clause is
to protect the employment of OFWs by mitigating the solidary liability of
placement agencies, such callous and cavalier rationale will have to be rejected.
 55

There can never be a justification for any form of government action that
alleviates the burden of one sector, but imposes the same burden on another
sector, especially when the favored sector is composed of private businesses
such as placement agencies, while the disadvantaged sector is composed of
OFWs whose protection no less than the Constitution commands. The idea that
private business interest can be elevated to the level of a compelling state
interest is odious (syn.: horrible).

Moreover, even if the purpose of the subject clause is to lessen the solidary
liability of placement agencies vis-a-vis their foreign principals, there are
mechanisms already in place that can be employed to achieve that purpose
without infringing on the constitutional rights of OFWs.

The POEA Rules and Regulations Governing the Recruitment and Employment
of Land-Based Overseas Workers, dated February 4, 2002, imposes
administrative disciplinary measures on erring foreign employers who default on
their contractual obligations to migrant workers and/or their Philippine agents.
These disciplinary measures range from temporary disqualification to preventive
suspension. The POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers, dated May 23, 2003, contains similar administrative
disciplinary measures against erring foreign employers.

Resort to these administrative measures is undoubtedly the less restrictive

means of aiding local placement agencies in enforcing the solidary liability of
their foreign principals.

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042
is violative of the right of petitioner and other OFWs to equal protection.

Further, there would be certain misgivings if one is to approach the

declaration of the unconstitutionality of the subject clause from the lone
perspective that the clause directly violates state policy on labor under Section 3,
Article XIII of the Constitution.

While all the provisions of the 1987 Constitution are presumed self-executing,
there are some which this Court has declared not judicially enforceable,
Article XIII being one, particularly Section 3 thereof, the nature of which, this
Court, in Agabon v. National Labor Relations Commission, has described to be
not self-actuating:

Art. XIII, Section 3. The State shall afford full protection to

labor, local and overseas, organized and unorganized, and
 56

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.

Thus, the constitutional mandates of protection to labor and

security of tenure may be deemed as self-executing in the
sense that these are automatically acknowledged and
observed without need for any enabling legislation. However,
to declare that the constitutional provisions are enough to
guarantee the full exercise of the rights embodied therein, and
the realization of ideals therein expressed, would be
impractical, if not unrealistic. The espousal of such view
presents the dangerous tendency of being overbroad and
exaggerated. The guarantees of "full protection to labor" and
"security of tenure", when examined in isolation, are facially
unqualified, and the broadest interpretation possible suggests
a blanket shield in favor of labor against any form of removal
regardless of circumstance. This interpretation implies an
unimpeachable right to continued employment a utopian notion,
doubtless but still hardly within the contemplation of the
framers. Subsequent legislation is still needed to define the
parameters of these guaranteed rights to ensure the protection
and promotion, not only the rights of the labor sector, but of the
 57

employers' as well. Without specific and pertinent legislation,

judicial bodies will be at a loss, formulating their own
conclusion to approximate at least the aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on

its own, be a source of a positive enforceable right to
stave off the dismissal of an employee for just cause owing to
the failure to serve proper notice or hearing. As manifested by
several framers of the 1987 Constitution, the provisions on
social justice require legislative enactments for their
enforceability.

Thus, Section 3, Article XIII cannot be treated as a principal source of direct

enforceable rights, for the violation of which the questioned clause may be
declared unconstitutional. It may unwittingly risk opening the floodgates of
litigation to every worker or union over every conceivable violation of so broad a
concept as social justice for labor.

It must be stressed that Section 3, Article XIII does not directly bestow on the
working class any actual enforceable right, but merely clothes it with the status
of a sector for whom the Constitution urges protection through executive or
legislative action and judicial recognition. Its utility is best limited to being an
impetus (syn.: force, drive) not just for the executive and legislative departments,
but for the judiciary as well, to protect the welfare of the working class. And it
was in fact consistent with that constitutional agenda that the Court in Central
Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko
Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice
Reynato S. Puno, formulated the judicial precept that when the challenge to a
statute is premised on the perpetuation of prejudice against persons favored by
the Constitution with special protection -- such as the working class or a section
thereof -- the Court may recognize the existence of a suspect classification and
subject the same to strict judicial scrutiny.

The view that the concepts of suspect classification and strict judicial scrutiny
formulated in Central Bank Employee Association exaggerate the significance of
Section 3, Article XIII is a groundless apprehension. Central Bank applied Article
XIII in conjunction with the equal protection clause. Article XIII, by itself, without
the application of the equal protection clause, has no life or force of its own as
elucidated in Agabon.

Along the same line of reasoning, the Court further holds that the subject
clause violates petitioner's right to substantive due process, for it deprives him of
 58

property, consisting of monetary benefits, without any existing valid

governmental purpose.

The argument of the Solicitor General, that the actual purpose of the subject
clause of limiting the entitlement of OFWs to their three-month salary in case of
illegal dismissal, is to give them a better chance of getting hired by foreign
employers. This is plain speculation. As earlier discussed, there is nothing in the
text of the law or the records of the deliberations leading to its enactment or the
pleadings of respondent that would indicate that there is an existing
governmental purpose for the subject clause, or even just a pretext of one.

The subject clause does not state or imply any definitive governmental
purpose; and it is for that precise reason that the clause violates not just
petitioner's right to equal protection, but also her right to substantive due process
under Section 1, Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries

for the entire unexpired period of nine months and 23 days of his employment
contract, pursuant to law and jurisprudence prior to the enactment of R.A. No.
8042.

Petitioner contends that his overtime and leave pay should form part of
the salary basis in the computation of his monetary award, because
these are fixed benefits that have been stipulated into his contract.

Petitioner is mistaken.

The word salaries in Section 10(5) does not include overtime and leave pay.
For seafarers like petitioner, DOLE Department Order No. 33, series 1996,
provides a Standard Employment Contract of Seafarers, in which salary is
understood as the basic wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for all work "performed" in
excess of the regular eight hours, and holiday pay is compensation for any work
"performed" on designated rest days and holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion
of overtime and holiday pay in the computation of petitioner's monetary award,
unless there is evidence that he performed work during those periods.

The rendition of overtime work and the submission of sufficient proof that
said was actually performed are conditions to be satisfied before a seaman
could be entitled to overtime pay which should be computed on the basis of 30%
 59

of the basic monthly salary. In short, the contract provision guarantees the right
to overtime pay but the entitlement to such benefit must first be established.

In the same vein, the claim for the day's leave pay for the unexpired portion of
the contract is unwarranted since the same is given during the actual service of
the seamen.

WHEREFORE, the Court GRANTS the Petition. The subject clause "or for
three months for every year of the unexpired term, whichever is less" in the 5th
paragraph of Section 10 of Republic Act No. 8042 is
DECLAREDUNCONSTITUTIONAL. The petitioner is hereby AWARDED his
salaries for the entire unexpired portion of his employment contract consisting of
nine months and 23 days computed at the rate of US$1,400.00 per month.

2. DIRECT HIRING

Article 18. Ban on direct-hiring. No employer may hire a Filipino worker for
overseas employment except through the Boards and entities authorized by the
Department of Labor and Employment. Direct-hiring by members of the
diplomatic corps, international organizations and such other employers as may
be allowed by the Department of Labor and Employment is exempted from this
provision.

Q: What is Direct‐hiring?
A: It is when an employer hires a Filipino worker for overseas employment
without going through the POEA or entities authorized by the Secretary of Labor.

Q: What is the ban on direct‐hiring?

A: GR: An Er may only hire Filipino worker for overseas employment through
POEA or entities authorized by DOLE.

Exception: Direct hiring by

1. members of the diplomatic corps,

2. members of the diplomatic organizations
3. international organizations and
4. such other employers as may be allowed by the Department of Labor and
Employment
5. also excepted are “name hirees” or those individual workers who are able to
secure contracts for overseas employment on their own efforts and
 60

representation without the assistance or participation of any agency. Their

hiring, nonetheless, has to be processed through the POEA.

Q: Why is direct‐hiring prohibited?

A:

1. To ensure the best possible terms and conditions of employment for the
worker.
2. To assure the foreign Er that he hires only qualified Filipino workers.
3. To ensure full regulation of employment in order to avoid exploitation.

B. REGULATION AND ENFORCEMENT

1. SUSPENSION OR CANCELLATION
OF LICENSE OR AUTHORITY (ART. 35, LABOR CODE)

Article 35. Suspension and/or cancellation of license or authority. The

Minister of Labor shall have the power to suspend or cancel any license or
authority to recruit employees for overseas employment for violation of rules and
regulations issued by the Ministry of Labor, the Overseas Employment
Development Board, or for violation of the provisions of this and other applicable
laws, General Orders and Letters of Instructions.

Q: What are the grounds for revocation of license?

A:

1. Incurring an accumulated 3 counts of suspension by an agency based on

final and executory orders within the period of validity of its license
2. Violations of the conditions of license
3. Engaging in acts of misrepresentation for the purpose of securing a license or
renewal
4. Engaging in the recruitment or placement of workers to jobs harmful to the
public health or morality or to the dignity of the country. (Sec. 3, Rule I, Book
VI, Rules and Regulations Governing Overseas Employment)

Q: What are the grounds for suspension or cancellation of license?

A:

1. Publishing job announcements w/o POEA’s approval

2. Charging a fee which may be in excess of the authorized amount before a
worker is employed
3. Deploying workers w/o processing through POEA
4. Recruitment in places outside its authorized area. (Sec. 4, Rule II, Book IV,
POEA Rules)
 61

5. Conviction of –
a) simple illegal recruitment;
b) illegal recruitment which is considered as an offense involving
economic sabotage; or
c) other prohibited acts laid down under Sec. 6, of R. A. 8042, as
amended by R. A. 10022. They are:
a) Grant a loan to an overseas Filipino worker with interest
exceeding eight percent (8%) per annum, which will be
used for payment of legal and allowable placement fees
and make the migrant worker issue, either personally or
through a guarantor or accommodation party, postdated
checks in relation to the said loan;
b) 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;
c) 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;
d) Impose a compulsory and exclusive arrangement whereby
an overseas Filipino worker is required to undergo health
examinations only from specifically designated medical
clinics, institutions, entities or persons, except in the case
of a seafarer whose medical examination cost is
shouldered by the principal/shipowner;
e) Impose a compulsory and exclusive arrangement whereby
an overseas Filipino worker is required to undergo training,
seminar, instruction or schooling of any kind only from
specifically designated institutions, entities or persons,
except recommendatory trainings mandated by
principals/shipowners where the latter shoulder the cost
of such trainings;
f) For a suspended recruitment/manning agency to engage
in any kind of recruitment activity including the processing
of pending workers' applications; and
g) 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.

2. REGULATORY AND VISITORIAL POWERS

OF THE DOLE SECRETARY
 62

Q: What are the regulatory powers of the Secretary of Labor and

Employment (SLE)?
A:

1. Restrict and regulate the recruitment and placement activities of all agencies
2. Issue orders and promulgate rules and regulations

Q: What constitute visitorial power?

A:

1. Access to employer’s records and premises at any time of the day or night,
whenever work is being undertaken
2. To copy from said records
3. 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
regulation issued pursuant thereto.

Q: Give 4 instances where the visitorial power of the SLE may be

exercised under the Labor Code.
A: Power to:

1. Inspect books of accounts and records of any person or entity engaged in

recruitment and placement, require it to submit reports regularly on
prescribed forms and act in violations of any provisions of the LC on
recruitment and placement. (Art. 37)
2. Have access to employer’s records and premises to determine violations of
any provisions of the LC on recruitment and placement. (Art. 128)
3. Conduct industrial safety inspections of establishments. (Art. 165)
4. Inquire into the financial activities of legitimate labor organizations (LLO) and
examine their books of accounts upon the filing of the complaint under oath
and duly supported by the written consent of at least 20% of the total
membership of the LO concerned.

Q: Can SLE issue search warrants or warrants of arrest?

A: No. Only a judge may issue search and arrest warrants. Art 38 (c) of the
Labor Code is unconstitutional inasmuch as it gives the SLE the power to issue
search or arrest warrants. The labor authorities must go through the judicial
process.

3. REMITTANCE OF FOREIGN EXCHANGE EARNINGS

Q: What is the rule on remittance of foreign exchange earnings?

 63

A: GR: It shall be mandatory for all OFWs to remit a portion of their foreign
exchange earnings to their families, dependents, and/or beneficiaries ranging
from 50% ‐ 80% depending on the worker’s kind of job. (Rule VIII, Book III, POEA
Rules)
XPN:
1. The worker’s immediate family members, beneficiaries and dependents are
residing with him abroad
2. Immigrants and Filipino professionals and employees working with the UN
agencies or specialized bodies
3. Filipino servicemen working in U.S. military installations. (Resolution No. 1‐
83, Inter‐Agency Committee for Implementation of E.O. 857)

Q: What is the effect of failure to remit?

A:

1. Workers – Shall be suspended or removed from the list of eligible workers

for overseas employment.

2. Employers – Will be excluded from the overseas employment program.

Private employment agencies shall face cancellation or revocation of their
licenses or authority to recruit. (Sec. 9, E.O. 857)

4. PROHIBITED ACTIVITIES

Q: What are prohibited practices in recruitment/placement (Art. 34.)?

A:

1. Furnishing or publishing any false notice/information/document related to

recruitment/employment
2. Failure to file reports required by SLE
3. Inducing or attempting 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
4. Recruitment/placement of workers in jobs harmful to public health or morality
or to the dignity of the country
5. Engaging directly or indirectly in the management of a travel agency
6. Substituting or altering employment contracts without approval of DOLE
7. Charging or accepting any amount greater than that specified by DOLE or
make a worker pay any amount greater than actually received by him
8. Committing any act of misrepresentation to secure a license or authority
9. Influencing or attempting to influence any person/entity not to employ any
worker who has not applied of employment through his agency
10. Obstructing or attempting to obstruct inspection by SLE or by his
representatives
 64

11. Withholding or denying travel documents from applicant workers before

departure for monetary considerations other than authorized by law
12. Granting a loan to an OFW which will be used for payment of legal and
allowable placement fees
13. Refusing to condone or renegotiate a loan incurred by an OFW after his
employment contract has been prematurely terminated through no fault of his
or her own
14. For a suspended recruitment/manning agency to engage in any kind of
recruitment activity including the processing of pending workers' applications;
and
15. For a recruitment/manning agency or a foreign principal/ Er to pass on the
OFW 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
16. Imposing a compulsory and exclusive arrangement whereby an OFW is
required to:
a. Avail a loan only from specifically designated institutions, entities or
persons
b. To undergo health examinations only from specifically designated
medical, entities or persons, except seafarers whose medical
examination cost is shouldered by the shipowner
c. To undergo training of any kind only from designated institutions,
entities or persons, except for recommendatory trainings mandated
by principals/shipowners. (Sec. 6, R.A. 10022)
c. Regulatory and Visitorial Powers of the Labor Secretary

Examinee’s Note: The following presentations are not expressly included in the
syllabus. They are provided below for reading purposes only. They begin and
end with this symbol: *********************

*****************************

Q: What are the remedies under the Migrant Workers Act and how may
they be enforced?
A:

CRIMINAL ACTIONS
RTC
Province or city:
1. Where the offense was committed or

1. Where the offended party actually resides at the same time of the
commission of the offense

MONEY CLAIMS
NLRC
 65

Original and exclusive jurisdiction to hear and decide claims arising out of an
Er‐Ee 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.
1. The liability of the principal/ Er and the recruitment/ placement agency
for any and all claims shall be joint and several.
2. The performance bond to de filed by the recruitment/ placement agency
shall be answerable for all money claims or damages that may be awarded to
the workers.
3. If the recruitment/placement agency is a juridical being, the corporate
officers and directors and partners as the case may be, shall themselves be
jointly and solidarily liable with the corporation or partnership for the claims
and damages.

ADMINISTRATIVE ACTIONS
Original and exclusive jurisdiction to hear and decide:
1. All cases which are administrative in character, involving or arising out
of violations of rules and regulations relating to licensing and registration of
recruitment and employment agencies or entities and
2. Disciplinary action (DA) cases and other special cases which are
administrative in character, involving Ers, principals, contracting partners and
Filipino migrant workers.
3. a. It may be filed with the POEA Adjudication Office or the DOLE/POEA
regional office of the place where the complaint applied or was recruited at the
option of the complainant. The office with which the complaint was first filed
shall take cognizance of the case.
4. b. DA cases and other special cases, as mentioned in the preceding
Section, shall be filed with POEA Adjudication Office.

PERIODS
Mandatory Period for Resolution of Illegal Recruitment Cases
The preliminary investigations (PI) of cases under R.A. 10022 shall be
terminated within a period of 30 calendar days from the date of their filing.
If the PI is conducted by a If the PI is conducted by a judge
prosecution officer and a prima and a prima facie case is found to
facie case is established exist
Information shall be filed in court Prosecution officer within 48 hours
within 24 hours from the termination from the date of receipt of the records
of the investigation of the case. (Sec. 11)
Prescriptive Period for Illegal Recruitment Cases
Simple Illegal Recruitment Economic Sabotage
Within 5 yrs from the time illegal Within 20 yrs from the time illegal
recruitment has happened recruitment has happened. (Sec.
12,R.A. 8042)

Q: Is compromise agreement on money claims allowed?

 66

A: Yes. Consistent with the policy encouraging amicable settlement of labor

disputes, Sec. 10 of R.A. 8042 allows resolution by compromise of cases filed
with the NLRC.

Q: When shall compromise agreements on money claims be paid?

A: Any compromise/amicable settlement or voluntary agreement on money
claims inclusive of damages shall be paid within 4 months from the approval of
the settlement by the appropriate authority.

Do OT and leave pay form part of the salary basis in the computation of
the monetary award?
A: No. The word “salaries” in Sec. 10(5) does not include overtime and leave pay.
For seafarers, DOLE Department Order No. 33, series 1996, provides a Standard
Employment Contract of Seafarers, in which salary is understood as the basic
wage, exclusive of OT, leave pay and other bonuses; whereas OT pay is
compensation for all work “performed” in excess of the regular 8 hours, and
holiday pay is compensation for any work “performed” on designated rest days
and holidays.
(Serrano v. Gallant Maritime Services & Marlow Navigation Co., Inc., G.R. No.
167614, Mar. 24, 2009)

OTHER RELATED TOPICS

Philippine Overseas Employment Administration

Q: What are the principal functions of the POEA?

A:

1. Protection of the right of Filipino workers to fair and equitable employment

practices
2. Regulation of private sector participation in the recruitment and overseas
placement of workers by setting up a licensing and registration system
3. Deployment of Filipino workers through gov’t to gov’t hiring
4. Formulation, implementation, and monitoring of overseas employment of
Filipino workers taking into consideration their welfare and domestic
manpower requirements
5. Shall inform migrant workers not only of their rights as workers but also of
their rights as human beings, instruct and guide the workers how to assert
their rights and provide the available mechanism to redress violation of their
rights. (Sec. 14, R.A. 10022)
6. Implementation, in partnership with other law‐enforcement agencies, of an
intensified program against illegal recruitment activities. (Sec. 14, R.A. 10022)

Q: May the POEA, at any time terminate or impose a ban on employment

of migrant workers?
A: Yes, in consultation with the DFA based on the ff. grounds:
 67

1. In pursuit of the National Interest or

2. When public welfare so requires. (Sec. 4 R.A. 10022)

Q: What are the minimum conditions/ provisions of overseas employment

contracts?
A:

1. Guaranteed wages for regular hours and overtime, not lower than the
minimum wage prescribed in all of the ff:

a. The host country

b. Bilateral agreements or international conventions ratified by the host
country and the Philippines
c. The Philippines

2. Free transportation to and from the worksite or offsetting benefit

3. Free food and accommodation or offsetting benefit
4. Just/authorized causes of termination of the contract or services of the worker

Note: An agreement that diminishes the Ees pay and benefits as contained in a
POEA‐approved contract is void, unless such subsequent agreement is approved
by the POEA.

Q: What is the rule on deployment of OFWs?

A: The State shall allow the deployment of OFWs:

1. Only in countries where the rights of Filipino migrant workers are protected.
2. To vessels navigating the foreign seas or to installations located offshore or
on high seas whose owners/Ers are compliant with international laws and
standards that protect the rights of migrant workers.
3. To companies and contractors with international operations: Provided, That
they are compliant with standards, conditions and requirements, as
embodied in the employment contracts prescribed by the POEA and in
accordance with internationally‐accepted standards. (Sec. 3, R.A. 10022
amending R.A. 8042)

Q: What are the guarantees of the receiving country for the protection of
the rights of OFWs?
A:

1. It has existing labor and social laws protecting the rights of workers,
including migrant workers;
 68

2. It is a signatory to and/or a ratifier of multilateral conventions, declarations

or resolutions relating to the protection of workers, including migrant workers;
and
3. It has concluded a bilateral agreement or arrangement with the government
on the protection of the rights of OFWs. . (Sec. 3, R.A. 10022 amending R.A.
8042)

Provided, that the receiving country is taking positive, concrete measures to

protect the rights of migrant workers in furtherance of any of the guarantees.
Note: In the absence of a clear showing that any of the guarantees exists in the
country of destination of the migrant workers, no permit for deployment shall be
issued by the POEA.

Q: What is the rule on repatriation?

A: GR: The repatriation of the:

1. Worker and the transport of his personal belongings ‐ shall be the primary
responsibility of the agency which recruited or deployed the worker overseas.
2. Remains and transport of the personal belongings of a deceased worker and
all costs attendant thereto ‐ shall be borne by the principal and/or the local
agency.

XPNs:
1. If the termination of employment is due solely to the fault of the worker, the
principal/ Er or agency shall not be responsible for the repatriation of the
former and/or his belongings
2. In cases of war, epidemic, disaster or calamities, natural or man‐made, and
other similar event, and where the principal or recruitment agency cannot be
identified, the Overseas Workers Welfare Administration, in coordination with
appropriate international agencies, shall take charge of the repatriation.
(Sec.15, R.A. 8042)

Q: What is the rule on mandatory repatriation of underage migrant

workers?
A: Upon discovery or being informed of the presence of migrant workers whose
ages fall below the minimum age requirement for overseas deployment, the
responsible officers in the foreign service shall without delay repatriate said
workers and advise the DFA through the fastest means of communication
available of such discovery and other relevant information. The license of a
recruitment/manning agency which recruited or deployed an underage migrant
worker shall be automatically revoked and shall be imposed a fine of not less
than P500,000 but not more than P1,000,000. (Sec. 9, R.A. 10022)

Q: What are the regulatory and adjudicatory functions of the POEA?

A:
 69

1. Regulatory – It regulates the private sector participation in the recruitment and

overseas placement of workers through its licensing and registration system.
2. Adjudicatory

a. Administrative cases involving violations of licensing rules and

regulations and registration of recruitment and employment
agencies or entities
b. Disciplinary action cases and other special cases which are
administrative in character involving employers, principals,
contracting partners and Filipino migrants.

Q: What are the grounds for disciplinary action of OFW’s?

A: Under R.A. 8042, these are:

1. Prostitution
2. Unjust refusal to depart for the worksite
3. Gunrunning or possession of deadly weapons
4. Vandalism or destroying company property
5. Violation of the laws and sacred practices of the host country and unjustified
breach of employment contract
6. Embezzlement of funds of the company or fellow worker entrusted for
delivery to relatives in the Phils.
7. Creating trouble at the worksite or in the vessel
8. Gambling
9. Initiating or joining a strike or work stoppage where the laws of the host
country prohibits strikes or similar actions
10. Commission of felony punishable by Philippine laws or by the host country
11. Theft or robbery
12. Drunkenness
13. Drug addiction or possession or trafficking of prohibited drugs
14. Desertion or abandonment

Q: What is the distinction between the jurisdiction of the LA and POEA?

A:

JURISDICTION
Labor Arbiter POEA
Original and exclusive jurisdiction over Original and exclusive jurisdiction
all claims arising out of Er‐Ee over:
relationship or by virtue of any law or 1. All cases which are administrative
contract involving OFWs including in character relating to licensing and
claims for: registration of recruitment and
1. Actual employment agencies
2. Moral 2. Disciplinary Action cases and other
3. Exemplary special cases, which are
4.Other forms of damages. (Sec. 10, administrative in character, involving
R.A. 8042) Ees, principals, contracting partners
 70

and Filipino migrant workers. (Rule

VII, Book VII, POEA Rules)

Q: A seafarer was prevented from leaving the port of Manila and refused
deployment without valid reason. His POEA‐approved employment contract
provides that the employer‐employee relationship shall commence only upon the
seafarer’s actual departure from the port in the point of hire. Is the seafarer
entitled to relief under the Migrant Workers’ Act, in the absence of an employer‐
employee relationship?
A: Yes. Despite the absence of an employer‐employee relationship, the NLRC has
jurisdiction over the seafarer’s complaint. The jurisdiction of labor arbiters is not
limited to claims arising from Er‐Ee relationships. Sec. 10 of the Migrant Workers
Act provides that the labor arbiters shall have jurisdiction over claims arising out
of an Er‐Ee 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. Since the present case involves the employment
contract entered into by petitioner for overseas employment, his claims are
cognizable by the labor arbiters of the NLRC. (Santiago v. CF Sharp Crew
Management,G.R. No. 162419, July 10, 2007)

Q: What matters fall outside the jurisdiction of the POEA?

A:

1. Foreign judgments – such claim must be brought before regular courts.

POEA is not a court; it is an administrative agency, exercising adjudicatory
or quasi‐judicial functions.
2. Torts – falls under the provisions of the Civil Code.

Employment of Non‐Resident Aliens

Q: What is required in the employment of non‐resident aliens?

A: Any alien seeking admission to the Phil. for employment purposes and any
domestic or foreign employer (Er) who desires to engage an alien for employment
in the Philippines:

1. Shall obtain an employment permit from the DOLE

2. The permit may be issued to a non‐resident alien or to the applicant Er after a
determination of the non‐availability of a person in the Phil. who is competent,
able and willing at the time of application to perform the services for which
the alien is desired
3. For an enterprise registered in preferred areas of investments, said permit
may be issued upon recommendation of the gov’t agency charged with the
supervision of said registered enterprise
 71

Q: The DOLE issued an alien employment permit for Earl Cone, a U.S. citizen, as
sports consultant and assistant coach for GMC. Later, the Board of Special
Inquiry of the Commission on Immigration and Deportation approved Cone’s
application for a change of admission status from temporary visitor to pre‐
arranged employee. A month later, GMC requested that it be allowed to employ
Cone as full‐fledged coach. The Dole Regional Director granted the request. The
Basketball Association of the Phils. appealed the issuance of said permit to the
SLE who cancelled Cone’s employment permit because GMC failed to show that
there is no person in the Philippines who is competent and willing to do the
services nor that the hiring of Cone would redound to the national interest. Is the
act of SLE valid?
A: Yes. GMC’s claim that hiring of a foreign coach is an Er’s prerogative has no
legal basis. Under Art. 40 of the LC, an Er seeking employment of an alien must
first obtain an employment permit from the DOLE. GMC’s right to choose whom
to employ is limited by the statutory requirement of an employment permit. (GMC
v. Torres, G.R. No. 9366, April 22, 1991)
Art. 41. Prohibition Against Transfer of Employment

Q: Who are required to obtain an employment permit?

A: GR: Only non‐resident aliens;

XPNS:
1. Diplomatic services and foreign gov’t officials
2. Officers and staff of int’l organizations and their legitimate spouses
3. Members of governing board who has voting rights only
4. Those exempted by special laws
5. Owners and representatives of foreign principals who interview Filipino
applicants for employment abroad
6. Aliens whose purpose is to teach, present and/or conduct research studies
7. Resident aliens. (D.O. 75‐06, May 31, 2006)

Q: May the non‐resident alien transfer employment after issuance of the

employment permit?
A: After the issuance of an employment permit, the alien shall not transfer to
another job or change his employer without prior approval of the Secretary of
Labor.

Q: What is required for immigrants and resident aliens?

A: An Alien Employment Registration Certificate.

Q: What is the duration of the employment permit?

A: GR: Minimum of 1 year

XPN: Unless revoked and subject to renewal

Q: May aliens be employed in entities engaged in nationalized activities?

A: GR: No.
 72

XPNs:
1. Sec. of Justice specifically authorizes the employment of technical personnel
2. Aliens are elected members of the board of directors or governing body of
corporations or associations or
3. Enterprises registered under the Omnibus Investment Code in case of
technical, supervisory or advisory positions, but for a limited period.

Art. 25. Private Sector Participation in the Recruitment and Placement of Workers

Q: What are the entities in the private sectors that can participate in
recruitment and placement of workers?
A:

1. Shipping or manning agents or representatives

2. Private recruitment offices
3. Public employment offices
4. Construction contractors if authorized by the DOLE and Construction Industry
Authority.
5. Persons that may be authorized by the SLE
6. Private employment agencies. (Sec. 1, Rule VII, Book I, IRR)

Q: What are the qualifications for participation in recruitment and

placement of workers?
A:

1. Filipino citizens, partnerships or corporations at least 75% of the authorized

capital stock of which is owned and controlled by Filipino citizens; (Art. 27, LC)
2. Capitalization
a. Single proprietorship or partnership
‐A minimum capitalization of P2 million
b. Corporation
‐A minimum paid‐up capital of P2 million
Provided, that those with existing licenses shall,
within 4 yrs from the effectivity hereof, increase their
capitalization or paid up capital, as the case may be,
to P2 million at the rate of P250,000.00 every year.
(Art. 28, LC)
3. Not otherwise disqualified by law or other government regulations to engage
in the recruitment and placement of workers for overseas employment. (Rule I,
Part II, POEA Rules)
4. Payment of registration fees
5. Posting of surety/cash bonds

Q: How will POEA regulate private sector participation in the

recruitment and overseas placement of workers?
A: By setting up a licensing and registration system. (Sec. 14, R.A. 10022)
 73

Q: Is a corporation, 70% of the authorized and voting capital of which is owned

and controlled by Filipino citizens, allowed to engage in the recruitment and
placement of workers, locally or overseas? Explain briefly.
A: No. It is because Art. 27 of the Labor Code requires at least 75%. (2002 Bar
Question)

Q: Who are disqualified to engage in the business of recruitment and placement

of workers?
A:

1. Travel agencies and sales agencies of airline companies; (Art. 26, LC)
2. Officers or members of the board of any corporation or members in a
partnership engaged in the business of a travel agency;
3. Corporations and partnerships, when any of its officers, members of the
board or partners, is also an officer, member of the board or partner of a
corporation or partnership engaged in the business of a travel agency;
4. Persons, partnerships or corporations which have derogatory records, such as
but not limited to those:

a. Certified to have derogatory record or information by the NBI or

by the Anti‐Illegal Recruitment Branch of the POEA;
b. Against whom probable cause or prima facie finding of guilt for
illegal recruitment or other related cases exists;
c. Convicted for illegal recruitment or other related cases and/or
crimes involving moral turpitude; and
d. Agencies whose licenses have been previously revoked or
cancelled by the POEA for violation of R.A. 8042, P.D. 442 as
amended and their implementing rules and regulations as well
as these rules and regulations.

5. Any official or Ee of the DOLE, POEA, OWWA, DFA and other government
agencies directly involved in the implementation of R.A. 8042 and/or any of
his/her relatives within the 4th civil degree of consanguinity or affinity; and
6. Persons or partners, officers and directors of corporations whose licenses have
been previously cancelled or revoked for violation of recruitment laws. (Sec. 2,
Rule I, 2002 Rules and Regulations on the

Recruitment and Employment of Land‐Based Workers)

Art. 26. Travel Agencies Prohibited to Recruit

Q: What is the rule on recruitment of travel agencies and sales agencies

of airline companies?
A: They are prohibited from engaging in the business of recruitment and
placement of workers for overseas employment whether for profit or not.
 74

Q: WTTA is a well‐known travel agency and an authorized sales agent of the

PAL. Since majority of its passengers are overseas workers, WTTA applied for a
license for recruitment and placement activities. It stated in its application that
its purpose is not for profit but to help Filipinos find employment abroad. Should
the application be approved?
A: The application should be disapproved, as it is prohibited by Art. 26 of the LC,
to wit: "Art 26. Travel agencies and sales agencies of airline companies are
prohibited from engaging in the business of recruitment and placement of
workers for overseas employment whether for profit or not." Rule I, Part II POEA
Rules and Regulations Governing the Recruitment and Employment of Land‐
Based Workers (2002) disqualifies any entity having common director or owner
of travel agencies and sales agencies of airlines, including any business entity
from the recruitment and placement of Filipino workers overseas, whether they
derive profit or not. (2006 Bar Question)
Art. 32. Fees to be Paid by Workers

Q: When may a worker be charged any fee?

A: Only when:

1. He has obtained work through recruiter’s efforts, and

2. The worker has actually commenced working

Note: A land based agency may charge and collect from its hired workers a
placement fee in an amount equivalent to 1 month salary, exclusive of
documentation costs.

Q: What are the only authorized payments that may be collected from a
hired worker?
A:

1. Placement fee in an amount equivalent to one month’s salary of the worker

and
2. Documentation costs.

******************************

III. LABOR STANDARDS

A. HOURS OF WORK
1. COVERAGE/EXCLUSIONS (ART. 82, LABOR CODE)

Article 82. Coverage. The provisions of this Title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government
employees, managerial employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in
 75

the personal service of another, and workers who are paid by resu ts as
determined by the Secretary of Labor in appropriate regulations.

As used herein, "managerial employees" refer to those whose primary duty

consists of the management of the establishment in which they are employed or
of a department or subdivision thereof, and to other officers or members of the
managerial staff.

“Field personnel" shall refer to non-agricultural employees who regularly

perform their duties away from the principal place of business or branch office of
the employer and whose actual hours of work in the field cannot be determined
with reasonable certainty.

NOTES:
---------------------------------------------
Examinee: Let us have first a brief dissect of the provision:

The First Paragraph says: “The provisions of this Title shall apply to
employees in all establishments and undertakings whether for profit or not…”
What are those provisions under that Title? See them below:

Title I
WORKING CONDITIONS AND REST PERIODS

Chapter I
HOURS OF WORK

Article 83.Normal hours of work

Article 84.Hours worked
Article 85.Meal periods
Article 86.Night shift differential
Article 87.Overtime work
Article 88.Undertime not offset by overtime
Article 89.Emergency overtime work

Chapter II
WEEKLY REST PERIODS

Article 91. Right to weekly rest day

Article 93.Compensation for rest day, Sunday or holiday work

Chapter III
HOLIDAYS, SERVICE INCENTIVE LEAVES AND SERVICE CHARGES

Article 94.Right to holiday pay

Article 95.Right to service incentive leave
Article 96.Service charges
 76

Under the First Paragraph, the above provisions do not apply to –

1. government employees,
2. managerial employees,
3. field personnel,
4. members of the family of the employer who are dependent on him for support,
5. domestic helpers,
6. persons in the personal service of another, and
7. workers who are paid by results as determined by the Secretary of Labor in
appropriate regulations.
------------------------------------------------------

Q: Who are the employees that are covered by the conditions of

employment?
A: GR: It applies to all Ee’s in all establishments.

XPN:
1. Gov’t employees
2. Managerial employees
3. Field personnel
4. The employers family members who depend on him for support
5. Domestic helpers and persons in the personal service of another, and
6. Workers who are paid by results as determined under DOLE regulations

Q: When does the condition on employment under the Labor Code apply?
A: Only if an Er‐Ee relationship exists.

Q: Who are government employees (Ees)?

A: They are Ees of the:

1. National Government
2. Any of its political subdivisions
3. Including those employed in GOCCs with original charters.

Q: What law governs government Ees?

A: The Civil Service Law, rules and regulations.

Q: Who are managerial Ees?

A: Those whose primary duty consists of the management of the establishment
in which they are employed or a department or subdivision thereof, and other
officers or members of the managerial staff.
They must meet all of the ff. conditions, namely:

1. Primary duty: management of the establishment in which they are employed

or of a department or sub‐division thereof;
2. Customarily or regularly direct the work of 2 or more Ees
 77

3. Has the authority to hire or fire other Ees of lower rank; or their suggestions
and recommendations as to the hiring and firing and as to the promotion or
any change of status of other Ees are given particular weight.
4. Execute under general supervision work along specialized or technical lines
requiring special training, experience, or knowledge
5. Execute under general supervision special assignment and tasks; and
6. Do not devote more than 20% of their hours worked to activities which are not
directly and closely related to performance of the work described. (Art. 82[2])

Q: Why are managerial Ees not covered?

A: They are employed by reason of their special training, expertise or knowledge
and for positions requiring the exercise of discretion and independent judgment.
Value of work cannot be measured in terms of hours.

Q: Who are field personnel?

A: They are:

1. non‐agricultural employees
2. who regularly perform their duties
3. away from the principal place of business or branch office of the employer;
and
4. whose actual hours of work in the field cannot be determined with reasonable
certainty.

Q: Who are workers paid by results?

A: They are:

1. paid based on the work completed; and

2. not on the time spent in working
3. including those who are paid on piece‐work, “takay”, “pakiaw”, or task basis
if their output rates are in accordance with the standards prescribed.

Q: Who are domestic helpers and persons in the personal service of

another?
A: Those who:

1. perform services in the employers (Er) home which are usually necessary or
desirable for the maintenance or enjoyment thereof; or
2. minister to the personal comfort, convenience or safety of the Er as well as the
members of his Ers household.

Q: A house personnel was hired by a ranking company official to maintain a

staff house provided for the official. The personnel is being paid by the company
itself. Is the house personnel a domestic servant of the company official?
A: No, the personnel is not a domestic helper but a regular employee of the
company.
 78

Q: What are the 3 groups of employees (Ees) under the LC?

A:

1. Managerial Ee ‐ One who is vested with the powers or prerogatives to lay

down and execute management policies and/or to hire, transfer, suspend,
lay‐off, recall, discharge, assign or discipline Ees.
2. Supervisory Ee ‐ those who in the interest of the Er, effectively recommend
such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment.
3. Rank‐and‐File Ee ‐ all Ees not falling within any of the above definitions. (Art.
212[m])

Q: Who determines working conditions?

A: Generally, they are determined by the employer, as he is usually free to
regulate, according to his discretion, all aspects of employment.

Q: What is the limitation on the employer’s power to regulate working

conditions?
A: It must be done in good faith and not for the purpose of defeating or
circumventing the rights of the employees. Such are not always absolute and
must be exercised with due regard to the rights of labor.
Note: One’s employment, profession, trade or calling is a property right and the
wrongful interference therewith is an actionable wrong.

Considering his duties and responsibilities, a shift engineer / foreman /

boiler head may be considered a member of the managerial staff.

Peňaranda vs. Baganga Plywood Corp.

May 3, 2006

As shift engineer, petitioner’s duties and responsibilities were as follows:

1. To supply the required and continuous steam to all consuming units at

minimum cost
2. To supervise, check and monitor manpower workmanship as well as operatio
of boiler and accessories
3. To evaluate performance of machinery and manpower
4. To follow-up supply of waste and other materials for fuel
5. To train new employees for effective and safety while working
6. Recommend parts and supplies purchases
7. To recommend personnel actions such as: promotion, or disciplinary actions
8. To check water from the boiler, feedwater and softener, regenerate softener or
beyond hardness limit
9. Perform other task as required by the superior from time to time

The foregoing enumeration, particularly items 1, 2, 3, 4, 5, and 7 illustrates

that petitioner was a member of the managerial staff. His duties and
 79

responsibilities conform to the definition of a member of a managerial staff under

the Implementing Rules. Moreover, in his Position Paper, he stated that he was
the foreman responsible for the operation of the boiler. The term foreman implies
that he was the representative of the management over the workers and the
operation of the department. On the basis of the foregoing, the Court finds no
justification to award overtime pay and premium pay for rest days to petitioner.

Outside or Field Sales Personnel

Another group of employees excluded from coverage refers to field personnel.
As a general rule, “field personnel” are those whose performance of their job or
service is not supervised by the employer or his representative, the workplace
being away from the principal office and whose hours and days of work cannot
be determined with reasonable certainty, hence, they are paid specific amount
for rendering specific service or performing specific work. If required to be at
specific places at specific times, employees including drivers cannot be said to be
field personnel despite the fact that they are performing work away from the
principal office of the employer.

In the case at bar, during the entire course of their fishing voyage, fishermen
employed by petitioner have no choice but to remain on board its vessel.
Although they perform non-agricultural work away from the petitioner’s business
offices, the fact remains that throughout the duration of their work they are
under the effective control and supervision of petitioner through the vessel’s
patron or master. Hence, the fishermen are not field personnel.

Auto Bus Transport System, Inc. v. Bautista

May 16, 2005

The definition of “field personnel” is not merely concerned with the location
where the employee regularly performs his duties but also with the fact that the
employee’s performance is unsupervised by the employer. As discussed above,
field personnel are those who regularly perform their duties away from the
principal place of business of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. Thus, in order to
conclude whether an employee is a field employee, it is also necessary to
ascertain if actual hours of work in the field can be determined with reasonable
certainty by the employer. In so doing, an inquiry must be made as to whether or
not the employee’s time and performance are constantly supervised by the
employer.

It is of judicial notice that along the routes that are plied by these bus
companies, there are its inspectors assigned at strategic places who board the
bus and inspect the passengers, the punched tickets, and the conductor’s
reports. There is also the mandatory once-a-week car barn or shop day, where
the bus is regularly checked as to its mechanical, electrical, and hydraulic
aspects. They too, must be at specific place at specified time, as they generally
observe prompt departure and arrival from their point of origin to their point of
 80

destination. In each and every depot, there is always the Dispatcher whose
function is precisely to see to it that the bus and its crew leave the premises at
specific times and arrive at the estimated proper time. These are present in the
case at bar. The driver, the complainant herein, was therefore under constant
supervision while in the performance of his work. He cannot be considered a
field personnel.

In contrast, in Union of Filipino Employees v. Vivar, January 20, 1992, the

sales personnel are field personnel. The Court explains:

It is undisputed that these sales personnel start their field work at 8:00 a. m.
after having reported to the office and come back to the office at 4:00 p. m. if
they are Makati-based. THe petitioner union maintains that the period between
8:00 a.m. to 4:00 p.m. comprises the sales personnel’s working hours which can
be determined with reasonable certainty. The Court does not agree. The law
requires that the actual hours of work in the field be reasonably ascertained. The
company has no way of determining whether or not these sales personnel really
spend the hours in between in actual field work.

2. NORMAL HOURS OF WORK

Article 83. Normal hours of work. The normal hours of work of any employee
shall not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one

million (1,000,000) or in hospitals and clinics with a bed capacity of at least one
hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5)
days a week, exclusive of time for meals, except where the exigencies of the
service require that such personnel work for six (6) days or forty-eight (48) hours,
in which case, they shall be entitled to an additional compensation of at least
thirty percent (30%) of their regular wage for work on the sixth day. For purposes
of this Article, "health personnel" shall include resident physicians, nurses,
nutritionists, dietitians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel.

NOTES:

FIRST PARAGRAPH:

The normal hours of work of any employee shall not exceed eight (8) hours a
day.

Purpose of the Eight-hour Labor Law

 81

The Eight-hour Labor Law was enacted not only to safeguard the health and
welfare of the laborer or employee, but in a way to minimize unemployment by
forcing employers, in cases where more than 8-hour operation is necessary, to
utilize different shifts of laborers or employees working only for 8 hours.

Part-Time Work
It is not prohibited to have “normal hours of work” of less than eight hours a
day. What the law regulates is work hours exceeding eight. It prescribes a
maximum but not a minimum. Therefore, part-time work, or a day’s work of less
than eight hours, is not prohibited.

SECOND PARAGRAPH
1. Health personnel in cities and municipalities with a population of at least
one million (1,000,000) or

2. Health personnel in hospitals and clinics with a bed capacity of at least

one hundred (100)

3. shall hold regular office hours for eight (8) hours a day, for five (5) days a
week, exclusive of time for meals, except where the exigencies of the
service require that such personnel work for six (6) days or forty-eight (48)
hours, in which case, they shall be entitled to an additional compensation
of at least thirty percent (30%) of their regular wage for work on the sixth
day.

4. For purposes of this Article, "health personnel" shall include

 resident physicians,
 nurses,
 nutritionists,
 dietitians,
 pharmacists,
 social workers,
 laboratory technicians,
 paramedical technicians,
 psychologists,
 midwives,
 attendants and all other hospital or clinic personnel.

The above are the health personnels covered by the forty-hour workweek.
Medical secretaries are also considered clinic personnel.

Health Personnel in Government Service

Health personnel in government service are, as already stated, excluded from
coverage of Articles 82-96. Their work hours, night shift differential pay, and
other employment benefits are specified in R. A. 7305, approved on March 26,
1992.
 82

Twelve-Hour Workshift with Overtime

Through a contract freely entered into, the workshift may exceed eight hours,
with corresponding overtime pay. Such arrangement is valid and binding.

In one case, the CBA of the parties provides:

“Section 1. Regular Working Hours – A normal workday

shall consist shall consist of not more than 8 hours. The regular
working hours for the company shall be from 7:30 a. m. to 4:30
p. m. The schedule of shift work shall be maintained; however,
the company may change the prevailing work time at its
discretion, should such change be necessary in the operations
of the Company. All employees shall observe such rules as
have been laid down by the company for the purpose of
effecting control over working hours.”

It is evident from the foregoing provision (of the CBA) that the working hours
may be changed, at the discretion of the company, should such change be
necessary for its operations, and that the employees shall observe such rules as
have been laid down by the company. The company had to adopt a continuous
24-hour work daily schedule by reason of the nature of its business and the
demands of its clients. It was established that the employees adhered to the
said work schedule since 1988. The employees are deemed to have waived the
eight-hour schedule since they followed, without any question or complaint, the
two-shift schedule while their CBA was still in force and prior thereto. The two-
shift schedule effectively changed the working hours stipulated in the CBA. As
the employees assented by practice to this arrangement, (8 hours regular plus 4
hours overtime), they cannot now be heard to claim that the overtime boycott is
justified because they were not obliged to work beyond eight hours. In other
words, a 12-hour workshift is validated by consent and its four-hour overtime
work with overtime pay becomes a contractual commitment. Boycott of the
established four-hour overtime is declared by the Court as an illegal strike.

Q: What are the normal hours of work of an Ee?

A: It should not exceed 8 hours in a general working day.
Note: Normal hours of work may be shortened or compressed.

Q: What are considered hours worked?

A:

1. All time during which an Ee is required to be:

a. On duty, or
b. At the Ers premises, or
c. At a prescribed workplace
 83

2. All time during which an Ee is suffered or permitted to work. (Sec. 3, Rule I,

Book III, IRR)

Q: What are the principles in determining hours worked?

A:

1. All hours which the Ee is required to give to his Er regardless of whether or

not such hours are spent in productive labor or involve physical or mental
exertion.
2. Rest period is excluded from hours worked, even if Ee does not leave his
workplace, it being enough that:
a. He stops working
b. May rest completely
c. May leave his workplace, to go elsewhere, whether within
or outside the premises of the workplace
3. All time spent for work is considered hours worked if:
a. The work performed was necessary
b. If it benefited the Er
c. Or the Ee could not abandon his work at the end of his
normal working hours because he had no replacement
d. Provided, the work was with the knowledge of his Er or
immediate supervisor
4. The time during which an Ee is inactive by reasons of interruptions in his
work beyond his control shall be considered working time:
a. If the imminence of the resumption of the work requires the
Ees presence at the place of work or
b. If the interval is too brief to be utilized effectively and
gainfully in the Ees own interest. (Sec. 4, Rule I, Book III,
IRR)

Q: What are the hours of work of health personnel?

A: GR: 8 hours/5 days (40‐hour work week), exclusive of time for meals.
XPN: Where the exigencies of the service require that such personnel work for 6
days or 48 hours, they shall be entitled to an additional compensation of at least
30% of their regular wage for work on the 6th day.

Note: 40‐hour work week does not apply if there is a training agreement
between the resident physician and the hospital and the training program is
duly accredited or approved by appropriate government agency.

Q: Who are covered by the 40‐hour work week?

A:

1. Health personnel in cities and municipalities with a population of at least 1

million; or
 84

2. Hospitals and clinics with a bed capacity of at least 100

Note: Art. 83(2) do not require hospitals to pay the Ees a full weekly salary with
paid 2 days off. (San Juan de Dios Ees Assoc.‐AFW et al. vs. NLRC, G.R. No.
126383, Nov.28, 1997)

A) COMPRESSED WORK WEEK

Q: What is a compressed workweek?

A: The normal workweek is reduced to less than 6 days but the total number of
work‐hours of 48 hours per week shall remain. The normal workday is increased
to more than 8 hours but not to exceed 12 hours, without corresponding overtime
premium. The concept can be adjusted accordingly depending on the normal
workweek of the company. (Department Advisory Order No. 2, Series of 2009)

Q: When is the implementation of a compressed work week valid?

A: The validity of the reduction of working hours can be upheld when the
arrangement is temporary, it is a more humane solution instead of a
retrenchment of personnel, there is notice and consultations with the workers
and supervisors, a consensus is reached on how to deal with deteriorating
economic conditions and it is sufficiently proven that the company was suffering
from losses. Under the Bureau of Working Conditions’ bulletin, a reduction of the
number of regular working days is valid where the arrangement is resorted to by
the employer to prevent serious losses due to causes beyond his control, such as
when there is a substantial slump in the demand for his goods or services or
when there is lack of raw materials. There is one main consideration in
determining the validity of reduction of working hours – that the company was
suffering from losses. A year of financial losses would not justify a reduced
workweek. (Linton Commercial v. Hellera, G.R. No. 163147, October 10, 2007)

Q: Under what conditions may a "compressed work week" schedule be legally

authorized as an exception to the "8‐hour a day" requirement under the LC?

A:

1. The Ee voluntarily agrees to it

2. There is no diminution in their weekly or monthly take home pay or fringe
benefits
3. The benefits are more than or at least commensurate or equal to what is due
the Ees without the compressed work week
4. OT pay will be due and demandable when they are required to work on those
days which should have ceased to be working days because of the
compressed work week schedule.
5. No strenuous physical exertion or that they are given adequate rest periods.
 85

6. It must be for a temporary duration as determined by the DOLE. (2005 Bar

Question)

Q: What are the requisites for adoption of compressed workweek?

A:

1. The Er shall notify the DOLE through the Regional Office which has
jurisdiction over the workplace, of the adoption of compressed workweek.
2. The notice shall be in Report Form attached to the advisory.
3. The Regional Office shall conduct an ocular visit to validate whether the
adoption of the flexible work arrangements is in accordance with this
issuance. (Department Advisory Order No. 2, Series of 2009)

Work interruption due to brownouts

Q: What are the guidelines on power interruptions?

A:

1. Brownouts of short duration but not exceeding 20 minutes shall be treated as

worked or compensable hours whether used productively by the employees
(Ees) or not.

2. Brownouts running for more than 20 minutes may not be treated as hours
worked provided any of the following conditions are present:
a. The Ees can leave their workplace or go elsewhere within
or without the work premises; or
b. The Ees can use the time effectively for their own interest.
3. In each case, the Er may extend the working hours of his Ees outside the
regular schedules to compensate for the loss of productive man‐hours without
being liable for OT pay.

4. Industrial enterprises with one or two work shifts may adopt any of the work
shift prescribed for enterprises with 3 work shifts to prevent serious loss or
damage to materials, machineries, or equipment that may result case of
power interruptions. (Policy Instruction No. 36)

3. MEAL BREAK

Q: What is the duration of the meal period?

A: Every Er shall give his Ees not less than 60 minutes or 1 hour time‐off for
regular meals.

Q: Is the meal period compensable?

 86

A: Being time‐off, it is not compensable. Employee must be completely relieved

from duty.

Meal time is NOT working time if the employee is completely freed from duties
during his meal period even though he remains in the workplace (Pan American
World Airways System [Phil.] vs. Pan American Employment Association).

Q: When is the meal period considered compensable?

A: It is compensable where the lunch period or meal time:

1. Is predominantly spent for the employers benefit; or

2. Where it is less than 20 minutes

Note: Where during meal period, the laborers are required to stand by for
emergency work, or where the meal hour is not one of complete rest, such is
considered OT. (Pan Am vs. Pan Am Ees Association, G.R. No. L‐16275, Feb. 23,
1961)

Rest periods or coffee breaks running from 5 to 20 minutes shall be

considered as compensable working time. (Sec. 7, Rule I, Book III, IRR)

Q: Are meal periods provided during OT work compensable?

A: Yes, since the 1 hour meal period (non‐compensable) is not given during OT
work because the latter is usually for a short period and to deduct from the same
would reduce to nothing the Ees OT work. Thus, the 1 hour break for meals
during OT should be treated as compensable.

Q: What are the instances where meal periods shortened to NOT less
than 20 minutes is compensable or not compensable?

A:

1. Compensable – At the instance of Employer, when:

a. Work is non‐manual in nature or does not involve strenuous

physical exertion;
b. Establishment regularly operates less than 16 hours a day;
c. Work is necessary to prevent serious loss of perishable goods.
d. Actual or impending emergency or there is urgent work to be
performed on machineries and equipment to avoid serious loss
which the Er would otherwise suffer. (Sec. 7, Rule I, Book III, IRR)

2. Not Compensable – Ee requested for the shorter meal time so that he can leave
work earlier than the previously established schedule.

Requisites:
 87

a. Ees voluntarily agree in writing and are willing to waive OT pay

for the shortened meal period;
b. No diminution in the salary and other fringe benefits of the Ees
which are existing before the effectivity of the shortened meal
period;
c. Work of the Ees does not involve strenuous physical exertion and
they are provided with adequate coffee breaks in the morning
and afternoon;
d. Value of the benefits derived by the Ees from the proposed work
arrangements is equal to or commensurate with the
compensation due them for the shortened meal period as well as
the OT pay for 30 minutes as determined by the Ees concerned;
e. OT pay will become due and demandable after the new time
schedule
f. Arrangement is of temporary duration.

No. 17, 2011 BAR

The meal time (lunch break) for the dining crew in Glorious Restaurant is
either from 10 a.m. to 11 a.m. or from 1:30 p.m. to 2:30 p.m., with pay. But the
management wants to change the mealtime to 11: a.m. to 12 noon or 12:30 p.m.
to 1:30 p.m., without pay. Will the change be legal?

A. Yes, absent an agreement to the contrary, the management determines work

B. hours and, by law, meal break is without pay.
C. No, because lunchbreak regardless of time should be with pay.
D. Yes, the management has control of its operations.
E. No, because existing practice cannot be discontinued unilaterally.

4. WAITING TIME

Q: When is waiting time considered working time?

A: When Ee is required to remain on call in the Ers premises or so close thereto
that he cannot use the time effectively and gainfully for his own purpose.

Note: The controlling factor is whether waiting time spent in idleness is so spent
predominantly for the Er’s benefit or for the Ee.

The mere fact that a large part of the time of the employees engaged in a
stand-by capacity in the employer’s auxiliary fire-fighting service was spent in
idleness or in playing cards and other amusement, the facilities for which were
provided by the employer, did not render inapplicable the overtime provisions of
the Act.

Similarly, a truck driver who has to wait at or near the jobsite for goods to be
loaded is working during the loading period. If the driver reaches his destination
 88

and while awaiting the return trip is required to take care of his employer’s
property, he is also working while waiting. In both cases, the employee is
engaged to wait. Waiting is an integral part of the job. On the other hand, for
example, if the truck driver is sent from Manila to Dagupan, leaving at 6 p.m.
and arriving at 12 noon, and is completely and specifically relieved from all duty
until 6 p.m. when he again goes on duty for the return trip, the idle time is not
working time. He is waiting to be engaged.

Q: When is waiting time not considered working time?

A: When the Ee is waiting to be engaged: idle time is not working time; it is not
compensable.

Working Hours; When Compensable; “While on Call”; Waiting Time

(1997)
Lito Kulangkulang and Bong Urongsulong are employed as truck drivers of
Line Movers, Inc. Usually. Lito is required by the personnel manager to just stay
at the head office after office hours because he could be called to drive the
trucks. While at the head office, Lito merely waits in the manager's reception
room. On the other hand. Bong is allowed to go home after office hours but is
required to keep his cellular phone on so that he could be contacted whenever
his services as driver becomes necessary. Would the hours that Lito and Bong
are on call be considered compensable working hours?
SUGGESTED ANSWER:
The hours of Lito and Bong while on call can be considered compensable
hours. The applicable rule is: "An employee who is required to remain on call in
the employer's premises or so close thereto that he cannot use the time
effectively and gainfully for his own purpose shall be considered as working
while on call. An employee who is not required to leave word at his home or with
company officials where be may be reached is not working while on call." Here,
Bong is required to stay at the office after office hours so he could be called to
drive the trucks of the Company. As for Bong, he is required to keep his cellular
phone so that he could be contacted whenever his services as driver as needed.
Thus, the waiting time of Lito and Bong should be considered are compensable
hours.

Q: When is an Ee considered working while on call?

A: When Ee is required to remain on call in the Ers premises or so close thereto

that he cannot use the time effectively and gainfully for his own purpose.

Q: When idle time is considered working time?

A: When the employee is idle or inactive by reason of interruptions beyond his
control shall be considered working time.

Q: When is travel time considered working time?

A:
 89

1. Travel from home to work

GR: Normal travel from home to work is not working time.
XPNS:
a. Emergency call outside his regular working hours where he
is required to travel to his regular place of business or some
other work site.
b. Done through a conveyance provided by the employer (Er).
c. Done under the supervision and control of the Er.
d. Done under vexing and dangerous circumstance.
2. Travel that is all in a day’s work – time spent in travel as part of the
employees (Ees) principal activity

e.g. travel from job site to job site during the work day, must be counted as
working hours.
3. Travel away from home
GR:
a. Travel that requires an overnight stay on the part of the Ee
when it cuts across the Ees workday is clearly working time.
b. The time is not only hours worked on regular workdays but
also during corresponding working hours on non‐working
days. Outside of these regular working hours, travel away
from home is not considered working time.

XPN: During meal period or when Ee is permitted to sleep in adequate

facilities furnished by the Er.

Q: What are the conditions in order for lectures, meetings and training
programs to be not considered as working time?
A: All of the ff. conditions must be present:

1. Attendance is outside of the employers regular working hours

2. Attendance is in fact voluntary and
3. The employee does not perform any productive work during such attendance.

5. OVERTIME WORK, OVERTIME PAY

Article 87. Overtime work. Work may be performed beyond eight (8) hours a
day provided that the employee is paid for the overtime work, an additional
compensation equivalent to his regular wage plus at least twenty-five percent
(25%) thereof. Work performed beyond eight hours on a holiday or rest day shall
be paid an additional compensation equivalent to the rate of the first eight hours
on a holiday or rest day plus at least thirty percent (30%) thereof.

NOTES:
 90

‘Overtime Pay’ Defined

Overtime compensation is additional pay for service or work rendered or

performed in excess of eight hours a day by employees or laborers in
employment covered by the Eight-hour Labor law.

Q: What is overtime work (OT)?

A: Work performed beyond 8 hours within the worker’s 24 hour workday.

Note: Express instruction from the employer (Er) to the employee (Ee) to render
OT work is not required for the Ee to be entitled to OT pay; it is sufficient that the
Ee is permitted or suffered to work. However, written authority after office hours
during rest days and holidays are required for entitlement to compensation.

Q: What is a work day?

A: The 24‐hour period which commences from the time the employee regularly
starts to work.

Example: If the worker starts to work 8 am today, the workday is from 8 am

today up to 8 am tomorrow.

Note: Minimum normal working hours fixed by law need not be continuous to
constitute the legal working day.

Q: May an employee be compelled to render OT work?

A: GR: No. OT work is voluntary.

XPN: Compulsory OT work in any of the following situations:

1. Urgent work to be performed on machines and installations in order to avoid

serious loss or damage to the Er or some other cause of similar nature
2. Work is necessary to prevent loss or damage to perishable goods
3. In case of imminent danger to the public safety due to an actual or impending
emergency in the locality caused by serious accidents, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity
4. Country is at war
5. Completion or continuation of the work started before the 8th hour is
necessary to prevent serious obstruction or prejudice to the business
operations of the Er
6. Any other national or local emergency has been declared
7. Necessary to prevent loss of life or property.

An express instruction from the employer to the employee to render overtime

work is not required for the employee to be entitled to overtime pay; it is
sufficient that the employee is permitted or suffered to work.
 91

Neither is an express approval by a superior a prerequisite to make overtime

work compensable. If the work performed was necessary or that it benefited the
company or that the employee could not abandon his work at the end of his
eight-hour work because there was no substitute ready to take his place and he
performed overtime services upon the order of his immediate superior,
notwithstanding the fact that there was a standing circular to the effect that
before overtime work may be performed with pay, the approval of the
corresponding department head should be secured, such overtime services are
compensable in spite of the fact that said overtime services were rendered
without the approval of the Department Head.

Note: There should be payment of additional compensation. Ees refusal to obey

the order of the Er constitutes insubordination for which he may be subjected to
disciplinary action.

No. 67, 2011 BAR

In a scenario like typhoon Ondoy, who may be required by the employer to
work overtime when necessary to prevent loss of life or property?

A. Health personnel
B. Employees with first aid training
C. Security and safety personnel
D. Any employee

Q: Can undertime (UT) offset OT?

A: Where a worker incurs undertime hours during his regular daily work, said
undertime hours should not be offset against the overtime hours on the same
day or on any other day. It is both prohibited by the statute and by
jurisprudence.

If it were otherwise, the unfairness would be evident from the fact that the
undertime hours represent only the employee’s hourly rate of pay while the
overtime hours reflect both the employee’s hourly rate of pay and the appropriate
overtime premium such that, not being of equal value. Offsetting the undertime
hours against the overtime hours would result in the undue deprivation of the
employee’s overtime premium.

The situation is even more unacceptable where the undertime hours are not
only offset against the overtime hours but are also charged against the accrued
leave of the employee for under this method the employee is made to pay twice
for his undertime hours with work beyond the regular working hours.The proper
method should be to deduct the undertime hours from the accrued leave but to
pay the employee the overtime compensation to which he is entitled. Where the
employee has exhausted his leave credits, his undertime hours may simply be
deducted from his day’s wage, but he should still be paid his overtime
compensation for work in excess of eight hours a day.
 92

Working Hours; Saturday Work (2003)

A case against an employer company was filed charging it with having
violated the prohibition against offsetting undertime for overtime work on another
day. The complainants were able to show that, pursuant to the Collective
Bargaining Agreement (CBA), employees of the union had been required to work
"overtime" on Saturday but were paid only at regular rates of pay on the thesis
that they were not required to complete, and they did not in fact complete, the
eight-hour work period daily from Monday through Friday. Given the
circumstances, the employer contended that the employees were not entitled to
overtime compensation, i.e., with premium rates of pay. Decide the controversy.
SUGGESTED ANSWER:
The employer is correct. While Art. 88 of the Labor Code clearly provides that
undertime work on any other particular day shall not be offset by overtime work
on any other day, this rule is inapplicable in this case pertaining to Saturday
work which in reality does not constitute overtime work as Saturday is still a
working day under the law and there is no CBA stipulation against it.

Q: Can the right to OT pay be waived?

A: GR: The right to OT pay cannot be waived as it is governed by law and not
merely by the agreement of the parties.

XPN:
1. If the waiver is done in exchange for certain valuable benefits and privileges,
which may even exceed the OT Pay, waiver may be permitted.
2. Compressed work week

No. 2, 2011 BAR

Pol requested Obet, a union officer and concurrently chairman of the
company's Labor-Management Council, to appeal to the company for a
recomputation of Pol’s overtime pay. After 5 p.m., his usual knock-off time, Obet
spent two hours at the Personnel Office, reconciling the differing computations of
Pol’s overtime. Are those two hours compensable?

A. Yes, because Obet performed work within the company premises.

B. No, since Obet’s action has nothing to do with his regular work assignment.
C. No, because the matter could have been resolved in the labor-management
council of which he is the chairman.
D. Yes, because the time he spent on grievance meetings is considered hours
worked.

No. 57, 2011 BAR

Night differential is differentiated from overtime pay in that

A. while overtime pay is given for overtime work done during day or night, night
differential is given only for work done between 10:00 p.m. and 6:00 a.m.
 93

B. while overtime pay is paid to an employee whether on day shift or night shift,
night shift differential is only for employees regularly assigned to night work.
C. while overtime pay is for work done beyond eight hours, night differential is
added to the overtime pay if the overtime work is done between 6:00 p.m.
and 12 midnight.
D. while overtime pay is 25% additional to the employee's hourly regular wage,
night differential is 10% of such hourly wage without overtime pay.

Martina is a clerk typist in Hospicio de San Jose, a charitable institution

dependent for its existence on contributions and donations from well wishers.
She renders work eleven (11) hours a day but has not been given overtime pay
since her place of work is a charitable institution. Is Socorro entitled to overtime
pay? Explain briefly.
YES. Martina is entitled to overtime compensation. She does not fall under
any of the exceptions enumerated under Art. 82 of the Labor Code. Said
provision equivocally states that “Title I, Book III of the Labor Code dealing with
hours of work, weekly rest periods, holidays, service incentive leaves and
service charges, covers all employees in all establishments, whether for profit or
not, except the following employees:

a. Government employees
b. Managerial employees
c. Officers and members of the managerial staff
d. Field personnel
e. Members of the family of the employer who and dependent on him for support
f. Domestic helpers
g. Persons in the personal service of another
h. Workers paid by results.

A covered employee who works beyond eight (8) hours is entitled to overtime
compensation.

OVERTIME PAY

Q: What is the rationale behind OT pay?

A: Employee is made to work longer than what is commensurate with his agreed
compensation for the statutory fixed or voluntarily agreed hours of labor he is
supposed to do. (PNB vs. PEMA and CIR, G.R. No. L‐30279, July 30, 1982)

Discourages the employer (Er) from requiring such work thus protecting the
health and well‐being of the worker, and also tend to remedy unemployment by
encouraging Ers to employ others workers to do what cannot be accomplished
during the normal hours of work.

CBA provision vis‐à‐vis overtime work

Q: May the overtime rate be subject to stipulation of the Ee and Er?

 94

A: Generally, the premium for work performed on the employee’s rest days or on
special days or regular holidays are included as part of the regular rate of the
employee in the computation of overtime pay for any overtime work rendered on
said days especially if the employer pays only the minimum overtime rates
prescribed by law. The employees and employer, however, may stipulate in their
collective agreement the payment of overtime rates higher than those provided by
law and exclude the premium rates in the computation of overtime pay. Such
agreement may be considered valid only if the stipulated overtime pay rates will
yield to the employees not less than the minimum prescribed by law.

Q: Distinguish Overtime pay from premium pay.

A:
OVERTIME PAY
Additional compensation for work
performed beyond 8 hours on
ordinary days (within the worker’s
24‐hour workday)
PREMIUM PAY
Additional compensation for work
performed within 8 hours on days
when normally he should not be
working (on non‐working days, such
as rest days and special days.)

But additional compensation for work

rendered in excess of 8 hours during
these days is also considered OT pay.

Q: What are the OT pay rates?

A:

PAY RATES
OT during a regular working day
Additional compensation of 25% of the regular wage
OT during a holiday or rest day
Rate of the first 8 hours worked on plus at least 30% of the regular wage
(RW):

if done on a special holiday OR rest day: 30% of 130% of regular wage

If done on a special holiday AND rest day: 30% of 150% of regular wage

if done on a regular holiday: 30% of 200% of regular wage

Q: What is the basis of computing the OT pay and additional

remuneration?

A: Regular wage which includes the cash wage only, without deduction on
account of facilities provided by the employer. (Art. 90)
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Q: In lieu of OT pay, the employee was given permission to go on leave on

some other day, is that valid?

A: No. Permission given to the employee (Ee) to go on leave on some other day of
the week shall NOT exempt the employer from paying the additional
compensation required because it would prejudice the Ee, for he will be deprived
of the additional pay for the OT work he has rendered and which is utilized to
offset the undertime he may have incured. Undertime could be charged against
the Ees accrued leave.

Q: Socorro is a clerk‐typist in the Hospicio de San Jose, a charitable institution

dependent for its existence on contributions and donations from well wishers.
She renders work 11 hours a day but has not been given OT pay since her place
of work is a charitable institution. Is Socorro entitled to OT pay? Explain briefly.

A: Yes. Socorro is entitled to OT compensation. She does not fall under any of the
exceptions to the coverage of Art. 82, under the provisions of hours of work. The
Labor Code is equally applicable to non‐profit institutions. A covered Ee who
works beyond 8 hours is entitled to OT compensation. (2002 Bar Question)

Working Hours; Sick Leave; Overtime Pay (1997)

Danilo Flores applied for the position of driver in the motor-pool of Gold
Company, a multinational corporation. Danilo was informed that he would
frequently be working overtime as he would have to drive for the company's
executives even beyond the ordinary eight-hour work day. He was provided with
a contract of employment wherein he would be paid a monthly rate equivalent to
35 times his daily wage, regular sick and vacation leaves, 5 day-leave with pay
every month and time off with pay when the company's executives using the
cars do not need Danilo's service for more than eight hours a day, in lieu of
overtime. Are the above provisions of the contract of employment in conformity
with, or violative of, the law?
SUGGESTED ANSWER:
Except for the provision that Danilo shall have time off with pay when the
company's executives using the cars do not need Danilo's service for more than
eight hours a day, in lieu of overtime, the provisions of the contract of
employment of Danilo are not violative of any labor law because they instead
improve upon the present provisions of pertinent labor laws.

Thus, the monthly rate equivalent to 35 times the daily wage may be
sufficient to include overtime pay. There is no labor law requiring the payment of
sick and vacation leaves except the provision for a five-day service incentive
leave in the Labor Code. The 5-day-leave with pay every month has no
counterpart in Labor Law and is very generous.

As for the provision in Danilo's contract of employment that he shall receive

time off with pay in lieu of overtime, this violates the provision of the Labor Code
which states that undertime work on any particular day shall not be offset by
overtime work on any other day. Permission given to the employer to go on leave
 96

on some other day of the week shall not exempt the employer from paying the
additional compensation required by the Labor Code.

Q: The employment contract requires work for more than 8 hours a day
with a fixed wage inclusive of OT pay. Is that valid?
A: It depends.

1. When the contract of employment requires work for more than 8 hours at
specific wages per day, without providing for a fixed hourly rate or that the
daily wages include OT pay, said wages cannot be considered as including
OT compensation. (Manila Terminal Co. vs. CIR, et al., 91 Phil., 625)
2. However, the employment contract may provide for a “built ‐in” OT pay.
Because of this, non‐payment of OT pay by the employer is valid. (Eng’g
Equipment vs. Minister of Labor, G.R. No. L‐64967, Sep. 23, 1985)

E-E Relationship; Workers paid by Results (2004)

TRX, a local shipping firm, maintains a fleet of motorized boats plying the
island barangays of AP, a coastal town. At day’s end the boat operators/crew
members turn over to the boat owner their cash collections from cargo fees and
passenger fares, less the expenses for diesel fuel, food, landing fees and spare
parts. Fifty percent (50%) of the monthly income or earnings derived from the
operations of the boats are given to the boatmen by way of compensation. Are
these boatmen entitled to overtime pay, holiday pay, and 13th month pay? (5%)
SUGGESTED ANSWER:
If the boatmen are considered employees, like jeepney drivers paid on a
boundary system, the boatmen are not entitled to overtime and holiday pay
because they are workers who are paid by results. Said workers, under the
Labor Code are not entitled, among others, to overtime pay and holiday pay. In
accordance with the Rules and Regulations implementing the 13th month pay
law, however, the boatmen are entitled to the 13th month pay. Workers who are
paid by results are to be paid their 13th month pay.

Wage; Reduction of Minimum Pay & Wages (2006)

Can an employer and an employee enter into an agreement reducing or
increasing the minimum percentage provided for night differential pay, overtime
pay, and premium pay? (5%)
SUGGESTED ANSWER:
Article 100 of the Labor Code prohibits the elimination and the diminution of
benefits being enjoyed by employees at the time the law was passed. The
employer and employee cannot enter into an agreement to reduce the minimum
percentage provided by law for night differential pay, overtime pay and premium
pay as that would be against public policy. On the other hand, an agreement
increasing the percentage of benefits would be valid for being beneficial to the
employee. However, Art. 227 of the Labor Code authorizes diminution or
reduction of benefits in case of an impelling, reasonable justification arising out
of an emergency, exigency or business losses.
 97

Wages; Computation; Holiday Pay; Overtime

Pay (2002)
This year, National Heroes Day (August 25) falls on a Sunday. Sunday is the
rest day of Bonifacio whose daily rate is P500.00.

A. If Bonifacio is required by his employer to work on that day for eight (8)
hours, how much should he be paid for his work? Explain. (3%)

B. If he works for ten (10) hours on that day, how much should he receive for
his work? Explain. (2%)

SUGGESTED ANSWER (UP Law Complex):

A. For working on his scheduled rest day, according to Art 93(a), Bonifacio
should be paid P500.00 (his daily rate) plus P150.00 (30% of his daily rate) =
P650.00. This amount of P650.00 should be multiplied by 2 = P1 ,300.00. This is
the amount that Bonifacio as employee working on his scheduled rest day which
is also a regular holiday, should receive. Art. 94(c) of the Labor Code provides
that an employee shall be paid a compensation equivalent to twice his regular
rate for work on any regular holiday. The "regular rate" of Bonifacio on May 1,
2002 is with an additional thirty percent because the day is also his scheduled
rest day.

B. P1,300.00 which is the amount that Bonifacio is to receive for working on

May 1, 2002 should be divided by 8 to determine his hourly rate of P162.50.
This hourly rate should be multiplied by 2 (the number of hours he worked
overtime). Thus, the amount that Bonifacio is entitled to receive for his overtime
work on May 1, 2002 is P325.00. (note: The Examinee disagrees with this
answer. SUPPLY2)

Sia, the employer, admits that Damasco’s work starts at 8:30 in the morning
and ends up at 6:30 in the evening daily, except holidays and Sundays.
However, Sia claims that Damasco’s basic salary of P140.00 a day is more than
enough to cover the “one hour excess work” which is the compensation they
allegedly agreed upon. What other evidences are required to warrant the award
of overtime pay?
Judicial admissions made by parties in the pleadings, or in the course of the
trial or other proceedings in the same case are conclusive, no further evidence
being required to prove the same, and cannot be contradicted unless previously
shown to have been made through palpable mistake or that no such admission
was made. In view of Sia’s formal admission that Damasco worked beyond eight
hours daily, the latter is entitled to overtime compensation. No further proof is
required. Sia already admitted she worked an extra hour daily. Thus, public
respondent gravely erred in deleting the award of overtime pay to Damasco on
the pretext that the claim has no factual basis.
Still, even assuming that Damasco received a wage which is higher than the
minimum provided by law, it does not follow that any additional compensation
 98

due her can be offset by her pay in excess of the minimum, in the absence of an
express agreement to that effect. Moreover, such arrangement, if there be any,
must appear in the manner required by law on how overtime compensation must
be determined. For it is necessary to have a clear and definite delineation
between an employee’s regular and overtime compensation to thwart violation of
the labor standards provision of the Labor Code (Damasco vs. NLRC, G.R. No.
115755, December 4, 2000).

6. NIGHT WORK (R. A. NO. 10151), NIGHT SHIFT DIFFERENTIAL

Amendment introduced by R. A. 10151 (Arts. 154-161)

Chapter V
Employment of Night Workers

Article 154. Coverage. - This chapter shall apply to all persons, who shall be
employed or permitted or suffered to work at night, except those employed in
agriculture, stock raising, fishing, maritime transport and inland navigation,
during a period of not less than seven (7) consecutive hours, including the
interval from midnight to five o'clock in the morning, to be determined by the
Secretary of Labor and Employment, after consulting the workers'
representatives/labor organizations and employers.

Night worker' means any employed person whose work requires performance of
a substantial number of hours of night work which exceeds a specified limit. This
limit shall be fixed by the Secretary of Labor after consulting the workers'
representatives/labor organizations and employers.

Article 155. Health Assessment. - At their request, workers shall have the right
to undergo a health assessment without charge and to receive advice on how to
reduce or avoid health problems associated with their work:

(a) Before taking up an assignment as a night worker;

(b) At regular intervals during such an assignment; and

(c) If they experience health problems during such, an assignment which

are not caused by factors other than the performance of night work.

With the exception of a finding of unfitness for night work, the findings of such
assessments shall not be transmitted to others without the workers' consent and
shall not be used to their detriment.
 99

Article 156. Mandatory Facilities. - Suitable first aid facilities shall be made
available for workers performing night work, including arrangements where such
workers, where necessary, can be taken immediately to a place for appropriate
treatment. The employers are likewise required to provide safe and healthful
working conditions and adequate or reasonable facilities such as sleeping or
resting quarters in the establishment and transportation from the work premises
to the nearest point of their residence subject to exceptions and guidelines to be
provided by the DOLE.

Article 157. Transfer. - Night workers who are certified as unfit for night work,
due to health reasons, shall be transferred, whenever practicable, to a similar
job for which they are fit to work.

If such transfer to a similar job is not practicable, these workers shall be granted
the same benefits as other workers who are unable to work, or to secure
employment during such period.

A night worker certified as temporarily unfit for night work shall be given the
same protection against dismissal or notice of dismissal as other workers who
are prevented from working for reasons of health.

Article 158. Women Night Workers. - Measures shall be taken to ensure that an
alternative to night work is available to women workers who would otherwise be
called upon to perform such work:

(a) Before and after childbirth, for a period of at least sixteen (16) weeks,
which shall be divided between the time before and after childbirth;

(b) For additional periods, in respect of which a medical certificate is

produced stating that said additional periods are necessary for the health
of the mother or child:

(1) During pregnancy;

(2) During a specified time beyond the period, after childbirth is fixed
pursuant to subparagraph (a) above, the length of which shall be
determined by the DOLE after consulting the labor organizations
and employers.

During the periods referred to in this article:

(i) A woman worker shall not be dismissed or given notice of

dismissal, except for just or authorized causes provided for in
this Code that are not connected with pregnancy, childbirth
and childcare responsibilities.
 100

(ii) A woman worker shall not lose the benefits regarding her
status, seniority, and access to promotion which may attach
to her regular night work position.

Pregnant women and nursing mothers may be allowed to

work at night only if a competent physician, other than the
company physician, shall certify their fitness to render night
work, and specify, in the case of pregnant employees, the
period of the pregnancy that they can safely work.

The measures referred to in this article may include transfer

to day work where this is possible, the provision of social
security benefits or an extension of maternity leave.

The provisions of this article shall not leave the effect of

reducing the protection and benefits connected with maternity
leave under existing laws.

Article 159. Compensation. The compensation for night workers in the form of
working time, pay or similar benefits shall recognize the exceptional nature of
night work.

Article 160. Social Services. - Appropriate social services shall be provided for
night workers and, where necessary, for workers performing night work."

Article 161. Night Work Schedules. - Before introducing work schedules

requiring the services of night workers, the employer shall consult the workers'
representatives/labor organizations concerned on the details of such schedules
and the forms of organization of night work that are best adapted to the
establishment and its personnel, as well as on the occupational health measures
and social services which are required. In establishments employing night
workers, consultation shall take place regularly.

NOTES:

Before introducing work schedules requiring the services of night workers, the
employer shall consult the workers' representatives/labor organizations
concerned on

1. the details of such schedules

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

In establishments employing night workers, consultation shall take place

regularly.
 101

Night Shift Differential

Article 86. Night shift differential. Every employee shall be paid a night
shift differential of not less than ten percent (10%) of his regular wage for each
hour of work performed between ten o’clock in the evening and six o’clock in the
morning.

Rationale of Night Shift Differential

Night work cannot be regarded as desirable, either from the point of view of
the employer or the wage earner. It is uneconomical unless overhead costs are
unusually heavy. Frequently, the scale of wages is higher as an inducement to
employment on the night shift, and the rate of production is generally lower.

Working Hours; Night Shift Differential (2002)

As a tireman in a gasoline station, open twenty four (24) hours a day with
only five (5) employees, Goma worked from 10:00 P.M. until 7:00 A.M. of the
following day. He claims he is entitled to night shift differential. Is he correct?
Explain briefly. (3%)
SUGGESTED ANSWER:
Yes. Under Art 86 of the Labor Code, night shift differential shall be paid to
every employee for work performed between 10:00 o'clock in the evening to six
o'clock in the morning. Therefore, Goma is entitled to nightshift differential for
work performed from 10:00 pm until 6:00 am of the day following, but not from
6:00 am to 7:00 am of the same day.
ANOTHER SUGGESTED ANSWER:
The Omnibus Rules Implementing the Labor Code (In Book III, Rule II dealing
with night shift differential) provides that its provisions on night shift differential
shall NOT apply to employees of "retail and service establishments regularly
employing not more than five (5) workers". Because of this provision, Goma is not
entitled to night shift differential because the gasoline station where he works
has only five employees.

NO. 57, 2011 BAR

Night differential is differentiated from overtime pay in that

A. while overtime pay is given for overtime work done during day or night, night
differential is given only for work done between 10:00 p.m. and 6:00 a.m.
B. while overtime pay is paid to an employee whether on day shift or night shift,
night shift differential is only for employees regularly assigned to night work.
C. while overtime pay is for work done beyond eight hours, night differential is
added to the overtime pay if the overtime work is done between 6:00 p.m.
and 12 midnight.
D. while overtime pay is 25% additional to the employee's hourly regular wage,
night differential is 10% of such hourly wage without overtime pay.
 102

The burden of proving payment of night shift differential rests on the

employer. The fact that the employee neglected to substantiate his claim for night
shift differentials is not prejudicial to his cause. (Seaborne Carriers Corporation
v. NLRC, G. R. No. 88795, Oct. 4, 1994)

Since time immemorial, the universal rule is that a man works at night due to
some driving necessity rather than for reasons of convenience. Thus, it cannot be
argued that due to our warm climate some prefer to work at night in order to
avoid the heat of the day. (Shell Company of the Philippine Islands v. National
Labor Union, G. R. No. L-1309, July 26, 1948)

Q: What is night shift differential (NSD)?

A: It is additional compensation of not less than 10% of an Ees regular wage for
every hour worked between 10:00 pm to 6:00 am, whether or not such period is
part of the worker’s regular shift.

Q: Who are entitled to NSD?

A: GR: NSD applies to all employees (Ees).

XPN:
1. Ees of the Gov’t and any of its political subdivisions, including GOCC’s.
2. Retail and service establishments regularly employing not more than 5
workers.
3. Includes task and contract basis
4. Domestic helpers and persons in the personal service of another.
5. Field personnel and Ees whose time and performance is unsupervised by the
employer
6. Managerial Ees

Q: May an employee waive the right to NSD?

A: GR: No, such waiver is against public policy. (Mercury Drug Co., Inc. vs.
Dayao, et al., G.R. No. L‐30452, Sep. 30, 1982)
XPN: Higher/better benefits

Nightwork

Q: What is nightwork?
A: Any and all work rendered between 6:00 pm and 6:00 am. (National Rice &
Corn Corp. v. NARIC, 105 Phil 891)

Q: What is night work prohibition with regard to women workers?

A: GR: No woman regardless of age shall be employed or permitted to work,

with or without compensation in any:
 103

1. Industrial undertaking or branch thereof between 10pm and 6am of the

following day.

2. Commercial or non‐industrial undertaking or branch thereof, other than

agricultural, between midnight and 6am of the following day.

3. Agricultural undertaking at nighttime unless she is given period of rest not

less than 9 consecutive hours.

XPNS:

1. Actual or impending emergencies

a. Caused by serious accident, fire, flood, typhoon, earthquake,

epidemic, other disasters, or calamity
b. To prevent loss of life or property or
c. In case of force majeure or
d. Imminent danger to public safety

2. Urgent work

a. To be performed on machineries, equipment or installations,

b. To avoid serious loss which the Er would otherwise suffer

3. Work is necessary to prevent serious loss to perishable goods

4. Woman Ees

a. Holds a responsible position of managerial or technical nature,

or
b. Has been engaged to provide health and welfare services

5. Nature of the work

a. Requires the manual skill and dexterity of women workers

and
b. The same cannot be performed with equal efficiency by male
workers

6. Women Ees are immediate members of the establishment or undertaking

7. In analogous cases exempted by the SLE in appropriate regulations. (Art. 131)

Note: The operation of Call Contract Centers which provides offshore case
solutions to US based clients who phone in to conduct product inquiries and
technical support, operating for 24/7, has been exempted from the prohibition
considering the inevitable time difference between the US and the Phils. and the
 104

peak time for its operation is between 8:00 pm to 10:00 am Manila time, thereby
making it necessary for 80% of its Ees, including women, to work during
graveyard shift. (BWC‐WHSD Opinion No. 491, s. 2003)

7. PART-TIME WORK

Purpose of the 8-Hour Labor Law

The Eight-hour Labor Law was enacted not only to safeguard the health and
welfare fo the laborer or employee, but in a way to minimize unemployment by
forcing employers, in cases where more than 8-hour operation is necessary, to
utilize different shifts of laborers or employees working only for 8 hours each.

Part-Time Work

Considering the purpose of the law, as mentioned above, it is not prohibited to

have normal hours of work of less than eight hours a day. What the law
regulates is work hours exceeding eight.

Part-time work is common in work places, such as restaurants, in schools,

and even in factories.

Entitlement of Part-Time or Contractual Workers to Service Incentive

Leave

Bureau of Working Conditions, Advisory Opinion to Philippine Integrated

Exporters, Inc. on the query about Conditions of Employment of Part
time Workers

Part-time workers are entitled to the full benefit of the yearly 5 days service
incentive leave with pay. The reason is that the provisions of Article 95 of the
Labor Code and its implementing rules, speak of the number of months in a year
for entitlement to said benefit. Consequently, part-time employees are also
entitled to the full five days service incentive leave benefit and not on a pro-rata
basis.

8. CONTRACT FOR PIECE WORK (SEE CIVIL CODE)

Art. 1467, Civil Code. A contract for the delivery at a certain price of an article
which the vendor in the ordinary course of his business manufactures or
procures for the general market, whether the same is on hand at the time or not,
is a contract of sale, but if the goods are to be manufactured specially for the
 105

customer and upon his special order, and not for the general market, it is a
contract for a piece of work.

Art. 1644, Civil Code. In the lease of work or service, one of the parties binds
himself to execute a piece of work or to render to the other some service for a
price certain, but the relation of principal and agent does not exist between them.

B. WAGES

Coverage and Exclusions

Q: To whom does the title on wages apply?

A: GR: It applies to all employees

XPN:
1. Farm tenancy or leasehold;
2. Household or domestic helpers, including family drivers and persons working
in the personal service of another;
3. Home workers engaged in needlework or in any cottage industry duly
registered in accordance with law;
4. Workers in duly registered cooperatives when so recommended by the
Bureau of Cooperative Development and upon approval of the Secretary of
Labor and Employment.
5. Workers of a barangay micro business enterprise (R.A. 9178)

Q: What is a wage?

A: It is the remuneration or earnings, however designated, 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, payable by an
employer (Er) to an employee (Ee) under a written or unwritten contract of
employment:

a. For work done or to be done, or for services rendered or to be

rendered; and includes

b. Fair and reasonable value of board, lodging, or other facilities

customarily furnished by the Er to the Ee as determined by SLE.

Q: What do you mean by customary?

A: It is founded on long‐established and constant practice connoting regularity.

Q: What do you mean by fair and reasonable value?

A: It shall not include any profit to the employer (Er) or to any person affiliated
with the Er.
 106

No work, No pay principle

Q: What does a “fair day’s wage for a fair day’s labor “mean (no work no
pay)?

A: GR: If there is no work performed by the Ee, without the fault of the Er, there
can be no wage or pay.

XPN: The laborer was able, willing and ready to work but was:
1. Prevented by management;
2. Illegally locked out;
3. Illegally suspended;
4. Illegally dismissed
5. Otherwise illegally prevented from working. (Aklan Electric Coop. v. NLRC,
G.R. No. 129246, Jan. 25, 2000)

CBA provision vis‐à‐vis Wage Order CBA Credibility

Q: Meycauayan College Faculty and Personnel Association as the employees

union in Meycauayan College, admits that its members were paid all the
increases in pay as mandated law. It appears however that in 1987, shortly
after union President Joy Bugo turned over the presidency, she discovered that
Art. IV of the CBA, which provides for higher salary increase was not
implemented. May the union claim the difference between their old salaries and
those provided by said CBA provision?
A: Yes, the terms and conditions of a collective bargaining contract constitute the
law between the parties. Beneficiaries thereof are therefore, by right, entitled to
the fulfillment of the obligation prescribed therein. Consequently, to deny binding
force to the CBA would place a premium on a refusal by a party thereto to
comply with the terms of the agreement. Such refusal would constitute an unfair
labor practice.

Moreover, compliance with a collective bargaining agreement is mandated by the

expressed policy to give protection to labor. Unless otherwise provided by law,
said policy should be given paramount consideration. (Meycauayan College v.
DRILON, G.R. No. 81144, My 7, 1990).

Worker’s preference in case of bankruptcy

Q: What is bankruptcy?
A: “Bankruptcy” is referred to in the Philippines as “Insolvency”. It denotes the
state of an entity or person that has liabilities greater than its assets.

Q: What happens if the Er business experiences bankruptcy or

liquidation?
 107

A: His workers shall enjoy first preference as regards their wages and monetary
claims, any provision of the law to the contrary notwithstanding.

Q: What are the principles underlying the preference?

A:

1. Declaration of bankruptcy or judicial liquidation before enforcement of the

worker’s preferential right;
2. Filing of claims by workers;
3. The right does not constitute a lien to the property of the insolvent debtor in
favor of workers. (DBP vs. NLRC, G.R. No. 82763 Mar. 19, 1990 and G.R. No.
97176, Mar. 18, 1993);
4. The preference in favor of the Ees applies to discharge of funds. The
preference does not only cover unpaid wages, it also extends to termination
pay and other monetary claims;
Note: Termination pay, after all, is considered as additional remuneration
for services rendered to the employer for a certain period of time; it is
computed on the basis of length of service. (PNB vs. Cruz, G.R. No. 80593,
Dec. 18, 1989)
Applicable only to ordinary preferred credit, hence, must yield to special
preferred credits.

Q: Are workers preferred than the tax claims of the Gov’t?

A: No. Art. 110 did not sweep away the overriding preference accorded under
the scheme of the Civil Code to tax claims of the government.

Q: Is worker preference applicable if the Er corporation is under

rehabilitation?

A: No. Suspension of payments order by the SEC mandates the holding in

abeyance the filing or the proceedings on labor cases against an Er who is under
rehabilitation to give the Er the chance to concentrate on how to revive his
business and not be distracted in trying to defend itself in labor cases filed
against it. (Rubberworld, Inc. v. NLRC, G.R. No. 126773, April 14, 1999)

Q: Premiere Bank, being the creditor‐mortgagee of XYZ & Co., a garment firm,
foreclosed the hypothecated assets of the latter. Despite the foreclosure, XYZ &
Co. continued its business operations. A year later, the bank took possession of
the foreclosed property. The garment firm's business operations ceased without
a declaration of bankruptcy. Caspar, an employee of XYZ & Co., was dismissed
from employment due to the cessation of business of the firm. He filed a
complaint against XYZ & Co. and the bank. The Labor Arbiter, after hearing, so
found the company liable, as claimed by Caspar, for separation pay. Premiere
Bank was additionally found subsidiarily liable upon the thesis that the
satisfaction of labor benefits due to the Ee is superior to the right of a mortgagee
of property. Was the Labor Arbiter correct in his decision?
 108

A: No. The preference of credits established in Art. 110 of the LC cannot be

invoked in the absence of any insolvency proceedings, declaration of
bankruptcy, or judicial liquidation. (DBP v. Santos, G.R. No. 75801, March 20,
1991). (2003 Bar Question)

Q: Distinguish the mortgage created under the Civil Code from the right of 1st
preference created by the LC as regards the unpaid wages of workers. Explain.

A: A mortgage directly subjects the property upon which it is imposed, whoever

the possessor may be, to the fulfillment of the obligation for which it was
constituted. It creates a real right which is enforceable against the whole world.
It is therefore a lien on an identified real property.

Mortgage credit is a special preferred credit under the Civil Code in the
classification of credits. The preference given by the LC when not attached to
any specific property is an ordinary preferred credit. (1995 Bar Question)

Labor Code provisions for wage protection

Q: What are the Labor Code provisions for wage protection

A:
Art. 112. Non‐Interference in Disposal of Wages‐No employer shall limit or
otherwise interfere with the freedom of any employee to dispose of his wages.
He shall not in any manner force, compel or oblige his employees to purchase
merchandise, commodities or other properties from the employer or from any
other person, or otherwise make use of any store or service of such employer or
any other person.
Art. 113 Wage Deduction‐No employer in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:

(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
Secretary of Labor.

Art. 114 No employer shall require his worker to make deposits from which
deductions shall be made for the reimbursement of loss of or damage to tools,
materials or equipments supplied by the employer; except when the employer is
engaged in such trades, occupations or business where the practice of making
deductions or requiring deposits is a recognized one, or is necessary, or
 109

desirable as determined by the Secretary of Labor in appropriate rules and

regulations.
Art. 115 Limitations‐No deduction from the deposits of an employee for the actual
amount of the loss or damage shall be made unless the employee has been
heard thereon, and his responsibility has been clearly shown.
Art 116 Withholding of Wages and Kickbacks Prohibited‐It shall be unlawful for
any person, directly or indirectly, to withhold any amount from the wages of a
worker or induce him to give up any part of his wages by force, stealth,
intimidation, threat or by any other means whatsoever without the worker’s
consent.
Art 117 Deduction to Ensure Employment‐It shall be unlawful to make any
deduction from the wages of any employee for the benefit of the employer or his
representative or intermediary as consideration of a promise of employment or
retention in employment or retention in employment.
Art. 118 Retaliatory Measures‐It shall be unlawful for an employer to refuse to
pay or reduce the wages and benefits, discharge or in any manner discriminate
against any employee who has filed any complaint instituted any proceeding
under this Title or has testified or is about to testify in such proceedings.

Attorney’s fees

Q: What are the limitations to the assessment of attorney’s lien against

the culpable party?

A:

1. In case of unlawful withholding of wages – 10% of the amount of wages to be

recovered.
2. It shall be unlawful for any person to demand or accept, in any judicial or
administrative proceedings for the recovery of wages, atty’s fees that exceed
10% of the amount of wages recovered.

Note: The prohibition on atty’s lien refers to proceedings for recovery of wages
and not to services rendered in connection with CBA negotiations. In the latter
case, the amount of atty’s fees may be agreed upon by the parties and the same
is to be charged against union funds as provided for in Art. 222 of the Labor
Code. (Pacific Banking Corp.v. Clave, G.R. No. 56965, Mar. 7, 1984)

Q: What is ordinary attorney’s fee?

A: It is the reasonable compensation paid to a lawyer by his client for the legal
services he has rendered.

Q: What is extraordinary attorney’s fee?

A: It is the indemnity for damages ordered by the court to be paid by the losing
party in litigation and is not to be paid to the lawyer but to the client, unless they
have agreed that the award shall pertain to the lawyer as an additional
 110

compensation or as a part thereof. (Traders Royal Bank Ee’s Union‐Independent

v. NLRC, G.R. No. 120592, Mar. 14, 1997)

Note: Art.111 of the LC deals with the extraordinary concept of attorney’s fees. It
may not be used as the standard in fixing the amount payable to the lawyer by
his client for the legal services he rendered. (Masmud v. NLRC, G.R. No. 183385,
Feb. 13, 2009)

Q: Santiago, a project worker, was being assigned by his Er, Bagsak Builders, to
Laoag, Ilocos Norte. Santiago refused to comply with the transfer claiming that it,
in effect, constituted a constructive dismissal because it would take him away
from his family and his usual work assignments in Metro Manila. The Labor
Arbiter (LA) found that there was no constructive dismissal but ordered the
payment of separation pay due to strained relations between Santiago and
Bagsak Builders plus atty’s fees equivalent to 10% of the value of Santiago's
separation pay.

Is the award of atty's fees valid? State the reasons for your answer.

A: No, the award of atty’s fees is not valid. According to the LC (Art. 111 [a]),
atty’s fees may be assessed in cases of unlawful withholding of wages which
does not exist in the case. The worker refused to comply with a lawful transfer
order, and hence, a refusal to work. Given this fact, there can be no basis for the
payment of atty's fees.

Could the LA have validly awarded moral and exemplary damages to

Santiago instead of atty's fees? Why?

A: No, moral and exemplary damages can be awarded only if the worker was
illegally terminated in an arbitrary or capricious manner. (Nueva Ecija Electric
Cooperative Inc., Ees’ Ass’n., vs. NLRC, G.R. No. 116066, Jan. 24, 2000; Cruz
vs. NLRC, G.R. No. 116384, Feb. 7, 2000; Phil. Aeolus etc., vs. NLRC, G.R. No.
124617, April 28, 2000). (2001 Bar Question)

Q: When can attorney’s fees and damages be awarded in an illegal

dismissal case?
A: For attorney’s fees, moral and exemplary damages to be granted, the plaintiff
must prove that the facts of his case fall within the enumerated instances in the
Civil Code. Thus, moral damages may only be recovered where the dismissal or
suspension of the employee was attended by bad faith or fraud, or constituted
an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy. In other words, the act must be a conscious and
intentional design to do a wrongful act for a dishonest purpose or some moral
obliquity. Exemplary damages, on the other hand, may only be awarded where
the act of dismissal was effected in a wanton, oppressive or malevolent manner.
(Chaves v. NLRC,G.R. No. 166382, June 27, 2006)

Q: What is union service fee?

 111

A: The appearance of labor federations and local unions as counsel in labor

proceedings has been given legal sanction under Art.222 of the LC, which allows
non‐lawyers to represent their organization thereof. The said labor federations
and local unions have a valid claim to atty’s fees which is called the Union
Service Fee.

1. WAGE VS. SALARY

Q: Distinguish between wage and salary.

A:

WAGE SALARY
(Gaa vs.CA, G.R. No. 44169, Dec. 3, 1985)
Compensation for manual labor (skilled Paid to “white collared workers” and
or unskilled) also known as “blue denotes higher degree of
collared workers”, paid at stated times employment or a superior grade of
and measured by the day, week, services and implies a position in
month or season. office.
Considerable pay for a lower and less Out gesture of a larger and more
responsible character of employment. important service
GR: Not subject to execution Subject to execution.
XPN: Debts incurred for food, shelter,
clothing and medical attendance.

2. MINIMUM WAGE DEFINED, MINIMUM WAGE SETTING

What is meant by statutory minimum wage?

The term statutory minimum wages refers simply to the lowest basic wage
rate fixed by law that an employer can pay his workers.

How is the minimum wage fixed?

The minimum wage rates for agricultural and non-agricultural workers and
employees in every region shall be those prescribed by the Regional Tripartite
Wages and Productivity Boards (RTWPB) which shall in no case be lower than
the statutory minimum wage rates.

What is the basis of the computation of the statutory minimum wage?

The basis of the minimum wage rates prescribed by law shall be the normal
working hours which shall not be more than eight hours a day.

What is a wage order?

 112

It refers to the order promulgated by the Regional Tripartite and Productivity

Board pursuant to its wage fixing authority.

Q: What are the standards or criteria for minimum wage setting?

A: In the determination of such regional minimum wages, the Regional Board

shall, among other relevant factors consider the following:

a) The demand for living wages

b) Wage adjustment vis‐a‐vis the consumer price index
c) The cost of living and changes or increases therein
d) The needs of workers and their families
e) The need to induce industries to invest in the countryside
f) Improvements in standards of living
g) The prevailing wage levels
h) Fair return of the capital invested and capacity to pay of employers
i) Effects on employment generation and family income
j) The equitable distribution of income and wealth along the imperatives of
economic and social development

No. 24, 2011 BAR

The CBA for the period January 2007 to December 2009 granted the
employees a P40 per day increase with the understanding that it is creditable as
compliance to any future wage order. Subsequently, the regional wage board
increased by P20 the minimum wage in the employer’s area beginning January
2008. The management claims that the CBA increase may be considered
compliance even if the Wage Order itself said that “CBA increase is not
creditable as compliance to the Wage Order.” Is the management's claim valid?

A. Yes, since creditability of the CBA increase is the free and deliberate
agreement and intention of the parties.
B. Yes, since the Wage Order cannot prejudice the management’s vested interest
in the provisions of the CBA.
C. No, disallowing creditability of CBA pay increase is within the wage board's
authority.
D. No, the CBA increase and the Wage Order are essentially different and are to
be complied with separately.

Criteria/ Factors for Wage Setting

Q: What is salary ceiling method?

A: A method of minimum wage adjustment whereby the wage adjustment is

applied to Ees receiving a certain denominated ceiling. In other words, workers
already being paid more than the existing minimum wage are also to be given a
wage increase. (ECOP v. NWCP, G.R. No. 96169, Sep. 24, 1991)
 113

Q: What is a floor wage method?

A: It involves the fixing of a determinate amount to be added to the prevailing
statutory minimum wage rates.

Q: The Regional Wage Board of Region II issued a Wage Order granting all Ees
in the private sector throughout the region an across‐the‐board increase of
P15.00 daily. Is this Wage Order valid?
A: The Wage Order is valid insofar as the mandated increase applies to Ees
earning the prevailing minimum wage rate at the time of the passage of the
Wage Order and void with respect to its application to Ees receiving more than
the prevailing minimum wage rate at the time of the passage of the Wage Order.
Pursuant to its authority, the Regional Wage Boards may issue wage orders
which set the daily minimum wage rates. In the present case, the Regional Wage
Board did not determine or fix the minimum wage rate. It did not set a wage
level nor a range to which a wage adjustment or increase shall be added.
Instead, it granted an across‐the‐board wage increase of P15.00 to all Ees in the
region. In doing so, the Regional Wage Board exceeded its authority by extending
the coverage of the Wage Order to wage earners receiving more than the
prevailing minimum wage rate, without a denominated salary ceiling. The Wage
Order granted additional benefits not contemplated by R.A. No. 6727. (MBTC v
NWPC Commission, G.R. No. 144322, Feb. 6, 2007)

Q: Since the Wage Order was declared void with respect to its application to
employees receiving more than the prevailing minimum wage rate at the time of
the passage of the Wage Order, should these Ees refund the wage increase
received by them?
A: No. The Ees should not refund the wage increase that they received under the
invalidated Wage Order. Being in good faith, the employees need not refund the
benefits they received. Since they received the wage increase in good faith, in the
honest belief that they are entitled to such wage increase and without any
knowledge that there was no legal basis for the same, they need not refund the
wage increase that they already received. (MBTC v NWPC Commission, G.R. NO.
144322, Feb. 6, 2007)

Q: Distinguish CBA and Wage Order.

A:

CBA WAGE ORDER

Not an ordinary contract. It can be Administrative issuance which
entered into only by an exclusive results from a statute (RA 6727)
bargaining agent or unit.
If the CBA provides better benefits then Only sets the minimum
the employees shall be entitled to the
same.
 114

Q: Can a CBA provision regarding wages prevail over a Wage Order?

A: Yes, where the CBA provides a wage or salary to be received by the

employees which is more than the amount set by the Wage Order, whether
issued prior to or after the conclusion of the CBA, it is incumbent upon the
employer to compensate the employees according to the provisions of the CBA
with respect to wages.

3. MINIMUM WAGE OF WORKERS PAID BY RESULTS

A) MINIMUM WAGE OF WORKERS PAID BY RESULTS

(SUPPLY2)

B) MINIMUM WAGE OF APPRENTICES

Q: What is the wage rate of an apprentice?

A: Start at not less than 75% of the statutory minimum wage for the 1st 6
months (except OJT); thereafter, shall be paid in full minimum wage, including
the full COLA.

C) MINIMUM WAGE OF LEARNERS

The wages or salary rates of the learners shall begin at not less than 75% of
the applicable minimum wage.

D) MINIMUM WAGE OF PERSONS WITH DISABILITY

(SUPPLY2)

4. COMMISSIONS

If the commissions are in a wage-or sales- percentage type, they may

properly be considered part of the basic salary. These commissions are not
overtime payments, nor profitsharing payments nor any other fringe benefit.
Thus, the salesman’s commissions, comprising a predetermined percent of the
selling price of the goods sold by each salesman, were properly included in the
term “basic salary” for purposes of computing their 13th month pay (Philippine
Duplicators, Inc. vs. NLRC and Philippine Duplicators Employees Union).
 115

In remunerative schemes consisting of a fixed or guaranteed wage plus

commission, the fixed or guaranteed wage is patently the “basic salary” for this
is what the employee receives for a standard work period. Commissions are
given for extra efforts exerted in consummating sales or other related
transactions. They are, as such, additional pay, which the Court has made clear
do not form part of the “basic salary” (Boie-Takeda Chemicals, Inc. vs. Dionisio
Dela Serna).

5. DEDUCTIONS FROM WAGES

Q: What is the rule in wage deductions?

A:
GR: It is strictly prohibited
XPN:

1. Deductions under Art. 113 for insurance premiums

2. Union dues in cases where the right of the worker or his union to check off
has been recognized by the employer (Er) or authorized in writing by the
individual worker concerned (Art. 113). Art. 241(o) provides that special
assessments may be validly checked‐off provided that there is an individual
written authorization duly signed by every employee (Ee).
3. Deductions for SSS, Medicare and Pag‐ibig premiums
4. Taxes withheld pursuant to the Tax Code
5. Deductions under Art. 114 for loss or damage to tools, materials or
equipments
6. Deductions made with the written authorization of the Ee for payment to a
third person. (Sec 13, Rule VIII, Book III of the IRR)
7. Deductions as disciplinary measures for habitual tardiness (Opinion dated
March 10, 1975 of the SLE)
8. Agency fees under Art. 248(e)
9. Deductions for value of meals and facilities freely agreed upon
10. In case where the Ee is indebted to the Er where such indebtedness has
become due and demandable. (Art. 1706, Civil Code)
11. In court awards, wages may be subject of execution or attachment, but
only for debts incurred for food, shelter, clothing, and medical attendance.
(Art. 1703, Civil Code)
12. Salary deduction of a member of a legally established cooperative. (R.A.
6938, Art. 59)

6. NON-DIMINUTION OF BENEFITS
 116

Q: What is the concept of non‐diminution (ND) of benefits?

A: GR: Benefits being given to employees (Ees) cannot be taken back or

reduced unilaterally by the employer (Er) because the benefit has become part
of the employment contract, whether written or unwritten.
XPN: To correct an error, otherwise, if the error is not corrected for a reasonable
time, it ripens into a company policy and Ees can demand it as a matter of
right.

Q: When is ND of benefits applicable?

A: It is applicable if it is shown that the grant of benefit:

1. Is based on an express policy of the law; or

2. Has ripened into practice over a long period of time and the practice is
consistent and deliberate and is not due to an error in the construction/
application of a doubtful or difficult question of law.

No. 56, 2011 BAR

X Company’s CBA grants each employee a 14th month year-end bonus.
Because the company is in financial difficulty, its head wants to negotiate the
discontinuance of such bonus. Would such proposal violate the “nondiminution
rule” in the Labor Code?

A. No, but it will certainly amount to negotiating in bad faith.

B. Yes since the rule is that benefits already granted in a CBA cannot be
withdrawn or reduced.
C. No, since the law does not prohibit a negotiated discontinuance of a CBA
benefit.
D. Yes, since such discontinuance will cancel the enjoyment of existing benefits.

7. FACILITIES VS. SUPPLEMENTS

Q: Distinguish between facilities and supplement

A:

FACILITIES
Items of expenses necessary for the
laborer’s and his family’s existence
and subsistence
Note: Does not include tools of trade or
articles / services primarily for the
benefit of the Er or necessary to the
conduct of the Er’s business.
SUPPLEMENT
Extra remuneration or special
privileges or benefits given to or
received by the laborers over and
above their ordinary earnings or
wages (Atok Big Wedge Mining Co. v.
Atok Big Wedge Mutual Benefit
Assoc, G.R. No. L‐7349, July 19,
1955) .
 117

Forms part of the wage Independent of wage

Deductible from wage Not wage deductible
For the benefit of the worker and his Granted for the convenience of the Er.
family.

Q: What is the criterion in determining whether an item is a supplement

or facility?
A: The criterion is not so much with the kind of the benefit or item (food, lodging,
bonus or sick leave) given, but its purpose. (State Marine v. Cebu Seamen’s
Ass’n., G.R. No. L‐12444, Feb. 28, 1963)

Q: When can the cost of facilities furnished by the Er be charged against

an Ee?
A: In order that the cost be charged against the Ee, the latter’s acceptance of
such facilities must be voluntary.

Q: What are the requirements for deducting values for facilities?

A:

1. Proof must be shown that such facilities are customarily furnished by the
trade
2. The provision of deductible facilities must be voluntarily accepted in writing
3. The facilities must be charged at fair and reasonable value (Mabeza v. NLRC,
G.R. No. 118506, April 18, 1997)

Q: Are food and lodging, or the electricity and water consumed by a

hotel worker, considered facilities?
A: No. These are supplements. Considering, therefore, that hotel workers are
required to work different shifts and are expected to be available at various odd
hours, their ready availability is a necessary matter in the operations of a small
hotel. Furthermore, granting that meals and lodging were provided and indeed
constituted facilities, such facilities could not be deducted without the Er
complying first with certain legal requirements. (Mabeza v. NLRC, G.R. No.
118506, April 18, 1997)

8. WAGE DISTORTION/ RECTIFICATION

Q: What is wage distortion (WD)?

A: A situation where an increase in wage results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates
between and among the Ee‐groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills,
length of service or other logical bases of differentiation.

Q: What are the elements of WD?

 118

A:

1. An existing hierarchy of positions with corresponding salary rates.

2. A significant change or increase in the salary rate of a lower pay class
without a corresponding increase in the salary rate of a higher one;
3. The elimination of the distinction between the 2 groups or classes; and
4. The WD exists in the same region of the country. (Alliance Trade Unions v.
NLRC, G.R. No. 140689, Feb. 17, 2004)

Q: Is the Er legally obliged to correct WD?

A: The Er and the union shall negotiate to correct the distortions. If there is no
union, the Er and the workers shall endeavor to correct such distinctions.

Q: What are the basic principles in WD?

A:

1. The concept of WD assumes an existing group or classification of Ees which

establishes distinctions among such Ees on some relevant or legitimate basis.
This classification is reflected in a differing wage rate for each of the classes
of Ees
2. Often results from gov’t decreed increases in minimum wages.
3. Should a WD exist, there is no legal requirement that, in the rectification of
that distortion by re‐adjustment of the wage rates of the differing classes of
Ees, the gap which had previously or historically existed be restored in
precisely the same amount. In other words, correction of a WD may be done
by reestablishing a substantial or significant gap (as distinguished from the
historical gap) between the wage rates of the differing classes of Ees.
4. The re‐establishment of a significant difference in wage rates may be the
result of resort to grievance procedures or collective bargaining negotiations.
(Metro Transit Org., Inc. v. NLRC, G.R. No. 116008, July 11, 1995)

Q: Distinguish the process for correction of WD of organized

establishments and unorganized establishments?
A:

Establishment Unorganized Establishments

(with union)
The Er and the union shall negotiate
to correct distortion.
Any dispute shall be resolved through
a grievance procedure under the CBA.
If it remains unresolved, it shall be
dealt with through voluntary
arbitration.
The dispute will be resolved within 10
days from the time the dispute was
(without union)
The Er and the workers shall
endeavor to correct the distortion.
Any dispute shall be settled through
the NCMB.
If it remains unresolved within 10
days it shall be referred to the NLRC.
The NLRC shall conduct continuous
hearings and decide the dispute
 119

referred to voluntary arbitration. within 20 days from the time the same
was referred.

Q: Can the issue of WD be raised in a notice of strike?

A: No. WD is non‐strikeable. (Ilaw at Buklod ng Manggagawa v. NLRC, G.R. No.
91980, June 27, 1991.) WD is neither a deadlock in collective bargaining nor
ULP.

Wage Distortion (2002)

A. How should a wage distortion be resolved (1) in case there is a collective
bargaining agreement and (2) in case there is none? Explain briefly. (3%)
SUGGESTED ANSWER:
A. According to Art. 124 of the Labor Code, in case there is a collective
bargaining agreement, a dispute arising from wage distortions shall be resolved
through the grievance machinery provided in the CBA, and if remains
unresolved, through voluntary arbitration. In case there is no collective
bargaining agreement, the employers and workers shall endeavor to correct such
distortions. Any dispute arising therefrom shall be settled through the National
Conciliation and Mediation Board and if it remains unresolved after ten (10)
calendar days of conciliations, then the dispute is referred to the appropriate
branch of the National Labor Relations Commission.

Wage; Wage Distortion; Definition &

Elements (2006)
When is there a wage distortion?
ALTERNATIVE ANSWER:
A WAGE DISTORTION arises when an increase in prescribed wage rates
results in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such wage
structure based on skills, length of service, or other logical bases of
differentiation (Article 124, Labor Code of the Philippines).
ALTERNATIVE ANSWER:
There is wage distortion when the following four elements concur:
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.

Wage; Wage Distortion; Means of Solving

(2006)
How should a wage distortion be settled?
SUGGESTED ANSWER:
In organized establishments, the wage distortion shall be resolved through
the GRIEVANCE PROCEDURE under their collective bargaining agreement, and if
it remains unresolved, through VOLUNTARY ARBITRATION. On the other hand,
 120

in establishments where there are no collective bargaining agreements or

recognized labor unions, the employers and workers shall endeavor to correct
such distortion. Any dispute arising therefrom shall be settled through the
National Conciliation and Mediation Board, and if it remains unresolved after ten
(10) calendar days of conciliation, shall be referred to the appropriate branch of
the National Labor Relations Commission for COMPULSORY ARBITRATION
(Article 124, Labor Code of the Philippines).

Wage; Wage Distortion; Not a ground for Strike/Lockout (2006)

Can the issue of wage distortion be raised in a notice of strike? Explain. (10%)
SUGGESTED ANSWER:
NO. Section 16, Chapter I of Rules Implementing RA 6727 provides that "Any
dispute involving wage distortions shall not be a ground for strike/lockout."
Article 124 of the Labor Code, as amended by Republic Act 6727 prescribes a
procedure for the correction of a wage distortion, implicitly excluding strikes or
lockouts or other concerted activities as modes of settlement of the issue. The
legislative intent that wage distortion shall be solved by voluntary negotiation or
arbitration is made clear in the rules (Ilaiv at Buklod ng Manggagawa v. NLRC,
G.R. No. 91980, June 27, 1991).

9. DIVISOR TO DETERMINE DAILY RATE

(SUPPLY2)

C. REST PERIODS
1. WEEKLY REST DAY

Article 91, Labor Code. Right to weekly rest day.

(a) It shall be the duty of every employer, whether operating for profit or not,
to provide each of his employees a rest period of not less than twenty-four (24)
consecutive hours after every six (6) consecutive normal work days.

(b) The employer shall determine and schedule the weekly rest day of his
employees subject to collective bargaining agreement and to such rules and
regulations as the Secretary of Labor and Employment may provide. However,
the employer shall respect the preference of employees as to their weekly rest
day when such preference is based on religious grounds.

Q: What is the right to weekly rest day (WRD)?

A: Every employer shall give his employees a rest period of not less than 24
consecutive hours after every 6 consecutive normal work days. (Sec. 3, Rule III,
Book III, IRR)
 121

Q: What is the scope of WRD?

A: It shall apply to all employers whether operating for profit or not, including
public utilities operated by private persons. (Sec. 1, Rule III, Book III, IRR)

Q: Who determines the WRD?

A: GR: Er shall determine and schedule the WRD of his Ee.

XPNs:
1. CBA
2. Rules and regulations as the SLE provides
3. Preference of employee (Ee) based on religious grounds – Ee shall make
known his preference in writing at least 7 DAYS before the desired effectivity
of the initial rest day so preferred. (Sec. 4(1), Rule III, Book III, IRR)

XPN to XPN no. 3: Employer (Er) may schedule the WRD of his choice for at
least 2 days in a month if preference of the employee will inevitably result in:
a. serious prejudice to the operations of the undertaking and
b. the Er cannot normally be expected to resort to other remedial measures. (Sec.
4(2), Rule III, Book III, IRR)

Q: When should employees (Ees) be informed of their schedule of WRD?

A: Er shall make known rest period by means of:
1. Written notice
2. Posted conspicuously in the workplace
3. At least 1 week before it becomes effective. (Sec.5, Rule III, Book III. IRR)

2. EMERGENCY REST DAY WORK

Article 92. When employer may require work on a rest day. The employer may
require his employees to work on any day:

a) In case of actual or impending emergencies caused by serious accident,

fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to
prevent loss of life and property, or imminent danger to public safety;
b) In cases of urgent work to be performed on the machinery, equipment, or
installation, to avoid serious loss which the employer would otherwise
suffer;
c) In the event of abnormal pressure of work due to special circumstances,
where the employer cannot ordinarily be expected to resort to other
measures;
d) To prevent loss or damage to perishable goods;
e) Where the nature of the work requires continuous operations and the
stoppage of work may result in irreparable injury or loss to the employer;
and
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f) Under other circumstances analogous or similar to the foregoing as

determined by the Secretary of Labor and Employment.

NOTES:

Q: Can an Ee be compelled to work on his rest day?

A: GR: No.

XPN:
1. Urgent work to be performed on the machinery, equipment or installation, to
avoid serious loss which the Er would otherwise suffer;
2. Nature of work requires continuous operations for 7 days in a week or more
and stoppage of the work may result in irreparable injury or loss to the Er;
3. Abnormal pressure of work due to special circumstances, where the Er cannot
be ordinarily expected to resort to other measures;
4. Actual or impending emergencies (serious accident, fire, flood, typhoon,
earthquake, etc.)
5. Prevent loss or damage to perishable goods;
6. Analogous or similar circumstances as determined by the SLE;
7. Work is necessary to avail of favorable weather or environmental conditions
where performance or quality of work is dependent thereon.

Q. What is the rule when an Ee volunteers to work on his rest day under
other circumstances?
A: He shall express it in writing subject to additional compensation. (Sec. 6[2],
Rule III, Book III, IRR)

Q: What is premium pay?

A: It is the additional compensation for work rendered by the employee on days
when normally he should not be working such as special holidays and weekly
rest days.

Q: Can the Er and Ee agree on the rate of premium pay other than that
provided by law?
A: Yes. Nothing shall prevent the Er and his Ee or their representatives from
entering into any agreement with terms more favorable to the Ees Provided: It
shall not be used to diminish any benefit granted to the Ees under existing laws,
agreements and voluntary Er practices. (Sec. 9, Rule III, Book III, IRR)

Article 93. Compensation for rest day, Sunday or holiday work.

Where an employee is made or permitted to work on his scheduled rest day, he

shall be paid an additional compensation of at least thirty percent (30%) of his
regular wage. An employee shall be entitled to such additional compensation for
work performed on Sunday only when it is his established rest day.
 123

When the nature of the work of the employee is such that he has no regular
workdays and no regular rest days can be scheduled, he shall be paid an
additional compensation of at least thirty percent (30%) of his regular wage for
work performed on Sundays and holidays.

Work performed on any special holiday shall be paid an additional

compensation of at least thirty percent (30%) of the regular wage of the
employee. Where such holiday work falls on the employee’s scheduled rest day,
he shall be entitled to an additional compensation of at least fifty per cent (50%)
of his regular wage.

Where the collective bargaining agreement or other applicable employment

contract stipulates the payment of a higher premium pay than that prescribed
under this Article, the employer shall pay such higher rate.

NOTES:

Q: What are the rates of compensation for rest day, Sunday or holiday
work?
A:

INSTANCES RATES OF ADDITIONAL

COMPENSATION
Work on a scheduled rest day + 30% Premium Pay (PP) of 100%
regular wage (RW). (Sec. 7, Rule III,
Book III, IRR)
Work has no regular workdays and + 30% PP of 100% RW . (Sec. 7, Rule
rest days III, Book III, IRR
(If performed on Sundays and
Holidays)
Work on a Sunday + 30% PP of 100% RW. (Sec. 7, Rule
(If Ee’s scheduled rest day) III, Book III, IRR)
Work performed on any Special Holiday 1st 8 hrs: + 30% PP of 100% RW
Excess of 8 hrs: + 30% of hourly
rate on said date. (M.C. No. 10,
Series of 2004)
Work performed on a Special Holiday 1st 8 hrs: + 50% PP of 100% regular
and same day is the scheduled rest wage
day Excess of 8 hrs: + 30% of hourly
rate on said date. (M.C. No. 10,
Series of 2004)
Work performed on a Special Working Ee is only entitled to his basic
Holiday rate. No PP is required.
Reason: Work performed is
considered work on ordinary
working days. (Sec. 7, Rule III, Book
 124

III, IRR)

Note: Holiday work provided under Art.93 pertains to special holidays or special
days.

Q: Jose applied with Mercury Drug Company for the position of Sales Clerk.
Mercury Drug Company maintains a chain of drug stores that are open everyday
till late at night. Jose was informed that he had to work on Sundays and
holidays at night as part of the regular course of employment. He was presented
with a contract of employment setting forth his compensation on an annual basis
with an express waiver of extra compensation for work on Sundays and
holidays, which Jose signed. Is such a waiver binding on Jose? Explain.
A: As long as the annual compensation is an amount that is not less than what
Jose should receive for all the days that he works, plus the extra compensation
that he should receive for work on his weekly rest WRD and for night differential
pay for late night work, considering the laws and wage orders providing for
minimum wages, and the pertinent provisions of the LC, then the waiver that
Jose signed is binding on him for he is not really waiving any right under Labor
Law. It is not contrary to law, morals, good customs, public order or public policy
for an Er and Ee to enter into a contract where the Ees compensation that is
agreed upon already includes all the amounts he is to receive for OT work and
for work on weekly rest days and holidays and for night differential pay for late
night work. (1996 Bar Question)

C. HOLIDAY PAY / PREMIUM PAY

Q: What is holiday pay (HP)?

A: It is a premium given to employees (Ees) pursuant to law even if he has not

been suffered to work on a regular holiday. It is limited to the 12 regular
holidays, also called legal holidays listed by law. The employee (Ee) should not
have been absent without pay on the working day preceeding the regular
holiday.

Q: What are the classes of special days (SD)?

A:

1. National Special Public Holiday (or special holidays or special days)

GR: Non working days

XPN: Otherwise declared by the President

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2. Local Special Public Holiday – Regular working day. (LOI 814 as amended
by LOI 1087)

NATIONAL SPECIAL DAYS DATE

All Saints Day November 1
Last Day of the Year December 31
Ninoy Aquino Day August 21
Other days declared by law

1. Special Non‐working days December 24

2. Special Public Holidays

3. Special National Holiday

4. Special Holiday ( for all schools)

a. Edsa Revolution Anniversary February 25

LOCAL SPECIAL DAYS
Those declared by: e.g. Manila day (in Manila
1. Law or only)
2. Ordinance

Q: What are regular holidays (RH)?

A: They are compensable whether worked or unworked subject to certain

conditions. They are also called legal holidays. The following are considered
regular holidays. (Presidential Proclamation No. 18)

REGULAR HOLIDAYS DATE

New Year’s Day January 1
Maundy Thursday April 21
Good Friday April 22
Eid’l Fitr Movable Date
Eidul Adha Movable date
Araw ng Kagitingan April 9
Labor Day May 1
Independence Day June 12
National Heroes Day Aug. 29 (last Monday of August)
Bonifacio Day Nov. 30
Christmas Day December 25
Rizal Day Dec. 30
 126

Note: RA 9492 has already been superseded by Presidential Proclamation

No. 18 issued by President Benigno C. Aquino III placing the observance of
regular holidays and national special days according to their respective dates in
the calendar.

Q: What are Muslim Holidays (MH)?

A: The MHs, except Eid’l Fitr and Eidul Adha, are observed in specified Muslim
areas. All private corporations, offices, agencies and entities or establishments
operating within the designated Muslim provinces and cities are required to
observe MH.

Q: When shall Eid’l Fitr and/or Eid’l Adha be declared a national

holiday?

A: The proclamation declaring a national holiday for the observance of Eid’l Fitr
and/or Eid’l Adha shall be issued:

1. After the approximate date of the Islamic holiday has been determined in
accordance with the:
a. Islamic Calendar (Hijra) or
b. Lunar Calendar or
c. Upon astronomical calculations
d. Whichever is possible or convenient

2. The Office of Muslim Affairs shall inform the Office of the President on which
day the holiday shall fall. (Sec.2, Proc. No. 1841)

Q: Can a Christian employee (Ee) working within the Muslim area be

compelled to work during MH?

A: No. Christians working within the Muslim areas may not report for work
during MH. Not only Muslim but also Christian Ee in the designated provinces
and cities are entitled to HP on the MH. (SMC v. CA, G.R. 146775, Jan. 30, 2002)

Q: Can a Muslim Ee working outside the Muslim area be compelled to

work during the observance of the MH?

A: GR: No. Muslim Ees shall be excused from work during MH without
diminution of salary or wages.

XPN: Those who are permitted or suffered to work on MH are entitled to at least
100% basic pay + 100% as premium of their basic pay. (SMC v. CA, G.R. No.
146775, Jan. 30, 2002)

Note: RH falling within temporary or periodic shutdown and temporary

cessation of work are compensable. However, if the temporary or periodic
 127

shutdown and cessation of work is due to business reverses, the employer may
not pay the RHs during such period.

Q: May an Er require an Ee to work on RH?

A: Yes. But Ee shall be compensated twice his regular rate.

Q: What are the rates of compensation for RH on Ees regular workday

and RH on Ees rest day?
A:

FORMULAS TO COMPUTE WAGES ON

REGULAR HOLIDAYS (RH)
(M.C.No.10, Series of 2004)

RH on Ee’s regular workday RH on Ee’s rest day

If unworked

100% 100%
e.g. 300 Php regular wage (RW) e.g. 300 Php (RW)

If worked (1st 8 hrs)

200% + 30% of 200%

e.g. 300(RW) e.g 600(200% of RW)
+ 300 X 0.3
600 = Total Wage (TW) 180
180+600= 780 (TW)

If worked (OT)(excess of 8 hrs)

230% 230% + 30% of hourly rate on said

200% + 30% of hourly rate on said date
date

Q: What is an important condition that should be met in order to

avail/receive the single HP?

A: The Ee should not have been absent without pay on the working day
preceding the RH.

Q: Distinguish between monthly paid and daily paid Ees.

A:

Monthly Paid Ees Daily Paid Ees

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One who is paid his wage or salary for
everyday of the month, including rest
days, Sundays, regular or special days,
although he does not regularly work on
these days.
One who is paid his wage or salary
only on those days he actually
worked, except in cases of regular
or special days, although he does
not regularly work on these days

Not excluded from benefit of HP.

Q: What is the effect if a legal holiday falls on a Sunday?

A: A legal holiday falling on a Sunday creates no legal obligation for the Er to

pay extra to the Ee who does not work on that day, aside from the usual HP to
its monthly paid Ee. (Wellington v. Trajano, G.R. 114698, July 3, 1995)

In Case of Absences

Q: Discuss the concept of absences.

A:

ABSENCES
Leave of absence with pay on the day Leave of absence without pay on the
immediatley preceding RH. day immediately preceding a regular
holiday.
GR: All covered Ees are entitled to HP. GR: An Ee may not be paid the
required HP if he has not worked on
such RH.
XPN: Where the day immediately
preceding the holiday is a:
1. Non‐working day (NWD) in the
establishment or
2. The scheduled rest day (RD) of
the Ee

In Case of Temporary Cessation of Work

Q: What is the effect in case there is a temporary or periodic shutdown

and temporary cessation of work?

A:

TEMPORARY OR PERIODIC SHUTDOWN and

TEMPORARY CESSATION OF WORK
(Sec. 7, Rule IV, Book III, IRR)
Instances Rule:
1. Yearly inventory or RH falling within the period shall be
 129

2. When the repair or cleaning of compensated.

machineries is undertaken

Due to business reverses (cessation RH may not be paid by the Er

as authorized by the Sec. of Labor)

Q: Distinguish Regular Holiday from Special Day.

A:

REGULAR HOLIDAY SPECIAL HOLIDAY

If Unworked

Regular pay No Pay

(subject to certain conditions for daily
paid Ee’s)

If worked

2x regular pay (200%) + 30% premium pay of 100% regular

wage

Other matters
Set by law Set by proclamation
Limited to those provided under Art. Not exclusive
94, LC

Q: What is the concept of double HP?

A: 2 RH on same day.

WED MAUNDY RATE

THURSDAY &
ARAW NG
KAGITINGAN
Present (Examinee: means not unworked 200%
absent)
LOA w/pay unworked 200%
LOA w/ pay worked 300%
(at least)
Authorized absence worked 300%
(at least)
Same Worked and day is 390%
Rest Day (Examinee: means
+30% of each 3
 130

100%)

Q: Is double HP applicable at present?

A: No, because Araw ng Kagitingan is moved to Monday nearest April 9. (R.A.
9242)

Q: What is the concept of successive RH?

A:

WED MAUNDY GOOD ENTITLED

THURS FRIDAY TO HP
Worked RH RH Yes. Both
LOA w/pay RH RH Yes. Both
LOA w/o pay RH RH No. Both
LOA w/o pay Worked RH Yes. Only to
HP on Friday

Q: What are the conditions so that an Ee may be entitled to 2 successive

HP?
A: On the day immediately preceding the 1st RH, he must be:

1. Present (worked), or
2. On LOA with pay. (Sec. 10, Rule IV, Book III, IRR)

Q: What if the conditions are not met?

A: He must work on the 1st RH to be entitled to HP on the 2nd RH. (Sec. 10, Rule
IV, Book III, IRR)

1. COVERAGE, EXCLUSIONS

Q: Who are entitled to holiday pay?

A: GR: All employees (Ees) are entitled. (Sec.1, Rule IV, Book III, IRR)

XPNS:
1. Gov’t Ees and any of its political subdivisions, including GOCCs (with original
charter)
2. Retail and service establishments regularly employing less than 10 workers
3. Domestic helpers and persons in the personal service of another
4. Ee engaged on task or contract basis or purely commission basis
5. Members of the Family of the Er who are dependent on him for support
6. Managerial Ee and other member of the managerial staff
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7. Field personnel and other Ee whose time and performance are unsupervised
by the Er
8. Ee paid fixed amount for performing work irrespective of the time consumed
in the performance thereof. (Sec. 1, Rule IV, Book III, IRR)

Q: What are retail establishments?

A: They are engaged in the sale of goods to end users for personal or household
use. (e.g. Grocery)

Q: What are service establishments?

A: They are engaged in the sale of services to individuals for their own or
household use. (e.g. TV repair shop)

Q: Is an exercise of profession retail or service?

A: It is neither retail nor service.

2. TEACHERS, PIECE WORKERS, TAKAY, SEASONAL WORKERS,

SEAFARERS

Q: What are the holiday pays of certain employees?

A:

EMPLOYEES RULE

Private school teachers (Faculty 1. Regular holidays during

members of colleges and semestral vacations
universities)
- Not entitled to holiday pay

2. Regular holiday during Christmas

vacation

-Shall be paid holiday pay

Ee paid by: Holiday pay shall not be less than

1. results or his average daily earnings for the
2. output last 7 actual work days preceding
the regular holiday.
(Piece work payment)
Provided: holiday pay shall not be
less than the statutory minimum
wage rate.
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Seasonal Workers May not be paid the required

holiday pay during offseason where
they are not at work.

Workers having no regular work Shall be entitled to holiday pay

days
Seafarers Shall be entitled to holiday pay
SUPPLY2 (Takay)

Q: Are the school faculty who according to their contracts are paid per
lecture hour entitled to unworked holiday pay?
A:

1. If during regular holiday – No. Art. 94 of LC is silent with respect to faculty

members paid by the hour who because of their teaching contracts are
obliged to work and consent to be paid only for work actually done (except
when an emergency or a fortuitous event or a national need calls for the
declaration of special holidays). Regular holidays specified as such by law
are known to both school and faculty members as "no class days"
certainly the latter do not expect payment for said unworked days, and
this was clearly in their minds when they entered into the teaching
contracts. (Jose Rizal College v. NLRC, G.R. No. 65482, Dec. 1, 1987)

2. If during special public holidays – Yes. The law and the IRR governing HP
are silent as to payment on Special Public Holidays. It is readily apparent
that the declared purpose of the HP which is the prevention of diminution
of the monthly income of the Ees on account of work interruptions is
defeated when a regular class day is cancelled on account of a special
public holiday and class hours are held on another working day to make
up for time lost in the school calendar. Otherwise stated, the faculty
member, although forced to take a rest, does not earn what he should earn
on that day. Be it noted that when a special public holiday is declared, the
faculty member paid by the hour is deprived of expected income, and it
does not matter that the school calendar is extended in view of the days or
hours lost, for their income that could be earned from other sources is lost
during the extended days. Similarly, when classes are called off or
shortened on account of typhoons, floods, rallies, and the like, these
faculty members must likewise be paid, whether or not extensions are
ordered. (Jose Rizal College v. NLRC, G.R. No. 65482, Dec.1, 1987)

Q: Lita, a full time professor in San Ildefonso University, is paid on a regular

monthly basis. She teaches for a period of 10 months in a school year, excluding
the 2 month summer‐break. During the semestral break, the University did not
pay her emergency Cost of Living allowance (ECOLA) although she received her
regular salary since the semestral break was allegedly not an integral part of the
school year and no teaching service were actually rendered by her. In short, the
University invoked the principle of "no work, no pay". She seeks your advice on
 133

whether or not she is entitled to receive her ECOLA during semestral breaks.
How would you respond to the query?
A: There is no longer any law making it the legal obligation of an employer to
grant an Emergency Cost of Living Allowance (ECOLA). Effective 1981, the
mandatory living allowances provided for in earlier Presidential Decrees were
integrated into the basic pay of all covered employees. Thus, whether the ECOLA
will be paid or not during the semestral break now depends on the provisions of
the applicable wage order or contract which may be a CBA, that many grant
said ECOLA. (1997 Bar Question)

E. LEAVES
1. SERVICE INCENTIVE LEAVE

Q: What is service incentive leave (SIL)?

A: It is 5 days leave with pay for every employee who has rendered at least 1 yr
of service. It is commutable to its money equivalent if not used or exhausted at
the end of year.

Q: What do you mean by at least 1 year of service?

A: Service for not less than 12 months, whether continuous or broken reckoned
from the date the employee started working, including authorized absences and
paid regular holidays unless the working days in the establishment as a matter
of practice or policy, or that provided in the employment contract is less than 12
months, in which case said period shall be considered as one year. (Sec. 3, Rule
V, Book III, IRR)

Q: Who are entitled to SIL?

A: GR: Applies to every Ee who has rendered at least 1 year of service. (Art.
95[a])

XPNS:
1. Government Ees and any of its political subdivisions including GOCCs
2. Those already enjoying the benefit
3. Domestic helpers and persons in the personal services of another
4. Those already enjoying vacation leave with pay of at least 5 days
5. Managerial Ees
6. Field personnel and other Ees whose performance is unsupervised by the Er
7. Employed in establishments regularly employing less than 10 workers
8. Exempt establishments
9. Engaged on task or contract basis, purely commission basis, or those who are
paid in a fixed amount of performing work irrespective of the time consumed
in the performance thereof. (Art. 95[b])
 134

Q: Are teachers of private schools on contract basis entitled to SIL?

A: Yes. The phrase "those who are engaged on task or contract basis" should,
however, be related with "field personnel" applying the rule on ejusdem generis
that general and unlimited terms are restrained and limited by the particular
terms that they follow. Clearly, Cebu Institute of Technology teaching personnel
cannot be deemed as field personnel which refers "to non ‐agricultural Ees who
regularly perform their duties away from the principal place of business or
branch office of the Er and whose actual hours of work in the field cannot be
determined with reasonable certainty. (Par. 3, Art. 82, LC). (CIT vs. Ople, G.R.
No. 70203, Dec. 18, 1987)

Q: Is SIL commutable to its monetary equivalent if not used or exhausted

at the end of the year?

A: Yes. It is aimed primarily at encouraging workers to work continuously and

with dedication to the company.

Q: What is the basis for cash conversion?

A: The basis shall be the salary rate at the date of commutation. The availment
and commutation of the SIL may be on a pro ‐rata basis. (No. VI(c), DOLE
Handbook on Worker’s Statutory Monetary Benefit)

Q: Are part‐time workers entitled to the full benefit of the yearly 5 day
SIL?

A: Yes. Art. 95 of Labor Code speaks of the number of months in a year for
entitlement to said benefit. (Bureau of Working Conditions Advisory Opinion to
Phil. Integrated Exporter’s, Inc.)

Q: Are piece‐rate workers entitled to the full benefit of the yearly 5 day
SIL?

A: It depends.

1. Yes. Provided:
a. They are working inside the premises of the employer (Er) and
b. Under the direct supervision of the Er.
2. No. Provided:
a. They are working outside the premises of the Er
b. Hours spent in the performance of work cannot be ascertained
with reasonable certainty
c. The are not under the direct supervision of the Er

Q: Does it apply to Ees with salaries above minimum wage?

A: No. The difference between the minimum wage and the actual salary received
by the Ees cannot be deemed as their 13th month pay and SIL pay as such
 135

difference is not equivalent to or of the same import as the said benefits

contemplated by law. (JPL Marketing Promotions v. CA, G.R. No. 151966, July 8,
2005.)

Q: Explain the entitlement of terminated Ees to SIL.

A:

1. Illegally dismissed Ees ‐ entitled to SIL until actual reinstatement. (Integrated

Contractor and Plumbing Works, Inc. v. NLRC, G.R.No. Aug.9, 2005)
2. Legally dismissed Ees – the Ee who had not been paid of SIL from outset of
employment is entitled only of such pay after a year from commencement of
service until termination of employment or contract. (JPL Marketing
Promotions v. CA, G.R. No. 151966, July 8, 2005)

2. MATERNITY LEAVE

Q: What is maternity leave benefit?

A: A covered female employee (Ee) is entitled to a daily maternity benefit

equivalent to 100% of her present basic salary, allowances and other benefits or
the cash equivalent of such benefits for 60 days or 78 days in case of caesarian
delivery.

Q: What are the requirements in order that maternity benefits may be

claimed?

A:
1. There is childbirth, abortion or miscarriage
2. She has paid at least 3 monthly contributions

Q: What are the conditions?

A:

1. The Ee shall have notified her employer (Er) of her pregnancy and the
probable date of her childbirth which notice shall be transmitted to the SSS

2. The payment shall be advanced by the Er in 2 equal installments within

30 days from the filing of the maternity leave application

3. In case of caesarian delivery, the Ee shall be paid the daily maternity

benefit for 78 days

4. Payment of daily maternity benefits shall be a bar to the recovery of

sickness benefits for the same compensable period of 60 days for the
same childbirth, abortion, or miscarriage
 136

5. The maternity benefits provided under Section 14 ‐A shall be paid only for
the first four deliveries
6. The SSS shall immediately reimburse the Er of 100% of the amount of
maternity benefits advanced to the Ee by the Er upon receipt of
satisfactory proof of such payment and legality thereof; and
7. If an Ee should give birth or suffer abortion or miscarriage without the
required contributions having been remitted for her by her Er to the SSS, or
without the latter having been previously notified by the Er of the time of
the pregnancy, the Er shall pay to the SSS damages equivalent to the
benefits which said Ee would otherwise have been entitled to, and the SSS
shall in turn pay such amount to the Ee concerned.

3. PATERNITY LEAVE

Q: What is the concept of paternity leave benefits?

A: Notwithstanding any law, rules and regulations to the contrary, every
married male employee in the private and public sectors shall be entitled to a
paternity leave of 7 days with full pay for the first 4 deliveries of the legitimate
spouse with whom he is cohabiting.

Q: What is paternity leave?

A: It refers to the benefits granted to a married male employee allowing him not
to report for work for 7 days but continues to earn the compensation therefore,
on the condition that his spouse has delivered a child or suffered a miscarriage
for purposes of enabling him to effectively lend support to his wife in her period
of recovery and/or in the nursing of the newly‐born child.

Q: What are the requirements in order to avail paternity leave?

A: The male employee (Ee) applying for paternity leave shall:

1. Notify his employer (Er) of the pregnancy of his legitimate spouse and
2. The expected date of such delivery.

Q: What are the conditions for entitlement to paternity leave?

A: The male Ee is;

1. Legally married to, and is cohabiting with the woman who delivers the baby
2. Ee of private or public sector;
3. Only for the first 4 deliveries of legitimate spouse with whom he is cohabiting;
and
4. Notify his Er of the pregnancy of his legitimate spouse and the expected date
of such delivery
 137

Note: For purposes of this Act, delivery shall include childbirth or any
miscarriage.

Q: Jemuel is a bank employee of BPI. He is cohabiting with Paula for straight

five years with whom he has four children. On the fifth year of their cohabitation,
Paula had her miscarriage. Jemuel is availing himself of his paternity leave. Is
he entitled to paternity leave?
A: No. Jemuel is not entitled to paternity leave because the facts of the case only
show that he is only cohabiting with Paula. The law expressly provides that the
male must be legally married to the woman with whom he is cohabiting as a
condition for entitlement of paternity leave. Even assuming that Jemuel is legally
married to Paula, he cannot avail also of the paternity leave because the law
limits the deliveries only to four which include childbirth or miscarriage. Based
on the facts, it is already the fifth delivery of the woman.

4. PARENTAL LEAVE (R. A. 8972)

Q: What is parental leave?

A: Leave benefits granted to a solo parent to enable him/her to perform parental
duties and responsibilities ‐ where physical presence is required.

In addition to leave privileges under existing laws, parental leave of not more
than 7 working days every year shall be granted to any solo parent Ee who has
rendered service of at least 1 year. (Sec. 8)

Q: What are the conditions for entitlement of parental leave?

A:
1. He or she must fall among those referred to as solo parent
2. Must have the actual and physical custody of the child or children
3. Must have at least rendered service of one year to his or her employer
4. He or she must remain a solo parent

Q: Who are those referred to as solo parent entitled to parental leave?

A: Any individual who falls under any of the ff. 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:

a. Death of spouse;
b. Detention or service of sentence of spouse for a criminal conviction for
at least 1 yr;
c. Physical and/or mental incapacity of spouse
 138

d. Legal separation or de facto separation from spouse for at least 1 yr as

long as he/she is entrusted with the custody of the children;
e. 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;
f. Abandonment of spouse for at least 1 yr;

3. Unmarried mother/father who has preferred to keep and rear his or her
child/children instead of:

a. having others care for them or

b. give them up to a welfare institution;

4. Any other person who solely provides:

a. parental care and

b. support to a child or children;

5. Any family member who assumes the responsibility of head of family as a

result of the:

a. death,
b. abandonment,
c. disappearance or
d. prolonged absence of the parents or solo parent.

Note: 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. (Sec.3)

5. LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN

AND CHILDREN (R. A. 9262)

Q: What is the leave for victims of violence against women or otherwise

known as battered woman leave?
A: A female employee who is a victim of violence (physical, sexual, or
psychological) is entitled to a paid leave of 10 days in addition to other paid
leaves. (R.A. 9262, Anti‐ VAWC Act)

6. SPECIAL LEAVE BENEFIT FOR WOMEN

(SUPPLY2)

D. SERVICE CHARGE
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Q: What are service charges (SC)?

A: These are charges collected by hotels, restaurants and similar establishments
and shall be distributed at the rate of:

COVERED Ees MANAGEMENT

85% 15%

Equally distributed among them 1. To answer for losses and

breakages and
2. Distributed to Ees receiving
more than P2000 a month at the
discretion of the management.

Q: Who are covered Ees?

A: GR: All Ees are covered, regardless of their position, designation, employment
status, irrespective of the method by which their wages are paid.
Note: Applies only to hotels, restaurants and similar establishment collecting
service charges.
XPN: Managerial Ees. (Sec. 2, Rule VI, Book III, IRR)

Distribution

Q: When is the share of employee distributed and paid to them?

A: Not less than once every 2 weeks or twice a month at intervals not exceeding
16 days.

Integration

Q: What happens if the Service Charge is abolished?

A: The share of the covered Ees shall be considered integrated in their wages on
the basis of the average monthly share of each Ees for the past 12 months
immediately preceding the abolition.

Note: Service charges form part of the award in illegal dismissal cases.

E. THIRTEENTH MONTH PAY

Q: What is 13th month pay or its equivalent?

 140

A: Additional income based on wage required by P.D. 851 requiring all

employers to pay their Employees a 13th month pay which is equivalent to 1/12
of the total basic salary earned by an employee (Ee) within a calendar year.

Q: Who are covered by P.D. 851?

A: GR: All rank‐and‐file Ees regardless of the amount of basic salary that they
receive in a month, if their employers (Er) are not otherwise exempted from
paying the 13th month pay. Such Ees are entitled to the 13th month pay
regardless of said designation of employment status, and irrespective of the
method by which their wages are paid.
Provided, that they have worked for at least 1 month, during a calendar year.
(Revised Guidelines on the Implementation of the 13th Month Pay Law)
XPN:
1. Government Ees
2. Household helpers
3. Ees paid purely on commission basis
4. Ees already receiving 13th month pay

Q: What would be your advice to your client, a manufacturing company, who

asks for your legal opinion on whether or not the 13th Month Pay Law covers a
casual Ee who is paid a daily wage?

A: I will advise the manufacturing company to pay the casual Ee 13th Month
Pay if such casual Ee has worked for at least 1 month during a calendar year.
The law on the 13th Month Pay provides that Ees are entitled to the benefit of
said law regardless of their designation or employment status.

The SC ruled in Jackson Building‐Condominium Corp. v. NLRC, G.R. No. 112546,

March 13, 1996, interpreting P.D.851, as follows: Ees are entitled to the 13th
month pay benefits regardless of their designation and irrespective of the
method by which their wages are paid. (1998 Bar Question)

Note: An Er, may give to his Ees ½ of the required 13th Month pay before the
opening of the regular school yr. and the other half on or before the Dec. 24.

Q: Is 13th Month Pay legally demandable?

A: Yes. It is a statutory obligation, granted to covered Ees, hence, demandable

as a matter of right. (Sec 1, P.D. 851)

Nature of 13th Month Pay

Q: In what form is the 13th month pay paid or given?

A: It is given in the form of:

1. Christmas Bonus
2. Midyear Bonus
3. Profit Sharing Scheme
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4. Other Cash bonuses amounting to not less than 1/12 of its basic salary

Note: It must always be in the form of a legal tender.

Q: What are not proper substitutes for 13th Month pay?

A:
a. Free rice
b. Electricity
c. Cash and stock dividends
d. COLA (Sec. 3)

Q: Concepcion Textile Co. included the OT pay, night ‐shift differential pay, and
the like in the computation of its Ees’ 13th ‐month pay. Subsequently, with the
promulgation of the decision of the SC in the case of SMC vs. Inciong (103 SCRA
139) holding that these other monetary claims should not be included in the
computation of the 13th month pay, Concepcion Textile Co. sought to recover
under the principle of solutio indebiti the overpayment of the Ees’ 13th‐month
pay, by debiting against future 13th‐month payments whatever excess amounts
it had previously made.
(1) Is the Company's action tenable?
(2) With respect to the payment of the 13th ‐month pay after the SMC ruling, what
arrangement, if any, must the Company make in order to exclude from the 13th ‐
month pay all earnings and remunerations other than the basic pay?
A: The Company's action is not tenable. The principle of solutio indebiti which is
a civil law concept is not applicable in labor law. (Davao Fruits Corp. vs. NLRC,
et al., G.R. No. 85073 August 24, 1993). After the 1981 SMC ruling, the High
Court decided the case of Philippine Duplicators Inc. vs. NLRC, GR 110068, Nov.
11, 1993. Accordingly, management may undertake to exclude sick leave,
vacation leave, maternity leave, premium pay for regular holiday, night
differential pay and cost of living allowance. Sales commissions, however,
should be included based on the settled rule as earlier enunciated in Songco vs.
NLRC, G.R. No. L‐50999, March 23, 1990. (1994 Bar Question)

Q: Are all Ers required to pay 13th Month Pay under P.D. 851?

A:
GR: Yes. It applies to all Ers,
XPN:

1. Distressed Ers:
a. Currently incurring substantial losses or
b. In the case of non‐profit institutions and organizations, where their
income, whether from donations, contributions, grants and other
earnings from any source, has consistently declined by more than
40% of their normal income for the last 2 years, subject to the
provision of Sec. 7 of P.D. 851;
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2. The Government and any of its political subdivisions, including GOCCs, except
those corporations operating essentially as private subsidiaries of the
Government;
3. Ers already paying their Ees 13‐month pay or more in a calendar year of its
equivalent at the time of this issuance:
4. Its equivalent shall include:
a. Christmas bonus
b. Mid‐year bonus
c. Profit‐sharing payments and
d. Other cash bonuses amounting to not less than 1/12th of the basic
salary but
5. It shall not include:
a. cash and stock dividends,
b. COLA
c. all other allowances regularly enjoyed by the Ee, as well as non ‐
monetary benefits.
6. Ers of household helpers and persons in the personal service of another in
relation to such workers; and

7. Ers 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
this issuance insofar as such workers are concerned.(Sec 3, P.D. 851)

Q: What are the options of covered Ers?

A:

1. Pay one‐half of the 13th‐month pay required before the opening of the regular
school year and the other half on or before the 24th day of December of every
year.
2. In any establishment where a union has been recognized or certified as the
collective bargaining agent of the Ee, the periodicity or frequency of payment
of the 13th month pay may be the subject of agreement.

Q: How are claims adjudicated?

A: Non‐payment of the 13th month pay provided by P.D. 851 and the rules of
NLRC shall be treated as money claims cases.

Q: Are the following Ees entitled to 13th month pay?

a. Ees who are paid by results

b. Ees with multiple Ers
c. Private school teachers
d. Resigned or separated Ees
A:
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Ee paid by results – entitled to 13th month pay.

Note: Ees paid a fixed or guaranteed wage plus commission are also
entitled to the mandated 13th month pay, based on their total earnings
during the calendar year, i.e. on both their fixed or guaranteed wage and
commission

Those with Multiple Ers – Government Ees working part time in a private
enterprise, including private educational institutions, as well as Ees working
in 2 or more private firms, whether full or part time basis, are entitled to the
required 13th month pay from all their private Ers regardless of their total
earnings from each or all their Ers.

Private School Teachers, including faculty members of universities and colleges –

entitled regardless of the number of months they teach or are paid within a
year, if they have rendered service for at least 1 month within a year.

Resigned or Separated Ees ‐ If resigned or separated from work before the time
of payment of 13th month pay, entitled to monetary benefit in proportion to
the length of time he started working during the calendar year up to the time
of resignation or termination of service. (Pro‐rated 13th month pay)

Q: When does pro‐ration of 13th Month Pay apply?

A: GR: Pro‐ration of this benefit applies only in cases of resignation or separation
from work; computation should be based on length of service and not on the
actual wage earned by the worker (Honda Phils. v. Samahan ng Manggagawa
sa Honda, G.R. No. 145561, June 15, 2005)
XPN: Ees who are paid a guaranteed minimum wage or commissions earned
are entitled to 13th month pay based on total earnings. (Philippine Agricultural
Commercial and Industrial Workers Union v. NLRC, G.R. No. 107994, Aug. 14,
1995)

Q: Is 14th Month Pay legally demandable?

A: No. The granting of 14th month pay is a management prerogative and is not
legally demandable. It is basically a bonus and is gratuitous in nature. (Kamaya
Point Hotel v. NLRC, G.R. No. 75289, Aug. 31, 1989)

Commissions vis‐à‐vis 13th month pay

Q: What is commission in relation to 13th month pay?

A:

1. The salesman’s commissions, comprising a pre‐determined percent of the

selling price of the goods sold by each salesman, were properly included in
the term basic salary for purposes of computing their 13th month pay.
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2. The so called commission paid to or received by medical representatives of

BoieTakeda Chemicals or by the rank and file Ees of Phil. Fuji Xerox were
excluded from the term basic salary because these were paid as productivity
bonuses. Such bonuses closely resemble profit sharing, payments and have
no clear, direct, necessary relation to the amount of work actually done by
each individual employee.

CBA vis‐à‐vis 13th month pay

Q: What is CBA in relation to 13th month pay?

A: The absence of an express provision in the CBA obligating the employer to
pay the members of a union thirteenth month pay is immaterial. Notwithstanding
therefore the absence of any contractual agreement, the payment of a thirteenth
month pay being a statutory grant, compliance with the same is mandatory and
is deemed incorporate in the CBA.

F. SEPARATION PAY

Article 283. Closure of establishment and reduction of personnel. The

employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of this Title,
by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every
year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

Article 284. Disease as ground for termination. An employer may

terminate the services of an employee who has been found to be suffering from
any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least one (1) month salary or to
one-half (1/2) month salary for every year of service, whichever is greater, a
fraction of at least six (6) months being considered as one (1) whole year.

G. RETIREMENT PAY
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Q: What is retirement?

A: It is the result of a bilateral act of the parties, a voluntary agreement between

the employer and the employees whereby the latter after reaching a certain age
agrees and/or consents to sever his employment with the former. (Soberano v.
Sec. of Labor, G.R. Nos. L‐43753‐56 and L‐50991, Aug. 29, 1980)

1. ELIGIBILITY (SUPPLY2)
2. AMOUNT (SUPPLY2)
3. RETIREMENT BENEFITS OF WORKERS PAID BY RESULTS (SUPPLY2)
4. RETIREMENT BENEFITS OF PART-TIME WORKERS (SUPPLY2)
5. TAXABILITY (SUPPLY2)

Q: What are the kinds of retirement schemes?

A:

1. Compulsory and contributory in nature;

2. One set up by the agreement between the employer (Er) and employees (Ees)
in the CBA or other agreements between them (other applicable employment
contract);
3. One that is voluntarily given by the Er, expressly as announced company
policy or impliedly as in the failure to contest the Ee’s claim for retirement
benefits. (Marilyn Odchimar Gertach v. Reuters Limited, Phils., G.R. No.
148542, Jan. 17, 2005)

Q: Who are covered by the LC provisions on retirement?

A:

GR: All employees (Ees) in the private sector:

1. Regardless of their position, designation or status; and
2. Irrespective of the method by which their wages are paid. (Sec.1, Rule II, Book
VI, IRR)

XPN:
1. Ees of the National Gov’t and its political subdivisions, including GOCCs (if
they are covered by the Civil Service Law)
2. Domestic helpers and persons in the personal service of another
3. Ees of retail, service, and agricultural establishments or operations employing
not more than 10 Ees (Sec.2, Rule II, Book VI, IRR)

Q: What is the retirement age?

A: It is the age of retirement that is specified in the:

1. CBA; or
2. Employment contract; or
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3. Retirement plan (Sec. 3, Rule II, Book VI, IRR).

4. Optional retirement age for underground mining employees: 50 ‐60 years
provided they have at least served for a period of 5 years. (Art.285 as
amended by R.A. 8558)

Q: What is the retirement age in the absence of a retirement plan or

other applicable agreement?
A:

1. Optional – 60 years old / 5 years in service (includes authorized absences,

vacations, regular holidays, mandatory military or civic service)
Note: The option to retire upon reaching the age of 60 years or more but
not beyond 65 is the exclusive prerogative of the employee (Ee) if there is
no provision on retirement in a CBA or any other agreement or if the
employer (Er) has no retirement plan. (R.A. 7641; Capili v. NLRC, G.R. No.
117378, Mar. 26, 1997)

2. Compulsory – 65 years old, regardless of years of service (company is not

bound to dismiss Ee; it is automatic). (Sec. 4, Rule II, Book VI, IRR)

Note: Retirement benefits, where not mandated by law, may be granted

by agreement of the Ees and their Er or as a voluntary act on the part of
the Er. Retirement benefits are intended to help the Ee enjoy the remaining
years of his life, lessening the burden of worrying for his financial support,
and are a form of reward for his loyalty and service to the Er (Aquino v.
NLRC, G.R. No. 87653, Feb. 11, 1992)

Q: Is compulsory retirement age below 60 allowed?

A: Yes. Art. 287 permits Er and Ee to fix the applicable retirement age at below
60. The same is legal and enforceable so long as the parties agree to be
governed by such CBA. (Pantranco North Express v. NLRC, G.R. No. 95940, July
24, 1996)

Q: What is the rule for extension of service of retiree upon his reaching
the compulsory retirement age?

A: Upon the compulsory retirement of an employee (Ee) or official in the public or

private service, his employment is deemed terminated. The matter of extension of
service of such Ee or official is addressed to the sound discretion of the Er. (UST
Faculty Union v. NLRC, G.R. No. 89885, Aug. 6,1990)

Q: What are retirement benefits?

A: In the absence of an applicable agreement or retirement plan – A retiree is

entitled to a retirement pay equivalent to at least ½ month salary for every year
 147

of service, a fraction of at least 6 months being considered as 1 whole year.

(Sec.5.1, Rule II, Book VI, IRR)

Q: What comprises ½ month salary or retirement pay?

A: Unless parties provide for broader inclusions:

1. 15 days salary based on latest salary rate;

2. Cash equivalent of not more than 5 days of service incentive leaves
(22.5/year of service)
3. 1/12 of the 13th month pay
4. All other benefits as may be agreed upon by the employer and employee (Ee).
(Sec.5.2, Rule II, Book VI, IRR)

Note: Under Sec. 26 of R.A. No. 4670,otherwise known as Magna Carta for
Public School Teachers, public school teachers having fulfilled the age and
service req’ts of the applicable retirement laws shall be given one range salary
raise upon the retirement, which shall be the basis of the computation of the
lump sum of the retirement pay and monthly benefit thereafter.

Q: Can Art. 287 of the LC (on retirement) as amended by R.A. 7641 be

applied retroactively?
A: Yes, provided:

1. The claimant for retirement benefits was still the employee of the employer at
the time the statute took effect; and
2. The claimant was in compliance with the req’ts for eligibility under the statute
for such retirement benefits. (PSVSIA v. NLRC, G.R. No. 115019, April 14,
1997)

Q: Are the provisions of the retirement plan binding as part of the

employment contract?

A: Yes. The retirement plan forms part of the employment contract since it is
made known to the Ees and accepted by them, and such plan has an express
provision that the company has the choice to retire an Ee regardless of age, with
20 years of service, said policy is within the bounds contemplated by the LC.
Moreover, the manner of computation of retirement benefits depends on the
stipulation provided in the company retirement plan. (Progressive Dev’t
Corporation v. NLRC, G.R. No. 138826, Oct.30, 2000)

Q: Rivera was employed as senior manufacturing pharmacist by UNILAB. She

later became Director of UNILAB's Manufacturing Division. UNILAB adopted a
comprehensive retirement plan (the plan or retirement plan) supported by a
retirement fund. A member is compulsorily retired upon reaching age 60 or has
completed 30 years of service, whichever comes first. Rivera completed 30 years
of service and UNILAB retired her pursuant to the terms of the plan, she received
the benefits in ‘88. At Rivera's request, UNILAB allowed her to continue working
for the company. She continued working beyond the compulsory separation from
 148

service that resulted from her retirement. From 1993 to 1994, Rivera served as a
personal consultant under contract for UNILAB’s sister companies which
assigned Rivera to render service involving UNILAB. In 1992, the company
amended its retirement plan, providing, among others, for an increase in
retirement benefits. Rivera asked that her retirement benefits be increased in
accordance with the amended retirement program. Whether Rivera is entitled to
the additional retirement benefits of the amended retirement plan?
A: No. Whether these terms included renewed coverage in the retirement plan is
an evidentiary gap that could have been conclusively shown by evidence of
deductions of contributions to the plan after 1988. Two indicators, however, tell
us that no such coverage took place. The first is that the terms of the retirement
plan, before and after its 1992 amendment, continued to exclude those who have
rendered 30 years of service or have reached 60 years of age. Therefore, the
plan could not have covered her. The second is the absence of evidence of, or of
any demand for, any reimbursement of what Rivera would have paid as
contributions to the plan had her coverage and deductions continued after 1988.
Thus, the Court concludes that her renewed service did not have the benefit of
any retirement plan coverage. (Rivera v. United Laboratories, Inc., G.R. No.
155639, April 22, 2009)

Q: Is a special retirement plan different from those contemplated under

the LC as agreed upon by the parties valid?
A: Yes. A pilot who retires after 20 years of service or after flying 20,000 hours
would still be in the prime of his life and at the peak of his career, compared to
one who retires at the age of 60 years old. Based on this peculiar circumstance
that PAL pilots are in, the parties provided for a special scheme of retirement
different from that contemplated in the LC. Conversely, the provisions of Art. 287
of the LC could not have contemplated the situation of PAL's pilots. Rather, it
was intended for those who have no more plans of employment after retirement,
and are thus in need of financial assistance and reward for the years that they
have rendered service. (PAL v. Airline Pilots Ass’n of the Phils., G.R. No. 143686,
Jan.15, 2002)

Q: In ‘55, Hilaria was hired as a grade school teacher at the Sta. Catalina
College. In ‘70, she applied for and was granted a 1 yr LOA without pay due to
the illness of her mother. After the expiration in ‘71 of her LOA, she had not been
heard from by Sta. Catalina. In the meantime, she was employed as a teacher at
the San Pedro Parochial School during SY ‘80 ‐‘81 and at the Liceo de San Pedro,
during SY ’81‐‘82. In ‘82, she applied anew at Sta. Catalina which hired her. On
Mar 22, ‘97, during the 51st Commencement Exercises of Sta. Catalina, Hilaria
was awarded a Plaque of Appreciation for 30 yrs of service and P12,000 as
gratuity pay. On May 31, ‘97, Hilaria reached the compulsory retirement age of
65. Sta. Catalina pegged her retirement benefits at P59,038.35. Deducted was
the amount of P12,000 representing the gratuity pay which was given to her.
Should the gratuity pay be deducted from the retirement benefits?
A: No. As for the ruling of the CA affirming that of the NLRC that the P12,000
gratuity pay earlier awarded to Hilaria should not be deducted from the
 149

retirement benefits due her, the same is in order. Gratuity pay is separate and
distinct from retirement benefits. It is paid purely out of generosity.

Q: What is the difference between gratuity pay and retirement benefits?

A:

GRATUITY PAY RETIREMENT BENEFITS

It is paid to the beneficiary for the past
services or favor rendered purely out of
the generosity of the giver or grantor. It is
not intended to pay a worker for actual
services rendered or for actual
performance. It is a money benefit or
bounty given to the worker, the purpose of
which is to reward Ee’s who have
rendered satisfactory service to the
company.
Are intended to help the Ee enjoy
the remaining years of his life,
releasing him from the burden of
worrying for his financial support,
and are a form of reward for his
loyalty to the Er. (Sta. Catalina
College and Sr. Loreta Oranza, vs.
NLRC and Hilaria Tercera, G.R.
No. 144483. November 19, 2003,
J. Carpio‐Morales)

b. Retirement pay under RA 7641 vis‐à‐vis retireent benefits under SSS and
GSIS laws

Q: What is retirement pay under the LC in relation to retirement benefits

under SSS and GSIS laws?

Social Security Law Revised Government Employees

Service Insurance Act Compensation
Act
Compulsory upon all Ees not Compulsory for all Compulsory upon
over 60 years of age and their permanent Ees below 60 all Ers and their
Ers. years of age upon Ees not over 60
1.Filipinos recruited in the appointment to years of
Phils. by foreign ‐ based Ers permanent status, and age;Provided, that
for employment abroad may for all elective officials for anEe who is over
be covered by the SSS on a the duration of their 60 years of age
voluntary basis. tenure. and paying
2. 1. Any person, whether contributions to
Compulsory upon all self‐ elected or appointed, in qualify for the
employed persons earning the service of an Er is a retirement or life
P1,800 or more per annum. covered Ee if he receives insurance benefit
compensation for such administered by
service. the System shall
be subject to
compulsory
coverage.
 150

Note: The Ees Compensation Commission shall ensure adequate coverage of

Filipino Ees employed abroad, subject to regulations as it may prescribe. (Art.
170) Any person compulsorily covered by the GSIS including the members of the
AFP, and any person employed as casual, emergency, temporary, substitute or
contractual, or any person compulsorily covered by the SSS are covered by the
Ee’s Compensation Program. (1997 Bar Question)

Article 287. Retirement. Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement

benefits as he may have earned under existing laws and any collective
bargaining agreement and other agreements: Provided, however, That an
employee’s retirement benefits under any collective bargaining and other
agreements shall not be less than those provided therein.

In the absence of a retirement plan or agreement providing for retirement benefits

of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least
six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month
salary’ shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month
pay and the cash equivalent of not more than five (5) days of service incentive
leaves.

Retail, service and agricultural establishments or operations employing not more

than ten (10) employees or workers are exempted from the coverage of this
provision.

Violation of this provision is hereby declared unlawful and subject to the penal
provisions under Article 288 of this Code.

H. WOMEN WORKERS

1. PROVISIONS AGAINST DISCRIMINATION

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Article 135, Labor Code. Discrimination prohibited. It shall be unlawful

for any employer to discriminate against any woman employee with respect to
terms and conditions of employment solely on account of her sex.

The following are acts of discrimination:

1. Payment of a lesser compensation, including wage, salary or other form of

remuneration and fringe benefits, to a female employees as against a male
employee, for work of equal value; and
2. Favoring a male employee over a female employee with respect to promotion,
training opportunities, study and scholarship grants solely on account of their
sexes.

Criminal liability for the willful commission of any unlawful act as provided in
this Article or any violation of the rules and regulations issued pursuant to
Section 2 hereof shall be penalized as provided in Articles 288 and 289 of this
Code: Provided, That the institution of any criminal action under this provision
shall not bar the aggrieved employee from filing an entirely separate and distinct
action for money claims, which may include claims for damages and other
affirmative reliefs. The actions hereby authorized shall proceed independently of
each other. (As amended by Republic Act No. 6725, May 12, 1989)

2. STIPULATION AGAINST MARRIAGE

Article 136, Labor Code. Stipulation against marriage. It shall be unlawful

for an employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of her marriage.

3. PROHIBITED ACTS

Article 137, Labor Code. Prohibited acts.

It shall be unlawful for any employer:

To deny any woman employee the benefits provided for in this Chapter or to
discharge any woman employed by him for the purpose of preventing her from
enjoying any of the benefits provided under this Code.

To discharge such woman on account of her pregnancy, or while on leave or in

confinement due to her pregnancy;
 152

To discharge or refuse the admission of such woman upon returning to her work
for fear that she may again be pregnant.

4. ANTI-SEXUAL HARASSMENT ACT (R. A. NO. 7877)

Q: What is the policy of the State in enacting the Anti-Sexual

Harassment law?
A: The State shall:

1. Value the dignity of every individual

2. Enhance the development of its human resources
3. Guarantee full respect for human rights and
4. Uphold the dignity of workers, Ee, applicants for employment, students or
those undergoing training, instruction or education. (Sec. 2)

Q: Who may be held liable for sexual harassment?

A: In a work, education or training ‐related environment sexual harassment may
be committed by an:

1. Ee
2. Manager
3. Supervisor
4. Agent of the (Er)
5. Teacher, instructor, professor
6. Coach, trainer, or
7. Any other person who, having authority, influence or moral ascendancy over
another in a work or training or education environment:
a. Demands
b. Requests or
c. Requires any sexual favor from the other, regardless of whether the
demand, request or requirement for submission is accepted by the
object of R.A. 7877. (Sec. 3)

Q: How is sexual harassment committed?

A: Generally, a person liable demands, requests, or otherwise requires any
sexual favor from the other, regardless of whether the demand, request or
requirement for submission is accepted by the latter.

Q: Under the Sexual Harassment Act, does the definition of sexual harassment
require a categorical demand or request for sexual favor?

A: No. It is true that the provision calls for a “demand, request or requirement of
a sexual favor.” But it is not necessary that the demand, request or requirement
of a sexual favor be articulated in a categorical manner. It may be discerned,
with equal certitude, from the acts of the offender.
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Likewise, it is not essential that the demand, request or requirement be made as

a condition for continued employment or for promotion to a higher position. It is
enough that the respondent’s acts result in creating an intimidating, hostile or
offensive environment for the employee. (Domingo v. Rayala, G.R. No. 155831,
Feb. 18, 2008)

Q: When is sexual harassment committed?

A: Specifically:

1. In a work‐related or employment environment:

a. The sexual favor is made as 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 Ee which in a way would discriminate,
deprive or diminish employment opportunities or otherwise adversely
affect said Ee;
b. The above acts would impair the Ees’ rights or privileges under existing
labor laws; or
c. The above acts would result in an intimidating, hostile, or offensive
environment for the Ee.

2. In an education or training environment:

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

Q: What are the duties of the Er or head of office in a work ‐related, education or
training environment?

A:
a. Prevent or deter the commission of acts of sexual harassment and
b. Provide the procedures for the resolution, settlement or prosecution of acts
of sexual harassment.

Towards this end, the Er or head of office shall:

1. Promulgate appropriate rules and regulations in consultation with and

jointly approved by the Ees or students or trainees, through their duly
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designated representatives, prescribing the procedure for the investigation

or sexual harassment cases and the administrative sanctions therefore.
(Sec. 4)

Note: Administrative sanctions shall not be a bar to prosecution in the

proper courts for unlawful acts of sexual harassment.
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.
3. The Er or head of office, education or training institution shall disseminate
or post a copy of this R.A. 7877 for the information of all concerned

Q: What is the liability of the Er, head of office, educational or training

institution?
A: Er shall be solidarily liable for damages arising from the acts of sexual
harassment committed in the employment, education or training environment
provided:

1. The Er or head of office, educational or training institution is informed of

such acts by the offended party; and
2. No immediate action is taken thereon. (Sec. 5)

Q: Can an independent action for damages be filed?

A: Yes. Nothing under R.A. 7877 shall preclude the victim of work, education or
training‐related sexual harassment from instituting a separate and independent
action for damages and other affirmative relief. (Sec. 6)

Q: What is the three‐fold liability rule in sexual harassment cases?

A: An act of sexual harassment may give rise to civil, criminal and
administrative liability on the part of the offender, each proceeding
independently of the others.

Q: When does the action prescribe?

A: Any action shall prescribe in 3 years.

Q: A Personnel Manager, while interviewing an attractive female applicant for

employment, stared directly at her for prolonged periods, albeit in a friendly
manner. After the interview, the manager accompanied the applicant to the door,
shook her hand and patted her on the shoulder. He also asked the applicant if
he could invite her for dinner and dancing at some future time. Did the Personnel
Manager, by the above acts, commit sexual harassment? Reason.

A: Yes, because the Personnel Manager, is in a position to grant or not to grant a

favor (a job) to the applicant. Under the circumstances, inviting the applicant for
dinner or dancing creates a situation hostile or unfriendly to the applicant's
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chances for a job if she turns down the invitation. [Sec. 3(a)(3), R.A. No. 7877,
Anti‐Sexual Harassment Act]. (2000 Bar Question)

Q: In the course of an interview, another female applicant inquired from the

same Personnel Manager if she had the physical attributes required for the
position she applied for. The Personnel Manager replied: "You will be more
attractive if you will wear micro‐mini dresses without the undergarments that
ladies normally wear." Did the Personnel Manager, by the above reply, commit
an act of sexual harassment? Reason.

A: Yes. The remarks would result in an offensive or hostile environment for the
Ee. Moreover, the remarks did not give due regard to the applicant’s feelings and
it is a chauvinistic disdain of her honor, justifying the finding of sexual
harassment (Villarama v. NLRC, G.R. No. 106341, Sep. 2, 1994)

Q: Pedrito Masculado, a college graduate from the province, tried his luck in the
city and landed a job as utility/maintenance man at the warehouse of a big
shopping mall. After working as a casual Ee for 6 months, he signed a contract
for probationary employment for 6 months. Being well ‐built and physically
attractive, his supervisor, Mr. Hercules Barak, took special interest to befriend
him. When his probationary period was about to expire, he was surprised when
one afternoon after working hours, Mr. Barak followed him to the men’s comfort
room. After seeing that no one else was around, Mr. Barak placed his arm over
Pedrito’s shoulder and softly said: “You have great potential to become a regular
Ee and I think I can give you a favorable recommendation. Can you come over to
my condo unit on Saturday evening so we can have a little drink? I’m alone, and
I’m sure you want to stay longer with the company.” Is Mr. Barak liable for
sexual harassment committed in a work‐related or employment environment?

A: Yes, the elements of sexual harassment are all present. The act of Mr. Barak
was committed in a workplace. Mr. Barak, as supervisor of Pedrito Masculado,
has authority, influence and moral ascendancy over Masculado.
Given the specific circumstances mentioned in the question like Mr. Barak
following Masculado to the comfort room, etc. Mr. Barak was requesting a sexual
favor from Masculado for a favorable recommendation regarding the latter's
employment. It is not impossible for a male, who is a homosexual, to ask for a
sexual favor from another male. (2000 Bar Question)

Q: What are the unlawful acts against women Ee?

A:
1. Discrimination with respect to the terms and conditions of employment solely
on account of sex

a. Payment of lesser compensation to a female Ee as against a male Ee

for work of equal value
b. Favoring a male Ee with respect to promotion, training opportunities,
study and scholarship grants on account of gender. (Art. 135)
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c. Favoring a male applicant with respect to hiring where the particular

job can equally be handled by a woman
d. Favoring a male Ee over a female Ee with respect to dismissal of
personnel.

2. Stipulating, whether as a condition for employment or continuation of

employment:

a. That a woman Ee shall not get married, or

b. That upon marriage, such woman Ee shall be deemed resigned or
separated. (Art. 136)

Note: A woman worker may not be dismissed on the ground of dishonesty

for having written ‘’single” on the space for civil status on the application
sheet, contrary to the fact that she was married. (PT&T Co. v. NLRC, G.R.
No. 118978, May 23, 1997)

3. Dismissing, discriminating or otherwise prejudice a woman Ee by reason of

her being married. (Art. 136)

4. Denying any woman Ee benefits provided by law. (Art. 137)

5. Discharge any woman for the purpose of preventing her from enjoying any of
the benefits provided by law. (Art. 137)

6. Discharging such woman on account of her pregnancy, or while on leave or in

confinement due to her pregnancy. (Art. 137)

7. Discharging or refusing the admission of such woman upon returning to her

work for fear that she may again be pregnant. (Art. 137)

Note: Discrimination in any form from pre‐ employment to post employment,

including hiring, promotion or assignment, based on the actual, perceived or
suspected HIV status of an individual is unlawful. (Philippine AIDS Prevention
and Control Act of 1998, [R.A. 8504])

Under Sec. 2 of R.A. 9710 or the Magna Carta of Women, the State condemns
discrimination against women in all its forms and pursues by all appropriate
means and without delay the policy of eliminating discrimination against women
in keeping with the Convention on the Elimination of All Forms of Discrimination
Against Women (CEDAW) and other international instruments consistent with
Philippine law. The State shall accord women the rights, protection, and
opportunities available to every member of society.
The State shall take steps to review and, when necessary, amend and/or repeal
existing laws that are discriminatory to women within three (3) years from the
effectivity of this Act. (Sec. 12, R.A. 9710)
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Q: Can an individual, the sole proprietor of a business enterprise, be said to

have violated the Anti‐Sexual Harassment Act of 1995 if he clearly discriminates
against women in the adoption of policy standards for employment and
promotions in the enterprise? Explain.
A: When an employer (Er) discriminates against women in the adoption of policy
standards for employment and promotion in his enterprise, he is not guilty of
sexual harassment. Instead, the Er is guilty of discrimination against women
Ees which is declared to be unlawful by the LC.
For an Er to commit sexual harassment, he – as a person of authority, influence
or moral ascendancy – should have demanded, requested or otherwise required
a sexual favor from his Ee whether the demand, request or requirement for
submission is accepted by the object of said act. (2003 Bar Question)

Q: At any given time, approximately 90% of the production workforce of a

semiconductor company are females. 75% of the female workers are married and
of child‐bearing years. It is imperative that the Company must operate with a
minimum number of absences to meet strict delivery schedules. In view of the
very high number of lost working hours due to absences for family reasons and
maternity leaves, the company adopted a policy that it will employ married
women as production workers only if they are at least 35 yrs of age. Is the policy
violative of any law?

A: Yes, it is violative of Art. 140 of the LC which provides that no employer shall
discriminate against any person in respect to terms and conditions of
employment on account of his age. (1998 Bar Question)

Stipulation Against Marriage (Art. 136, LC)

Q: What is the no‐spouse employment policy?

A: GR:
1. Policy banning spouses from working in the same company.
2. May not facially violate Art. 136 of the LC but it creates a disproportionate
effect and the only way it could pass judicial scrutiny is by showing that it is
reasonable despite the discriminatory albeit disproportionate effect.

XPN: Bona fide occupational qualification rule (BFOQ)

Q: What is the BFOQ rule?

A: There must be a finding of any BFOQ to justify an Ers no spouse rule. There
must be a compelling business necessity for which no alternative exist other than
the discriminating practice.

To justify a BFOQ the employer must prove two factors:

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1. That the employment qualification is reasonably related to the essential

operation of the job involved; and
2. That there is a factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties of
the job. (Star Paper v. Simbol, G.R. No. 164774, April 12, 2006)

Q: What is the importance of the BFOQ Rule?

A:

1. To ensure that the Ee can effectively perform his work

2. So that the no‐spouse rule will not impose any danger to business.

Q: Tecson was employed by Glaxo as medical representative who has a policy

against Ees having relationships against competitor’s Ees. Tecson married
Bettsy, a Branch coordinator of Astra, Glaxo’s competitor. Tecson was
transferred to another area. Tecson did not accept such transfer.
Is the policy of Glaxo valid and reasonable so as to constitute the act of Tecson
as willful disobedience?
A: The prohibition against personal or marital relationships with Ees of
competitors companies upon Glaxo’s Ees is reasonable under the circumstances
because relationships of that nature might compromise the interest of the
company. Glaxo does not impose an absolute prohibition against relationships
between its Ees and those of competitor companies. Its Ees are free to cultivate
relationships with and marry persons of their own choosing. What the company
merely seeks to avoid is a conflict of interest between the Ee and the company
that may arise out of such relationships. Furthermore, the prohibition forms part
of the employment contract and Tecson was aware of such restrictions when he
entered into a relationship with Bettsy. (Duncan Asso. of Detailman‐PTGWO v.
Glaxo Wellcome Phil. Inc., G.R. No. 162994, Sep.17, 2004)

Classification of Certain Women Workers (Art. 138, LC)

Q: Who are covered under this Title?

A: Any women who is permitted or suffered to work:

1. With or without compensation

2. In any night club, cocktail lounge, massage clinic, bar or similar
establishment
3. Under the effective control or supervision of the Er for a substantial period of
time
4. Shall be considered as an Ee of such establishment for purposes of labor and
social legislation.

I. EMPLOYMENT OF MINORS
(LABOR CODE AND R. A. NO. 7678; R. A. NO. 9231)
 159

Labor Code

Art. 62, Par. 2, Labor Code. An apprenticeship agreement with a minor

shall be signed in his behalf by his parent or guardian, if the latter is not
available, by an authorized representative of the Department of Labor, and the
same shall be binding during its lifetime.

Article 139. Minimum employable age.

No child below fifteen (15) years of age shall be employed, except when he
works directly under the sole responsibility of his parents or guardian, and his
employment does not in any way interfere with his schooling.

Any person between fifteen (15) and eighteen (18) years of age may be employed
for such number of hours and such periods of the day as determined by the
Secretary of Labor and Employment in appropriate regulations.

The foregoing provisions shall in no case allow the employment of a person

below eighteen (18) years of age in an undertaking which is hazardous or
deleterious in nature as determined by the Secretary of Labor and Employment.

Article 140.Prohibition against child discrimination. No employer shall

discriminate against any person in respect to terms and conditions of
employment on account of his age.

Q: What are the general prohibitions?

A: GR:

1. No person under 18 years of age will be allowed to be employed in an

undertaking which is hazardous or deleterious in nature.
2. No Er shall discriminate against any person in respect to terms and
conditions of employment on account of his age.

XPN:

A. Below 15 yrs. Old

1. The child works directly under the sole responsibility of his parents, or
guardians who employ members of his family, subject to the following
conditions:
a. Employment does not endanger the child’s safety, health and morals
b. Employment does not impair the child’s normal dev’t
c. Er‐parent or legal guardian provides the child with the primary and/or
secondary education prescribed by the Dept. of Education
 160

2. The child’s employment or participation in public entertainment or

information through cinema, theater, radio or television is essential
provided:
a. Employment contract is concluded by the child’s parents or legal
guardian,
b. With the express agreement of the child concerned, if possible, and
c. The approval of DOLE, the following must be complied with:
a) The employment does not involve advertisement or
commercials promoting alcoholic beverages, intoxicating
drinks, tobacco and its by‐products or exhibiting violence
b) there is a written contract approved by DOLE
c) the conditions provided in the first instance are met.

B. Above 15 but below 18 – may be employed in any non‐hazardous work

C. Above 18 – no prohibition

Q: What is the duty of the Er before engaging child into work?

A: The Er shall first secure a work permit from the DOLE which shall ensure
observance of the requirements. (Sec. 12, R.A. 7160)

Q: What is the rule regarding the issuance of work certificates/ permits

for children at least 15 but below 18 years of age?
A: The issuance of a DOLE Certificate to youth aged 15 to below 18 years of age
is not required by law. No employer shall deny opportunity to any such youth
applying for employment merely on the basis of lack of work permit or certificate
of eligibility for employment. Any young person aged 15 to below 18 years of age
may present copy of this DOLE advisory to any employer, job provider,
government authority, or his/her representative when seeking employment or
anytime during employment. (DOLE Department Advisory No. 01‐08)

Q: What is a non‐hazardous work?

A: It is any work or activity in which the Ee is not exposed to any risk which
constitutes an imminent danger to his safety and health.

Q: What are hazardous workplaces?

A:
1. Nature of work exposes the workers to dangerous environmental elements,
contaminants or work conditions
2. Workers are engaged in construction work, logging, fire ‐fighting, mining,
quarrying, blasting, stevedoring, dock work, deep ‐sea fishing, and
mechanized farming
3. Workers are engaged in the manufacture or handling of explosives and other
pyrotechnic products
4. Workers use or are exposed to heavy or power‐driven tools
 161

Q: You were asked by a paint manufacturing company regarding the possible

employment as a mixer of a person, aged 17, who shall be directly under the
care of the section supervisor. What advice would you give? Explain briefly.

A: I will advise the paint manufacturing company that it cannot hire a person
who is aged 17. Art 13 (c) of the LC provides that a person below 18 yrs of age
shall not be allowed to work in an undertaking which is hazardous or
deleterious in nature as determined by the SLE. Paint manufacturing has been
classified by the SLE as a hazardous work. (2002 Bar Question)

Q: What are the prohibitions on the employment of children in certain

advertisements?

A: No employment of child models in all commercial advertisements promoting:

1. Violence
2. Alcoholic beverages
3. Intoxicating drinks
4. Tobacco and its by products

Q: A spinster school teacher took pity on one of her pupils, a robust and
precocious 12‐year old boy whose poor family could barely afford the cost of his
schooling. She lives alone at her house near the school after her housemaid left.
In the afternoon, she lets the boy do various chores as cleaning, fetching water
and all kinds of errands after school hours. She gives him rice and P30.00 before
the boy goes home at 7:00 every night. The school principal learned about it and
charged her with violating the law which prohibits the employment of children
below 15 years of age. In her defense, the teacher stated that the work
performed by her pupil is not hazardous, and she invoked the exception provided
in the Department Order of DOLE for the engagement of persons in domestic and
household service. Is her defense tenable? Reason?

A: No, her defense is not tenable. Under Art. 139 of the LC on “minimum
employable age”, no child below 15 years of age shall be employed except when
he works directly under the sole responsibility of his parents or guardian, the
provisions of the alleged DO of DOLE to the contrary notwithstanding. A mere DO
cannot prevail over the express prohibitory provisions of the LC. (2004 Bar
Question)

Q: Determine whether the following minors should be prohibited from being hired
and from performing their respective duties indicated hereunder:

1. A 17‐year old boy working as miner at the Walwadi Mining

Corporation.

A: Yes, he should be prohibited from being hired and from performing the duties
of a miner because such constitutes hazardous work under D.O. No. 04 Series of
 162

1999. Art. 139 (c) of LC expressly prohibits the employment of persons below 18
years of age in an undertaking which is hazardous or deleterious in nature as
determined by the SLE.

2. An 11‐year old boy who is an accomplished singer and performer in

different parts of the country.
A: No, he should not be prohibited from being hired and from performing as a
singer. Under Art. VIII Sec. 12 par. 2 of R.A. 7619 as amended by R.A. 7658, this
constitutes an exception to the general prohibition against the employment of
children below 15 years of age, provided that the following requirements are
strictly complied with:

1. The Er shall ensure the protection, health safety and morals of the child
2. The Er shall institute measures to prevent the child’s exploitation or
discrimination taking into account the system and level of remuneration,
and the duration and arrangement of working time; and
3. The Er shall formulate and implement, subject to the approval and
supervision of competent authorities, a continuing program for training and
skill acquisition of the child. Moreover, the child must be directly under the
sole responsibility of his parents or guardian and his employment should
not in any way interfere with his schooling.

3. A 15‐year old girl working as a library assistant in a girls' high

school.

A: No, she should not be prohibited from working as a library assistant because
the prohibition in the LC against employment of persons below 18 years of age
merely pertains to employment in an undertaking which is hazardous or
deleterious in nature as identified in the guidelines issued by the SLE working
as a library assistant is not one of undertakings identified to be hazardous
under D.O. No 04 Series of 1999.

4. A 16‐year old girl working as model promoting alcoholic beverages.

A: Yes, she should be prohibited from working as a model promoting alcoholic

beverages. R.A. 7610 categorically prohibits the employment of child models in
all commercials or advertisements promoting alcoholic beverages and
intoxicating drinks, among other things.

5. A 17‐year old boy working as a dealer in a casino.

A: Yes, he should be prohibited from working as a dealer in casino, because Art.

140 of the LC prohibits the employment of persons below 18 years of age in an
undertaking which is hazardous or deleterious in nature identified in the
guidelines issued by the SLE. Working as a dealer in a casino is classified as
hazardous under D.O. No. 04 Series of 1999 as it exposes children to physical,
psychological or sexual abuses. (2006 Bar Question)
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Act Against Child Labor (RA 9231) and Child Abuse Law (RA 7610)

Q: What is child labor?

A: Any work or economic activity performed by a child that subjects him or her to
any form of exploitation or is harmful to his or her health and safety or physical,
mental or psychosocial development.

Q: Who is a working child?

A: Any child engaged as follows:

1. When the child is below 18 years of age in a work or economic activity that is
not child labor; or
2. When the child is below 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

Q: When may the State intervene in behalf of the child?

A:
1. The parent, guardian, teacher or person having care or custody of the child
fails or is unable to protect the child against abuse, exploitation and
discrimination; or
2. When such acts are committed against the child by the said parent, guardian,
teacher or person having care and custody over the child

Q: What is the limitation on the hours of work of a working child?

A: If the child is:
1. Below 15 years of age – not more than 20 hours a week and not more than 4
hours a day
- Not allowed to work between 8:00 pm – 6:00 am
2. At least 15 years of age but below 18 years of age – will not exceed 8 hours a
day or 40 hours a week
- Not allowed to work between 10:00 pm – 6:00 am

Q: What are the worst forms of labor?

A:

1. All forms of slavery (Anti‐Trafficking of Persons Act of 2003) or practices

similar to slavery such as sale and trafficking of children, debt bondage and
serfdom and forced or compulsory labor, including recruitment of children for
use in armed conflict;
2. The use, procuring, offering or exposing of a child pornography or for
pornographic performances;
 164

3. The use, procuring, offering or exposing of a child for illegal or illicit activities,
including the production and trafficking of dangerous drugs and volatile
substances prohibited under existing laws;
4. Employing child models in all commercials or advertisements promoting
alcoholic beverages, intoxicating drinks, tobacco and its byproducts and
violence; and
5. Work which, by its nature or circumstances in which it is carried out, is
hazardous or likely to be harmful to the health, safety or morals of children.

Q: Who can file a complaint for unlawful acts committed against

children?
A:
1. Offended party
2. Parents or guardians
3. Ascendants or collateral relatives within the 3rd degree of consanguinity
4. Officer, social worker or representative of a licensed child ‐caring institution
5. Officer or social worker of DSWD
6. Barangay chairman of the place where the violation occurred, where the child
is residing or employed
7. At least 3 concerned, responsible citizens where the violation occurred

Q: Which courts have jurisdiction over offenses punishable under R.A.

9231?
A: The Family Courts shall have original jurisdiction over all cases involving
offenses punishable under this Act

J. 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

Q: What is domestic or household service?

A:
1. Services in the Ers home
2. Usually necessary or desirable
3. For the maintenance and employment thereof
4. Includes ministering to the personal comfort and convenience of the members
of the Ers household
5. Including services of family drivers.

Q: Who is a househelper?

A: A househelper is synonymous to domestic servant

1. Any person, male or female;
2. Who renders services in and about the Ers home and;
 165

3. Services are usually necessary or Desirable for the maintenance and

enjoyment thereof, and
4. Ministers exclusively to the personal comfort and enjoyment of Ers family

Note: The children and relatives of a househelper who live under the Ers roof
and who share the accommodations provided for the househelper by the Er shall
not be deemed as househelper’s if they are not otherwise engaged as such and
are not required to perform any substantial household work. (Sec 3, Rule XII,
Book III, IRR)

The definition of a househelper cannot be interpreted to include househelp or

laundry women working in staffhouses of a company. (APEX Mining CO., Inc., v.
NLRC, G.R. No. 94951, April 22, 1991)

Benefits accorded househelpers

Q: What are the rights of househelpers?

A:
1. Original contract of domestic service shall not last for more than 2 years
but it may be renewed by the parties. (Art. 142)
2. Entitled to minimum wage in addition to lodging, food, and medical
attendance. (Art. 144)
3. Employment contract should be reviewed every 3 years with the end view
of improving the terms and conditions of employment. (Art. 143)
4. SSS benefits for those who are receiving at least P1,000 per month. (Art.
143)
5. Non‐assignment to a work in a commercial, industrial or agricultural
enterprise at a wage or salary rate lower than that provided for
agricultural or non‐agricultural workers. (Art. 145)
6. Ees under 18 years of age shall be given opportunity for at least
elementary education. The cost of education shall be part of the HH’s
compensation, unless otherwise stipulated. (Art 146)
7. Should be treated in a just and humane manner. (Art. 147)
8. Not to be treated with physical violence (Art. 147)
9. Suitable and sanitary living headquarters as well as adequate food and
medical attendance. (Art. 148)
10. Termination of employment should be
a. upon expiration of term of employment, or
b. based on just cause (Art. 149)
11. Indemnity for unjust termination of service
12. Employment certification as to nature and duration of service and
efficiency and conduct of househelper.

Q: What is the minimum wage for househelpers?

A:
1. Meto Manila‐P 800 / month
2. Other Chartered Cities or First Class Municipalities ‐P 650 / month
 166

3. In other Municipalities‐P 550 / month

4.
Note: The minimum cash wage rates shall be paid to the househelpers in
addition to lodging, food and medical attendance.

Q: Is there an OT Pay for househelpers?

A: No. The LC is silent on the grant of OT pay, HP, Premium Pay and SIL to those
engaged in the domestic or household service. Moreover Art. 82 of LC expressly
excludes domestic helpers from its coverage. (Ultra Villa Food Haus v. Geniston,
G.R. No. 120473, June 23, 1999)

Q: Erlinda worked as a cook, preparing the lunch and merienda of the Ees of
Remington Industrial Sales Corp. She worked at the premises of the company.
When Erlinda filed an illegal dismissal case, Mr. Tan, the managing director of
Remington Corp. claimed that Erlinda was a domestic helper, and not a regular
Ee of Remington Corp. Mr. Tan argued that it is only when the househelper or
domestic servant is assigned to certain aspects of the business of the Er that
such househelper or domestic servant may be considered as such an employee.
Is Erlinda a domestic or househelper?

A: No, Erlinda is clearly not a househelper. A “househelper” or “domestic

servant” under the Implementing Rules of the LC is one who is employed in the
Er’s home to minister exclusively to the personal comfort and enjoyment of the
Er’s family. A househelper, domestic servant or laundrywoman in a home or in a
company staffhouse is different in the sense that in a corporation or a single
proprietorship engaged in business or industry or any agricultural or similar
pursuit, service is being rendered in the staffhouses or within the premises of the
business of the Er. In such instance, they are Ees of the company or Er in the
business concerned, entitled to the privileges of a regular Ee. The mere fact that
the househelper or domestic servant is working within the premises of the
business of the employer and in relation to or in connection with its business, as
in its staffhouses for its guest or even for its officers and Ees, warrants the
conclusion that such househelper or domestic servant is and should be
considered a regular Ee and not a househelper. (Remington Industrial v.
Castaneda, G.R. Nos. 169295‐96, Nov.20, 2006)

Q: NBC has a resthouse and recreational facility in the highlands of Tagaytay

City for the use of its top executives and corporate clients. The resthouse staff
includes a caretaker, two cooks and a laundrywoman. All of them are reported to
the SSS as domestic or household Ees of the resthouse and recreational facility
and not of NBC. Can NBC legally consider the caretaker, cooks and
laundrywoman as domestic Ee’s of the resthouse and not of NBC?
A: No, they are not domestic Ees. They are NBC’s Ees because the resthouse
and recreational facility are business facilities as they are for use of the top
executives and clients of NBC. (Traders Royal Bank v. NLRC, G.R. No. 127864,
Dec. 22. 1999). (2000 Bar Question)
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Termination

Q: What is the proper procedure in the termination of a househelper?

A: The termination of the employment of a househelper should be:

a. Upon expiration of the term of employment, or

b. Based on just cause (Art. 149)

Reliefs for Unjust Termination

Q: What are the rules for indemnity?

A:

1. If the period for household service is fixed, neither the Er nor the
househelper may terminate the contract before the expiration of the term
except for just cause.

2. If the househelper is unjustly dismissed, he or she shall be paid the

compensation already earned plus that for the 15 days by way of
indemnity.
3. If the househelper leaves without justifiable reason, he or she shall forfeit
any unpaid salary due him or her not exceeding 15 days.

Q: When can the HH demand for employment certification?

A: Upon the severance of the household service relationship, the househelper
may demand from the Er a written statement of the nature and duration of the
service and his/ her efficiency and conduct as househelper.

REPUBLIC ACT NO. 10361

Domestic Workers Act or Batas Kasambahay
Approved: JAN 18 2013

Section 3. Coverage. – This Act applies to all domestic workers employed and
working within the country.

Section 4. Definition of Terms. – As used in this Act, the term:

(a) Debt bondage refers to the rendering of service by the domestic worker
as security or payment for a debt where the length and nature of service is
not clearly defined or when the value of the service is not reasonably
applied in the payment of the debt.

(b) Deployment expenses refers to expenses that are directly used for the
transfer of the domestic worker from place of origin to the place of work
covering the cost of transportation. Advances or loans by the domestic
worker are not included in the definition of deployment expenses.
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(c) Domestic work refers to work performed in or for a household or

households.

(d) Domestic worker or "Kasambahay" refers to any person engaged in

domestic work within an employment relationship such as, but not limited
to, the following: general househelp, nursemaid or "yaya", cook, gardener,
or laundry person, but shall exclude any person who performs domestic
work only occasionally or sporadically and not on an occupational basis.

The term shall not include children who are under foster family
arrangement, and are provided access to education and given an
allowance incidental to education, i.e. "baon", transportation, school
projects and school activities.

(e) Employer refers to any person who engages and controls the services of
a domestic worker and is party to the employment contract.

(f) Household refers to the immediate members of the family or the

occupants of the house that are directly provided services by the domestic
worker.

(g) Private Employment Agency (PEA) refers to any individual, legitimate

partnership, corporation or entity licensed to engage in the recruitment and
placement of domestic workers for local employment.

(h) Working children, as used under this Act, refers to domestic workers
who are fifteen (15) years old and above but below eighteen (18) years old.

ARTICLE II
RIGHTS AND PRIVILEGES

Section 5.Standard of Treatment. – The employer or any member of the

household shall not subject a domestic worker or "kasambahay" to any kind of
abuse nor inflict any form of physical violence or harassment or any act tending
to degrade the dignity of a domestic worker.

Section 6.Board, Lodging and Medical Attendance. – The employer shall provide
for the basic necessities of the domestic worker to include at least three (3)
adequate meals a day and humane sleeping arrangements that ensure safety.

The employer shall provide appropriate rest and assistance to the domestic
worker in case of illnesses and injuries sustained during service without loss of
benefits.

At no instance shall the employer withdraw or hold in abeyance the provision of

these basic necessities as punishment or disciplinary action to the domestic
worker.
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Section 7.Guarantee of Privacy. – Respect for the privacy of the domestic worker
shall be guaranteed at all times and shall extend to all forms of communication
and personal effects. This guarantee equally recognizes that the domestic worker
is obliged to render satisfactory service at all times.

Section 8.Access to Outside Communication. – The employer shall grant the

domestic worker access to outside communication during free time: Provided,
That in case of emergency, access to communication shall be granted even
during work time. Should the domestic worker make use of the employer’s
telephone or other communication facilities, the costs shall be borne by the
domestic worker, unless such charges are waived by the employer.

Section 9.Right to Education and Training. – The employer shall afford the
domestic worker the opportunity to finish basic education and may allow access
to alternative learning systems and, as far as practicable, higher education or
technical and vocational training. The employer shall adjust the work schedule of
the domestic worker to allow such access to education or training without
hampering the services required by the employer.

Section 10.Prohibition Against Privileged Information. – All communication and

information pertaining to the employer or members of the household shall be
treated as privileged and confidential, and shall not be publicly disclosed by the
domestic worker during and after employment. Such privileged information shall
be inadmissible in evidence except when the suit involves the employer or any
member of the household in a crime against persons, property, personal liberty
and security, and chastity.

ARTICLE III
PRE-EMPLOYMENT

Section 11.Employment Contract. – An employment contract shall be executed

by and between the domestic worker and the employer before the
commencement of the service in a language or dialect understood by both the
domestic worker and the employer. The domestic worker shall be provided a
copy of the duly signed employment contract which must include the following:

(a) Duties and responsibilities of the domestic worker;

(b) Period of employment;

(c) Compensation;

(d) Authorized deductions;

(e) Hours of work and proportionate additional payment;

(f) Rest days and allowable leaves;

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(g) Board, lodging and medical attention;

(h) Agreements on deployment expenses, if any;

(i) Loan agreement;

(j) Termination of employment; and

(k) Any other lawful condition agreed upon by both parties.

Section 13.Recruitment and Finder’s Fees. – Regardless of whether the

domestic worker was hired through a private employment agency or a third
party, no share in the recruitment or finder’s fees shall be charged against the
domestic worker by the said private employment agency or third party.

Section 14.Deposits for Loss or Damage. – It shall be unlawful for the employer
or any other person to require a domestic worker 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.

Section 15.Prohibition on Debt Bondage. – It shall be unlawful for the employer

or any person acting on behalf of the employer to place the domestic worker
under debt bondage.

Section 16.Employment Age of Domestic Workers. – It shall be unlawful to

employ any person below fifteen (15) years of age as a domestic worker.

Working children shall be entitled to minimum wage, and all benefits provided
under this Act.

Any employer who has been sentenced by a court of law of any offense against
a working child under this Act shall be meted out with a penalty one degree
higher and shall be prohibited from hiring a working child.

ARTICLE IV
EMPLOYMENT – TERMS AND CONDITIONS

Section 20.Daily Rest Period. – The domestic worker shall be entitled to an

aggregate daily rest period of eight (8) hours per day.

Section 21.Weekly Rest Period. – The domestic worker shall be entitled to at

least twenty-four (24) consecutive hours of rest in a week. The employer and the
domestic worker shall agree in writing on the schedule of the weekly rest day of
the domestic worker: Provided, That the employer shall respect the preference of
the domestic worker as to the weekly rest day when such preference is based on
religious grounds. Nothing in this provision shall deprive the domestic worker
and the employer from agreeing to the following:
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(a) Offsetting a day of absence with a particular rest day;

(b) Waiving a particular rest day in return for an equivalent daily rate of
pay;

(c) Accumulating rest days not exceeding five (5) days; or

(d) Other similar arrangements.

Section 22.Assignment to Nonhousehold Work. – No domestic worker shall be

assigned to work in a commercial, industrial or agricultural enterprise at a wage
rate lower than that provided for agricultural or nonagricultural workers. In such
cases, the domestic worker shall be paid the applicable minimum wage.

Section 23.Extent of Duty. – The domestic worker and the employer may
mutually agree for the former to temporarily perform a task that is outside the
latter’s household for the benefit of another household. However, any liability
that will be incurred by the domestic worker on account of such arrangement
shall be borne by the original employer. In addition, such work performed
outside the household shall entitle the domestic worker to an additional payment
of not less than the existing minimum wage rate of a domestic worker. It shall be
unlawful for the original employer to charge any amount from the said household
where the service of the domestic worker was temporarily performed.

Section 24.Minimum Wage. – The minimum wage of domestic workers shall not
be less than the following:

(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 mother municipalities.

After one (1) year from the effectivity of this Act, 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.

Section 25.Payment of Wages. – Payment of wages shall be made on time

directly to the domestic worker to whom they are due in cash at least once a
month. The employer, unless allowed by the domestic worker through a written
consent, shall make no deductions from the wages other than that which is
mandated by law. No employer shall pay the wages of a domestic worker by
means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any
object other than the cash wage as provided for under this Act.
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The domestic worker is entitled to a thirteenth month pay as provided for by law.

Section 27.Prohibition on Interference in the Disposal of Wages. – It shall be

unlawful for the employer to interfere with the freedom of any domestic worker to
dispose of the latter’s wages. The employer shall not force, compel or oblige the
domestic worker to purchase merchandise, commodities or other properties from
the employer or from any other person, or otherwise make use of any store or
services of such employer or any other person.

Section 28.Prohibition Against Withholding of Wages. – It shall be unlawful for

an employer, directly or indirectly, to withhold the wages of the domestic worker.
If the domestic worker 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 domestic worker to give up any part of the wages
by force, stealth, intimidation, threat or by any other means whatsoever.

Section 29.Leave Benefits. – A domestic worker who has rendered at least one
(1) year of service shall be entitled to an annual service incentive leave of five (5)
days with pay: Provided, That 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.

Section 30.Social and Other Benefits. – A domestic worker who has rendered at
least one (1) month of service shall be covered by the Social Security System
(SSS), the Philippine Health Insurance Corporation (PhilHealth), and the Home
Development Mutual Fund or Pag-IBIG, and shall be entitled to all the benefits in
accordance with the pertinent provisions provided by law.

Premium payments or contributions shall be shouldered by the employer.

However, if the domestic worker is receiving a wage of Five thousand pesos
(P5,000.00) and above per month, the domestic worker shall pay the
proportionate share in the premium payments or contributions, as provided by
law.

The domestic worker shall be entitled to all other benefits under existing laws.

ARTICLE V
POST EMPLOYMENT

Section 32.Termination of Service. – Neither the domestic worker nor the

employer may terminate the contract before the expiration of the term except for
grounds provided for in Sections 33 and 34 of this Act. If the domestic worker is
unjustly dismissed, the domestic worker shall be paid the compensation already
earned plus the equivalent of fifteen (15) days work by way of indemnity. If the
domestic worker leaves without justifiable reason, any unpaid salary due not
exceeding the equivalent fifteen (15) days work shall be forfeited. In addition, the
employer may recover from the domestic worker costs incurred related to the
 173

deployment expenses, if any: Provided, That the service has been terminated
within six (6) months from the domestic worker’s employment.

If the duration of the domestic service is not determined either in stipulation or

by the nature of the service, the employer or the domestic worker may give notice
to end the working relationship five (5) days before the intended termination of
the service.

The domestic worker and the employer may mutually agree upon written notice
to pre-terminate the contract of employment to end the employment relationship.

Section 33.Termination Initiated by the Domestic Worker. – The domestic

worker may terminate the employment relationship at any time before the
expiration of the contract for any of the following causes:

(a) Verbal or emotional abuse of the domestic worker by the employer or

any member of the household;

(b) Inhuman treatment including physical abuse of the domestic worker by

the employer or any member of the household;

(c) Commission of a crime or offense against the domestic worker by the

employer or any member of the household;

(d) Violation by the employer of the terms and conditions of the

employment contract and other standards set forth under this law;

(e) Any disease prejudicial to the health of the domestic worker, the
employer, or member/s of the household; and

(f) Other causes analogous to the foregoing.

Section 34.Termination Initiated by the Employer. – An employer may terminate

the services of the domestic worker at any time before the expiration of the
contract, for any of the following causes:

(a) Misconduct or willful disobedience by the domestic worker of the lawful

order of the employer in connection with the former’s work;

(b) Gross or habitual neglect or inefficiency by the domestic worker in the

performance of duties;

(c) Fraud or willful breach of the trust reposed by the employer on the
domestic worker;

(d) Commission of a crime or offense by the domestic worker against the

person of the employer or any immediate member of the employer’s family;
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(e) Violation by the domestic worker of the terms and conditions of the
employment contract and other standards set forth under this law;

(f) Any disease prejudicial to the health of the domestic worker, the
employer, or member/s of the household; and

(g) Other causes analogous to the foregoing.

ARTICLE IX
PENAL AND MISCELLANEOUS PROVISIONS

Section 40.Penalty. – Any violation of the provisions of this Act declared

unlawful shall be punishable with a fine of not less than Ten thousand pesos
(P10,000.00) but not more than Forty thousand pesos (P40,000.00) without
prejudice to the filing of appropriate civil or criminal action by the aggrieved
party.

Section 41.Transitory Provision; Non-Diminution of Benefits. – All existing

arrangements between a domestic worker and the employer shall be adjusted to
conform to the minimum standards set by this Act within a period of sixty (60)
days after the effectivity of this Act: Provided, That adjustments pertaining to
wages shall take effect immediately after the determination and issuance of the
appropriate wage order by the RTWPBs: Provided, further, That nothing in this
Act shall be construed to cause the diminution or substitution of any benefits and
privileges currently enjoyed by the domestic worker hired directly or through an
agency.

ARTICLE X
FINAL PROVISIONS

Section 43.Separability Clause. – If any provision or part of this Act is declared

invalid or unconstitutional, the remaining parts or provisions not affected shall
remain in full force and effect.

Section 44.Repealing Clause. – All articles or provisions of Chapter III

(Employment of Househelpers) of Presidential Decree No. 442, as amended and
renumbered by Republic Act No. 10151 are hereby expressly repealed. All laws,
decrees, executive orders, issuances, rules and regulations or parts thereof
inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

Approved: JAN 18 2013

(Sgd.) BENIGNO S. AQUINO III
President of the Philippines

K. EMPLOYMENT OF HOMEWORKERS
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Defintion

Q: Who are homeworkers?

A: They are those who perform in or about his own home any processing or
fabrication of goods or materials, in whole or in part, which have been furnished
directly or indirectly, by an Er and sold thereafter to the latter.

Q: Who is the Er of Homeworker?

A: Includes any person, natural or artificial who, for his account or benefit, or on
behalf of any person residing outside the country, directly or indirectly, or
through an Ee, 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 directions.

2. Sells any goods, articles or materials to be processed or fabricated in or abut

a home and then rebuys them after such processing or fabrication, either by
himself or through some other person.

Rights and benefits accorded homeworkers

Q: What is the duty of the Er in case he contracts with another the

performance of his work?

A: It shall be the duty of the Er to provide in such contract that the Ees or HWs of
the contractor and the latter’s subcontractor shall be paid in accordance with the
LC.

Q: What is the liabilty of the Er if the contractor or subcontractor fails

to pay the wages or earnings of his Ees?

A: Er shall be jointly and severally liable with the contractor or sub ‐contractor to
the workers of the latter to the extent that such work is performed under such
contract, in the same manner as if the Ees or HWs were directly engaged by the
Er.

Q: Can Homeworkers form labor organizations?

A: Yes. DO No. 5, replacing Rule XIV of the IRR Book 3 of the LC, authorizes the
formation and registration of labor organization of industrial HWs. It also makes
explicit the Ers duty to pay and remit SSS, Philhealth and ECC premiums.

Q: What are the prohibitions against homework?

A: No homework shall be performed on:

1. Explosives, fireworks and similar articles;
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2. Drugs and poisons; and

3. Other articles, the processing of which requires exposure to toxic substances.
(Sec. 13, Rule XIV, Book III, IRR)

Conditions for deduction from homeworker’s earnings

Q: Can the Er make deductions on homeworker’s earnings?

A: GR: No Er, contractor or subcontractor shall make any deduction from the
HWs earnings for the value of materials which have been lost, destroyed,
soiled or otherwise damage.
XPN: Unless the ff. conditions are met:

1. The HW is clearly shown to be responsible for the loss or damage

2. The Ee is given reasonable opportunity to show cause why deductions should
not be made;
3. The amount of such deduction is fair and reasonable and shall not exceed the
actual loss or damages; and
4. The deduction is made at such rate that the amount deducted does not
exceed 20% of the HW’s earnings in a week.

Q: Distinguish househelpers from homeworkers.

A:

HOUSEHELPERS
Minister to the personal needs and
comfort of his Er in the latter’s home
HOMEWORKERS
Performs in or about his own home any
processing or fabrication of goods or
materials, in whole or in part, which
have been furnished directly or
indirectly, by an Er and sold thereafter
to the latter.

Q: Josie is the confidential secretary of the Chairman of the Board of the bank.
She is presently on maternity leave. In an arrangement where the Chairman of
the Board can still have access to her services, the bank allows her to work in
her residence during her leave. For this purpose, the bank installed a fax
machine in her residence, and gave her a cellphone and a beeper. Is Josie a
homeworker under the law? Explain.

A: No, she is actually an office worker. She is not an industrial homeworker who
accepts work to be fabricated or processed at home for a contractor, which work,
when finished, will be returned to or repurchased by said contractor. (Art. 155,
LC) (2000 Bar Question)

L .APPRENTICES AND LEARNERS

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Apprentices

Q: Who is an apprentice?
A: Any worker who is covered by a written apprenticeship agreement with an
individual employer or any of the entities recognized under the LC.

Q: What is apprenticeship?

A: It is practical training on the job supplemented by related theoretical

instruction.

Q: What is an apprenticeable occupation?

A: That which requires more than 3 months of practical training with theoretical
instruction.

Q: What is on the job training (OJT)?

A: It is practical work experience through actual participation in productive
activities given to or acquired by an apprentice.

Q: What are highly technical industries?

A: Those which are engaged in the application of advanced technology.

Q: What are related theoretical instructions?

A: Technical information based on apprenticeship standards approved by the
Bureau.

Note: Prior approval by TESDA (formerly DOLE) of the proposed apprenticeship

program is a condition sine qua non. Otherwise, apprentice becomes a regular
Ee. (Nitto Enterprises v. NLRC, G.R. No. 114337, Sep. 29, 1995).

Q: What are the qualifications of an apprentice?

A:

1. At least 15 years of age

Note: Those below 18 years of age shall not work in hazardous
occupations
2. Physically fit for the occupation
3. Possess vocational aptitude and capacity
4. Possess:
a. The ability to comprehend, and
b. Follow oral and written instructions
5. The company must have an apprenticeship program duly approved by the
DOLE.

Note: Trade and industry associations may recommend to the SLE appropriate
educational requirements for different occupations.
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Q: When is an occupation deemed hazardous?

A:

1. Nature of work exposes worker to dangerous environmental elemental

contaminants or work conditions
2. Workers are engaged in construction work, logging, firefighting, mining,
quarrying, blasting, stevedoring, deep‐sea fishing, and mechanized farming
3. Workers are engaged in the manufacture or handling of explosives and other
pyrotechnic products
4. Workers use, or are exposed to heavy or power ‐driven machinery or
equipment.

Q: Who may employ apprentices?

A:

1. Only employers in highly technical industries and

2. Only in apprenticeable occupations approved by SLE

Q: What is the employment status of apprentices?

A: They are contractual workers whose length of service depends on the term
provided for in the apprenticeship agreement. Thus, the employer is not obliged
to employ the apprentice after the completion of his training.

Q: What is the period of apprenticeship?

A: Must not exceed 6 months:

1. 2 months/400 hours: Trades or occupations which normally require 1 year or

more for proficiency
2. 1 month/200 hours: Occupations and jobs which require more than 3 months
but less than 1 year for proficiency. (Sec. 19, Rule VI, Book II, IRR)

Q: What is the status of an apprentice hired after such term?

A: He is deemed a regular Ee. He cannot be hired as a probationary Ee since the
apprenticeship is deemed the probationary period.

Q: What is the wage rate of an apprentice?

A: Start at not less than 75% of the statutory minimum wage for the 1st 6
months (except OJT); thereafter, shall be paid in full minimum wage, including
the full COLA.

Note: GR: Apprenticeship programs shall be primarily voluntary

XPN: Compulsory apprenticeship:

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1. National security or economic development so demand, the President may

require compulsory training
2. Services of foreign technicians are utilized by private companies in
apprenticeable trades.

Q: What are the rules regarding apprenticeship agreements?

A: Apprenticeship agreements, including the wage rates of apprentices, shall:

1. Conform to the rules issued by SLE.

2. The period of apprenticeship shall not exceed 6 months.
3. Apprenticeship agreements providing for wage rates below the legal
minimum wage, which in no case shall start below 75% of the applicable
min. wage, may be entered into only in accordance with apprenticeship
programs duly approved by the SLE.
4. The DOLE shall develop standard model programs of apprenticeship. (Sec.
18, Rule VI, Book II, IRR)

Q: Who signs the apprenticeship agreement?

A: Every apprenticeship agreement shall be signed by:

1. The employer or his agent, or

2. An authorized representative of any of the recognized organizations,
associations or groups, and
3. The apprentice.

Q: Who will sign if the apprentice is a minor?

A: An apprenticeship agreement with a minor shall be signed in his behalf by:
1. His parent or guardian, or if the latter is not available,
2. An authorized representative of the DOLE.

Q: May apprentices be hired without compensation?

A: Required:

1. By school
2. By the training program curriculum
3. For Graduation
4. For board examinations

Q: What are the rules on working scholars?

A: There is no Er‐Ee relationship between students on one hand, and schools,

where there is written agreement between them under which the former agree to
work for the latter in exchange for the privilege to study free of charge. The
student is not considered an Ee. (Sec. 14, Rule IX, Book III, IRR)

Q: Padilla entered into a written agreement with Gomburza College to work for
the latter in exchange for the privilege of studying in said institution. His work
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was confined to keeping clean the lavatory facilities of the school. One school
day, he got into a fist fight with a classmate, Monteverde, as a result of which
the latter sustained a fractured arm. Victor filed a civil case for damages against
him, impleading Gomburza College due to the latter's alleged liability as his Er.
Under the circumstances, could Gomburza College be held liable by Victor
Monteverde as an Padilla’s Er?

A: Gomburza College is not liable for the acts of Padilla because there is no Er ‐Ee
relationship between them. As provided in the Rules and Regulations
Implementing the LC "there is no Er ‐Ee relationship between students on one
hand, and schools, colleges, or universities on the other, where students work
with the latter in exchange for the privilege to study free of charge, provided the
students are given real opportunity, including such facilities as may be
reasonable and necessary to finish their chosen courses under such
arrangement." (1997 Bar Question)

Q: Who may terminate an apprenticeship agreement?

A:

1. Either party may terminate an agreement after the probationary period but
only for a valid cause.
2. It may be initiated by either party upon filing a complaint or upon DOLE’s
own initiative.

Q: Who may appeal the decision of the authorized agency of the DOLE?

A: It may be appealed by any aggrieved person to the SLE within 5 days from
receipt of the decision.

Note: The decision of the SLE shall be final and executory.

Q: What is Exhaustion of Administrative Remedies (EAR)?

A: It is a condition precedent to the institution of action. (Sec. 32b, Rule VI, Book
II, IRR)

Q: How is the principle of Exhaustion of Administrative Remedies

applied in case of breach of apprenticeship agreement?

A: No person shall institute any action for the enforcement of any apprenticeship
agreement or damages for breach of any such agreement, unless he has
exhausted all available administrative remedies.

Q: Who shall settle differences arising out of apprenticeship agreement?

A: The plant apprenticeship committee shall have the initial responsibility for
settling differences arising out of apprenticeship agreement. (Sec. 32b, Rule VI,
Book II, IRR)
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Q: What is the procedure for the termination of apprenticeship?

A: The party terminating shall:

1. Serve a written notice on the other at least 5 days before actual termination,
2. Stating the reason for such decision; and
3. A copy of said notice shall be furnished the Apprenticeship Division
concerned.

Learners

Q: Who are learners?

A:
1. They are persons hired as trainees in semi ‐skilled and other industrial
occupations
2. Which are non‐apprenticeable and
3. Which may be learned through practical training on the job in a relatively
short period of time
4. Which shall not exceed 3 months
5. Whether or not such practical training is supplemented by theoretical
instructions. (Sec. 1a, Rule VII, Book II, IRR)

Q: When may learners be employed?

A:
1. When no experienced worker is available
2. It is necessary to prevent curtailment of employment opportunities; and
3. Employment does not create unfair competition in terms of labor costs or
impair or lower working standards.

Q: What is a learnership agreement?

A: Any employer desiring to employ learners shall enter into a learnership
agreement with them, which agreement shall include:
1. The names and addresses of the learners;
2. The duration of the learnership period, which shall not exceed 3 months;
3. The wages or salary rates of the learners which shall begin at not less than
75% of the applicable minimum wage; and
4. A commitment to employ the learners if they so desire, as regular employees
upon completion of the learnership.

Q: What is the qualification of a learner?

A: Must be at least 15 years of age.

Note: Those below 18 years of age shall not work in hazardous occupations.

Q: Who may employ learners?

A: Only employers in semi‐skilled and other industrial occupations which are
non‐apprenticeable.
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Q: What is the status of learners who have been allowed or suffered work during
the first 2 months, if training is terminated by the Er before the end of the
stipulated period through no fault of the learner?

A: They are deemed regular employees. (Sec. 4, Rule VII, Book II, IRR)

Distinctions between Learnership and Apprenticeship

Q: Distinguish Learnership from Apprenticeship.

A:
Learnership Apprenticeship
Nature
Training on the job in semi‐skilled Training in trades which are
and other industrial occupation or apprenticeable, that is, practical
trades which are non‐apprenticeable training on the job supplemented by
and which may be learned thru related theoretical instruction for more
practical training on the job in a than 3 months.
relatively short period of time.
Duration of training
Max: 3 months Min: 3 months
Max: 6 months
Commitment to employ
With commitment to employ the No commitment to hire
learner as a regular Ee if he desires
upon completion of learnership
In case of pretermination of contract
Considered a regular Ee if pre‐ Worker not considered as regular
termination occurs after 2 months of employee.
training and the dismissal is without
fault of the learner.
Coverage
Semi‐skilled/Indus‐trial occupations Highly technical industries and only in
industrial occupation
There is a list of learnable trades by No list
TESDA
Written agreement
Require Learnership Agreement Requires Apprenticeship Agreement

M. PERSONS WITH DISABILITY

(R.A. NO. 7277, AS AMENDED BY R. A. NO. 9442)

1. DEFINITION
 183

Q: Who are handicapped workers (HW)?

A: Those whose earning capacity is impaired by:

1. Physical deficiency
2. Age
3. Injury
4. Disease
5. Mental deficiency
6. Illness

Q: What is the duration of the employment period of handicapped

workers?
A: There is no minimum or maximum duration. It depends on the agreement but
it is necessary that there is a specific duration stated.

Q: May handicapped workers be hired as apprentices or learners?

A: Yes, if their handicap is not such as to effectively impede the performance of

job operations in the particular occupations for which they are hired. (Art. 81)

Q: Can a handicapped workers acquire the status of a regular Ee?

A: Yes, if work is usually or necessarily or desirable to the business. (Bernardo

v. NLRC, G.R No. 122917, July 12, 1999)

Q: Who may employ handicapped workers?

A: Employers in all industries. Provided, the handicap is not such as to

effectively impede the performance of job operations in the particular occupations
for which they are hired.

Q: When can handicapped workers be employed?

A:
1. When their employment is necessary to prevent curtailment of employment
opportunities and
2. When it will not create unfair competition in labor costs or lower working
standards. (Art. 79)

Q: Does the mere fact that a worker has a disability, make him a
handicapped worker?

A: No, because his disability may not impair his efficiency or the quality of his
work. If despite his disability he can still efficiently perform his work, he cannot
be classified as handicapped; he would be considered a qualified disabled
worker entitled to the same treatment as qualified able ‐bodied workers.
 184

2. RIGHTS OF PERSONS WITH DISABILITY

Q: What are the rights and privileges of disabled workers?

A:
1. Equal opportunity for employment
2. Sheltered employment (the gov’t shall endeavour to provide them work if
suitable employment for disabled persons cannot be found through open
employment)
3. Apprenticeship
4. Vocational rehabilitation (means to develop the skills and potentials of
disabled workers and enable them to compete in the labor market)
5. Vocational guidance and counselling

3. PROHIBITION ON DISCRIMINATION AGAINST PERSONS WITH

DISABILITY

Q: What is the prohibition on discrimination against disabled workers?

A: No disable person shall be denied access to opportunities for suitable

employment. A qualified disabled employee 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.

Five percent (5%) of all casual emergency and contractual positions in the
Departments of Social Welfare and Development; Health; Education, Culture and
Sports; and other government agencies, offices or corporations engaged in social
development shall be reserved for disabled persons.

4. INCENTIVES FOR EMPLOYERS

Q: What are the incentives provided for employers in employing disabled

workers?

A: 1. Entitled to an additional deduction, from their gross income, equivalent to

twenty‐five percent (25%) of the total amount paid as salaries and wages to
disabled persons: Provided, however, That such entities present proof as
certified by the Department of Labor and Employment that disabled persons are
under their employ: Provided, further, That the disabled employee is accredited
 185

with the Department of Labor and Employment and the Department of Health as
to his disability, skills and qualifications

2. Private entities that improve or modify their physical facilities in order to

provide reasonable accommodation for disabled persons shall also be entitled to
an additional deduction from their net taxable income, equivalent to fifty percent
(50%) of the direct costs of the improvements or modifications

Q: Distinguish handicapped from disabled.

A:
Handicapped Disabled
(Differently Abled)
Earning capacity is impaired by age, or Refers to all suffering from
physical or mental deficiency or injury. restriction of different abilities as a
result of mental, physical or
sensory impairment to perform an
activity in the manner or within
range considered normal for a
human being.
Covers only workers. Covers all activities or endeavors.
Basis: loss/impairment of earning Basis: range of activity which is
capacity. normal for a human being.
Loss due to injury or physical or mental Restriction due to impairment of
defect or age. mental/physical/ sensory defect .
If hired, entitled to 75% of minimum If qualified, entitled to all terms and
wage. conditions as qualified able‐bodied
Subject to definite periods of person.
employment.
Employable only when necessary to No restrictions on employment.
prevent curtailment of employment Must get equal opportunity and no
opportunity. unfair competition.

IV. TERMINATION OF EMPLOYMENT

A. EMPLOYER‐EMPLOYEE RELATIONSHIP

Q: What determines the existence of an employment relationship?

A: It is determined by law and not by contract. Whether or not an Er ‐Ee

relationship exists between the parties is a question of fact. In this regard, the
findings of the NLRC are accorded not only respect but finality if supported by
evidence.
 186

Note: Taxi or jeepney drivers under the “boundary” system are Ee’s of the taxi
or jeepney owners/operators; so also the passenger bus drivers and conductors.
(Jardin vs. NLRC and Goodman Taxi, G.R. No. 119268, Feb. 23, 2000)

Q: The employment contract stipulates that there is no Er ‐Ee relationship

between the parties. Is that valid?

A: No. The existence of an Er‐Ee relation is a question of law and being such, it
cannot be made the subject of agreement. (Tabas v. California Manufacturing
Co., G.R. No. L‐80680, Jan. 26, 1989)

Q: Banco de Manila and the Ang Husay Janitorial and Pest Control Agency
entered into an Independent Contractor Agreement with the usual stipulations:
specifically, the absence of Er‐Ee relationship, and the relief from liability
clauses. Can the bank, as a client, and the agency, as an independent
contractor, stipulate that no Er‐Ee relationship exists between the bank and the
Ees of the Agency who may be assigned to work in the Bank? Reason.

A: Yes, they can stipulate provided the relationship is job contracting. However
the stipulation cannot prevail over the facts and the laws. The existence of Er ‐Ee
relationship is determined by facts and law and not by stipulation of the parties.
(Insular Life Assurance Co.. Ltd. v. NLRC, G.R. No. 119930, March 12,1998)

Q: ASIA executed a 1‐year contract with the Baron Hotel (BARON) for the former
to provide the latter with 20 security guards to safeguard the persons and
belongings of hotel guests, among others. The security guards filled up Baron
application form and submitted the executed forms directly to the Security
Department of Baron. The pay slips of the security guards bore BARON's logo
and showed that Baron deducted therefrom the amounts for SSS premiums,
medicare contributions and withholding taxes. Assignments of security guards,
who should be on duty or on call, promotions, suspensions, dismissals and
award citations for meritorious services were all done upon approval by
BARON's chief security officer. After the expiration of the contract with ASIA,
BARON did not renew the same and instead executed another contract for
security services with another agency. ASIA placed the affected security guards
on "floating status" on "no work no pay" basis. Having been displaced from work,
the ASIA security guards filed a case against the BARON for illegal dismissal,
overtime pay, minimum wage differentials, vacation leave and sick leave
benefits, and 13th month pay. BARON denied liability alleging that ASIA is the
employer of the security guards and therefore, their complaint for illegal
dismissal and payment of money claims should be directed against ASIA.
Nevertheless, BARON filed a Third Party Complaint against ASIA.
Is there an Er‐Ee relationship between the BARON, on one hand, and the ASIA
security guards, on the other hand? Explain briefly.
A: As a general rule, the security guards of a private security guard agency are
the employees of the latter and not of the establishment that has entered into a
contract with the private security guard agency for security services. But under
the facts in the question, Baron Hotel appear to have hired the security guards,
 187

to have paid their wages, to have the power to promote, suspend or dismiss the
security guards and the power of control over them, namely, the security guards
were under orders of Baron Hotel as regard their employment. Because of the
above‐mentioned circumstances, Baron Hotel is the Er of the security guards.

Q: Assuming that ASIA is the Er, is the act of ASIA in placing the
security guards on "floating status" lawful? Why?
A: It is lawful for a private security guard agency to place its security guard on a
"floating status" if it has no assignment to give to said security guards. But if the
security guards are placed on a "floating status" for more than 6 months, the
security guards may consider themselves as having been dismissed. (1999 Bar
Question)

Q: Lacson was one of more than 100 Ees who were terminated from employment
due to the closure of LBM Construction Corporation. LBM was a sister company
of Lastimoso Construction, Inc. and RL Realty & Dev’t Corp. All 3 entities formed
what came to be known as the Lastimoso Group of Companies. The 3
corporations were owned and controlled by members of the Lastimoso family;
their incorporators and directors all belonged to the Lastimoso family. The 3
corporations were engaged in the same line of business, under one management,
and used the same equipment including manpower services. Lacson and his co ‐
Ees filed a complaint with the Labor Arbiter against LBM, RL Realty and
Lastimoso Construction to hold them jointly and severally liable for backwages
and separation pay. Lastimoso Construction, Inc. RL Realty & Development
Corporation interposed a Motion to Dismiss contending that they are juridical
entitles with distinct and separate personalities from LBM Construction
Corporation and therefore, they cannot be held jointly and severally liable for the
money claims of workers who are not their Ees. Rule on the motion to dismiss.
Should it be granted or denied? Why?
A: It is very clear that even if LBM Construction company, Lastimoso
Construction Company, Inc. and RL Realty & Dev’t Corp. all belong to the
Lastimoso family and are engaged in the same line of business under one
management and used the same equipment including manpower services, these
corporations were separate juridical entities. Thus, only the LBM Construction
Corp. is the Er of Teofilo Lacson. The other corporation do not have any Er ‐Ee
relations with Lacson. The case in question does not include any fact that would
justify piercing the veil of corporate fiction of the other corporations in order to
protect the rights of workers. In a case (Concept Builders, Inc. v. NLRC, G.R. No.
108734, May 29, 1996) the SC ruled that it is a fundamental principle of
corporation law that a corporation is an entity separate and distinct from its
stockholders and from other corporations to which it may be connected. But this
separate and distinct personality of a corporation is merely a fiction created by
law for convenience and to promote justice. So, when the notion of separate
juridical personality is used to defeat public convenience, justify wrong, protect
fraud or defend crime, or is used as a device to defeat the labor laws, this
separate personality of the corporation maybe disregarded or the veil of
corporate fiction pierced. (1999 Bar Question)
 188

1. FOUR-FOLD TEST

Q: What factors determine the existence of an Er‐Ee relationship?

A: The “four–fold test”:

1. Selection and engagement of the employee;

2. Payment of wages;
3. Power of dismissal; and
4. Power of control. (The Labor Code with Comments and Cases 2007, Azucena,
Vol I, p.158)

Q: What is control test?

A: The person for whom the services are performed reserves a right to control not
only the end to be achieved but also the means to be used in reaching such end.

Note: However, in certain cases the control test is not sufficient to give a
complete picture of the relationship between the parties, owing to the complexity
of such a relationship where several positions have been held by the worker. The
better approach is to adopt the two‐tiered test. (Francisco vs. NLRC, G.R. No.
170087, Aug. 31, 2006)

Q: Genesis entered into a Career’s Agent Agreement with EmoLife Insurance

Company, a domestic corporation engaged in insurance business. In the
Agreement, it provides that the agent is an independent contractor and nothing
therein shall be construed or interpreted as creating an employer ‐ employee
relationship. It further provides that the agent must comply with three
requirements: (1) compliance with the regulations and requirements of the
company; (2) maintenance of a level of knowledge of the company's products that
is satisfactory to the company; and (3) compliance with a quota of new
businesses. However, EmoLife insurance company terminated Genesis’ services.
Genesis filed an illegal dismissal complaint alleging therein that an employer ‐
employee relationship exists and that he was illegally dismissed. Is he an
employee of the insurance company?

A: Genesis is not an employee of EmoLife Insurance Company. Generally, the

determinative element is the control exercised over the one rendering the service.
The concept of “control” in Labor Code has to be compared and distinguished
with “control” that must necessarily exist in a principal ‐agent relationship. The
employer controls the employee both in the results and in the means and manner
of achieving this result. The principal in an agency relationship, e.g. insurance
agent, on the other hand, also has the prerogative to exercise control over the
agent in undertaking the assigned task based on the parameters outlined in the
pertinent laws. In the present case, the Agreement fully serves as grant of
authority to Genesis as EmoLife’s insurance agent. This agreement is
supplemented by the company’s agency practices and usages, duly accepted by
 189

the agent in carrying out the agency. Foremost among these are the directives
that the principal may impose on the agent to achieve the assigned tasks, to the
extent that they do not involve the means and manner of undertaking these
tasks. The law likewise obligates the agent to render an account; in this sense,
the principal may impose on the agent specific instructions on how an account
shall be made, particularly on the matter of expenses and reimbursements. To
these extents, control can be imposed through rules and regulations without
intruding into the labor law concept of control for purposes of employment.
(Gregorio Tongko v. ManuLife Insurance Company, G.R. No. 167622, Jun. 29,
2010)

Two‐ tiered Test

Q: What is the two‐tiered test?

A:

1. The putative Er’s power to control the Ee with respect to the means and
methods by which the work is to be accomplished; and
2. The underlying economic realities of the activity or relationship.

Note: This two‐tiered test would provide us with a framework of analysis, which
would take into consideration the totality of circumstances surrounding the true
nature of the relationship between the parties. This is especially appropriate in
this case where there is no written agreement or terms of reference to base the
relationship on and due to the complexity of the relationship based on the
various positions and responsibilities given to the worker over the period of the
latter’s employment. (Francisco vs. NLRC, G.R. No. 170087, Aug. 31, 2006)

Q: What is the proper standard for economic dependence?

A: The proper standard is whether the worker is dependent on the alleged

employer for his continued employment in that line of business

2. KINDS OF EMPLOYMENT

Kinds of employment

a. Probationary
b. Regular
c. Project employment
d. Seasonal
e. Casual
f. Fixed-term
 190

A. PROBATIONARY EMPLOYMENT

Q: What is probationary employment?

A: Employment where the employee (Ee), upon his engagement:

1. Is made to undergo a trial period

2. During which the Er determines his fitness to qualify for regular employment,
3. Based on reasonable standards made known to the Ee at the time of
engagement. (Sec 6, Rule I, Book VI, IRR)

Note: The services of an Ee who has been engaged on probationary basis may
be terminated only for just cause, when he fails to qualify as a regular Ee in
accordance with reasonable standards prescribed by the Er.

Q: Michelle Miclat was employed on a probationary basis as marketing assistant

by Clarion Printing House but during her employment she was not informed of
the standards that would qualify her as a regular employee (Ee). 30 days after,
Clarion informed Miclat that her employment contract had been terminated
without any reason. Miclat was informed that her termination was part of
Clarion’s cost‐cutting measures. Is Miclat considered as a regular Ee and hence
entitled to its benefits?

A: Yes. Probationary employment shall be governed by the following rules: (d) In

all cases of probationary employment, the Er shall make known to the Ee the
standards under which he will qualify as a regular Ee at the time of his
engagement. Where no standards are made known to the Ee at that time, he
shall be deemed a regular Ee”. In the case at bar, she was deemed to have been
hired from day one as a regular Ee. (Clarion Printing House Inc., vs. NLRC, G.R.
No. 148372, June 27, 2005)

Q: What are the characteristics of probationary employment?

A:

1. It is an employment for a trial period;

2. It is a temporary employment status prior to regular employment;
3. It arises through a contract with the following elements:

a. The employee (Ee) must learn and work at a particular type of work
b. Such work calls for certain qualifications
c. The probation is fixed
d. The Er reserves the power to terminate during or at the end of the trial
period
e. And if the Ee has learned the job to the satisfaction of the Er, he
becomes a regular Ee.

Q: What is the period of probationary employment?

 191

A: GR: It shall not exceed 6 months.

XPNs:

1. Covered by an apprenticeship or learnership agreement stipulating a

different period
2. Voluntary agreement of parties (especially when the nature of work
requires a longer period)
3. The Er gives the(Ee a second chance to pass the standards set. (Mariwasa
Manufacturing, Inc. v. Leogardo, Jr.,G.R. No. 74246, Jan. 26, 1989)
4. When the same is required by the nature of the work, e.g. the probationary
period set for professors, instructors and teachers is 3 consecutive years of
satisfactory service pursuant to DOLE Manual of Regulations for Private
Schools.
5. When the same is established by company policy.

Note: Period of probation shall be reckoned from the date the Ee actually started
working. (Sec.6 [b], Rule I, Book VI, IRR)

After the lapse of the probationary period (6 months), Ee becomes regular.

Probationary Ees may be dismissed before end of the probationary period.

Q: May the Er and Ee validly agree to extend the probationary period

beyond 6 months?
A: Yes. Such an extension may be lawfully agreed upon, despite the restrictive
language of Art. 281. A voluntary agreement extending the original probationary
period to give the Ee a second chance to pass the probation standards
constitutes a lawful exception to the statutory limit. (Mariwasa Manufacturing,
Inc. v. Leogardo, Jr., G.R. No. 74246, Jan.26, 1989)

Note: By voluntarily agreeing to such an extension, the Ee waived any benefit

attaching to the completion of the period if he still failed to make the grade
during the period of extension. (Mariwasa Mfg. Inc. v. Hon. Leogardo, G.R. No.
74246, Jan.26, 1989)

Q: Is double or successive probation allowed?

A: No. The evil sought to be prevented is to discourage scheming employers from

using the system of double or successive probation to circumvent the mandate of
the law on regularization and make it easier for them to dismiss their employees.
(Holiday Inn Manila v. NLRC, G.R. No. 109114, Sep. 14, 2003)

Q: Middleby Phils. Corp. hired Alcira as eng’g support services supervisor on a

probationary basis for 6 months. Apparently unhappy with Alcira’s performance,
Middleby terminated his services. Alcira contends that he was already a regular
employee (Ee) when he was terminated. According to Alcira’s computation, since
Art. 13 of the Civil Code provides that 1 month is composed of 30 days, 6 months
totaling 180 days, then his 180th day would fall on Nov. 16, ‘96 making him a
 192

regular Ee before his termination. Is the contention of the petitioner in the

computation of 6 months correct?
A: No, the computation of the 6‐month probationary period is reckoned from the
date of appointment up to the same calendar date of the 6th month following. In
short, since the number of days in each particular month was irrelevant, Alcira
was still a probationary Ee when Middleby opted not to “regularize” him on Nov.
20, 1996. (Alcira v. NLRC, G.R. No. 149859, June 9, 2004)

Note: In Mitsubishi Motors v. Chrysler Phils. Labor Union, G.R. No. 148738, June
29, 2004, the SC ruled in this wise:

“Applying Art. 13 of the Civil Code, the probationary period of 6 ‐months consists
of the 180 days. This is in conformity with par.1, Art. 13 of the Civil Code. The
number of months in the probationary period, 6, should then be multiplied by the
number of days within a month, 30; hence, the period of 180 days. As clearly
provided for the in last par. of Art. 13, in computing a period, the first day shall
be excluded and the last day included. Thus, the 180 days commenced on May
27, 1996, and ended on Nov. 23, 1996. The termination letter dated Nov. 25,
1996 was served on Paras only on Nov. 26, 1996. He was, by then already a
regular Ee of the company under Art. 281 of the LC.”

How to resolve the conflict between the Alcira and Mitsubishi Motors case

1. Statutory Construction – The latter case prevails (Mitsubishi Motors); or

2. Rule more favorable to the Ee – use the computation which would amount to
granting the subject Ee regular employment status (based on Constitutional
and statutory provisions for the liberal interpretation of labor laws)

Q: What is the purpose of the period?

A: To afford the employer an opportunity to observe the fitness of a probationary

employee at work.

Q: In what instances is a probationary employee (Ee) deemed a regular

Ee?

A:
1. If he is allowed to work after a probationary period. (Art. 281)
2. If no standards, under which he will qualify as a regular Ee, are made
known to him at the time of his engagement. (Sec. 6 [d], Rule I, Book VI,
IRR)

Article 281, Labor Code. Probationary employment. Probationary

employment shall not exceed six (6) months from the date the employee started
working, unless it is covered by an apprenticeship agreement stipulating a
longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify
as a regular employee in accordance with reasonable standards made known by
 193

the employer to the employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered a regular
employee.

Q: What are the grounds for terminating probationary employment?

A:
1. Just/authorized causes
2. When he fails to qualify as a regular Ee in accordance with reasonable
standards made known by the employer (Er) to the Ee at the time of his
engagement (ICMC v. NLRC, G.R. No. 72222, Jan. 30, 1989)

Note: While probationary Ees do not enjoy permanent status, they are afforded
the security of tenure protection of the Constitution. Consequently, they cannot
be removed from their positions unless for cause. Such constitutional protection,
however, ends upon the expiration of the period stated in their probationary
contract of employment. Thereafter, the parties are free to renew the contract or
not. (CSA v. NLRC, G.R. No. 87333, Sep. 6, 1991)

Q: What are the limitations on the employer’s (Er’s) power to terminate a

probationary employment contract?

A:
1. The power must be exercised in accordance with the specific req’ts of the
contract
2. If a particular time is prescribed, the termination must be within such time
and if formal notice is required, then that form must be used
3. The Er’s dissatisfaction must be real and in good faith, not feigned so as to
circumvent the contract or the law
4. There must be no unlawful discrimination in the dismissal

Note: The probationary employee is entitled to procedural due process prior to

dismissal from service.

Q: R.L. Cruz was employed as gardener by Manila Hotel on “probation status”

effective Sep. 22, ‘76. The appointment signed by Cruz provided for a 6 month
probationary period. On Mar. 20, ‘77, or a day before the expiration of the
probationary period, Cruz’s was promoted to lead gardener position. On the
same day Cruz’ position was “abolished” by Manila Hotel allegedly due to
economic reverses or business recession, and to salvage the enterprise from
imminent danger of collapse. Was Cruz illegally dismissed?
A: Yes, there is no dispute that as a probationary employee (Ee), Cruz had but
limited tenure. Although on probationary basis, however, Cruz still enjoys the
constitutional protection on security of tenure. During his tenure of employment,
therefore, or before his contract expires, Cruz cannot be removed except for cause
as provided for by law.
 194

What makes Cruz’ dismissal highly suspicious is that it took place at a time
when he needs only but a day to be eligible as a regular Ee. That he is
competent finds support in his being promoted to a lead gardener in so short
span of less than 6 months. By terminating his employment or abolishing his
position with but only one day remaining in his probationary appointment, the
hotel deprived Cruz of qualifying as a regular Ee with its concomitant rights and
privileges. (Manila Hotel Corp. v. NLRC, G.R. No. L‐53453, Jan. 22, 1986)

Q: Colegio San Agustin (CSA) hired the Gela Jose as a grade school classroom
teacher on a probationary basis for SY ‘84 – ‘85. Her contract was renewed for
SY’s ‘85‐‘86 and ‘86‐‘87. On Mar. 24, ‘87, the CSA wrote the Gela that "it would
be in the best interest of the students and their families that she seek
employment in another school or business concern for next school year".
Notwithstanding the said notice, the CSA still paid Gela her salary for April 15 to
May 15, 1987. On April 6, ‘87, Gela wrote the CSA and sought reconsideration
but she received no reply. Thereafter, she filed a complaint for illegal dismissal.
Was Gela illegally dismissed?
A: No. The Faculty Manual of CSA underscores the completion of 3 years of
continuous service at CSA before a probationary teacher acquires tenure. Hence,
the Gela cannot claim any vested right to a permanent appointment since she
had not yet achieved the prerequisite 3‐year period under the Manual of
Regulation for Private Schools and the Faculty Manual of CSA.

In the instant case where the CSA did not wish to renew the contract of
employment for the next school year, the Gela has no ground to protest. She was
not illegally dismissed. Her contract merely expired. (CSA v. NLRC, G.R No.
87333, Sep. 6, 1991)

Q: During their probationary employment, 8 Ees were berated and insulted by

their supervisor. In protest, they walked out. The supervisor shouted at them to
go home and never to report back to work. Later, the personnel manager
required them to explain why they should not be dismissed from employment for
abandonment and failure to qualify for the positions applied for. They filed a
complaint for illegal dismissal against their Er. As a LA, how will you resolve the
case?

A: As a LA I will resolve the case in favor of the 8 probationary Ees due to the ff::
1. Probationary Ees also enjoy security of tenure. (Biboso v. Victoria Milling, G.R.
No. L‐44360, Mar. 31, 1977)
2. In all cases involving Ees on probationary status, the Er shall make known to
the Ee at the time he is hired, the standards by which he will qualify for the
positions applied for.
3. The filing of the complaint for illegal dismissal effectively negates the Ers
theory of abandonment. (Rizada v. NLRC, G.R. No. 96982, Sep. 21, 1999)
4. The order to go home and not to return to work constitutes dismissal from
employment.
 195

5. The 8 probationary Ees were terminated without just cause and without due
process

In view of the foregoing, I will order reinstatement to their former positions

without loss of seniority rights with full backwages, plus damages and atty’s
fees. (2006 Bar Question)

B. REGULAR EMPLOYMENT

Q: What is regular employment?

A:
1. An employment shall be deemed to be regular where the Ee has been
engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the Er, the provisions of written agreements to the
contrary notwithstanding and regardless of the oral agreements of the
parties. (Sec. 5 [a], Rule I, Book VI, IRR)

2. Any Ee who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular Ee with respect to the
activity in which he is employed and his employment shall continue while
such activity exists. (Sec. 5 [b], Rule I, Book VI, IRR)

Note: Regularization is not a management prerogative; rather, it is the nature of

employment that determines it. It is a mandate of the law. (PAL v. Pascua, G.R.
No. 143258, Aug. 15, 2003)

Regular employment does not mean permanent employment. A probationary Ee

becomes a regular Ee after 6 months. A regular Ee may only be terminated for
just/authorized causes.

The practice of entering into employment contracts which would prevent the
workers from becoming regular should be struck down as contrary to public
policy and morals. (Universal Robina Corp. v. Catapang, G.R. No. 164736, Oct.
14, 2005)

Reasonable connection rule

Q: What is the test to determine regular employment?

A:

1. The primary standard of determining regular employment is the reasonable

connection between the particular activity performed by the employee (Ee) to
the usual trade or business of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade of the Er. (De
Leon v. NLRC, G.R. No. 70705, Aug. 21, 1989)
 196

Note: The connection can be determined by considering the nature of the

work performed and its relation to the scheme of the particular business or
trade in its entirety. (Highway Copra Traders v. NLRC, G.R. No. 108889,
July 30, 1998)

2. Also, the performance of a job for at least a year is sufficient evidence of the
job’s necessity if not indispensability to the business. This is the rule even if
its performance is not continuous and merely intermittent. The employment is
considered regular, but only with respect to such activity and while such
activity exists. (Universal Robina Corp. v. Catapang, G.R. No. 164736, Oct.
14, 2005).

Note: The status of regular employment attaches to the casual Ee on the day
immediately after the end of his first year of service. The law does not provide
the qualification that the Ee must first be issued a regular appointment or must
first be formally declared as such before he can acquire a regular status. (Aurora
Land Projects Corp. v. NLRC, G.R. No. 114733, Jan. 2, 1997)

Q: Is the mode of compensation determinative of regular employment?

A: No, while the Ees mode of compensation was on a “per piece basis” the status
and nature of their employment was that of regular Ees. (Labor Congress of the
Phils v. NLRC, G.R. No. 123938, May 21, 1998)

Q: When does Art. 280 not apply?

A: It does not apply in case of OFWs.
Note: Seafarers cannot be considered as regular Ees. Their employment is
governed by the contracts they sign everytime they are hired and their
employment terminated when the contract expires. Their employment is fixed for
a certain period of time. (Ravago v. Esso Eastern Maritime Ltd., G.R. No. 158324,
Mar. 14, 2005)

Article 280, Labor Code. Regular and casual

employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business
or trade of the employer, except where the 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 or where the work or service to be
performed is seasonal in nature and the employment is for the
duration of the season.

An employment shall be deemed to be casual if it is not

covered by the preceding paragraph: Provided, That any
employee who has rendered at least one year of service,
 197

whether such service is continuous or broken, shall be

considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while
such activity exists.

Q: Moises was employed by La Tondeña at the maintenance section of its Eng’g

Dep’t paid on a daily basis through petty cash vouchers. His work consisted
mainly of painting company building and equipment and other odd jobs relating
to maintenance. After a service of more than 1 year, Moises requested that he be
included in the payroll of regular workers, instead of being paid through petty
cash vouchers. Instead La Tondeña’s dismissed Moises and claimed that Moises
was contracted on a casual basis specifically to paint certain company buildings
and that its completion terminated Moises’ employment. Can Moises be
considered as a regular Ee?
A: Yes, the law demands that the nature and entirety of the activities performed
by the Ee be considered. Here, the painting and maintenance work given Moises
manifests a treatment consistent with a maintenance man and not just a painter,
for if his job was only to paint a building there would be no basis for giving him
other work assignments in‐between painting activities.
It is not tenable to argue that the painting and maintenance work of Moises are
not necessary in La Tondeña’s business of manufacturing liquors; otherwise,
there would be no need for the regular maintenance section of the company’s
eng’g dep’t. (De Leon v. NLRC, G.R. No. 70705, Aug. 21, 1989)

Q: Honorio Dagui was hired by Doña Aurora Suntay Tanjangco in 1953 to take
charge of the maintenance and repair of the Tanjangco apartments and
residential bldgs. He was to perform carpentry, plumbing, electrical and
masonry work. Upon the death of Doña Aurora Tanjangco in ‘82 her daughter,
Teresita Tanjangco Quazon, took over the administration of all the Tanjangco
properties, and dismissed Dagui. Is Honorio Dagui a regular employee (Ee)?
A: Yes. The jobs assigned to Dagui as maintenance man, carpenter, plumber,
electrician and mason were directly related to the business of the Tanjangco’s as
lessors of residential and apartment bldgs. Moreover, such a continuing need for
his services by the Tanjangcos is sufficient evidence of the necessity and
indispensability of his services to their business or trade.
Dagui should likewise be considered a regular Ee by the mere fact that he
rendered service for the Tanjangcos for more than one year, that is, beginning
‘53 until ‘82, under Doña Aurora; and then from 1982 up to June 8, ‘91 under
the daughter, for a total of 29 and 9 years respectively. Owing to Dagui's length
of service, he became a regular Ee, by operation of law, one year after he was
employed in ‘53 and subsequently in ‘82. (Aurora Land Projects Corp. v. NLRC,
G.R. No. 114733, Jan. 2, 1997)

Q: A total of 43 Ees who are deaf‐mutes were hired and re‐hired on various
periods by Far East Bank and Trust Co. as money sorters and counters through
a uniformly worded agreement called “Employment Contract for Handicapped
Workers.” The company disclaimed that these Ees were regular Ees and
 198

maintained among others that they are a special class of workers, who were
hired temporarily under a special employment arrangement which was a result
of overtures made by some civic and political personalities to the Bank. Should
the deaf‐mute Ees be considered as regular Ees?

A: Yes. The renewal of the contracts of the handicapped workers and the hiring
of others leads to the conclusion that their tasks were beneficial and necessary
to the bank. It also shows that they were qualified to perform the responsibilities
of their positions; their disability did not render them unqualified or unfit for the
tasks assigned to them.
The Magna Carta for Disabled Persons mandates that a qualified disabled Ee
should be given the same terms and conditions of employment as a qualified
able‐bodied person. The fact that the Ees were qualified disabled persons
necessarily removes the employment contracts from the ambit of Art. 80. Since
the Magna Carta accords them the rights of qualified able ‐bodied persons, they
are thus covered by Art. 280 of the LC. (Bernardo v. NLRC, G.R. No. 122917,
July 12, 1999)

Q: Coca‐Cola Bottlers Phils, Inc., (CCBPI) engaged the services of the workers as
“sales route helpers” for a period of 5 months. After 5 months, the workers were
employed by the company on a day ‐to‐day basis. According to the company, the
workers were hired to substitute for regular route helpers whenever the latter
would be unavailable or when there would be an unexpected shortage of
manpower in any of its work places or an unusually high volume of work. The
practice was for the workers to wait every morning outside the gates of the sales
office of the company, if thus hired, the workers would then be paid their wages
at the end of the day. Should the workers be considered as regular employees
(Ees) of CCBPI?
A: Yes, the repeated rehiring of the workers and the continuing need for their
services clearly attest to the necessity or desirability of their services in the
regular conduct of the business or trade of the company. The fact that the
workers have agreed to be employed on such basis and to forego the protection
given to them on their security of tenure, demonstrate nothing more than the
serious problem of impoverishment of so many of our people and the resulting
unevenness between labor and capital. (Magsalin & Coca‐Cola v. N.O.W.M., G.R.
No. 148492, May 9, 2003)

Q: Metromedia Times Corp. entered, for the fifth time, into an agreement with
Efren Paguio, appointing him to be an account executive of the firm. He was to
solicit advertisements for “The Manila Times,”. The written contract between the
parties provided that, “You are not an Ee of the Metromedia Times Corp. nor
does the company have any obligations towards anyone you may employ, nor
any responsibility for your operating expenses or for any liability you may incur.
The only rights and obligations between us are those set forth in this agreement.
This agreement cannot be amended or modified in any way except with the duly
authorized consent in writing of both parties.” Is Efren Paguio a regular
employee of Metromedia Times Corporation?
 199

A: Yes, he performed activities which were necessary and desirable to the

business of the Er, and that the same went on for more than a year. He was an
account executive in soliciting advertisements, clearly necessary and desirable,
for the survival and continued operation of the business of the corp.
The corporation cannot seek refuge under the terms of the agreement it has
entered into with Efren Paguio. The law, in defining their contractual
relationship, does so, not necessarily or exclusively upon the terms of their
written or oral contract, but also on the basis of the nature of the work of Efren
has been called upon to perform. A stipulation in an agreement can be ignored
as and when it is utilized to deprive the Ee of his security of tenure. (Paguio v.
NLRC, G.R. No. 147816, May 9, 2003)

C. PROJECT EMPLOYMENT

Q: What is project employment?

A: Employment that has been fixed for a specific project or undertaking the
completion for which has been determined at the time of engagement of the
employee (Ee). (Sec.5 [a], Rule I, Book VI, IRR). The period is not the determining
factor, so that even if the period is more than 1 year, the Ee does not necessarily
become regular.

Note: Where the employment of a project Ee is extended long after the supposed
project has been finished, the Ees are removed from the scope of project Ees and
considered as regular Ees.

Repeated hiring on a project ‐to‐project basis is considered necessary and

desirable to the business of the Er. The Ee is regular (Maraguinot v. NLRC, G.R.
No. 120969, Jan. 22, 1998 ). However, repeated hiring does not necessarily
mean regular employment. (Filipinas Pre‐Fabricated Building Systems
(FILSYSTEMS), Inc. v. Puente, G.R. No. 153832,. March 18, 2005 )

Indicators of project employment

Q: What are the Indicators of Project Employment?

A: Either one or more of the following circumstances, among others, may be
considered as indicators that an employee is a project employee. (Hanjin v.
Ibañez, G.R. No. 170181, June 26, 2008)

a. The duration of the specific/identified undertaking for which the worker is

engaged is reasonably determinable

b. Such duration, as well as the specific work/service to be performed, is defined

in an employment agreement and is made clear to the employee at the time of
hiring.
 200

Note: Absent any other proof that the project employees were informed of
their status as such, it will be presumed that they are regular employees.

c. The work/service performed by the employee is in connection with the

particular project/undertaking for which he is engaged

d. The employee, while not employed and awaiting engagement, is free to offer
his services to any other employer

e. The termination of his employment in the particular project/undertaking is

reported to the Department of Labor and Employment Regional Office having
jurisdiction over the workplace within 30 days following the date of his
separation from work, using the prescribed form on employees’
termination/dismissal/suspensions

f. An undertaking in the employment contract by the employer to pay completion

bonus to the project employee as practiced by most construction companies

Q: What are the requisites in determining whether an employee (Ee) is a

project Ee?
A:
1. The project Ee was assigned to carry out a specific project or undertaking,
and
2. The duration and scope of which were specified at the time the Ee was
engaged for that project. (Imbuido v. NLRC, G.R. No. 114734, Mar. 31, 2000)
3. The Ee must have been dismissed every after completion of his project or
phase
4. Report to the DOLE of Ee’s dismissal on account of completion of contract
(Policy Inst. No. 20; D.O. 19 [1997])

Q: What is a project?
A: A "project" has reference to a particular job or undertaking that may or may
not be within the regular or usual business of the Er. In either case, the project
must be distinct, separate and identifiable from the main business of the Er, and
its duration must be determined or determinable (PAL v. NLRC, G.R. No. 125792,
Nov. 9, 1998).

Q: Can a project employee (Ee) or a member of a work pool acquire the

status of a regular Ee?
A: Yes, when the following concur:
1. There is a continuous rehiring of project Ee’s even after cessation of a project;
and
2. The tasks performed by the alleged “project Ee” are vital, necessary and
indispensable to the usual business or trade of the employer (Er).

Note: The length of time during which the Ee was continuously re ‐hired is not
controlling, but merely serves as a badge of regular employment. Enero and
 201

Maraguinot have been employed for a period of not less than 2 years and have
been involved in at least 18 projects. These facts are the basis in considering
them as regular Ees of the company. (Maraguinot v. NLRC, G.R. No. 120969,
Jan. 22, 1998)

Members of a work pool from which a construction company draws its project
Ees, if considered Ees of the construction company while in the work pool, are
non‐project Ees or Ees for an indefinite period. If they are employed in a
particular project, the completion of the project or any phase thereof will not
mean severance of Er‐Ee relationship. Unless the workers in the work pool are
free to leave any time and offer their services to other Ers. (L.T. Datu & Co., Inc.
v. NLRC, G.R. No. 113162, Feb. 9, 1996)

Q: What is the “day certain” rule?

A: It states that a project employment that ends on a certain date does not end
on an exact date but upon the completion of the project.

Q: Are project Ees entitled to separation pay?

A: GR: Project Ees are not entitled to separation pay if they are terminated as a
result of the completion project.

XPN: If the projects they are working on have not yet been completed when their
services are terminated; project Ees also enjoy security of tenure during the
limited time of their employment. (De Ocampo v. NLRC, G.R. No. 81077, June 6,
1990)

Q: Roger Puente was hired by Filsystems, Inc., initially as an installer and

eventually promoted to mobile crane operator, and was stationed at the
company’s premises. Puente claimed in his complaint for illegal dismissal, that
his work was continuous and without interruption for 10 years, and that he was
dismissed from his employment without any cause. Filsystems on its part
averred that Puente was a project Ee in the company’s various projects, and that
after the completion of each project, his employment was terminated, and such
was reported to the DOLE. Is Roger Puente a regular Ee?
A: No, Puente is a project Ee. The contracts of employment of Puente attest to the
fact that he was hired for specific projects. His employment was coterminous
with the completion of the projects for which he had been hired. Those contracts
expressly provided that his tenure of employment depended on the duration of
any phase of the project or on the completion of the construction projects.
Furthermore, the company regularly submitted to the labor dep’t reports of the
termination of services of project workers. Such compliance with the reportorial
req’t confirms that Puente was a project Ee.
The mere rehiring of Puente on a project ‐to‐project basis did not confer upon him
regular employment status. “The practice was dictated by the practical
consideration that experienced construction workers are more preferred.” It did
 202

not change his status as a project Ee. (Filipinas Pre‐Fabricated Building Systems
(FILSYSTEMS), Inc. v. Puente, G.R. No. 153832, Mar. 18, 2005)

D. SEASONAL EMPLOYMENT

Q: What is seasonal employment?

A: Employment where the job, work or service to be performed is seasonal in

nature and the employment is for the duration of the season. (Sec.5 [a], Rule I,
Book VI, IRR)

An employment arrangement where an employee (Ee) is engaged to work during

a particular season on an activity that is usually necessary or desirable in the
usual business or trade of the employer (Er).

Note: For seasonal Ees, their employment legally ends upon completion of the
project or the season. The termination of their employment cannot and should not
constitute an illegal dismissal. (Mercado v. NLRC, G.R. No. 79869, Sept. 5, 1991)
One year duration on the job is pertinent in deciding whether a casual Ee has
become regular or not, but it is not pertinent to a seasonal or project Ee. Passage
of time does not make a seasonal worker regular or permanent. (Mercado v.
NLRC, G.R. No. 78969, Sep. 5, 1991)
During off‐season, the relationship of Er‐Ee is not severed; the seasonal Ee is
merely considered on LOA without pay. Seasonal workers who are repeatedly
engaged from season to season performing the same tasks are deemed to have
acquired regular employment. (Hacienda Fatima v. National Federation of
Sugarcane Workers‐Food and General Trade, G.R. No. 149440, Jan. 28, 2003)

Q: Are seasonal Ees entitled to separation pay?

A: When the business establishment is sold which effectively terminates the
employment of the seasonal Ees, the latter would be entitled to separation pay.

Q: Can seasonal employees (Ees) be considered as regular Ees?

A: Yes. The fact that seasonal Ees do not work continuously for one whole year
but only for the duration of the season does not detract from considering them in
regular employment. Seasonal workers who are called to work from time to time
and are temporarily laid off during off ‐season are not separated from service in
that period, but merely considered on leave until re‐employed.
If the Ee has been performing the job for at least a year, even if the performance
is not continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such activity
exists. (Benares v. Pancho, G.R. No. 151827, April 29, 2005)
 203

Q: Carlito Codilan and Maximo Docena had been working for the rice mill for 25
years, while Eugenio Go, Teofilo Trangria and Reynaldo Tulin have been working
for 22, 15, and 6 years respectively. The operations of the rice mill continue to
operate and do business throughout the year even if there are only two or three
harvest seasons within the year. This seasonal harvesting is the reason why the
company considers the workers as seasonal Ees. Is the company correct in
considering the Ees as seasonal Ees?
A: No, the fact is that big rice mills such as the one owned by the company
continue to operate and do business throughout the year even if there are only
two or three harvest seasons within the year. It is a common practice among
farmers and rice dealers to store their palay and to have the same milled as the
need arises. Thus, the milling operations are not seasonal. Finally, considering
the number of years that they have worked, the lowest being 6 years, the
workers have long attained the status of regular Ees as defined under Art. 280.
(Tacloban Sagkahan Rice Mill v. NLRC, G.R. No. 73806, Mar. 21, 1990)

E. CASUAL EMPLOYMENT

Q: What is casual employment?

A:
1. It is an employment where the Ee is engaged in an activity which is not
usually necessary or desirable in the usual business or trade of the Er, provided:
such employment is not project nor seasonal (Art. 281).

Note: But despite the distinction between regular and casual employment,
every Ee shall be entitled to the same rights and privileges, and shall be
subject to the same duties as may be granted by law to regular Ees during
the period of their actual employment.

2. An Ee is engaged to perform a job, work or service which is merely incidental

to the business of the Er, and such job, work or service is for a definite period
made known to the Ee at the time of engagement (Sec. 5 [b], Rule I, Book VI, IRR)

Note: If he has rendered at least 1 year of service, whether such service is

continuous or broken, he is considered as regular Ee with respect to the
activity in which he is employed and his employment shall continue while
such activity exists.

A Casual Ee is only casual for 1 year, and it is the passage of time that gives
him a regular status. (KASAMMA‐CCO v. CA, G.R. No. 159828, April 19,
2006)
The purpose is to give meaning to the constitutional guarantee of security of
tenure and right to self‐organization. (Mercado v. NLRC, G.R. No. 79868, Sep.
5, 1991)
 204

Q: Yakult Phils. is engaged in the manufacture of cultured milk. The workers

were hired to cut cogon grass and weeds at the back of the factory building used
by Yakult. They were not required to work on fixed schedule and they worked on
any day of the week on their own discretion and convenience. The services of the
workers were terminated by Yakult on less than 1 ‐year after. May casual or
temporary Ees be dismissed by the Er before the expiration of the 1 ‐year period
of employment?

A: Yes, the usual business or trade of Yakult Phils. is the manufacture of

cultured milk. The cutting of the cogon grasses in the premises of its factory is
hardly necessary or desirable in the usual business of the Yakult.

The workers are casual Ees. Nevertheless, they may be considered regular Ees if
they have rendered services for at least 1 year. When, as in this case, they were
dismissed from their employment before the expiration of the 1 ‐year period they
cannot lawfully claim that their dismissal was illegal. (Capule, et al. v. NLRC,
G.R. No. 90653, Nov. 12, 1990)

Q: How is the project worker different from a casual or contractual

worker? Briefly explain your answers.

PROJECT WORKER CASUAL or CONTRACTUAL

WORKER
Used to designate workers in the Generic term used to designate
construction industry, hired to perform a any worker covered by a wrtitten
specific undertaking for a fixed period, contract to perform a specific
co‐terminus with a project or phase undertaking for a fixed period
thereof determined at the time of the
engagement of the Ee
To be considered a true project worker, it There is no such requirement for an
is required that a termination report be ordinary contractual worker
submitted to the nearest public
employment office upon the completion of
the construciton project. (Aurora Land
Projects Corp. v. NLRC, G.R. No. 114733,
Jan. 2, 1997)

F. FIXED-TERM EMPLOYMENT

Q: What is the nature of term employment?

A: A contract of employment for a definite period terminates by its own terms at

the end of such period. (Brent School v. Zamora, G.R. No. L‐48494, Feb. 5, 1990)
 205

Q: What is the decisive determinant in term employment?

A: It is the day certain agreed upon by the parties for the commencement and
the termination of their employment relation.

Q: What is a fixed‐term employment?

A: It is an employment where a fixed period of employment was agreed upon:

1. Knowingly and voluntarily by the parties,
2. Without any force, duress or improper pressure being brought to bear upon
the employee (Ee) and
3. Absent any other circumstances vitiating his consent, or
4. Where it satisfactorily appears that the Er and Ee dealt with each other on
more or less equal terms with no moral dominance whatever being exercised
by the former over the latter. (Brent School, Inc. v. Zamora, G.R. No. 48494,
Feb. 5, 1990)

Note: A fixed‐period Ee does not become a regular Ee because his employment is

co‐terminus with a specific period of time.
Ee hired on a fixed‐term is regular if job is necessary and desirable to the
business of Er. (Philips Semiconductor v. Fadriquela, G.R. No. 141717, April
2004)

Q: Is “term employment” a circumvention of the law on security of

tenure?
A: No, it is not a circumvention of the law if it follows the requisites laid down by
the Brent ruling. (Romares v. NLRC, G.R. No. 122327, Aug. 19, 1998)

Q: Rene was hired as an athletic director in Christ Omar Diviva School for a
period of five years. As such, he oversees the work of coaches and related staff
involved in intercollegiate or interscholastic athletic programs. However, he was
not rehired upon the expiration of said period. Rene questions his termination
alleging that he was a regular employee and could not be dismissed without
valid cause. Is he a regular employee?
A: No. Rene was not a regular employee but an employee under a fixed ‐ term
contract. While it can be said that the services he rendered were usually
necessary and desirable to the business of the school, it cannot also be denied
that his employment was for a fixed term of five years. The decisive determinant
in fixed‐ term employment should not be the activities that the employee is called
upon to perform, but the day certain agreed upon by the parties for the
commencement and termination of their employment relation (Brent School Inc. v.
Zamora, G.R. No. 48494, Feb. 5, 1990).

Q: In the above‐ mentioned facts, will Rene automatically become a regular

employee if he is rehired by the school for another definite period of
employment?
 206

A: No. The decisive determinant in term employment is the day certain agreed
upon by the parties for the commencement and termination of their employment
relationship, a day certain being understood to be that which must necessarily
come, although it may not be known when and not whether the work is usually
necessary and desirable to the business of the employer.

Q: Does the “Reasonable Connection Rule” applies in fixed ‐ term employment for
a fixed‐ term employee be eventually classified as regular employee?
A: No. It should be apparent that this settled and familiar notion of a period, in
the context of a contract of employment, takes no account at all of the nature of
the duties of the employee; it has absolutely no relevance to the character of his
duties as being usually necessary and desirable to the usual business of the
employer, or not.

Q: Dean Jose and other employees are holding administrative positions as dean,
dep’t heads and institute secretaries. In the implementation of the
Reorganization, Retrenchment and Restructuring program effective Jan. 1, 1984,
Dean Jose and other employees were retired but subsequently rehired. Their
appointment to their administrative positions as dean, dep’t heads and institute
secretaries had been extended by the company from time to time until the
expiration of their last appointment on May 31, 1988. Were Dean Jose and other
employees illegally dismissed?
A: No. Petitioners were dismissed by reason of the expiration of their contracts of
employment. Petitioners' appointments as dean, dep’t heads and institute
secretaries were for fixed terms of definite periods as shown by their respective
contracts of employment, which all expired on the same date, May 31, 1988. The
validity of employment for a fixed period has been acknowledged and affirmed
by the SC. (Blancaflor v. NLRC, G.R. No. 101013, Feb. 2, 1993)

3. JOB CONTRACTING

1. ARTICLE 106-109 OF THE LABOR CODE

Article 106. Contractor or subcontractor. Whenever an employer enters into

a contract with another person for the performance of the former’s work, the
employees of the contractor and of the latter’s subcontractor, if any, shall be paid
in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
 207

The Secretary of Labor and Employment may, by appropriate regulations, restrict

or prohibit the contracting-out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.

There is "labor-only" contracting where the person supplying workers to an

employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.

Article 107. Indirect employer. The provisions of the immediately preceding

article shall likewise apply to any person, partnership, association or corporation
which, not being an employer, contracts with an independent contractor for the
performance of any work, task, job or project.

Article 108.Posting of bond. An employer or indirect employer may require the

contractor or subcontractor to furnish a bond equal to the cost of labor under
contract, on condition that the bond will answer for the wages due the
employees should the contractor or subcontractor, as the case may be, fail to pay
the same.

Article 109. Solidary liability. The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held responsible
with his contractor or subcontractor for any violation of any provision of this
Code. For purposes of determining the extent of their civil liability under this
Chapter, they shall be considered as direct employers.

B. DEPARTMENT ORDER NO. 18-A

(SUPPLY2)

C. DEPARTMENT CIRCULAR NO. 01-12

(SUPPLY2)
 208

D. EFFECTS OF LABOR-ONLY CONTRACTING

Q: What are the effects of finding that there is labor‐only contracting?

A: A finding that a contractor is a “labor ‐only” contractor is equivalent to
declaring that there is an employer‐employee relationship between the principal
and the employees of the “labor ‐only” contractor. (Assoc. Anglo‐American
Tobacco Corp. v. Clave, G.R. No. 50915, Aug. 30, 1990)

E. TRILATERAL RELATIONSHIP IN JOB CONTRACTING

Q: Who are the parties in contracting and subcontracting?

A:
1. Contractor/subcontractor – Refers to any person engaged in a legitimate
contracting or subcontracting arrangement.

2. Contractual Ee – One who is employed by a contractor or subcontractor to

perform or complete a job, work, or service pursuant to an arrangement
between the latter and a principal. (D.O. 18‐02)

3. Principal – Any Er who puts out or farms out a job, service, or work to a
contractor or subcontractor.

Q: Describe the relationship arising from contractual arrangements.

A: There is a trilateral relationship between the principal, contractor and Ee.
There exists a contractual relationship between the principal and the contractor
or subcontractor to its Ees.

Q: When is there “job contracting”?

A: Specifically, there is “job contracting” where:

1. The contractor carries on an independent business and undertakes the

contract work on his own account under his own responsibility according to
his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the
work except as to the results thereof; and

2. The contractor has substantial capital or investment in the form of tools,

equipment, machineries, work premises, and other materials which are
necessary in the conduct of his business.

Q: When is there “labor‐only” contracting?

A: A person is deemed to be engaged in “labor‐only” contracting where:

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1. The person supplying workers to an employer does not have substantial

capital or investment in the for of tools, equipment, machineries, work
premises, among others; and

2. The workers recruited and placed by such person are performing activities
which are directly related to the principal business of such employer. (Baguio
v. NLRC, G.R. No. 79004‐08, Oct. 4, 1991)

Q: What is a permissible job contracting or subcontracting?

A: It refers to an arrangement whereby a principal agrees to farm out with a

contractor or subcontractor the performance of a specific job, work, or service
within a definite or predetermined period, regardless of whether such job, work
or, service is to be performed or completed within or outside the premises of the
principal.

Q: What are the conditions that must be met in order to be considered as

permissible job contracting or subcontracting?
A: The following conditions must be met:

1. The contractor carries on a distinct and independent business and

undertakes the contract work on his account under his own responsibility
according to his own manner and method, free from the control and direction
of his employer or principal in all matters connected with the performance of
his work except as to the results thereof;

2. The contractor has substantial capital or investment; and

3. The agreement between the principal and contractor or subcontractor assures

the contractual employees entitlement to all labor and occupational safety
and health standards, free exercise of the right to self ‐organization, security
of tenure, and social welfare benefits. (Gallego v. BAYER Phils., Inc., G.R. No.
179807, July 31, 2009, J. Carpio‐Morales)

Q: What are the factors to consider in determining whether contractor is

carrying on an independent business?

A:
1. Nature and extent of work
2. Skill required
3. Term and duration of the relationship
4. Right to assign the performance of specified pieces of work
5. Control and supervision of worker
6. Power of employer to hire, fire and pay wages
7. Control of the premises
8. Duty to supply premises, tools, appliances, materials and labor
9. Mode, manner and terms of payment. (Vinoya v. NLRC, G.R. No. 126286, Feb
2, 2000)
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Note: Individuals with special skills, expertise or talent enjoy the freedom to
offer their services as independent contractors. An individual like an artist or
talent has a right to render his services without any one controlling the means
and methods by which he performs his art or craft. (Sonza vs. ABS‐CBN, G.R.
No. 138051, June 10, 2004)

Q: What are the rights of a contractual Ee (CEe)?

A: They shall be entitled to all the rights and privileges due to a regular Ee as
provided in the LC, as amended to include the ff:

1. Safe and healthful working conditions

2. Service Incentive Leave, rest days, OT pay, holiday pay, 13th month pay and
separation pay
3. Social security and welfare benefits;
4. Self‐organization, CBA and peaceful concerted actions
5. Security of tenure (Sec. 8, DO 18‐02)

Q: What are the effects of termination of CEe to separation pay and

other benefits?
A:

1. If prior to the expiration of the employment contract between the principal and
the contractor or subcontractor – The right of CEe to separation pay or other
related benefits shall be governed by the applicable laws and jurisprudence
on termination of employment

2. If the termination results from the expiration of the contract between the
principal and the contractor or subcontractor – The Ee shall not be entitled to
separation pay. However, this is w/o prejudice to completion bonuses or
other emoluments including retirement pay as may be provided by law or in
the contract between the principal and the contractor.

Q: When is the principal deemed the employer of the contractual

employee?
A: Where:

1. There is labor‐only contracting

2. The contracting arrangement falls within the prohibited acts

Q: May the Er or indirect Er require the contractor or subcontractor to furnish a

bond equal to the cost of labor under contract to answer for the wages due to
Ees in case the contractor or subcontractor fails to pay the same?
A: Yes. The Er or indirect Er may require the contractor or subcontractor to
furnish a bond that will answer for the wages due to the Ees.

Q: What is the liability of the principal?

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A: The principal shall be solidarily liable with the contractor in the event of any
violation of any provision of the LC, including the failure to pay wages. This will
not prevent the principal from claiming reimbursement from the contractor.

Q: What does substantial capital or investment mean?

A: It refers to the capital stocks and subscribed capitalization in case of

corporations, tools, equipments, implement, machineries and work premises,
actually and directly used by the contractor or subcontractor in the performance
or completion of the job, work or service contracted out. (D.O. 18‐02)

Note: The law does not require both substantial capital and investment in the
form of tools, equipments, machineries, etc. This is clear from the use of
conjunction “or”. If the contention was to require the contractor to prove that he
has both capital and requisite investment, then the conjunction “and” should
have been used. (Virginia Neri v. NLRC, G.R. No. 97008, July 21, 1993)

Q: What does the right to control mean?

A: It refers to the right reserved to the person for whom the services of the
contractual workers are performed, to determine not only the end to be achieved,
but also the manner and means to be used in reaching that end. (D.O. 18‐02)

Q: SMC and Sunflower Cooperative entered into a 1‐yr Contract of Services, to be

renewed on a month to month basis until terminated by either party. Pursuant to
the contract, Sunflower engaged private respondents to render services at SMC’s
Bacolod Shrimp Processing Plant. The contract was deemed renewed by the
parties every month after its expiration on Jan. 1, ‘94 and respondents continued
to perform their tasks until Sep. 11, ‘95. In July ‘95, private respondents filed a
complaint before the NLRC, praying to be declared as regular Ees of SMC, with
claims for recovery of all benefits and privileges enjoyed by SMC rank and file
Ees. Respondents subsequently filed an Amended Complaint to include illegal
dismissal as additional cause of action following SMC’s closure of its Bacolod
Shrimp Processing Plant on which resulted in the termination of their services.
SMC filed a Motion for Leave to File Attached Third Party Complaint to implead
Sunflower as 3rd‐Party Defendant. Are private respondents Ees of the
independent cooperative contractor (Sunflower) or of the SMC?

A: The contention of SMC holds no basis. Using the “substantial capital” doctrine
and the “right of control test”, the Court found that the Sunflower had no
substantial capital in the form of tools, equipment, machineries, work premises
and other materials to qualify itself as an independent contractor. The lot,
building, machineries and all other working tools utilized by private respondents
in carrying out their tasks were owned and provided by SMC. In addition, the
shrimp processing company was found to have control of the manner and
method on how the work was done. Thus, the complainants were deemed Ees
not of the cooperative but of the shrimp processing company. Since respondents
who were engaged in shrimp processing performed tasks usually necessary or
desirable in the aquaculture business of SMC, they should be deemed regular
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Ees of the latter and as such are entitled to all the benefits and rights
appurtenant to regular employment. (SMC vs. Prospero Aballa, et al., G.R. No.
149011, June 28, 2005, J. Carpio‐Morales)

Q: What are the conditions before permitting job contracting?

A:

1. The labor contractor must be duly licensed by the appropriate Regional Office
of the DOLE
2. There should be a written contract between the labor contractor and his
client‐Er that will assure the Ees at least the minimum labor standards and
benefits provided by existing laws.

Note: The Ees of the contractor or subcontractor shall be paid in accordance with
the provisions of the LC. (Art. 106)

Q: What is labor‐only contracting?

A: It refers to an arrangement where the following conditions concur:

1. The person supplying workers to an Er does not have substantial capital or

investment in the form of tools, equipment, machineries, work, premises,
among others, or
2. Even if such person has substantial assets, the same are not actually or
directly used by the Ees contracted out;
3. The workers recruited and placed by such person are performing activities
which are directly related to the principal business of such Er.

Q: Why is labor only contracting prohibited?

A: It gives rise to confusion as to who is the real Er of the workers and who is
liable to their claims. It also deprives workers of the opportunity to become
regular Ees.

Q: How do we determine if one is engaged in labor/job only contracting?

A: The test to determine whether one is a job/labor only contracting is to look

into the elements of a job contractor. If all the elements of a job contractor are
present, then he is a job contractor. Absent one of the elements for a job
contractor, then the person is a labor‐only contractor.

Note: It is the opinion of Dean Antonio H. Abad, Jr. that the decisive determinant
in job contracting should not be the fact that the contracted workers are
“performing activities which are directly related to the main business of the
principal,” but that the principal has no right to control the conduct of the
employees as to the means employed to achieve an end; not the character of the
activities as being “usually necessary or desirable in the usual business of the
employer.”
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It cannot be gainsaid that the activities of the contracted workers are always
necessary or desirable; even that they are directly related to the main business
of the principal. The primordial consideration should be the “control test.” Hence,
if the arrangement passes the control test, it is “job ‐contracting.” If it fails, it is
“labor‐only contracting.”

Q: Distinguish between job contracting and labor only contracting

A:

JOB CONTRACTING LABOR‐ONLY CONTRACTING

Liability is limited (shall be solidarily Liability extends to all those provided
liable with Er only when the Er fails to under the Labor Standards law
comply with req’ts as to unpaid wages
and other labor standards violations)
Permissible, subject only to certain Prohibited by Law
conditions
The contractor has substantial capital Has no substantial capital or
or investment investment

Q: SMPC entered into a contract with Arnold for the milling of lumber as well as
the hauling of waste wood products. The company provided the equipment and
tools because Arnold had neither tools and equipment nor capital for the job.
Arnold, on the other hand, hired his friends, relatives and neighbors for the job.
Their wages were paid by SMPC to Arnold, based on their production or the
number of workers and the time used in certain areas of work. All work activities
and schedules were fixed by the company.

1. Is Arnold a job contractor? Explain briefly

2. Who is liable for the claims of the workers hired by Arnold? Explain briefly.

A:

1. No. In the problem given, Arnold did not have sufficient capital or investment
for one. For another, Arnold was not free from the control and direction of
SMPC because all work activities and schedules were fixed by the company.
Therefore, Arnold is not a job contractor. He is engaged in labor ‐only
contracting.
2. SMPC is liable for the claims of the workers hired by Arnold. A finding that
Arnold is a labor only contractor is equivalent to declaring that there exist an
Er‐Ee relationship between SMPC and workers hired by Arnold. This is so
because Arnold is considered a mere agent of SMPC (Lim v. NLRC, G.R. No.
124630, Feb. 19, 1999); 2002 Bar Question)

Q: What are the grounds for delisting of contractors or subcontractors?

A:
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1. Non‐submission of contracts between the principal and the contractor or

subcontractor when required to do so;
2. Non‐submission of annual report;
3. Findings through arbitration that the contractor or subcontractor has engaged
in labor‐only contracting and other prohibited activities;
4. Non‐compliance with labor standards and working conditions. (Sec. 16, D.O.
18‐02)

B. DISMISSAL FROM EMPLOYMENT

1. JUST CAUSES

Q: What are the just causes for termination (Art. 282, LC)?
A:

1. Serious misconduct or willful disobedience by the employee (Ee) of the lawful

orders of his employer (Er) or representative in connection with his work
2. Gross and habitual neglect by the Ee of his duties
3. Fraud or willful breach by the Ee of the trust reposed in him by his Er or duly
organized representative
4. Commission of a crime or offense by the Ee against the person of his Er or
any immediate member of his family or his duly authorized representative.
5. Other causes analogous to the foregoing

Note: The burden of proving that the termination was for a valid or authorized
cause shall rest on the Er. (Art. 277[b])

Provision:

Article 282. Termination by employer. An employer may

terminate an employment for any of the following
causes:

Serious misconduct or willful disobedience by the

employee of the lawful orders of his employer or
representative in connection with his work;

Gross and habitual neglect by the employee of his duties;

Fraud or willful breach by the employee of the trust

reposed in him by his employer or duly authorized
representative;
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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

Other causes analogous to the foregoing.

SERIOUS MISCONDUCT

Q: What is serious misconduct?

A: It is an improper or wrong conduct; the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment. To be serious within
the meaning and intendment of the law, the misconduct must be of such grave
and aggravated character and not merely trivial or unimportant. (Villamor Golf
Club v. Pehid, G.R. No. 166152, Oct. 4, 2005)

Q: What are the elements of serious misconduct?

A:
1. It must be serious or of such a grave and aggravated character;
2. Must relate to the performance of the employees (Ee) duties;
3. Ee has become unfit to continue working for the employer. (Philippine Aeolus
Automotive United Corp. v. NLRC, G.R. No. 124617, April 28, 2000)

Q: Give some examples of serious misconduct.

A:
1. Sexual harassment
2. Fighting within the company premises
3. Uttering obscene, insulting or offensive words against a superior
4. Falsification of time records
5. Gross immorality

Q: Escando, upset at his transfer to the washer section, repeatedly uttered “gago
ka” and threatened bodily harm to his superior Mr. Andres. Is the utterance of
the obscene words and threats of bodily harm gross and willful misconduct?

A: Yes. The repeated utterances by Escando of obscene, insulting or offensive

words against a superior were not only destructive of the morals of his co ‐
employees (Ees) and a violation of the company rules and regulations, but also
constitute gross misconduct which is one of the grounds provided by law to
terminate the services of an Ee. (Autobus Workers Union v. NLRC, G.R. No.
11753, June 26, 1998)

Q: Samson made insulting and obscene utterances towards the General

Manager saying “Si EDT bullshit yan, sabihin mo kay EDT yan” among others
during the Christmas party. Are the utterances towards the General Manager
gross misconduct?
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A: The alleged misconduct of Samson when viewed in its context is not of such
serious and grave character as to warrant his dismissal. Samson made the
utterances and obscene gestures at an informal Christmas gathering and it is to
be expected during this kind of gatherings, where tongues are more often than
not loosened by liquor of other alcoholic beverages, that employees (Ees) freely
express their grievances and gripes against their employers (Ers). Ees should be
allowed wider latitude to freely express heir grievances and gripes against their
Er. Ees should be allowed wider latitude to freely express their sentiments
during these kinds of occasions which are beyond the disciplinary authority of
the Er. (Samson v. NLRC, G.R. No. 121035, April 12, 2000)

WILLFUL DISOBEDIENCE

Q: When is willful disobedience of the Er’s lawful orders a just cause for
termination?
A: 2 requisites must concur:
1. The employees (Ees) assailed conduct must have been willful or intentional,
the willfulness being characterized by a wrongful and perverse attitude.
2. The disobeyed orders, regulations or instructions of the Er must be:
a. Reasonable and lawful
b. Sufficiently made known to the Ee
c. Must pertain to or be in connection with the duties which the Ee has been
engaged to discharge. (Cosep V. NLRC, G.R. No. 124966 June 16, 1998)

Note: There is no law that compels an Ee to accept a promotion for the reason
that a promotion is in the nature of a gift or reward, which a person has the right
to refuse. The exercise of the Ee of the right to refuse a promotion cannot be
considered in law as insubordination or willful disobedience. (PT&T Corp. v. CA,
G.R. No. 152057, Sep. 29, 2003)

Q: The company vehicle was brought out of the company premises without
authorization twice. In the first instance the company opted not to implement any
action against Dioks and instead issued a memorandum reiminding Dioks as
well as the security guards of the proper procedure. However, in the second
instance the vehicle met an accident. Is Dioks guilty of willful disobedience even
though he was not the one who personally brought the company vehicle out of
the company premises and was merely a passenger in the second incident?

A: Yes. A rule prohibiting Ees from using company vehicles for private purpose
without authority from management is a reasonable one. When Dioks rode the
company vehicle he was undoubtedly aware of the possible consequences of his
act and taking into consideration his moral ascendancy over the security guards
it was incumbent upon him not only to admonish them but also to refrain from
using the company car himself. (Family Planning Org. of the Phil. v. NLRC, G.R.
No. 75907, Mar. 23, 1992)
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Q: Escobin’s group were security guards based in Basilan. They were placed in
floating status and were asked to report for reassignment in Metro Manila by
PISI. Upon failure to report or respond to such directives they were ordered
dismissed from employment by PISI for willful disobedience. Did the failure to
report to Manila amount to willful disobedience?

A: The reasonableness of the rule pertains to the kind of character of directives

and commands and to the manner in which they are made. In this case, the
order to report to the Manila office fails to meet this standard. The order to report
to Manila was inconvenient, unreasonable, and prejudicial to Escobin’s group
since they are heads of families residing in Basilan and they were not given
transportation money or assurance of availability of work in Manila. (Escobin v.
NLRC, G.R. No. 118159. April 15, 1998)

NEGLIGENCE

Q: When is negligence a just cause for termination?

A: When it is gross and habitual.

Q: When is there Gross Negligence?

A: Gross negligence implies a want or absence of or failure to exercise slight care

of diligence of the entire absence of care it evinces thoughtless disregard of
consequences without exerting any effort to avoid them. However, such neglect
must not only be gross but habitual in character. (Judy Phils. v. NLRC, G.R. No.
111934, April 29, 1998)

Q: When is there Habitual Neglect of duties?

A: Habitual Neglect implies repeated failure to perform one’s duties over a period
of time, depending upon the circumstance. (JGB and Associates v. NLRC, GR No.
10939, Mar. 7, 1996)

Q: Antiola, as assorter of baby infant dress as for Judy Phils. erroneously

assorted and packaged 2,680 dozens of infant wear. Antiola was dismissed
from employment for this infraction. Does the single act of misassortment
constitute gross negligence?

A: No. Such neglect must not only be gross but also habitual in character. Hence,
the penalty of dismissal is quite severe considering that Antiola committed the
infraction for the first time. (Judy Phils. v. NLRC, G.R. No. 111934. April 29,
1998)

Q: Does the failure in performance evaluations amount to gross and habitual

neglect of duties?

A: As a general concept “poor performance” is equivalent to inefficiency and

incompetence in the performance of official duties. The fact that an employee’s
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(Ee’s) performance is found to be poor or unsatisfactory does not necessarily

mean that the Ee is grossly and habitually negligent of his duties. Gross
negligence implies a want or absence of or failure to exercise slight care of
diligence or the entire absence or care. He evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. (Eastern Overseas
Employment Center Inc. v. Bea, G.R. 143023, Nov.29, 2005)

Q: Is inefficiency a just cause for dismissal?

A: Yes, 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. (Buiser v. Leogardo, G.R. No. L‐
63316, July 31, 1984)

This ground is considered analogous to those enumerated under Art. 282.

(Skippers United Pacific v. Magud, G.R. No. 166363, Aug. 15, 2006)

Q: Gamido was a quality control inspector of VH Manufacturing. Gamido was

allegedly caught by the company Pres. Dy Juanco of sleeping and was
dismissed from employment. Did Gamido’s act of sleeping on the job constitute a
valid cause of dismissal?

A: Sleeping on the job as a valid ground for dismissal only applies to security
guards whose duty necessitates that they be awake and watchful at all times.
Gambido’s single act of sleeping further shows that the alleged negligence or
neglect of duty was neither gross nor habitual. (VH Manufacturing v. NLRC, G.R.
No. 130957, Jan. 19, 2000)

Q: Give some forms of neglect of duty.

A:
1. Habitual tardiness and absenteeism
2. Abandonment:

a. Failure to report for work or absence without justifiable reason

b. Clear intention to sever Er ‐Ee relationship manifested by some overt acts.
(Labor et. al v. NLRC, GR No. 110388, Sep.14, 1995)

ABANDONMENT

Q: What is abandonment as a just cause for termination?

A: It means the deliberate, unjustified refusal of an employee to resume his

employment.

Q: What are the requirements for a valid finding of abandonment?

A: For a valid finding of abandonment, 2 factors must be present:
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1. The failure to report for work, or absence without valid or justifiable reason;
and
2. A clear intention to sever Er‐Ee relationship, with the 2nd element as the more
determinative factor, being manifested by some overt acts. (Sta. Catalina
College s. NLRC, G.R. No. 144483, Nov. 19, 2003)

Q: How to prove abandonment?

A: To prove abandonment, the Er must show that the Ee deliberately and
unjustifiably refused to resume his employment without any intention of
returning. There must be a concurrence of the intention to abandon and some
overt acts from which an Ee may be deduced as having no more intention to
work. The law, however, does not enumerate what specific overt acts can be
considered as strong evidence of the intention to sever the Ee ‐Er relationship.
(Sta. Catalina College v. NLRC, G.R. No. 144483. Nov. 19, 2003)

Q: Mejila a barber at Windfield Barber Shop, had an altercation with a fellow

barber which resulted in his subsequent turning over the duplicate keys of the
shop to the cashier and took away all his belongings there from and worked at
different barbershop. Mejila then filed an illegal dismissal case but did not seek
reinstatement as a relief. Did Mejila commit abandonment?
A: Mejila’s acts such as surrendering the shop’s keys, not reporting to the shop
anymore without any justifiable reason, his employment in another barber shop,
and the filing of a complaint for illegal dismissal without praying for
reinstatement clearly show that there was a concurrence of the intention to
abandon and some overt acts from which it may be inferred that the Ee
concerned has no more interest in working. (Jo v. NLRC, G.R. No. 121605, Feb. 2,
2000)

FRAUD; BREACH OF TRUST/LOSS OF CONFIDENCE

Q: When is breach of trust/loss of confidence a just cause for

termination?

A:
1. It applies only to cases involving:

a. Employees (Ees) occupying positions of trust and confidence (confidential

and managerial Ee’s) – to this class belong managerial Ees, i.e., those
vested with the powers or prerogatives to lay down management policies
and/or to hire, transfer, suspend, lay‐off, recall, discharge, assign or
discipline Ees or effectively recommend such managerial actions
b. Ees routinely charged with the care and custody of the employer’s (Er’s)
money or property – to this class belong cashiers, auditors, property
custodians, etc., or those who, in the normal and routine exercise of their
functions, regularly handle significant amounts of money or property.
(Mabeza v. NLRC, G.R. No. 118506 April 18, 1997)

2. The loss of trust and confidence must be based on willful breach.

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Note: A breach is willful if it is done intentionally, knowingly, and purposely

without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly, or inadvertently (De la Cruz v. NLRC, G.R. No.
119536, Feb. 17, 1997)

3. The act constituting the breach must be “work ‐related” such as would show
the Ee concerned to be unfit to continue working for the Er. (Gonzales V.
NLRC, G.R. No. 131653, Mar. 26, 2001)

4. It must be substantial and founded on clearly established facts sufficient to

warrant the Ee’s separation from employment. (Sulpicio Lines Inc. V. Gulde,
G.R. No. 149930, Feb. 22, 2002)

5. Fraud must be committed against the Er or his representatives, e.g.:

a. Falsification of time cards

b. Theft of company property
c. Unauthorized use of company vehicle

Note: The treatment of rank and file personnel and managerial Ees in so far as
the application of the doctrine of loss of trust and confidence is concerned is
different. As regards managerial Ees, such as Caoile, mere existence of a basis
for believing that such Ee has breached the trust of his Er would suffice for his
dismissal. (Caoile v. NLRC, G.R. No. 115491, Nov. 24, 1998)

Q: What are the guidelines for the doctrine of loss of confidence to

apply?

A:
1. Loss of confidence should not be simulated (reasonable basis for loss of
trust and confidence)
2. Not used for subterfuge for causes which are improper and/or illegal and
unjustified
3. Not arbitrarily asserted in the face of overwhelming evidence to the
contrary
4. Must be genuine, not a mere afterthought to justify earlier action taken in
bad faith and
5. The Ee involved holds a position of trust and confidence

Note: The breach of trust must rest on substantial grounds and not on the Er’s
arbitrariness, whims, caprices, or suspicion; otherwise, the Ee would eternally
remain at the mercy of the Er. It should be genuine and not simulated, nor
should it appear as a mere afterthought to justify earlier action taken in bad
faith of a subterfuge for causes which are improper, illegal, or unjustified. It has
never been intended to afford and occasion for abuse because of its subjective
nature. There must, therefore, be an actual breach of dully committed by the
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employee which must be established by substantial evidence. (Dela Cruz v.

NLRC, G.R. No. 119536, Feb. 17, 1997)

Q: Mabeza a chambermaid at Hotel Supreme was terminated from employment

because of her refusal to sign an affidavit attesting to their employer’s (Er’s)
compliance with minimum wage and other labor standards. Mabeza filed a
complaint for illegal dismissal against Hotel Supreme. As a defense, Hotel
Supreme claimed that she abandoned her work and belatedly claimed loss of
confidence as the ground for the dismissal of Mabeza because she stole some of
the properties of her Er. Is loss of confidence a valid ground for dismissal of a
hotel chambermaid?
A: No. Loss of confidence as a just cause for dismissal was never intended to
provide Ers with a blank check for terminating their Ees. Evidently, an ordinary
chambermaid who has to sign out for linen and other hotel property from the
property custodian each day and who has to account for each and every towel or
bed sheet utilized by the hotel's guests at the end of her shift would not fall
under any of these two classes of Ees for which loss of confidence, if ably
supported by evidence, would normally apply. (Mabeza v. NLRC, G.R. No.
118506, April 18, 1997)

Q: Abelardo Abel was first hired by Philex Mining Corp. in Jan. ’88. He was later
assigned to the company’s Legal Dep’t as a Contract Claims Asst., and held the
position for 5 yrs prior to his transfer to the Mine Eng’g and Draw Control Dep’t
wherein he was appointed Unit Head. In ‘02, he was implicated in an
irregularity occurring in the subsidence area of the company’s mine site at
Benguet. His co‐worker Danilo, executed an affidavit known as the “Subsidence
Area Anomaly”. The incidents in Lupega’s affidavit supposedly took place when
Abel was still a Contract Claims Asst. at the company’s legal dep’t. An
investigation was promptly launched by the company’s officers. Abel attended
the meetings but claimed that he was neither asked if he needed the assistance
of counsel nor allowed to properly present his side. By memo, the company
found Abel guilty of (1) fraud resulting in loss of trust and confidence and (2)
gross neglect of duty, and was meted out the penalty of dismissal from
employment. Was Abel validly dismissed for any of the causes provided for in
Art. 282 of the LC?
A: No. The 1st requisite for dismissal on the ground of loss of trust and
confidence is that the Ee concerned must be holding a position of trust and
confidence. Abel was a contract claims assistant at the time he allegedly
committed the acts which led to its loss of trust and confidence. It is not the job
title but the actual work that the Ee performs. It was part of Abel’s
responsibilities to monitor the performance of the company’s contractors in
relation to the scope of work contracted out to them.
The 2nd requisite is that there must be an act that would justify the loss of trust
and confidence. Loss of trust and confidence, to be a valid cause for dismissal,
must be based on a willful breach of trust and founded on clearly established
facts. The basis for the dismissal must be clearly and convincingly established
but proof beyond reasonable doubt is not necessary. The company’s evidence
 222

against Abel fails to meet this standard. Its lone witness, Lupega, did not
support his affidavit and testimony during the company investigation with any
piece of evidence at all. It could hardly be considered substantial evidence. (Abel
v. Philex Mining Corp., G.R. No. 178976, July 31, 2009, J. Carpio ‐Morales)

TERMINATION OF EMPLOYMENT PURSUANT TO UNION SECURITY CLAUSE

Q: MSMG was a local union affiliated with ULGWP a national federation. MSMG
had a dispute with ULGWP over an imposition of a fine prompting MSMG to
declare independence from ULGWP. Because of the dispute, ULGWP asked for
the dismissal from employment of the officers of MDMG from the company by
virtue of a union security clause in the CBA. The company dismissed the officers.
Does a union security clause absolve the company from observing the
requirement of due process?

A: Although union security clauses embodied in the CBA may be validly enforced
and dismissals pursuant thereto may likewise be valid, this does not erase the
fundamental requirement of due process. An employer cannot merely rely upon a
labor federation’s allegations in terminating union officers expelled by the
federation for allegedly committing acts of disloyalty and/or inimical to the
interest of the federation and in violation of its constitution and by laws.

The right of an Ee to be informed of the charges against him and to be given a

reasonable opportunity to present his side in a controversy with either the
company or his own union is not wiped away by a union security clause in a
CBA. Even assuming that a federation had valid grounds to expel union officers,
due process requires that these union officers be accorded a separate hearing by
the company. (MSMG v. Ramos, G.R. No. 113907, Feb. 28, 2000)

TOTALITY OF INFRACTIONS DOCTRINE

Q: What is the totality of infractions doctrine?

A: It is the totality, not the compartmentalization of company infractions that the

Ee has committed, which justifies the penalty of dismissal. (MERALCO v. NLRC,
G.R. No. 114129, Oct. 24, 1996)

Note: Where the Ee has been found to have repeatedly incurred several
suspensions or warnings on account of violations of company rules and
regulations, the law warrants their dismissal as it is akin to “habitual
delinquency”. (Villeno v. NLRC, G.R. No. 108153, Dec. 26, 1995)

Q: What are the guidelines to determine the validity of termination?

A: Gravity of the offense

1. Position occupied by the employee
2. Degree of damage to the employer
3. Previous infractions of the same offense
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4. Length of Service

COMMISSION OF A CRIME

Q: What do you mean by “commission of a crime or offense” as a just

cause for termination of an Ee?
A: It refers to an offense by the Ee against the person of his employer or any
immediate member of his family or his duly authorized representative and thus,
conviction of a crime involving moral turpitude is not analogous thereto as the
element of relation to his work or to his employer is lacking.

Note: A criminal case need not be actually filed. Commission of acts constituting
a crime itself is sufficient.

ANALOGOUS CASES

Q: What is required for an act to be included in analogous cases of just

causes of termination?
A: Must be due to the voluntary and/or willful act or omission of the employee
(Nadura v. Benguet Consolidated, G.R. No. L‐17780, Aug. 24, 1962), e.g.:
1. Violation of company rules and regulations
2. Drunkenness
3. Gross inefficiency
4. Illegally diverting employer’s products
5. Failure to heed an order not to join an illegal picket
6. Violation of safety rules and code of discipline

Q: What is the doctrine of incompatibility?

A: Where the employee has done something that is contrary or incompatible with
the faithful performance of his duties, his employer has a just cause for
terminating his employment. (Manila Chauffeur’s League v. Bachrach Motor Co.,
G.R. No. L‐47071, June 17, 1940)

2. AUTHORIZED CAUSES

Q: What are the authorized causes of termination by the employer (Er)?

A:

1. Installation of labor‐saving devices (automation/robotics)

2. Redundancy (superfluity in the performance of a particular work) – exists

where the services of an employee (Ee) are in excess of what is reasonably
 224

demanded by the actual req’ts of the enterprise. (Wiltshire File Co., Inc. v.
NLRC, G.R. No. 82249, Feb. 7, 1991)

Note: The redundancy should not have been created by the Er.

3. Reorganization

Note: An Er is not precluded from adopting a new policy conducive to a

more economical and effective management, and the law does not require
that the Er should be suffering financial losses before he can terminate the
services of the employee on the ground of redundancy (DOLE Phil., Inc. v.
NLRC, G.R. No. L‐55413, July 25, 1983)

4. Retrenchment – cutting of expenses and includes the reduction of

personnel; It is a management prerogative, a means to protect and
preserve the Er’s viability and ensure his survival. To be an authorized
cause it must be affected in good faith (GF) and for the retrenchment,
which is after all a drastic recourse with serious consequences for the
livelihood of the Ee’s or otherwise laid‐off.

Note: The phrase “to prevent losses” means that retrenchment or

termination from the service of some Ees is authorized to be undertaken by
the Er sometime before the anticipated losses are actually sustained or
realized. Evidently, actual losses need not set in prior to retrenchment.
(Cajucom VII v. TP Phils Cement Corp., et al, G.R. No. 149090, Feb. 11,
2005)

5. Closing or cessation of operation of the establishment or undertaking –

must be done in good faith and not for the purpose of circumventing
pertinent labor laws.

6. Disease – must be incurable within 6 months and the continued

employment is prohibited by law or prejudicial to his health as well as to
the health of his co‐Ees with a certification from the public health officer
that the disease is incurable within 6 months despite due to medication
and treatment

Q: What are other authorized causes?

A:
1. Total and permanent disability of Ee
2. Valid application of union security clause
3. Expiration of period in term of employment
4. Completion of project in project employment
5. Failure in probation
6. Relocation of business to a distant place
7. Defiance of return‐to work‐order
8. Commission of Illegal acts in strike
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9. Violation of contractual agreement

10. Retirement

Q: What are the procedural steps required in termination of an employee

for authorized causes?
A:
1. Written Notice to DOLE 30 days prior to the intended day of termination.
Purpose: To enable it to ascertain the verity of the cause of termination.
2. Written notice to Ee concerned 30 days prior the intended date of
termination.
3. Payment of separation pay ‐ Serious business losses do not excuse the Er
from complying with the clearance or report required in Art. 283 of the LC
and its IRR before terminating the employment of its workers. In the
absence of justifying circumstances, the failure of the Er to observe the
procedural req’ts under Art. 284 taints their actuations with bad faith if
the lay‐off was temporary but then serious business losses prevented the
reinstatement of respondents, the Er’s should have complied with the
req’ts of written notice.

REDUNDANCY

Q: What are the requisites of a valid redundancy?

A:

1. Written notice served on both the employees (Ees) and the DOLE at least 1
month prior to separation from work
2. Payment of separation pay equivalent to at least 1 month pay or at least 1
month pay for every year of service, whichever is higher
3. Good faith in abolishing redundant position
4. Fair and reasonable criteria in ascertaining what positions are to be
declared redundant:
a. Less preferred status, e.g. temporary Ee
b. Efficiency and
c. Seniority

Q: Ong, a Sales Manager of Wiltshire File Co., Inc., was informed of the
termination of his employment due to redundancy upon returning from a trip
abroad. Ong maintains that there can be no redundancy since he was the only
person occupying his position in the company.

Is there redundancy even though Ong was the only one occupying his position.

A: Redundancy in an employer’s (Er’s) personnel does not necessarily or even

ordinarily refer to duplication of work. The characterization of Ong’s services as
no longer necessary or sustainable and therefore properly terminable, was an
exercise of business judgment on the part of Wiltshire.
 226

Furthermore, a position is redundant where it is superfluous, and superfluity of

a position or positions may be the outcome of a number of factors, such as over
hiring of workers, decreased volume of business, or dropping of a particular
product line or service activity previously manufactured or undertaken by the
enterprise. The Er has no legal obligation to keep in its payroll more employees
that are necessary for the operation of its business. (Wiltshire File Co., Inc. v.
NLRC, G.R. No. 82249, Feb. 7, 1991)

RETRENCHMENT

Q: What are the circumstances that must be present for a valid

retrenchment?

A:

1. The losses expected should be substantial and not merely de minimis in

extent ‐ If the loss purportedly sought to be forestalled by retrenchment is
clearly shown to be insubstantial and inconsequential in character, the bona
fide nature of the retrenchment would appear to be seriously in question.

2. The substantial loss apprehended must be reasonably imminent ‐ as such

imminence can be perceived objectively and in good faith by the employer
(Er). There should be a certain degree of urgency for the retrenchment.

3. It must be reasonably necessary and likely to prevent the expected losse ‐

The Er should have taken other measures prior or parallel to retrenchment to
forestall losses such as cutting other costs than labor costs.

4. The alleged losses if already realized, and the expected imminent losses
sought to be forestalled, must be proved by sufficient and convincing evidence
‐ The reason for requiring this quantum of proof is readily apparent: any less
exacting standard of proof would render too easy the abuse of this ground for
termination of services of employees. (Lopez Sugar Corp. v. Federation of Free
Workers, G.R. No. 75700‐01, Aug. 30, 1990)

Note: The losses which the company may suffer or is suffering may be proved
by financial statements audited by independent auditors (Asian Alcohol
Corporation v. NLRC, G.R. No. 131108, Mar. 25, 1999)

Retrenchment is a means of last resort.

Q: What are the requisites of a valid retrenchment?

A:
1. Written notice served on both the Ee and the DOLE at least 1 month prior to
the intended date of retrenchment
 227

2. Payment of separation pay equivalent to at least one month pay or at least

1/2 month pay for every year of service, whichever is higher
3. Good faith
4. Proof of expected or actual losses
5. The employer used fair and reasonable criteria in ascertaining who would be
retained among the Ees, such as status, efficiency, seniority, physical fitness,
age, and financial hardship of certain workers (Asian Alcohol Corp. v. NLRC,
G.R. No. 131108, Mar. 25, 1999).

Q: What are the criteria in selecting employees (Ees) to be retrenched?

A: There must be fair and reasonable criteria to be used in selecting Ees to be

dismissed such as:
1. Less preferred status;
2. Efficiency rating;
3. Seniority. (Phil. Tuberculosis Society, Inc. v. National Labor Union, G.R. No.
115414, Aug. 25, 1998)

Q: What is the “last in first out (LIFO)” rule?

A: It applies in the termination of employment in the line of work. What is
contemplated in the LIFO rule is that when there are two or more Ees occupying
the same position in the company affected by the retrenchment program, the last
one employed will necessarily be the first one to go. (Maya Farms Ees’
Organization v. NLRC, G.R. No. 106256, Dec. 28, 1994)

Q: Is the seniority rule or "last in first out" policy to be strictly followed in

effecting a retrenchment or redundancy program?

A: Again, in Asian Alcohol Corp., the SC stated that with regard the policy of
"first in, last out" in choosing which positions to declare as redundant or whom
to retrench to prevent further business losses, there is no law that mandates
such a policy. The reason is simple enough. A host of relevant factors come into
play in determining cost efficient measures and in choosing the Ees who will be
retained or separated to save the company from closing shop. In determining
these issues, management plays a pre‐eminent role. The characterization of
positions as redundant is an exercise of business judgment on the part of the Er.
It will be upheld as long as it passes the test of arbitrariness. (2001 Bar
Question)

Q: What is the difference between redundancy and retrenchment?

A: In redundancy, company has no financial problems, unlike in retrenchment

where the company will suffer financial losses.

Q: Philippine Tuberculosis Society, Inc. retrenched 116 Ees after incurring

deficits amounting to 9.1 million pesos. Aside for retrenching some of its Ees, the
company also implemented cost cutting measures to prevent such losses for
 228

increasing and minimizing it. The NLRC ruled that the retrenchment was not
valid on the ground that the Society did not take seniority into account in their
selection. Was the retrenchment done by the Society not valid for its failure to
follow the criteria laid down by law?

A: No. The Society terminated the employment of several workers who have
worked with the Society for great number of years without consideration for the
number of years of service and their seniority indicates that they had been
retained for such a long time because of loyal and efficient service. The burden of
proving the contrary rest on the Society. (Phil. Tuberculosis Society, Inc. v.
National Labor Union, G.R. No. 115414, Aug. 25, 1998)

Q: Due to mounting losses the former owners of Asian Alcohol Corporation sold
its stake in the company to Prior Holdings. Upon taking control of the company
and to prevent losses, Prior Holdings implemented a reorganization plan and
other cost‐saving measures and one of them is the retrenchment of 117
employees (Ees) of which some are members of the union and the majority held
by non‐union members. Some retrenched workers filed a complaint for illegal
dismissal alleging that the retrenchment was a subterfuge for union busting
activities.

Was the retrenchment made by Asian Alcohol valid and justified?

A: Yes. Even though the bulk of the losses were suffered under the old
management and continued only under the new management ultimately the new
management of Prior Holdings will absorb such losses. The law gives the new
management every right to undertake measures to save the company from
bankruptcy. (Asian Alcohol Corp. v. NLRC, G.R. No. 131108, Mar. 25, 1999)

CLOSURE

Q: What are the requisites of a valid closure?

A:
1. Written notice served on both the employees (Ees) and the DOLE at least 1
month prior to the intended date of closure
2. Payment of separation pay equivalent to at least one month pay or at least
1/2 month pay for every year of service, whichever is higher, except when
closure is due to serious business losses
3. Good faith
4. No circumvention of the law
5. No other option available to the Er

Q: What is the test for the validity of closure or cessation of

establishment or undertaking?
A: The ultimate test of the validity of closure or cessation of establishment or
undertaking is that it must be bona fide in character. And the burden of proving
such falls upon the Er. (Capitol Medical Center, Inc. vs. Dr. Meris, G.R. No.
155098, Sep. 16, 2005, J. Carpio‐Morales)
 229

Q: When is separation pay required in case of closure?

A: Only where closure is not due to serious business losses nor due to an act of
gov’t. (North Davao Mining Corp v. NLRC, G.R. No. 112546, Mar. 13, 1996; NFL
v. NLRC, G.R. No. 127718, Mar. 2, 2000)

Q: Galaxie Steel Corp. decided to close down because of serious business loses.
It filed a written notice with the DOLE informing its intended closure and the
termination of its employees (Ees). It posted the notice of closure on the corporate
bulletin board.

Q: Does the written notice posted by Galaxie on the bulletin board sufficiently
comply with the notice req’t under Art. 283 of the LC?
A: No. In order to meet the purpose, service of the written notice must be made
individually upon each and every Ee of the company. However, the Court held
that where the dismissal is for an authorized cause, non ‐compliance with
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. Still, the employer should indemnify the Ee, in the form of nominal
damages, for the violation of his right to statutory due process.
(Galaxie Steel Workers Union v. NLRC, G.R. No. 165757, Oct. 17, 2006)

Are Ees entitled to separation pay?

A: No. Galaxie had been experiencing serious financial losses at the time it
closed business operations. Art. 283 of the LC governs the grant of separation
benefits "in case of closures or cessation of operation" of business
establishments "not due to serious business losses or financial reverses." Where,
the closure then is due to serious business losses, the LC does not impose any
obligation upon the employer to pay separation benefits. (Galaxie Steel Workers
Unin v. NLRC, G.R. No. 165757, Oct. 17, 2006)

Q: Rank‐and‐file workers of SIMEX filed a petition for direct certification and

affiliated with Union of Filipino Workers (UFW). Subsequently, 36 workers of the
company’s “lumpia” dep’t and 16 other workers from other dep’ts were
effectively locked out when their working areas were cleaned out. The workers
through UFW filed a complaint for unfair labor practices against the company.
SIMEX then filed a notice of permanent shutdown/total closure of all units of
operation in the establishment with the DOLE allegedly due to business reverses
brought about by the enormous rejection of their products for export to the United
States.

Was the closure warranted by the alleged business reverses?

A: The closure of a business establishment is a ground for the termination of the

services of any employee unless the closing is for the purpose of circumventing
the provisions of the law. But, while business reverses can be a just cause for
terminating employees, they must be sufficiently proved. In this case, the
audited financial statement of SIMEX clearly indicates that they actually derived
 230

earnings. Although the rejections may have reduced their earnings they were not
suffering losses. There is no question that an employer may reduce its work force
to prevent losses but it must be serious, actual and real otherwise this ground for
termination would be susceptible to abuse by scheming employers who might be
merely feigning business losses or reverses in their business ventures to ease
out employees. (Union of Filipino Workers v. NLRC, G.R. No. 90519, Mar. 23,
1992)

Q: Carmelcraft Corporation closed it business operations allegedly due to losses

of P1,603.88 after the Carmelcraft Ees Union filed a petition for certification
election. Carmelcraft Union filed a complaint for illegal lockout and ULP with
damages and claim for employment benefits. Were the losses incurred by the
company enough to justify closure of its operations?

A: The determination to cease operations is a prerogative of management that is

usually not interfered with by the State as no business can be required to
continue operating at a loss simply to maintain the workers in employment. That
would be a taking of property without due process of law which the employer
has a right to resist. But where it is manifest that the closure is motivated not by
a desire to avoid further losses but to discourage the workers from organizing
themselves into a union for more effective negotiations with management, the
State is bound to intervene. The losses of less than P2,000 for a corporation
capitalized at P3 million cannot be considered serious enough to call for the
closure of the company. (Carmelcraft Corp. v. NLRC, G.R. No. 90634 ‐35, June 6,
1990)

Q: Is the transferee of the closed corporation required to absorb the

employees (Ees) of the old corporation?

A:
GR: There is no law requiring a bona fide purchaser of assets of an on ‐going
concern to absorb in its employ the Ee’s of the latter except when the transaction
between the parties is colored or clothed with bad faith (BF). (Sundowner Dev’t
Corp. v. Drilon, G.R. No. 82341, Dec. 6, 1989)
XPNs:

1. Where the transferee was found to be merely an alter ego of the different
merging firms. (Filipinas Port Services, Inc. v. NLRC, G.R. No. 97237, Aug.
16, 1991)
2. Where the transferee voluntarily agrees to do so. (Marina Port Services,
Inc. v. Iniego, G.R. No. 77853, Jan. 22, 1990)

Q: Marikina Dairy Industries, Inc. decided to sell its assets and close operations
on the ground of heavy losses. The unions alleged that the financial losses were
imaginary and the dissolution was a scheme maliciously designed to evade its
legal and social obligations to its employees (Ees). The unions want the buyers of
the corporations assets restrained to operate unless the members of the unions
 231

were the ones hired to operate the plant under the terms and conditions
specified in the collective bargaining agreements.

Is the buyer of a company’s assets required to absorb the Ees of the seller?

A: There is no law requiring that the purchaser of a company’s assets should

absorb its Ees and the most that can be done for reasons of public policy and
social justice was to direct that buyers of such assets to give preference to the
qualified separated Ees in the filling up of vacancies in the facilities of the buyer.
(MDII Supervisors & Confidential Ees Ass’n (FFW) v. residential Assistant on
Legal Affairs, G.R. Nos. L‐45421‐23, Sep. 9, 1977)

Q: What is the difference between closure and retrenchment?

A:
CLOSURE RETRENCHMENT
Is the reversal of fortune of the Er Is the reduction of personnel for the
whereby there is a complete cessation purpose of cutting down on costs of
of business operations to prevent operations in terms of salaries and
further financial drain upon an Er who wages resorted to by an Er because
cannot pay anymore his Ees since of losses in operation of a business
business has already stopped. occasioned by lack of work and
considerable reduction in the volume
of business.
One of the prerogatives of management As in the case of retrenchment,
is the decision to close the entire however, for the closure of a
establishment or to close or abolish a business or a department due to
department or section thereof for serious business losses to be
economic reasons, such as to minimize regarded as an authorized cause for
expenses and reduce capitalization. terminating Ees, it must be proven
that the losses incurred are
substantial and actual or reasonably
imminent; that the same increased
through a period of time; and that the
condition of the company is not likely
to improve in the near future.
Does not obligate the Er for the LC provides for the payment of
payment of separation package if there separation package in case of
is closure of business due to serious retrenchment to prevent losses.
losses.

DISEASE

Q: When is disease a ground for dismissal?

A: Where the Ee suffers from a disease, and:

 232

1. His continued employment is prohibited by law or prejudicial to his health or

to the health of his co‐Ees. (Sec.8, Rule I, Book VI, IRR)
2. With a certification by competent public health authority that the disease is
incurable within 6 months despite due medication and treatment. (Solis v.
NLRC, GR No. 116175, Oct. 28,1996)

Note: The req’t for a medical certification cannot be dispensed with;

otherwise, it would sanction the unilateral and arbitrary determination by the
Er of the gravity or extent of the Ee’s illness and thus defeat the public policy
on the protection of labor. (Manly Express v Payong, G.R. No. 167462, Oct.25,
2005)
Termination of services for health reasons must be effected only upon
compliance with the above requisites. The req’t for a medical certificate under
Art. 284 of the LC cannot be dispensed with; otherwise, it would sanction the
unilateral and arbitrary determination by the Er of the gravity or extent of the
Ee’s illness and thus defeat the public policy on the protection of labor. (Sy et.
al v. CA, G.R. No. 142293, Feb. 27, 2003)

Q: What is the procedure in terminating an employee (Ee) on the ground

of disease?
A:
1. The employer (Er) shall not terminate his employment unless:

a. There is a certification by a competent public health authority

b. That the disease is of such nature or at such a stage that it cannot be
cured within a period of 6 months even with proper medical treatment.

2. If the disease or ailment can be cured within the period, the Er shall not
terminate the Ee but shall ask the Ee to take a leave. The Er shall
reinstate such Ee to his former position immediately upon the restoration
of his normal health. (Sec. 8, Rule I, Book VI, IRR)

Q: Is an employee suffering from a disease entitled to reinstatement?

A: Yes, provided he presents a certification by a competent public health
authority that he is fit to return to work. (Cebu Royal Plant v. Deputy Minister,
G.R. No. L‐58639, Aug. 12, 1987)

Q: Is the requirements of a medical certificate mandatory?

A: Yes, it is only where there is a prior certification from a competent public
authority that the disease afflicting the employee sought to be dismissed is of
such nature or at such stage that it cannot be cured within 6 months even with
proper medical treatment that the latter could be validly terminated from his job.
(Tan v. NLRC, G. R. No. 116807, April 14, 1997)

Note: Termination from work on the sole basis of actual perceived or suspected
HIV status is deemed unlawful. (Sec. 35, R.A. 8504 HIV/AIDS Law)
 233

Q: Anna Ferrer has been working as bookkeeper at Great Foods, Inc., which
operates a chain of high‐end restaurants throughout the country, since 1970
when it was still a small eatery at Binondo. In the early part of the year 2003,
Anna, who was already 50 years old, reported for work after a week ‐long
vacation in her province. It was the height of the SARS scare, and management
learned that the first confirmed SARS death case in the Phils, a “balikbayan”
nurse from Canada, is a townmate of Anna. Immediately, a memorandum was
issued by management terminating the services of Anna on the ground that she
is a probable carrier of SARS virus and that her continued employment is
prejudicial to the health of her co‐Ees. Is the action taken by the employer (Er)
justified?

A: The Er’s act of terminating the employment of Anna is not justified. There is no
showing that said employee is sick with SARS, or that she associated or had
contact with the deceased nurse. They are merely town mates. Furthermore,
there is no certification by a competent public health authority that the disease is
of such a nature or such a stage that it cannot be cured within a period of 6
months even with proper medical treatment. (Implementing Rules, Book VI, Rule
1, Sec. 8, LC) (2004 Bar Question)

Q: Discuss the rules on separation pay with regard to each cause of

termination.

A:
CAUSE OF TERMINATION SEPARATION PAY
Automation Equivalent to at least 1 month
pay or at least 1 month pay for
every year of service, whichever
is higher
Redundancy Equivalent to at least 1 month
pay or at least 1 month pay for
every year of service, whichever
is higher
Retrenchment Equivalent to 1 month pay or at
least ½ month pay for every year
or service
Closures or cessation of operation not due Equivalent to at least 1 month
to serious business losses/financial pay or at least 1 month pay for
reverses every year of service (if due to
severe financial losses, no
separation pay
Disease Equivalent to at least 1 month
pay or at least ½ month pay for
every year of service, whichever
is higher

Note: A fraction of at least 6 months shall be considered 1 whole year.

 234

There is no separation pay when the closure is due to an act of the gov’t.

Q: What is the purpose of the 2 notices served to the Ee and DOLE 1

month prior to termination?
A:

1. To give the Ees some time to prepare for the eventual loss of their jobs and
their corresponding income, look for other employment and ease the impact
of the loss of their jobs.
2. To give DOLE the opportunity to ascertain the verity of the alleged cause of
termination. (Phil. Telegraph & Telephone Corp. v. NLRC, G.R. No. 147002,
April 15, 2005)

Note: Notice to both the Ees concerned and the DOLE are mandatory and must
be written and given at least 1 month before the intended date of retrenchment –
and the fact that the Ees were already on temporary lay‐off at the time notice
should have been given to them is not an excuse to forego the 1 ‐month written
notice. (Sebuguero v. NLRC, G.R. No.115394, Sep. 27, 1995)

Q: DAP Corp. ceased its operation due to the termination of its distribution
agreement with Int’l Distributors Corp. which resulted in its need to cease its
business operations and to terminate the employment of its Ees. Marcial et al.
filed a complaint for illegal dismissal and for failure to give the Ees written
notices regarding the termination of their employment. On the other hand, DAP
claims that their Ees actually knew of the termination therefore the written
notices were no longer required. Are written notices dispensed with when the
Ees have actual knowledge of the redundancy?

A: The Ees’ actual knowledge of the termination of a company’s distributorship

agreement with another company is not sufficient to replace the formal and
written notice required by law. In the written notice, the Ees are informed of the
specific date of the termination, at least a month prior to the date of effectivity, to
give them sufficient time to make necessary arrangements. In this case,
notwithstanding the Ees knowledge of the cancellation of the distributorship
agreement, they remained uncertain about the status of their employment when
DAP failed to formally inform them about the redundancy. (DAP Corp. v. CA, G.R.
No. 165811, Dec. 14, 2005)

3. DUE PROCESS

Q: What is Substantive due process?

A: Substantive Due Process provides the ground for disciplinary action, i.e.
corrective or retributive
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Q: What are the 2‐fold requirements of a valid dismissal for a just

cause?

A:
1. Substantive – it must be for a just cause
2. Procedural – there must be notice and hearing

A) TWIN-NOTICE REQUIREMENT

B) HEARING; MEANING OF OPPORTUNITY TO BE HEARD

Q: What is the process to be observed by the employer (Er) for termination of the
employment based on any of the just causes for termination?

A:
1. A written notice should be served to the Ee specifying the ground/s for
termination and giving the said Ee reasonable opportunity to explain.

Note: This first written notice must apprise the Ee that his termination is
being considered due to the acts stated in the notice. (Phil. Pizza Inc. v.
Bungabong, G.R. No. 154315, May 9, 2005)

2. A hearing or conference should be held during which the Ee concerned,

with the assistance of counsel, if the Ee so desires, is given the
opportunity to respond to the charge, present his evidence and present the
evidence presented against him.
3. A written notice of termination – If termination is the decision of the Er, it
should be served on the Ee indicating that upon due considerations of all
the circumstance, grounds have been established to justify his
termination, at least one month prior to his termination.

Note: Single notice of termination does not comply with the requirements
of the law. (Aldeguer & Co., Inc. vs. Honeyline Tomboc, G.R. No. 147633,
July 28, 2008)

Q: What is the purpose of notice and hearing?

A:
1. The req’t of notice is intended to inform the Ee concerned of the Er’s intent
to dismiss him and the reason for the proposed dismissal
2. On the otherhand the req’t of hearing affords the Ee the opportunity to
answer his Er’s charges against him and accordingly to defend himself
there from before dismissal is effected. (Salaw v. NLRC G.R. No. 90786
Sep. 27, 1991)
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Note: Failure to comply with the req’t of the 2 notices makes the dismissal
illegal. The procedure is mandatory. (Loadstar Shipping Co. Inc. v.
Mesano, G.R. No. 138956, Aug. 7, 2003)

Q: While it may be true that the Er enjoys wider latitude of discretion in

terminating employees (Ees) should there exists valid and just cause, would this
be sufficient for the Er to depart from giving the Ee the right to be heard?

A: Art. 277(b) of the LC mandates that an Er who seeks to dismiss an Ee must

“afford the latter ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires.” Expounding on this provision,
the SC held that “ample opportunity” connotes every kind of assistance that
management must accord the Ee to enable him to prepare adequately for his
defense including legal representation. (U‐BIX Corp. vs. Bravo, G.R. No. 177647,
Oct. 31, 2008)

Q: What is included in the opportunity to be heard?

A: The issue was addressed in an en banc decision rendered by the Supreme

Court. With a 14‐1 vote the Court through Chief Justice Corona held as follows:

1. “Ample opportunity to be heard” in an employee dismissal case means any

meaningful opportunity (verbal or written) given to the employee to answer
the charges against him or her and submit evidence in support of the
defences, whether in a hearing, conference or some other fair, just and
reasonable way.
2. A formal hearing or conference becomes mandatory only when requested by
the employee in writing or substantial evidentiary disputes exist or a
company rule or practice requires it, or when similar circumstance justify it.
3. The “ample opportunity to be heard” standard in the Labor Code prevails over
the “hearing or conference” requirement in the implementing rules and
regulations. (Perez v. PT&T, G.R. No. 152048, Apr. 7, 2009)

Q: Who has the burden of proof?

A: The burden of proof rests upon the employer to show that the dismissal of the
employee is for a just cause, and failure to do so would necessarily mean that
the dismissal is not justified, consonant with the constitutional guarantee of
security of tenure.

Note: Due process refers to the process to be followed; burden of proof refers to
the amount of proof to be adduced.

In money claims, the burden of proof as to the amount to be paid the Ees rests
upon the Er since he is in custody of documents that would be able to prove the
amount due, such as the payroll.

Q: What is the degree of proof?

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A: In administrative or quasi‐judicial proceedings, substantial evidence is

considered sufficient in determining the legality of an employer’s dismissal of an
employee. (Pangasinan III Electric Cooperative, Inc. v. NLRC, G.R. No. 89878,
Nov. 13, 1992)

Q: Perez and Doria were employed by PT&T. After investigation, Perez and Doria
were placed on preventive suspension for 30 days for their alleged involvement
in anomalous transactions in the shipping section. PT&T dismissed Perez and
Doria from service for falsifying documents. They filed a complaint for illegal
suspension and illegal dismissal. The LA found that the 30 ‐day extension of
suspension and the subsequent dismissal were both illegal. The NLRC reversed
the LA’s decision, it ruled that Perez and Doria were dismissed for just cause,
that they were accorded due process and that they were illegally suspended for
only 15 days (without stating the reason for the reduction of the period of
petitioners’ illegal suspension). On appeal, CA held that they were dismissed
without due process. Whether petitioners were illegally dismissed?

A: Yes. The Er must establish that the dismissal is for cause in view of the
security of tenure that Ees enjoy under the Constitution and the LC. PT&T failed
to discharge this burden. PT&T’s illegal act of dismissing Perez and Doria was
aggravated by their failure to observe due process. To meet the req’ts of due
process in the dismissal of an Ee, an Er must furnish the worker with 2 written
notices: (1) a written notice specifying the grounds for termination and giving to
said Ee a reasonable opportunity to explain his side and (2) another written
notice indicating that, upon due consideration of all circumstances, grounds have
been established to justify the Er's decision to dismiss the Ee.

There is however, no need for a hearing or conference. “To be heard” does not
mean verbal argumentation alone inasmuch as one may be heard just as
effectively through written explanations, submissions or pleadings. In other
words, the existence of an actual, formal “trial ‐type” hearing, although preferred,
is not absolutely necessary to satisfy the employee’s right to be heard. (Perez. v.
Phil. Telegraph and Telephone Company, G.R. No. 152048, April 7, 2009)

Q: What are the guidelines in determining whether penalty imposed on

Ee is proper?

A:

1. Gravity of the offense

2. Position occupied by the Ee
3. Degree of damage to the employer (Er)
4. Previous infractions of the same offense
5. Length of service (ALU‐TUCP v. NLRC, G.R. No. 120450, Feb. 10, 1999; PAL v.
PALEA, G.R. No.L‐24626, June 28,1974)

Q: Felizardo was dismissed from Republic Flour Mills ‐Selecta ice cream
Corporation for dishonesty and theft of company property for bringing out a pair
 238

of boots, 1 piece aluminum container and 15 pieces of hamburger patties. Is the

penalty of dismissal commensurate with the offense committed?

A: There is no question that the employer has the inherent right to discipline its
Ees which includes the right to dismiss. However this right is subject to the
police power of the State. In this case the Court finds that the penalty imposed
upon Felizardo was not commensurate with the offense committed considering
the value of the articles he pilfered and the fact that he had no previous
derogatory record during his 2 years of employment in the company. Moreover, it
should also be taken into account that Felizardo was not a managerial or
confidential Ee in whom greater trust is reposed by management and from whom
greater fidelity to duty is correspondingly expected. (ALU‐TUCP v. NLRC, G.R. No.
120450, Feb. 10, 1999)

AGABON DOCTRINE

Q: If the dismissal is for a just or authorized cause but the requirement of due
process of notice and hearing were not complied with should the dismissal be
held illegal?

A: No, In Agabon v. NLRC, G.R. No. 158693, Nov. 17, 2004, it was held that
when dismissal is for just or authorized cause but due process was not
observed, the dismissal should be upheld.

However, the employer (Er) should be held liable for non ‐compliance with the
procedural req’ts of due process (e.g. damages). The Agabon ruling was modified
by JAKA Food Processing v. Pacot (G.R. No. 515378, Mar. 28, 2005) where it
was held that:

1. If based on just cause (Art. 282) but the Er failed to comply with the notice
req’t, the sanction to be imposed upon him should be tempered because the
dismissal process was, in effect, initiated by an act imputable to the Ee; and
2. If based on authorized causes (Art. 283) but the Er failed to comply with the
notice req’t, the sanction should be stiffer because the dismissal process was
initiated by Er’s exercise of his management prerogative.

C. RELIEFS FOR ILLEGAL DISMISSAL

1. REINSTATEMENT

Q: What are the remedies available to an illegally dismissed employee

(Ee)?
A: An Ee who is unjustly dismissed from work shall by entitled to:

1. Reinstatement without loss of seniority rights and

 239

2. Full backwages. (Sec. 3, Rule I, Book VI, IRR)

3. Separation pay in lieu of reinstatement, if the latter is no longer feasible

Q: What is reinstatement?
A: It is the restoration of the employee to the state from which he has been
unjustly removed or separated without loss of seniority rights and other
privileges.

Immediately executory: actual reinstatement and payroll reinstatement

Q: What are the forms of reinstatement?

A:

1. Actual or physical – the employee (Ee) is admitted back to work

2. Payroll – the Ee is merely reinstated in the payroll

Note: An order of reinstatement by the LA is not the same as actual

reinstatement of a dismissed or separated Ee. Thus, until the Er continuously
fails to actually implement the reinstatement aspect of the decision of the LA,
their obligation to the illegally dismissed Ee, insofar as accrued backwages and
other benefits are concerned, continues to accumulate. It is only when the
illegally dismissed Ee receives the separation pay (in case of strained relations)
that it could be claimed with certainty that the Er ‐Ee realtionship has formally
ceased thereby precluding the possibility of reinstatement. In the meantime, the
illegally dismissed Ees entitlement to backwages, 13th month pay, and other
benefits subsists. Until the payment of separation pay is carried out, the Er
should not be allowed to remain unpunished for the delay, if not outright refusal,
to immediately execute the reinstatement aspect of the LA’s decision.

Further, the Er cannot refuse to reinstate the illegally dismissed Ee by claiming

that the latter had already found a job elsewhere. Minimum wage earners are
left with no choice after they are illegally dismissed from their employment, but
to seek new employment in order to earn a decent living. Surely, we could not
fault them for their perseverance in looking for and eventually securing new
employment opportunities instead of remaining idle and waiting the outcome of
the case. (Triad Security & Allied Services, Inc. et al v. Ortega, G.R. No. 160871,
Feb. 6, 2006).

A. PENDING APPEAL (ART. 223, LABOR CODE)

Q: Distinguish Arts. 223 from 279 of the LC?

A:
 240

Art. 279 Art. 223

Presupposes that the judgment has
already become final and executory.
Consequently, there is nothing left to be
done except the execution thereof.
May be availed of as soon as the
labor arbiter renders a judgment
declaring that the dismissal of the
Ee is illegal and ordering said
reinstatement. It may be availed of
even pending appeal

Note: An award or order for reinstatement is self ‐executory. It does not require
the issuance of a writ of execution. (Pioneer Texturizing Corp. v. NLRC, G.R. No.
118651, Oct. 16, 1997)

Q: PAL dismissed Garcia, for violating PAL’s Code of Discipline for allegedly
sniffing shabu in PAL’s Technical Center Toolroom Section. Garcia then filed for
illegal dismissal and damages where the Labor Arbiter (LA) ordered PAL to
immediately reinstate Garcia. On appeal, the NLRC reversed the decision and
dismissed Garcia’s complaint for lack of merit. Garcia’s motion for
reconsideration was denied by the NLRC. It affirmed the validity of the writ and
the notice issued by the LA but suspended and referred the action to the
Rehabilitation Receiver for appropriate action. Whether Garcia may collect their
wages during the period between the LA’s order of reinstatement pending appeal
and the NLRC decision overturning that of the LA?

A: Par. 3 of Art. 223 of the LC provides that the decision of the LA reinstating a
dismissed or separated Ee, insofar as the reinstatement aspect is concerned,
shall immediately be executory, pending appeal.

Even if the order of reinstatement of the LA is reversed on appeal, it is obligatory

on the part of the Er to reinstate and pay the wages of the dismissed Ee during
the period of appeal until reversal by the higher court. On the other hand, if the
Ee has been reinstated during the appeal period and such reinstatement order is
reversed with finality, the Ee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he actually rendered services during
the period.

In other words, a dismissed Ee whose case was favorably decided by the LA is

entitled to receive wages pending appeal upon reinstatement, which is
immediately executory. Unless there is a restraining order, it is ministerial upon
the LA to implement the order of reinstatement and it is mandatory on the Er to
comply therewith. (Garcia vs. PAL, G.R. No. 164856, Jan.20, 2009)

Q: May a court order the reinstatement of a dismissed employee (Ee) even if the
prayer of the complaint did not include such relief?
A: Yes. So long as there is a finding that the Ee was illegally dismissed, the
court can order the reinstatement of an Ee even if the complaint does not include
a prayer for reinstatement, unless, of course the Ee has waived his right to
 241

reinstatement. By law, an Ee who is unjustly dismissed is entitled to

reinstatement among others. The mere fact that the complaint did not pray for
reinstatement will not prejudice the Ee, because technicalities of law and
procedure are frowned upon in labor proceedings (Pheschem Industrial Corp. v.
Moldez, G.R. No. 1161158, May 9, 2005).

Q: What happens if there is an Order of Reinstatement but the position

is no longer available?
A: The employee (Ee) should be given a substantially equivalent position. If no
substantially equivalent position is available, reinstatement should not be
ordered because that would in effect compel the employer to do the impossible.
In such a situation, the Ee should merely be given a separation pay consisting of
1‐month salary for every year of service (Grolier Int’l Inc. v. ELA, G.R. No. 83523,
Aug. 31, 1989)

B. SEPARATION PAY IN LIEU OF REINSTATEMENT

Q: How can separation pay be viewed?

A: Under present laws and jurisprudence, separation pay may be viewed in 4

ways:

1. In lieu of reinstatement in illegal dismissal cases, where Ee is ordered

reinstated but reinstatement is not feasible.
2. As Er’s statutory obligation in cases of legal termination due to authorized
causes under Art. 283 and 284 of the LC.
3. As financial assistance, as an act of social justice and even in case of legal
dismissal under Art. 282 of the LC.
4. As employment benefit granted in CBA or company policy. (Poquiz, 2005)

Q: Is an illegally dismissed employee entitled to reinstatement as a

matter of right?

A: GR: Yes.

XPNS: Proceeds from an illegal dismissal wherein reinstatement is ordered but

cannot be carried out as in the following cases:

1. Reinstatement cannot be effected in view of the long passage of time or

because of the realities of the situation.
2. It would be inimical to the employers’ interest.When reinstatement is no
longer feasible.
3. When it will not serve the best interest of the parties involved.
4. Company will be prejudiced by reinstatement.
5. When it will not serve a prudent purpose.
 242

6. When there is resultant strained relation (applies to both confidential and

managerial employees (Ees) only).
7. When the position has been abolished (applies to both managerial,
supervisory and rank‐and‐file Ees).

Note: In such cases, it would be more prudent to order payment of separation

pay instead of reinstatement. (Quijano v. Mercury Drug Corporation, G.R. No.
126561, July 8, 1998)

Q: Respondents are licensed drivers of public utility jeepneys owned by Moises

Capili. When Capili assumed ownership and operation of the jeepneys, the
drivers were required to sign individual contracts of lease of the jeepneys. The
drivers gathered the impression that signing the contract was a condition
precedent before they could continue driving. The drivers stopped plying their
assigned routes and a week later filed with the Labor Arbiter a complaint for
illegal dismissal praying not for reinstatement but for separation pay. Are the
respondents entitled to separation pay?
A: No. When drivers voluntarily chose not to return to work anymore, they must
be considered as having resigned from their employment. The common
denominator of those instances where payment of separation pay is warranted
is that the employee was dismissed by the employer. (Capili v. NLRC, G.R.
117378, Mar. 26, 1997)

Q: Two groups of seasonal workers claimed separation benefits after the closure
of Phil. Tobacco processing plant in Balintawak and the transfer of its tobacco
operations to Candon, Ilocos Sur. Phil. Tobacco refused to grant separation pay
to the workers belonging to the first batch (Lubat group), because they had not
been given work during the preceding year and, hence, were no longer in its
employ at the time it closed its Balintawak plant. Likewise, it claims exemption
from awarding separation pay to the second batch (Luris group), because the
closure of its plant was due to "serious business losses," as defined in Art. 283
of the LC. Both labor agencies held that the Luris and Lubat groups were entitled
to separation pay equivalent to 1/2 month salary for every of service, provided
that the Ee worked at least 1 month in a given year. Is the separation pay
granted to an illegally dismissed Ee the same as that provided under Art. 283 of
the LC in case of retrenchment to prevent losses?
A: No. The separation pay awarded to employees due to illegal dismissal is
different from the amount of separation pay provided for in Art. 283 of the LC.
Prescinding from the above, Phil. Tobacco is liable for illegal dismissal and
should be responsible for the reinstatement of the Lubat group and the payment
of their backwages. However, since reinstatement is no longer possible as Phil.
Tobacco have already closed its Balintawak plant, members of the said group
should instead be awarded normal separation pay (in lieu of reinstatement)
equivalent to at least one month pay, or one month pay for every year of service,
whichever is higher. It must be stressed that the separation pay being awarded
to the Lubat group is due to illegal dismissal; hence, it is different from the
amount of separation pay provided for in Article 283 in case of retrenchment to
 243

prevent losses or in case of closure or cessation of the Er’s business, in either of

which the separation pay is equivalent to at least one (1) month or one ‐half (1/2)
month pay for every year of service, whichever is higher. (Phil. Tobacco Flue‐
Curing & Redrying Corp. v. NLRC, G.R. No. 127395, Dec. 10, 1998)

STRAINED RELATION RULE

Q: What is the doctrine of strained relations?

A: When the Er can no longer trust the Ee and vice versa, or there were
imputations of bad faith to each other, reinstatement could not effectively serve
as a remedy. This doctrine applies only to positions which require trust and
confidence (Globe Mackay v. NLRC, G.R. No. 82511, March 3, 1992).

Note: Under the circumstances where the employment relationship has become
so strained to preclude a harmonious working relationship and that all hopes at
reconciliation are naught after reinstatement, it would be more beneficial to
accord the Ee backwages and separation pay.

Q: What must be proven before the principle of strained relations can be

applied to a particular case?
A:

1. The Ee concerned occupies a position where he enjoys the trust and

confidence of his Er; and
2. That it is likely that if reinstated, an atmosphere of antipathy and antagonism
may be generated as to adversely affect the efficiency and productivity of the
Ee concerned. (Globe Mackay Cable & Wire Corp. v. NLRC G.R. No. 82511,
Mar. 3, 1992)

Q: Does the doctrine of strained relationship always bar reinstatement

in all cases?
A: No. The doctrine should be applied on a case to case basis, based on each
case’s peculiar conditions and not universally. Otherwise, reinstatement can
never be possible simply because some hostility is invariably engendered
between the parties as a result of litigation. That is human nature. (Anscor
Transport v. NLRC, G.R. No. 85894, Sept. 28, 1990)
Besides, no strained relations should arise from a valid and legal act of
asserting one's right; otherwise an Ee who shall assert his right could be easily
separated from the service, by merely paying his separation pay on the pretext
that his relationship with his employer (Er) had already become strained. (Globe
Mackay Cable & Wire Corp. v. NLRC, G.R. No. 82511, Mar. 3, 1992)

Q: Differentiate Art. 279 of the LC from Sec. 7 of R.A. 10022.

A:
Art. 279, LC (Local Workers) Sec. 7, RA 10022 (Migrant
Workers)
 244

Reinstatement Full Reimbursement of his

Full backwages from the time of his placement fee with interest of 12%
compensation was withheld from him up per annum.
to the time of his actual reinstatement.

2. BACKWAGES

Q: What are backwages?

A: It is the relief given to an employee (Ee) to compensate him for the lost
earnings during the period of his dismissal. It presupposes illegal termination.

Note: Entitlement to backwages of the illegally dismissed Ee flows from law.

Even if he does not ask for it, it may be given. The failure to claim backwages in
the complaint for illegal dismissal is a mere procedural lapse which cannot
defeat a right granted under substantive law. (St. Michael’s Institute v. Santos,
G.R. No. 145280, Dec. 4, 2001)

Q: What is the basis of awarding backwages to an illegally dismissed

employee (Ee)?

A: The payment of backwages is generally granted on the ground of equity. It is

a form of relief that restores the income that was lost by reason of the unlawful
dismissal; the grant thereof is intended to restore the earnings that would have
accrued to the dismissed Ee during the period of dismissal until it is determined
that the termination of employment is for a just cause. It is not private
compensation or damages but is awarded in furtherance and effectuation of the
public objective of the LC. Nor is it a redress of a private right but rather in the
nature of a command to the employer to make public reparation for dismissing
an Ee either due to the former’s unlawful act or bad faith. (Tomas Claudio
Memorial College Inc., v. CA, G.R. No. 152568, Feb. 16, 2004)

Q: What is the period covered by the payment of backwages?

A: The backwages shall cover the period from the date of dismissal of the
employee up to the date of:

1. Actual reinstatement, or if reinstatement is no longer feasible

2. Finality of judgment awarding backwages (Buhain v. CA, G.R. 143709, July
2, 2002)

Note: The backwages to be awarded should not be diminished or reduced by

earnings elsewhere during the period of his illegal dismissal. The reason is that
the Ee while litigating the illegality of his dismissal must earn a living to support
himself and his family. (Bustamante v. NLRC, G.R. No. 111651, Mar. 15, 1996;
Buenviaje v. CA, G.R. No. 147806, Nov. 2002)
 245

A. COMPUTATION

Q: What is included in the computation of backwages?

A: They cover the following:

1. Transportation and emergency allowances

2. Vacation or service incentive leave and sick leave
3. 13th month pay

Note: Facilities such as uniforms, shoes, helmets and ponchos should not be
included in the computation of backwages because said items are given for free,
to be use only during official tour of duty not for private or personal use.
The award of backwages is computed on the basis of 30 ‐day month. (JAM Trans
Co. v. Flores, G.R. No. L‐63555, Mar. 19, 1993)

Q: What does the term “full backwages” mean?

A: The Labor Code as amended by R.A. 6715 points to "full backwages" as

meaning exactly that, i.e., without deducting from backwages the earnings
derived elsewhere by the concerned Ee during the period of his illegal dismissal.
(Buenviaje v. CA, G.R. 147806, Nov. 12, 2002)

The underlying reason for this ruling is that the employee, while litigating the
legality (illegality) of his dismissal, must still earn a living to support himself and
family, while full backwages have to be paid by the employer as part of the price
he has to pay for illegally dismissing his Ee. (Bustamante v. NLRC, G.R. No.
111651, Mar. 15, 1996)

Q: Is an Ee entitled to backwages even after the closure of the business?

A: Yes. The closure of the business rendered the reinstatement of complainant to
her previous position impossible but she is still entitled to the payment of
backwages up to the date of dissolution or closure. An employer found guilty of
unfair labor practice in dismissing his Ee may not be ordered to pay backwages
beyond the date of closure of business where such closure was due to legitimate
business reasons and not merely an attempt to defeat the order of reinstatement.
(Pizza Inn v. NLRC, G.R. No. 74531, June 28, 1988)

Q: What are the circumstances that prevent award of backwages?

A:

1. Dismissal for cause

2. Death, physical or mental incapacity of the employee
3. Business reverses
4. Detention in prison
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B. LIMITED BACKWAGES

(SUPPLY2)

D. PREVENTIVE SUSPENSION

Q: What is preventive suspension?

A: During the pendency of the investigation, the Er may place the Ee under
preventive suspension leading to termination when there is an imminent threat
or a reasonable possibility of a threat to the lives and properties of the Er, his
family and representatives as well as the offender’s co ‐workers by the continued
service of the Ee.

Q: What is the duration of preventive suspension?

A: It should not last for more than 30 days. The Ee should be made to resume
his work after 30 days. It can be extended provided the Ee’s wages are paid
after the 30‐day period.

This period is intended only for the purpose of investigating the offense to
determine whether he is to be dismissed or not. It is not a penalty.

Note: The Er may continue the period of preventive suspension provided that he
pays the salary of the Ee.

If more than 1 month, the Ee must actually be reinstated or reinstated in the

payroll. Officers are liable only if done with malice.

Q: Cantor and Pepito were preventively suspended pending application for their
dismissal by Manila Doctor’s Hospital after being implicated by one Macatubal
when they refused to help him when he was caught stealing x ‐ray films from the
hospital. Was the preventive suspension of Cantor and Pepito proper?

A: Where the continued employment of an Ee poses a serious and imminent

threat to the life and property of the employer or on his co ‐Ees, the Ees’
preventive suspension is proper. In this case, no such threat to the life and
property of the Er or of their co ‐Ee’s is present and they were merely implicated
by the Macatubal. (Manila Doctors Hospital v. NLRC, G.R. No 64897, Feb. 28,
1985)

E. CONSTRUCTIVE DISMISSAL

Q: What is constructive dismissal?

A: An involuntary resignation resorted to when:

 247

1. continued employment becomes impossible, unreasonable, or unlikely

2. there is a demotion in rank or diminution in pay or
3. clear discrimination, insensibility or disdain by an Er becomes unbearable to
the Ee. (Leonardo v. NLRC, G.R. No.125303, June 16, 2000)

Note: There is no formal dismissal. The Ee is placed in a situation by the Er such

that his continued employment has become unbearable. Abandonment is
incompatible with constructive dismissal.

Q: Reynaldo was hired by Geminilou Trucking Service (GTS) as a truck driver to

haul and deliver products of San Miguel Pure Foods Company, Inc. He was paid
P 400 per trip and made 4 trips a day. He claimed that he was requested by
GTS to sign a contract entitled “Kasunduan Sa Pag‐Upa ng Serbisyo” which he
refused as he found it to alter his status as a regular Ee to merely contractual.
He averred that on account of his refusal to sign the Kasunduan, his services
were terminated prompting him to file a complaint before the NLRC for
constructive dismissal against the GTS. Would Reynaldo’s refusal to sign the
Kasunduan adequately support his allegation of constructively dismissal?

A: No. The test of constructive dismissal is whether a reasonable person in the

employee’s (Ee's) position would have felt compelled to give up his job under the
circumstances. In the present case, the records show that the lone piece of
evidence submitted by Reynaldo to substantiate his claim of constructive
dismissal is an unsigned copy of the Kasunduan. This falls way short of the
required quantum of proof which is substantial evidence, or such relevant
evidence as a reasonable mind might accept as adequate to support a
conclusion. Reynaldo was not dismissed, but that he simply failed to report for
work after an altercation with a fellow driver. (Madrigalejos vs. Geminilou
Trucking Service, G.R. No. 179174, Dec. 24, 2008)

Q: Flores, a conductor of JAM Transportation Co., Inc., had an accident where he

had to be hospitalized for a number of days. Upon reporting back to the company
he was told to wait. For several days this continued and he was promised a
route assignment which did not materialize. Upon speaking to Personnel
Manager Medrano, he was told that he will be accepted back to work but as a
new employee. Flores rejected the offer because it would mean forfeiture of his
18 years of service to the company. Is the offer for reinstatement as a new
employee (Ee) a constructive dismissal?

A: Yes. Flores’ re‐employment as a new Ee would be very prejudicial to him as it

would mean a demotion in rank and privileges, retirement benefits as his
previous 18 years of service with the company would simply be considered as
non‐existent. It amounts to constructive dismissal. (JAM Transportation Co., Inc.
v. Flores, G.R. No. 82829, Mar. 19, 1993)

Q: Quinanola was transferred from the position of Executive Secretary to the

Executive Vice President and General Manager to the Production Dep’t as
Production Secretary. Quinanola rejected the assignment and filed a complaint
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for illegal dismissal due to constructive dismissal. Did the transfer of Quinanola
amount to constructive dismissal?
A: No. Quinanola’s transfer was not unreasonable since it did not involve a
demotion in rank nor a change in her place of work nor a diminution in pay,
benefits and privileges. It did not constitute a constructive dismissal.
Furthermore, an employee’s security of tenure does not give him a vested right in
his position as would deprive the company of its prerogative to change his
assignment or transfer him where he will be most useful. (Philippine Japan
Active Carbon Corp. v. NLRC, G.R. No. 83239, Mar. 8, 1989)

Q: Sangil was a utility man/assistant steward of the passenger cruise vessel

Crown odyssey under a one‐year contract. Sangil suffered head injuries after an
altercation with a Greek member of the crew. He informed the captain that he no
longer intends to return aboard the vessel for fear that further trouble may erupt
between him and the other Greek crewmembers of the ship. Was Sangil
constructively dismissed?

A: Yes. There is constructive dismissal where the act of a seaman in leaving ship
was not voluntary but was impelled by a legitimate desire for self ‐preservation
or because of fear for his life Constructive dismissal does not always involve
diminution in pay or rank but may be inferred from an act of clear discrimination,
insensibility or disdain by an Er may become unbearable on the part of the Ee
that it could foreclose any choice by him except to forego his continued
employment. (Sunga Ship Management Phils., Inc. v. NLRC, G.R. No. 119080,
April 14, 1998)

QUITCLAIM

Q: What is a quitclaim?

A: It is a document executed by an employee in favor of the employer preventing

the former from filing any further money claim against the latter arising from
employment.

Q: What are the elements of a valid quitclaim?

A:

1. Voluntarily entered into with full understanding of what the employee is

doing
2. Represents a reasonable settlement

Q: What constitutes reasonable settlement?

A: Reasonable settlement requires that the consideration for the quitclaim is

credible and reasonable. (Periquet v. NLRC, G.R. No. 91298, June 22, 1990)

Q: Is “dire necessity” a ground to nullify a quitclaim?

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A: Dire necessity is not an acceptable ground for annulling the releases,

especially since it has not been shown that the employees had been forced to
execute them. It has not even been proven that the considerations for the
quitclaims were unconscionably low and that the petitioners had been tricked
into accepting them. Furthermore, no deception has been established on the part
of the employer that would justify the annulment of the employees’ quitclaim.
(Veloso v. DOLE, G.R. No. 87297, August 5, 1991.)

Termination of employment by employee

Q: How can an employee (Ee) terminate his service with his employer
(Er)?
A:

1. Without just cause – by serving written notice on the Er at least 1 month in

advance. The Er upon whom no such notice was served may hold the Ee
liable for damages.
2. With just cause – an Ee may put an end to employment without serving
any notice on the Er for any of the following just causes:
a. Serious insult by the Er or his representative on the hour and
person of the Ee
b. Inhuman and unbearable treatment accorded the Ee by the Er or
his representative
c. Commission of a crime or offense by the Er or his representative
against the person of the Ee or any of the immediate members of his
family
d. Other causes analogous to any of the foregoing

Q: When is employment not deemed terminated?

A:

1. Bona fide suspension of the operation of a business or undertaking for a

period not exceeding 6 months, or
2. The fulfillment by the Ee of a military or civic duty shall not terminate
employment.

Note: In all such cases, the Er shall reinstate the Ee to his former position
without loss of seniority rights if he indicates his desire to resume his work not
later than 1 month from the resumption of operations of his Er or from his relief
from the military or civic duty. (Art. 286)

V. MANAGEMENT PREROGATIVE

Q: What is Management Prerogative?

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A:
GR: It is the right of an Er to regulate, according to his own discretion and
judgment, all aspects of employment, including:
1. Hiring
2. Work assignments
3. Working methods
4. Time, place and manner of work
5. Tools to be used
6. Processes to be followed
7. Supervision of workers
8. Working regulations
9. Transfer of Ees
10. Work supervision
11. Lay‐off of workers
12. Discipline
13. Dismissal
14. Recall of workers

XPNs: Otherwise limited by special laws.

Note: So long as a company’s prerogatives are exercised in good faith for the
advancement of the Er’sinterest and not for the purpose of defeating or
circumventing the rights of the Ees under special laws or under valid
agreements, the Supreme Court will uphold them.

Q:
1. An exclusive school for girls, run by a religious order, has a policy of not
employing unwed mothers, women with live‐in partners, and lesbians. Is the
policy violative of any provision of the LC on employment of women?
2. The same school dismissed 2 female faculty members on account of
pregnancy out of wedlock. Did the school violate any provision of the LC on
employment of women?
A:
1. No, the policy does not violate the LC. The practice is a valid exercise of
management function. Considering the nature and reason for existence of the
school, it may adopt such policy as will advance its laudable objectives. In
fact, the policy accords with the constitutional precept of inculcating ethical
and moral values in schools. The school policy does not discriminate against
women solely on account of sex (Art. 135, LC) nor are the acts prohibited
under Art. 137 of the LC.

2. No, because to tolerate pregnancy out of wedlock will be a blatant

contradiction of the school's laudable mission which, as already stated,
accords with high constitutional precepts. This answer does not contradict the
ruling in Chua‐Qua where the teacher merely fell in love with a bachelor
student and the teacher, also single, did not get pregnant out of wedlock.
(2000 Bar Question)
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Q: Little Hands Garment Company, an unorganized manufacturer of children's

apparel with around 1,000 workers, suffered losses for the 1st first time in
history when its US and European customers shifted their huge orders to China
and Bangladesh. The management informed its Ees that it could no longer afford
to provide transportation shuttle services. Consequently, it announced that a
normal fare would be charged depending on the distance traveled by the
workers availing of the service.
Was the Little Hands Garments Company within its rights to withdraw this
benefit which it had unilaterally been providing to its Ees?
A: Yes, because this is a management prerogative which is not due any legal or
contractual obligation. – The facts of the case do not state the circumstances
through which the shuttle service may be considered as a benefit that ripened
into a demandable right. There is no showing that the benefit has been
deliberately and consistently granted, i.e. with the employer’s full consciousness
that despite its not being bound by law or contract to grant it, it just the same
granted the benefit. (2005 Bar Question)

A. DISCIPLINE

Q: Discuss briefly the Er’s right to discipline his Ees.

A: The Er has the prerogative to instill discipline in his Ees and to impose
reasonable penalties, including dismissal, on erring Ees pursuant to company
rules and regulations. (San Miguel Corporation v. NLRC, G.R. No. 87277, May 12,
1989)

Q: Is the power of the Er to discipline his Ees absolute?

A: No. While management has the prerogative to discipline its Ees and to impose
appropriate penalties on erring workers, pursuant to company rules and
regulations, however, such management prerogatives must be exercised in good
faith for the advancement of the Er’s interest and not for the purpose of defeating
or circumventing the rights of the Ees under special laws and valid agreements.
(PLDT vs. Teves, G.R. No. 143511, November 10, 2010)

Q: May the Er be compelled to share with its Ees the prerogative of formulating a
code of discipline? Is a code of discipline unilaterally formulated by the Er
enforceable?
A: The Er has the obligation to share with its Ees its prerogative of formulating a
code of discipline. This is in compliance with the State’s policy stated in Article
211 of the Labor Code, to ensure the participation of workers in decision and
policy‐making processes affecting their rights, duties and welfare. The exercise
of management prerogatives has, furthermore, never been considered to be
boundless. This obligation is not dispensed with by a provision in the collective
bargaining agreement recognizing the exclusive right of the Er to make and
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enforce company rules and regulations to carry out the functions of management
without having to discuss the same with the union and much less obtain the
latter’s conformity thereto. A code of discipline unilaterally formulated and
promulgated by the Er would be unenforceable. (Philippine Airlines, Inc. vs.
NLRC et al., G.R. No. August 13, 1993.)

B. TRANSFER OF EMPLOYEES

Q: Discuss briefly the Er’s right to transfer and reassign Ees.

A: In the pursuit of its legitimate business interests, especially during adverse
business conditions, management has the prerogative to transfer or assign Ees
from one office or area of operation to another provided there is no demotion in
rank or diminution of salary, benefits and other privileges and the action is not
motivated by discrimination, bad faith, or effected as a form of punishment or
demotion without sufficient cause. This privilege is inherent in the right of Ers to
control and manage their enterprises effectively.
Note: The right of Ees to security of tenure does not give them vested rights to
their positions to the extent of depriving management of its prerogative to change
their assignments or to transfer them. (Endico v. Quantum Foods Distribution
Center, G.R. No. 161615, Jan. 30, 2009)

Q: May the Er exercise his right to transfer an Ee and compel the latter to accept
the same if said transfer is coupled with or is in the nature of promotion?
A: No. There is no law that compels an Ee to accept promotion, as a promotion is
in the nature of a gift or a reward, which a person has a right to refuse. When an
Ee refused to accept his promotion, he was exercising his right and cannot be
punished for it. While it may be true that the right to transfer or reassign an Ee is
an Er’s exclusive right and the prerogative of management, such right is not
absolute. (Dosch vs. NLRC and Northwest Airlines, G.R. No. 51182, July 5, 1983)

Q: Who has the burden of proving that the transfer was reasonable?
A: The Er must be able to show that the transfer is not unreasonable,
inconvenient or prejudicial to the Ee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits. Should the Er fail to
overcome this burden of proof, the Ee’s transfer shall be tantamount to
constructive dismissal. (Blue Dairy Corporation v. NLRC, 314 SCRA 401 [1999])

C. PRODUCTIVITY STANDARD

Q: May an Er impose productivity standards for its workers?

A: Yes. An Er is entitled to impose productivity standards for its workers, and in
fact, non‐compliance may be visited with a penalty even more severe than
demotion. The practice of a company in laying off workers because they failed to
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make the work quota has been recognized in this jurisdiction. Failure to meet the
sales quota assigned to each of them constitute a just cause of their dismissal,
regardless of the permanent or probationary status of their employment. 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. This management prerogative of requiring
standards may be availed of so long as they are exercised in good faith for the
advancement of the Er’s interest. (Leonardo vs. NLRC, G.R. No. 125303, June 16,
2000)

D. GRANT OF BONUS

Q: What is a bonus?
A: It is an amount granted and paid to an Ee for his industry and loyalty which
contributed to the success of the Ers business and made possible the realization
of profits.

Q: Can bonus be demanded?

A:
GR: Bonus is not demandable as a matter of right. It is a management
prerogative given in addition to what is ordinarily received by or strictly due to
recipient. (Producers Bank of the Phil. v. NLRC, G.R. No. 100701, March 28,
2001)
XPNs: Given for a long period of time
1. Consistent and deliberate – Er continued giving benefit without any condition
imposed for its payment
2. Er knew he was not required to give benefit
3. Nature of benefit is not dependent on profit
4. Made part of the wage or compensation agreed and stated in the employment
contract.

Q: The projected bonus for the Ees of Suerte Co. was 50% of their monthly
compensation. Unfortunately, due to the slump in the business, the president
reduced the bonus to 5% of their compensation. Can the company unilaterally
reduce the amount of bonus? Explain briefly.
A: Yes. The granting of a bonus is a management prerogative, something given in
addition to what is ordinarily received by or strictly due the recipient. An Er
cannot be forced to distribute bonuses when it can no longer afford to pay. To
hold otherwise would be to penalize the Er for his past generosity. (Producers
Bank of the Phil. v NLRC, G.R. No. 100701, March 28, 2001). (2002 Bar
Question)
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E. CHANGE OF WORKING HOURS

Q: Discuss briefly the Er’s right to change working hours.

A: Well‐settled is the rule that management retains the prerogative, whenever
exigencies of the service so require, to change the working hours of its Ees.

Q: May the normal hours fixed in Article 83 be reduced by the Er?

Explain.
A: The present article provides that the normal hours of work of an Ee shall not
exceed eight (8) hours a day. This implies that the Er, in the exercise of its
management prerogatives, may schedule a work shift consisting of less than
eight hours. And following the principle of “a fair day’s wage for a fair day’s
labor”, the Er is not obliged to pay an Ee, working for less than eight hours a
day, the wages due for eight hours. Nonetheless, if by voluntary practice or
policy, the Ee for a considerable period of time has been paying his Ees wages
due for eight hours work although the work shift less than eight hours (e.g.
seven) it cannot later on increase the working hours without an increase in the
pay of the employees affected. An Er is not allowed to withdraw a benefit which
he has voluntarily given. An Er is not allowed to withdraw a benefit which he
has voluntarily given.

F. RULES ON MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR-

EMPLOYERS

Q: Peds was employed by Glaxo as medical representative who has a policy

against Ees having relationships against competitor’s Ees. Peds married Jali, a
Branch coordinator of Astra, Glaxo’s competitor. Peds was transferred to another
area. Peds did not accept such transfer. Is the policy of Glaxo valid and
reasonable so as to constitute the act of Peds as willful disobedience?
A: The prohibition against personal or marital relationships with Ees of
competitors‐companies upon Glaxo’s Ees is reasonable under the circumstances
because relationships of that nature might compromise the interest of the
company. Glaxo does not impose an absolute prohibition against relationships
between its Ees and those of competitor companies. Its Ees are free to cultivate
relationships with and marry persons of their own choosing. What the company
merely seeks to avoid is a conflict of interest between the Ee and the company
that may arise out of such relationships. Furthermore, the prohibition forms part
of the employment contract and Peds was aware of such restrictions when he
entered into a relationship with Jali. (Duncan Association of Detailman‐PTGWO
v. Glaxo Wellcome Phil. Inc., G.R. No. 162994, Sep. 17, 2004)

Q: Is a company policy prohibiting marriage between co‐workers valid?

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A: There must be a finding of a bona fide occupational qualification (BFOQ) to

justify an Er’s No Spouse Rule. There must be a compelling business necessity
for which no alternative exists other than the discriminating practice. (Star Paper
vs. Simbol, G.R. No. 164774, April 12, 2006)

Q: What are the factors that the Er must prove inorder to justify BFOQ?
A: The Er must prove 2 factors:
1. That the employment qualification is reasonably related to the essential
operation of the job involved; and
2. That there is a factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties of
the job. (Star Paper et al. vs. Simbol, G.R. No. 164774, April 12, 2006)

G. POST‐EMPLOYMENT BAN

Q: Genesis Fulgencio had been working for Solidbank Corporation since 1977.
He later on applied for retirement. Solidbank required Genesis to sign an
undated Undertaking where he promised that "[he] will not seek employment
with a competitor bank or financial institution within one (1) year from February
28, 1995, and that any breach of the Undertaking or the provisions of the
Release, Waiver and Quitclaim would entitle Solidbank to a cause of action
against him before the appropriate courts of law.” Equitable Banking Corporation
(Equitable) employed Genesis. Is the post ‐retirement employment ban
incorporated in the Undertaking which Genesis executed upon his retirement is
unreasonable, oppressive, hence, contrary to public policy?
A: No. There is a distinction between restrictive covenants barring an Ee to
accept a post‐employment competitive employment or restraint on trade in
employment contracts and restraints on post‐retirement competitive employment
in pension and retirement plans either incorporated in employment contracts or
in collective bargaining agreements between the Er and the union of Ees, or
separate from said contracts or collective bargaining agreements which provide
that an Ee who accepts post retirement competitive employment will forfeit
retirement and other benefits or will be obliged to restitute the same to the
employer. The strong weight of authority is that forfeitures for engaging in
subsequent competitive employment included in pension and retirement plans
are valid even though unrestricted in time or geography. A post ‐retirement
competitive employment restriction is designed to protect the Er against
competition by former Ee who may retire and obtain retirement or pension
benefits and, at the same time, engage in competitive employment. (Rivera vs.
Solidbank, G.R. No. 163269, April 19, 2006)

LIMITATIONS IN THE EXERCISE OF MANAGEMENT PREROGATIVE

Q: Is the exercise of management prerogative unlimited?

A: No. It is circumscribed by limitations found in:
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1. Law,
2. CBA, or
3. General principles of fair play and justice

Furthermore, a line must be drawn between management prerogatives regarding

business operations per se and those which affect the rights of Ees. In treating
the latter, management should see to it that its Ees are at least properly
informed of its decisions and modes of actions. So long as a company’s
prerogatives are exercised in good faith for the advancement of the Er’sinterest
and not for the purpose of defeating or circumventing the rights of the Ees under
special laws or under valid agreements, the Supreme Court will uphold them.
(PAL v. NLRC, G.R. No. 85985, Aug. 13, 1993; San Miguel Brewery Sales v9.
Ople, G.R. No. 53515, February 8, 1989)

Note: It must be established that the prerogative being invoked is clearly a

managerial one.

VI. SOCIAL AND WELFARE LEGISLATION (P.D. 626)

Q: What is Social Legislation?

A: It consists of statutes, regulations and jurisprudence that afford protection to
labor, especially to working women and minors, and is in full accord with the
constitutional provisions on the promotion of social justice to insure the well
being and economic security of all the people.

A. SOCIAL SECURITY LAW (RA 8282)

Q: What is the policy objective in the enactment of (SSS) Law?

A: It is the policy of the State to establish, develop, promote and perfect a sound
and viable tax‐exempt SSS suitable to the needs of the people throughout the
Phils., which shall promote social justice and provide meaningful protection to
members and their beneficiaries against the hazards of disability, sickness,
maternity, old age, death, and other contingencies resulting in loss of income or
financial burden. (Sec. 2)
The enactment of SSS law is a legitimate exercise of the police power. It affords
protection to labor and is in full accord with the constitutional mandate on the
promotion of social justice. (Roman Catholic Archbishop of Manila v. SSS, G.R.
No. 15045 Jan. 20, 1961)

Q: Are the premiums considered as taxes?

A: No. The funds contributed to the System belong to the members who will
receive benefits, as a matter of right, whenever the hazards provided by the law
occur. (CMS Estate, Inc., v. SSS, G.R. No. 26298 Sep.28, 1984)
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Q: Are benefits received under SSS Law part of the estate of a member?
A: No. Benefits receivable under the SSS Law are in the nature of a special
privilege or an arrangement secured by the law pursuant to the policy of the
State to provide social security to the workingman. The benefits are specifically
declared not transferable and exempt from tax, legal processes and liens. (SSS v.
Davac, et. al., G.R. No.21642, July 30, 1966)

Q: How are disputes settled?

DISPUTE SETTLEMENT
Social Security Disputes involving:
Commission 1. Coverage
(SSC) 2. Benefits
3. Contributions
4. Penalties
5. Any other matter related thereto.

Note: Disputes within the mandatory period of 20 days

after the submission of evidence. (Sec. 5a)
Decision, in the absence of appeal, shall be final and
executory 15 days after date of notification. (Sec. 5b)
CA / SC Decisions of SSC shall be appealable to:
1. CA – questions of law and fact (Sec. 5c)
2. SC – questions of law. (Sec. 5c)
Execution of SSC may, motu proprio or on motion of any interested
decision party, issue a writ of execution to enforce any of its
decisions or awards, after it has become final and
executory. (Sec. 5d)

Q: Can the SSC validly re‐evaluate the findings of the RTC, and on its own,
declare the latter’s decision to be bereft of any basis?
A: No. It cannot review, much less reverse, decisions rendered by courts of law
as it did in the case at bar when it declared that the CFI Order was obtained
through fraud and subsequently disregarded the same, making its own findings
with respect to the validity of Bailon and Alice’s marriage on the one hand and
the invalidity of Bailon and Teresita’s marriage on the other. In interfering with
and passing upon the CFI Order, the SSC virtually acted as an appellate court.
The law does not give the SSC unfettered discretion to trifle with orders of
regular courts in the exercise of its authority to determine the beneficiaries of the
SSS. (SSS vs. Teresita Jarque Vda. De Bailon, G.R. No. 165545, Mar. 24, 2006,
J. Carpio‐Morales)

Q: Who is an employer (Er)?

A: Any person, natural or juridical, domestic or foreign, who carries into the
Phils. any trade, business, industry, undertaking or activity of any kind and
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uses the services of another person who is under his orders as regards the
employment, except the Government and any of its political subdivisions,
branches or instrumentalities, including corporations owned or controlled by the
Government: Provided, That a self‐employed person shall be both Ee and Er at
the same time. (Sec 8[c])

Q: Who is an employee (Ee)?

A: Any person who performs services for an Er in which either or both mental
and physical efforts are used and who receives compensation for such services,
where there is an Er‐Ee relationship: Provided, That a self‐employed person shall
be both Ee and Er at the same time. (Sec. 8[d])

Q: What is employment?
A: GR: Any service performed by an Ee for his Er.

XPNs:

1. Employment purely casual and not for the purpose of occupation or

business of the Er;
2. Service performed on or in connection with an alien vessel by an Ee if he is
employed when such vessel is outside the Phils;
3. Service performed in the employ of the Phil. Government or instrumentality
or agency thereof;
4. Service performed in the employ of a foreign government or international
organization, or their wholly‐owned instrumentality:
5. Such other services performed by temporary and other Ees which may be
excluded by regulation of the SSC. Ees of bona fide independent
contractors shall not be deemed Ees of the Er engaging the services of said
contractors. (Sec. 8[j])

Q: What is a contingency?
A: The retirement, death, disability, injury or sickness and maternity of the
member.

1. COVERAGE

Q: Who are covered by SSS?

A:

1. Compulsory Coverage

a. All Ees not over 60 years of age and their Ers;

b. Domestic helpers whose income is not less than P 1000/month and not
over 60 years of age and their Ers;
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a) Any benefit earned by the Ees under private benefit plans existing
at the time of the approval of the Act shall not be discontinued,
reduced or otherwise impaired;
b) Existing private plans shall be integrated with the SSS but if the Er
under such plan is contributing more than what is required by this
Act, he shall pay to the SSS the amount required to him, and he
shall continue with his contributions less the amount paid to SSS;
c) Any changes, adjustments, modifications, eliminations or
improvements in the benefits of the remaining private plan after the
integration shall be subject to agreements between the Ers and the
Ees concerned; and
d) The private benefit plan which the Er shall continue for his Ees shall
remain under the Ers management and control unless there is an
existing agreement to the contrary
c. All self‐employed – considered both an Er and Ee
d. Professionals;
e. Partners and single proprietors of business;
f. Actors and actresses, directors, scriptwriters and news correspondents
who do not fall within the definition of the term “Ee”;
g. Professional athletes, coaches, trainers and jockeys; AND
h. Individual farmers and fisherman. (Sec. 9)

2. Voluntary

a. Spouses who devote full time to managing the household and family
affairs, unless they are also engaged in other vocation or employment
which is subject to mandatory coverage ; (Sec. 9[b])
b. Filipinos recruited by foreign ‐based Ers for employment abroad may be
covered by the SSS on a voluntary basis; (Sec. 9[c])
c. Ee separated from employment to maintain his right to full benefits
d. Self‐employed who realizes no income for a certain month

3. By Agreement

Any foreign government, international organization, or their wholly ‐owned

instrumentality employing workers in the Phils., may enter into an agreement
with the Phil. government for the inclusion of such Ees in the SSS except those
already covered by their respective civil service retirement systems.

Q: When is the compulsory coverage deemed effective?

A:

1. Employer – on the first day of operation

2. Employee – on the day of his employment
3. Compulsory coverage of self‐employed – upon his registration with the SSS
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Q: What is the effect of separation of an employee from his employment

under compulsory coverage?
A:

1. His Ers obligation to contribute arising from that employment shall cease
at the end of the month of separation,
2. But said Ee shall be credited with all contributions paid on his behalf and
entitled to benefits according to the provisions of R.A. 9282.
3. He may, however, continue to pay the total contributions to maintain his
right to full benefit. (Sec. 11)

Note: The above provision recognizes the “once a member, always a member”
rule.

Q: What is the effect of interruption of business or professional income?

A: If the self‐employed member realizes no income in any given month:

1. He shall not be required to pay contributions for that month.

2. He may, however, be allowed to continue paying contributions under the
same rules and regulations applicable to a separated Ee member:
3. Provided, that no retroactive payment of contributions shall be allowed
other than as prescribed under Sec.22‐A. (Sec. 11‐A)

Q: On her way home from work, Asteria Benedicta, a machine operator in a sash
factory, enters a movie house to relax. But she is stabbed by an unknown
assailant. Her claim for benefits under the SSS Law is denied on the ground that
her injury is not work‐connected. Is the denial legal? Why?
A: No. It is not necessary, for the enjoyment of benefits under the SSS Law that
the injury is work‐connected. What is important is membership in the SSS and
not the causal connection of the work of the Ee to his injury or sickness.
Claims based on work‐connected injuries or occupational diseases are covered
by the State Insurance Fund.

2. EXCLUSIONS FROM COVERAGE

Q: Enumerate the kinds of employment which are excepted from compulsory

coverage under the SSS Law.
A: Under Section 8(j) of R.A. 1161, as amended, the following services or
employments are excepted from coverage:

a. Employment purely casual and not for the purpose of occupation or

business of the employer;

b. Service performed on or in connection with an alien vessel by an employee

if he is employed when such vessel is outside the Philippines;
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c. Service performed in the employ of the Philippine Government or

instrumentality or agency thereof;

d. 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 this Act 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

e. Such other services performed by temporary and other employees which

may be excluded by regulation of the Commission. Employees of bona fide
independent contractors shall not be deemed employees of the employer
engaging the service of said contractors.

3. BENEFITS

Q: What are the benefits under the SSS Act?

A:

1. Monthly Pension
2. Retirement Benefits
3. Death Benefits
4. Disability Benefits
5. Funeral Benefits
6. Sickness Benefits
7. Maternity Benefits

Q: Are the benefits provided for in the SSS Law transferable?

A: Benefits provided for in the SSS Law are not transferable and no power of
attorney or other document executed by those entitled thereto in favor of any
agent, attorney or any other person for the collection thereof on their behalf shall
be recognized, except when they are physically unable to collect personally such
benefits. (Sec.15, R.A. 1161, as amended)

Q: What are the reportorial requirements of the Er and self‐employed?

A:
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1. Er ‐ Report immediately to SSS the names, ages, civil status, occupations,

salaries and dependents of all his covered Ees

2. Self‐employed ‐ Report to SSS within 30 days from the first day of his
operation, his name, age, civil status, occupation, average monthly net
income and his dependents

Monthly Pension

Q: How much is the monthly pension?

A:

1. The monthly pension shall be the highest of the following amounts:

a. The sum of the following:
i. ii. P300.00; plus
ii. 20% of the average monthly salary credit; plus
iii. 2% of the average monthly salary credit for each credited year of
service in excess of 10 years; or
b. 40% of the average monthly salary credit; or
c. P1,000.00, provided that the monthly pension shall in no case be paid for
an aggregate amount of less than sixty (60) months (Sec. 12 [a])
2. Minimum Pension
a. P1,200.00 ‐ members with at least 10 credited years of service
b. P2,400.00 for those with 20 credited years of service. (Sec. [b])

Q: What will happen to the monthly pension of a retiree in case of

death?
A:

1. Upon the death of the retired member, his primary beneficiaries as of the date
of his retirement will get 100% of his monthly pension plus the dependent's
pension for each child.

Note: The above phrase “primary beneficiaries (as of the date of his
retirement) was declared unconstitutional by the SC in Dycaico v. SSS and
SSC (G.R. No. 16137, June 6, 2006) because it is in violation of the equal
protection, due process and social justice.

2. If he dies within 60 months from the start of his pension and he has no
primary beneficiaries, his secondary beneficiaries will receive a lump sum
benefit equivalent to the difference of 60 multiplied by the monthly pension
and the total monthly pensions paid by the SSS excluding the dependent's
pension. (Sec. 12‐B [d])

Q: Bonifacio and Elena are living together as husband and wife without the
benefit of marriage. Bonifacio declared Elena and their children as his primary
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beneficiaries in his self‐employed data record in SSS. A few months prior to his
death, Bonifacio married Elena.Is Elena entitled to the survivor’s pension?
A: Yes, she is considered primary beneficiary of Bonifacio. The phrase “Upon the
death of the retired member, his primary beneficiaries as of the date of his
retirement will get 100 per cent of his monthly pension xxx” of Sec. 12 ‐B d of RA
8282 is unconstitutional because it violates the: (1) equal protection clause
because it impermissibly discriminates against dependent spouses whose
respective marriages to the SSS members were contracted after the latter’s
retirement; (2) due process clause because it outrightly deprives spouses who
married the SSS members after their retirement of the survivor’s pension, a
property interest, without giving them opportunity to be heard; and (3) social
justice.
Further, the survivorship pension applied for was classified as death benefits.
Hence, the contingency that gives rise to the entitlement of Elena is the death of
Bonifacio and not his retirement. (Dycaico v. SSS, G. R. No. 16137, June 6, 2006)

Q: When is the monthly pension and dependent’s pension suspended?

A:

1. Upon the reemployment or resumption of self‐employment

2. Recovery of the disabled member from his permanent total disability
3. Failure to present himself for examination at least once a year upon notice
by the SSS. (Sec. 13‐A [b])

Retirement Benefit

Q: What is a retirement benefit?

A: It is a cash benefit paid to a member who can no longer work due to old age.

Q: What are the types of retirement benefits?

A:

1. Monthly Pension ‐ Lifetime cash benefit paid to a retiree who has paid at
least 120 monthly contributions to the SSS prior to the semester of retirement .
2. Lump Sum Amount ‐ Granted to a retiree who has not paid the required
120 monthly contributions.

Q: Who are entitled for retirement benefits?

A:

1. A member who
a) has paid at least 120 monthly contributions prior to the semester of
retirement;
b) at least 60 years old; and
c) already separated from employment or has ceased to be self ‐employed,
OR
2. At least 65 years old, shall be entitled for as long as he lives to the monthly
pension; (Sec 12‐B [a])
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3. A member
a) At least 60 years old at retirement; and
b) Does not qualify for pension benefits under paragraph (a) above ‐ entitled
to a lump sum benefit equal to the total contributions paid by him and on
his behalf;
c) Must be separated from employment and is not continuing payment of
contributions to the SSS on his own. (Sec. 12‐B [b])
Q: What happens when the retirement pensioner is re ‐employed or
resumes self‐employment?
A: The monthly pension of a retirement pensioner who resumes employment and
is less than 65 years old will be suspended. He and his Er will again be subject
to compulsory coverage. (Sec. 12‐B [c])

Q: Are the children of a retiree member entitled to the dependent's

pension?
A: Yes (Sec. 12[A]). However, only 5 minor children, beginning from the youngest,
are entitled to the dependents' pension. No substitution is allowed. Where there
are more than 5 legitimate and illegitimate children, the legitimate ones will be
preferred.

Q: For how long will the dependent child receive the pension?
A: Until the child reaches 21 years of age, gets married, gets employed and
earns P300 a month or more, or dies.
However, the dependent's pension is granted for life to children who are over 21
years old, provided they are incapacitated and incapable of self ‐support due to
physical or mental defect which is congenital or acquired during minority.

Death Benefit

Q: When is a beneficiary entitled to death benefits?

A:

1. Upon death of a member, if he has paid at least 36 monthly contributions

prior to the semester of death:

a) primary beneficiaries shall be entitled to the monthly pension; or

b) If there are no primary beneficiaries, secondary beneficiaries shall be
entitled to a lump sum benefit equivalent to 36 times the monthly pension.

2. Upon death of a member If he has not paid the required 36 monthly

contributions prior to the semester of death:
a) Primary or secondary beneficiaries shall be entitled to a lump sum benefit
equivalent to the monthly pension multiplied by the number of monthly
contributions paid to the SSS: or
b) 12 times the monthly pension, whichever is higher. (Sec. 13)

Disability Benefit
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Q: What is a disability benefit?

A: It is a cash benefit paid to a member who becomes permanently disabled,
either partially or totally.

Q: What is the difference between death benefits and Permanent Total

Disability benefits?
A:

Death Benefits PTD Benefits

Requisite
at least 36 monthly contributions
Benefits payable to whom
Primary Beneficiaries Member
Failure to make 36 monthly payments
Benefits shall be in lump sum equivalent to the monthly pension times the
number of monthly contributions paid to SSS or 12 times the monthly pension,
whichever is higher.

Q: What is the effect of the death of the PTD pensioner?

A:

1. Primary beneficiaries are entitled to receive monthly pension as of the date of

disability.
2. No primary beneficiaries and he dies within 60 months from the start of his
monthly pension ‐ secondary beneficiaries shall be entitled to a lump sum
benefit equivalent to the total monthly pensions corresponding to the balance
of the 5‐year guaranteed period excluding the dependents’ pension. (Sec. 13‐
A [c])

Q: What is the effect of retirement or death to partial disability pension?

A: Disability pension shall cease upon his retirement or death. (Sec 13‐A [j])

Funeral Benefit

Q: What is the funeral benefit?

A: A funeral grant equivalent to P12, 000.00 shall be paid, in cash or in kind, to
help defray the cost of expenses upon the death of a member or retiree. (Sec. 13‐
B)

Sickness Benefit

Q: What is sickness benefit?

A: It is a daily cash allowance paid for the number of days a member is unable
to work due to sickness or injury.
Q: What are the requirements to be entitled for sickness benefit?
A:
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1. The member paid at least 3 monthly contributions in the 12 ‐month period

immediately preceding the semester of sickness or injury
2. Confined for more than 3 days in a hospital or elsewhere with the approval of
the SSS
3. He has used all current company sick leaves with pay for the current year
4. Notified his Er or the SSS, if he is a separated, voluntary or self ‐employed
member

Q: Who will pay sickness benefits? and how much is the benefit?
A: The Er shall pay the:

1. Ee for each compensable confinement or fraction thereof or

2. SSS if member is self ‐employed daily sickness benefit equivalent to 90% of

his average daily salary credit, subject to the following conditions:

a) In no case shall the daily sickness benefit be paid longer than 120 days in
1 calendar year, nor shall any unused portion of the 120 days of sickness
benefit granted be carried forward and added to the total number of
compensable days allowable in the subsequent year;
b) Not paid for more than 240 days on account of the same confinement; and
c) Ee member shall notify his Er of the fact of his sickness or injury within 5
calendar days after the start of his confinement unless such confinement:
I. is in a hospital
II. ii. the Ee became sick or was injured while working or within the
premises of the Er (notification to the Er not necessary);

3. If the member is unemployed or self ‐employed, he shall directly notify the SSS
of his confinement within 5 calendar days after the start thereof unless such
confinement is in a hospital in which case notification is also not necessary;

4. Where notification is necessary, confinement shall be deemed to have started

not earlier than the 5th day immediately preceding the date of notification.
(Sec.14 [b])

Note: The law does not require that sickness must be related to the duties of the
beneficiaries.

Q: When will compensable confinement commence?

A:

1. Begins on the 1st day of sickness

2. Payment of such allowances shall be promptly made by the Er:

a) every regular payday or on the 15th and last day of each month,
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b) in case of direct payment by the SSS ‐ as long as such allowances are due
and payable. (Sec. 14[b])

Q: What are the requirements in order that Er may claim reimbursement

of the sickness benefit?
A:

1. 100% of daily benefits shall be reimbursed by SSS if the following

requirements are satisfied:

2. Er shall be reimbursed only for each day of confinement starting from the
10th calendar day immediately preceding the date of notification to the SSS if
the notification to the SSS is made beyond 5 calendar days after receipt of the
notification from the Ee member. (Sec. 14 [c])
Q: When will reimbursement be made by SSS?
A:GR: SSS shall reimburse the Er or pay the unemployed member only for
confinement within 1 year immediately preceding the date the claim for benefit or
reimbursement is received by the SSS

XPN: Confinement in a hospital in which case the claim for benefit or

reimbursement must be filed within 1 year from the last day of confinement.
(Sec. 14[c])

Maternity Benefit

Q: What is the maternity benefit?

A: The maternity benefit is a daily cash allowance granted to a female member
who was unable to work due to childbirth or miscarriage.

Q: What are the qualifications for entitlement to the maternity benefit?

A:

1. She has paid at least three monthly contributions within the 12 ‐month
period immediately preceding the semester of her childbirth or miscarriage.
2. She has given the required notification of her pregnancy through her
employer if employed, or to the SSS if separated, voluntary or self ‐employed
member.

Q: Is the voluntary or self ‐employed member also entitled to the

maternity benefit?
A: Yes, A voluntary or a self‐employed member is entitled to the maternity
benefit provided that she meets the qualifying conditions.

Q: How much is the maternity benefit?

A: The maternity benefit is equivalent to 100 per cent of the member’s average
daily salary credit multiplied by 60 days for normal delivery or miscarriage, 78
days for caesarean section delivery.
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Q: How is the maternity benefit computed?

1. Exclude the semester of contingency (delivery or miscarriage).

Note: Semester refers to two consecutive quarters ending in the quarter of

contingency. Quarter refers to three consecutive months ending March, June,
September or December.

2. Count 12 months backwards starting from the month immediately before the
semester of contingency.

3. Identify the six highest monthly salary credits within the 12 ‐month period.

Note: Monthly salary credit means the compensation base for contributions
benefits related to the total earnings for the month.

4. Add the six highest monthly salary credits to get the total monthly salary
credit.

5. Divide the total monthly salary credit by 180 days to get the average daily
salary credit. This is equivalent to the daily maternity allowance.

6. Multiply the daily maternity allowance by 60 (for normal delivery or

miscarriage) or 78 days (for caesarean section delivery) to get the total
amount of maternity benefit.

Q: What is the difference of compensability under the Labor Law and the
Social Security Law?
A: The claims are different as to their nature and purpose. (Ortega vs. Social
Security Commission, G.R. No. 176150, June 25, 2008)

LABOR LAW SOCIAL SECURITY LAW

Purpose
Governs compensability of : Benefits are intended to provide
1. work‐related disabilities insurance or protection against the
2. when there is loss of income hazards or risks of disability,
due to work‐connected or work‐ sickness, old age or death, inter alia,
aggravated injury or illness. irrespective of whether they arose
from or in the course of the
employment.
Nature
A disability is total and permanent if Disability may be permanent total or
as a result of the injury or sickness permanent partial.
the Ee is unable to perform any
gainful occupation for a continuous
period exceeding 120 days regardless
of whether he loses the use of any of
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his body parts.

4. BENEFICIARIES

Q: Who are primary beneficiaries?

A:

1. The dependent spouse until he or she remarries

2. The dependent legitimate, legitimated or legally adopted, and illegitimate

children,: Provided, That the dependent illegitimate children shall be entitled
to 50% of the share of the legitimate, legitimated or legally adopted children.

Q: Who are secondary beneficiaries?

A: In the absence of primary beneficiaries, the dependent parents.
In the absence of all the foregoing, any other person designated by the member
as his or her secondary beneficiary. (Sec. 8[k])

Q: Who are considered dependents?

A:

1. The legal spouse entitled by law to receive support from the member;
2. The legitimate, legitimated, or legally adopted, and illegitimate child who:
3. The parent who is receiving regular support from the member.

Q: What is meant by “dependent for support”?

A: The entitlement to benefits as a primary beneficiary requires not only
legitimacy but also dependence upon the member Ee. (Gil v. SSC CA‐ GR SP.
37150, May 8, 1996)
If a wife who is already separated de facto from her husband cannot be said to
be "dependent for support" upon the husband, absent any showing to the
contrary. Conversely, if it is proved that the husband and wife were still living
together at the time of his death, it would be safe to presume that she was
dependent on the husband for support, unless it is shown that she is capable of
providing for herself. (SSS v. Aguas, G.R. No. 165546, Feb. 27, 2006)

Q: Who is entitled to the benefits of an SSS member who was survived not only
by his legal wife, who is not dependent upon the member, but also by two
common‐law wives with whom he had illegitimate minor children?
A: The illegitimate minor children shall be entitled to the death benefits as
primary beneficiaries because the legal wife is not dependent upon the member.
The SSS Law is clear that for a minor child to qualify as a “dependent” the only
requirements are that he/she must be below 21 yrs. of age, not married nor
gainfully employed. (Signey v. SSS, G.R. No. 173582, Jan.28, 2008)
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Q: What is compensation?
A: All actual remuneration for employment, including the mandated cost of living
allowance, as well as the cash value of any remuneration paid in any medium
other than cash except that part of the remuneration received during the month
in excess of the maximum salary.

Q: The owners of FALCON Factory, a company engaged in the assembling of

automotive components, decided to have their building renovated. (50) persons,
composed of engineers, architects and other construction workers, were hired by
the company for this purpose. The work was estimated to be completed in 3
years. The Ees contended that since the work would be completed after more
than 1 year, they should be subject to compulsory coverage under the Social
Security Law. Do you agree with their contention? Explain your answer fully.
A: No. Under Sec. 8 (j) of R.A. 1161, as amended, employment of purely casual
and not for the purpose of the occupation or business of the employer are
excepted from compulsory coverage. An employment is purely casual if it is not
for the purpose of occupation or business of the Er.
In the problem given, Falcon Factory is a company engaged in the assembly of
automotive components. The 50 persons (engineers, architects and construction
workers) were hired by Falcon Factory to renovate its building. The work to be
performed by these 50 people is not in connection with the purpose of the
business of the factory. Hence, the employment of these 50 persons is purely
casual. They are, therefore, excepted from the compulsory coverage of the SSS
law. (2000 Bar Question)

B. GSIS LAW (R.A. 8291)

Q: What are the purposes behind the enactment of the GSIS Act?
A: To provide and administer the following social security benefits for
government employees (Ee):

1. Compulsory life insurance

2. Optional life insurance
3. Retirement benefits
4. Disability benefits to work‐related contingencies; and
5. Death benefits

Q: Who are considered employers (Er) under the GSIS Act?

A:

1. National Government
2. Its political subdivisions, branches, agencies, instrumentalities
3. GOCCs, and financial institutions with original charters
4. Constitutional Commissions and the Judiciary (Sec. 2[c])
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Q: Can SSS Ees be covered by GSIS?

A: Yes.

Q: Who is an Employee or member?

A: Any person, receiving compensation while in the service of an Er, whether by
election or appointment, irrespective of status of appointment, including
barangay and sanggunian officials. (Sec. 2[d])

Q: What is compensation?
A: The basic pay or salary received by an Ee, pursuant to his or her election or
appointment, excluding per diems, bonuses, OT pay, honoraria, allowances and
any other emoluments received in addition to the basic pay which are not
integrated into the basic pay under existing laws. (Sec. 2[i])

Q: Baradero is a member of the Sangguniang Bayan of the Municipality of La

Castellana, Negros Occ. and is paid on a per diem basis. On the other hand, Belo
a Vice‐Governor of Capiz is in a hold over capacity and is paid on a per diem
basis. Are the services rendered by Baradero and Belo on a per diem basis
creditable in computing the length of service for retirement purposes?
A: Yes. The traditional meaning of per diem is a reimbursement for extra
expenses incurred by the public official in the performance of his duties. Under
this definition the per diem is intended to cover the cost of lodging and
subsistence of officers and employees when the latter are on a duty outside of
their permanent station. On the other hand, a per diem could rightfully be
considered a compensation or remuneration attached to an office.

The per diems paid to Baradero and Belo were in the nature of compensation or
remuneration for their services as Sangguniang Bayan and Vice‐Governor,
respectively, rather than a reimbursement for incidental expenses incurred while
away from their home base.

If the remuneration received by a public official in the performance of his duties

does not constitute a mere “allowance for expenses” but appears to be his actual
base pay, then no amount of categorizing the salary as a “per diem” would take
the allowances received from the term service with compensation for the purpose
of computing the number of years of service in government. (GSIS v. CSC, G. R.
Nos. 98395 and 102449, June 19, 1995)

Q: What are the sources of funds of the GSIS?

A: It comes from the monthly contributions of the covered Ees and Ers. (Sec. 5)
The contributions of the Ees are deducted and withheld by the Er each month
from the monthly salary of the former and are remitted by the latter, together
with its own share, to the System within the first 10 days of each calendar
month following the month to which the contributions apply. (Sec. 6)
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Q: What is the penalty in case of delayed remittance or non ‐remittance

of contributions?
A: The unremitted contributions shall be charged interests as prescribed by the
GSIS Board of Trustees but shall not be less than 2% simple interest per month
from due date to the date of payment by the employers concerned.

1. COVERAGE

Q: What government Ees are subject to coverage under the GSIS?

A:

GR: All Ees receiving compensation who have not reached the compulsory
retirement age, irrespective of employment status.
XPNs:

1. Uniformed members of the:

a. AFP; and
b. PNP.
2. Contractuals who have no Er and Ee relationship with the agencies they
serve.

Q: Who are covered by life insurance, retirement and other social

security protection?
A:

GR: All members of the GSIS shall have life insurance, retirement, and all other
social security protections such as disability, survivorship, separation, and
unemployment benefits. (Sec. 3)
XPNs: Members of:
1. The judiciary; and
2. Constitutional commissions who shall have life insurance only.

2. EXCLUSIONS FROM COVERAGE

Q: Who, under the GSIS, are excluded from the coverage?

A:

1. Ees who have separate retirement schemes (members of the Judiciary,

Constitutional Commissions and others similarly situated)
2. Contractual Ees who have no Er‐Ee with the agencies they serve
3. Uniformed members of the AFP, BJMP, whose coverage by the GSIS has
ceased effective June 24, 1997
 273

4. Uniformed members of the PNP whose coverage by the GSIS has ceased
effective February 1, 1996. (Sec. 2.4, Rule II, IRR)

Q: For the purpose of benefit entitlement, how are the members

classified?
A:

1. Active members
a) Still in the service and are paying integrated premiums.
b) Covered for the entire package benefits and privileges being
extended by GSIS.
2. Policyholders
a. Covered for life insurance only
b. Can avail of policy loan privilege only
c. May also apply for housing loans
d. Judiciary and Constitutional Commissions
3. Retired Members
a) Former active members who have retired from the service and are
already enjoying the corresponding retirement benefits applied for
b) Not entitled to any loan privilege, except stock purchase loan (Sec.
2.2, Rules II, IRR)

3. BENEFITS

Q: What are the benefits provided by the GSIS Act?

A:
1. Separation
2. Unemployment or involuntary separation
3. Retirement
4. Permanent disability
5. Temporary disability
6. Survivorship
7. Funeral
8. Life Insurance
9. Such other benefits and protection as may be extended to them by the
GSIS such as loans.

Q: What are the benefits under P.D. 1146 (Revised GSIS Act of 1977) that may
be granted to the separated members of the PNP, BJMP and BFP?
A: GR:

1. Old‐age benefit
2. Permanent disability benefit
3. Survivorship benefit
4. Funeral benefit
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5. Retirement benefit

XPN: Judiciary (Life insurance only – tax exempt)

Q: What are the reportorial requirements of the Er?

A: Er must report to GSIS the names, employment status, positions, salaries of
the employee and such other matter as determined by the GSIS.

Separation Benefits

Q: When will a member be entitled to separation benefits and what comprises

these separation benefits?
A: A member who has rendered a minimum of 3 years creditable service shall be
entitled to separation benefit upon resignation or separation under the following
terms:

1. A member with at least 3 years but less than 15 years: Cash payment
equivalent to 100% of the AMC for every year of service the member has
paid contributions:
a) not less than P12,000.00
b) Payable upon reaching 60 years of age or upon separation, whichever
comes later.
2. A member with less than 15 years of service and less than 60 years of
age at the time of resignation or separation:
a. Cash payment equivalent to 18 times the basic monthly pension (BMP),
payable at the time of resignation or separation
b. An old‐age pension benefit equal to the basic monthly pension, payable
monthly for life upon reaching the age of 60.

Q: What are the effects of separation from service with regard to

membership?
A: A member separated from the service shall continue to be a member and shall
be entitled to whatever benefits he has qualified to.
Note: A member separated for a valid cause shall automatically forfeit his
benefits, unless the terms of resignation or separation provide otherwise.
In the case of forfeiture, the separated employee shall be entitled to receive only
½ of the cash surrender value of his insurance.

Unemployment Benefits

Q: What are the conditions for entitlement to unemployment benefits?

A:

a) The recipient must be a permanent employee at the time of separation;

b) His separation was involuntary due to the abolition of his office or position
resulting from reorganization; and
c) He has been paying the contribution for at least 1 year prior to separation.
 275

Q: What will consist of an unemployment benefit?

A: It will consists of cash payment equivalent to 50% of the average monthly
compensation
Note: A member who has rendered at least 15 years of service will be entitled to
separation benefits instead of unemployment benefits.

Retirement Benefits

Q: What are the conditions in order to be entitled to retirement benefits?

A:

1. A member has rendered at least 15 years of service;

2. He is at least 60 years of age at the time of retirement; and
3. He is not receiving a monthly pension benefit from permanent total
disability. (Sec. 13‐A)

Q: What is the rule in case of extension of service in order to be entitled

for retirement benefit?
A: The doctrine in Cena vs. CSC (G.R. No. 97419, July 3, 1992), was modified in
Rabor vs. CSC, (G.R. No. 111812, May 31, 1995), where the SC held that: The
head of the government agency concerned is vested with discretionary authority
to allow or disallow extension of the service of an official or Ee who has reached
65 years old without completing the 15 years of government service. However,
this discretion is to be exercise conformably with the provisions of Civil Service
Memorandum Circular No. 27, series of 1990 which provides that the extension
shall not exceed 1 year.

Q: What is the reason for compulsory retirement?

A: The compulsory retirement of government officials and Ees upon their
reaching the age of 65 years is founded on public policy which aims by it to
maintain efficiency in the government service and at the same time give to the
retiring public servants the opportunity to enjoy during the remainder of their
lives the recompense, for their long service and devotion to the government , in
the form of a comparatively easier life, freed from the rigors of civil service
discipline and the exacting demands that the nature of their work and their
relations with their superiors as well as the public would impose upon them.
(Beronilla v. GSIS, G.R. No. 21723, Nov. 26, 1970)

Q: What are the options of the retiree with regard to his or her
retirement benefits?
A: The retiree may get either of the following:

1. Lump sum equivalent to 6 months of the basic monthly pension (BMP)

payable at the time of retirement and an old‐age pension benefit equal to BMP
payable for life, starting upon the expiration of the 5 years covered by the lump
sum; or
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2. Cash payment equivalent to 18 times his BMP and monthly pension for life
payable immediately. (Sec. 13[a])

Permanent Disability Benefits

Q: What is disability?
A: Any loss or impairment of the normal functions of the physical and/or mental
faculty of a member, which reduces or eliminates his/her capacity to continue
with his/her current gainful occupation or engage in any other gainful
occupation.

Q: What is total disability?

A: Complete incapacity to continue with present employment or engage in any
gainful occupation due to the loss or impairment of the normal functions of the
physical and/or mental faculties of the member.

Q: What is permanent total disability (PTD)?

A: Accrues or arises when recovery from impairment mentioned in Sec.2(q)
(defining disability) is medically remote.

Q: What is permanent partial disability (PPD)?

A: Accrues or arises upon the irrevocable loss or impairment of certain portions of
the physical faculties, despite which the member is able to pursue a gainful
occupation.

Q: What are the conditions in order to be entitled for permanent

disability benefits?
A: The permanent disability was not due to any of the ff:

1. Grave misconduct
2. Notorious negligence
3. Habitual intoxication
4. Willful intention to kill himself or another

Q: What are the two types of permanent disability?

A:

a) Permanent total disability (PTD) ‐ accrues or arises when recovery from

any loss or impairment of the normal functions of the physical and/or
mental faculty of a member which reduces or eliminates his capacity to
continue with his current gainful occupation or engage in any other gainful
occupation is medically remote. [Section 2 (q) and (s)]

b) Permanent partial disability (PPD) ‐ accrues or arises upon the irrevocable

loss or impairment of certain portion/s of the physical faculties, despite
which the member is able to pursue a gainful occupation. (Sec. 2[u])
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PTD PPD
Causes
Complete and permanent loss of the
1. Complete loss of sight of both use of:
eyes 1. Any finger
2. Loss of 2 limbs at or above the 2. Any toe
ankle or wrist 3. One arm
3. Permanent complete paralysis 4. One hand
of 2 limbs 5. One foot
4. Brain injury resulting in 6. One leg
incurable imbecility or insanity 7. One or both ears
5. Such other cases as may be 8. Hearing of one or both ears
determined by the GSIS 9. Sight of one eye
Such other causes as determined by
GSIS
Benefits
1. A member is entitled to the monthly A member is entitled to cash payment
income benefit for life equivalent to the in accordance with the schedule of
BMP when: disabilities to be prescribed by GSIS,
a. He is in the service at the time of if he satisfies the given conditions of
the disability or either (1) or (2) of Sec. 16(a).
b. If separated from service
c. He has paid at least 36 monthly
contributions within 5 years
immediately preceding his disability
d. He has paid a total of at least 180
monthly contribution prior his
disability
e. He is not receiving old‐age
retirement pension benefits

2. If the member does not satisfy the

conditions above but has rendered at
least 3 years service, he shall be
advanced the cash payment
equivalent to 100% of his average
monthly compensation for each year of
service he has pad contributions but
not less than P12,000.00 which
should have been his separation
benefit (he shall no longer receive
separation benefits)

Q: When will the payment of these benefits be suspended?

A:
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1. In case a member is re‐employed; or

2. Member recovers from disability as determined by the GSIS; or
3. Fails to present himself for medical examination when required by the
GSIS. (Sec. 16 [c])

Q: Manioso was suffering from several diseases from 1959 to 1994 when he
worked as Accounting Clerk I at the Budget Commission up to the time he was
transferred and promoted to the DENR as Senior Bookkeeper. On ‘95, he was
hospitalized. The results of his examinations showed that he was suffering from
Acute Myocardial Infarction and Hypertensive Vascular Disease. From Jan ‐ May
‘95 when he compulsory retired from government service and after serving for 36
yrs, he no longer reported for work. His sick leave covering said period was duly
approved. In the meantime, Manioso filed a claim for income benefits with the
GSIS which found his ailments work‐related. He was granted Temporary Total
Disability benefits for 2 months. He was later granted Permanent Partial
Disability benefits for 8 months. It appears that he appealed for more disability
benefits with the GSIS which subjected him to a series of medical tests. In ‘97,
he was brought to the PGH several times due to Chronic Renal Infection 2° to
Obstructive Uropathy 2° to Staghorn Calculi (L) and Benign Prostatic
Hypertrophy; Diabetes Mellitus Neprophaty, Stage IV, and Hypertensive
Nephrosclerosis. He then filed a request with the GSIS for additional disability
benefits, claiming that the ailments for which he was hospitalized several times
in ‘97 developed from his work‐related illnesses. The GSIS disapproved
Manioso’s request.

Do Manioso’s ailments which later developed fall under the category of

permanent total disability?
A: Yes. Under Art. 192 (c) of P.D. No. 442, as amended (the LC), the following
disabilities are deemed total and permanent: (1) Temporary total disability
lasting continuously for more than 120 days. Under Section 2(b), Rule VII of the
Amended Rules on Ee’s Compensation, “[a] disability is total and permanent if
as a result of the injury or sickness the Ee is unable to perform any gainful
occupation for a continuous period exceeding 120 days, except as otherwise
provided under Rule X of these Rules.” In the case at bar, Manioso was on sick
leave from Jan 11, ‘95 up to his date of retirement on May 15, ‘95 or for a period
of more than 120 days. Surely, the DENR, in approving his more than 120 days
leave must have passed upon his Medical Certificate relative to his ailments.
Manioso’s disability having lasted for more than 120 days, he is entitled to PTD
benefits. (Manioso, v. GSIS, G.R. No. 148323, Apr. 29, 2005)

Q: Does Manioso’s retirement from service prevent him from entitlement

to PTD benefits?
A: No. Benefits due an Ee due to work‐related sickness shall be provided until
he becomes gainfully employed, or until his recovery or death. None of these are
present in Manioso’s case. It would be an affront to justice if Manioso, a
government Ee who had served for 36 years, is deprived of the benefits due him
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for work‐related ailments that resulted in his Permanent Total Disability.

(Manioso v. GSIS, G.R. No. 148323, Apr. 29, 2005)
Temporary Disability Benefits
Q: When does temporary total disability arises?
A: It accrues or arises when the impaired physical and/or mental faculties can
be rehabilitated and/or restored to their normal functions. (Sec 2[t])

Q: What benefits are given for temporary disability?

A:

1. Member is entitled to 75% of his current daily compensation for each day or
fraction thereof of total disability benefit, to start at the 4th day but not
exceeding 120 days in one calendar year when:

1) He has exhausted all sick leaves

2) CBA sick leave benefits

Provided, that:

I. He was in the service at time of disability; or

II. ii. If separated, he has rendered at least 3 years of service and has
paid at least 6 monthly contributions in the year preceding his
disability

2. The temporary total disability benefits shall in no case be less than P70 a
day.

Note: A member cannot enjoy the temporary total disability benefit and sick
leave pay simultaneously.
An application for disability must be filed with the GSIS within 4 years from the
date of the occurrence of the contingency.

Survivorship Benefits

Q: Who are entitled to survivorship benefits?

A: Upon the death of a member or pensioner, his beneficiaries shall be entitled to
survivorship benefits. Such benefit shall consist of:

1. The basic survivorship pension which is 50% of the basic monthly pension;
and
2. The dependent children’s pension not exceeding 50% of the basic monthly
pension

Q: Under what conditions are the primary beneficiaries entitled to the

basic monthly pension?
A: Upon the death of a member, the primary beneficiaries shall be entitled to:

1. Survivorship pension: Provided, That the deceased:

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2. The survivorship pension plus a cash payment equivalent to 100% of his

average monthly compensation for every year of service: Provided, That the
deceased was in the service at the time of his death with at least 3 years of
service; OR
3. A cash payment equivalent to 100% of his average monthly compensation for
each year of service he paid contributions, but not less than P12,000.00:
Provided, That the deceased has rendered at least 3 years of service prior to
his death but does not qualify for the benefits under item (1) or (2) of this
paragraph. [Sec. 21 (a)]

Q: After the end of the guaranteed 30 months, are the beneficiaries still
entitled to any survivorship benefits?
A: Yes. The survivorship pension shall be paid as follows:

1. When the dependent spouse is the only survivor, he/she shall receive the
basic survivorship pension for life or until he or she remarries;

2. When only dependent children are the survivors, they shall be entitled to
the basic survivorship pension for as long as they are qualified, plus the
dependent children’s pension equivalent to 10% of the basic monthly
pension for every dependent child not exceeding 5, counted from the
youngest and without substitution;

3. When the survivors are the dependent spouse and the dependent children,
the dependent spouse shall receive the basic survivorship pension for life
or until he/she remarries, and the dependent children shall receive the
dependent children’s pension. (Sec. 21[b])

Note: The dependent children shall be entitled to the survivorship pension as

long as there are dependent children and, thereafter, the surviving spouse shall
receive the basic survivorship pension for life or until he or she remarries.

Q: When are secondary beneficiaries entitled to survivorship benefits?

A: In the absence of primary beneficiaries, the secondary beneficiaries shall be
entitled to:

1. The cash payment equivalent to 100% of his average monthly

compensation for each year of service he paid contributions, but not less than
P12,000.00: Provided, That the member is in the service at the time of his death
and has at least 3 years of service; or
2. In the absence of secondary beneficiaries, the benefits under this par.
shall be paid to his legal heirs. (Sec. 21[c])

Q: What are the benefits that the beneficiaries are entitled to upon the
death of the pensioner?
A:
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1. Upon the death of an old‐age pensioner or a member receiving the monthly

income benefit for permanent disability, the qualified beneficiaries shall be
entitled to the survivorship pension defined in Sec. 20 of this Act, subject to
the provisions of par. (b) of Sec.21.
2. When the pensioner dies within the period covered by the lump sum, the
survivorship pension shall be paid only after the expiration of the said period.

Q: Gary Leseng was employed as a public school teacher at the Marinduque

High. On April 27, 1997, a memorandum was issued by the school principal
designating Gary to prepare the model dam project, which will be the official
entry of the school in the search for Outstanding Improvised Secondary Science
Equipment for Teachers. Gary complied with his superior's instruction and took
home the project to enable him to finish before the deadline. While working on the
model dam project, he came to contact with a live wire and was electrocuted. The
death certificate showed that he died of cardiac arrest due to accidental
electrocution.
Bella (Gary’s common‐law wife) and Jobo (his only son) filed a claim for death
benefits with the GSIS which was denied on the ground that Gary’s death did
not arise out of and in the course of employment and therefore not compensable
because the accident occurred in his house and not in the school premises. Is
Bella entitled to file a claim for death benefits with the GSIS? Why?
A: The beneficiaries of a member of the GSIS are entitled to the benefits arising
from the death of said member. Death benefits are called survivorship benefits
under the GSIS Law. Not being a beneficiary, Bella is not entitled to receive
survivorship benefits. She is not a beneficiary because she is a common ‐law
wife and not a legal dependent spouse. (1991 Bar Question)

Q: Is the cause of death of Gary (cardiac arrest due to accidental electrocution in

his house) compensable? Why?

A: Yes. To be compensable under the GSIS Law, the death need not be work
connected.

Q: Abraham, a policeman, was on leave for a month. While resting in their

house, he heard two of his neighbors fighting with each other. Abraham rushed
to the scene intending to pacify the protagonists. However, he was shot to death
by one of the protagonists. Eva Joy, a housemaid, was Abraham's surviving
spouse whom he had abandoned for another woman years back. When she
learned of Abraham's death, Eva Joy filed a claim with the GSIS for death
benefits. However, her claim was denied because: (a) when Abraham was
killed, he was on leave; and (b) she was not the dependent spouse of Abraham
when he died. Resolve with reasons whether GSIS is correct in denying the
claim.
A: Yes, because under the law, a dependent is one who is a legitimate spouse
living with the Ee. (Art. 167 [i], LC) In the problem given, Eva Joy had been
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abandoned by Abraham who was then living already with another woman at the
time of his death.
Moreover, Abraham was on leave when he was killed. The 24 ‐hour duty rule
does not apply when the policeman is on vacation leave. (ECC v. CA, G.R. No.
121545, Nov. 14, 1996) Taking together jurisprudence and the pertinent
guidelines of the ECC with respect to claims for death benefits, namely:

1. That the Ee must be at the place where his work requires him to be;
2. That the Ee must have been performing his official functions; and
3. That if the injury is sustained elsewhere, the Ee must have been executing
an order for the Er, it is not difficult to understand then why Eva Joy's claim was
denied by the GSIS. (Tancinco v. GSIS, G.R. No. 132916, Nov. 16, 2001)

In the present case, Abraham was resting at his house when the incident
happened; thus, he was not at the place where his work required him to be.
Although at the time of his death Abraham was performing a police function, it
cannot be said that his death occurred elsewhere other than the place where he
was supposed to be because he was executing an order for his Er. (2005 Bar
Question)

Funeral Benefits

Q: What comprises the funeral benefit?

A: Cash not less than P12,000 to be increased to at least P18,000 after 5 years
(specifically year 2002). The amount shall be determined and specified by the
GSIS through an information circular distributed to all Ers for posting at their
premises. (Sec. 23, par.1)

Q: When will it be paid?

A: Upon the death of:

1. An active member
2. A member who has been separated from the service but is entitled to
future separation or retirement benefits
3. A member who is a pensioner (excluding survivorship pensioners)
4. A retiree who is at the time of his retirement was of pensionable age, at
least 60 years old, who opted to retire under RA 1616 (An act further
amending Sec.12, C.A. 186, as amended, by prescribing two other modes of
retirement and for other purposes).

Life Insurance

Q: What are the classes of life insurance coverage?

A:

1. Compulsory life insurance

2. Optional life insurance
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Note: The plans may be endowment or ordinary life.

Q: When does compulsory life insurance coverage take effect?

A: All Ees including the members of the Judiciary and the Constitutional
Commissioners except for Members of the AFP, the PNP, BFP and BJMP, shall,
under such terms and conditions as may be promulgated by the GSIS, be
compulsorily covered with life insurance, which shall automatically take effect as
follows:

1. Those employed after the effectivity of this Act, their insurance shall take
effect on the date of their employment;
2. For those whose insurance will mature after the effectivity of this Act, their
insurance shall be deemed renewed on the day following the maturity or
expiry date of their insurance;
3. For those without any life insurance as of the effectivity of this Act, their
insurance shall take effect following said effectivity.

Q: When may a member obtain optional life insurance coverage?

A:

1. A member may at any time apply for himself and/or his dependents an
insurance and/or pre‐need coverage embracing:
a. Life
b. Memorial plans
c. Health
d. Education
e. Hospitalization
f. Other plans as maybe designed by GSIS
2. Any employer may apply for group insurance coverage for its employees.

Q: Where can GSIS loans be invested in?

A:

1. In direct housing loans to members and group housing projects secured by

first mortgage giving priority to the low income groups
2. In short and medium term loans to members such as salary, policy,
educational, emergency stock purchase plan, and other similar loans

Q: What is the prescriptive period to claim the benefits?

A:

GR: 4 Years from the date of contingency

XPN: Life insurance and retirement (Sec. 28)

Q: What is the process for the adjudication of claims and disputes

regarding the GSIS benefits?
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A: The quasi‐judicial functions of the GSIS shall be vested in its Board of

Trustees.

1. The GSIS, in appropriate cases, or any person whose rights are or may be
prejudiced by the operations or enforcement of R.A. 8291 and other laws
administered by the GSIS, may file a petition before the GSIS either personally or
through counsel.
2. Within 15 days from receipt of the notice of decision or award, the
aggrieved party may appeal the decision of the GSIS Board of Trustees to the
CA. Appeal shall be taken by filling a verified petition for review with the CA.
(Sec 1 to 5, Rule 43, Rules of Court)
3. When no appeal is perfected and there is no order to stay by the Board, by
the CA or by the SC, any decision or award of the Board shall be enforced and
executed in the same manner as decisions of the RTC.
Note: The social security benefits shall be exempt from attachment,
garnishment, execution, levy or other processes issued by the courts,
quasi‐judicial bodies or administrative agencies including the Commission
on Audit, disallowances, and from all financial obligations of the members.

Q: May a member enjoy the benefits provided for in the Revised GSIS Act
simultaneous with similar benefits provided under other laws for the same
contingency?
A: Whenever other laws provide similar benefits for the same contingencies
covered by this Act, the member who qualifies to the benefits shall have the
option to choose which benefits will be paid to him. However, if the benefits
provided by the law chosen are less than the benefits provided under this Act,
the GSIS shall pay only the difference. (Sec. 55)

4. BENEFICIARIES

Q: Who are the considered beneficiaries?

A:

1. Primary beneficiaries

a. The legal dependent spouse until he/she remarries and

b. The dependent children. (Sec. 2[g])

2. Secondary beneficiaries

a. The dependent parents and

b. Subject to the restrictions on dependent children, the legitimate
descendants. (Sec. 2[h])

Q: Who are considered dependents?

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A:

1) Legitimate spouse dependent for support upon the member or pensioner;

2) Legitimate, legitimated, legally adopted child, including the illegitimate child,
a. who is unmarried,
b. not gainfully employed,
c. not over the age of majority, or if over the age of majority,
incapacitated and incapable of self‐support due to a mental or
physical defect acquired prior to age of majority; and
3) Parents dependent upon the member for support. (Sec. 2[f])

C. LIMITED PORTABILITY LAW (RA 7699)

Q: What is the Limited Portability Rule?

A: A covered worker who transfers employment from one sector to another or is
employed on both sectors, shall have creditable services or contributions on both
Systems credited to his service or contribution record in each of the Systems and
shall be totalized for purposes of old‐age, disability, survivorship, and other
benefits in either or both Systems. (Sec. 3)
All contributions paid by such member personally, and those that were paid by
his employers to both Systems shall be considered in the processing of benefits
which he can claim from either or both Systems. (Sec. 4)

Q: How are the "portability" provisions of R.A. No. 7699 beneficial or

advantageous to SSS and GSIS members in terms of their creditable employment
services in the private sector or the government, as the case may be, for purposes
of death, disability or retirement?
A: Portability provisions of R.A. No. 7699 shall benefit a covered worker whose
creditable services or contributions in both systems credited to his service or
contribution record in each of the system and shall be totalized for purposes of
old‐age, disability, survivorship and other benefits. (Sec. 3)
The "portability" provisions of R.A. 7699 allow the transfer of funds for the
account and benefit of the worker who transfers from one system to another.

This is advantageous to the SSS and GSIS members for purposes of death,
disability or retirement benefits. In the event the employees transfer from the
private sector to the public sector, or vice ‐versa, their creditable employment
services and contributions are carried over and transferred as well. (2005 Bar
Question)

D. EMPLOYEES’S COMPENSATION – COVERAGE AND NON-COMPENSABLE

Q: Discuss briefly the Employee’s Compensation Program (ECP).

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A: It is the program provided for in Article 166 to 208 of the Labor Code whereby
a fund known as the State Insurance Fund (SIF) is established through premium
payments exacted from Ers and from which the Ees and their dependents in the
event of work‐connected disability or death, may promptly secure adequate
income benefit, and medical or related benefits.

Coverage

Q: Who are subject to coverage under the ECP?

A: Ers and their Ees not over sixty (60) years of age are subject to compulsory
coverage under this program.
The Er may belong to either the:
1. Public sector covered by the GSIS, comprising the National Government,
including GOCCs, Philippine Tuberculoses Society, the Philippine National Red
Cros, and the Philippine Veterans Bank; and
2. Private sector covered by the SSS, comprising all Ers other than those
defined in the immediately preceding paragraph.

The Ee may belong to either the:

1. Public sector comprising the employed workers who are covered by the
GSIS, including the members of the AFP, elective officials who are receiving
regular salary and any person employed as casual emergency, temporary,
substitute or contractual;
2. Private sector comprising the employed workers who are covered by the
SSS.

Q: When does compulsory coverage take effect?

A:

1. Employer – on the first day of operation

2. Employee – on the day of his employment

Q: What is an Occupational Disease?

A: One which results from the nature of the employment, and by nature is meant
conditions which all Ees of a class are subject and which produce the disease as
a natural incident of a particular occupation, and attach to that occupation a
hazard which distinguishes it from the usual run of occupations and is in excess
of the hazard attending the employment in general
To be occupational, the disease must be one wholly due to causes and
conditions which are normal and constantly present and characteristic of the
particular occupation.

Q: What is Sickness?
A: It means any illness definitely accepted as an occupational disease listed by
the Commission or any illness caused by employment, subject to proof that the
risk of contracting the same is increased by working conditions (Art. 167(l), LC).
 287

Q: Discuss briefly the theory of Increased Risk.

A: The term “sickness” as defined in Article 167(l) of the Labor Code is a
recognition of the theory of increased risk. To establish compensability under the
same, the claimant must show substantial proof of work ‐connection, but what is
required is merely a reasonable work ‐connection and not a direct causal relation.
Proof of actual cause of the ailment is not necessary. The test of evidence of
relation of the disease with the employment is probability and not certainty.
(Jimenez v. Employees’ Compensation Commission, G.R. No. L ‐58176, March 23,
1984; Panotes vs. ECC, G.R. No. L‐64802, March 29, 1984)

Q: May an illness not listed by the Employees Compensation Commission

as an occupational disease be compensable?
A: Where the illness is not listed by the Employees Compensation Commission
as an occupational disease, it must be established that the risk of contracting the
same is increased by working conditions.

Q: What defenses may be interposed by the State Insurance Fund (SIF) against
a claim for compensation made by a covered Ee or his dependents?
A: The following defenses may be set up:

1. Injury is not work‐connected or the sickness is not occupational

2. Disability or death was occasioned by the Ee’s intoxication, wilful
intention to injure or kill himself or another, or his notorious negligence (Art.
172, LC)
3. No notice of sickness, injury or death was given to the Er (Art. 206, LC)
4. Claim was filed beyond three (3) years from the time the cause of action
accrued (Art. 201, LC, as amended by P.D. 1921)

Note: Notorious negligence is equivalent to gross negligence; it is something more

than mere carelessness or lack of foresight.

Q: Abraham Dino works as a delivery man in a construction supply

establishment owned by Abraham Julius. One day, while Dino was making
reports on his delivery, he had an altercation with Julius; irked by the
disrespectful attitude of Dino, Julius pulled out his gun and shot Dino, hitting
him in the spinal column and paralyzing him completely. Julius was prosecuted
for the act.
1. Is the disability suffered by Abraham Dino compensable?
2. If Abraham Dino recovers compensation from the SIF, can he still recover
from Abraham Julius damages in the criminal case? Why?

A:
1) Yes. The injury was sustained by Abraham Dino in his place of work and
while in the performance of his official functions.
 288

2) No. Under Article 173 of the Labor Code, as amended by P.D. 1921, the
liability of the State Insurance Fund under the Employee’s Compensation
Program shall be exclusive and in place of all other liabilities of the Er to the
Ee or his dependents or anyone otherwise entitled to recover damages on
behalf of the Ee or his dependents.

Q: Socrates Benjie, a truck driver employed by a local construction company,

was injured in an accident while on assignment in one of his employer’s project
in Iraq. Considering that his injury was sustained in a foreign country, is
Socrates Benjie entitled to benefits under the ECP?
A: Yes. Filipinos working abroad in the service of an Er, domestic or foreign, who
carries on in the Philippines any trade, business, industry, undertaking or
activity of any kind, are covered by the ECP. (Rule 1, Section 5, ECC Rules;
Art.169, LC)

Q: What is the “Going and Coming Rule”? Is this rule absolute?

A: GR: In the absence of special circumstances, an Ee injured while going to or
coming from his place of work is excluded from the benefits of Workmen’s
Compensation Act.

XPNS:

1. Where the Ee is proceeding to or from his work on the premises of the Er;
2. Proximity Rule—where the Ee is about to enter or about to leave the
premises of his Er by way of exclusive or customary means of ingress and
egress;
3. Ee is charged, while on his way to or from his place of employment or at
his home, or during this employment with some duty or special errand connected
with his employment; and
4. Where the Er as an incident of the employment provides the means of
transportation to and from the place of employment.

Q: Who are entitled to benefits under the ECP?

A: The covered Ee, his dependents, and in case of his death, his beneficiaries.

Q: Who are the dependents of the Ee?

A:

1. Legitimate, legitimated, legally adopted or acknowledged natural child

who is unmarried, not gainfully employed, and not over twenty ‐one (21) years
of age or over twenty‐one (21) years of age provided he is incapacitated and
incapable of self‐support due to a physical or mental defect which is
congenital or acquired during minority;
2. Legitimate spouse living with the Ee; and
3. Parents of said Ee wholly dependent upon him for regular support.
(Art.167(i), LC, as amended by P.D. 1921)

Q: Who are included in the term beneficiaries?

 289

A: "Beneficiaries" means the dependent spouse until he remarries and

dependent children, who are the primary beneficiaries. In their absence, the
dependent parents and subject to the restrictions imposed on dependent
children, the illegitimate children and legitimate descendants who are the
secondary beneficiaries; Provided, that the dependent acknowledged natural
child shall be considered as a primary beneficiary when there are no other
dependent children who are qualified and eligible for monthly income benefit.
(Art. 167, LC, as amended by Sec. I, P.D. 1921)

Q: What are the benefits which may be enjoyed under the SIF?
A:
1. Medical Benefits
2. Disability Benefits
3. Death Benefits
4. Funeral Benefits

Medical Benefit

Q: What are the conditions of entitlement to Medical Services?

A: For an Ee to be entitled to medical services, the following conditions must be
satisfied:

1. He has been duly reported to the System (SSS or GSIS);

2. He sustains a permanent disability as a result of an injury or sickness;
and
3. The System has been notified of the injury or sickness which caused his
disability.

Disability Benefit

Q: What are disability benefits?

A: They are income benefits in case of temporary total disability, permanent total
disability and permanent partial disability

Q: What are the disabilities that are considered total and permanent?
A: The following disabilities shall be deemed total and permanent:

1. Temporary total disability lasting continuously for more than one hundred
twenty days, except as otherwise provided for in the Rules;
2. Complete loss of sight of both eyes;
3. Loss of two limbs at or above the ankle or wrist;
4. Permanent complete paralysis of two limbs;
5. Brain injury resulting in incurable imbecility or insanity; and
6. Such cases as determined by the Medical Director of the System and
approved by the Commission. (Art.192(c), LC)
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Q: May a permanent partial disability be converted to permanent total

disability after the Ee’s retirement? Why?
A: Yes. This is in line with the social justice provision in the Constitution. A
person’s disability may not manifest itself fully at one precise moment in time
but rather over a period of time. And disability should not be understood more on
its medical significance but on the loss of earning capacity.

Q: May permanent total disability arise although the Ees does not lose
the use of any part of his body?
A: Yes. Where the Ee is unable, by reason of the injury or sickness, to perform
his customary job for more than 120 days, permanent total disability arises.
(Ijares vs. CA, G.R. No. 105854, August 26, 1999)

Death Benefit

Q: What are the conditions for entitlement to death benefits?

A: The beneficiaries of a deceased Ee shall be entitled to an income benefit if all
of the following conditions are satisfied:

1. The Ee has been duly reported to the System;

2. He died as a result of an injury or sickness; and
3. The System has been duly notified of his death, as well as the injury or
sickness which caused his death.

Q: For how long are the primary beneficiaries entitled to the death
benefits?
A:

1. Dependent Spouse—until he or she remarries.

2. Dependent Children—until they get married, or find gainful employment,
or reach twenty‐one (21) years of age.
3. Dependent Child suffering from physical or mental defect—until such
defect disappears.

Q: If an Ee suffers disability or dies before he is duly reported for coverage to the

System (SSS or GSIS), who will be liable for the benefits?
A: The Er (Sec.1, Rule X; Sec.1, Rule XI; Sec. 1, Rule XII; Sec. 1, Rule XIII; ECC
Rules )

Funeral Benefit

Q: What is the funeral benefit?

A: A funeral benefit of P10, 000.00 shall be paid upon the death of a covered Ee
or permanently totally disabled pensioner.

Q: When is an Er liable to pay a penalty to the State Insurance Fund

(SIF)?
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A: In case the employee's injury or death was due to the failure of the employer
to comply with any law, or to install and maintain safety devices, or take other
precautions for the prevention of injury, said employer shall pay to the State
Insurance Fund a penalty of twenty‐five percent of the lump sum equivalent of
the income benefit payable by the System to the employee. All employers,
especially those who should have been paying a rate of contribution higher than
required of them under this Title, are enjoined to undertake and strengthen
measures for the occupational health and safety of their employee. (Art.200, LC)

Q: Who are required to make contributions to the SIF?

A: Contributions under this Title shall be paid in their entirety by the employer
and any contract or device for the deduction of any portion thereof from the
wages or salaries of the employees shall be null and void. (Art.183(c), LC)
The Republic of the Philippines guarantees the benefits prescribed under this
Title, and accepts general responsibility for the solvency of the State Insurance
Fund. In case of any deficiency, the same shall be covered by supplemental
appropriation from the national government. (Art.184, LC)

Q: When does the right to compensation or benefit for loss or impairment of an

Ee’s earning capacity due to work‐related illness or injury arise?
A: It arises or accrues upon, and not before, the happening of the contingency.
Hence, an Ee acquires no vested right to a program of compensation benefits
simply because it was operative at the time he became employed. (San Miguel
Corporation vs. NLRC, G.R. No. 57473, August 15, 1988)

Q: Does recovery from the SIF bar a claim for benefits under the SSS
Law? Why?
A: No, as expressly provided for in Article 173 of the Labor Code, payment of
compensation under the SIF shall not bar the recovery of benefits under the SSS
Law, Republic Act No. 1161, as amended. Benefits under the SIF accrue to the
Ees concerned due to hazards involved and are made a burden on the
employment itself. On the other hand, social security benefits are paid to SSS
members by reason of their membership therein for which they contribute their
money to a general fund. (Maao Sugar Central Co., Inc. vs. CA, G.R. No. 83491,
August 27, 1990)

VII. LABOR RELATIONS LAW

A. RIGHT TO SELF ORGANIZATION

1. WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE BARGAINING

Q: What is the extent of the right to self‐organization?

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A: It includes the right:

1. To form, join and assist labor organizations for the purpose of collective
bargaining (CB) through representatives of their own choosing; and
2. To engage in lawful and concerted activities for the purpose of CB or for
their mutual aid and protection. (Art. 246)

Q: Who are the persons/Ee’s eligible to join a labor organization (LO) for
purposes of CB?
A: The entities covered are all persons employed in:

1. Commercial industrial, and agricultural enterprises; and

2. In religious, charitable, medical or educational institutions whether
operating for profit or not. (Art. 243)

Q: Who are the persons/Ee’s eligible to join a labor organization for

mutual aid and protection?
A: The following enjoy the right to self ‐organization for mutual aid and
protection:

1. Ambulant workers
2. Intermittent workers
3. Itinerant workers
4. Self‐employed people
5. Rural workers
6. Those without and definite Er’s. (Art. 243)

A) WHO CANNOT FORM, JOIN OR ASSIST LABOR ORGANIZATIONS

Q: Who are the persons/Ee’s not granted the right to self‐organization:

A:

1. High level or Managerial Government Ee’s. (Sec. 3, E.O. 180)

2. Ee’s of International organizations with immunities. (ICMC v. Calleja, G.R.
No. 85750, Sep. 28, 1990)
3. Managerial Employees. (Art. 212 of LC)
4. Members of the AFP including the police officers, policemen, firemen, and
jail guards. (Sec. 4, E.O. 180)
5. Confidential Employees. (Metrolab Industries Inc. v. Confesor, G.R. No.
108855, Feb. 28, 1996)
6. Employees of cooperatives who are its members. (Benguet Elec. Coop. v.
Ferrer‐Calleja, G.R. No. 79025, Dec. 29, 1989); However they may form worker’s
association. (NEECO Ee’s Assoc. v. NLRC, G.R. No. 16066, Jan. 24, 2000)
7. Non‐Ee’s. (Rosario Bros. v. Ople, G.R. No. L‐5390, July 31, 1984)
8. Gov’t Ee’s, including GOCC’s with original charters. (Arizala v. CA, G.R.
Nos. 43633‐34, Sep. 14, 1990)
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9. Aliens without a valid working permit or aliens with working permits but
are nationals of a country which do not allow Filipinos to exercise their right of
self‐organization and to join or assist labor organizations. (Art. 269 of LC; D.O.
No. 9 [1997], Rule II, Sec. 2)

2. BARGAINING UNIT

Q: What is a bargaining unit?

A: It is a group of Ee’s of a given Er, comprised of all or less than all of the entire
body of the Ee’s which the collective interest of all the Ee’s consistent with equity
to the employer, indicate to be best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the law.

Q: What is an appropriate bargaining unit?

A: 1. A group of employees (Ees)

1. Of a given employer
2. Comprised of all or less than all of the entire body of Ees
3. Which the collective interest of all the Ees consistent with equity to the Er
4. Indicate to be best suited to serve the reciprocal rights and duties of the
parties under the collective bargaining provisions of the law.

A) TEST TO DETERMINE THE CONSTITUENCY

OF AN APPROPRIATE BARGAINING UNIT

Q: What are the factors considered in determining the appropriateness

of a bargaining unit?
A:

1) Will of the Ees. (Globe Doctrine)

2) Affinity and unity of the Ees interest, such as substantial similarity of
work and duties, or similarity of compensation and working conditions.
(Substantial Mutual Interest Rule)
3) Prior collective bargaining history
4) Similarity of employment status. (SMC v. Laguesma, G.R. No. 100485,
Sep. 21, 1994)

Q: What are the factors considered in determining the substantial

mutual interest doctrine?

A. Similarity in the scale and manner of determining earnings

B. Similarity in employment benefits, hours of work, and other terms and
conditions of employment
C. Similarity in the kinds of work performed
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D. Similarity in the qualifications, skills and training of Ees

E. Frequency of contract or interchange among the Ees
F. Geographical proximity
G. Continuity and integration of production processes
H. Common supervision and determination of labor‐relations policy
I. History of CB
J. Desires of the affected Ees or
K. Extent of union organization

Q: A registered labor union in UP, ONAPUP, filed a petition for certification

election (PCE) among the non‐academic Ees. The university did not oppose,
however, another labor union, the All UP Workers Union assents that it
represents both academic and non‐academic personnel and seeks to unite all
workers in 1 union. Do Ees performing academic functions need to comprise a
bargaining unit distinct from that of the non‐academic Ees?

A: Yes. The mutuality of interest test should be taken into consideration. There
are two classes of rank and file Ees in the university that is, those who perform
academic functions such as the professors and instructors, and those whose
function are non‐academic who are the janitors, messengers, clerks etc. Thus,
not much reflection is needed to perceive that the mutuality of interest which
justifies the formation of a single bargaining unit is lacking between the two
classes of Ees. (U.P. v. Ferrer‐Calleja, G.R. No.96189, July 14, 1992)

Q: Is the bargaining history a decisive factor in the determination of

appropriateness of bargaining unit?

A: No. While the existence of a bargaining history is a factor that may be

reckoned with in determining the appropriate bargaining unit, the same is not
decisive or conclusive. Other factors must be considered. The test of grouping is
community or mutuality of interests. This is so because the basic test of an
asserted bargaining unit’s acceptability is whether or not it is fundamentally the
combination which will best assure to all Ees the exercise of their CB rights.
(Democratic Labor Ass’n v. Cebu Stevedoring Company, Inc., G.R. No. L‐10321,
Feb. 28, 1958)

Q: What is “one‐union, one‐company” policy?

GR: It is the proliferation of unions in an Er unit. Such is discouraged as a matter
of policy unless there are compelling reasons which would deny a certain class
of Ees to the right to self‐organization for purposes of collective bargaining (CB).
XPNs:
1. Supervisory Ees who are allowed to form their own unions apart from the
rank‐and‐file Ees and
2. The policy should yield to the right of Ees to form union for purposes not
contrary to law, self‐organization and to enter into CB negotiations.

Note: Two companies cannot be treated into a single bargaining unit even if their
businesses are related.
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Subsidiaries or corporations formed out of former divisions of a mother company

following a re‐organization may constitute a separate bargaining unit.

Q: Union filed a PCE among the rank and file Ees of three security agencies
including the Veterans Security. The latter opposed alleging that the three
security agencies have separate and distinct corporate personalities. May a
single PCE filed by a labor union in the three corporations instead of filing 3
separate petitions?

A: Yes. The following are indications that the 3 agencies do not exist and operate
separately and distinctly from each other with different corporate direction and
goals: 1) Veterans Security failed to rebut the fact that they are managed
through the Utilities Management Corp with all their Ees drawing their salaries
and wages from the said entity; 2) that the agencies have common and
interlocking incorporators and officers; 3) that they have a single mutual benefit
system and followed a single system of compulsory retirement. 4) they could
easily transfer security guards of one agency to another and back again by
simply filling‐up a common pro‐forma slip; 5) they always hold joint yearly
ceremonies such as the PGA Annual Awards Ceremony; and 6) they continue to
be represented by one counsel.

Hence, the veil of corporate fiction of the 3 agencies should be lifted for the
purpose of allowing the Ees of the 3 agencies to form single union. As a single
bargaining unit, the Ees need not file 3 separate PCE. (Philippine Scout Veterans
Security and Investigation Agency v. SLE, G.R. No. 92357, July 21, 1993)

B. VOLUNTARY RECOGNITION

Q: What are the 3 methods of determining the bargaining

representative?

A:

1. Voluntary recognition
2. Certification election with or without run ‐off
3. Consent election

Q: What is voluntary recognition (VR)?

A: The process by which a legitimate labor union is recognized by the employer

(Er) as the exclusive bargaining representative or agent in a bargaining unit,
reported with the Regional Office. (Sec. 1 [bbb], Rule I, Book V, IRR)

(I) REQUIREMENTS
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Q: What are the requirements for VR?

A: The notice of VR shall be accompanied by the original copy and 2 duplicate

copies of the following req’ts:

A. Joint statement under oath of VR

B. Certificate of posting of joint statement for 15 consecutive days in at least

2 conspicuous places in the establishment of the bargaining unit

C. Certificate of posting

D. Approximate number of Ees in the bargaining unit and the names of those
who supported the recognition

E. Statement that the labor union is the only LLO operating within the
bargaining unit.

Note: Where the notice of voluntary recognition is sufficient in form, number and
substance and where there is no registered labor union operating within the
bargaining unit concerned, the Regional Office, through the Labor Relations
Division shall, within 10 days from receipt of the notice, record the fact of VR in
its roster of legitimate labor unions and notify the labor union concerned.

Q: What are the three (3) conditions to voluntary recognition (VR)?

A: VR requires 3 concurrent conditions:

1. VR is possible only in an unorganized establishment.

2. Only one union must ask for recognition. If there 2 or more unions asking
to be recognized, the Er cannot recognize any of them; the rivalry must be
resolved through an election.

3. The union voluntarily recognized should be the majority union as indicated

by the fact that members of the bargaining unit did not object to the projected
recognition. If no objection is raised, the recognition will proceed, the DOLE will
be informed and CBA recognition will commence. If objection is raised, the
recognition is barred and a certification election or consent election will have to
take place.

Note: In an organized establishment, voluntary recognition is not possible. A

petition to hold a CE has to be filed within the freedom period which means the
last 60 days of the 5th year of the expiring CBA. The petition may be filed by
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any Legitimate Labor Organization (LLO), but the petition must have written
support of at least 25% of the Ees in the bargaining unit.

Q: Where and when to file the petition for VR?

A: Within 30 days from such recognition, Er shall submit a notice of VR with the
Regional Office which issued the recognized labor union’s certificate of
registration or certificate of creation of a chartered local.

Q: What are the effects of recording of fact of voluntary recognition (VR)?

A:

1. The recognized labor union shall enjoy the rights, privileges and
obligations of an existing bargaining agent of all the employees (Ees) in the
bargaining unit.
2. It shall also bar the filing of a petition for certification election by any labor
organization for a period of 1 year from the date of entry of VR.

C) CERTIFICATION ELECTION
(I) IN AN UNORGANIZED ESTABLISHMENT
(IN AN ORGANIZED ESTABLISHMENT)

Article 256. Representation issue in organized establishments. In organized

establishments, when a verified petition questioning the majority status of the
incumbent bargaining agent is filed by any legitimate labor organization
including a national union or federation which has already issued a charter
certificate to its local chapter participating in the certification or a local chapter
which has been issued a charter certificate by the national union or federation
before the Department of Labor and Employment within the sixty (60)-day period
before the expiration of the collective bargaining agreement, the Med-Arbiter shall
automatically order an election by secret ballot when the verified petition is
supported by the written consent of at least twenty-five percent (25%) of all the
employees in the bargaining unit to ascertain the will of the employees in the
appropriate bargaining unit. To have a valid election, at least a majority of all
eligible voters in the unit must have cast their votes. The labor union receiving
the majority of the valid votes cast shall be certified as the exclusive bargaining
unit of all the workers in the unit. When an election which provides for three or
more choices results in no choice receiving a majority of the valid votes cast, a
run-off election shall be conducted between the labor unions receiving the two
highest number of votes: Provided, That the total number of votes for all
contending unions is at least fifty percent (59%) of the number of votes cast. In
cases where the petition was filed by a national union or federation, it shall not
be required to disclose the names of the local chapter’s officers and members.
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At the expiration of the freedom period, the employer shall continue to

recognize the majority status of the incumbent bargaining agent where no
petition for certification election is filed.

Article 257. Petitions in unorganized establishments. In any establishments

where there is no certified bargaining agent, a certification election shall
automatically be conducted by the Med-Arbiter upon the filing of a petition by
any legitimate labor organization, including a national union or federation which
has already issued a charter certificate to its local/chapter participating in the
certification election or a local/chapter which has been issued a charter
certificate by a national union or federation. In cases where the petition was filed
by a national union or federation, it shall not be required to disclose the names of
the local chapter’s officers and members.

Q: Distinguish the requisites for a petition for certification election

between an organized and an unorganized establishment.

A:
Art.256. ORGANIZED Art.257. UNORGANIZED
Bargaining agent
Present None
Petition filed
Has to be a verified petition No need to be verified
Freedom Period
No petition for CE except within 60 Not applicable. No freedom period.
days before the expiration of the CBA. Petition can be filed anytime.
(See Art. 253 & 253‐A)
Substantial support rule
Must be duly supported by 25% of all No substantial support rule.
the members of the appropriate Why? Intention of law is to bring in
bargaining unit (ABU). the union, to implement policy behind
Percentage base: all members of an Art. 211(a).
ABU.

Note: The approval of the PCE in an unorganized bargaining unit is NEVER

appealable, the reason being that the law wants the unionized to be unionized.

Q: What is certification election (CE)?

A: It is the process of determining through secret ballot the sole and exclusive
representative of the Ees in an appropriate bargaining unit, for purposes of CB or
negotiation. (Sec. 1 [h], Rule I, Book V, IRR)

Note: The process is called CE because it serves as the official, reliable and
democratic basis for the BLR to determine and certify the union that shall be the
exclusive bargaining representative of the Ees for the purpose of bargaining with
the Er.
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Q: What is the nature of certification election?

A: A certification election is not a litigation but merely an investigation of a non ‐
adversarial fact‐finding character in which BLR plays a part of a disinterested
investigator seeking merely to ascertain the desire of the employees as to the
matter of their representation. (Airline Pilots Ass’n of the Philippines v. CIR, G.R.
No. L‐33705, April 15, 1977)

Q: What is the purpose of a certification election?

A: It is a means of determining the worker’s choice of:

1. Whether they want a union to represent them for collective bargaining or if

they want no union to represent them at all.
2. And if they choose to have a union to represent them, they will choose
which among the contending unions will be the sole and exclusive bargaining
representative of the employees in the appropriate bargaining unit.

Q: What are the issues involved in a certification proceeding?

A: Certification proceedings directly involve two issues:

1. Proper composition and constituency of the bargaining unit; and

2. The veracity of majority membership claims of the competing unions so as
to identity the one union that will serve as the bargaining representative of the
entire bargaining unit.

Note: Some of the Ees may not want to have a union; hence, “no union” is one of
the choices named in the ballot. If “no union” wins, the company or the
bargaining unit remains un‐unionized for at least 12 months, the period is
known as 12‐month bar. After that period, a petition for a CE may be filed again.

Q: Should the consent signatures of at least 25% of the Ees in the bargaining
unit be submitted simultaneously with the filing of the petition for certification
election (PCE)?
A: No, the administrative rule requiring the simultaneous submission of the 25%
consent signatures upon the filing of PCE should not be strictly applied to
frustrate the determination of the legitimate representative of the workers.
Accordingly, the Court held that the mere filing of a PCE within the freedom
period is sufficient basis for the issuance of an order for the holding of a CE,
subject to the submission of the consent signatures within a reasonable period
from such filing. (Port Workers Union of the Phils. v. Laguesma, G.R. Nos. 94929 ‐
30, Mar. 18, 1992)

Q: Who may file a petition for certification election (PCE)?

A. Any legitimate labor organization (LLO)

B. A national union or federation which has already issued a charter
certificate to its local chapter participating in the CE
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C. A local chapter which has been issued a charter certificate

D. An Er only when requested to bargain collectively in a bargaining unit
where no registered CBA exists. (Sec. 1, Rule VIII, Book V, IRR as
amended by D.O. 40‐F‐03)

Note: A national union or federation filing a petition in behalf of its local/chapter

shall not be required to disclose the names of the local/chapter’s officers and
members, but shall attach to the petition the charter certificate it issued to its
local/chapter. (Sec. 1, Rule VIII, Book V, IRR as amended by D.O. 40 ‐F‐03)

Q: May an employee intervene in the petition for certification election

(PCE)?
A: Yes, for the purpose of protecting his individual right. (Sec. 1, Rule VIII, Book
V, IRR as amended by D.O. 40‐03)

Q: Where is PCE filed?

A: It shall be filed with the Regional Office which issued the petitioning union's
certificate of registration/certificate of creation of chartered local. (Implementing
Rules, as amended by D.O. 40‐03)

Q: Who shall hear and resolve the PCE?

A: The Mediator‐Arbiter.

Q: When to file PCE?

A: The proper time to file the PCE depends on whether the Certified Bargaining
Unit has a CBA or not:

1. If it has no CBA, the petition may be filed anytime outside the 12 ‐month
bar (certification year).
2. If it has CBA, it can be filed only within the last 60 days of the 5th year of
the CBA.

Note: At the expiration of the freedom period, the Er shall continue to recognize
the majority status of the incumbent bargaining agent where no PCE is filed.

Q: Distinguish union election from certification election.

A:

UNION ELECTION CERTIFICATION ELECTION

Held pursuant to the union’s constitution
and by‐laws
Right to vote is enjoyed only by union
members
Winners of union election become officers
and representatives of the union only
The process is ordered and
supervised by DOLE
All Ees whether union or non‐
union members who belong to
the appropriate bargaining unit
can vote
The winner in a CE is an entity,
a union, which becomes the
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representative of the whole

bargaining unit that includes
even the members of the
defeated unions.

Note: Both in CE and union election, the prescribed procedures should be

followed.

Q: Can a "no‐union" win in a certification Election (CE)?

A: Yes. Because the objective in a CE is to ascertain the majority representation

of the bargaining representative, if the Ee’s desire to be represented at all by
anyone. Hence, no union is one of the choices in a CE. (2006 Bar Question)

Alternative Answer:

No. A no union cannot win in a CE. The purpose of a CE is to select an excusive

bargaining agent and a no union vote would precisely mean that the voter is not
choosing any of the contending unions. If the no ‐union votes constitute a majority
of the valid votes cast, this fact will all the more mean that no union won in CE.
A one‐year bar will consequently stop the holding of another CE to allow the Er
to enjoy industrial peace for at least one year.

Q: In what instance may a PCE be filed outside the freedom period of a

current CBA?

A: As a general rule, in an establishment where there is a CBA in force and

effect, a PCE may be filed only during the freedom period of such CBA. But to
have that effect, the CBA should have been filed and registered with the DOLE.
(Art. 231, 253‐A and 256, LC). (1997 Bar Question)

Thus, a CBA that has not been filed and registered with the DOLE cannot be a
bar to a CE and such election can be held outside the freedom period of such
CBA.

Alternative Answer:

A PCE may be filed outside the freedom period of a current CBA if such CBA is a
new CBA that has been prematurely entered into, meaning, it was entered into
before the expiry date of the old CBA. The filing of the PCE shall be within the
freedom period of the old CBA which is outside the freedom period of the new
CBA that had been prematurely entered into.

Q: Are probationary employees (Ees) entitled to vote in a CE? Why?

A: Yes, in a CE, all rank ‐and‐file Ees in the appropriate bargaining unit (ABU)
are entitled to vote. This principle is clearly stated in Art. 255 of the LC which
states that the "labor organization designated or selected by the majority of the
Ees in such unit shall be the exclusive representative of the Ees in such unit for
the purpose of collective bargaining (CB)."
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CB covers all aspects of the employment relation and the resultant CBA
negotiated by the certified union binds all Ees in the bargaining unit. Hence, all
rank‐ and‐file Ees, probationary or permanent, have a substantial interest in the
selection of the bargaining representative. The LC makes no distinction as to
their employment status as basis for eligibility to vote in the petition for CE. The
law refers to "all" the Ees in the bargaining unit. All they need to be eligible to
vote is to belong to the "bargaining unit" (Airtime Specialists, Inc. v. Ferrer‐
Calleja, G.R. No. 80612‐16, Dec. 29, 1989). (1999 Bar Question)

Q: What is direct certification?

A: It is the process whereby the Med ‐Arbiter directly certifies a labor

organization of an appropriate bargaining unit (ABU) of a company after a
showing that such petition is supported by at least a majority of the Ees in the
bargaining unit.

Q: Does the failure of SAMAFIL (an independent union) to prove its affiliation
with NAFLU‐KMU federation affect its right to file a PCE as an independent
union?

A: No, as a LLO, it has the right to file a PCE on its own beyond question. Its
failure to prove its affiliation with the NAFLU ‐KMU cannot affect its right to file
said PCE as an independent union. At the most, its failure will result in an
ineffective affiliation with NAFLU‐KMU. Despite affiliation, the local union
remains the basic unit free to serve the common interest of all its members and
pursue its own interests independently of the federation. (Samahan ng mga
Manggagawa sa Filsystems v. SLE, G.R. No. 128067, June 5, 1998)

Q: May illegally dismissed Ees of the company participate in the

certification election (CE)?
A: Yes, it is now well‐settled that Ees who have been improperly laid off but who
have at present an unabandoned right to or expectation of re ‐employment, are
eligible to vote in CE’s. Thus, and to repeat, if the dismissal is under question, as
in the case now at bar whereby a case of illegal dismissal and/or ULP was filed,
the Ee’s concerned could still qualify to vote in the elections. (Phil. Fruits &
Vegetables Industries v. Torres, G.R. No. 92391, July 3, 1992)

Q: Is direct certification (DC) still allowed?

A: No. Even in a case where a union has filed a petition for CE, the mere fact
that there was no opposition does not warrant a DC. More so in a case when the
required proof is not presented in an appropriate proceeding and the basis of the
DC is the union’s self‐serving assertion that it enjoys the support of the majority
of the Ees, without subjecting such assertion to the test of competing claims.
(Samahang Manggagawa sa Permex v. Secretary, G.R. No. 107792, Mar. 2,
1998)

Q: What are the grounds for denying the PCE?

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A:
1. The petitioning union or federation is not listed in the DOLE’s registry of
legitimate labor unions or that its registration certificate legal personality
has been revoked or cancelled with finality
2. Failure of a local chapter or national union/federation to submit a duly
issued charter certificate upon filing of the petition
3. The petition was filed before or after the FREEDOM PERIOD of a duly
registered CBA; provided that the 60 ‐day period based on the original CBA
shall not be affected by any amendment, extension or renewal of the CBA;
(contract bar rule)
4. The petition was filed within 1 year from entry of voluntary recognition or
within the same period from a valid certification, consent or run ‐off election
and no appeal on the results of the certification, consent or run ‐off election
is pending; (12‐month bar; certification year bar rule)
5. A duly certified union has commenced and sustained negotiations with the
Er in accordance with Art. 250 of the LC within the 1 ‐year period.
(negotiation bar rule)
6. There exists a bargaining deadlock which had been submitted to
conciliation or arbitration or had become the subject of a valid notice of
strike or lockout to which an incumbent or certified bargaining agent is a
party. (deadlock bar rule)
7. In case of an organized establishment, failure to submit the 25% support
req’t for the filing of the PCE.
8. Non‐appearance of the petitioner for 2 consecutive scheduled conferences
before the med‐arbiter despite due notice, and
9. Absence of Er‐Ee relationship between all the members of the petitioning
union and the owner of the establishment where the proposed bargaining
unit is sought to be represented. (Sec.14[a], Rule VIII, Book V, IRR, as
amended by D.O. 40‐F‐03)

Q: What is a prohibited ground for the denial/suspension of the petition

for certification election?

A: The inclusion as union members of Ees outside the bargaining unit. Said Ees
are automatically deemed removed from the list of membership of said unions.

Q: Does the filing of a petition to cancel the petitioner’s registration cause the
suspension or dismissal of the petition for certification election?

A: No. To serve as a ground for dismissal of a PCE, the legal personality of the
petitioner should have been revoked or cancelled “with finality”.

Q: UNIDAD, a labor organization claiming to represent the majority of the rank

and file workers of BAGSAK Toyo Manufacturing Corp. (BMTC), filed a petition
for CE during the freedom period obtaining in said corp. Despite the opposition
thereto by SIGAW Federation on the ground that UNIDAD was not possessed
with all the attributes of a duly registered union, the Med ‐Arbiter issued an order
calling for a CE on July 25, 2001. This order was promulgated and served on the
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parties on July 12, 2001. On July 14, 2001, UNIDAD submitted and served the
required documents for its registration as an independent union, which
documents were approved by the DOLE on July 15, 2001.

During the elections, UNIDAD won over SIGAW. SIGAW questioned UNIDAD's
victory on the ground that UNIDAD was not a duly registered union when it filed
the petition for a CE. Shall SIGAW’s case prosper or not? Why?

A: No, SIGAW's case will not prosper. The application of technicalities of

procedural req’ts in CE disputes will serve no lawful objective or purpose. It is a
statutory policy that no obstacles should be placed on the holding of a CE,
(Samahang ng Manggagawa sa Pacific Plastic vs. Laguesma, G.R. No. 111245,
Jan. 31, 1997) and that the law is indisputably partial to the holding of a CE.
(Western Agusan vs. Trajano G.R. No. 65833, May 6, 1991)

At any rate, UNIDAD completed all the req’ts for union registration on July 14,
2001, and legitimate union status was accorded on July 15, 2000, or at least 10
days before the scheduled date for holding the CE. (2001 Bar Question)

Q: What is meant by “contract‐bar rule”?

A: Contract‐bar rule means that while a valid and registered CBA is subsisting,
the BLR is not allowed to hold an election contesting the majority status of the
incumbent union except during the 60‐day period immediately prior to its
expiration, which period is called the freedom period.

Note: In the absence of such timely notice or filing of petition, the contract
executed during the automatic renewal period is a bar to CE.

There shall be no amendment, alteration, or termination of any of the provisions

of the CBA except to give notice of one party’s intention to amend, alter and
terminate the provisions within the freedom period.

Q: What are the requirements in order to invoke the contract bar rule?

A: The existing CBA must:

1. Be in writing and signed by all contracting parties

2. Contain the terms and conditions of employment
3. Cover employees in an appropriate bargaining unit
4. Be for a reasonable period or duration
5. Be ratified
6. Be registered with the BLR; and
7. The violation of the contract bar rule or the existence of a duly registered
CBA must be specially pleaded as a defense.

Q: What is the effect of an invalid or unregistered CBA?

A: There is no bar and therefore a certification election may be held.
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Note: Registration of CBA only puts into effect the contract ‐bar rule but the CBA
itself is valid and binding even if unregistered.

Q: What are the exceptions to the contract bar rule?

1. The CBA is unregistered

2. The CBA is inadequate and incomplete
3. The CBA was hastily entered into (Doctrine of premature extension)
4. Withdrawal of affiliation from the contracting union brought about by
schism or mass disaffiliation
5. Contract where the identity of the representative is in doubt. (ALU v. Ferrer
Calleja, G.R. No. 85085, Nov. 6, 1989)
6. CBA entered into between the Er and the union during the pendency of a
petition for CE (Vassar Industries Ees Union v. Estrella, G.R. No. L ‐46562, Mar.
31, 1978)
7. CBA conducted between the Er and the union is not bar to a certification
election filed by another union and said CBA can be renegotiated at the option of
the new bargaining agent. (ATU v. Hon. Noriel, G.R. No. L‐48367, Jan. 16, 1979)
8. A CBA registered with falsified supporting documents
9. CBA was concluded in violation of an order enjoining the parties from
entering into a CBA until the issue of representation is resolved
10. Petition is filed during the 60‐day freedom period.

Note: Basic to the contract bar rule is the proposition that the delay of the right
to select representatives can be justified only where stability is deemed
paramount. Excepted from the contract bar rule are certain types of contracts
which do not foster industrial stability, such as contracts where the identity of
the representative is in doubt. Any stability derived from such contracts must be
subordinated to the Ees’ freedom of choice because it does not establish the type
of industrial peace contemplated by law. (Firestone Tire & Rubber Company Ee’s
Union v. Estrella, G.R. No. L‐45513‐14, Jan. 6, 1978)

Q: Can the BLR certify a union as the exclusive bargaining representative after
showing proof of majority representation thru union membership cards without
conducting an election?

A: No. The LC (In Arts. 256, 257 and 258) provides only for a CE as the mode for
determining the exclusive collective bargaining representative if there is a
question of representation in an appropriate bargaining unit. (1998 Bar
Question)

Q: When does deadlock arise?

A: It arises when there is an impasse, which presupposes reasonable effort at

good faith bargaining which, despite noble intentions, did not conclude in an
agreement between the parties.
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Q: What is deadlock bar rule?

A: A petition for certification election (PCE) cannot be entertained if, before the
filing of the PCE, a bargaining deadlock to which an incumbent or certified
bargaining agent is a party, had been submitted to conciliation or arbitration or
had become the subject of a valid strike or lockout.

Q: What are the indications of a genuine deadlock?

A:

1. The submission of the deadlock to a third party conciliator or arbitrator;

and
2. The deadlock is the subject of a valid notice strike or lockout.

Q: Capitol Medical Center Ees’ Association‐Alliance of Filipino Workers (CMCEA ‐

AFW) emerged as the certified representative of the rank ‐and‐file Ees at Capitol
Medical Center (CMC). Due to CMC’s refusal to bargain collectively, CMCEA ‐AFW
filed a notice of strike and later on staged the strike after complying with the
other legal req’ts. The SLE assumed jurisdiction over the case and issued an
order certifying the same to the NLRC for compulsory arbitration. During all of
these events Capitol Medical Center Alliance of Concerned employees (Ees) ‐
Unified Filipino Service Workers filed a petition for CE among the regular rank ‐
and‐file Ees of CMC. The petition for CE was dismissed and the CMC was
directed to negotiate with CMCEA‐AFW. Was the dismissal of the PCE proper?
A: Yes, if the law proscribes the conduct of a CE when there is a bargaining
deadlock submitted to conciliation or arbitration, with more reason should it not
be conducted if, despite attempts to bring an Er to the negotiation table by the
certified bargaining agent, there was "no reasonable effort in good faith" on the
Er to bargain collectively.
The circumstances in this case should be considered as similar in nature to a
"bargaining deadlock" when no CE could be held. This is also to make sure that
no floodgates will be opened for the circumvention of the law by unscrupulous
Ers to prevent any certified bargaining agent from negotiating a CBA. Sec. 3,
(Rule VIII), Book V of the IRR should be interpreted liberally so as to include a
circumstance where a CBA could not be concluded due to the failure of one party
to willingly perform its duty to bargain collectively. (Capitol Medical Center
Alliance of Concerned Ees v. Laguesma, G.R. No. 118915, Feb. 4, 1997)

Q: Should the certification election proceedings be suspended in view of the

pending case for cancellation of the union’s certificate of registration?
A: No, the pendency of a cancellation case is not a ground for the dismissal or
suspension of a representation proceeding considering that a registered labor
organization (LO) continues to be a legitimate one entitled to all the rights
appurtenant thereto until a final valid order is issued cancelling such
registration.
Once a LO attains the status of a LLO it begins to possess all of the rights and
privileges granted by law to such organizations. As such rights and privileges
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ultimately affect areas which are constitutionally protected, the activities in

which LO, associations and unions are engaged directly affect the public interest
and should be zealously protected. (Progressive Dev’t Corp. v. SLE, G.R. No.
115077, April 18, 1997)

Q: What is negotiation bar rule?

A: A PCE cannot be entertained if, before the filing of the PCE, the duly
recognized or certified union has commenced negotiations with the Er in
accordance with Art. 250 of the LC.

Q: What is certification year rule?

A: No PCE may be filed within one year from the date of a valid certification,
consent, or run‐off election or from the date of voluntary recognition.

(4) RUN-OFF ELECTION

(I) REQUIREMENTS

Q: What is a run‐off election?

A: An election conducted when:

1. An election which provides for 3 or more choices results in none of the

contending unions receiving a majority of the valid votes cast, and
2. There are no objections or challenges which if sustained can materially
alter the results, provided
3. The total number of votes for all the contending unions is at least 50% of
the number of votes cast. (Sec. 1, Rule X, Book V, IRR)
4. Not one of the choices obtained the majority of the valid votes cast (50%+ 1
second majority);
5. The two choices which garnered the highest votes will be voted and the
one which garners the highest number of votes will be declared the winner
provided they get the majority votes of the total votes cast.

Q: Who are the choices in a run‐off election?

A: The unions receiving the highest and 2nd highest number of the votes cast.
(Sec.2, Rule X, Book V, IRR)
Note: “No Union” shall not be a choice in the run‐off election

E. RE-RUN ELECTION

Q: When does Re‐run Election take place?

1. If one choice receives a plurality of the vote and the remaining choices
results in a tie; or
2. If all choices received the same number of votes.
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Note: In both instances, the no union is also a choice.

F. CONSENT ELECTION

Q: What is a consent election?

A: An election voluntarily agreed upon by the parties, with or without the
intervention by DOLE. (Sec.1 [h], Rule I, Book V, IRR)

Note: To afford an individual employee‐voter an informed choice where a

local/chapter is the petitioning union, the local/chapter shall secure its certificate
of creation at least 5 working days before the date of the consent election. (Sec.1,
Rule VIII, Book V, IRR as amended by DO 40‐F‐03)

Q: What are the requisites before a labor union can be declared a winner
(double majority rule)?

A:

1. Majority of the eligible voters cast their votes.

2. Majority of the valid votes cast is for such union.

Q: How to determine the double majority rule?

A:
1. In determining the eligible votes cast (first majority) include spoiled ballots
2. In determining valid votes (second majority), eliminate spoiled ballots but
included the challenged votes.

Q: A certification election was conducted among the rank ‐and‐file Ees of Holiday
Inn Manila Pavilion Hotel. In view of the significant number of segregated votes,
contending unions, National Union of Workers in Hotels, Restaurants and Allied
Industries—Manila Pavilion Hotel Chapter (NUWHRAIN ‐MPHC) and Holiday Inn
Manila Pavilion Hotel Labor Union (HIMPHLU), referred the case back to the Med ‐
Arbiter to decide which among those votes would be opened and tallied. 11 votes
were initially segregated because they were cast by dismissed Ees, albeit the
legality of their dismissal was still pending before the CA. 6 other votes were
segregated because the Ees who cast them were already occupying supervisory
positions at the time of the election. Still 5 other votes were segregated on the
ground that they were cast by probationary Ees and, pursuant to the existing
CBA, such Ees cannot vote. NUHWHRAIN ‐MPHC further avers that HIMPHLU,
which garnered 169 votes, should not be immediately certified as the bargaining
unit, as the opening of the 17 segregated ballots would push the number of valid
votes cast to 338, hence, the 169 votes which HIMPHLU garnered would be 1
vote short of the majority which would then become 170.
 309

Was HIMPHLU able to obtain the required majority for it to be certified as the
exclusive bargaining agent?

A: No, it is well‐settled that under the “double majority rule” for there to be a
valid certification election, majority of the bargaining unit must have voted and
the winning union must have garnered majority of the valid votes cast.

Following the ruling that all the probationary Ees votes should be deemed valid
votes while that of the supervisory Ees should be excluded, it follows that the
number of valid votes cast would increase. Under Art. 256 of the LC, the union
obtaining the majority of the valid votes cast by the eligible voters shall be
certified as the sole exclusive bargaining agent of all the workers in the
appropriate bargaining unit. This majority is 50% + 1, in this case at least 170.
HIMPHLU obtained 169, clearly it was not able to obtain a majority vote.
(NUWHRAIN ‐MPHC v. SLE, G.R. No. 181531, July 31, 2009)

Q: Distinguish certification election, consent election, direct certification, and run ‐

off and re‐run elections.

A:
Purpose Participation of
Med‐Arbiter
Certification Election
To determine the sole and exclusive Requires petition for CE filed by a
bargaining agent of all the Ees in an union or Er. A Med‐Arbiter grants the
appropriate bargaining unit for the petition and an election officer is
purpose of collective bargaining. designated by regional director to
supervise the election.
Note: Med‐Arbiter may determine if
there is Er‐Ee relationship and if the
voters are eligible.
Consent Election
To determine the issue of majority Held by agreement of the unions with
representation of all the workers in or without the participation of the Med ‐
the appropriate CB unit mainly for the Arbiter.
purpose of determining the
administrator of the CBA when the
contracting union suffered massive
disaffiliation and not for the purpose
of determining the bargaining agent
for purpose of CB.
Direct Certification
A LO is directly certified as an Med‐Arbiter directly certifies that a
appropriate bargaining unit of a labor union is the exclusive CB
company upon showing that petition representative of the Ees of an
is supported by at least a majority of appropriate bargaining unit without
the Ees in the bargaining unit. holding a CE, but merely on the basis
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Note: Direct certification is no longer

of evidence of in support of the union’s
allowed. claim that is the choice of the majority
of the Ees.
Run‐Off Election
Takes place between the unions who
received the two highest number of
votes in a CE with 3 or more choices,
where not one of the unions obtained
the majority of the valid votes cast,
provided the total union votes is at
least 50% of the votes cast.
Re‐run Election
Takes place in 2 instances:

a. If one choice receives a plurality of

the vote and the remaining choices
results in a tie; or

b. If all choices received the same

number of votes.

c. In both instances, the no union is

also a choice.

Note: Petition for cancellation of registration is not a bar to a PCE. No prejudicial

question shall be entertained in a petition for certification election. (D.O. 40‐03)

G. AFFILIATION AND DISAFFILIATION OF THE LOCAL UNION FROM THE

MOTHER UNION

Q: How is a local chapter created?

A: A duly registered federation or national union may directly create a local/

chapter by issuing a charter certificate indicating the establishment of a
local/chapter.

1. The chapter shall acquire legal personality only for purposes of filing a
petition for certification election from the date it was issued a charter
certificate
2. The chapter shall be entitled to all other rights and privileges of a legitimate
labor organization (LLO) only upon the submission of the following documents
in addition to its charter certificate:
 311

a. Names of the chapter’s officers, their addresses, and the principal office of
the chapter
b. Chapter’s constitution and by‐laws
c. Where the chapter’s constitution and by‐laws are the same as that of the
federation or the national union, this fact shall be indicated accordingly
3. The genuineness and due execution of the supporting requirements shall be:
a. Certified under oath by the secretary or treasurer of the local/chapter, and
b. Attested to by its president (Sec.2[e], Rule III, Book V, IRR, as amended by
D.O. 40‐F‐03)

Note: Under the LC and the rules, the power granted to LOs to directly create a
chapter or local through chartering is given to a federation or national union only,
not to a trade union center. (SMCEU v. San Miguel Packaging Products Ees
Union, G.R. No. 171153, Sep. 12, 2007)

Q: Where is the application for registration filed?

A:

1. Independent labor unions, chartered locals or worker’s associations – It is

filed with the Regional Office (RO). where the applicant principally operates. It
shall be processed by the Labor Relations Division at the RO.
2. Federations, national unions or worker’s association operating in more
than one region – It is filed with the BLR of the RO, but shall be processed by the
BLR.

Q: What is the duty of the BLR after a LO had filed the necessary papers
and documents for registration?

A: It becomes mandatory for the BLR to check if the req’ts under Art. 234 of the
LC have been sedulously complied with. If its application for registration is
vitiated by falsification and serious irregularities, especially those appearing on
the face of the application and the supporting documents, a LO should be denied
recognition as a LLO. (Progressive Dev’t Corp.‐Pizza Hut v. Laguesma, G.R. No.
115077, April 18, 1997)

Q: Within what period should the BLR act on the applications submitted
before it?

A: It shall act on all applications for registration within 10m days from receipt
either by:

1. Approving the application and issuing the certificate of

registration/acknowledging the notice/report; or
2. Denying the application/notice for failure of the applicant to comply with
the requirements for registration/notice (D.O. 40‐03, Rule IV, Sec.4, series of
2003)
 312

Note: All requisite documents shall be:

1. Certified under oath by the secretary or treasurer of the organization, as

the case may be and
2. Attested to it by its President.

Q: May the BLR review the issuance of a certificate of registration?

A: No. The BLR has the duty to review the application for registration not the
issuance of a certificate of registration.

Q: Why is a lesser requirement imposed for a chartered local?

A: The intent of the law in imposing lesser req’ts in the case of branch or local of
a registered federation or national union is to encourage the affiliation of a local
union in order to increase the local union’s bargaining power respecting terms
and conditions of labor. (Progressive Dev’t Corp v. SLE, G.R. No. 96425, Feb. 4,
1992)

Q: What are the requirements before a federation can be issued a

certificate of registration?

A: The application for registration of federations and national unions shall be

accompanied by the following documents:

a. A statement indicating the name of the applicant labor union, its principal
address, the name of its officers and their respective addresses;

b. The minutes of the organizational meeting(s) and the list of Ees who
participated in the said meeting(s);

c. The annual financial reports if the applicant union has been in existence
for 1 or more years, unless it has not collected any amount from the
members, in which case a statement to this effect shall be included in the
application;

d. The applicant union's constitution and by‐laws, minutes of its adoption or

ratification, and the list of the members who participated in it. The list of
ratifying members shall be dispensed with where the constitution and by ‐
laws was ratified or adopted during the organizational meeting(s). In such
a case, the factual circumstances of the ratification shall be recorded in the
minutes of the organizational meeting(s);

e. The resolution of affiliation of at least 10 LLOs, whether independent

unions or chartered locals, each of which must be a duly certified or
recognized bargaining agent in the establishment where it seeks to
operate; and
 313

f. The name and addresses of the companies where the affiliates operate
and the list of all the members in each company involved. (D.O. 40‐03,
Rule, III, Sec. 2‐B, series of 2003)

Q: What are the requirements for affiliation?

A: The report of affiliation of independently registered labor unions with a
federation or national union shall be accompanied by the following documents:

1. Resolution of the labor union's board of directors approving the affiliation;

2. Minutes of the general membership meeting approving the affiliation;
3. The total number of members comprising the labor union and the names of
members who approved the affiliation;
4. The certificate of affiliation issued by the federation in favor of the
independently registered labor union; and
5. Written notice to the employer concerned if the affiliating union is the
incumbent bargaining agent. (D.O. 40‐03, Rule, III, Sec. 7, series of 2003)

Q: What is the effect of affiliation?

A: The labor union that affiliates with a federation is subject to the laws of the
parent body under whose authority the local union functions. The constitution,
by‐laws and rules of the mother federation, together with the charter it issues to
the local union, constitutes an enforceable contract between them and between
the members of the subordinate union inter se. Thus, pursuant to the constitution
and by‐laws, the federation has the right to investigate and expel members of
the local union. (Villar v. Inciong, G.R. No. L‐50283‐84, April 20, 1983)

Q: May a local union disaffiliate from the federation?

A:
GR: A labor union may disaffiliate from the mother union to form an independent
union only during the 60‐day freedom period immediately preceding the
expiration of the CBA.

XPN: Even before the onset of the freedom period, disaffiliation may still be
carried out, but such disaffiliation must be effected by the majority of the union
members in the bargaining unit.

Note: This happens when there is a substantial shift in allegiance on the part of
the majority of the members of the union. In such a case, however, the CBA
continues to bind the members of the new or disaffiliated and independent union
up to determine the union which shall administer the CBA may be conducted.
(ANGLO‐KMU v. Samahan ng Manggagawang Nagkakaisa sa Manila Bay
Spinning Mills at J.P. Coats, G.R. No.118562, July 5, 1996)

Q: What is the limitation to disaffiliation?

A: Disaffiliation should be in accordance with the rules and procedures stated in

the constitution and by‐laws of the federation. A local union may disaffiliate with
 314

its mother federation provided that there is no enforceable provision in the

federation’s constitution preventing disaffiliation of a local union. (Tropical Hut
Ees Union v. Tropical Hut, G.R. Nos. L‐43495‐99, Jan. 20, 1990)

Note: A prohibition to disaffiliate in the Federation’s constitution and by ‐laws is

valid because it is intended for its own protection.

Q: What is the effect of cancellation of registration of a federation or a

national union?

A:
GR: It shall operate to divest its locals/chapters of their status as LLO.

XPN: Locals/chapters retain status as LLO if they arecovered by a duly

registered CBA.

Note Locals or chapters who retained status as LLO shall be allowed to register
as independent unions. If they fail to register, they shall lose their legitimate
status upon the expiration of the CBA.

Q: PSEA is a local union in Skylander company which is affiliated with PAFLU.

PSEA won the certification election among the rank and file Ees of the Skylander
company but its rival union PSEA‐WATU protested the results. Pending the
resolution of such controversy, PSEA disaffiliated with PAFLU and hence
affiliated with NCW which was supported by its members. May a local union
disaffiliate with its mother federation pending the settlement of the status as the
sole and exclusive bargaining agent?

A: Yes. The pendency of an election protest does not bar the valid disaffiliation of
the local union which was supported by the majority of its members.

The right of a local union to disaffiliate with the federation in the absence of any
stipulation in the constitution and by ‐laws of the federation prohibiting
disaffiliation is well settled. Local unions remain as the basic unit of association,
free to serve their own interest subject to the restraints imposed by the
constitution and by‐laws of national federation and are free to renounce such
affiliation upon the terms and conditions laid down in the agreement which
brought such affiliation to existence. In the case at bar, no prohibition existed
under the constitution and by‐laws of the federation. Hence, the union may
freely disaffiliate with the federation. (Philippine Skylanders v. NLRC, G.R. No.
127374, Jan. 31, 2002)

Q: Distinguish between an independently registered and unregistered

chartered local union.

A:
CHARTERED LOCAL UNION
Independently Registered Unregistered
How to affiliate?
 315

By signing contract of affiliation By application of with the federation

for the issuance of a charter certificate
to be submitted to the BLR
Effect of Disaffiliation to the union (local)
Would not affect its being a LLO and Would cease to be LLO and would no
therefore it would continue to have longer have the legal personality and
legal personality and to posses all the rights and privileges granted by
rights and privileges of LLO. law to LLO, unless the local chapter is
covered by its duly registered CBA.
Effect of Disaffiliation to the CBA
An existing CBA would continue to be The CBA would continue to be valid.
valid as the LO can continue The local chapter will not lose its
administering then CBA. personality, unless it registers a new.
Entitlement to union dues after Disaffiliation
LO entitled to the union dues and not Union dues may no longer be collected
the federation from which the LO as there would no longer be any labor
disaffiliated. union that is allowed to collect such
union dues from the Ees.

Q: What is the form of the decision of the denial of application for

registration?

A: It shall be:
1. In writing
2. Stating in clear terms the reason for the decision
3. Applicant union must be furnished a copy of said decision.

Q: Is the denial of registration appealable?

A: Yes.

1. Decisions of the Regional Office shall be appealable to the BLR and CA.
2. The BLR’s decisions on cases appealed from Regional Director are final
and not appealable to the SLE.
3. Decisions of the BLR denying the registration of a LO (federation or
national union) is appealable to the SLE within 10 days from receipt of the
decision, on grounds of:
a. Grave abuse of discretion; or
b. Gross incompetence.
4. Decision of SLE appealable to CA.

Q: How is appeal taken with regard to denial or cancellation of

registration?

A:
DENIAL OR CANCELLATION OF REGISTRATION
By Regional office By BLR
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Transmit records within 24 hours

from receipt of the Memo of Appeal
BLR will decide on the matter within SLE decides on the matter within 20
20 days from receipt of the records days from receipt of records
Appeal to CA via Rule 65

Note: Appeal is by memo of appeal within 10 days from receipt of notice.

Q: Who cancels the certificate of registration?

A: The certificate of registration of any LLO, whether national or local, may be

cancelled by the BLR, after due hearing, only on the grounds specified in Art.
239. (as amended by R.A. 9481)

Q: What is the effect of a petition for cancellation or of union

registration?

A: It shall not suspend the proceedings for certification election (CE) nor shall it
prevent the filing of CE.

In case of cancellation, nothing herein shall restrict the right of the union to seek
just and equitable remedies in the appropriate courts.

Q: Where is a petition for cancellation of registration or application for

voluntary dissolution filed?

A:

1. For legitimate independent labor unions, local/chapter and worker’s

association – It shall be filed with the Regional Office which issued its certificate
of registration or creation.
2. For federations, national or industry and trade union centers – It shall be
filed with the BLR. (Sec. 1, Rule XIV, Book V, IRR as amended by D.O. 40 ‐F‐03)

Q: Who may file a petition for cancellation of registration?

A:

a. For legitimate individual labor union, chartered local and worker’s association
– Any party‐in‐interest may file a petition for cancellation of registration if the
ground is:
a) Failure to comply with any of the req’ts under Art. 234, 237 and 238 of
the LC.
b) Violation of any provision under Art. 239, LC.
b. For federations, national or industry unions, trade union centers – Only
members of the labor organization (LO) concerned may file if the grounds are
actions involving violations of Art. 241, subject to the 30% rule.
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Q: What is the effect of cancellation of registration if the cancellation is

made in the course of the proceedings?

A: Where a labor union is a party in a proceeding and later it loses its

registration permit in the course or during the pendency of the case, such union
may continue as party without need of substitution of parties, subject however to
the understanding that whatever decision may be rendered will be binding only
upon those members of the union who have not signified their desire to withdraw
from the case before its trial and decision on the merits.

Note: Rationale: Principle of agency is applied – the Ees are the principals, and
the LO is merely an agent of the former, consequently, the cancellation of the
union’s registration would not deprive the consenting member ‐Ees of their right
to continue the case as they are considered as the principals.

Q: What are the grounds for cancellation of union registration?

A:

1) Misrepresentation, false statement or fraud in connection with the:

a) Adoption or application of the constitution and by ‐laws or amendments
thereto
b) Minutes of ratification and
c) List of members who took part in the ratification;
d) Election of officers
e) Minutes of the election of officers and
f) List of voters (Art. 239 as amended)
2) Voluntary dissolution by the members. (as amended by R.A. 9481)

Note: A pronouncement as to the legality of the strike is not within the meaning
of Art. 239 of the LC.

Q: What are the prohibited grounds for cancellation of union

registration?
A:

1. The inclusion as union member of Ees who are outside the bargaining unit
shall not be a ground to cancel the union registration. The ineligible Ees are
automatically deemd removed from the list of membership of the union as.(Art.
245‐A as amended by RA 9481)
2. The affiliation of the rank‐and‐file and supervisory unions operating within
the same establishment to the same federation or national union shall not be a
ground to cancel registration of either union. (Sec. 6, Rule XIV, Book V, as
inserted by D.O. 40‐F‐03)

Q: How is voluntary cancellation of registration made?

A: Registration may be cancelled by the organization itself provided:
 318

1. At least ⅔ of its general membership votes to dissolve the organization, in

a meeting duly called for that purpose; and

2. An application to cancel registration is thereafter submitted by the board of

the organization, attested by its president.

Q: What are the “reportorial requirements” required to be submitted by a

legitimate labor organization (LLO) ?
A: The following documents are required to be submitted to BLR by the LLO
concerned:

1. Within 30 days from adoption or ratification of the constitution and by laws

(CBL) or amendments thereto:
a. CBL or amendments thereto
b. Minutes of ratification
c. List of members who took part in the ratification of the constitution and by ‐
laws;
2. Within 30 days from date of election or appointment:
a. List of elected and appointed officers and agents entrusted with the
handing of union funds
b. Minutes of election of officers
c. List of voters
3. Annual financial report within 30 days after the close of every fiscal year
4. List of members at least once a year or whenever required by the Bureau.
(Sec. 1, Rule V, Book V, IRR, as amended by D.O. 40 ‐F‐03)

Note: Failure to submit reportorial requirements is no longer a ground for

cancellation but shall subject the erring officers or members to suspension,
expulsion from membership, or any appropriate penalty (Art. 242‐A, as inserted
by R.A. 9481).

Q: What is the successor‐ in‐interest doctrine?

A:
GR: It is when an Er with an existing CBA is succeeded by another Er, the
successor‐in‐interest who is the buyer in good faith has no liability to the Ees in
continuing employment and the bargaining agreement because these contracts
are in personam.

XPNs:
1. When the successor‐in‐interest expressly assumes an obligation;
2. The sale is a device to circumvent the obligation; or
3. The sale or transfer is made in bad faith.

(I) SUBSTITUTIONARY DOCTRINE

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Q: What is the substitutionary doctrine?

A: It is where there occurs a shift in the Ees union allegiance after the execution
of a collective bargaining (CB) contract with the Er, the Ees can change their
agent (labor union) but the CB contract which is still subsisting continues to bind
the Ees up to its expiration date. They may however, bargain for the shortening
of said expiration date.

Note: The Er cannot revoke the validly executed CB contract with their Er by the
simple expedient of changing their bargaining agent. The new agent must
respect the contract. (Benguet Consolidated Inc. v. BCI Ees and Worker’s Union ‐
PAFLU, G.R. No. L‐24711, April 30, 1968)

It cannot be invoked to support the contention that a newly certified CB agent

automatically assumes all the personal undertakings of the former agent ‐like the
“no strike clause” in the CBA executed by the latter.

H. UNION DUES AND SPECIAL ASSESSMENTS

(I) REQUIREMENTS FOR VALIDITY

Union Dues

Q: What are union dues?

A: These are regular monthly contributions paid by the members to the union in
exchange for the benefits given to them by the CBA and to finance the activities
of the union in representing the union.

Q: What is check‐off?

A: It is a method of deducting from an Ee’s pay at a prescribed period, the

amounts due the union for fees, fines and assessments.

Deductions for union service fees are authorized by law and do not require
individual check‐off authorizations.

Q: What is the nature and purpose of check‐off?

A: Union dues are the lifeblood of the union.

All unions are authorized to collect reasonable membership fees, union dues,
assessments and fines and other contributions for labor education and research,
mutual death and hospitalization benefits, welfare fund, strike fund and credit
and cooperative undertakings.(Art. 277[a])

Q: What are the requisites of a valid check‐off?

A:
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GR: No special assessments, atty’s fees, negotiation fees or any other

extraordinary fees may be checked off from any amount due to an employee
(Ee) without individual written authorization duly signed by the Ee.

The authorization should specifically state the:

1. Amount
2. Purpose &
3. Beneficiary of the deduction.

XPNs:
1. For mandatory activities under the LC
2. For agency fees
3. When non‐members of the union avail of the benefits of the CBA

a. Non‐members may be assessed union dues equivalent to that paid by

union members;
b. Only by board resolution approved by majority of the members in general
meeting called for the purpose.

Special Assessments

Q: What are special assessments or extraordinary fees?

A: These are assessments for any purpose or object other than those expressly
provided by the labor organization’s constitution and by‐laws.

Q: What are the requisites for a valid levy of special assessment or

extraordinary fees?
A:

1. Authorization by a written resolution of the majority of all members at the

general membership meeting duly called for that purpose;
2. Secretary’s record of the minutes of the meeting, which must include the:
a. List of members present
b. Votes cast
c. Purpose of the special assessments
d. Recipient of such assessments
3. Individual written authorization to check ‐off duly signed by the Ee
concerned – to levy such assessments.

Q: What is the effect of failure to strictly comply the requirements set by

law?
A: It shall invalidate the questioned special assessments. Substantial
compliance of the requirements is not enough in view of the fact that the special
assessment will diminish the compensation of union members. (Palacol v. Ferrer‐
Calleja, G.R. No. 85333, Feb. 26, 1990)

Q: Who has jurisdiction over check‐off disputes?

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A: Being an intra‐union dispute, the Regional Director of DOLE has jurisdiction

over check off disputes.

Q: Distinguish check‐off from special assessments.

A:
Check‐off Special Assessment
How approved
(Union Dues) By written resolution approved by
By obtaining the individual written majority of all the members at the
authorization duly signed by the Ee meeting called for that purpose.
which must specify:
1. Amount
2. Purpose
3. Beneficiary

Exception to such requirement

(Agency fees) No exception; written resolution is
Not necessary when: mandatory in all instances.

1. For mandatory activities under the

LC
2. For agency fees
3. When non‐members of the union
avail of the benefits of the CBA:

a. Said non‐members may

be assessed union dues
equivalent to that paid
by union members;
b. Only by Board resolution
approved by majority of
the members in general
meeting called for the
purpose

Q: Are Ees who are members of another union considered free riders?

A: No. When the union bids to become the bargaining agent, it voluntarily
assumes the responsibility of representing all the Ees.

I) AGENCY FEES

Q: What is an agency fee?

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A: It is an amount equivalent to union dues, which a non ‐union member pays to

the union because he benefits from the CBA negotiated by the union.

Note: Agency fee cannot be imposed on Ees already in the service and are
members of another union. If a closed shop agreement cannot be applied to
them, neither may an agency fee, as a lesser form of union security, be imposed
to them. Payment by non‐union members of agency fees does not amount to an
unjust enrichment basically the purpose of such dues is to avoid discrimination
between union and non‐union members.

(I) REQUISITES FOR ASSESSMENT

Q: What are the requisites for assessment of Agency fees (Art. 248 [e],
LC)?

A:

1. The employee is part of the bargaining unit

2. He is not a member of the union
3. He partook of the benefits of the CBA

Note: The individual authorization required under Art. 242, par. O of the LC
shall not apply to the non‐members of the recognized collective bargaining agent.

Q: Distinguish union dues from agency fees.

A:
Union Dues
Is deducted from members for the
payment of union dues
May not be deducted from the salaries
of the union members without the
written consent of the workers
affected.
Agency Fee
Is deducted from non‐members of the
bargaining agent (union) for the
enjoyment of the benefits under the
CBA.
May be deducted from the salary of
the Ees without their written consent.

B. RIGHT TO COLLECTIVE BARGAINING

Q: What is collective bargaining (CB)?

A:
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a. It is the process of negotiation by an organization or group of workmen, in

behalf of its members, with the employer (Er), concerning wages, hours of
work, and other terms and conditions of employment and

b. The settlement of disputes by negotiation between an Er and the

representative of his employees (Ee)

c. It is the 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 does not compel any party to agree to a
proposal or to make any concession. (Art. 252, LC)

Note:
GR: No court or administrative agency or official shall have the power to set or
fix wages, rates of pay, hours of work, or other terms and conditions of
employment

XPNs: As otherwise provided under the LC:

1. National Wages and Productivity Commission and RTWPB as to wage

fixing. (Art. 99 and 122, LC)
2. NCMB and NLRC as to wage distortion. (Art. 124, LC)
3. SLE and President of the Philippines as to certification and assumption of
powers over labor disputes. (Art. 236[g], LC)

Q: What is the purpose behind this rule?

A: It is to encourage a truly democratic method of regulating the relations
between the employers and employees by means of agreements freely entered
into through CB.

Q: Who are the parties to a CB?

A:
1. Employer
2. Employees, represented by the exclusive bargaining agent

Q: What are the jurisdictional preconditions in collective bargaining?

A:

1. Possession of the status of majority representation of the employees

representative in accordance with any of the means of selection or designation
provided for the Labor Code
2. Proof of majority representation
3. A demand to bargain under Art. 250 (a) of the LC. (Kiok Loy v. NLRC, G.R.
No. L‐54334, Jan.22, 1986)
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1. DUTY TO BARGAIN COLLECTIVELY

Q: When does the duty of the employer (Er) to bargain collectively arise?
A: Only after the union requests the Er to bargain. If there is no demand, the Er
cannot be in default.

Note: Where a majority representative has been designated, it is an ULP for the
Er, as a refusal to collectively bargain, to deal and negotiate with the minority
representative to the exclusion of the majority representative.
Where there is a legitimate representation issue, there is no duty to bargain
collectively on the part of the Er (Lakas ng mga Manggagawang Makabayan v.
Marcelo Enterprises, G.R. No. L‐38258, Nov. 19, 1982)

Q: What is a collective bargaining agreement (CBA)?

A: It is a contract executed upon request of either the Er or the exclusive
bargaining representative of the Ees incorporating the agreement reached after
negotiations with respect to wages, hours of work, terms and conditions of
employment, including proposals for adjusting any grievance or questions under
the agreement.
Note: The certification of the CBA by the BLR is not required to make such
contract valid. Once it is duly entered into and signed by the parties, a CBA
becomes effective as between the parties whether or not it has been certified by
the BLR. (Liberty Flour Mills Ee’s Association v. Liberty Flour Mills, G.R. Nos.
58768‐70, Dec. 29, 1989)

Q: What is a zipper clause?

A: It is a stipulation in a CBA indicating that issues that could have been
negotiated upon but not contained in the CBA cannot be raised for negotiation
when the CBA is already in effect.
A CBA is not an ordinary contract but one impressed with public interest, only
provisions embodied in the CBA should be so interpreted and complied with.
Where a proposal raised by a contracting party does not find print in the CBA, it
is not a part thereof and the proponent has no claim whatsoever to its
implementation. (SMTFM‐UWP v. NLRC , G.R. No. 113856, Sept. 7, 1998)

Q: When shall bargaining commence?

A: It commences within 12 months after the determination and certification of the
Ees exclusive bargaining representative. (certification year)

Q: What is the procedure in CB?

A: When a party desires to negotiate an agreement:
1. It shall serve a written notice upon the other party with a statement of
proposals
2. Reply by the other party shall be made within 10 days with counter
proposals
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3. In case of differences, either party may request for a conference which

must be held within 10 calendar days from receipt of request
4. If not settled, NCMB may intervene and encourage the parties to submit
the dispute to a voluntary arbitrator
5. If not resolved, the parties may resort to any other lawful means (either to
settle the dispute or submit it to a voluntary arbitrator).

Note: During the conciliation proceeding in the NCMB, the parties are prohibited
from doing any act which may disrupt or impede the early settlement of
disputes. (Art.250[d], LC)

Q: What are the stages in CB?

A:
1. Preliminary process: Sending a written notice for negotiation which must
be clear and unequivocal
2. Negotiation process.
3. Execution process: The signing of the agreement
4. Publication for at least 5 days before ratification
5. Ratification by the majority of all the workers in the bargaining unit
represented in the negotiation (not necessary in case of arbitral award)
6. Registration process.
7. Administration process: The CBA shall be jointly administered by the
management and the bargaining agent for a period of 5 years.
8. Interpretation and Application process.

Q: Does a petition for cancellation of a union’s certificate of registration involve a

prejudicial question that should first be settled before parties could be required
to collectively bargain?
A: No. A pending cancellation proceeding is not a bar to set mechanics for
collective bargaining (CB). If a certification election may still be held even if a
petition for cancellation of a union’s registration is pending, more so that the CB
process may proceed. The majority status of the union is not affected by the
cancellation proceedings. (Capitol Medical Center v. Trajano, G.R. No. 155690,
June 30, 2005)

A) WHEN THERE IS ABSENCE OF A CBA

Q: What is the duty to bargain collectively when there is no CBA?

A: It is the performance of a mutual obligation:

1. To meet and convene promptly and expeditiously in good faith (GF)

2. For the purpose of negotiating an agreement with respect to wages, hours
of work and all other terms and conditions of employment
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3. Including proposals for adjusting any grievances or questions arising

under such agreement; and
4. To execute a contract incorporating such agreements if requested by either
party. (Art. 252)

Q: What are the limitations to the duty to bargain collectively?

A:

1. Such duty does not compel any party to agree to a proposal or to make
any concession.
2. Parties cannot stipulate terms and conditions of employment which are
below the minimum req’ts prescribed by law.

Q: May either party bargain to an impasse?

A: It depends:

1. Where the subject of a dispute is a mandatory bargaining subject, either

party may bargain to an impasse as long as he bargains in GF.

2. Where the subject is non‐mandatory, a party may not insist in bargaining

to the point of impasse. His instance may be construed as evasion of duty to
bargain.

Q: What is the test of bargaining in bad faith?

A: There is no perfect test of good faith (GF) in bargaining. The GF or BF is an
inference to be drawn from the facts and is largely a matter for the NLRC’s
expertise. The charge of BF should be raised while the bargaining is in progress.
Note: With the execution of the CBA, BF 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. This is not a case where
private respondent exhibited an indifferent attitude towards CB because the
negotiations were not the unilateral activity of petitioner union. The CBA is good
enough that private respondent exerted “reasonable effort of GF bargaining.”
(Samahang Manggagawa sa Top Form Manufacturing ‐United Workers of the
Phils v. NLRC, G.R. No. 113856, Sept. 7, 1998)

With respect to the first issue, petitioner union anchors its arguments on the
alleged commitment of private respondent to grant an automatic across-the-
board wage increase in the event that a statutory or legislated wage increase is
promulgated. It cites as basis therefor, the aforequoted portion of the Minutes of
the collective bargaining negotiation on February 27, 1990 regarding wages,
arguing additionally that said Minutes forms part of the entire agreement
between the parties.
The basic premise of this argument is definitely untenable. To start with, if
there was indeed a promise or undertaking on the part of private respondent to
obligate itself to grant an automatic across-the-board wage increase, petitioner
union should have requested or demanded that such "promise or undertaking"
 327

be incorporated in the CBA. After all, petitioner union has the means under the
law to compel private respondent to incorporate this specific economic proposal
in the CBA. It could have invoked Article 252 of the Labor Code defining "duty to
bargain," thus, the duty includes "executing a contract incorporating such
agreements if requested by either party." Petitioner union's assertion that it had
insisted on the incorporation of the same proposal may have a factual basis
considering the allegations in the aforementioned joint affidavit of its members.
However, Article 252 also states that the duty to bargain "does not compel any
party to agree to a proposal or make any concession." Thus, petitioner union may
not validly claim that the proposal embodied in the Minutes of the negotiation
forms part of the CBA that it finally entered into with private respondent.
The CBA is the law between the contracting parties — the collective
bargaining representative and the employer-company. Compliance with a CBA is
mandated by the expressed policy to give protection to labor. In the same vein,
CBA provisions should be "construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction upon
it, giving due consideration to the context in which it is negotiated and purpose
which it is intended to serve." This is founded on the dictum that a CBA is not an
ordinary contract but one impressed with public interest. It goes without saying,
however, that only provisions embodied in the CBA should be so interpreted and
complied with. Where a proposal raised by a contracting party does not find
print in the CBA, it is not a part thereof and the proponent has no claim
whatsoever to its implementation.
Hence, petitioner union's contention that the Minutes of the collective
bargaining negotiation meeting forms part of the entire agreement is pointless.
The Minutes reflects the proceedings and discussions undertaken in the process
of bargaining for worker benefits in the same way that the minutes of court
proceedings show what transpired therein. At the negotiations, it is but natural
for both management and labor to adopt positions or make demands and offer
proposals and counter-proposals. However, nothing is considered final until the
parties have reached an agreement. In fact, one of management's usual
negotiation strategies is to ". . . agree tentatively as you go along with the
understanding that nothing is binding until the entire agreement is reached." 16 If
indeed private respondent promised to continue with the practice of granting
across-the-board salary increases ordered by the government, such promise
could only be demandable in law if incorporated in the CBA.
Moreover, by making such promise, private respondent may not be
considered in bad faith or at the very least, resorting to the scheme of feigning to
undertake the negotiation proceedings through empty promises. As earlier
stated, petitioner union had, under the law, the right and the opportunity to
insist on the foreseeable fulfillment of the private respondent's promise by
demanding its incorporation in the CBA. Because the proposal was never
embodied in the CBA, the promise has remained just that, a promise, the
implementation of which cannot be validly demanded under the law.
Petitioner's reliance on this Court's pronouncements in Kiok Loy v. NLRC is,
therefore, misplaced. In that case, the employer refused to bargain with the
collective bargaining representative, ignoring all notices for negotiations and
 328

requests for counter proposals that the union had to resort to conciliation
proceedings. In that case, the Court opined that "(a) Company's refusal to make
counter-proposal, if considered in relation to the entire bargaining process, may
indicate bad faith and this is specially true where the Union's request for a
counter-proposal is left unanswered." Considering the facts of that case, the
Court concluded that the company was "unwilling to negotiate and reach an
agreement with the Union."
Neither does petitioner union deny the fact that "there is no provision of the
1990 CBA containing a stipulation that the company will grant across-the-board
to its employees the mandated wage increase." They simply assert that private
respondent committed "acts of unfair labor practices by virtue of its contractual
commitment made during the collective bargaining process." The mere fact,
however, that the proposal in question was not included in the CBA indicates
that no contractual commitment thereon was ever made by private respondent as
no agreement had been arrived at by the parties. Thus:
Obviously the purpose of collective bargaining is the reaching of an agreement
resulting in a contract binding on the parties; but the failure to reach an
agreement after negotiations continued for a reasonable period does not
establish a lack of good faith. The statutes invite and contemplate a collective
bargaining contract, but they do not compel one. The duty to bargain does not
include the obligation to reach an agreement.
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. This is not a
case where private respondent exhibited an indifferent attitude towards
collective bargaining because the negotiations were not the unilateral activity of
petitioner union. The CBA is proof enough that private respondent exerted
"reasonable effort at good faith bargaining."
Indeed, 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. (Samahang Manggagawa sa Top Form Manufacturing ‐United
Workers of the Phils v. NLRC, G.R. No. 113856, Sept. 7, 1998)

Q: What is a deadlock?
A: It is synonymous with impasse or a standstill which presupposes reasonable
effort at GF bargaining but despite noble intentions does not conclude an
agreement between the parties.

Q: In case of deadlock in the renegotiation of the CBA, what are the

actions that may be taken by the parties?
A: The parties may:

1. Call upon the NCMB to intervene for the purpose of conducting conciliation
or preventive mediation;
2. Refer the matter for voluntary arbitration or compulsory arbitration;
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3. Declare a strike or lockout upon compliance with the legal req’ts (This
remedy is a remedy of last resort).

Q: May economic exigencies justify refusal to bargain?

A: No. An employer is not guilty of refusal to bargain by adamantly rejecting the
union’s economic demands where he is operating at a loss, on a low profit
margin, or in a depressed industry, as long as he continues to negotiate. But
financial hardship constitutes no excuse for refusing to bargain collectively.

B) WHEN THERE IS A CBA

Q: What is the duty to bargain collectively when there is a CBA?

A:

1. When there is a CBA the duty to bargain collectively shall also mean that
neither party shall terminate nor modify such agreement during its lifetime.
2. Either party can serve a written notice to terminate or modify the
agreement at least 60 days prior to its expiration date.
3. 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. (Art.
253, LC)

Q: What is the automatic renewal clause of CBAs?

A: Although a CBA has expired, it continues to have legal effects as between the
parties until a new CBA has been entered into (Pier & Arrastre Stevedoring
Services, Inc. v. Confessor, G.R. No. 110854, February 13, 1995). This is so
because the law makes it a duty of the parties to keep the status quo and to
continue in full effect the terms and conditions of the existing agreement until a
new agreement is reached by the parties. (Art. 253, LC). (2008 Bar Question)

2. COLLECTIVE BARGAINING AGREEMENT

A. MANDATORY PROVISIONS OF CBA

Q: What are the mandatory provisions of the CBA?

A:
1. Grievance machinery
2. Voluntary arbitration
3. Wages
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4. Hours of work
5. Family planning
6. Rates of pay
7. Mutual observance clause

Note: In addition, the BLR requires the CBA should include a clear statement of
the terms of the CBA.
Er’s duty to bargain is limited to mandatory bargaining subjects; as to other
matters, he is free to bargain or not.

Q: How are cases arising from the Interpretation or implementation of

CBAs handled and disposed?
A: They are disposed through the grievance machinery and if not resolved by the
grievance machinery, through voluntary arbitration. (1995 Bar Question)

Q: What is grievance?
A: It is any question by either the employer or the union regarding the
interpretation or implementation of any provision of the CBA or interpretation or
enforcement of company personnel policies. (Sec.1 [u], Rule I, Book V, IRR)

Q: What provisions must the parties include in a CBA?

A:
1. Provisions that will ensure the mutual observance of its terms and conditions.
2. A machinery for adjustment and resolution of grievances arising from the:
a. Interpretation/implementation of the CBA and
b. Interpretation/ enforcement of company personnel policies. (Art.
260, par. 1).

(I) GRIEVANCE PROCEDURE

Q: What is grievance machinery?

A: It refers to the mechanism for the adjustment and resolution of grievances
arising from the interpretation or enforcement of company personnel policies. It is
part of the continuing process of collective bargaining (CB).
Note: It is a must provision in any CBA and no collective agreement can be
registered in the absence of such procedure.

Q: How is grievance machinery established?

A:
1. Agreement by the parties
2. A grievance committee – composed of at least 2 representatives each from the
members of the bargaining unit and the employer, unless otherwise agreed
upon by the parties – shall be created within 10 days from the signing of CBA
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Note: Although Art. 260 of the Labor Code mentions “parties to a CBA”, it does
not mean that a grievance machinery cannot be set up in a CBA ‐less enterprise.
In any workplace where grievance can arise, a grievance machinery can be
established.

Q: What is grievance procedure?

A: It refers to the internal rules of procedure established by the parties in their
CBA which usually consists of successive steps starting at the level of the
complainant and his immediate supervisor and ending, when necessary, at the
level of the top union and company officials and with voluntary arbitration as the
terminal step.

Q: What will happen to grievances submitted to the grievance machinery which

are not settled within 7 calendar days from the date of their submission?
A: They shall automatically be referred to voluntary arbitration prescribed in the
CBA. (Art. 260, par.2, Labor Code)
Either party may serve notice upon the other of its decision to submit the issue to
voluntary arbitration (VA):

1. If the party upon whom such notice is served fails/refuses to respond within
7 days from receipt, VA/panel designated in the CBA shall commence
arbitration proceedings
2. If the CBA does not designate or if the parties failed to name the VA/panel,
the regional branch of NCMB appoints VA/panel

(II) VOLUNTARY ARBITRATION

Q: What is voluntary arbitration?

A: It refers to the mode of settling labor management disputes by which the
parties select a competent, trained and impartial third person who shall decide
on the merits of the case and whose decision is final and executory. (Sec.1 [d],
Rule II, NCMB Revised Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings, Oct. 15, 2004)

Q: What is the difference between compulsory and voluntary arbitration?

A: Compulsory arbitration is a system whereby the parties to a dispute are
compelled by the government to forego their right to strike and are compelled to
accept the resolution of their dispute through arbitration by a 3rd party. The
essence of arbitration remains since a resolution of a dispute is arrived at by
resort to a disinterested third party whose decision is final and binding on the
parties, but in compulsory arbitration, such a third party is normally appointed
by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the
parties is made, pursuant to a voluntary arbitration clause in their collective
 332

agreement, to an impartial third person for a final and binding resolution.

Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator,
nothing is left to be done by both parties but to comply with the same. After all,
they are presumed to have freely chosen arbitration as the mode of settlement
for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator who shall hear and decide their case. Above all, they have
mutually agreed to be bound by said arbitrator's decision. (Luzon Dev’t Bank v.
Ass’n of Luzon Dev’t Bank Ees, G.R. No. 120319, Oct. 6, 1995)

Q: What is the basis for voluntary arbitration and its rationale?

A: 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 (Sec. 3, Art. XIII, 1987 Constitution).

(III) NO STRIKE-NO LOCKOUT CLAUSE

Q: When does the No Strike‐No Lockout clause in the CBA apply?

A: The “no strike‐no lockout” clause in the CBA applies only to economic strikes.
It does not apply to ULP strikes. Hence, if the strike is founded on an unfair labor
practice of the employer, a strike declared by the union cannot be considered a
violation of the no strike clause. (Master Iron Labor Union v. NLRC, G.R. No.
92009, Feb. 17, 1993)

(IV) LABOR MANAGEMENT COUNCIL

Q: What is the role of the Department of Labor and Employment in the

creation of Labor Management Councils?
A: The Department shall promote the formation of labor ‐management councils in
organized and unorganized establishments to enable the workers to participate
in policy and decision‐making processes in the establishment, insofar as said
processes will directly affect their rights, benefits and welfare, except those
which are covered by collective bargaining agreements or are traditional areas of
bargaining.
The Department shall promote other labor ‐management cooperation schemes
and, upon its own initiative or upon the request of both parties, may assist in the
formulation and development of programs and projects on productivity,
occupational safety and health, improvement of quality of work life, product
quality improvement, and other similar schemes. (Sec. 1, Rule XXI, Book V, IRR)

Q: How is the representative in the Management Council Selected?

 333

A: In organized establishments, the workers’ representatives to the council shall

be nominated by the exclusive bargaining representative. In establishments
where no legitimate labor organization exists, the workers representative shall
be elected directly by the employees at large. (Sec. 2, Rule XXI, Book V, IRR)

B) DURATION OF CBA

(I) FOR ECONOMIC PROVISIONS

(II) FOR NON-ECONOMIC PROVISIONS

Q: What is the duration of a CBA?

A:
1. With respect to the representation aspect (refers to the identity and
majority status of the union that negotiated the CBA as the exclusive bargaining
representative): 5 years
2. With respect to all other provisions (refers to the rest of the CBA, economic
as well as non‐economic provisions other than representational provisions): 3
years after the execution of the CBA

Q: What are the economic provisions of a CBA?

A:
1. Wages
2. Family planning
3. Effectivity of the agreement
4. Other terms and conditions of employment

Q: What are the non‐economic provisions of a CBA?

A:
1. Coverage of the bargaining unit
2. Union security clauses
3. Management prerogatives and/or rights/responsibilities of employees
4. Grievance machinery and voluntary arbitration
5. No strike – no lock out provision

Q: What is the effectivity and retroactivity date of other economic

provisions of the CBA?
A:

a. If the CBA is the very first for the bargaining unit, the parties have to
decide the CBA effectivity date.

b. Those made within 6 months after date of expiry of the CBA are subject to
automatic retroaction to the day immediately following the date of expiry.
 334

c. Those not made within 6 months, the parties may agree to the date of
retroaction.

Note: This rule applies only if there is an existing agreement. If there is no

existing agreement, there is no retroactive effect because the date agreed upon
shall be the start of the period of agreement.
Art. 253‐A on retroactivity does not apply if the provisions were imposed by the
SLE by virtue of arbitration. It applies only if the agreement was voluntarily
made by the parties.

Q: May the economic provisions of an existing CBA be extended beyond

the 3 year period as prescribed by law in the absence of a new
agreement?

A: Yes. Under the principle of hold over, until a new CBA has been executed by
and between the parties, they are duty bound to keep the status quo and must
continue in full force and effect the terms and conditions of the existing
agreement. The law does not provide for any exception or qualification as to
which of the economic provisions of the existing agreement are to retain force
and effect. Therefore, it must be encompassing all the terms and condition in the
said agreement. (New Pacific Timber v. NLRC, G.R. No. 124224, Mar. 17, 2000)

In a long line of cases, this Court has held that when a collective bargaining
contract is entered into by the union representing the employees and the
employer, even the non-member employees are entitled to the benefits of the
contract. To accord its benefits only to members of the union without any valid
reason would constitute undue discrimination against nonmembers. It is even
conceded, that a laborer can claim benefits from the CBA entered into between
the company and the union of which he is a member at the time of the conclusion
of the agreement, after he has resigned from the said union.

In the same vein, the benefits under the CBA in the instant case should be
extended to those employees who only became such after the year 1984. To
exclude them would constitute undue discrimination and deprive them of
monetary benefits they would otherwise be entitled to under a new collective
bargaining contract to which they would have been parties. Since in this
particular case, no new agreement had been entered into after the CBA's
stipulated term, it is only fair and just that the employees hired thereafter be
included in the existing CBA. This is in consonance with our ruling that the terms
and conditions of a collective bargaining agreement continue to have force and
effect even beyond the stipulated term when no new agreement is executed by
and between the parties to avoid or prevent the situation where no collective
bargaining agreement at all would govern between the employer company and
its employees. (New Pacific Timber v. NLRC, G.R. No. 124224, Mar. 17, 2000)

Q: Mindanao Terminal Company and respondent union has an existing CBA

which was about to expire. Thus, negotiations were held regarding certain
 335

provisions of the CBA which resulted in a deadlock. Thus the union filed a notice
of strike. During the conference called by the NCMB the company and the union
were able to agree on all of the provisions of the CBA except for one. However,
the last unresolved provision was subsequently settled but no CBA was signed.
Hence, in the records of the Mediation Arbiter, all issues were settled before the
lapse of the 6 month period after the expiration of the old CBA. Does the signing
of the CBA determine the date it was entered into within the 6 month period?

A: No. The signing of the CBA does not determine whether the agreement was
entered into within the 6 month period from the date of expiration of the old CBA.
In the present case, there was already a meeting of the minds between the
company and the union prior to the end of the 6 month period after the expiration
of the old CBA. Hence, such meeting of the mind is sufficient to conclude that an
agreement has been reached within the 6 month period as provided under Art.
253‐A of the LC. (Mindanao Terminal and Brokerage Services Inc., v. Confessor,
G.R. No. 111809, May 5, 1997)

Q: When is the effectivity of a CBA arbitral award concluded beyond 6 months

from the expiration of the old CBA?

A: The CBA arbitral awards granted 6 months from the expiration of the last
CBA shall retroact to such time agreed upon by both the Er and the union.
Absent such agreement as to retroactivity, the award shall retroact to the 1st
day after the 6 month period following the expiration of the last day of the CBA
should there be one. In the absence of a CBA, the SLE’s determination of the
date of retroactivity as part of his discretionary powers over arbitral award shall
control. (Manila Electric Company v. Quisumbing, G.R. No. 127598, Feb. 22 and
Aug. 1, 2000)

Q: PAL was suffering from a worsened financial condition resulting to a

retrenchment which downsized its labor force by more than 1/3 thereby
affecting numerous union members. Hence, the union went on strike. The PAL
offered that shares of stock be transferred to its Ees but the union refused. Thus,
PAL claimed it has no alternative left but to close. Hence, the union PALEA
offered that the CBA be suspended for 10 years and to waive some of the
economic benefits in the CBA provided they remain the certified bargaining
agent. PAL agreed and resumed operations. Is the agreement to suspend the
CBA for 10 years abdicated the worker’s right to bargain?

A: No. The primary purpose of a CBA is to stabilize labor ‐management relations

in order to create a climate of a sound and stable industrial peace. The assailed
agreement was the result of the voluntary CB negotiations undertaken in the
light of severe financial situation faced by PAL.

Q: Is the agreement in conflict with Art. 253‐A of the LC?

A: No. There is no conflict between the agreement and Art. 253 ‐A of the LC for
the latter has a 2‐fold purpose namely: a) to promote industrial stability and
predictability and b) to assign specific time tables wherein negotiations become a
 336

matter of right and requirement. In so far as the first purpose, the agreement
satisfies the first purpose. As regard the second purpose, nothing in Art. 253 ‐A
prohibits the parties from waiving or suspending the mandatory timetables and
agreeing on the remedies to enforce the same.

Q: Does the agreement violate the 5 year representation limit as

provided under Art. 253‐A of the LC?

A: No. For under the said article, the representation limit of the exclusive
bargaining agent applies only when there is an existing CBA in full force and
effect. In this case, the parties agreed to suspend the CBA and put in abeyance
the limit on representation. (Rivera v. Espiritu, G.R. No. 135547, Jan. 23, 2002)

(III) FREEDOM PERIOD

Q: What may be done during the 60‐day freedom period?

A:

1. A labor union may disaffiliate from the mother union to form a local or
independent union only during the 60‐day freedom period immediately preceding
the expiration of the CBA.
2. Either party can serve a written notice to terminate or modify agreement at
least 60‐days prior to its expiration period.
3. A petition for certification election may be filed.

Q: When to file CBA?

A: Within 30 days from execution of CBA.

Q: What are the requirements for registration?

A: The application for CBA registration shall be accompanied by the original and
2 duplicate copies of the following req’ts:

1. CBA
2. A statement that the CBA was posted in at least 2 conspicuous places in
the establishment concerned for at least 5 days before its ratification
3. Statement that the CBA was ratified by the majority of the Ees in the
bargaining unit.

Note: The following documents must be certified under oath by the

representative of the Er and the labor union. No other document shall be required
in the registration of the CBA.

Q: What is a single enterprise bargaining?

 337

A: It involves negotiation between one certified labor union and one Er. Any
voluntarily recognized or certified labor union may demand negotiations with its
Er for terms and conditions of work covering Ee’s in the bargaining unit
concerned.

Q: What is a multi‐Er bargaining scheme?

A: It involves negotiation between and among several certified labor unions and
Ers.

3. UNION SECURITY
(SUPPLY2)
A) UNION SECURITY CLAUSES; CLOSED SHOP, UNION SHOP,
MAINTENANCE OF MEMBERSHIP SHOP, ETC.
(SUPPLY2)
B) CHECK-OFF; UNION DUES, AGENCY FEES
(SUPPLY2)

4. UNFAIR LABOR PRACTICE IN COLLECTIVE BARGANING

Q: What are the forms of ULP in bargaining?

A:

1. Failure to meet and convene

2. Evading the mandatory subjects of bargaining.
3. Bad faith in bargaining (boulwarism), including failure to execute the CBA if
requested
4. Gross violation of the CBA
5. Surface Bargaining
6. Blue sky bargaining

Note: Violations of CBA, except those which are gross in character, shall no
longer be treated as ULP but a grievance under CBA. (Art. 261, LC, Silva v.
NLRC, G.R. No. 110226, June 19 1997)

With the amendments introduced by RA 6715, it can be gleaned that the

Labor Arbiter still retains jurisdiction over ULP cases. There is, however, a
significant change: The unqualified jurisdiction conferred upon the Labor Arbiter
prior to the amendment by RA 6715 has been narrowed down so that "violations
of a Collective Bargaining Agreement, except those which are gross in character,
shall no longer be treated as unfair labor practice but as grievances under the
Collective Bargaining Agreement. It is further stated that "gross violations of
Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such agreement." Hence, for a ULP case
to be cognizable by the Labor Arbiter, and the NLRC to exercise its appellate
 338

jurisdiction, the allegations in the complaint should show prima facie the
concurrence of two things, namely: (1) gross violation of the CBA; AND (2) the
violation pertains to the economic provisions of the CBA. (Silva v. NLRC, G.R. No.
110226, June 19 1997)

Q: What is featherbedding/ make work activities?

A: It refers to the practice of the union or its agents in causing or attempting to

cause an employer (Er) to pay or deliver or agree to pay or deliver money or other
things of value, in the nature of an exaction, for services which are not performed
or not to be performed, as when a union demands that the Er maintain personnel
in excess of the latter’s requirements.

Note: It is not featherbedding if the work is performed no matter how

unnecessary or useless it may be.

Q: What is the sweetheart doctrine?

A: It is when a LO asks for or accepts negotiations or atty’s fees from employers

as part of the settlement of any issue in CB or any other dispute.

Note: The resulting CBA is considered as a “sweetheart contract” – a CBA that

does not substantially improve the employees wages and benefits and whose
benefits are far below than those provided by law.

Q: When does boulwarism occur?

A: It occurs when employer (Er) directly bargains with the employee (Ee)
disregarding the union; the aim was to deal with the labor union through Ees
rather than with the Ees thru the union. Er submits its proposals and adopts a
take‐it‐or‐leave‐it stand.

A) BARGAINING IN BAD FAITH

Q: What is the test of bargaining in bad faith? A: There is no perfect test of

good faith (GF) in bargaining. The GF or BF is an inference to be drawn from the
facts and is largely a matter for the NLRC‘s expertise. The charge of BF should
be raised while the bargaining is in progress. Note: With the execution of the
CBA, BF 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. This is not a case where private respondent exhibited an
indifferent attitude towards CB because the negotiations were not the unilateral
activity of petitioner union. The CBA is good enough that private respondent
exerted ―reasonable effort of GF bargaining. (Samahang Manggagawa sa Top
Form Manufacturing‐United Workers of the Phils v. NLRC, G.R. No. 113856, Sept.
7, 1998)
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B) REFUSAL TO BARGAIN

Q: When is there refusal to bargain?

A: A union violates its duty to bargain collectively by entering negotiations with a
fixed purpose of not reaching an agreement or signing a contract.

Q: Does an Er’s steadfast insistence to exclude a particular substantive

provision in the negotiations for a CBA constitute refusal to bargain or bargaining
in BF?
A: No. This is no different from a bargaining representative’s perseverance to
include one that they deem of absolute necessity. Indeed, an adamant insistence
on a bargaining position to the point where the negotiations reach an impasse
does not establish bad faith. Obviously, the purpose of CB is the reaching of an
agreement resulting in a contract binding on the parties; but the failure to reach
an agreement after negotiations have continued for a reasonable period does not
establish a lack of good faith. The statutes invite and contemplate a collective
bargaining contract, but they do not compel one. The duty to bargain does not
include the obligation to reach an agreement. While the law makes it an
obligation for the Er and the Ees 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. (Union of Filipro Ees v. Nestle Phils., G.R. Nos.
158930‐31, Mar. 3, 2008)

Q: May economic exigencies justify refusal to bargain?

A: No. An employer is not guilty of refusal to bargain by adamantly rejecting the
union‘s economic demands where he is operating at a loss, on a low profit
margin, or in a depressed industry, as long as he continues to negotiate. But
financial hardship constitutes no excuse for refusing to bargain collectively.

C) INDIVIDUAL BARGAINING
(SUPPLY2)

D) BLUE SKY BARGAINING

Q: What are the forms of ULP in bargaining? A:

1. Failure to meet and convene
2. Evading the mandatory subjects of bargaining.
3. Bad faith in bargaining (boulwarism), including failure to execute the CBA if
requested
4. Gross violation of the CBA
 340

5. Surface Bargaining
6. Blue sky bargaining

Q: What is blue‐sky bargaining?

A: It is defined as making exaggerated or unreasonable proposals.

Note: Whether or not the union is engaged in blue ‐sky bargaining is determined
by the evidence presented by the union as to its economic demands. Thus, if the
union requires exaggerated or unreasonable economic demands, then it is guilty
of ULP. (Standard Chartered Bank v. Confessor, G.R. No. 114974, June 16,
2004)

E) SURFACE BARGAINING

Q: What are the examples of ULP in bargaining? A:

1. Delaying negotiations by discussing unrelated matters
2. Refusal to accept request to bargain
3. Rejecting a union‘s offer to prove its majority claim
4. Shutdown to avoid bargaining
5. Engaging in surface bargaining

Q: What is surface bargaining?

A: It is the act of going through the motions of negotiating without any legal
intent to reach an agreement. It involves the question of whether or not the Ers
conduct demonstrates an unwillingness to bargain in good faith or is merely
hard bargaining. (Standard Chartered Bank v. Confessor, G.R. No. 114974, June
16, 2004)
Note: Occurs when the Er constantly changes its position over the agreement.

5. UNFAIR LABOR PRACTICE (ULP)

A) NATURE OF ULP
(SUPPLY2)

B) ULP OF EMPLOYERS

Q: What are the ULP that may be committed by Ers?

A:
1. Interference
2. Yellow dog condition
3. Contracting out
4. Company unionism
 341

5. Discrimination for or against union membership

6. Discrimination because of testimony
7. Violation of duty to bargain
8. Paid negotiation
9. Gross violation of CBA

INTERFERENCE

Q: What is meant by interference?

A: The act of Er to interfere with, restrain or coerce Ees in the exercise of their
right to self organization.

Q: What is the test of interference?

A: Whether the Er has engaged in conduct which, it may reasonably be said,
tends to interfere with the free exercise of the Ees right to self ‐organization.
Note: Direct evidence that an Ee was in fact intended or coerced by the
statements of threats of the Er is not necessary if there is a reasonable
interference that the anti‐union conduct of the Er does have an adverse effect on
self‐organization and CB. (The Insular Life Assurance‐NATU v. The Insular Life
Co. Ltd, G.R. No.L‐25291, Jan. 30, 1971)

Q: What is the totality of conduct doctrine?

A: It states that the culpability of Er’s remarks is to be evaluated not only on the
basis of their implications, but against the background of and in conjunction with
collateral circumstances.
Under this doctrine, expressions of opinion by an Er, though innocent in
themselves, frequently were held to be ULP because of:
1. The circumstances under which they were uttered
2. The history of the particular Er’s labor relations or anti ‐union bias
3. Their connection with an established collateral plan of coercion or
interference. (The Insular Life Assurance‐NATU v. The Insular Life Co. Ltd,
G.R. No.L‐25291, Jan. 30, 1971)

Q: Phil. Marine Officers Guild (PMOG) is a union representing some of

Philsteam’s officers and Cebu Seamen’s Association (CSA) is another union
representing some of Philsteam’s officers. PMOG sent a letter to Philsteam
requesting for CB but the company asked the former to first prove it represents
the majority. Simultaneously, Philsteam interrogated its captains, deck officers
and engineers while CSA likewise sent its demands to Philsteam. The company
recognized CSA as representing the majority and entered into a CBA. Hence
PMOG declared a strike. PMOG was subjected to vilification and Philsteam’s pier
superintendent participated in the solicitation of membership for CSA. Is the
company guilty of ULP?
A: Yes. Although the company is free to make interrogations as to its Ees’ union,
the same should be for a legitimate purpose and must not interfere with the
exercise of self‐organization otherwise it is considered as ULP. Moreover,
Philsteam’s supervisory Ees’ statement that PMOG is a “money ‐making” union,
 342

which is made to appear to be said in behalf of the union and the participation of
the company’s pier superintendent in soliciting membership for the competing
union, is ULP for interfering with the exercise of the right to self ‐organization.
(Philsteam and Navigation v. Philippine Marine Officers Guild, G.R. Nos. L ‐20667
and L‐20669, Oct. 29, 1965)

Q: What is a lockout?
A: It means any temporary refusal of an Er to furnish work as a result of an
industrial or labor dispute. (Art.212[p])

Q: When does lockout or closure amount to ULP?

A: A lockout, actual or threatened, as a means of dissuading the Ees from
exercising their rights is clearly an ULP. However, to hold an Er guilty, the
evidence must establish that the purpose was to interfere with the Ees exercise
of their rights.

Q: What are other examples of acts of interference?

a. Outright and unconcealed intimidation

b. In order that interrogation would not be deemed coercive:
c. Intimidating expressions of opinion by Er

Note: An Er who interfered with the right to self ‐organization before a union is
registered can be held guilty of ULP. (Samahan ng mga Manggagawa sa
Bandolino‐LMLC v. NLRC, G.R. No. 125195, July 17, 1997)
It is the prerogative of the company to promote, transfer or even demote its Ees to
other positions when the interests of the company reasonably demand it. Unless
there are circumstances which directly point to interference by the company with
the Ees right to self‐organization, the transfer of an Ee should be considered as
within the bounds allowed by law. (Rubberworld Phils. v. NLRC, G.R. No. 75704,
July 19, 1989)

YELLOW DOG

Q: What is a yellow dog condition?

A: It is to require as a condition of employment that a person or an Ee shall not
join a labor organization or shall withdraw from one to which he belongs.

Q: What is a yellow dog contract?

A: It is a promise exacted from workers as condition of employment that they are
not to belong to or attempt to foster a union during their period of employment.

Q: Is yellow dog contract valid?

A: No. It is null and void because:
1. It is contrary to public policy for it is tantamount to involuntary servitude.
2. It is entered into without consideration for Ees in waiving their right to self ‐
organization.
 343

3. Ees are coerced to sign contracts disadvantageous to their family.

Note: This is one of the cases of ULP that may be committed in the absence of an
Er‐Ee relationship.

Q: What are the 3 usual provisions under a yellow dog contract?

A:
1. A representation by the Ee that he is not a member of a labor union.
2. A promise by the Ee not to join a labor union.
3. A promise by the Ee that upon joining a labor union, he will quit his
employment.

CONTRACTING OUT

Q: What is “contracting out” as a form of ULP?

A: It is to contract out services or functions being performed by union members
when such will interfere with, restrain or coerce Ees in the exercise of their rights
to self‐organization.

Q: Does it mean that an Er cannot contract out work?

A:
GR: Contracting out services is not ULP per se.
XPNs: It is ULP only when the ff. exists:
1. The services contracted out are being performed by union members; and
2. Such contracting out interferes with, restrains, or coerce Ees in the exercise of
their right to self‐organization.

Note: When the contracting out is being done for business reasons such as
decline in business, inadequacy of equipment or to reduce cost, then it is a valid
exercise of management prerogative.

Q: Company "A" contracts out its clerical and janitorial services. In the
negotiations of its CBA, the union insisted that the company may no longer
engage in contracting out these types of services, which services the union
claims to be necessary in the company's business, without prior consultation. Is
the union's stand valid or not? For what reason(s)?
A: The union's stand is not valid. It is part of management prerogative to contract
out any work, task, job or project except that it is an ULP to contract out services
or functions performed by union members when such will interfere with, restrain
or coerce Ees in the exercise of their rights to self ‐organization. (Art. 248[c] of the
LC). (2001 Bar Question)

Q: What is a run‐away shop?

A: It is an industrial plant moved by its owners from one location to another to
escape labor regulations or State laws or to discriminate against Ees at the old
plant because of their union activities.
 344

Q: Is resorting to run‐away shop ULP?

A: Yes. Where a plant removal is for business reasons but the relocation is
hastened by anti‐union motivation, the early removal is ULP. It is immaterial that
the relocation is accompanied by a transfer of title to a new employer (Er) who is
an alter ego of the original Er.

COMPANY UNIONISM

Q: What is a company union?

A: Any labor organization whose formation, function or administration has been
assisted by any act defined as ULP. (Art. 212[i])

Q: What are the forms of company unionism?

A:

1. Initiation of the company union idea by:

a. Outright formation by Er or his representatives

b. Ee formation on outright demand or influence by Er and
c. Managerially motivated formation by Ees

2. Financial support to the union by:

a. Er defrays union expenses

b. Pays atty’s fees to the attorney who drafted the Constitution or by ‐
laws of the union.

3. Er encouragement assistance ‐ Immediately granting of exclusive

recognition as bargaining agent without determining whether the union
represents the majority of the employees

4. Supervisory assistance‐ Soliciting membership, permitting union activities

during work time or coercing Ees to join the union by threats of dismissal
or demotion

Q: What is meant by the act of company‐domination of union?

A: This is to initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization including giving of financial or other
support to it or its organizers or supporters.

Q: Why is company unionism/captive unionism a form of ULP?

A: It is considered ULP because the officers will be beholden to the Ers and they
will not look after the interest of whom they represent.

DISCRIMINATION FOR OR AGAINST UNION MEMBERSHIP

Q: What is meant by discrimination as a form of ULP?

 345

A: It 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.

Q: When is a discharge of an Ee discriminatory?

A: For the test of determining whether or not a discharge is discriminatory, it is
necessary that the underlying reason for the discharge be established.
The fact that a lawful cause for discharge is available is not a defense where the
Ee is actually discharged because of his union activities. If the discharge is
actually motivated by lawful reason, the fact that the Ee is engaged in union
activities at the time will lie against the Er and prevent him from the exercise of
business judgment to discharge an Ee for cause. (Phil. Metal Foundries Inc. v.
CIR, G.R. Nos. L‐34948‐49, May 15, 1979)

Q: Jobo has 3 hotels, the Taal Vista Lodge, Manila Hotel and the Pines Hotel.
Among the 3, Pines Hotel had more Ees and the only one with a labor
organization (LO). When the bonus was distributed among the 3 hotels, Pines
Hotel Ees received the least amount compared to the Ees of Manila Hotel and
Taal Vista Lodge. Did the company commit ULP?
A: Yes. The sharing of the bonuses is discriminatory and such constitute ULP.
The Pines Hotel Ees would be receiving fewer bonuses compared to the Ees of
Taal Vista Lodge and Manila Hotel where neither has a LO nor does the
complainant union has a member. Taking into account that Pines Hotel is
realizing profit compared to that of Taal Vista. Same analogy applies in the
salary increase. (Manila Hotel Co. v. Pines Hotel Ees’ Ass’n, G.R. No.L ‐30139,
Sep. 28, 1972)

Q: When can there be a valid discrimination?

A: The employer is not guilty of ULP if it merely complies in good faith with the
request of the certified union for the dismissal of employees expelled from the
union pursuant to the union security clause in the CBA. (Soriano v. Atienza, G.R.
No. L‐68619, Mar. 16, 1989)

Q: A profit sharing scheme was introduced by the company for its managers and
supervisors who are not members of the union, hence do not enjoy the benefits of
the CBA. The respondent union wanted to participate with the scheme but was
denied by the company due to the CBA. Subsequently the company distributed
the profit sharing to the manager, supervisors and other non ‐union member Ees.
As a result the union filed a notice of strike alleging ULP. Is the non ‐extension of
the profit sharing scheme to union members discriminatory and an ULP?

A: No. There can be no discrimination when the Ees are not similarly situated.
The situation of union members is different and distinct from non ‐union members
because only union members enjoy the benefit under the CBA. The profit sharing
scheme was extended to those who do not enjoy the benefits of the CBA. Hence,
there is no discrimination and ULP is not committed. (Wise and Co., Inc. v. NLRC,
G.R. No. L‐87672, Oct. 13, 1989)
 346

Q: Is dismissal of an Ee pursuant to a union security clause a form of

ULP?

A: No. Union security clauses in the CBA, if freely and voluntarily entered into,
are valid and binding. Thus, the dismissal of an Ee by the company pursuant to
a labor union’s demand in accordance with a union security agreement does not
constitute ULP. (Malayang Samahan ng mga Manggagawa sa M. Greenfield v.
Ramos, G.R. No. 113907, Feb. 28, 2000)

A union member who is employed under an agreement between the union and
his Er is bound by the provisions thereof since it is a joint and several contract of
the members of the union entered into by the union as their agent. (Manalang v.
Artex Dev’t, G.R. No. L‐20432, Oct. 30, 1967)

Q: Is notice and hearing required in case an Ee is dismissed pursuant to

a union security clause?

A: Yes. Although a union security clause in a CBA may be validly enforced and
dismissal pursuant to thereto may likewise be valid, this does not erode the
fundamental requirement of due process. The reason behind the enforcement of
union security clauses which is the sanctity and inviolability of contracts cannot
erode one’s right to due process.

Notwithstanding the fact that the dismissal was at the instance of the federation
and that it undertook to hold the company free from any liability resulting from
such dismissal, the company may still be held liable if it was remiss in its duty
to accord the would‐be dismissed Ees their right to be heard on the matter.

Q: Mabeza and her co‐Ees were asked by the company to sign an affidavit
attesting to the latter’s compliance with pertinent labor laws. Mabeza signed the
affidavit but refused to swear to its veracity before the City prosecutor. Mabeza
then filed a LOA which was denied by management. After sometime, she
attempted to return to work but the company informed her not to report for work
and continue with her unofficial leave. Did the company commit ULP?

A: Yes. The act of compelling an Ee to sign an instrument indicating the Er’s

compliance with Labor laws which the company might have violated together
with the act of terminating or coercing those Ees to cooperate is an act of ULP.
This is analogous with Art. 248 (f) of the LC which provides: “to dismiss,
discharge or otherwise prejudice or discriminate against an Ee for having given
or being about to give testimony under this Code”. For in not giving a positive
testimony in favor of the Er, Mabeza reserved not only her right to dispute the
claim but also to work for better terms and condition. (Mabeza v. NLRC, G.R No.
118506, April 18, 1997)

VIOLATION OF DUTY TO BARGAIN

Q: What is violation of the duty to bargain as a kind of ULP?

 347

A: This is the act of violating the duty to bargain collectively as prescribed in the
LC.

Q: What are the forms of ULP in bargaining?

A:

1. Failure or refusal to meet and convene

2. Evading the mandatory subject of bargaining
3. Bad faith (BF) bargaining, including failure to execute the CBA if requested
4. Gross violation of the CBA

Note: A company’s refusal to make counter ‐proposal, if considered in relation to

the entire bargaining process, may indicate BF and this is especially true where
the union’s request for a counter proposal is left unanswered. (Kiok Loy v. NLRC,
G.R. No. L‐54334, Jan. 22, 1986)

Q: What are the examples of ULP in bargaining?

A:

1. Delaying negotiations by discussing unrelated matters

2. Refusal to accept request to bargain
3. Rejecting a union’s offer to prove its majority claim
4. Shutdown to avoid bargaining
5. Engaging in surface bargaining

Q: Balmar Farms Ees Association (BFEA) is affiliated with Associated Labor

Union (ALU). ALU won in the certification election held in the company. Thus,
ALU sent its proposal for a CBA, but the company refused to act on it alleging
that BEA is the sole and exclusive bargaining representative and that BFEA
through its president had sent a letter informing the company of its disaffiliation
with ALU. Is the company guilty of ULP for refusing to bargain collectively?
A: Yes. ALU is the certified exclusive bargaining representative after winning the
certification election. The company merely relied on the letter of disaffiliation by
BFEA’s president without proof and consequently refusing to bargain collectively
constitutes ULP. Such refusal by the company to bargain collectively with the
certified exclusive bargaining representative is a violation of its duty to
collectively bargain which constitutes ULP. (Balmar Farms v. NLRC, G.R.
No.73504, Oct. 15, 1991)

Q: The Kilusang Kabisig, a newly‐formed labor union claiming to represent a

majority of the workers in the Microchip Corp., proceeded to present a list of
demands to the management for purposes of collective bargaining (CB). The
Microchips Corp., a multinational corp.engaged in the production of computer
chips for export, declined to talk with the union leaders, alleging that they had
not as yet presented any proof of majority status. The Kilusang Kabisig then
charged Microchip Corp. with ULP, and declared a "wildcat" strike wherein
means of ingress and egress were blocked and remote and isolated acts of
 348

destruction and violence were committed. Was the company guilty of an ULP
when it refused to negotiate with the Kilusang Kabisig?

A: No. It is not an ULP not to bargain with a union which has not presented any
proof of its majority status. The LC imposes on an Er the duty to bargain
collectively only with a legitimate labor organization designated or selected by
the majority of the Ees in an appropriate CB unit. It is not a ULP for an Er to ask
a union requesting to bargain collectively that such union first show proof of its
being a majority union. (1997 Bar Question)

PAID NEGOTIATION

Q: What is meant by paid negotiation as a form of ULP?

A: It is the act of the employer to pay negotiation or atty’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.

GROSS VIOLATION OF CBA

Q: When is the violation of CBA considered as ULP?

A: Only when the violation is gross – There must be a flagrant and/or malicious
refusal to comply with the economic provision of the CBA.

Note: All the ULP acts must have a relation to the Ees exercise of their right to
self‐organization. Anti‐union or anti‐organization motive must be proved because
it is a definitional element of ULP.

If violation is not gross, it is not ULP but a grievance under CBA. The “grossly
violate” phrase is an amendment by R.A. 6715.

Q: A complaint for ULP was filed by a prosecutor of the CIR against Alhambra
company, upon the charges of the union that 15 of its members employed as
drivers and helpers are discriminated for being deprived of the benefits under
the CBA with no justifiable reason other than union membership. Is the company
guilty of ULP?

A: Yes. The refusal to extend the benefits and privileges under the CBA to Ees
constitutes ULP. Failure on the part of the company to live up in good faith to the
terms of the CBA is a serious violation of the duty to collectively bargain which
again amounts to ULP. The 15 drivers and helpers are found to be Ees of the
company, hence, the benefit and privileges under the CBA should be extended to
them. (Alhambra Industries v. CIR, G.R. No. L‐25984, Oct. 30, 1970)

Q: What are the reliefs available in ULP cases?

A: The following reliefs may be availed of:
1. Cease and desist order
2. Affirmative order
3. Court may order the employer to bargain. CBA may be imposed.
 349

4. Strike by union members

Note: ULP cases are not subject to compromise in view of the public interest
involve. The relation between capital and labor is not merely contractual. They
are impressed with public interest that labor contracts must yield to common
good.

Q: Is the commission of an ULP by an employer subject to criminal

prosecution?
A: Yes, because ULPs are not only violations of the civil rights of both labor and
management but are also criminal offenses against the State which shall be
subject to prosecution and punishment. (Art. 247 LC; See also B.P. Blg. 386 as
amended by R.A. 6715). However, the criminal aspect can only be filed when the
decision of the labor tribunals, finding the existence of ULP, shall have become
final and executory. (2005 Bar Question)

C) ULP OF LABOR ORGANIZATIONS

Q: What are the ULP of LOs?

A: It shall be ULP for a LO, its officers, agents or representatives:

1. To restrain or coerce Ees in the exercise of their rights to self ‐organization.

However, a LO shall have the right to prescribe its own rules with respect to
the acquisition or retention of membership
2. To cause or attempt to cause an Er to discriminate against an Ee, including
discrimination against an Ee with respect to whom membership in such
organization has been denied or to terminate an Ee on any ground other than
the usual terms and conditions under which membership or continuation of
membership is made available to other members
3. To violate the duty, or refuse to bargain collectively with the Er, provided it is
the representative of the Ees
4. To cause or attempt to cause an Er 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
5. To ask for or accept negotiations or atty’s fees from Ers as part of the
settlement of any issue in collective bargaining (CB) or any other dispute or
6. To violate a CBA.

Q: Is interference by a LO an ULP?
A: No, because interference by a LO in the exercise of the right to organize is
itself a function of self‐organizing.
 350

Q: What are examples of interference which does not amount to ULP?

A:
1. Union campaigns for membership even among members of another union
2. Filing by a union of a petition to dislodge an incumbent bargaining union
3. A bargaining union, through a union security clause, requires an incoming
employee to join the union.

Q: May a union coerce Ees to join a strike?

A: No. A union violates the law when, to restrain or coerce non ‐strikers from
working during the strike, it:
1. Assaults or threatens to assault them
2. Threatens them with the loss of their jobs
3. Blocks their ingress to or egress from the plant
4. Damages non‐strikers’ automobiles or forces them off the highway
5. Physically preventing them from working
6. Sabotages the Er’s property in their presence, thereby creating an atmosphere
of fear or violence
7. Demonstrates loudly in front of a non‐strikers’ residence with signs and
shouts accusing the non‐striker of “scabbing”
8. Holding the non striker up to ridicule
9. Seeking public condemnation of the non‐striker

Q: What is a case of union induced discrimination by labor organization

(LO)?
A: This pertains to the arbitrary use of union security clause.

A union member may not be expelled from the union, and consequently from his
job, for personal and impetuous reasons or for causes foreign to the closed shop
agreement. (Manila Mandarin Ees Union v. NLRC, G.R. No. 76989, Sep. 29,
1987)

Labor unions are not entitled to arbitrarily exclude qualified applicants for
membership and a closed‐shop applicants provision will not justify the employer
in discharging, or a union in insisting upon the discharge of an employee whom
the union thus refuses to admit to membership without any reasonable ground
thereof. (Salunga v. CIR, G.R. No. L‐22456, Sep. 27, 1967)

Q: When is there refusal to bargain?

A: A union violates its duty to bargain collectively by entering negotiations with a

fixed purpose of not reaching an agreement or signing a contract.

C. RIGHT TO PEACEFUL CONCERTED ACTIVITIES

 351

Q: What is the constitutional basis of strikes, lockouts and other

concerted activities?

A: The State 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 (Sec. 3, Art. XIII, 1987
Constitution).

Note: The law does not look with favor upon strikes and lockouts because of
their disturbing and pernicious effects upon the social order and the public
interests; to prevent or avert them and to implement Sec. 6, Art. XIV of the
Constitution, the law has created several agencies, namely: the BLR, the DOLE,
the Labor Management Advisory Board, and the CIR. (Luzon Marine Dev’t Union
v. Roldan, G.R. No. L‐2660, May 30, 1950)

Q: What is a concerted action?

A: It is an activity undertaken by 2 or more employees, by one on behalf of the

others.

Q: Are all concerted actions strikes?

A: Not all concerted activities are strikes. They may only be protest actions –
they do not necessarily cause work stoppage by the protesters. A strike in
contrast is always a group action accompanied by work stoppage.

Q: The Ees wrote and published a letter to the bank president, demanding his
resignation on the grounds of immorality, nepotism, favoritism and
discrimination in the appointment and promotion of bank Ees. The bank
dismissed the 8 Ees on the alleged libelous letter. Were the Ees engaged in a
concerted activity?
A: Yes, assuming that they acted in their individual capacities when they wrote
the letter, they were nonetheless protected, for they were engaged in a concerted
activity, in their right of self ‐organization that includes concerted activity for
mutual aid and protection. Any interference made by the company will constitute
as ULP.
The joining in protests or demands, even by a small group of Ees, if in
furtherance of their interests as such is a concerted activity protected by the
Industrial Peace Act. It is not necessary that union activity be involved or that
collective bargaining be contemplated. (Republic Savings Bank v. CIR, G.R. No. L‐
20303, Oct. 31, 1967)

Q: What is a strike?
A: It means any temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute. (Sec.1 [uu], Rule I, Book
V, IRR)
It shall comprise not only concerted work stoppages, but also slowdowns, mass
leaves, sitdowns, attempt to damage, destroy or sabotage plant equipment and
 352

facilities, and similar activities. (Samahang Manggagawa sa Sulpicion Lines v.

Sulpicio Lines, Inc., G.R. No. 140992, Mar. 25, 2004)

Q: What is the purpose of a strike?

A: A strike is a coercive measure resorted to by laborers to enforce their
demands. The idea behind a strike is that a company engaged in a profitable
business cannot afford to have its production or activities interrupted, much less,
paralyzed. (Phil. Can Co. v. CIR, G.R. No. L‐3021, July 13, 1950)

Q: What is a lockout?
A: It means any temporary refusal of an employer to furnish work as a result of
an industrial or labor dispute. (Art. 212 [p])

Q: What is a strike area?

A: It means the establishment, warehouses, depots, plants or offices, including

the sites or premises used as runaway shops, of the Er struck against, as well
as the immediate vicinity actually used by picketing strikers in moving to and fro
before all points of entrance to and exit from said establishment. (Sec. 1 [vv],
Rule I, Book V, IRR)

Q: What is an internal union dispute?

A: It includes all disputes or grievances arising from any violation of or

disagreement over any provision of the constitution and by laws of a union,
including any violation of the rights and conditions of union membership
provided for in this LC. (Art. 212 [q])

Q: What is a boycott?

A: It is an attempt, by arousing a fear of loss, to coerce others, against their will

to withhold from one denominated “unfriendly to labor” their beneficial business
intercourse.

Q: What is a slowdown?

A: It is a method by which one’s employees, without seeking a complete

stoppage of work, retard production and distribution in an effort to compel
compliance by the employer with the labor demands made upon him.

Q: Does an “overtime boycott” or “work slowdown” by the employees constitute a

strike and hence a violation of the CBA’s “No strike, no lockout” clause?
A: Yes, the concept of a slowdown is a "strike on the installment plan." It is a
willful reduction in the rate of work by concerted action of workers for the
purpose of restricting the output of the employer (Er), in relation to a labor
dispute; as an activity by which workers, without a complete stoppage of work,
retard production or their performance of duties and functions to compel
management to grant their demands.
 353

Such a slowdown is generally condemned as inherently illicit and unjustifiable,

because while the employees (Ees) "continue to work and remain at their
positions and accept the wages paid to them," they at the same time "select what
part of their allotted tasks they care to perform of their own volition or refuse
openly or secretly, to the Er's damage, to do other work;" in other words, they
"work on their own terms." (Interphil Laboratories Ees Union‐FFW v. Interphil
Laboratories, Inc., G.R. No. 142824, Dec. 19, 2001)

Q: What are the characteristics of a strike?

A:

1. Existence of an Er‐Ee relationship

2. Existence of a labor dispute
3. Employment relation is deemed to continue although in a state of belligerent
suspension
4. Temporary work stoppage
5. Work stoppage is done through concerted action
6. The striking group is a legitimate labor organization; in case of a bargaining
deadlock, it must be the employees’ sole bargaining representative

Q: PAL dismissed strike leader Capt. Gaston as a result of which the Union
resolved to undertake the grounding of all PAL planes and the filing of
applications for “protest retirement” of members who had completed 5 years of
continuous service, and “protest resignation” for those who had rendered less
than 5 years of service in the company. PAL acknowledged receipt of said letters
and among the pilots whose “protest resignation or retirement” was accepted by
PAL were Enriquez and Ecarma.

Before their readmission, PAL required Enriquez and Ecarma to accept 2

conditions, namely: that they sign conformity to PAL’s letter of acceptance of
their retirement and or resignation and that they submit an application for
employment as new employees (Ees) without protest or reservation. As a result
of this their seniority rights were lost.
Are the pilots entitled to the restoration of their seniority rights?
A: No, an Ee has no inherent right to seniority. He has only such rights as may
be based on a contract, statute, or an administrative regulation relative thereto.
Seniority rights which are acquired by an Ee through long ‐time employment are
contractual and not constitutional. The discharge of an Ee thereby terminating
such rights would not violate the Constitution. When the pilots tendered their
respective retirement or resignation and PAL immediately accepted them, both
parties mutually terminated the contractual employment relationship between
them thereby curtailing whatever seniority rights and privileges the pilots had
earned through the years.

Q: Does the action of the Ees of PAL fall under the ambit of concerted
actions protected by law?
 354

A: No, the pilot’s mass action was not a strike because Ees who go on strike do
not quit their employment. Ordinarily, the relationship of Er and Ee continues
until one of the parties acts to sever the relationship or they mutually act to
accomplish that purpose. As they did not assume the status of strikers, their
“protest retirement/resignation” was not a concerted activity which was
protected by law. (Enrique v. Zamora, G.R. No. L‐51382, Dec. 29, 1986)

Q: What is a labor dispute?

A: Any controversy or matter concerning terms or conditions or representation of
persons in negotiating, fixing, maintaining, changing or arranging the terms and
conditions of employment, regardless of whether or not the disputants stand in
the proximate relation of Ers and Ees. (Gold City Integrated Port Services, Inc. v.
NLRC, G.R. No. 103560, July 6, 1995)

Q: When is a person or entity considered as participating or interested

in a labor dispute?
A:
1. If relief is sought against him or it, and
2. He or it is engaged in the same industry, trade, craft, or occupation in which
such dispute occurs, or
3. Has a direct or indirect interest therein, or
4. Is a member, officer, or agent of any association composed in whole or in part
of employees or employers engaged in such industry, trade, craft, or
occupation.

Q: Liwayway Publication Inc. is a second sub lessee of a part of the premises of

the Permanent Concrete Products, Inc. It has a bodega for its newsprint in the
sublet property which it uses for its printing and publishing business. The daily
supply of newsprint needed to feed its printing plant is taken from its bodega.
The Ees of the Permanent Concrete Products Inc. declared a strike against their
company. The union members picketed, stopped and prohibited Liwayway’s
trucks from entering the compound to load newsprint from its bodega.
Does the lower court have jurisdiction to issue a writ of preliminary injunction
considering that there was a labor dispute between Permanent Concrete
Products, Inc. and the union?
A: Yes, Liwayway Publication Inc. is not in anyway related to the striking union
except for the fact that it is the sub ‐ lessee of a bodega in the company’s
compound.
The business of Liwayway is exclusively the publication of magazines which has
absolutely no relation or connection whatsoever with the cause of the strike of
the union against their company, much less with the terms, conditions or
demands of the strikers. Liwayway is merely a 3rd person or an innocent by ‐
stander. (Liwayway Pub., Inc. v. Permanent Concrete Workers Union, G.R. No. L ‐
25003, Oct. 23, 1981)

Q: Because of financial problems, the company decided to temporarily shutdown

its operations at the dyeing and finishing division. It notified the DOLE of the
 355

shutdown. Raymund Tomaroy with 16 members of the union staged a picket in

front of the company’s compound, carrying placards. He demanded a resumption
of work and 13th month pay. The company filed a petition to declare the strike
illegal. The union argues that they did not stage a strike, for considering that the
dyeing and finishing division of the company was shut down, it could not have
caused a work stoppage. Was the action of the union a strike?

A: Yes, the concerted efforts of the members of the union and its supporters
caused a temporary work stoppage. The allegation that there can be no work
stoppage because the operation in the division had been shut down is of no
consequence. It bears stressing that the other divisions were fully operational.
(Bukluran ng Manggagawa sa Clothman Knitting Corp. v. CA, G.R. No. 158158,
Jan.17, 2005)

1. FORMS OF CONCERTED ACTIVITIES

Q: What are the types of strike?

A:

1. Economic strike – used to secure the economic demands such as higher

wages and better working conditions for the workers
2. ULP strike – protest against ULP of management

Q: Distinguish between an economic strike and an ULP strike.

A:
ECONOMIC STRIKE ULP STRIKE
As to nature
Voluntary strike because the Ee will Involuntary strike; the LOis forced to
declare a strike to compel management go on strike because of the ULP
to grant its demands committed against them by the Er. It
is an act of self‐defense since the
Ee’s are being pushed to the wall
and their only remedy is to stage a
strike
Who will initiate
The CB agent of the appropriate Either the CB agent or the LLO in
bargaining unit can declare an behalf of its members
economic strike
As to the cooling‐off period
30 days from notice of strike before the 15 days from the filing of the notice
intended date of actual strike subject of strike
to the 7‐day strike ban
As to the exception to the cooling‐off period
 356

No exception – mandatory The cooling‐off period may be

Note: notice of strike and strike vote
may be dispensed with; they may
strike immediately
dispensed with, and the union may
take immediate action in case of
dismissal from employment of their
officers duly elected in accordance
with the union’s constitution and by ‐
laws, which may constitute union
busting where the existence of the
union is threatened. It must still
observe the mandatory 7‐day strike
ban period before it can stage a valid
strike

Q: What are the different forms of strike?

A:

1. Legal Strike‐one called for a valid purpose and conducted through means
allowed by law.
2. Illegal Strike‐one staged for a purpose not recognized by law, or if for a valid
purpose, conducted through means not sanctioned by law.
3. Economic Strike‐ one staged by workers to force wage or other economic
concessions from the employer which he is not required by law to grant
(Consolidated Labor Association of the Phil. vs. Marsman, G.R. No. L ‐17038,
July 31, 1964)
4. ULP Strike‐one called to protest against the employer’s acts of unfair practice
enumerated in Article 248 of the Labor Code, as amended, including gross
violation of the collective bargaining agreement (CBA) and union busting.
5. Slow Down Strike‐one staged without the workers quitting their work but by
merely slackening or by reducing their normal work output.
6. Wild‐Cat Strike‐one declared and staged without filing the required notice of
strike and without the majority approval of the recognized bargaining agent.
7. Sit Down Strike‐one where the workers stop working but do not leave their
place of work.

2. WHO MAY DECLARE A STRIKE OR LOCKOUT?

Q: Who may declare a strike or lockout?

A:

1. Any certified or duly recognized bargaining representative may declare a

strike in cases of bargaining deadlock and unfair labor practice. Likewise, the
employer may declare a lockout in the same cases.
2. In the absence of a certified or duly recognized bargaining representative, any
legitimate labor organization in the establishment may declare a strike but
 357

only on the ground of unfair labor practice. (Section 2, Rule XIII Book V,
Omnibus Rules Implementing The Labor Code, as amended).

3. REQUISITES FOR A VALID STRIKE

4. REQUISITES FOR A VALID LOCKOUT

Q: What are the requisites of a lawful strike / lockout?

A: The requirements for a valid strike or lockout are as follows:

1. It must be based on a valid and factual ground;

2. A strike or lockout NOTICE shall be filed with the National Conciliation and
Mediation Board (NCMB) at least 15 days before the intended date of the
strike or lockout if the issues raised are unfair labor practices, or at least
30 days before the intended date thereof if the issue involves bargaining
deadlock.

3. In cases of dismissal from employment of union officers duly elected in

accordance with the union constitution and by ‐laws, which may constitute
UNION BUSTING where the existence of the union is threatened, the 15 ‐
day cooling‐off period shall not apply and the union may take action
immediately after the strike vote is conducted and the result thereof
submitted to the Department of Labor and Employment.

4. A strike must be approved by a majority vote of the members of the Union

and a lockout must be approved by a majority vote 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 that purpose.

5. A strike or lockout VOTE shall be reported to the NCMB ‐DOLE Regional

Branch at least 7 days before the intended strike or lockout subject to the
cooling‐off period.

6. In the event the result of the strike/lockout 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. (NSFW vs. Ovejera, G.R.
No. 59743, May 31, 1982)

In case of dismissal from employment of union officers which may

constitute union busting, the time requirement for the filing of the Notice of
Strike shall be dispensed with but the strike vote requirement, being
mandatory in character, shall “in every case” be complied with.
7. The dispute must not be the subject of an assumption of jurisdiction by the
President or the Secretary of Labor and Employment, a certification for
compulsory arbitration, or submission to compulsory or voluntary
 358

arbitration nor a subject of a pending case involving the same grounds for
the strike or lockout.

Q: What are the valid grounds for declaring a strike or lockout?

A: The law recognizes 2 grounds for the valid exercise of the right to strike or
lockout, namely:

1. Collective Bargaining Deadlock (CBD)‐economic;

2. Unfair Labor Practice (ULP)‐political

Note: It is possible to change an economic strike into a ULP strike. (Consolidated

Labor Ass’n of the Phils. v. Marsman and Co., G.R. No. L‐17038, July 31, 1964)
Violations of CBA must be gross to be considered as ULP.

Q: What is conversion doctrine?

A: It is when a strike starts as economic and later, as it progresses, it becomes a
ULP, or vice versa.

Q: Can a strike be converted into a lockout?

A: No, a strike cannot be converted into a pure and simple lockout by the mere
expedient of filing before the trial court a notice of offer to return to work during
the pendency of the labor dispute between the union and the employer. (Rizal
Cement Workers Union v. CIR, G.R. No. L‐18442, Nov. 30, 1962).

Q: Give examples of strike and explain their legality.

A:

1. Sit‐down strike – Characterized by a temporary work stoppage of workers

who seize or occupy property of the Er or refuse to vacate the premises of
the Er.

Illegal – Amounts to a criminal act because of the Ee’s trespass on the

premises of the Er

2. Wildcat strike – A work stoppage that violates the labor contract and is not
authorized by the union.

Illegal –Because it fails to comply with certain req’ts of the law, to wit:
notice of strike, vote and report on strike vote

3. Slowdown – Strike on an installment plan; an activity by which workers,

without complete stoppage of work, retard production or their performance
of duties and functions to compel management to grant their demands

Illegal – Ees work on their own terms; while the Ees continue to work and
remain in their positions and accept wages paid to them, they at the same
 359

time select what part on their allotted tasks they care to perform on their
own volition or refuse openly or secretly

4. Sympathetic strike – Work stoppages of workers of one company to make

common cause with other strikers or other companies without demands or
grievances of their own against the Er

Illegal – There is no labor dispute between the workers who are joining the
strikers and the latter’s Er

5. Secondary strike – Work stoppages of workers of one company to exert

pressure on their Er so that the latter will in turn bring pressure upon the
Er of another company with whom another union has a labor dispute

Illegal – There is no labor dispute involved.

Note: A strike can validly take place only in the presence of and in relation
to a labor dispute between Er and Ee.

6. Welga ng bayan (Cause Oriented Strikes) – A political strike and therefore

there is neither a bargaining deadlock nor any ULP
Illegal – It is a political rally

7. Quickie strikes‐ brief and unannounced temporary work stoppage

Illegal‐ failure to comply with notice requirements and etc.

Q: Two unions, joined a welga ng bayan. The unions, led by their officers,
staged a work stoppage which lasted for several days, prompting FILFLEX and
BIFLEX Corporations to file a petition to declare the work stoppage illegal for
failure to comply with procedural req’ts. Whether the Ees committed an illegal
work stoppage?
A: Yes. Ees, who have no labor dispute with their Er but who, on a day they are
scheduled to work, refuse to work and instead join a welga ng bayan commit an
illegal work stoppage. There being no showing that the two unions notified the
corporations of their intention, or that they were allowed by the corporations, to
join the welga ng bayan, their work stoppage is beyond legal protection.(BIFLEX
Phils. Inc. Labor Union (NAFLU) vs. FILFLEX Industrial and Manufacturing Corp.,
G.R. No. 155679, Dec. 19, 2006)

Q: What are the tests in determining the legality of strike?

A: The following must concur:

1. Purpose test – the strike must be due to either bargaining deadlock and/or
the ULP
2. Compliance with the procedural and substantive req’ts of the law. (See
requisites of a valid strike)
 360

3. Means employed test – It states that a strike may be legal at its inception but
eventually be declared illegal if the strike is accompanied by violence which is
widespread, pervasive and adopted as a matter of policy and not mere
violence which is sporadic which normally occur in a strike area.

Q: What are the instances when a strike or lockout cannot be declared?

A: Non‐strikable issues:

1. CBA violations not gross in character

2. Grounds involving inter/intra‐union disputes
3. When there is no notice of strike or lockout or without the strike or lockout
vote
4. After assumption of jurisdiction by the SLE
5. After certification or submission of dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same grounds for
strike or lockout
6. Labor standards cases such as wage orders. (Guidelines governing Labor
Relations [Oct. 19, 1987] issued by Sec. Drilon. See also Art. 261, LC)

Q: What are the procedural and substantive requisites before a strike

may be declared?
A:

1. Notice of strike – filed with the NCMB taking into consideration the cooling ‐off
period
Note: The failure of the union to serve the company a copy of the notice of
strike is a clear violation of Section 3, Rule XXII, Book V of the Rules
Implementing the LC. The Constitutional precepts of due process mandate
that the other party be notified of the adverse action of the opposing party.
(Filipino Pipe and Foundry Corp. v. NLRC, G.R. No. 115180, Nov.r 16,
1999)

2. 30/15 day Cooling‐off period before the intended date of actual strike – notice
of strike is filed with the NCMB taking into consideration the cooling ‐off
period, at least:

a. 30 days before the intended strike for bargaining deadlocks;

b. 15 days before the intended strike for ULP

3. Strike vote

a. The decision to declare a strike must be approved by a majority of the

total union membership in the bargaining unit concerned.
b. It must be obtained by secret ballot through meetings or referenda
called for the purpose.
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c. Its purpose is to ensure that the intended strike is a majority decision.

The report on the strike vote must be submitted to DOLE at least 7 days
before the intended strike subject to the cooling ‐off period.
d. The regional branch may supervise the conduct of the secret balloting at
its own initiative or upon request of any party.

4. Furnish the regional branch of the NCMB with a notice to conduct a strike
vote, at least 24‐hours before the meeting for such purpose (Sec. 10, Rule XXII
of the Omnibus Rules of the NLRC).

5. 7‐Day strike ban – a 7‐day waiting period before the date of the purported
strike (within which the union intending to conduct a strike must at least
submit a report to DOLE as to the result of the strike vote)

Note: To give DOLE an opportunity to verify whether the projected strike

really carries the imprimatur of the majority of the union members in
addition to the cooling‐off period before the actual strike. (Lapanday
Workers’ Union, et.al. v. NLRC, G.R. Nos. 95494 ‐97, Sep. 7, 1995)

Q: What is a cooling‐off period?

A: It is the period of time given the NCMB to mediate and conciliate the parties. It
is the span of time allotted by law for parties to settle their disputes in a peaceful
manner before staging a strike or lockout.
Note: Cooling‐off and waiting period may be done simultaneously.

Q: What is the effect of non‐compliance with the requisites of a strike?

A: The strike may be declared illegal.

Q: What is the purpose of giving notice of the conduct of a strike vote to the
NCMB at least 24 hours before the meeting for the said purpose?
A:
1. Inform the NCMB of the intent of the union to conduct a strike vote;
2. Give the NCMB ample time to decide on whether or not there is a need to
supervise the conduct of the strike vote to prevent any acts of violence and or
irregularities;
3. Ample time to prepare for the deployment of the requisite personnel. (Capitol
Medical Center v. NLRC, G.R. No. 147080, April 26, 2005)

Q: Is a no strike/lockout clause legal?

A: Yes, but it is applicable only to economic strikes, not ULP strikes. As a
provision in the CBA, it is a valid stipulation although the clause may be invoked
by an employer (Er) only when the strike is economic in nature or one which is
conducted to force wage or other concessions from the Er that are not mandated
to be granted by the law itself. It would be inapplicable to prevent a strike which
is grounded on ULP. (Panay Electric Co. v. NLRC, G.R. No. 102672, Oct. 4, 1995;
Malayang Samahan ng mga Manggagawa sa Greenfield v. Ramos, G.R. No.
113907, Feb. 28, 2000)
 362

Q: What is a preventive mediation case?

A: It involves labor disputes which are the subject of a formal or informal request
for conciliation and mediation assistance sought by either or both parties or upon
the initiative of the NCMB. (Sec. 1 [mm], Rule I, Book V, IRR)
Note: The regional branch may treat the notice as preventive mediation case
upon agreement of the parties.

Q: What are the contents of the notice of strike or lockout?

A:

1. Name and addresses of Er

2. Union involved
3. Nature of the industry to which the Er belongs
4. Number of union members
5. Workers in the bargaining unit
6. Other relevant date
7. In case of bargaining deadlocks: unresolved issues, written proposals of the
union, counter‐proposals of the Er and proof of request for conference to settle
differences
8. In case of ULP: The acts complained of, and the efforts taken to resolve the
dispute

Note: NCMB shall inform the concerned party in case notice does not conform
with the req’ts.

Q: What action will the board take on the notice of strike of strike or
lockout?
A:
1. Upon receipt of notice, the regional branch of the Board shall exert all efforts
at mediation and conciliation to enable the parties to settle the dispute
amicably. It shall also encourage the parties to submit the dispute to
voluntary arbitration.
2. The regional branch of the NCMB may, upon agreement of the parties, treat a
notice as a preventive mediation case.
3. During the proceedings, the parties shall not do any act which may disrupt or
impede the early settlement of the dispute. They are obliged, as part of their
duty to bargain collectively in good faith and to participate fully and promptly
in conciliation meetings called by the regional branch of the NCMB.
4. A notice, upon agreement of the parties, may be referred to alternative modes
of dispute resolution, including voluntary arbitration.

Q: Was the strike held by the union legal based on the fact that the
notice of strike only contained general allegations of ULP?
A: No. Rule XIII Sec. 4 Book V of the Implementing Rules of the LC provides: In
cases of ULP, the notice of strike shall as far as practicable, state the acts
 363

complained of and the efforts to resolve the dispute amicably. (Tiu v. NLRC, G.R.
No. 123276, Aug. 18, 1997)

Q: NFSW, the bargaining agent of Central Azucarera de la Carlota (CAC) rank

and file employees, filed a notice of strike based on non ‐payment of the 13th
month pay and 6 days thereafter they held the strike. A day after the
commencement of the strike, a report of the strike ‐vote was filed by NFSW with
MOLE. CAC filed a petition to declare the strike illegal due to non ‐compliance
with the 15‐day cooling of period and the strike was held before the lapse of 7
days from the submission to the MOLE of the result of the strike vote. Was the
strike held by NFSW legal?

A: No. The cooling‐off period in Art. 264(c) and the 7‐day strike ban after the
strike‐vote report prescribed in Art. 264 (f) were meant to be mandatory. The law
provides that “the labor union may strike” should the dispute “remain unsettled
until the lapse of the requisite number of days from the filing of the notice”, this
clearly implies that the union may not strike before the lapse of the cooling ‐off
period. The cooling‐off period is for the Ministry of Labor and Employment to
exert all efforts at mediation and conciliation to effect a voluntary settlement.

The mandatory character of the 7‐day strike ban is manifest in the provision that
“in every case” the union shall furnish the MOLE with the results of the voting
“at least 7 days before the intended strike.” This period is to give time to verify
that a strike vote was actually held. (NFSW v. Ovejera, G.R. No. L‐59743, May
31, 1982)

Q: Fil Transit Ees Union filed a notice of strike with the BLR because of alleged
ULP of the company. Because of failure to reach an agreement the union went on
strike. Several employees (Ees) were dismissed because of the strike. The union
filed another notice of strike alleging ULP, massive dismissal of officers and
members, coercion of Ees and violation of workers rights to self ‐organization. The
Ministry of Labor and Employment, after assuming jurisdiction over the dispute,
ordered all striking Ees including those who were dismissed to return to work.
The company however countered that no strike vote had been obtained before
the strike was called and the result of the strike vote was not reported to
Ministry of Labor and Employment. Was the strike held by the union illegal for
failure to hold a strike vote?

A: Yes, there is no evidence to show that a strike vote had in fact been taken
before a strike was called. Even if there was a strike vote held, the strike called
by the union was illegal because of non ‐observance by the union of the
mandatory 7‐day strike ban counted from the date the strike vote should have
been reported to the DOLE. (First City Interlink Transportation Co., Inc. v.
Confessor, G.R. No. 106316, May 5, 1997)

Q: The company conceived and decided to retrench its Ees and selected about 40
Ees to be dismissed because of the lack of work. Because of this about 200 Ees
 364

during break‐time boarded buses and went to the Ministry of Labor but they
were advised to return to work.

Upon returning to the company’s premises, the Ees were only allowed to stay in
the canteen and were not given work because according to the company the
machines were undergoing repairs. Are the Ees entitled to reinstatement and
backwages?

A: The Ees are entitled to reinstatement but not to backwages. Both parties
being in pari delicto, having conducted an illegal strike and lockout respectively,
there must be a restoration of the status quo ante and must bring the parties
back to their respective positions prior to the illegal strike and lockout which
shall be done by reinstating the remaining Ees. However, it is the general rule
that strikers are not entitled to backwages. The principle of “no work, no pay” is
applicable in view of the finding of the illegality of the strike. (Philippine Inter‐
Fashion, Inc v. NLRC, G.R. No. L‐59847, Oct. 18, 1982)

Q: What are the exceptions to the “no backwages rule” of strikers?

A:
1. When the Ees were illegally locked thus compelling them to stage a strike
2. When the Er is guilty of the grossest form of ULP
3. When the Er committed discrimination in the rehiring of strikers refusing to
readmit those against whom there were pending criminal cases while
admitting nonstrikers who were also criminally charged in court;
4. When the workers who staged a voluntary ULP strike offered to return to
work unconditionally but the Er refused to reinstate them. (Manila Diamond
Hotel vs. Manila Diamond Hotel Ees’ Union, G.R. No. 158075, June 30, 2006)

5. REQUISITES FOR LAWFUL PICKETING

Q: What is picketing?
A: It is the act of marching to and fro the employers premises which is usually
accompanied by the display of placard and other signs, making known the facts
involved in a labor dispute.
The right to picket as a means of communicating the facts of a labor dispute is a
phase of the freedom of speech guaranteed by the Constitution. If peacefully
carried out, it can not be curtailed even in the absence of Er ‐Ee relationship.
(PAFLU v. Cloribel, G.R. No. L‐25878, Mar. 28, 1969)

Q: Is the right to picket an absolute right?

A: No, while peaceful picketing is entitled to protection as an exercise of free
speech, the courts are not without power to confine or localize the sphere of
communication or the demonstration to the parties to the labor dispute, including
those with related interests, and to insulate establishments or persons with no
industrial connection or having interest totally foreign to the context of the
 365

dispute. (Liwayway Pub., Inc. v. Permanent Concrete Workers Union, G.R. No. L ‐
25003, Oct. 23, 1981)

The right to peaceful picketing shall be exercised by the workers with due
respect for the rights of others. No person engaged in picketing shall commit any
act of violence, coercion or intimidation. Stationary picket, the use of means like
placing of objects to constitute permanent blockade or to effectively close points
of entry or exit in company premises are prohibited by law.

Q: Who is a strike‐breaker?
A: Any person who obstructs, impedes, or interferes with by force, violence,
coercion, threats, or intimidation any peaceful picketing affecting wages, hours
or conditions of work or in the exercise of the right of self ‐organization or
collective bargaining. (Art. 212 [r])

6. ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR

CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC FOR
COMPULSORY ARBITRATION

Q: Discuss the assumption of jurisdiction by the Secretary of Labor and

Employment (SLE) on strikes/lockouts.
A:

1. Discretionary
a. If in his opinion there exists a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest.
b. He may certify the same to the NLRC for compulsory arbitration
c. Effect – Automatically enjoins the intended or impending strike/lockout but
if one has already taken place, all striking or locked out Ees shall
immediately return to work and the Er shall immediately resume
operations and re‐admit all workers under the same terms and conditions
prevailing before the strike or lockout (Trans‐Asia Shipping Lines, Inc.‐
Unlicensed Crews Ee’s Union v. CA, G.R. No. 145428, July 7, 2004)

Note: A motion for reconsideration does not suspend the effects as the
assumption order is immediately executory.

2. Mandatory (within 24 hours)

a. In labor disputes adversely affecting the continued operation of hospitals,
clinics or medical institutions.
b. May assume jurisdiction or certify it to the NLRC for compulsory arbitration
c. Duty of striking union or locking out Er to provide and maintain an
effective skeletal workforce of medical and other health personnel, where
movement and service shall be unhampered and unrestricted as are
necessary to insure the proper and adequate protection of the life and
 366

health of its patients most especially emergency cases for the duration of
the strike or lockout (Art. 263 [g])

Q: What does the phrase “under the same terms and conditions”
contemplate?
A:
GR: It contemplates only actual reinstatement. This is in keeping with the
rationale that any work stoppage or slowdown in that particular industry can
be inimical to the national economy.
XPN: Payroll reinstatement in lieu of actual reinstatement but there must be
showing of special circumstances rendering actual reinstatement
impracticable, or otherwise not conducive to attaining the purpose of the law in
providing for assumption of jurisdiction by the SLE in a labor dispute that
affects the national interest. (Manila Diamond Hotel Ees Union v. SLE, G.R. No.
140518, Dec. 16, 2004)

Q: What are issues that the SLE may resolve when he assumes
jurisdiction over a labor dispute?
A:

1. Issues submitted to the SLE for resolution and such issues involved in the
labor dispute itself. (St. Scholastica’s College v. Torres, G.R. No. 100158, June
2, 1992)
2. SLE may subsume pending labor cases before LAs which are involved in the
dispute and decide even issues falling under the exclusive and original
jurisdiction of LAs such as the declaration of legality or illegality of strike
(Int’l. Pharmaceuticals v. SLE, G.R. Nos. 92981 ‐83, Jan. 9, 1992)

Note: Power of SLE is plenary and discretionary. (St. Luke’s Medical Center v.
Torres, G.R. No. 99395, June 29, 1993)

Q: Is it necessary for the SLE to issue a return ‐to‐work order in an

assumption order?
A: No, the mere issuance of an assumption order automatically carries with it a
return‐to‐work order although not expressly stated therein. (TSEU‐FFW v. CA,
G.R. Nos. 143013‐14, Dec.18, 2000)

Q: What is the extent of the powers of the President during

strikes/lockouts?
A:

1. May determine the industries, which are in his opinion indispensable to

national interest
2. May intervene at any time and assume jurisdiction over any such labor
dispute in order to settle or terminate the same. (Art. 263[g])
 367

Note: The decision of the President/SLE is final and executory after receipt
thereof by the parties.

Q: May a return to work order be validly issued pending determination of

the legality of the strike?
A: Yes. Where the return to work order is issued pending the determination of
the legality of the strike, it is not correct to say that it may be enforced only if the
strike is legal and may be disregarded if illegal. Precisely, the purpose of the
return to work order is to maintain the status quo while the determination is
being made. (Sarmiento v. Tuico, G.R. Nos. 75271‐73, June 27, 1988)

7. NATURE OF ASSUMPTION ORDER OR CERTIFICATION ORDER

Q: What is the nature of the power of SLE under Art. 263(g)?

A: The assumption of jurisdiction is in the nature of a police power measure. This
is done for the promotion of the common good considering that a prolonged strike
or lockout can be inimical to the national economy. The SLE acts to maintain
industrial peace. Thus, his certification for compulsory arbitration is not intended
to impede the worker’s right to strike but to obtain a speedy settlement of the
dispute. (Philtread Workers Union v. Confesor, G.R. No. 117169, Mar. 12, 1997)
Art. 263(g) does not interfere with the workers right to strike but merely
regulates it, when in the exercise of such right national interest will be affected.
The LC vests upon the SLE the discretion to determine what industries are
indispensable to national interest.

Q: What is the nature of assumption and certification orders of the

Secretary of Labor?
A: The underlying principle embodied in Art. 264 (g) on the settlement of labor
disputes is that assumption and certification orders are executor in character
and are strictly complied with by the parties even during the pendency of any
petition questioning their validity. This extraordinary authority given to the
Secretary of Labor is aimed at arriving at a peaceful and speedy solution to labor
disputes, without jeopardizing national interests.

Q: A notice of strike was filed by the PSBA Ees Union ‐FFW, alleging union
busting, coercion of Ees and harassment on the part of PSBA. The conciliation
being ineffective, the strike pushed through. A complaint for ULP and for a
declaration of illegality of the strike with a prayer for preliminary injunction was
filed by PSBA against the union.
While the cases were pending, a complaint was filed in the RTC of Manila by
some PSBA students against PSBA and the union, seeking to enjoin the union
and its members from picketing and from barricading themselves in front of the
schools main gate. A TRO was then issued by the RTC, which the union opposed
on the ground that the case involves a labor dispute over which the RTC had no
 368

jurisdiction. The Acting SLE later on assumed jurisdiction over the labor dispute
and ordered the striking Ee’s to return to work. Was the SLE correct in ordering
the striking Ees to return to work?
A: Yes. In the opinion of the Acting SLE, the labor dispute adversely affected the
national interest, affecting as it did 9,000 students. He is authorized by law to
assume jurisdiction over the labor dispute, after finding that it adversely affected
the national interest. This power is expressly granted by Art. 263 (g) of the LC,
as amended by B.P. Blg. 227.

Q: Does the RTC have jurisdiction to decide on the case filed by the PSBA
students?
A: No, the RTC was without jurisdiction over the subject matter of the case filed
by some PSBA students, involving as it does a labor dispute over which the labor
agencies had exclusive jurisdiction. That the regular courts have no jurisdiction
over labor disputes and to issue injunctions against strikes is well ‐settled. (PSBA
v. Noriel, G.R. No. 80648, Aug. 15, 1988)

Q: Members of the union learned that a redundancy program would be

implemented by the company. Thereupon it filed a Notice of strike on the grounds
of ULP. A number of conciliation meetings were conducted but to no avail so the
union staged a strike while the company terminated 383 union members from
service pursuant to its redundancy program. Pursuant to Art. 263(g) of the LC the
SLE certified the labor dispute for compulsory arbitration. Accordingly the SLE
enjoined the strike staged by the union and all striking workers were directed to
return to work within 24 hours except for those who were terminated due to
redundancy.
Was the SLE correct in excepting from the return‐to‐work order those who
were terminated due to redundancy?
A: No, Art. 263(g) is clear and unequivocal in stating that all striking or lock ‐out
Ees shall immediately return to work and the Er shall immediately resume
operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. Records of the case would show that the
strike occurred one day before the members of the union were dismissed due to
alleged redundancy. Thus the abovementioned article directs that the Er must
readmit all workers under the same terms and conditions prevailing before the
strike. (PLDT v. Manggagawa ng Komunikasyon sa Pilipinas, G.R. No. 162783,
July 14, 2005)

8. EFFECT OF DEFIANCE OF ASSUMPTION OR CERTIFICATION ORDERS

Q: What is the effect of defiance to the return to work order?

A: It shall be considered an illegal act committed in the course of the strike or
lockout and shall authorize the SLE or the NLRC, as the case may be, to enforce
the same under pain or loss of employment status or entitlement to full
 369

employment benefits from the locking ‐out Er or backwages, damages and/or

other positive and/or affirmative reliefs, even to criminal prosecution against the
liable parties. (Sec. 6, Rule IX, of the New Rules of Procedure of the NLRC; St.
Scholastica’s College v. Torres, G.R. No. 100158, June 2, 1992)

9. ILLEGAL STRIKE

Q: When is a strike illegal?

A:
a. Contrary to specific prohibition of law, such as strike by employees (Ees)
performing governmental functions;
b. Violates a specific req’t of law;
c. Declared for an unlawful purpose, such as inducing the employer (Er) to
commit ULP against non‐union Ees;
d. Employs unlawful means in the pursuit of its objective, such as
widespread terrorism of non‐strikers;
e. Declared in violation of an existing injunction;
f. Contrary to an existing agreement, such as a no strike clause or conclusive
arbitration clause

Q: What is “good faith (GF) strike” doctrine?

A: A strike may be considered legal where the union believed that the company
committed ULP and the circumstances warranted such belief in GF, although
subsequently such allegations of ULP are found out as not true. (Bacus v. Ople,
GR No. L‐56856, Oct. 23, 1984, People’s Industrial and Commercial Ees and
Organization (FFW) v. People’s Industrial and Commercial Corp., G.R. No.37687,
Mar. 15, 1982)

Q: What is the effect of the GF of strikers on the legality of strike?

A:
GR: A strike grounded on ULP is illegal if no such acts actually exist.
XPN: Even if no ULP acts are committed by the Er, if the Ees believe in GF that
ULP acts exist so as to constitute a valid ground to strike, then the strike held
pursuant to such belief may be legal. Where the union believed that the Er
committed ULP and the circumstances warranted such belief in GF, the
resulting strike may be considered legal although, subsequently, such
allegations of ULP were found to be groundless. (NUWHRAIN‐Interim Junta v.
NLRC, G.R. No. 125561, Mar. 6, 1998)

A) LIABILITY OF UNION OFFICERS

B) LIABILITY OF ORDINARY WORKERS
 370

Q: Should separation pay and backwages be awarded to the participants

of an illegal strike?
A: No backwages will be awarded to union members as a penalty for their
participation in the illegal strike. As for the union officers, for knowingly
participating in an illegal strike, the law mandates that a union officer may be
terminated from employment and they are not entitled to any relief. (Gold City
Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, Sep. 21, 1990)

Q: What is the rule on reinstatement of striking workers?

A: Striking employees are entitled to reinstatement, regardless of whether or not
the strike was the consequence of the employers ULP because while out on
strike, the strikers are not considered to have abandoned their employment, but
rather have only ceased from their labor; the declaration of a strike is not a
renunciation of employment relation.

Q: Who are not entitled to reinstatement?

A:

1. Union officers who knowingly participate in the illegal strike

2. Any striker or union who knowingly participates in the commission of illegal
acts during the strike

Note: Those union members who have joined an illegal strike but have not
committed any illegal act shall be reinstated but without back wages.
The responsibility for the illegal acts committed during the strike must be on an
individual and not on a collective basis. (First City Interlink Transportation Co.,
Inc. v. Confesor, G.R. No. 106316, May 5, 1997)

Q: Are strikers entitled to their backwages or strike duration pay?

A:
GR: No, even if such strike was legal.
XPN:
1. Where the strikers voluntarily and unconditionally offered to return to work,
but the employer refused to accept the offer – workers are entitled to back
wages from the date their offer was made
2. When there is a return‐to‐work order and the Ees are discriminated against
other Ees, workers are entitled to back wages from the date of discrimination
3. In case of a ULP strike, in the discretion of the authority deciding the case

Q: What is the rule in strikes in hospitals?

A:

1. It shall be the duty of the striking employees or locking ‐out employer to

provide and maintain an effective skeletal workforce of medical and health
personnel for the duration of the strike or lockout.
 371

2. SLE may immediately assume jurisdiction within 24 hours from knowledge of

the occurrence of such strike or lockout certify it to the NLRC for compulsory
arbitration.

Q: More or less 1400 Ees of the company staged a mass walk ‐out, allegedly
without anybody leading them as it was a simultaneous, immediate and
unanimous group action and decision, to protest the non ‐payment of their
salaries and wages. The Minister of Labor and Employment who found the strike
to be illegal granted the clearance to terminate the employment of those who
were instigators in the illegal strike. Was the decision of the Minister of
Employment in granting the clearance correct?
A: No, a mere finding of the illegality of a strike should not be automatically
followed by wholesale dismissal of the strikers from their employment. While it is
true that administrative agencies exercising quasi ‐judicial functions are free from
the rigidities of procedure, it is equally well ‐settled that avoidance of
technicalities of law or procedure in ascertaining objectively the facts in each
case should not, however, cause denial of due process. (Bacus v. Ople, G.R. No.
L‐56856, Oct. 23, 1984)

Q: 2 days after the union struck, the SLE ordered the striking workers to return
to work within 24 hours. But the striking union failed to return to work and
instead they continued their pickets. As a result, violence erupted in the picket
lines. The service bus ferrying non‐striking workers was stoned causing injuries
to its passengers. Threats, defamation, illegal detention, and physical injuries
also occurred. The company was directed to accept back all striking workers,
except the union officers, shop stewards, and those with pending criminal
charges. Was the SLE correct in not including the union officers, shop stewards
and those with pending criminal charges in the return ‐to‐work order?
A: No, to exclude union officers, shop stewards and those with pending criminal
charges in the directive to the company to accept back the striking workers
without first determining whether they knowingly committed illegal acts would
be tantamount to dismissal without due process of law. (Telefunken
Semiconductors Ees Union‐FFW v. SLE, G.R. No. 122743 & 127215, Dec. 12,
1997)

C) LIABILITY OF EMPLOYER
(SUPPLY2)

D) WAIVER OF ILLEGALITY OF STRIKE

Q: When is there a waiver of the illegality of a strike by the employer?

A: When an employer accedes to the peaceful settlement brokered by the NLRC
by agreeing to accept all employees who had not yet returned to work, it waives
 372

the issue of the illegality of the strike. (Reformist Union v. NLRC, G.R. No.
120482,Jan. 27, 1997)

10. INJUNCTIONS

Q: What is an injunction?

A: It is an order or a writ that commands a person to do or not to do a particular

act. It may be a positive (mandatory) or a negative (prohibitory) command.

A) REQUISITES FOR LABOR INJUNCTIONS

Q: May the court or quasi ‐judicial entity issue any injunction during
strikes/lockouts?
A: GR: No court or entity shall enjoin any picketing, strike or lockout, or any
labor dispute.
XPN:
1. When prohibited or unlawful acts are being or about to be committed that will
cause grave or irreparable damage to the complaining party. (Art. 218[e])
2. On the ground of national interest
3. The SLE or the NLRC may seek the assistance of law enforcement agencies to
ensure compliance with this provision as well as with such orders as he may
issue to enforce the same (Art. 263[g])

B) “INNOCENT BYSTANDER RULE”

Q: What must an “innocent by‐stander” satisfy before a court may enjoin

a labor strike?
A: The innocent by stander must show:

1. Compliance with the grounds specified in Rule 58 of the Rules of Court, and
2. That it is entirely different from, without any connection whatsoever to, either
party to the dispute and, therefore, its interests are totally foreign to the
context thereof. (MSF Tire & Rubber v. CA, G.R. 128632, Aug. 5, 1999)

Q: May the RTC take cognizance of the complaint where the same is but
an incident of a labor dispute?
A: No, where the subject matter of the 3rd party claim is but an incident of the
labor case, it is a matter beyond the jurisdiction of the RTC, such courts have no
 373

jurisdiction to act on labor cases or various incidents arising therefrom, including

the execution of decisions, awards or orders.

A party, by filing its 3rd party claim with the deputy sheriff, it submitted itself
to the jurisdiction of the NLRC acting through the LA.

The broad powers granted to the LA and to the NLRC by Art. 217, 218 and
224 of the LC can only be interpreted as vesting in them jurisdiction over
incidents arising from, in connection with or relating to labor disputes, as the
controversy under consideration, to the exclusion of the regular courts. The RTC,
being a co‐equal body of the NLRC, has no jurisdiction to issue any restraining
order or injunction to enjoin the execution of any decision of the latter.
(Deltaventures v. Cabato, G.R. No. 118216, Mar. 9, 2000)

Q: The employer filed with the RTC a complaint for damages with preliminary
mandatory injunction against the union, the main purpose of which is to
dispense the picketing of the members of the union. The union filed a motion to
dismiss on the ground of lack of jurisdiction. The RTC denied the motion to
dismiss and enjoined the picketing, it said that mere allegations of Er ‐Ee
relationship does not automatically deprive the court of its jurisdiction and even
the subsequent filing of charges of ULP, as an afterthought, does not deprive it of
its jurisdiction. Was the issuance by the RTC of the injunction proper?
A: No, the concerted action taken by the members of the union in picketing the
premises of the department store, no matter how illegal, cannot be regarded as
acts not arising from a labor dispute over which the RTCs may exercise
jurisdiction. (Samahang Manggagawa ng Liberty Commercial v. Pimentel, G.R.
No. L‐78621, Dec. 2, 1987)

VIII. PROCEDURE AND JURISDICTION

A. LABOR ARBITER

1. JURISDICTION OF THE LABOR ARBITER

Q: What is the distinction between the jurisdiction of the labor arbiter (LA) and
the National Labor Relations Commission (NLRC)?
A:
1. The NLRC has exclusive appellate jurisdiction on all cases decided by the LA.
2. The NLRC does not have original jurisdiction on the cases over which the LA
have original and exclusive jurisdiction.
3. The NLRC cannot have appellate jurisdiction if a claim does not fall within the
exclusive original jurisdiction of the LA.
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Q: What is the nature of jurisdiction of labor arbiters (LAs)?

A: It is original and exclusive. LAs have no appellate jurisdiction.

Q: What are the cases falling under the jurisdiction of labor arbiters
(LAs)?

A: Exclusive and original jurisdiction to hear and decide the following cases
involving all workers:
1. ULP cases
2. Termination disputes
3. If accompanied with a claim for reinstatement, those that workers file
involving wages, rates of pay, hours of work and other terms and conditions
of employment
4. Claims for actual, moral, exemplary and other forms of damages arising from
Er‐Ee relations
5. Cases arising from any violation of Art. 264, including questions involving the
legality of strikes and lockouts;
6. Except claims for Employment Compensation, Social Security, Philhealth and
maternity benefits, all other claims arising from Er ‐Ee relations, including
those of persons in domestic or household service, involving an amount
exceeding P5000 regardless of whether accompanied with a claim for
reinstatement
7. Monetary claims of overseas contract workers arising from Er ‐Ee relations
under the Migrant Worker’s Act of 1995 as amended by RA 10022
8. Wage distortion disputes in unorganized establishments not voluntarily
settled by the parties pursuant to RA 6727
9. Enforcement of compromise agreements when there is non‐compliance by any
of the parties pursuant to Art. 227 of the Labor Code (LC), as amended; and
10. Other cases as may be provided by law

Note: Although the provision speaks of exclusive and original jurisdiction of LAs,
the cases enumerated may instead be submitted to a voluntary arbitrator by
agreement of the parties under Art. 262 of the LC. The law prefers voluntary over
compulsory arbitration.

Q: What is the nature of the cases which the labor arbiter (LA) may
resolve?
A: The cases that an LA can hear and decide are employment related. Where no
Er‐Ee relationship exists between the parties and no issue is involved which may
be resolved by reference to the LC, other labor statutes, or any collective
bargaining agreement, it is the RTC that has jurisdiction. (Lapanday Agricultural
Dev’t. Corp v. CA, G.R. No. 112139, Jan.31, 2000)

The LA has jurisdiction over controversies involving Ers and Ees only if there is a
“reasonable causal connection” between the claim asserted and the Er ‐Ee
relations. Absent such link, the complaint is cognizable by the regular court.
(Eviota v. CA, G.R. No. 152121, July 29, 2003)
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Q: Do labor arbiters exercise concurrent jurisdiction with the NLRC?

A: Yes, with respect to contempt cases.

Q: What are the cases referred to grievance machinery and voluntary

arbitration?

A: Disputes arising from the:

1. Interpretation or implementation of the CBA

2. Interpretation or enforcement of company personnel policies

Q: What is the extent of the jurisdiction of the labor arbiter (LA) if there
are unresolved matters arising from the interpretation of the CBA?
A:
GR: LAs have no jurisdiction over unresolved or unsettled grievances arising
from the interpretation or implementation of the CBA and those arising from the
interpretation or enforcement of company personnel policies.
XPN: Actual termination disputes

Note: Where the dispute is just in the interpretation, implementation or

enforcement stage of the termination, it may be referred to the grievance
machinery set up by the CBA or by voluntary arbitration. Where there was
already actual termination, i.e., violation of rights, it is already cognizable by the
LA. (Maneja v. NLRC, G.R. No. 124013, June 5, 1998)

Q: Does the use of the word “may” in the provisions of the Grievance Procedure
allow the alternative of submitting the case before the labor arbiter (LA)?
A: Yes. The use of the word “may” shows the intention of the parties to reserve
the right to submit the illegal termination dispute to the jurisdiction of the LA,
rather than to a voluntary arbitrator. Petitioner validly exercised his option to
submit his case to a LA when he filed his complaint before the proper
government agency. In other words, the CA is correct in holding that voluntary
abitration is mandatory in character if there is a specific agreement between the
parties to that effect. It must be stressed however that, in the case at bar, the
use of the word “may” shows the intention of the parties to reserve the right of
recourse to LAs. (Vivero v. CA, G.R. No. 138938, Oct.24, 2000)

Q: What are the cases which do not fall under the jurisdiction of the
labor arbiters (LA)?
A: LAs have no jurisdiction over the ff:

1. Foreign governments (JUSMAG‐Phils. v. NLRC, G.R. No. 108813, Dec. 15,

1994)
2. Int’l agencies (Lasco v. NLRC, G.R. Nos. 109095‐109107, Feb. 23, 1995)
3. Intra‐corporate disputes which fall under P.D. 902 ‐A and now falls under the
jurisdiction of the regular courts pursuant to the new Securities Regulation
Code (Nacpil v. IBC, G.R. No. 144767, Mar. 21, 2002)
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4. Executing money claims against government (Dept of Agriculture v. NLRC,

G.R. No. 104269, Nov. 11, 1993)
5. Cases involving GOCCs with original charters which are governed by civil
service law, rules or regulations (Art. IX‐B, Sec.2, No.1, 1987 Constitution)
6. Local water district (Tanjay Water District v. Gabaton, April 17, 1989) except
where NLRC jurisdiction is invoked (Zamboanga City Water District v. Buat,
G.R. No. 104389, May 27, 1994)
7. The aggregate money claim does not exceed P5000 and without claim for
reinstatement (Rajah Humabon Hotel, Inc. v. Trajano, G.R. Nos. 100222 ‐23,
Sep.14, 1993)
8. Claim of employee (Ee) for cash prize under the Innovation Program of the
company, although arising from Er‐Ee relationship, is one requiring
application of general civil law on contracts which is within the jurisdiction of
the regular courts (SMC v. NLRC, G.R. No. 80774, May 31, 1988)
9. Cause of action based on quasi‐delict or tort which has no reasonable
connection with any of the claims enumerated in Art.217 of the LC (Ocheda v.
CA, G.R. No. 85517, Oct. 16, 1992)
10. Complaint arising from violation of training agreement (Singapore Airlines
v. Pano, G.R. No. L‐47739, June 22, 1983)

Q: FASAP, the sole and exclusive bargaining representative of the flight

attendants, flight stewards and pursers of PAL, and respondent PAL entered into
a CBA incorporating the terms and conditions of their agreement for the years
‘01‐‘05. Sec. 144, Part A of the CBA provides that compulsory retirement shall be
55 for females and 60 for males. They filed an action with the RTC claiming that
the CBA provision is discriminatory and hence unconstitutional. The RTC issued
a TRO. The appellate court ruled that the RTC has no jurisdiction over the case at
bar. Whether RTC has jurisdiction over the petitioners' action challenging the
legality of the provisions on the compulsory retirement age contained in the CBA?
A: Yes. The subject of litigation is incapable of pecuniary estimation, exclusively
cognizable by the RTC, pursuant to Sec. 19 (1) of BP Blg. 129, as amended.
Being an ordinary civil action, the same is beyond the jurisdiction of labor
tribunals.
Not every controversy or money claim by an employee (Ee) against the employer
(Er) or vice‐versa is within the exclusive jurisdiction of the LA. Actions between
Ees and Er where the Er‐Ee relationship is merely incidental and the cause of
action precedes from a different source of obligation is within the exclusive
jurisdiction of the regular court. Here, the Er ‐Ee 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. (Halaguena vs. PAL
Incorporated, G.R. No. 172013, Oct. 2, 2009)

Q: Who has the exclusive appellate jurisdiction over all cases decided by
Labor Arbiters?
A: The NLRC.

Q: What is the effect of perfection of an appeal on execution?

 377

A: The perfection of an appeal shall stay the execution of the decision of the
Labor Arbiter on appeal, except execution for reinstatement pending appeal.
Note: The provision of Art. 223 is clear that an award by the LA for
reinstatement shall be immediately executor even pending appeal and the
posting of a bond by the employer shall not stay the execution for reinstatement.
(Pioneer Texturizing Corp. v. NLRC, G.R. No. 118651, Oct. 16, 1997)

A) VERSUS REGIONAL DIRECTOR

Q: What is the difference between the power of Secretary of Labor and

Employment (SLE), Regional Director (RD) and Labor Arbiter (LA)?
A:
Art. 128 Art. 129 Art. 217(a)(6)
VP and EP of SLE RD LA
Inspection of Adjudication of Ees LA exercises original
establishments and claims for wages and and exclusive
issuance of orders to benefits jurisdiction
compel compliance with
labor standards, wage
orders and other labor
laws
Enforcement of labor Limited to monetary All other claims arising
legislation in general claims from Er‐Ee relations
Proceeding is an offshoot Initiated by sworn LA decides case within
of routine inspections complaints filed by any 30 calendar days after
interested party submission of the case
by the parties for
decision
No jurisdictional req’ts Jurisdictional req’ts: 1) All other claims
1) Complaint arises from arising from Er‐Ee
Er‐Ee relationship relations
2) Claimant is an Ee or 2) Including those of
person employed in persons in domestic or
domestic or household household service
service or a HH 3) Involving an amount
3) Complaint does NOT exceeding P5,000
include a claim for 4) Whether or not
reinstatement accompanied with a
4) Aggregate money claim claim for reinstatement
of EACH claimant does
not exceed P5,000
Appealable to SLE (In Appealable to NLRC Appealable to NLRC
case compliance order is
 378

issued by Regional Office)

2. REINSTATEMENT PENDING APPEAL

Q: PAL dismissed Garcia, for violating PAL’s Code of Discipline for allegedly
sniffing shabu in PAL’s Technical Center Toolroom Section. Garcia then filed for
illegal dismissal and damages where the Labor Arbiter (LA) ordered PAL to
immediately reinstate Garcia. On appeal, the NLRC reversed the decision and
dismissed Garcia’s complaint for lack of merit. Garcia’s motion for
reconsideration was denied by the NLRC. It affirmed the validity of the writ and
the notice issued by the LA but suspended and referred the action to the
Rehabilitation Receiver for appropriate action. Whether Garcia may collect their
wages during the period between the LA’s order of reinstatement pending appeal
and the NLRC decision overturning that of the LA?

A: Par. 3 of Art. 223 of the LC provides that the decision of the LA reinstating a
dismissed or separated Ee, insofar as the reinstatement aspect is concerned,
shall immediately be executory, pending appeal.

Even if the order of reinstatement of the LA is reversed on appeal, it is obligatory

on the part of the Er to reinstate and pay the wages of the dismissed Ee during
the period of appeal until reversal by the higher court. On the other hand, if the
Ee has been reinstated during the appeal period and such reinstatement order is
reversed with finality, the Ee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he actually rendered services during
the period.

In other words, a dismissed Ee whose case was favorably decided by the LA is

entitled to receive wages pending appeal upon reinstatement, which is
immediately executory. Unless there is a restraining order, it is ministerial upon
the LA to implement the order of reinstatement and it is mandatory on the Er to
comply therewith. (Garcia vs. PAL, G.R. No. 164856, Jan.20, 2009)

Q: May dismissed employees (Ees) collect their wages during the period between
the Labor Arbiter’s (LA’s) order of reinstatement pending appeal and the NLRC
decision overturning that of the LA?

A: Yes. Par. 3 of Art. 223 of the Labor Code provides that the decision of the LA
reinstating a dismissed or separated Ee, insofar as the reinstatement aspect is
concerned, shall immediately be excutory, pending appeal.

Even if the order of reinstatement of the LA is reversed on appeal, it is obligatory

on the part of the employer (Er) to reinstate and pay the wages of the dismissed
Ee during the period of appeal until reversal by the higher court. On the other
hand, if the Ee has been reinstated during the appeal period and such
reinstatement order is reversed with finality, the Ee is not required to reimburse
 379

whatever salary he received for he is entitled to such, more so if he actually

rendered services during the period. (Pfizer v. Velasco, G.R. No. 177467, March
9, 2011)

Unless there is a restraining order, it is ministerial upon the LA to implement the

order of reinstatement and it is mandatory on the Er to comply therewith. (Garcia
v. PAL, G.R. No. 164856, Jan. 20, 2009)

3. REQUIREMENTS TO PERFECT APPEAL TO NLRC

Q: How is an appeal from LA to NLRC perfected?

A:

1. The appeal is perfected:

a. Filed within the reglementary period provided in Sec. 1 of this Rules
b. Verified by the appellant himself in accordance with Sec. 4, Rule 7 of the
Rules of Court, as amended
c. In the form of a memorandum of appeal which shall state the grounds
relied upon and the arguments in support thereof, the relief prayed for,
and with a statement of the date the appellant received the appealed
decision, resolution or order
d. In 3 legibly typewritten or printed copies
e. Accompanied by (i) proof of payment of the required appeal fee; (ii) posting
of a cash or surety bond as provided in Sec. 6 of this Rule; (iii) a certificate
of non‐forum shopping; and (iv) proof of service upon the other parties.
2. Mere notice of appeal without complying with the other requisites aforestated
shall not stop the running of the period for perfecting an appeal.

Q: Is the posting of an appeal bond required for the perfection of an appeal from
a Labor Arbiter’s (LA’s) decision involving monetary award?
A: Yes. In case the decision of the LA or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the
posting of a bond. (Sec.6, Rule VI, NLRC 2005 Rules of Procedure)

Q: What are the forms of the appeal bond?

A: It shall either be in the form of cash deposit or surety bond equivalent in
amount to the monetary award, exclusive of damages and attorney's fees. (Sec.
6, Rule VI, NLRC 2005 Rules of Procedure)

Q: Who may issue a surety bond?

A: It shall be issued by a reputable bonding company duly accredited by the
Commission or the SC, and shall be accompanied by original or certified true
copies of:
 380

1. A joint declaration under oath by the Er, his counsel, and the bonding
company, attesting that the bond posted is genuine, and shall be in effect
until final disposition of the case.
1. An indemnity agreement between the Er‐appellant and bonding company;
2. Proof of security deposit or collateral securing the bond: provided, that a
check shall not be considered as an acceptable security;
3. A certificate of authority from the Insurance Commission;
4. Certificate of registration from the SEC;
5. Certificate of authority to transact surety business from the Office of the
President;
6. Certificate of accreditation and authority from the SC; and
7. A notarized board resolution or secretary's certificate from the bonding
company showing its authorized signatories and their specimen signatures.
(Sec. 6, Rule VI, NLRC 2005 Rules of Procedure)

Note: The appellant shall furnish the appellee with a certified true copy of the
said surety bond with all the above‐mentioned supporting documents.

Q: What is the period within which a cash or surety bond shall be valid
and effective?
A: From the date of deposit or posting, until the case is finally decided, resolved
or terminated, or the award satisfied. This condition shall be deemed
incorporated in the terms and conditions of the surety bond, and shall be binding
on the appellants and the bonding company. (Sec. 6, Rule VI, NLRC 2005 Rules
of Procedure)

Q: What is the effect if the bond is verified by the NLRC to be irregular or

not genuine?
A: The Commission shall cause the immediate dismissal of the appeal, and
censure or cite in contempt the responsible parties and their counsels, or subject
them to reasonable fine or penalty. (Sec.6, Rule VI, NLRC 2005 Rules of
Procedure)
Note: The appellee shall verify the regularity and genuineness of the bond and
immediately report any irregularity to the NLRC.

Q: May the bond be reduced?

A:
GR: No.
XPN: On meritorious grounds, and only upon the posting of a bond in a
reasonable amount in relation to the monetary award.

Note: The mere filing of a motion to reduce bond without complying with the
requisites in the preceding paragraphs shall not stop the running of the period to
perfect an appeal (Sec. 6, Rule VI, NLRC 2005 Rules of Procedure).

Q: Company "A", within the reglementary period, appealed the decision of a

Labor Arbiter directing the reinstatement of an Ee and awarding backwages.
 381

However, A's cash bond was filed beyond the ten day period. Should the NLRC
entertain the appeal? Why?

A: No, the NLRC should not entertain the appeal, as the same was not perfected
for failure to file a bond. In ABA vs. NLRC, G.R. No.122627, July 18, 1999, the
SC ruled: "An appeal bond is necessary...the appeal may be perfected only upon
the posting of cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award
in the judgment appealed from." (2001 Bar Question)

Q: Is a motion for reconsideration (MR) of the NLRC decision required

before certiorari may be availed of?

A: Yes. A MR is required to enable NLRC to correct its mistakes. If no MR is filed,

NLRC’s decision becomes final and executory.

Q: What is the remedy in case of denial of the MR?

A: If the motion is denied, the aggrieved party may file a petition for certiorari not
later than 60 days from notice of the judgment, order or resolution. In case a
motion for reconsideration or new trial is timely filed, whether such motion is
required or not, the 60 day period shall be counted from notice of the denial of
said motion. No extension of time to file the petition shall be granted except for
compelling reason and in no case exceeding 15 days. (Sec. 4, Rule 65, Rules of
Court.)
Q: What is the effect if no service of summons was made?

A: In the absence of service of summons or a valid waiver thereof, the hearings

and judgment rendered by the labor arbiter is null and void.

Q: What is compulsory arbitration?

A: The process of settlement of labor disputes by a government agency which

has the authority to investigate and make an award binding on all the parties.

Q: Can the Labor Arbiter (LA) conduct compulsory arbitration?

A: Yes. Under the Labor Code, it is the LA who is clothed with the authority to
conduct compulsory arbitration on cases involving termination disputes [Art.217,
P.D. 442, as amended]. (PAL v. NLRC, G.R. No. 55159, Dec. 22, 1989)

Q: What are the rules on venue of filing cases?

A:

1. All cases which the Labor Arbiters (LAs) have authority to decide may be filed
in the Regional Arbitration Branch (RAB) having jurisdiction over the
workplace of the complainant /petitioner.
 382

Note: Workplace is understood to be the place or locality where the

employee (Ee) is regularly assigned when the cause of action arose. It
shall include the place where the Ee is supposed to report back after a
temporary detail, assignment or travel.
In case of field Ees, as well as ambulant or itinerant workers, their
workplace is where they are”

a. Regularly assigned
b. Supposed to regularly receive their salaries and wages
c. Receive their work instructions from
d. Reporting the results of their assignment to their employers (Er)

2. Where 2 or more RABs have jurisdiction over the workplace, the first to
acquire jurisdiction shall exclude others.

3. Improper venue when not objected to before filing of position papers shall be
deemed waived.

4. Venue may be changed by written agreement of the parties or when the NLRC
or the LA so orders, upon motion by the proper party in meritorious cases.

5. For Overseas Contract Workers where the complainant resides or where the
principal office of the respondent Er is located, at the option of the
complainant.

Note: The Rules of Procedure on Venue is merely permissive, allowing a

different venue when the interest of substantial justice demands a different
one. (Dayag v. Canizares, GR. No. 124193, Mar. 6, 1998)

B. NATIONAL LABOR RELATIONS COMMISSION (NLRC)

Q: What is the NLRC?

A: It is an administrative body with quasi ‐judicial functions and the principal

government agency that hears and decides labor ‐management disputes; it is
attached to the DOLE solely for program and policy coordination only.

Q: How are the powers and functions of the NLRC allocated?

A:
1. En Banc

a. Promulgating rules and regulations and governing the hearings and

disposition of cases before any of its divisions and regional branches.
b. Formulating policies affecting its administration and operations.
c. On temporary or emergency basis, to allow cases within the jurisdiction of
any division to be heard and decided by any other division whose docket
 383

allows the additional workload and such transfer will not expose litigants
to unnecessary additional expense.

2. Division (8 Divisions with 3 members)

a. Adjudicatory;
b. All other powers, functions and duties;
c. Exclusive appellate jurisdiction over cases within their respective territorial
jurisdiction.

Q: Does an individual Commissioner have adjudicatory power?

A: No. The law lodges the adjudicatory power on each of the eight divisions, not
on the individual commissioners nor on the whole commission. The “division” is a
legal entity, not the person who sits in it. Hence, an individual commissioner has
no adjudicatory power, although of course, he can concur or dissent in deciding a
case.

1. JURISDICTION

Q: What are the two kinds of jurisdiction of the NLRC?

A:
1. Exclusive Original Jurisdiction
a. Certified labor disputes causing or likely to cause a strike or lockout in
an industry indispensable to national interest, certified to it by the
Secretary of Labor or the President for compulsory arbitration
b. 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
c. Injunction in strikes or lockouts under Art. 264 of the Labor Code (LC)
d. Contempt cases
2. Exclusive Appellate Jurisdiction
a. All cases decided by the Labor Arbiters under Art. 217(b) of the LC and
Sec. 10 of R.A.8042 (Migrant Worker’s Act); and
b. Cases decided by the Regional Offices of DOLE in the exercise of its
adjudicatory function under Art.129 of the LC over monetary claims of
workers amounting to not more than P5000 and not accompanied by
claim for reinstatement.

Q: What is the composition of the NLRC?

A:
1. Chairman
2. 23 Members
 384

a. 8 members each, shall be chosen only from among the nominees of the
workers and employers (Er) organization respectively.
b. The Chairman and the 7 remaining members shall come from the public
sector, with the latter to be chosen preferably from among the
incumbent Labor Arbiters.
c. Upon assumption into office, the members nominated by the workers
and Ers organization shall divest themselves of any affiliation with or
interest in the federation or association to which they belong.

Note: There is no need for the Commission on Appointments to confirm the

positions in the NLRC. Such requirement has no constitutional basis. (Calderon v.
Carale, GR. No. 91636, April 23, 1992)

Q: How does the NLRC adjudicate cases?

A:

1. The NLRC adjudicates cases by division. A concurrence of 2 votes is needed

for a valid judgment.

Note: Whenever the required membership in a division is not complete and

the concurrence of the Commissioners to arrive at judgment or resolution
cannot be obtained, the Chairman shall designate such number of additional
Commissioners from the other divisions as may be necessary.

2. It shall be mandatory for the division to meet for purposes of consultation.

Note: The conclusion of a division on any case submitted to it for decision

should be reached in consultation before the case is assigned to a member for
the writing of the opinion.

3. A certification that a consultation has been conducted, signed by the

presiding commissioner of the division, shall be issued (copy attached to the
record of case and served upon the parties).

Q: What are the qualifications of the Chairman and the Commissioners?

A:

1. Member of the Philippine Bar

2. Engaged in the practice of law in the Philippines for at least 15 years
3. At least 5 years experience or exposure in handling labor management
relations
4. Preferably a resident of the region where he is to hold office

Q: What are the qualifications of an Executive Labor Arbiter?

A:
 385

1. Member of the Philippine Bar

2. Engaged in the practice of law in the Philippines for at least 10 years
3. At least 5 years experience or exposure in handling labor management
relations

Q: What is the term of office of the Chairman, Commissioners and Labor

Arbiters (LAs)?
A: They shall hold office during good behavior until they reach the age of 65
unless removed for causes as provided by law or become incapacitated to
discharge the function of his office.
Provided, however, that the President of the Philippines may extend the services
of the Commissioners and LAs up to the maximum age of 70 years upon the
recommendation of the Commission en banc.

Q: Some disgruntled members of Bantay Labor Union filed with the Regional
Office of the DOLE a written complaint against their union officers for
mismanagement of union funds. The Regional Director (RD) did not rule in the
complainants' favor. Not satisfied, the complainants elevated the RD’s decision to
the NLRC. The union officers moved to dismiss on the ground of lack of
jurisdiction. Are the union officers correct? Why?
A: Yes, the union officers are correct in claiming that the NLRC has no
jurisdiction over the appealed ruling of the RD. in Barles v. Bitonio, G.R. No.
120220, June 16, 1999, the SC ruled:

“Appellate authority over decisions of the RD involving examination of union

accounts is expressly conferred on the Bureau of Labor Relations (BLR) under the
Rule of Procedure on Mediation‐ Arbitration.”

Sec. 4. Jurisdiction of the BLR — (b) The BLR shall exercise appellate jurisdiction
over all cases originating from the RD involving complaints for examination of
union books of accounts.

The language of the law is categorical. Any additional explanation on the matter
is superfluous." (2001 Bar Question)

Q: Company "A" and Union "B" could not resolve their negotiations for a new
CBA. After conciliation proceedings before the NCMB proved futile, B went on
strike. Violence during the strike prompted A to file charges against striker ‐
members of B for their illegal acts. The SLE assumed jurisdiction, referred the
strike to the NLRC and issued a return ‐to‐work order. The NLRC directed the
parties to submit their respective position papers and documentary evidence. At
the initial hearing before the NLRC, the parties agreed to submit the case for
resolution after the submission of the position papers and evidence.
Subsequently, the NLRC issued an arbitral award resolving the disputed
provisions of the CBA and ordered the dismissal of certain strikers for having
knowingly committed illegal acts during the strike. The dismissed employees
elevated their dismissal to the CA claiming that they were deprived of their right
to due process and that the affidavits submitted by A were self ‐serving and of no
 386

probative value. Should the appeal prosper? State the reason(s) for your answer
clearly.

A: The appeal should not prosper. The SC, in many cases, has ruled that
decisions made by the NLRC may be based on position papers. In the question, it
is stated that the parties agreed to submit the case for resolution after the
submission of position papers and evidence. Given this fact, the striker ‐members
of B cannot now complain that they were denied due process. They are in
estoppel. After voluntarily submitting a case and encountering an adverse
decision on the merits, it is too late for the loser to question the jurisdiction or
power of the court. A party cannot adopt a posture of double dealing. (Marquez
vs. Secretary of Labor, G.R. No. 80685, March 16, 1989). (2001 Bar Question)

Q: Is barangay conciliation available in labor cases?

A: No. Labor cases are not subject to barangay Conciliation since ordinary rules
of procedure are merely suppletory in character vis‐à‐vis labor disputes which
are primarily governed by labor laws. (Montoya v. Escayo, G.R. No. 82211‐12,
Mar. 21, 1989)

Q: What are the powers of the NLRC?

A:
1. Rule making power – promulgation of rules and regulations:
a. Governing disposition of cases before any of its division/regional offices.
b. Pertaining to its internal functions
c. As may be necessary to carry out the purposes of the Labor Code.
2. Power to issue compulsory processes (administer oaths, summon parties,
issue subpoenas)
3. Power to investigate matters and hear disputes within its jurisdiction
(adjudicatory power – original and appellate jurisdiction over cases)
4. Contempt power
5. Ocular Inspection
6. Power to issue injunctions and restraining orders

2. EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF

REINSTATEMENT

Q: May dismissed employees (Ees) collect their wages during the period between
the Labor Arbiter’s (LA’s) order of reinstatement pending appeal and the NLRC
decision overturning that of the LA?
A: Yes. Par. 3 of Art. 223 of the Labor Code provides that the decision of the LA
reinstating a dismissed or separated Ee, insofar as the reinstatement aspect is
concerned, shall immediately be excutory, pending appeal.

Even if the order of reinstatement of the LA is reversed on appeal, it is obligatory

on the part of the employer (Er) to reinstate and pay the wages of the dismissed
 387

Ee during the period of appeal until reversal by the higher court. On the other
hand, if the Ee has been reinstated during the appeal period and such
reinstatement order is reversed with finality, the Ee is not required to reimburse
whatever salary he received for he is entitled to such, more so if he actually
rendered services during the period. (Pfizer v. Velasco, G.R. No. 177467, March
9, 2011)

3. REMEDIES
(SUPPLY2)

Q: What is an injunction or a temporary restraining order (TRO)?

A: Orders which may require, forbid, or stop the doing of an act. The power of
the NLRC to enjoin or restrain the commission of any or all prohibited or unlawful
acts under Art. 218 of Labor Code can only be exercised in a labor disputes.
Note: A restraining order is generally regarded as an order to maintain the
subject of controversy in status quo until the hearing of an application for a
temporary injunction. (BF Homes v. Reyes, G.R. No. L‐30690 November 19, 1982)

Q: Who may issue a TRO?

A:

1. President (Art.263[g])
2. Secretary of Labor (Art. 263[g])
3. NLRC (Art.218)

Note: Art. 218 of the Labor Code limits the grant of injunctive power to the
“NLRC”. The LA is excluded statutorily. Hence, no NLRC Rules can grant him
that power.

Q: What is the procedure for the issuance of restraining

order/injunction?
A:

1. Filing of a verified petition

2. Hearing after due and personal notice has been served in such manner as the
Commission shall direct to:
a. All known persons against whom relief is sought
b. Also the Chief Executive or other public officials of the province or city
within which the unlawful acts have been threatened or commercial
charged with the duty to protect the complainant’s property.
3. Reception at the hearing of the testimonies of the witnesses with opportunity
for cross‐examination, in support of the allegations of the complaint made
under oath as well as testimony in opposition thereto.
4. Finding of fact of the Commission to the effect that:
 388

a. Prohibited or unlawful acts have been threatened and will be committed,

or have been and will be continued unless restrained, but no injunction or
TRO shall be issued on account of any threat, prohibited or unlawful act,
except against the persons, association or organization making the threat
or committing the prohibited or unlawful act or actually authorizing or
ratifying the same after actual knowledge thereof.
b. The substantial and irreparable injury to the complainant’s property.

Note: Irreparable Injury ‐an injury which cannot be adequately

compensated in damages due to the nature of the injury itself or the
nature of the right or property injured or when there exist no
pecuniary standard for the measurement of damages.

c. That as to each item of relief to be granted, greater injury will be inflicted

upon the complainant by the denial of the relief than will be inflicted upon
the defendants by the granting of the relief.

d. That complainant has no adequate remedy at law

Note: Adequate remedy – one that affords relief with reference to
the matter in controversy and which is appropriate to the particular
circumstances of the case if the remedy is specifically provided by
law. (PAL v. NLRC, GR. No. 120567, Mar. 20, 1998)

e. That public officers charged with the duty to protect complainant’s property
are unable or unwilling to furnish adequate protection.

5. Posting of a bond.

4. CERTIFIED CASES
(SUPPLY2)

Requirements to Perfect Appeal to Court of Appeals

Q: Is judicial review of the NLRC’s decision available?

A: Yes, through petitions for certiorari (Rule 65) which should be initially filed
with the CA in strict observance of the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired. The CA is procedurally equipped to
resolve unclear or ambiguous factual finding, aside from the increased number of
its component divisions. (St. Martin Funeral Home v. NLRC, G.R. No. 130866,
Sep. 16, 1998)

Q: Within what period should the petition for certiorari be filed with the
Court of Appeals?
A: Under Section 4, Rule 65 (as amended by A.M. No. 00 ‐2‐03‐SC) of the Rules of
Civil Procedure, the petition must be filed within sixty (60) days from notice of the
 389

judgment or from notice of the resolution denying the petitioner’s motion for
reconsideration. This amendment is effective September 1, 2000, but being
curative may be given retroactive application. (Narzoles v. NLRC, G.R. No.
141959, Sep. 29, 2000)

The period within which a petition for certiorari against a decision of the NLRC
may be filed should be computed from the date counsel of record of the party
receives a copy of the decision or resolution, and not from the date the party
himself receives a copy thereof. Article 224 of the Labor Code, which requires
that copies of final decisions, orders or awards be furnished not only the party’s
counsel of record but also the party himself applies to the execution thereof and
not to the filing of an appeal or petition for certiorari. (Ginete v. Sunrise Manning
Agency, G.R. No. 142023, June 21, 2001)

C. BURUEAU OF LABOR RELATIONS – MED-ARBITERS

1. JURISDICTION (ORIGINAL AND APPELLATE) (SUPPLY2, APPELLATE)

Q: What is covered by the BLR’s jurisdiction and functions?

A: The BLR no longer handles “all labor management disputes”; rather its
functions and jurisdiction are largely confined to:

1. Union matters
2. Collective bargaining registry and
3. Labor education.

Note: Jurisdiction over labor management problems or disputes is also exercised

by other offices:

1. DOLE Regional Offices

2. Office of the Secretary of Labor
3. NLRC
4. POEA
5. OWWA
6. SSS‐ECC
7. RTWPB
8. NWPC
9. Regular courts over intra‐corporate disputes.

Q: Who is a mediator‐arbiter?
A: An officer in the Regional Office or Bureau authorized to hear, conciliate and
decide representation cases or assist in the disposition of intra or inter ‐union
disputes.

Q: What kinds of cases fall within BLR’s jurisdiction?

A: The BLR has original and exclusive jurisdiction over:
 390

1. Inter‐union disputes
2. Intra‐union disputes
3. Other related labor relations disputes

Q: What is the coverage of inter/intra‐union disputes?

A: They shall include:

1. Conduct or nullification of election of union and workers’ association

officers
2. Audit/accounts examination of union or workers’ association funds
3. Deregistration of collective bargaining agreements (CBAs)
4. Validity/invalidity of union affiliation or disaffiliation
5. Validity/invalidity of acceptance/ non‐acceptance for union membership
6. Validity/invalidity of voluntary recognition
7. Opposition to application for union or CBA registration
8. Violations of or disagreements over any provision of the constitution and
by‐laws of union or workers’ association
9. Disagreements over chartering or registration of labor organizations or the
registration of CBAs;
10. Violations of the rights and conditions of membership in a union or
workers’ association;
11. Violations of the rights of legitimate labor organizations (LLO), except
interpretation of CBAs;
12. 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 requirements under Rule V;
13. Such other disputes or conflicts involving the rights to self ‐organization,
union membership and CB –

a. Between and among LLO and

b. Between and among members of a union or workers’ association. (Sec.1,
Rule XI, Book V, IRR as amended by D.O. 40‐F‐03)

Q: What is covered by the phrase “other related labor relations

disputes”?
A:

1. Any conflict between:

a. A labor union and the employer (Er); or
b. A labor union and a group that is not a labor organization (LO); or
c. A labor union and an individual who is not a member of such union
2. Cancellation of registration of unions and worker’s associations filed by
individual/s other than its members, or group that is not a LO.
3. A petition for Interpleader involving labor relations. (Sec. 2, Rule XI, Book V,
IRR as amended by D.O. 40‐F‐03)
 391

Q: Who may file a complaint or petition involving intra/inter ‐union

disputes?
A: A legitimate labor organization or its members. (Sec. 5, Rule XI, D.O. 40‐03)

Q: What if the issue involves the entire membership?

A: The complaint must be signed by at least 30% of the entire membership of the
union.

Q: What if the issue involves a member only?

A: Only the affected member may file the complaint. (Sec. 5, Rule XI, D.O. 40‐03)

Note:
GR: Redress must first be sought within the union itself in accordance with its
constitution and by‐laws
XPNs:
1. Futility of intra‐union remedies;
2. Improper expulsion procedure;
3. Undue delay in appeal as to constitute substantial injustice;
4. The action is for damages;
5. Lack of jurisdiction of the investigating body; action for the administrative
agency is patently illegal, arbitrary and oppressive;
6. Issue is purely a question of law;
7. Where the administrative agency had already prejudged the case; and
8. Where the administrative agency was practically given the opportunity to
act on the case but it did not.

Q: May a decision in an inter/intra‐union dispute be appealed from?

A: Yes.

Q: Within what period may an appeal to a decision of the med ‐arbiter or

regional director in an inter/intra‐union dispute be filed?
A: The decision may be appealed by any of the parties within 10 days from
receipt thereof. (Sec. 16, Rule XI, D.O. 40‐03)

Q: To whom is the decision appealable?

A: The decision is appealable to the:

1. Bureau of Labor Relations (BLR): if the case originated from the Med ‐
Arbiter or Regional Director;
2. SLE: if the case originated from the BLR.

Q: What is the extent of the Bureau of Labor Relations (BLRs) authority?

A:

1. It may hold a referendum election among the members of a union for the
purpose of determining whether or not they desire to be affiliated with a
federation.
 392

2. But the BLR has no authority to:

a. Order a referendum among union members to decide whether to expel or

suspend union officers.
b. Forward a case to the Trade Union Congress of the Philippines for arbitration
and decision.

Q: Is Katarungang Pambarangay applicable to labor disputes?

A: No. Art. 226 of the LC grants original and exclusive jurisdiction over the
conciliation and mediation of disputes grievances or problems in the regional
offices of the DOLE. It is the Bureau and its divisions (now the NCMB) and not
the Barangay Lupong Tagapamayapa which are vested by law with original and
exclusive authority to conduct conciliation and mediation proceedings on labor
controversies before endorsement to the appropriate labor arbiter for
adjudication.

Note: Conciliation‐Mediation is now done by the NCMB, not Bureau Labor

Relations.

Q: What are the administrative functions of the Bureau Labor Relations

(BLR)?
A:

1. Regulation of the labor unions

2. Keeping the registry of labor unions
3. Maintenance of a file of the CBA
4. Maintenance of a file of all settlements or final decisions of the SC, CA,
NLRC and other agencies on labor disputes

Q: What are the effects of filing or pendency of inter/intra ‐union dispute

and other labor relations disputes?
A:

1. The rights relationships and obligations of the party‐litigants against each

other and other parties‐in‐interest prior to the institution of the petition shall
continue to remain during the pendency of the petition and until the date of the
decision rendered therein. Thereafter, the rights, relationships and obligations of
the party‐litigants against each other and other parties ‐in‐interest shall be
governed by the decision ordered.

2. The filing or pendency of any inter/intra union disputes is not a prejudicial

question to any petition for certification election, hence it shall not be a ground
for the dismissal of a petition for certification of election or suspension of the
proceedings for the certification of election. (Sec. 3, Rule XI, DO 40‐03)

Q: State the rules on appeal in intra/inter‐union disputes.

A:
 393

1. Formal Requirements

a. Under oath
b. Consist of a memorandum of appeal.
c. Based on either of the following grounds:

i. Grave abuse of discretion

ii. Gross violation of the rules
iii. With supporting arguments and evidence

2. Period ‐ within 10 days from receipt of decision.

3. To whom appealable

a. BLR – if the case originated from the Med‐Arbiter/Regional Director.

b. SLE – if the case originated from the BLR.

4. Where Filed ‐ Regional Office or to the BLR, where the complaint originated
(records are transmitted to the BLR or Sec. within 24 hours from the receipt of
the memorandum of appeal). (Rule XI, D.O. 40‐03)

D. NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB)

1. NATURE OF PROCEEDINGS

(SUPPLY2)

Q: What are the alternative modes of settlement of labor dispute under

Art. 211 of the Labor Code?
A:

1. Voluntary Arbitration
2. Conciliation
3. Mediation

2. CONCILIATION V. MEDIATION

Q: What is Conciliaton and Mediation?

A:
CONCILIATION MEDIATION
Is conceived of as a mild form of Is a mild intervention by a neutral
 394

intervention by a neutral third party third party

The conciliator‐Mediator, relying on his
persuasive expertise, who takes an
active role in assisting parties by trying
to keep disputants talking, facilitating
other procedural niceties, carrying
messages back and forth between the
parties, and generally being a good
fellow who tries to keep things calm
and forward‐looking in a tense
situation
It is the process where a disinterested
3rd party meets with management and
labor, at their request or otherwise,
during a labor dispute or in collective
bargaining conferences, and by cooling
tempers, aids in reaching an
agreement
The conciliator‐mediator, whereby he
starts advising the parties or offering
solutions or alternatives to the
problems with the end in view of
assisting them towards voluntarily
reaching their own mutually
acceptable settlement of the dispute
It is when a 3rd party studies each
side of the dispute then makes
proposals for the disputants to
consider. The mediator cannot make
an award nor render a decision

Conciliation ‐ is conceived of as a mild form of intervention by a neutral third

party, the Conciliator‐Mediator, relying on his persuasive expertise, who takes
an active role in assisting parties by trying to keep disputants talking,
facilitating other procedural niceties, carrying messages back and forth
between the parties, and generally being a good fellow who tries to keep things
calm and forward‐looking in a tense situation.
It is the process where a disinterested 3rd party meets with management and
labor, at their request or otherwise, during a labor dispute or in collective
bargaining conferences, and by cooling tempers, aids in reaching an agreement.
Mediation ‐ is a mild intervention by a neutral third party, the Conciliator ‐
Mediator, whereby he starts advising the parties or offering solutions or
alternatives to the problems with the end in view of assisting them towards
voluntarily reaching their own mutually acceptable settlement of the dispute.
It is when a 3rd party studies each side of the dispute then makes proposals for
the disputants to consider. The mediator cannot make an award nor render a
decision.

Q: What is the Legal Basis of Conciliation and Mediation?

A: Article 13, Section 3, of our New Constitution provides:
“The State shall promote xxx the preferential use of voluntary modes of setting
disputes including conciliation and shall ensure mutual compliance by the
parties thereof in order to foster industrial peace.”
Note: A similar provision is echoed in the Declaration of Policy under Article
211 (a) of the Labor Code, as amended.

Q: Who can avail of Conciliation and Mediation Services of the NCMB?

A: Any party to a labor dispute, either the union or management, may seek the
assistance of NCMB or any of its Regional Branches by means of formal
 395

request for conciliation and preventive mediation. Depending on the nature of

the problem, a request may be filed in the form of consultation, notice of
preventive mediation or notice of strike/lockout.

Q: Where can a request for Conciliation and Mediation be filed?

A: An informal or formal request for conciliation and mediation service can be
filed at the NCMB Central Office or any of its Regional Branches. There are at
present fourteen (14) regional offices of the NCMB which are strategically located
all over the country for the convenient use of prospective clients.

3. PREVENTIVE MEDIATION

Q: What is Preventive Mediation Cases?

A: Refer to the potential labor disputes which are the subject of a formal or
informal request for conciliation and mediation assistance sought by either or
both parties or upon the initiative of the NCMB to avoid the occurrence of actual
labor disputes.

Q: What are the valid issues for a notice of strike / lockout or

preventive mediation case?
A: A notice of strike or lockout maybe filed on ground of unfair labor practice
acts, gross violation of the CBA, or deadlock in collective bargaining. A
complaint on any of the above ground must be specified in the NCMB Form or
the proper form used in the filing of complaint.
In case of preventive mediation, any issue may be brought before the NCMB
Central Office or its regional offices for conciliation and possible settlement
through a letter. This method is more preferable than a notice of strike/lockout
because of the non‐adversarial atmosphere that pervades during the
conciliation conferences.

Q: What advantage can be derived from conciliation and mediation

services?
A: Conciliation and mediation is non‐litigious/non‐adversarial, less expensive,
and expeditious. Under this informal set‐up, the parties find it more expedient
to fully ventilate their respective positions without running around with legal
technicalities and, in the course thereof, afford them a wider latitude of
possible approaches to the problem.

Q: Are the parties bound by the agreement entered into by them?

A: Certainly, the parties are bound to honor any agreement entered into by
them. It must be pointed out that such an agreement came into existence as a
result of painstaking efforts among the union, management, and the
Conciliator‐Mediator. Therefore, it is only logical to assume that the Conciliator
assigned to the case has to follow up and monitor the implementation of the
agreement.
 396

Q: Is conciliation and mediation service still possible during actual

strike or lockout?
A: Definitely, it is possible to subject an actual strike or actual lockout to
continuing conciliation and mediation services. In fact, it is at this critical stage
that such conciliation and mediation services by fully given a chance to work
out possible solution to the labor dispute. With the ability of the Conciliator ‐
Mediator to put the parties at ease and place them at a cooperative mood, the
final solutions of all the issues involved may yet be effected and settled.

Q: When the dispute has already been assumed or certified to the

NLRC, is it also possible to remand the same to conciliation and
mediation services?
A: Yes, the parties are not precluded from availing the services of an NCMB
Conciliator‐Mediator as the duty to bargain collectively subsists until the final
resolution of all issues involved in the dispute. Conciliation is so pervasive in
application that, prior to a compulsory arbitration award, the parties are
encouraged to continue to exhaust all possible avenues of mutually resolving
their dispute, especially through conciliation and mediation services.

Q: What benefit can the parties have in appearing during conciliation

conferences?
A: Generally speaking, any party appearing during scheduled conciliation
conferences has the advantage of presenting its position on the labor
controversy. The issue raised in the complaint can be better ventilated with the
presence of the concerned parties. Moreover, the parties can observe a norm of
conduct usually followed in like forum.

Arbitration

Q: What is arbitration?
A: It is the submission of a dispute to an impartial person for determination on
the basis of evidence and arguments of the parties. The arbiter’s decision or
award is enforceable upon the disputants. It may be voluntary (by agreement) or
compulsory (required by statutory provision). (Luzon Dev’t Bank v. Ass’n of
Luzon Dev’t Bank Employees, G.R. No. 120319, Oct. 6, 1995)

Q: Can the court fix resort to voluntary arbitration (VA)?

A: Resort to VA dispute, should not be fixed by the court but by the parties
relying on their strengths and resources.

Q: Who are the parties to labor relations cases?

A:

1. Employees organization
2. Management
3. The public
 397

Note: Employer and Ees are active parties while the public and the State are
passive parties. (Poquiz, 2006, p.3)

Q: What is the concept of tripartism?

A: It is the representation of 3 sectors. These are:

1. The public or the government

2. The employers
3. The workers
– in policy‐making bodies of the gov’t.

Q: Can workers insist that they be represented in the policy making in

the company?
A: No. Such kind of representation in the policy ‐making bodies of private
enterprises is not ordained, not even by the Constitution. What is provided for is
workers participation in policy and decision ‐making process directly affecting
their rights, benefits, and welfare.

E. DOLE REGIONAL DIRECTORS

1. JURISDICTION
(SUPPLY2)

Q: What is the rule on the recovery of simple money claims?

A:
1. The aggregate money claim of each employee (Ee) or househelper (HH)
does not exceed P5,000.
2. The claim is presented by an Ee or person employed in the domestic or
household service or HH.
1. The claim arises from Er‐Ee relationship.
2. The claimant does not seek reinstatement.

Note: In the absence of any of the ff. requisites, it is the labor arbiter (LA) who
shall have the jurisdiction over the claims arising from Er ‐Ee relations, except
claims for Ees compensation, SSS, Philhealth, and maternity benefits, pursuant
to Art.217 of the Labor Code.
The proceedings before the Regional Office shall be summary and non ‐litigious in
nature.

Q: What is the adjudicatory power of the Regional Director (RD)?

A: The RD or any of his duly authorized hearing officer is empowered through
summary proceeding and after due notice, to hear and decide cases involving
 398

recovery of wages and other monetary claims and benefits, including legal
interests.

Q: An airline which flies both the international and domestic routes requested the
SLE to approve the policy that all female flight attendants upon reaching age 40
with at least 15 years of service shall be compulsorily retired; however, flight
attendants who have reached age 40 but have not worked for 15 years will be
allowed to continue working in order to qualify for retirement benefits, but in no
case will the extension exceed 4 years. Does the SLE have the authority to
approve the policy?
A: Yes. Art.132 (d) of the Labor Code provides that the SLE shall establish
standards that will ensure the safety and health of women employees including
the authority to determine appropriate minimum age and other standards for
retirement or termination in special occupations such as those of flight attendants
and the like. (1998 Bar Question)

F. DOLE SECRETARY

1. VISITORIAL AND ENFORCEMENT POWERS

Q: What are the 3 kinds of powers of the Secretary of Labor and

Employment (SLE)?
A:
1. Visitorial powers
2. Enforcement powers
3. Appellate or power to review

Q: What constitute visitorial power?

1. Access to employer’s records and premises at any time of the day or night,
whenever work is being undertaken
2. To copy from said records
3. 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 regulation issued
pursuant thereto.

Q: Give 4 instances where the visitorial power of the SLE may be

exercised under the Labor Code.
A: Power to:

1. Inspect books of accounts and records of any person or entity engaged in

recruitment and placement, require it to submit reports regularly on prescribed
 399

forms and act in violations of any provisions of the LC on recruitment and

placement. (Art. 37)
2. Have access to employer’s records and premises to determine violations of
any provisions of the LC on recruitment and placement. (Art. 128)
3. Conduct industrial safety inspections of establishments. (Art. 165)
4. Inquire into the financial activities of legitimate labor organizations (LLO)
and examine their books of accounts upon the filing of the complaint under oath
and duly supported by the written consent of at least 20% of the total
membership of the LO concerned.

Q: What is enforcement power?

A: It is the power of the SLE to:

1. Issue compliance orders

2. Issue writs of execution for the enforcement of their orders, except in cases
where the employer (Er) contests the findings of the labor officer and raise
issues supported by documentary proof which were not considered in the
course of inspection
3. Order stoppage of work or suspension of operation when non ‐compliance with
the law or implementing rules and regulations poses grave and imminent
danger to health and safety of workers in the workplace
4. Require Ers to keep and maintain such employment records as may be
necessary in aid to the visitorial and enforcement powers
5. Conduct hearings within 24 hours to determine whether:

a. An order for stoppage of work or suspension of operations shall be lifted

or not; and
b. Er shall pay employees concerned their salaries in case the violation is
attributable to his fault. (As amended by RA 7730; Guico v. Secretary,
G.R. No. 131750, Nov.16, 1998)

Q: What are the violations under Art. 128?

A:
1. Obstruct, impede, delay or otherwise render ineffective the orders of the
SLE or his authorized representatives
2. Any government employee found guilty of, or abuse of authority, shall be
subject to administrative investigation and summary dismissal from service.

Q: What are the limitations to other courts?

A: In relation to enforcement orders issued under Art. 128, no inferior court or
entity shall:

1. Issue temporary or permanent injunction or restraining order or

2. Assume jurisdiction over any case

Q: What are the instances when enforcement power may not be used?
A:
 400

1. Case does not arise from the exercise of visitorial power

2. When Er‐Ee relationship ceased to exist at the time of the inspection
3. If employer contests the finding of the Labor Regulation Officer and such
contestable issue is not verifiable in the normal course of inspection

B. POWER TO SUSPEND THE EFFECTS OF TERMINATION Art. 277 (b), LC

Q: Does the DOLE Secretary have the power to suspend the effects of
termination?
A: Yes, under Article 277 (b) of the Labor Code, the Secretary of Labor may
suspend the effects of the termination pending resolution of the dispute in the
event of a prima facie finding by the appropriate official of the Department of
Labor and Employment before whom such dispute is pending that the
termination may cause serious labor dispute or is in implementation of a mass
layoff.

3. ASSUMPTION OF JURISDICTION
(SUPPLY2)

4. APPELLATE JURISDICTION
(SUPPLY2)

5. VOLUNTARY ARBITRATION POWERS

(SUPPLY2)

G. GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION

1. SUBJECT MATTER OF GRIEVANCE

2. VOLUNTARY ARBITRATOR
(SUPPLY2)

A) JURISDICTION
(SUPPLY2)

B) PROCEDURE
(SUPPLY2)
 401

C) REMEDIES
(SUPPLY2)

Submission Agreement

Q: How is arbitration initiated?

A:

1. Submission agreement – Where the parties define the disputes to be

resolved
2. Demand notice – Invoking collective agreement arbitration clause

Q: Who is a voluntary arbitrator (VA)?

A:

1. Any person accredited by the NCMB as such

2. Any person named or designated in the CBA by the parties to act as their
VA
3. One chosen with or without the assistance of the NCMB, pursuant to a
selection procedure agreed upon in the CBA
4. Any official that may be authorized by the SLE to act as VA upon the
written request and agreement of the parties to a labor dispute. (Art. 212 [n])

Q: What are the powers of a voluntary arbitrator?

A:

1. Hold hearings
2. Receive evidence
3. Take whatever action necessary to resolve the dispute including efforts to
effect a voluntary settlement between parties. (Art. 262‐A)

Q: How is a voluntary arbitrator (VA)/panel chosen?

A:

1. The parties in a CBA shall designate in advance a VA/panel, preferably

from the listing of qualified VAs duly accredited by the NCMB, or
2. Include in the agreement a procedure for the selection of such VA or panel
of VAs, preferably from the listing of qualified VAs duly accredited by the NCMB.
(Art.260, par.3)

Q: Who will designate the voluntary arbitrator (VA)/panel in case the

parties fail to select one?
A: It is the NCMB that shall designate the VA/panel based on the selection
procedure provided by the CBA. (Manila Central Line Free Workers Union v.
Manila Central Line Corp., G.R. No. 109383, June 15, 1998)
 402

Q: May Labor Arbiters (LA) be designated as voluntary arbitrators (VA)?

A: Yes. There is nothing in the law that prohibits LAs from also acting as VAs as
long as the parties agree to have him hear and decide their dispute. (Manila
Central Line Free Workers Union v. Manila Central Line Corp., G.R. No. 109383,
June 15, 1998)

Q: What falls under the jurisdiction of Voluntary Arbitrators (VA)?

A: Generally, the arbitrator is expected to decide only those questions expressly
delineated by the submission agreement. Nevertheless, the arbitrator can
assume that he has the necessary power to make a final settlement since
arbitration is the final resort for the adjudication of the disputes. (Ludo and Luym
Corp. v. Saornido, G.R. No. 140960, Jan. 20, 2003)

Q: What cases are within the jurisdiction of VA?

A: Original and exclusive jurisdiction over:

1. All unresolved grievances arising from the:

2. Wage distortion issues arising from the application of any wage orders in
organized establishments
3. Those arising from interpretation and implementation of productivity incentive
programs under R.A. 6971
4. Violations of CBA provisions which are not gross in character are no longer
treated as ULP and shall be resolved as grievances under the CBA
Note: Gross violation of CBA provisions shall mean flagrant and/or malicious
refusal to comply with the economic provisions of such agreement.
5. Any other labor disputes upon agreement by the parties including ULP and
bargaining deadlock. (Art. 262)

Q: May the NLRC and DOLE entertain disputes/grievances/matters under

the exclusive and original jurisdiction of the voluntary arbitrator?
A: No. They must immediately dispose and refer the same to the grievance
machinery or voluntary arbitration provided in the CBA
The parties may choose to submit the dispute to voluntary arbitration
proceedings before or at the stage of compulsory arbitration proceedings.

Q: What is the effect of the award of voluntary arbitrator (VA)?

A: The decision or award of the VA acting within the scope of its authority shall
determine the rights of the parties and their decisions shall have the same legal
effects as judgment of the courts. Such matters on fact and law are conclusive.

Q: Are both the employer and the bargaining representative of the

employees required to go through the grievance machinery in case a
grievance arises?
A: Yes, because it is but logical, just and equitable that whoever is aggrieved
should initiate settlement of grievance through the grievance machinery. To
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impose compulsory procedure on employers alone would be oppressive of

capital.

Q: Who has jurisdiction over actual termination disputes and complaints

for illegal dismissal filed by workers pursuant to the union security
clause?
A: The Labor Arbiter and not the grievance machinery.

Q: What is the nature of the power of a voluntary arbitrator?

A: Arbitrators by the nature of their functions, act in a quasi ‐judicial capacity (BP
129, as amended by R.A. 9702); where a question of law is involved or there is
abuse of discretion, courts will not hesitate to pass upon review of their acts.

Rule 43, Rules of Court

Q: Are decisions of voluntary arbitrators (VAs) appealable?

A: GR: Decisions of VA are final and executory after 10 calendar days from
receipt of the copy of the award or decision by the parties. (Art. 262‐A)

XPNs:
1. Appeal to the CA via Rule 43 of the Rules of Court within 15 days from the
date of receipt of VA’s decision. (Luzon Dev’t Bank v. Ass’n of Luzon Dev’t Bank
Ee’s, G.R. No. 120319, Oct. 6, 1995)
2. If decision of CA is adverse to a party, appeal to the SC via Rule 45 on
pure questions of law.

Note: A VA by the nature of her functions acts in quasi ‐judicial capacity. There is
no reason why the VA’s decisions involving interpretation of law should be
beyond the SC’s review. Administrative officials are presumed to act in
accordance with law and yet the SC will not hesitate to pass upon their work
where a question of law is involved or where a showing of abuse of authority or
discretion in their official acts is properly raised in petitions for certiorari.
(Continental Marble Corporation v. NLRC, G.R. No. L ‐43825, May 9, 1988)

Q: PSSLU had an existing CBA with Sanyo Phils., Inc. which contains a union
security clause which provides that: “all members of the union covered by this
agreement must retain their membership in good standing in the union as
condition of his / her continued employment with the company.” On account of
anti‐union activities, disloyalty and for joining another union, PSSLU expelled 12
employees (Ees) from the Union. As a result, PSSLU recommended the dismissal
of said Ees pursuant to the union security clause. Sanyo approved the
recommendation and considered the said Ees dismissed. Thereafter, the
dismissed Ees filed with the Arbitration Branch of the NLRC a complaint for
illegal dismissal.
Does the voluntary arbitrator (VA) have jurisdiction over the case?
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A: No, the VA has no jurisdiction over the case. Although the dismissal of the Ees
concerned was made pursuant to the union security clause provided in the CBA,
there was no dispute whatsoever between PSSLU and Sanyo as regards the
interpretation or implementation of the said union security clause. Both PSSLU
and Sanyo are united and have come to an agreement regarding the dismissal of
the Ees concerned. Thus there is no grievance between the union and
management which could be brought to the grievance machinery. The dispute is
between PSSLU and Sanyo, on the one hand, and the dismissed union members,
on the other hand. The dispute therefore, does not involve the interpretation or
implementation of a CBA. (Sanyo Philippines Workers Union‐PSSLU v. Canizares,
G.R. No. 101619, July 8, 1992)

Q: X was employed as telephone operator of Manila Midtown Hotel. She was

dismissed from her employment for committing the following violations of
offenses subject to disciplinary actions, namely: falsifying official documents and
culpable carelessness‐negligence or failure to follow specific instructions or
established procedures. X then filed a complaint for illegal dismissal with the
Arbitration branch of the NLRC. The Hotel challenged the jurisdiction of the Labor
Arbitrator (LA) on the ground that the case falls within the jurisdictional ambit of
the grievance procedure and voluntary arbitration under the CBA.
Does the LA have jurisdiction over the case?
A: Yes, the LA has jurisdiction. The dismissal of X does not call for the
interpretation or enforcement of company personnel policies but is a termination
dispute which comes under the jurisdiction of the LA. The dismissal of X is not
an unresolved grievance. Neither does it pertain to interpretation of company
personnel policy. (Maneja v. NLRC, G.R. No. 124013, June 5, 1998)

Q: Sime Darby Salaried Employees (Ees) Association ‐ALU (SDSEA‐ALU) wrote

petitioner Sime Darby Pilipinas (SDP) demanding the implementation of a
performance bonus provision identical to the one contained in their own CBA
with SDP. Subsequently, SDP called both respondent SDEA and SDEA ‐ALU to a
meeting wherein the former explained that it was unable to grant the
performance bonus. In a conciliation meeting, both parties agreed to submit their
dispute to voluntary arbitration. Their agreement to arbitrate stated, among other
things, that they were "submitting the issue of performance bonus to voluntary
arbitration."

Does the voluntary arbitrator (VA) have the power to pass upon not only the
question of whether to grant the performance bonus or not but also to determine
the amount thereof?
A: Yes, in their agreement to arbitrate, the parties submitted to the VA “the issue
of performance bonus.” The language of the agreement to arbitrate may be seen
to be quite cryptic. There is no indication at all that the parties to the arbitration
agreement regarded “the issue of performance bonus” as a two ‐tiered issue, only
one tier of which was being submitted to arbitration. Possibly, Sime Darby’s
counsel considered that issue as having dual aspects and intended in his own
mind to submit only one of those aspects to the VA, if he did, however, he failed
 405

to reflect his thinking and intent in the arbitration agreement. (Sime Darby Phils.
v. Magsalin, G.R. No. 90426, Dec. 15, 1989)

Q: Apalisok, production chief for RPN Station, was dismissed due to her alleged
hostile, arrogant, disrespectful, and defiant behavior towards the Station
Manager. She informed RPN that she is waiving her right to resolve her case
through the grievance machinery as provided in the CBA. The voluntary
arbitrator (VA) resolved the case in the employees (Ees) favor.
On appeal, the CA ruled in favor of RPN because it considered the waiver of
petitioner to file her complaint before the grievance machinery as a
relinquishment of her right to avail herself of the aid of the VA. The CA said that
the waiver had the effect of resolving an otherwise unresolved grievance, thus
the decision of the VA should be set aside for lack of jurisdiction. Is the ruling of
the CA correct?

A: No. Art. 262 of the Labor Code provides that upon agreement of the parties,
the VA can hear and decide all other labor disputes.
Contrary to the finding of the CA, voluntary arbitration as a mode of settling the
dispute was not forced upon respondents. Both parties indeed agreed to submit
the issue of validity of the dismissal of petitioner to the jurisdiction of the VA by
the Submission Agreement duly signed by their respective counsels. The VA had
jurisdiction over the parties’ controversy.
The Ees waiver of her option to submit her case to grievance machinery did not
amount to relinquishing her right to avail herself of voluntary arbitration.
(Apalisok v. RPN, G.R. No. 138094, May 29, 2003)

H. COURT OF APPEALS
1. RULE 65, RULES OF COURT

Q: Is judicial review of the NLRC’s decision available?

A: Yes, through petitions for certiorari (Rule 65) which should be initially filed
with the CA in strict observance of the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired. The CA is procedurally equipped to
resolve unclear or ambiguous factual finding, aside from the increased number of
its component divisions.

(St. Martin Funeral Home v. NLRC, G.R. No. 130866, Sep. 16, 1998)
Note: Rule 65, Section 1, Rules of Court
Petition for Certiorari‐‐When any tribunal, board or officer exercising judicial or
quasi‐judicial functions has acted without or in excess of its or his jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, and
there is no appeal, or any plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that judgment be
 406

rendered annulling or modifying the proceedings of such tribunal, board or

officer, and granting such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order
or resolution subject thereof, copies of all pleadings and documents relevant and
pertinent thereto, and a sworn certification of non ‐forum shopping as provided in
the third paragraph of section 3, Rule 46.

Q: Within what period should the petition for certiorari be filed with the
Court of Appeals?
A: Under Section 4, Rule 65 (as amended by A.M. No. 00 ‐2‐03‐SC) of the Rules of
Civil Procedure, the petition must be filed within sixty (60) days from notice of the
judgment or from notice of the resolution denying the petitioner’s motion for
reconsideration. This amendment is effective September 1, 2000, but being
curative may be given retroactive application. (Narzoles v. NLRC, G.R. No.
141959, Sep. 29, 2000)
The period within which a petition for certiorari against a decision of the NLRC
may be filed should be computed from the date counsel of record of the party
receives a copy of the decision or resolution, and not from the date the party
himself receives a copy thereof. Article 224 of the Labor Code, which requires
that copies of final decisions, orders or awards be furnished not only the party’s
counsel of record but also the party himself applies to the execution thereof and
not to the filing of an appeal or petition for certiorari. (Ginete v. Sunrise Manning
Agency, G.R. No. 142023, June 21, 2001)

I. SUPREME COURT
1. RULE 45, RULES OF COURT

Q: How does a party appeal from a judgment, or final order or

resolution, of the Court of Appeals?
A: A party desiring to appeal may file with the Supreme Court a verified petition
for review on certiorari under Rule 45 within fifteen (15) days from notice of the
judgment, final order or resolution appealed from. (Sea Power Shipping
Enterprises, Inc. v. CA, G.R. No. 138270, June 28, 2001)
Note: Rule 45, Section 1, Rules of Court:
Filing of petition with Supreme Court.—A party desiring to appeal by certiorari
from a judgment, final order or resolution of the Court of Appeals, the
Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other
courts, whenever authorized by law, may file with the Supreme Court a verified
petition for review on certiorari. The petition may include an application for a writ
of preliminary injunction or other provisional remedies and shall raise only
questions of law, which must be distinctly set forth. The petitioner may seek the
same provisional remedies by verified motion filed in the same action or
proceeding at any time during its pendency.
 407

Q: Give the policy of the Supreme Court regarding appeals in labor

cases.
A: The Supreme Court is very strict regarding appeals filed outside the
reglementary period for filing the same. To extend the period of the appeal is to
delay the case, a circumstance which could give the employer the chance to wear
out the efforts and meager resources of the worker that the latter is constrained
to give up for less than what is due him. (Firestone Tire and Rubber Co. of the
Philippines v. FirestoneTire and Rubber Co. Employees Union, G.R. No. 75363,
Aug. 4, 1992)

J. PRESCRIPTION OF ACTIONS

Q: Give the rules as regards the prescriptive period provided for in the
Labor Code (LC).
A:
SUBJECT PRESCRIPTIVE PERIOD
Offenses penalized under the LC 3 years
ULP One (1) year from accrual of such
ULP; otherwise forever barred (Art.
290)
Money Claims 3 years from the time the cause of
action accrued; otherwise forever
barred
All money claims accruing prior to the Within one (1) year from the date of
effectivity of the LC effectivity, in accordance with IRR;
otherwise, they shall forever be
barred
Workmen’s Compensation claims Dec. 31, 1974 shall be filed not later
accruing prior to the than Mar. 31, 1975 before the
effectivity of the LC and between Nov. appropriate regional offices of the
1, 1974‐Dec. 31, 1974 Department of Labor. (Art. 291)

Illegal Dismissal Cases 4 years. It commences to run from

the date of formal dismissal.
(Mendoza v. NLRC, G.R. No. 122481,
Mar. 5, 1998)