DE LA SALLE UNIVERSITY COLLEGE OF LAW

Lasallian Commission on Bar Operations 2018

LABOR LAW AND SOCIAL LEGISLATION

Green Notes
Chel Sy
LCBO Chairperson Tet Valeza Andrei Elinzano
Academic Affairs Labor Law and Social
Nico Garcia Chairperson Legislation Chairperson
LCBO Vice Chair for
Internals Janine Tutanes Kella Ortega
Rod Zantua Labor Law and Social
Steph Griar Academic Affairs Deputy Legislation Deputy
LCBO Vice Chair for Chairpersons Chairperson
Externals
Roman Castillo
Pat Costales Labor Law I Subject Head
LCBO Executive Secretary
AA Payad
Ces Naga Labor Law II Subject Head
LCBO Executive Treasurer
LABOR LAW
Table of Contents
FUNDAMENTAL PRINCIPLES AND CONCEPTS ............ 5
LABOR LEGISLATION ............................................................ 5
LEGAL BASIS .......................................................................... 5
STATE POLICIES, BILL OF RIGHTS, AND SOCIAL
JUSTICE .................................................................................... 5
CIVIL CODE ............................................................................. 6
SOURCES OF LABOR LAW .................................................. 6
RECRUITMENT AND PLACEMENT .................................... 7
ELEMENTS ........................................................................ 10
PROHIBITED ACTIVITIES.............................................. 10
TYPES OF ILLEGAL RECRUITMENT .......................... 11
ILLEGAL RECRUITMENT VS. ESTAFA ...................... 13
LIABILITY OF LOCAL RECRUITMENT AGENCY
AND FOREIGN EMPLOYER .......................................... 14
BAN ON DIRECT HIRING ............................................. 15
REGULATION OF RECRUITMENT AND PLACEMENT
ACTIVITIES ............................................................................ 15
SUSPENSION OR CANCELLATION OF LICENSE OR
AUTHORITY ..................................................................... 15
REGULATORY AND VISITORIAL POWERS OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT
(DOLE) SECRETARY ....................................................... 15
PROHIBITED ACTIVITIES.............................................. 16
LABOR STANDARDS ............................................................ 19
CONDITIONS OF EMPLOYMENT .................................... 19
SCOPE ................................................................................. 19
HOURS OF WORK ........................................................... 20
HOLIDAY PAY ................................................................. 25
THIRTEENTH MONTH PAY ......................................... 28
SERVICE CHARGE .......................................................... 30
WAGES ................................................................................... 31
WAGES VERSUS SALARIES .......................................... 31
PAYMENT OF WAGES ................................................... 31
FACILITIES AND SUPPLEMENTS ............................... 32
NON-DIMINUTION OF BENEFITS .............................. 32
PROHIBITION REGARDING WAGES ......................... 33
WAGE ORDER .................................................................. 35
WAGE DISTORTION ....................................................... 37
LEAVES ................................................................................... 37
SERVICE INCENTIVE LEAVE ....................................... 37
MATERNITY LEAVE ....................................................... 38
PATERNITY LEAVE ........................................................ 38
PARENTAL LEAVE FOR SOLO PARENTS ................. 38
LEAVE BENEFITS FOR WOMEN WORKERS UNDER
SPECIAL LAWS ................................................................ 39
SPECIAL GROUPS OF EMPLOYEES ................................. 41
WOMEN WORKERS ........................................................ 41
MINORS ............................................................................. 42
KASAMBAHAY ................................................................ 43
HOMEWORKERS ............................................................. 44
Rights and benefits of homeworkers.............................. 45
Conditions for deduction from homeworker’s earnings
.............................................................................................. 45
NIGHT WORKERS ........................................................... 45
MIGRANT WORKERS ..................................................... 46
APPRENTICES AND LEARNERS ................................. 47
When Apprentices may be Employed ........................... 48
When Learners may be Employed ................................. 49
Lasallian Commission on Bar Operations 2018
LABOR LAW
Enforcement ....................................................................... 50
DISABLED WORKERS ..................................................... 50
Forms of discrimination against the handicapped in
employment ....................................................................... 50
POST EMPLOYMENT ............................................................. 52
EMPLOYER-EMPLOYEE RELATIONSHIP ...................... 52
TESTS TO DETERMINE RELATIONSHIP ................... 52
KINDS OF EMPLOYMENT ............................................. 53
SUBCONTRACTING VERSUS LABOR-ONLY
CONTRACTING ............................................................... 55
TERMINATION OF EMPLOYMENT................................. 57
Security of Tenure ............................................................. 57
Requisites of a Valid Termination .................................. 57
Measure of Penalty............................................................ 58
TERMINATION BY EMPLOYEE ........................................ 58
RETIREMENT .................................................................... 58
TERMINATION BY EMPLOYER ........................................ 59
JUST CAUSES .................................................................... 59
AUTHORIZED CAUSES .................................................. 63
DUE PROCESS .................................................................. 67
General concepts ............................................................... 67
Right to counsel ................................................................. 69
Burden of proof ................................................................. 69
Degree of proof .................................................................. 69
Prescription ........................................................................ 70
RELIEFS FROM ILLEGAL DISMISSAL ............................. 70
REINSTATEMENT ........................................................... 70
BACKWAGES .................................................................... 70
SEPARATION PAY .......................................................... 71
DAMAGES, ATTORNEY’S FEES, AND OTHER
INDEMNITY ...................................................................... 71
PREVENTIVE SUSPENSION............................................... 72
RETIREMENT ........................................................................ 72
RA 7641 ............................................................................... 73
Computation of retirement pay ...................................... 73
Termination and Retirement, distinguished ................. 73
MANAGEMENT PREROGATIVE ........................................ 74
Management prerogative, defined ......................................... 74
DISCIPLINE............................................................................ 74
TRANSFER OF EMPLOYEES .............................................. 74
PRODUCTIVITY STANDARD ............................................ 74
BONUS .................................................................................... 75
CHANGE OF WORKING HOURS ..................................... 75
MARITAL DISCRIMINATION ........................................... 75
POST-EMPLOYMENT BAN ................................................ 75
LABOR RELATIONS ............................................................... 77
RIGHT TO SELF-ORGANIZATION................................... 77
WHO MAY EXERCISE THE RIGHT .............................. 78
WHO MAY NOT EXERCISE THE RIGHT .................... 78
COMMINGLING/MIXTURE OF MEMBERSHIP ....... 80
RIGHTS AND CONDITIONS OF MEMBERSHIP ....... 80
BARGAINING UNIT ............................................................ 82
BARGAINING REPRESENTATIVE ................................... 85
RIGHTS OF LABOR ORGANIZATION ............................ 90
CHECK OFF, ASSESSMENT, AGENCY FEES ............. 91
COLLECTIVE BARGAINING ......................................... 92
NO STRIKE-NO LOCKOUT CLAUSE .......................... 94
UNFAIR LABOR PRACTICE............................................... 97
NATURE, ASPECTS ......................................................... 97
ULP by Employers ............................................................ 98
ULP BY LABOR ORGANIZATIONS ........................... 100
MOTIVE, CONDUCT, AND PROOF ........................... 101
3
LABOR LAW LABOR LAW

PEACEFUL CONCERTED ACTIVITIES ......................... 101

CONCERTED ACTIVITIES BY LABOR
ORGANIZATIONS ......................................................... 102
PICKET ............................................................................. 107
CONCERTED ACTIVITIES BY EMPLOYER .............. 107
ASSUMPTION OF JURISDICTION ............................. 108

JURISDICTION AND REMEDIES ..................................... 111

LABOR ARBITER ................................................................ 111
Jurisdiction ....................................................................... 111
Requirements to perfect appeal to NLRC.................... 111
Reinstatement pending appeal ..................................... 112
NATIONAL LABOR RELATIONS COMMISSION
(NLRC) .................................................................................. 112
Jurisdiction ....................................................................... 112
COURT OF APEALS ........................................................... 112
Appeal via rule 65, Rules of Court ............................... 112
SUPREME COURT .............................................................. 113
RULE 45, RULES OF COURT........................................ 113
BUREAU OF LABOR RELATIONS (BLR) ....................... 113
JURISDICTION ............................................................... 113
NATIONAL CONCILIATION AND MEDIATION
BOARD (NCMB).................................................................. 113
CONCILIATION vs. MEDIATION .............................. 113
PREVENTIVE MEDIATION ......................................... 113
DOLE REGIONAL DIRECTORS ....................................... 113
RECOVERY/ADJUDICATORY POWERs .................. 114
DOLE SECRETARY............................................................. 114
VISITORIAL AND ENFORCEMENT POWERS ........ 114
POWER TO SUSPEND EFFECTS OF TERMINATION
............................................................................................ 114
REMEDIES ....................................................................... 114
VOLUNTARY ARBITRATOR ........................................... 114
JURISDICTION ............................................................... 114
Remedy ............................................................................. 115
PRESCRIPTION OF ACTIONS ......................................... 115

Lasallian Commission on Bar Operations 2018 4

LABOR LAW LABOR LAW

LABOR LEGISLATION
It consists of statutes, regulations, and jurisprudence
governing the relations between capital and labor, by
providing for certain employment standards and a legal
framework for negotiating, adjusting, and administering
those standards and other incidents of employment.
(Azucena)

LABOR LAW, defined

Law governing the rights and duties of employer and
employees respecting term and conditions of employment by:
1. Prescribing certain standards, or
2. By establishing a legal framework within which
better terms and conditions of work could be
obtained through:
a. Collective Bargaining or
b. Other concerted activities

LEGAL BASIS

Police power of the state

While the right of the workers to security of tenure is
guaranteed by the Constitution, its exercise may be
reasonably regulated pursuant to the police power of the State
to safeguard health, morals, peace, education, order, safety
and the general welfare of the people. Consequently, persons
who desire to engage in the learned professions requiring
scientific or technical knowledge may be required to take an

FUNDAMENTAL
examination as a prerequisite to engaging in their chosen
careers.1

PRINCIPLES STATE POLICIES, BILL OF RIGHTS, AND

SOCIAL JUSTICE

AND CONCEPTS GENERAL RULE

Social justice in favor of labor

Where the evidence may be reasonably interpreted in two
divergent ways, one prejudicial and the other favorable to
him, the balance must be tilted in his favor (labor) consistent
with the principle of social justice.2

EXCEPTION

When the employer is in the right

The constitutional policy of providing full protection to labor
is not intended to oppress or destroy management. The
commitment of the Supreme Court to the cause of labor does
not prevent the High Tribunal from sustaining the employer
when it is in the right. 3

Social justice not to countenance wrongdoing of labor

The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the
underprivileged. At best, it may mitigate the penalty but it
certainly will not condone the offense. Compassion for the
poor is an imperative of every humane society but only when
the recipient is not a rascal claiming an undeserved privilege. 4

1 St. Lukes Medical Center Employees-Association-AFW vs NLRC, 2007. 3 Garcia vs. NLRC, 1994
2 HFS Phil. Inc., vs. Pilar, 2009 4 PLDT vs. NLRC, 1988

Lasallian Commission on Bar Operations 2018 5

LABOR LAW LABOR LAW

CIVIL CODE
It is the Civil Code (1700-1712), not the Labor Code, that
describes the nature of labor-management relations.
(Azucena)
CONTRACTS
Under the Civil Code, contracts of labor are explicitly subject
to the police power of the state because they are not ordinary
contracts but are impressed with public interest. Inasmuch as,
in this particular instance, the contract in question would
have been deemed in violation of pertinent labor laws, the
provisions of said laws would prevail over the terms of the
contract, and private respondent would still be entitled to
overtime pay.5
If the benefits are enjoyed after promulgation of Labor Code,
it is a matter of company practice which cannot be unilaterally
revoked by the employer.
Same requisites in non-diminution rule applies.
COMPANY POLICY
Follow policy until declared null by proper authorities
But until and unless the rules or orders are declared to be
illegal or improper by competent authority, the employees
ignore or disobey them at their peril. It is impermissible to
reverse the process: suspend enforcement of the orders or
rules until their legality or propriety shall have been subject
of negotiation, conciliation, or arbitration.8

In the interpretation of contracts, obscure words and

provisions shall not favor the party that caused the obscurity.
Consequently, the terms of the contract of employment
should be construed strictly against petitioner, which
prepared it. Indeed, a contract of employment is impressed
with public interest. For this reason, provisions of applicable
statutes are deemed written into the contract. Hence, the
parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations
by simply contracting with each other. Moreover, in case of
doubt, the terms of a contract should be construed in favor of
labor.6

SOURCES OF LABOR LAW

1. The Labor Code and its implementing rules and

regulations;
2. Social legislation (SSS, GSIS, etc.);
3. Civil Code;
4. Decisions of the Supreme Court;
5. Labor contracts/CBAs;
6. Company practice;
7. Company policy.

PRINCIPLES IN LABOR CONTRACTS

Implied incorporation of labor laws in labor contracts

Labor laws are considered written in every contract.
Stipulations in violation thereof are considered null.7

Legislated wage increases as amendments in labor contracts

Similarly, legislated wage increases are deemed amendments
to the contract. Thus, employers cannot hide behind their
contracts in order to evade their (or their contractors' or
subcontractors') liability for noncompliance with the
statutory minimum wage. (Id.)

COMPANY PRACTICE

If the benefits are enjoyed at the time or even before

promulgation of the Labor Code (May 1, 1974), Art. 100
applies – non-diminution rule.

5 PAL Employees Savings and Loan Assn., Inc. vs. NLRC, 1996 7 Mariveles Shipyard vs. CA, 2003
6 Innodata Philippines, Inc. vs. Quejada-Lopez, 2006 8 GTE Directories Corp. vs. Sanchez, 1991

Lasallian Commission on Bar Operations 2018 6

LABOR LAW LABOR LAW

RECRUITMENT AND PLACEMENT, defined

Any act of canvassing, enlisting, contracting, transporting,

utilizing, hiring or procuring of workers, and includes
referrals, contract services, promising or advertising for
employment, locally or abroad whether for profit or not:
Provided, that any person or entity, which in any manner
offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and
placement. [Art. 13(b), LC]

The proviso in Article 13 (b) raises a presumption that the

individual or entity is engaged in recruitment and placement
of workers 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 of workers.”9

The number of persons dealt with is not an essential requisite

of the act of recruitment and placement of workers.

ALLOWED ENTITIES TO ENGAGE IN RECRUITMENT

AND PLACEMENT OF WORKERS

1. Private employment agencies [Sec. 25, LC];

RECRUITMENT 2.
3.
4.
Private recruitment entities [Sec. 25, LC];
Public employment offices [Sec. 16, LC];
Shipping or manning agents or representatives;

AND 5.
6.
The POEA [EO 797];
The construction contractors if authorized to
operate by DOLE and the Construction Industry

PLACEMENT
Authority;
7. Members of the Diplomatic Corps [Sec. 18, LC];
8. International Organizations [Sec. 18, LC]; and
9. Name Hirees [POEA Rules].

Private Employment Agency

Private fee-charging employment agency, defined.

Any person or entity engaged in recruitment and placement
of workers for a fee which is charged, directly or indirectly,
from the workers or employers or both. (Art. 13 (c), Labor
Code)

License, defined.
A document issued by the Department of Labor authorizing
a person or entity to operate a private employment agency.
(Art. 13 (d), Labor Code)

Private Recruitment Entity

Private recruitment entity, defined.

Any person or association engaged in the recruitment and
placement of workers, locally or overseas, without charging,
directly or indirectly, any fee from the workers or employers.
[Art. 13(e), LC]

Authority, defined.
A document issued by the Department of Labor authorizing
a person or association to engage in recruitment and
placement activities as a private recruitment entity. (Art. 13
(f), LC)

9 People vs. Panis, 1986

Lasallian Commission on Bar Operations 2018 7

LABOR LAW LABOR LAW

The law institutes the policies on overseas employment and

establishes a higher standard of protection and promotion of
Private Employment Agency and Private Recruitment the welfare of migrant workers, their families, and of overseas
Agency, distinguished Filipinos in distress.11
It requires certain guarantee of protection for the overseas
Bar 2002 workers before they are deployed in countries that meet some
Type Definition Requires criteria.12
Private Any person or License - a
Employment entity engaged in document issued by POEA Rules and RA 8042 only apply to migrant
Agency recruitment and the Department of workers/overseas workers.
placement of Labor authorizing a
workers for a fee person or entity to The State shall deploy overseas Filipino workers only in
from the workers operate a private countries where the rights of Filipino migrant workers are
or employers or employment protected. The government recognizes any of the following as
both. agency. guarantee on the part of the receiving country for the
Private Any person or Authority - a protection of the rights of overseas Filipino workers:
Recruitment association document issued by a. It has existing labor and social laws protecting the
Agency engaged in the the Department of rights of migrant workers;
recruitment and Labor authorizing a b. It is a signatory to multilateral conventions,
placement of person or declarations or resolutions relating to the
workers, locally association to protection of migrant workers;
or overseas, engage in c. It has concluded a bilateral agreement or
without charging recruitment and arrangement with the government protecting the
any fee from the placement activities rights of overseas Filipino workers; and
workers or as a private d. It is taking positive, concrete measures to protect
employers recruitment entity. the rights of migrant workers, in furtherance of any
of the guarantees under subparagraphs (a), (b) and
Public Employment Offices (c) hereof.

To pursue its responsibility to promote employment
opportunities, the DOLE carries out programs for local and
overseas employment.
Effective allocation of manpower resources in local
employment is assigned to the BLE (Bureau of Local
Employment) and to POEA (Philippine Overseas
Employment Administration) for overseas employment. (Id.)
The POEA shall recruit and place workers to service the
requirements for trained and competent Filipino workers by
foreign governments and their instrumentalities and such
other employers as public interest may require.10
In the absence of a clear showing that any of the
aforementioned guarantees exists in the country of
destination of the migrant workers, no permit for deployment
shall be issued by the Philippine Overseas Employment
Administration (POEA). 13
Notwithstanding the above-mentioned, in pursuit of the
national interest or when public welfare so requires, the
POEA Governing Board, after consultation with the
Department of Foreign Affairs, may, at any time, terminate or
impose a ban on the deployment of migrant workers. 14
International Organizations (Sec. 18, LC)

POEA (E.O. 797)
Philippine Overseas Employment Administration (POEA)
was created by EO 7979 and was reorganized by EO 247.
Among the principal functions of the POEA are the
formulation, implementation, and monitoring of the overseas
employment of Filipino workers and the protection of their
rights to fair and equitable employment practices. It also
participates in the deployment of Filipino workers through
government-to-government hiring. (Azucena)
RA 8042, as amended by RA 10022, is known as the “Migrant
Workers and Overseas Filipino Act of 1995.”
No employer may hire a Filipino worker for overseas
employment except through the Boards and entities
authorized by the Secretary of Labor. Direct hiring by
members of the diplomatic corps, international organizations
and such other employers as may be allowed by the Secretary
of Labor is exempted from this provision.15
Name Hirees
‘Name Hirees’ or those individual workers who are able to
secure contracts for overseas employment on their own efforts
and representation without the assistance or participation of
any agency.16
Are there prohibited entities to engage in recruitment and
placement of workers? Yes, those not included in the ‘allowed
entities’ above are prohibited.

10 Sec. 3(f), Powers and Functions, EO No. 247 (1986) Reorganizing the Philippines 13 Sec. 4, Deployment of Migrant Workers, RA 8042
Overseas Employment Administration and For Other Purposes, as amended by 14 Sec. 5, Deployment of Migrant Workers, RA 8042
RA 10022 15 Art. 18 Ban on Direct Hiring, Labor Code
11 RA 8042, as amended by RA 10022, is known as the “Migrant Workers and 16 Part III, Rule III, POEA Rules Governing the Overseas Employment as

Overseas Filipino Act of 1995.” amended

12 Id.

Lasallian Commission on Bar Operations 2018 8

LABOR LAW LABOR LAW

6. Overseas employment licenses are valid for 4 years

QUALIFICATIONS TO ENGAGE IN THE BUSINESS OF from the date of issuance unless sooner cancelled,
RECRUITMENT AND PLACEMENT OF FILIPINO revoked, or suspended;
WORKERS FOR OVERSEAS EMPLOYMENT: 7. Local employment licenses are valid only for 2
years from the date of issuance;
1. Filipino citizens, partnerships or corporations at least 8. Provisional licenses are valid for 1 year within
seventy-five percent (75%) of the authorized and which the applicant should be able to comply with
voting capital stock of which is owned and its undertaking to deploy 100 workers to its new
controlled by Filipino citizens; principal; Compliance thereto shall result in
upgrade to full license, while failure leads to its
2. A minimum capitalization for: expiration;
Private employment agency for local 9. In case of death of the sole proprietor-license
employment…17 holder, the license may be extended upon the
• Two Hundred Thousand Pesos (P200,000.00) request of the heirs, to continue only upon for the
in case of a single proprietorship or purpose of winding up business operations.
partnership;
• Minimum paid-up capital of Five Hundred DISQUALIFIED ENTITIES TO ENGAGE IN
Thousand Pesos (P2,000,000.00) in case of a RECRUITMENT AND PLACEMENT OF WORKERS
corporation.
Bar 2006
Private recruitment or manning agency for overseas
Travel agencies and sales agencies of airline companies are
employment…18
prohibited from engaging in the business of recruitment
• Two Million Pesos (P2,000,000.00) in case of a
and placement of workers for overseas employment
single proprietorship or partnership;
whether for profit or not. 21
• Minimum paid-up capital of Two Million
Pesos (P2,000,000.00) in case of a corporation;
DISQUALIFICATION
Provided that those with existing licenses
shall, within four years from effectivity hereof,
The following are not qualified to engage in the business of
increase their capitalization or paid up capital,
recruitment and placement of Filipino workers overseas:
as the case may be, to Two Million Pesos
1. Travel agencies and sales agencies of airline
(P2,000,000.00) at the rate of Two Hundred
companies;
Fifty Thousand (P250,000.00) every year;
2. Officers or members of the Board of any
corporation or members in a partnership engaged
3. Those not otherwise disqualified by law or other
in the business of a travel agency;
government regulations to engage in the recruitment
3. Corporations and partnerships, when any of its
and placement of workers for overseas
officers, members of the board or partners, is also
employment [seafarers].
an officer, member of the board or partner of a
corporation or partnership engaged in the business
Licenses are non-transferrable because
of a travel agency;
1. It can only be used by the person it was issued to;
4. Persons, partnerships or corporations which have
2. It can only be used at the place designated therein
derogatory records, such as but not limited to the
following:
Other Rules and Regulations on License/Authority: 19
1. Only the person or entity to whom the license or a. Those certified to have derogatory record
or information by the National Bureau of
authority was issued, can use it;
Investigation or by the Anti-Illegal
2. The license or authority may only be used in the
place stated thereto; Recruitment and placement Recruitment Branch of the POEA;
should only be made in that place and nowhere b. Those against whom probable cause or
prima facie finding of guilt for illegal
else;
recruitment or other related cases exists;
3. License or authority cannot be transferred,
c. Those convicted for illegal recruitment or
conveyed nor assigned to any person or entity;
other related cases and/or crimes
4. Any transfer of business address, appointment or
involving moral turpitude; and
designation of any agent or representative
d. Those agencies whose licenses have been
including the establishment of additional offices
previously revoked or cancelled by the
anywhere shall be subject to the prior approval of
Administration for violation of RA 8042,
the Department of Labor;
PD 442 as amended and their
5. Provincial recruitment and/or job fairs are allowed
implementing rules and regulations as
only upon written authority from POEA; 20
well as these rules and regulations.

17 Sec. 1(b), Rule II, Rules and Regulations Governing Private Recruitment and 19 Sec. 6, 8, Rule II, Rules and Regulations Governing Private Recruitment and
Placement Agency for Local Employment Placement Agency for Local Employment; Sec. 5-7, Rule II, 2002 POEA Rules and
18 Sec. 1(b) Rule I, Part II, POEA Rules and Regulations Governing the Recruitment Regulations on the Recruitment and Employment of Land-Based Workers
and Employment of Land-Based Overseas Workers (2002); Section 1(b), Rule I, Part 20 Part I, Rule VI, 2002 POEA Rules

II, POEA Rules and Regulations Governing the Recruitment and Employment of 21 Article 26, Travel Agencies Prohibited To Recruit, LC

Seafarers (2003)

Lasallian Commission on Bar Operations 2018 9

LABOR LAW
All applicants for issuance/renewal of license shall
be required to submit clearances from the National
Bureau of Investigation and Anti-Illegal
Recruitment Branch, POEA, including clearances
for their respective officers and employees.
5. Any official or employee of the DOLE, POEA,
OWWA, DFA and other government agencies
directly involved in the implementation of R.A.
8042, otherwise known as Migrant Workers and
Overseas Filipino Act of 1995 and/or any of
his/her relatives within the fourth 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. [POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers22
ILLEGAL RECRUITMENT
ELEMENTS
Simple Illegal Recruitment
1. Undertakes any recruitment activity as defined
under Article 13(b) or any prohibited practice
enumerated under Article 34; AND
2. Does not have a license or authority to engage in
the recruitment and placement of workers.
The first two (2) elements for simple illegal recruitment as
cited above apply to illegal recruitment involving economic
sabotage. A third element is added that:
• There be at least 3 recruitees in case of large-scale
illegal recruitment; or
• There be at least 3 recruiters in case of syndicated
illegal recruitment.
Illegal Recruitment committed by a Non-Licensee or Non-
Holder
1. Any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, procuring workers
(CETCHUP) and includes referring, contact
services, promising or advertising for employment
abroad, (CRAP) is committed; AND
2. Such act is committed by a non-license or non-
holder of authority.
Illegal Recruitment regardless of whether a holder of
license/authority or not
1. Any of the grounds under Sec. 6 of RA 8042 is
committed (See Art. 34 above); AND
2. It is committed by any person, whether a non-
licensee, non-holder, license or holder of authority.
PROHIBITED ACTIVITIES
22 Sec. 2, Part II, Rule I, 2003 POEA Rules
Lasallian Commission on Bar Operations 2018
LABOR LAW
It shall be unlawful for any individual, entity, licensee or
holder of authority: (Art. 34, LC)
a. To charge or accept, directly or indirectly, any
amount greater than that specified in the schedule
of allowable fees prescribed by the Secretary of
Labor, or to make a worker pay any amount greater
than that actually;
b. To furnish or publish any false notice or
information or document in relation to recruitment
or employment;
c. To give any false notice, testimony, information or
document or commit any act of misrepresentation
for the purpose of securing a license or authority
under this Code.
d. To induce or attempt to induce a worker already
employed to quit his employment in order to offer
him to another unless the transfer is designed to
liberate the worker from oppressive terms and
conditions of employment;
e. To influence or to attempt to influence any person
or entity not to employ any worker who has not
applied for employment through his agency;
f. To engage in the recruitment or placement of
workers in jobs harmful to public health or morality
or to the dignity of the Republic of the Philippines;
g. To obstruct or attempt to obstruct inspection by the
Secretary of Labor or by his duly authorized
representatives;
h. To fail to file reports on the status of employment,
placement vacancies, remittance of foreign
exchange earnings, separation from jobs,
departures and such other matters or information
as may be required by the Secretary of Labor.
i. To substitute or alter employment contracts
approved and verified by the Department of Labor
from the time of actual signing thereof by the
parties up to and including the periods of
expiration of the same without the approval of the
Secretary of Labor;
j. To become an officer or member of the Board of any
corporation engaged in travel agency or to be
engaged directly or indirectly in the management
of a travel agency; and
k. To withhold or deny travel documents from
applicant workers before departure for monetary
or financial considerations other than those
authorized under this Code and its implementing
rules and regulations.
Violation of those grounds (under Art. 34) by a holder of license
or authority is not illegal recruitment, but a prohibited
recruitment practice. However, if these grounds are committed
by non-holders of license or authority, then it becomes illegal
recruitment.23
Sec. 6 of RA 8042 considers these grounds as illegal
recruitment. With the addition of ten (10) grounds:
It shall likewise include the following acts, whether
committed by any person, whether a non-licensee, non-
holder, licensee or holder of authority:
10
LABOR LAW LABOR LAW

l. Failure to actually deploy without valid reasons as

determined by the Department of Labor and
Employment; and
m. Failure to reimburse expenses incurred by the
workers 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 TYPES OF ILLEGAL RECRUITMENT
n. To allow a non-Filipino citizen to head or manage a
licensed recruitment/manning agency.
Bar 2002, 2005
Kinds of illegal recruitment:
XXX
✓ Illegal recruitment under Art. 38 of Labor Code;
In addition to the acts enumerated above, it shall also be
and
unlawful for any person or entity to commit the following
✓ Illegal recruitment under Sec. 6 of RA 8042.
prohibited acts:
1. Grant a loan to an overseas Filipino worker with
interest exceeding eight percent (8%) per annum, Art. 38 (b), Labor Code Sec. 6 of RA 8042
which will be used for payment of legal and Definition: “… any act of
allowable placement fees and make the migrant canvassing, enlisting,
Definition: “[a]ny
worker issue, either personally or through a contracting, transporting,
recruitment activities,
guarantor or accommodation party, postdated utilizing, hiring, procuring
including the prohibited
checks in relation to the said loan; workers and includes referring,
practices enumerated
2. Impose a compulsory and exclusive arrangement contact services, promising or
under Art. 34 of [the
whereby an overseas Filipino worker is required to advertising for employment
Labor Code], to be
avail of a loan only from specifically designated abroad, whether for profit or
undertaken by non-
institutions, entities or persons; not, when undertaken by a non-
licensees or non-holders
3. Refuse to condone or renegotiate a loan incurred by license or non-holder of
of authority…” (Sec.
an overseas Filipino worker after the latter's authority contemplated under
38a)
employment contract has been prematurely Article 13(f) of PD No. 442, as
terminated through no fault of his or her own; amended (Labor Code)
4. Impose a compulsory and exclusive arrangement Applies only to non- Both applies to holder or non-
whereby an overseas Filipino worker is required to holder of holder of license or authority
undergo health examinations only from specifically license/authority “It shall likewise include
designated medical clinics, institutions, entities or the following acts,
persons, except in the case of a seafarer whose whether committed by
medical examination cost is shouldered by the any person, whether a
principal/shipowner; non-licensee, non-holder,
5. Impose a compulsory and exclusive arrangement licensee or holder of
whereby an overseas Filipino worker is required to authority xxx”
undergo training, seminar, instruction or schooling Local Employment Overseas Employment
of any kind only from specifically designated Both have large-scale and syndicated illegal recruitment;
institutions, entities or persons, except for both recruitments are considered as offense involving
recommendatory trainings mandated by economic sabotage
principals/shipowner where the latter shoulder the No express provision The persons criminally liable
cost of such trainings; regarding criminal for the above offenses are the
6. For a suspended recruitment/manning agency to liability of accomplices principals, accomplices and
engage in any kind of recruitment activity and accessories in illegal accessories. In case of juridical
including the processing of pending workers' recruitment under Labor persons, the officers having
applications; and Code; but there is theory control, management or
7. For a recruitment/manning agency or a foreign of imputed knowledge; direction of their business
principal/employer to pass on the overseas shall be liable.
Filipino worker or deduct from his or her salary the Doctrine of imputed knowledge applies to both (see
payment of the cost of insurance fees, premium or discussion below)
other insurance related charges, as provided under 11 grounds (Art. 34, LC) 21 grounds (Sec. 6, RA 8042, as
the compulsory worker's insurance coverage. amended by 10022;
substantially the same with
The persons criminally liable for the above offenses are the Art. 34 but with two new
principals, accomplices and accessories. In case of juridical grounds)
persons, the officers having control, management or direction
of their business shall be liable. (Art. 38, LC)

Lasallian Commission on Bar Operations 2018 11

LABOR LAW
Both the Labor Code and the Migrant Workers Act clearly
show that illegal recruitment is an offense that is essentially
committed by non-licensee or non-holder of authority.24
TYPES OF ILLEGAL RECRUITMENT UNDER
PHILIPPINE LAW
Illegal Recruitment under the Labor Code
a. Simple Illegal Recruitment or Illegal Recruitment
w/o license
Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code,
to be undertaken by non-licensees or non-holders of
authority, shall be deemed illegal and punishable
under Article 39 of this Code.
The Department of Labor and Employment or any
law enforcement officer may initiate complaints
under this Article. (Art. 38 (a), LC)
Elements of Simple Illegal Recruitment:
1. Undertakes any recruitment activity as
defined under Article 13(b) or any prohibited
practice enumerated under Article 34; AND
2. Does not have a license or authority to engage
in the recruitment and placement of workers.
All you need to prove is that the non-licensee is
practicing recruitment.
b. Illegal Recruitment as Economic Sabotage
✓ Large Scale Illegal Recruitment
✓ Syndicated Illegal Recruitment
(1) Large Scale Illegal Recruitment if it is committed
against 3 or more persons individually or as a
group.
(2) Syndicated Illegal Recruitment if it is committed
by 3 or more persons in conspiracy.
Illegal Recruitment under the Labor Code is one of local
employment. If it is overseas employment, it is RA 8042 that
applies.
Illegal Recruitment under RA 8042
a. Illegal Recruitment committed by a non-license or
non-holder
Any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, procuring workers
(CETCHUP) and includes referring, contact
24 People v Alvarez, 2002
25 Sec. 6, Par. 1, RA 8042
Lasallian Commission on Bar Operations 2018
LABOR LAW
services, promising or advertising for employment
abroad, (CRAP) whether for profit or not, when
undertaken by a non-license or non-holder of authority
contemplated under Article 13(f) of Presidential
Decree No. 442, as amended (aka Labor Code). x x
x25
Elements of Illegal Recruitment committed by a non-license or
non-holder
1. Any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, procuring
workers (CETCHUP) and includes referring,
contact services, promising or advertising for
employment abroad, (CRAP) is committed;
AND
2. Such act is committed by a non-license or non-
holder of authority.
b. Illegal Recruitment committed regardless of
whether a holder of license/authority or not
It shall likewise include the following acts, whether
committed by any person, whether a non-licensee, non-
holder, license or holder of authority: x x x
(enumeration of ground follows) 26
It is only under RA 8042 that a holder of
license/authority may commit illegal recruitment.
For enumeration of grounds, see Sec. 34 and
comments above.
Elements of Illegal Recruitment regardless of whether a holder
of license/authority or not:
1. Any of the grounds under Sec. 6 of RA 8042 is
committed (See Art. 34 above); AND
2. It is committed by any person, whether a non-
licensee, non-holder, license or holder of
authority.
c. Illegal Recruitment as Economic Sabotage
✓ Large Scale Illegal Recruitment
✓ Syndicated Illegal Recruitment
(1) Large Scale Illegal Recruitment - Illegal
recruitment is deemed committed in large
scale if committed against three (3) or more
persons individually or as a group.
(2) Syndicated Illegal Recruitment - Illegal
recruitment is deemed committed by a
syndicate if carried out by a group of three
(3) or more persons conspiring and/or
confederating with one another in carrying
out any unlawful or illegal transaction,
enterprise or scheme defined under the
first paragraph hereof, [i.e. Sec. 38(a)].
(Article 38 (b), LC)
Both the Labor Code and RA 8042 have illegal recruitment as
economic sabotage. Illegal Recruitment under RA 8042 is one
of overseas employment. If it is local employment, it is the Labor
Code that applies.
26 Sec. 6, Par. 1, RA 8042
12
LABOR LAW LABOR LAW

(Art. 38(b), LC) constitutes

Failure of the prosecution to prove the guilt of the accused The penalty of life economic sabotage
beyond reasonable doubt does not absolve the civil obligation imprisonment and as
to return the money collected. a fine of One defined herein.
Hundred
Thousand Pesos
(P1000,000.00)
shall be imposed if
illegal recruitment
constitutes
economic sabotage
as defined herein

Penalties for Illegal Recruitment under

Article 39 and RA 8042 ILLEGAL RECRUITMENT VS. ESTAFA
Article 39
Was repealed by Filing of Illegal Recruitment Case, Not a Bar to Filing of
RA 8042
implication by Estafa Case
RA 8042.
Imprisonment of Any person found Illegal recruitment and estafa are entirely different offenses
not less than four guilty of illegal and neither one necessarily includes or is necessarily included
years nor more recruitment shall in the other. A person who is convicted of illegal recruitment
than eight years or suffer the penalty may, in addition, be convicted of estafa by false pretenses or
a fine of not less of imprisonment of fraudulent acts under Article 315, paragraph 2(a) of the
Illegal than P20,000 nor not less than six (6) Revised Penal Code. In the same manner, a person acquitted
Recruitment more than years and one (1) of illegal recruitment may be held liable for estafa. Double
w/o License P100,000 or both day but not more jeopardy will not set in because illegal recruitment is malum
such than twelve (12) prohibitum, in which there is no necessity to prove criminal
imprisonment and years and a fine not intent, whereas estafa is malum in se, in the prosecution of
fine, at the less than two which, proof of criminal intent is necessary.27
discretion of the hundred thousand
court. pesos (P200,000.00) Conviction for Illegal recruitment, Not a Bar to Conviction
Imprisonment of nor more than five for Estafa
not less than two hundred thousand
years nor more pesos In People v. Cortez, the Court explained that: “In this
than five years or (P500,000.00). jurisdiction, it is settled that a person who commits illegal
a fine of not less recruitment may be charged and convicted separately of
than P10,000 nor Provided, however, illegal recruitment under the Labor Code and estafa under
more than P50,000, that the maximum par. 2(a) of Art. 315 of the Revised Penal Code. The offense of
or both such penalty shall be illegal recruitment is malum prohibitum where the criminal
Illegal intent of the accused is not necessary for conviction, while
imprisonment and imposed if the
Recruitment estafa is malum in se where the criminal intent of the accused
fine, at the person illegally
w/ License is crucial for conviction. Conviction for offenses under the
discretion of the recruited is less
court than eighteen (18) Labor Code does not bar conviction for offenses punishable
years of age or by other laws. Conversely, conviction for estafa under par.
committed by a 2(a) of Art. 315 of the Revised Penal Code does not bar a
non-licensee or conviction for illegal recruitment under the Labor Code. It
non-holder of follows that one's acquittal of the crime of estafa will not
authority. necessarily result in his acquittal of the crime of illegal
Illegal recruitment The penalty of life recruitment in large scale, and vice versa.”28
when committed imprisonment and
by a syndicate or a fine of not less Acquittal in the Illegal Recruitment Case, Not a Bar to
in large scale shall than five hundred Conviction for Estafa
Large Scale be considered an thousand pesos
Illegal offense involving (P500,000.00) nor Considering that illegal recruitment and estafa are distinct
Recruitment economic sabotage more than one crimes, a person acquitted of illegal recruitment may be held
and shall be million pesos liable for estafa. A person’s acquittal in the illegal recruitment
penalized in (P1,000,000.00) case does not proves that she is not guilty of estafa. 29
accordance with shall be imposed if
Article 39 hereof. illegal recruitment

27 Rosita Sy vs. People, 2010 29 Sy v. People, 2010

28 People v. Ochoa, 2011; People v. Ocden 2011

Lasallian Commission on Bar Operations 2018 13

LABOR LAW
Conviction for both Illegal Recruitment and Estafa, Not
Double Jeopardy
Double jeopardy could not result from prosecuting and
convicting the accused-appellant for both crimes considering
that they were entirely distinct from each other not only from
their being punished under different statues but also from
their elements being different. 30
Same Evidence to prove Illegal Recruitment may be used to
prove Estafa
It is thus enough to show that the recruiter and his cohort
acted with unity of purpose in defrauding the victims by
misrepresenting that they had the power, influence, agency
and business to obtain overseas employment for them upon
payment of a placement fee, which they did pay and deliver
to the recruiter.31
LIABILITY OF LOCAL RECRUITMENT AGENCY AND
FOREIGN EMPLOYER
Solidary Liability
"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 be 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.”32
The applicant for license to operate a private employment
agency shall assume joint and solidary liability with the
employer for all claims and liabilities which may arise in
connection with the implementation of the contract, including
but not limited to payment of wages, death and disability
compensation and repatriations.33
The applicant for license to operate a manning agency shall
assume joint and solidary liability with the employer for all
claims and liabilities which may arise in connection with the
implementation of the employment contract, including but
not limited to wages, death and disability compensation and
their repatriation.34
The liability extends to the expiration of the contract.35
30 People v. Bayker, 2016
31 People v. Alzona, 2004]
32 [Section 10, RA No. 8042, as amended by Section 7, RA No. 10022]
33 Sec. 1(f)(3), Rule II, Part II, 2002 POEA Rules
34 Sec. 1(e)(8), Rule II, Part II, 2003 POEA Rules
Lasallian Commission on Bar Operations 2018
LABOR LAW
Theory of Imputed Knowledge
There is a doctrine in agency which states that the principal is
chargeable with and bound by the knowledge of or notice to
his agent received while the agent was acting as such. Simply
put, notice to the agent is notice to the principal.
Since the local employment agency is considered the agent of
the foreign employer (the principal), knowledge of the former
of existing labor and social legislation in the Philippines is
binding on the latter. Consequently, notice to the former of
any violation thereof is notice to the latter.
However, notice to the principal is not notice to the agent. The
SC held in Sunace International Management Services, Inc. vs.
NLRC that “the theory of imputed knowledge ascribes the
knowledge of the agent to the principal, not the other way
around. The knowledge of the principal-foreign employer
cannot, therefore, be imputed to its agent.”36
Termination of Contract of Migrant Workers Without Just
or Valid Cause
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:
a. To the full reimbursement of his placement fee with
interest of twelve percent (12%) per annum plus
b. 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.37
Serrano Doctrine: Illegally dismissed OFWs are now entitled
to all the salaries for the entire unexpired portion of their
employment contracts, irrespective of the stipulated term or
duration thereof.
Rule before Serrano (1995-2009): 3-month salary rule
applied
The employment contract involved in the instant case covers
a two-year period but the overseas contract worker actually
worked for only 26 days prior to his illegal dismissal. Thus,
the three months’ salary rule applies (Flourish Maritime
Shipping v. Almanzor, 2008)
Rule after Serrano: invalidated the 3- month salary cap
clause
The SC there held that “said clause is unconstitutional for
being an invalid classification, in violation of the equal
protection clause.”38
In the case of Yap39, the SC affirmed the Serrano ruling, but
did not apply the Operative Fact doctrine: “As an exception
to the general rule, the doctrine applies only as a matter of
equity and fair play.”
35 OSM Shipping Philippines, Inc. v. NLRC, 2003
36 Sunace International Management Services, Inc. vs. NLRC
37 Sec. 10 of RA 8042
38 Serrano v. Gallant Maritime Services, Inc., 2009
39 Yap vs. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc.
(2011)
14
LABOR LAW
N B : In 2010, a year after Serrano, RA 10022, in amending RA
8042, reincorporated the nullified 3-month salary cap clause.
However, the SC did not allow this and again struck the
revived clause as unconstitutional in the 2014 case of Sameer
Overseas Placement Agency vs. Cabiles.40 There, the SC said that:
“when a law or a provision of law is null because it is
inconsistent with the Constitution, the nullity cannot be cured
by reincorporation or reenactment of the same or a similar law
or provision. A law or provision of law that was already
declared unconstitutional remains as such unless
circumstances have so changed as to warrant a reverse
conclusion.”
Hence, the case of Serrano holds as binding precedent, even
after the passage of RA 10022.
BAN ON DIRECT HIRING
Direct Hiring, defined
It refers to the process of directly hiring workers by employers
for overseas employment as authorized by the DOLE
Secretary and processed by the POEA, including:
1. Those hired by international organizations;
2. Those hired by members of the diplomatic corps;
3. Name hirees or workers who are able to secure
overseas employment opportunity with an
employer without the assistance or participation of
any agency.41
Ban on Direct Hiring
General Rule:
No direct hiring except through the Boards and Entities
authorized by the Secretary of Labor. (Art. 18, LC)
Exception:
1. Members of the diplomatic corps;
2. International organizations; and
3. Heads of state and government officials with the
rank of at least deputy minister
4. Other employers as may be allowed by the
Secretary of Labor, such as:
a. Those provided in (1), (2) and (3) who
bear a lesser rank, if endorsed by the
POLO, or Head of Mission in the absence
of the POLO;
b. Professionals and skilled workers with
duly executed/authenticated contracts
containing terms and conditions over
and above the standards set by the
POEA. The number of professional and
skilled Overseas Filipino Workers hired
for the first time by the employer shall
not exceed five (5). For the purpose of
40of Sameer Overseas Placement Agency vs. Cabiles (2014)
41Section 1(i), Rule II, Omnibus Rules and Regulations Implementing the
Migrant Workers and Overseas Filipinos Act of 1995, as amended by R.A. No.
10022 (2010)
Lasallian Commission on Bar Operations 2018
LABOR LAW
determining the number, workers hired
as a group shall be counted as one; or
c. Workers hired by a relative/family
member who is a permanent resident of
the host country.42 Their hiring,
nonetheless, has to be processed through
the POEA.43
Rationale for the Ban
To ensure that such employment is fully regulated by the
government through its agencies, such as the POEA. In this
way, adverse exploitation of the migrant workers by foreign
employers is minimized, if not eradicated. [Chan, 2017]
REGULATION OF RECRUITMENT AND
PLACEMENT ACTIVITIES
SUSPENSION OR CANCELLATION OF LICENSE OR
AUTHORITY
The Secretary of Labor shall have the power to suspend or
cancel any license or authority to recruit employees for
overseas employment for violation of rules and regulations
issued by the 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. (Art. 35, LC)
REGULATORY AND VISITORIAL POWERS OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE)
SECRETARY
Regulatory Power
The Secretary of Labor shall have the power to restrict and
regulate the recruitment and placement activities of all
agencies within the coverage of this Title and is hereby
authorized to issue orders and promulgate rules and
regulations to carry out the objectives and implement the
provisions of this Title. (Art. 36, LC)
Secretary of Labor has the power and authority not only to
restrict and regulate the recruitment and placement activities
of all agencies but also to promulgate rules and regulations to
carry out the objectives and implement the provisions governing
said activities. Implicit in these powers is the award of
appropriate relief to the victims of the offenses committed by the
faulting agency or contractor.44
Visitorial Power
The Secretary of Labor or his duly authorized representatives
may, at any time, inspect the premises, books of accounts and
records of any person or entity covered by this Title, require
42Section 124, Rule II, Part III, Revised POEA Rules and Regulations Governing
the Recruitment and Employment of Landbased Overseas Filipino Workers of
2016
43 Part III, Rule III, POEA Rules Governing the Overseas Employment as
amended (2002)
44 Eastern Assurance and Surety Corp. vs. Secretary of Labor, 1990.
15
LABOR LAW
it to submit reports regularly on prescribed forms, and act on
violation of any provisions of this Title. (Art. 37, LC)
Close Down Power
The Secretary of Labor shall close companies, establishments
and entities found to be engaged in the recruitment of
workers for overseas employment, without having been
licensed or authorized to do so. (Art. 38 (c), LC)
The Secretary of Labor, not being a judge, may NO longer
issue search or arrest warrants. Hence, the authorities must go
through the judicial process for these warrants. To that extent,
Article 38(c) of the Labor Code is unconstitutional and of no
force and effect.45
Only the power to issue search or arrests warrants were
stripped from the Secretary of Labor. (Anonuevo)
Penalties
If the offender is a corporation, partnership, association or
entity, the penalty shall be imposed upon the officer or
officers of the corporation, partnership, association or entity
responsible for violation; and if such officer is an alien, he
shall, in addition to the penalties herein prescribed, be
deported without further proceedings. (Art. 39 (d), LC)
In every case, conviction shall cause and carry the automatic
revocation of the license or authority and all the permits and
privileges granted to such person or entity under this Title,
and the forfeiture of the cash and surety bonds in favor of the
Overseas Employment Development Board or the National
Seamen Board, as the case may be, both of which are
authorized to use the same exclusively to promote their
objectives. (Art. 39 (e), LC)
PROHIBITED ACTIVITIES
It shall be unlawful for any individual, entity, licensee or
holder of authority: (Art. 34, LC)
a. To charge or accept, directly or indirectly, any
amount greater than that specified in the schedule
of allowable fees prescribed by the Secretary of
Labor, or to make a worker pay any amount greater
than that actually;
b. To furnish or publish any false notice or
information or document in relation to recruitment
or employment;
c. To give any false notice, testimony, information or
document or commit any act of misrepresentation
for the purpose of securing a license or authority
under this Code.
d. To induce or attempt to induce a worker already
employed to quit his employment in order to offer
him to another unless the transfer is designed to
liberate the worker from oppressive terms and
conditions of employment;
e. To influence or to attempt to influence any person
or entity not to employ any worker who has not
applied for employment through his agency;
f. To engage in the recruitment or placement of
workers in jobs harmful to public health or morality
or to the dignity of the Republic of the Philippines;
45 Salazar v. Achacoso, 1990.
Lasallian Commission on Bar Operations 2018
LABOR LAW
g. To obstruct or attempt to obstruct inspection by the
Secretary of Labor or by his duly authorized
representatives;
h. To fail to file reports on the status of employment,
placement vacancies, remittance of foreign
exchange earnings, separation from jobs,
departures and such other matters or information
as may be required by the Secretary of Labor.
i. To substitute or alter employment contracts
approved and verified by the Department of Labor
from the time of actual signing thereof by the
parties up to and including the periods of
expiration of the same without the approval of the
Secretary of Labor;
j. To become an officer or member of the Board of any
corporation engaged in travel agency or to be
engaged directly or indirectly in the management
of a travel agency; and
k. To withhold or deny travel documents from
applicant workers before departure for monetary
or financial considerations other than those
authorized under this Code and its implementing
rules and regulations.
Sec. 6 of RA 8042 considers these grounds as illegal
recruitment. With the addition of ten (10) grounds:
It shall likewise include the following acts, whether
committed by any person, whether a non-licensee, non-
holder, licensee or holder of authority:
l. Failure to actually deploy without valid reasons as
determined by the Department of Labor and
Employment; and
m. Failure to reimburse expenses incurred by the
workers 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
n. To allow a non-Filipino citizen to head or manage a
licensed recruitment/manning agency.
XXX
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;
16
LABOR LAW
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 for
recommendatory trainings mandated by
principals/shipowner 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.
JURISDICTION
Regional Trial Court, for Criminal Action for Illegal
Recruitment
A criminal action arising from illegal recruitment as defined
herein shall be filed with the Regional Trial Court of the
province or city where the offense was committed or where
the offended party actually resides at the same 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. Provided, however, That the
aforestated provisions shall also apply to those criminal
actions that have already been filed in court at the time of the
effectivity of this Act.46
NLRC, for Money Claims Arising from Employer-
Employee Relations
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 filing
of the complaint, the claims arising out of an employer-
employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms
of damages.
POEA, for Administrative and Disciplinary Actions
The POEA shall exercise original and exclusive jurisdiction to
hear and decide:
a. All cases, which are administrative in character,
involving or arising out of violations of rules and
46Sec. 9, RA 8042
Lasallian Commission on Bar Operations 2018
LABOR LAW
regulations relating to licensing and registration of
recruitment and employment agencies or entities;
and
b. Disciplinary action cases and other special cases,
which are administrative in character, involving
employers, principals, contracting partners and
Filipino migrant workers.47
ALIEN EMPLOYMENT REGULATION
The State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods, and adopt
measures that help make them competitive. (Art. XII, Sec. 12,
1987 Constitution)
The ownership and management of mass media shall be
limited to citizens of the Philippines, or to corporations,
cooperatives or associations, wholly-owned and managed by
such citizens.
The Congress shall regulate or prohibit monopolies in
commercial mass media when the public interest so requires.
No combinations in restraint of trade or unfair competition
therein shall be allowed. (Art. XVI, Sec. 11(1), Constitution)
The advertising industry is impressed with public interest,
and shall be regulated by law for the protection of consumers
and the promotion of the general welfare.
Only Filipino citizens or corporations or associations at least
seventy per centum (70%) of the capital of which is owned by
such citizens shall be allowed to engage in the advertising
industry.
The participation of foreign investors in the governing body
of entities in such industry shall be limited to their
proportionate share in the capital; thereof, and all the
executive and managing officers of such entities must be
citizens of the Philippines. (Art. XVI, Sec. 11(2), 1987
Constitution)
No franchise, certificate, or any other form of authorization
for the operation of a public utility shall be granted except to
citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines, at least sixty per
centum (60%) of whose capital is owned by such citizens; nor
shall such franchise, certificate, or authorization be exclusive
in character or for a longer period than fifty years. Neither
shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or
repeal by the Congress when the common good so requires.
The State shall encourage equity participation in public
utilities by the general public. The participation of foreign
investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in its
capital, and all the executive and managing officers of such
corporation or association must be citizens of the Philippines.
(Art. XII, Sec. 11, 1987 Constitution)
Employment permit of non-resident aliens (Art. 40, LC)
47Sec. 28, RA 8042
17
LABOR LAW
Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer
who desires to engage an alien for employment in the
Philippines shall obtain an employment permit from the
Department of Labor.
The employment permit may be issued to a non-resident alien
or to the applicant employer after a determination of the non-
availability of a person in the Philippines who is competent,
able and willing at the time of application to perform the
services for which the alien is desired. For an enterprise
registered in preferred areas of investments, said employment
permit may be issued upon recommendation of the
government agency charged with the supervision of said
registered enterprise.
Prohibition against transfer of employment. (Art. 41, LC)
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.
b. Any non-resident alien who shall take up
employment in violation of the provision of this
Title and its implementing rules and regulations
shall be punished in accordance with the
provisions of Articles 289 and 290 of the Labor
Code.
In addition, the alien worker shall be subject to deportation
after service of his sentence.
Submission of list (Art. 42, LC)
Any employer employing non-resident foreign nationals on
the effective date of this Code shall submit a list of such
nationals to the Secretary of Labor within thirty (30) days after
such date indicating their names, citizenship, foreign and
local addresses, nature of employment and status of stay in
the country. The Secretary of Labor shall then determine if
they are entitled to an employment permit.
COVERAGE
General rule
All foreign nationals who intend to engage in gainful
employment in the Philippines shall apply for Alien
Employment Permit (AEP). 48
The following categories of foreign nationals are exempt from
securing an employment permit49
a. All members of the diplomatic service and foreign
government officials accredited by and with
reciprocity arrangements with the Philippine
government;
b. Officers and staff of international organizations of
which the Philippine government is a member, and
their legitimate spouses desiring to work in the
Philippines;
c. Foreign nationals elected as members of the
Governing Board who do not occupy any other
position, but have only voting rights in the
corporation;
d. All foreign nationals granted exemption by law;
e. Owners and representatives of foreign principals
48Section1, D.O. 97-09, The Revised Rules for the Issuance of Employment Permits
to Foreign Nationals
Lasallian Commission on Bar Operations 2018
LABOR LAW
whose companies are accredited by the POEA, who
come to the Philippines for a limited period and
solely for the purpose of interviewing Filipino
applicants for employment abroad;
f. Foreign nationals who come to the Philippines to
teach, present and/or conduct research studies in
universities and colleges as visiting, exchange or
adjunct professors under formal agreements
between the universities or colleges in the
Philippines and foreign universities or colleges; or
between the Philippine government and foreign
government; provided that the exemption is one a
reciprocal basis; and
g. Permanent residing foreign nationals, probationary
or temporary resident visa holders.
CONDITIONS OF GRANT OF PERMIT
Employment permit of non-resident aliens. Any alien seeking
admission to the Philippines for employment purposes and
any domestic or foreign employer who desires to engage an
alien for employment in the Philippines shall obtain an
employment permit from the Department of Labor.
The employment permit may be issued to a non-resident alien
or to the applicant employer after a determination of the non-
availability of a person in the Philippines who is competent, able and
willing at the time of application to perform the services for which
the alien is desired. For an enterprise registered in preferred
areas of investments, said employment permit may be issued
upon recommendation of the government agency charged
with the supervision of said registered enterprise.
GROUNDS FOR DENIAL OF PERMIT
An application of AEP may be denied by the Regional
Director based on any of the following grounds:
1. misrepresentation of facts in the application;
2. submission of falsified documents;
3. the foreign national has a derogatory record; or
4. availability of a Filipino who is competent, able and
willing to the job intended for the foreign national.50
49Section 2, Id.
50 Sec. 10, D.O. 97-09
18
LABOR LAW LABOR LAW

CONDITIONS OF EMPLOYMENT

SCOPE

General rule:
Applies to all employees in all establishments and
undertakings whether for profit or not.

Exceptions:
Does not apply to the following:
(a) Government employees;
(b) Managerial employees;
(c) Field personnel;
(d) Members of the family of the employer who are
dependent on him for support;
(e) Domestic helpers;
(f) Persons in the personal service of another; and
(g) Workers who are paid by results as determined by
the Secretary of Labor in appropriate regulations.
[Art. 82, LC]

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". (LC)

Types of Managerial Employees51

LABOR 1) Executives/Managers
2) Supervisors
3) Officers/members of managerial staff if the

STANDARDS
following requisites are present:
a. Primary Duty: consists of the
performance of work directly related to
management policies of their ER
b. customarily and regularly exercises
discretion and independent judgment
c. Either:
(1) Regularly and directly assist a
proprietor or a managerial
employee (whose primary duty
consists of the management of the
establishment in which he is
employed or subdivision thereof);
or
(2) execute (under general
supervision) work along specialized
or technical lin es requiring special
training, experience, or
knowledge; OR
(3) execute (under general
supervision) special assignments
and tasks; and
d. Who do not devote more than 20% of
their hours worked in a work-week to
activities which are not directly and
closely related to the performance of the
work described in paragraphs (1), (2)
and (3) above.

51 Rule I & 2 (b), Book III, IRR

Lasallian Commission on Bar Operations 2018 19

LABOR LAW
HOURS OF WORK
Principles in determining hours worked
Hours worked [Art. 84, LC]
1. All time which an employee is required to be on
duty or to be at a prescribed workplace; and
2. All time during which an employee is suffered or
permitted to work.
Considered as hours worked under the Labor Code
1. Rest periods of short duration during working
hours (must not be more than 20 minutes); 

2. Waiting time, if integral part of the work; 
 General rule:
3. If required to be on call and cannot use time
effectively for his own purpose; and
4. Lectures, meetings and training programs unless it
is outside working hours, voluntary and not
productive.
Summary of General Principles in determining if time is
considered as hours worked52
(1) All hours are hours worked which the employee is
required to give his employer, regardless of whether
or not such hours are spent in productive labor or
involve physical or mental exertion.
(2) An employee need not leave the premises of the work
place in order that his rest period shall not be counted, it
being enough that:
(a) he stops working,
(b) may rest completely and
(c) may leave his work place, to go elsewhere,
whether within or outside the premises of his
work place.
(3) All time spent shall be Considered as hours
worked, if the work was with the knowledge of his
employer or immediate supervisor.
(a) If the work performed was necessary;
(b) It benefited the employer; or
(c) The employee could not abandon his work at
the end of his normal working hours because
he had no replacement.
(4) The time during which an employee is inactive by
reason of interruptions in his work beyond his
control shall be considered working time either if:
(a) The imminence of the resumption of work
requires the employee's presence at the place of
work; or
(b) If the interval is too brief to be utilized
effectively and gainfully in the employee's
own interest.
Normal Hours of Work
General Rule:
52 Sec 4, Rule I, Book III, IRR
Lasallian Commission on Bar Operations 2018
LABOR LAW
The normal hours of work of any employee shall not exceed 8
hours a day, for 6 days a week (8x6) [Art. 83, LC]
Exceptions:
1. Health Personnel
2. Compressed Work Week
3. Flexible Work Arrangements
Health Personnel, coverage
Health personnel in cities and municipalities:
(a) With a population of at least one million (1,000,000);
or
(b) In hospitals and clinics with a bed capacity of at
least one hundred (100)
40 hours. Shall hold regular office hours for eight (8) hours a
day, for five (5) days a week, exclusive of time for meals.
Exception:
48 hours. Where exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours. In
such case, health personnel shall be entitled to an additional
compensation of at least thirty percent (30%) of their regular
wage for work on the sixth day.
Who are considered as health personnel
Health personnel includes the following:
(a) Resident physicians
(b) Nurses, nutritionists
(c) Dietitians
(d) Pharmacists
(e) Social workers
(f) Laboratory technicians
(g) Paramedical technicians
(h) Psychologists
(i) Midwives
(j) Attendants
(k) All other hospital or clinic personnel.
Compressed Work Week
The Compressed Work Week (CWW) is governed by
Department Order No. 2, Series of 2004. It is done by the
employer in order to prevent serious losses due to causes
beyond his control. For example: Substantial slump in
demand for his goods or services or lack of raw materials.
Conditions of a valid CWW schemes
DOLE shall recognize CWW schemes adopted in accordance
with the following:
(1) It is expressly and voluntarily supported by
majority of the employees affected;
(2) If work is hazardous, a certification is needed from
an accredited safety organization or the firm’s
safety committee that work beyond 8 hours is
within the limits or level of exposure set by DOLE’s
occupational safety and health standards; and
20
LABOR LAW
(3) The Department of Labor and Employment is
notified about the CWW.
Effects of CWW schemes
A CWW scheme which complies with the foregoing
conditions shall have the following effects:
(1) Unless there is a more favorable practice existing in
the firm, work beyond eight hours will not be
compensable by overtime premium provided the total
number of hours worked per day shall not exceed twelve
(12) hours. In any case, any work performed beyond
12 hours a day or 48 hours a week shall be subject
to overtime premium.
(2) Consistent with Articles 85 of the Labor Code,
employees under a CWW scheme are entitled to
meal periods of not less than sixty (60) minutes. The
right of employees to rest days as well as to holiday
pay, rest day pay or leaves in accordance with law
or applicable collective bargaining agreement or
company policy shall not be impaired.
(3) Adoption of the CWW scheme shall in no case result in
diminution of existing benefits. Reversion to the normal
eight-hour workday shall not constitute a diminution of
benefits. The reversion shall be considered a
legitimate exercise of management prerogative,
provided that the employer shall give the
employees prior notice of such reversion within a
reasonable period of time. The employees must
agree to the change of work schedule. The
employees must not suffer any loss of overtime
pay, fringe benefits, or their weekly or monthly
take-home pay.
Department Order No. 21
D.O. No. 21 sanctions the waiver of overtime pay in consideration
of the benefits that the employees will derive from the
adoption of a compressed workweek scheme. The
compressed workweek scheme was originally conceived for
establishments wishing to save on energy costs, promote
greater work efficiency and lower the rate of employee
absenteeism, among others. Under this scheme, the generally
observed workweek of six (6) days is shortened to five (5)
days but prolonging the working hours from Monday to
Friday without the employer being obliged for pay overtime
premium compensation for work performed in excess of eight
(8) hours on weekdays, in exchange for the benefits above
cited that will accrue to the employees.53
Flexible Work Arrangements
It includes:
(1) Reduction of workdays - the normal workdays per
week are reduced but should not last for more than
six months.
(2) Rotation of workers - employees are rotated or
alternatively provided work within the workweek.
53 Bisig Manggagawa sa Tryco vs. NLRC, 2008
Lasallian Commission on Bar Operations 2018
LABOR LAW
(3) Forced leave - employees are required to go on
leave.
(4) Broken time schedule - the schedule of work is not
continuous but the number of work hours within
the day or week is not reduced.
(5) Flexi-holiday schedule - the employees agree to
avail themselves of the holidays at some other days.
Power Interruptions/brownouts
Inactive due to work interruptions
The time during which an employee is inactive by reason of
interruptions in his work beyond his control shall be considered
working time either if:
(a) The imminence of the resumption of work requires
the employee's presence at the place of work; or
(b) If the interval is too brief to be utilized effectively
and gainfully in the employee's own interest. 54
Work interruption due to brownout
Policy Instruction No. 36 of the DOLE provided the following
rules regarding power interruptions or brownouts:
(a) Brownouts not more than 20 minutes
Brownouts of short duration but not exceeding 20
minutes shall be treated as worked or compensable
hours whether used productively by the employees
or not. First 20 minutes is compensable. But if the
employees are required to stay in their workplaces,
such time is compensable even if it exceeds the first
20 minutes.
(b) Brownouts for more than 20 minutes
Brownouts running for more than 20 minutes may
not be treated as hours worked provided any of the
following conditions are present:
(i) The employees can leave their workplace
or go elsewhere whether within or
without the work premises; or
(ii) The employees can use the time
effectively for their own interest.
In each case, the employer may extend the working
hours of his employees outside the regular
schedules to compensate for the loss of productive
man-hours without being liable for overtime
Industrial enterprise with one or two workshifts
may adopt any of the workshifts prescribed for
enterprises with 3 workshifts to prevent serious
loss or damage to materials, machineries, or
equipment that may result in case of power
interruptions.
Meal Break
Regular Meal Break
54 Sec 4 (d), Rule 1, Book III, IRR
21
LABOR LAW
Not less than 60 minutes time-off for their regular meals,
subject to such regulations as the Secretary of Labor may
prescribe. [Art. 85, LC]
NOTE: The eight-hour work period does not include the meal
break. Nowhere in the law may it be inferred that employees
must take their meals within the company premises.
Employees are not prohibited from going out of the premises
as long as they return to their posts on time. 55
During meal period where the laborers are required to stand
by for emergency work or where said meal hour is not one of
complete rest, such period is considered overtime.
Shorter Meal Period
Less than 1 hour but not less than 20 minutes.
Requisites for Shortened Meal Period
(a) Employees voluntarily agree in writing and waive
the overtime pay;
(b) No diminution in the salary and other fringe
benefits of the employees already existing;
(c) Work is not physically strenuous and that they are
provided with adequate coffee breaks in the
morning and afternoon;
(d) Value of benefits is equal to the compensation due
them;
(e) Overtime pay will become due and demandable if
ever they are permitted or made to work beyond
4:30pm; and
(f) The arrangement is only for a temporary duration.
Compensability of Meal Period
General rule:
Meal periods are not compensable
Exceptions:
It is compensable in the following cases:
(a) Where meal time is predominantly spent for the
employer’s benefit; 56
(b) Meal period of 1 hour is deemed compensable
when employee is on continuous shift57
(c) Shortened meal period of less than 1 hour but not
less than 20 minutes subject to qualifications under
Sec 7, par 1, Rule I, Book III, IRR, to wit:
i. Where the work is non-manual work in
nature or does not involve strenuous
physical exertion;
ii. Where the establishment regularly
operates not less than sixteen (16) hours a
day;
iii. In case of actual or impending
emergencies or there is urgent work to be
performed on machineries, equipment or
installations to avoid serious loss which
the employer would otherwise suffer;
and
55 Philippine Airlines vs. NLRC, 1999
56 Azucena citing 31 Am. Jur. 881; Duka, Labor Laws and Social Legislation
57 National Development Co. vs. CIR, 1962
58 Sec 4(b), Rule I, Book III, IRR
Lasallian Commission on Bar Operations 2018
LABOR LAW
iv. Where the work is necessary to prevent
serious loss of perishable goods.
NOTE: If meal time is less than 20 minutes, it is considered
rest period and shall be considered compensable time.
Employees may request that their meal period be shortened
so that they can leave work earlier than the established
schedule. However, such shortened meal period is not
compensable.
Short Duration or “Coffee Break”
Rest periods or coffee breaks running from five (5) to twenty
(20) minutes shall be considered as compensable working
time. [Sec 7, par. 2, Rule I, Book III, IRR}
If more than 20 minutes, an employee need not leave the
premises of the work place in order that his rest period shall
not be counted, it being enough that:
1. he stops working,
2. may rest completely and
3. may leave his work place, to go elsewhere, whether
within or outside the premises of his work place.58
Under the law, the idle time that an employee may spend for
resting and during which he may leave the spot or place of
work though not the premises of his employer, is not counted
as working time ONLY where the work is broken or is not
continuous.59
Waiting Time
“Waiting time” is compensable if during the period the
employee is subject to the absolute control of the employer
such that the employee is effectively deprived of the time to
attend to other personal pursuits.60
Legal test
Whether waiting time constitute working time depends upon
the circumstances of each particular case. The facts may show
that the employer was engaged or was waiting to be engaged.
The controlling factor is whether waiting time spend in idleness
is so spent predominantly for the employer’s benefit or for the
employees.61
Requisites for waiting time to be considered as hours
worked
(1) It is an integral part of his work;
(2) The employee is required by the employer to wait;
or
(3) Employee is required to remain on call in the
premises of the employer or so close thereto that he
can no longer use the time effectively for his own
purpose or benefit.
Night Shift Differential
Rationale
It is a form of premium for working at a time when people are
supposed to be asleep in accordance with the law of nature.
59 National Dev’t Company vs. CIR, nd
60 Africa vs. NLRC, 1989
61 Azcucena citing Armour vs. Wantock
22
LABOR LAW
Waiver of payment of night shift differential
General Rule:
Night Shift Differential (NSD) cannot be waived.
Exception:
For higher and bigger benefits.
Employees covered
All employees, except the following:
1. Government employees
2. Those of retail and service establishments regularly
employing not more than five (5) workers;
3. Domestic helpers and persons in the personal
service of another;
4. Managerial employees
5. Field personnel and other employees whose time
and performance is unsupervised by the employer
including those who are engaged on task or
contract basis, purely commission basis, or those
who are paid a fixed amount for performing work
irrespective of the time consumed in the
performance thereof.
Time covered
10:00 pm to 6:00 am
Rate
NSD only: Not less than 10% of his regular wage for each
hour of work.62
NSD during overtime: At least twenty-five per cent (25%)
and an additional amount of no less than ten per cent (10%)
of such overtime rate for each hour or work performed
between 10 p.m. to 6 a.m.
Overtime Work
Overtime work must be voluntary and consensual.
Overtime compensation, defined
Overtime compensation is additional pay for service or work
rendered or performed in excess of eight hours a day by
employees or laborers covered by the Eight-hour Labor Law.63
Nature of Overtime work
To be considered as overtime work, the hours worked must
be in excess of and in addition to the 8 hours worked during
the prescribed daily work period.64
In case of health personnel, overtime work is hours worked in
excess of 8 hours during the prescribed daily work period or
in excess of 40 hours worked during the regular work week
of 5 days. [Art. 83, LC]
Rationale for overtime compensation
There can be no other reason than that he is made to work
longer than what is commensurate with his agreed
compensation for the statutorily fixed or voluntary agreed
hours of labor he is supposed to do.
62 Sec 3, Rule II, Book III, IRR
63 National Shipyard and Steel Corp. vs. CIR, 1961
64 Caltex Regular Employees at Manila Office vs. Caltex Philippines Inc., 1995
65 Lagatic vs. NLRC, nd.
Lasallian Commission on Bar Operations 2018
LABOR LAW
Undertime is not offset by Overtime
Undertime work on any particular day shall not be offset by
overtime work on any other day. Permission given to the
employee to go on leave on some other day of the week shall
not exempt the employer from paying the additional
compensation required. [Art. 88, LC]
Off-setting would prejudice the worker depriving him of the
additional pay for the rest day work he has rendered and
which is utilized to offset his equivalent time off on regular
workdays. It would circumvent the law on payment of
premiums for rest day and holiday work. 65
Emergency or Compulsory Overtime Work
General rule:
Employees cannot be compelled to render overtime work
against their will for this will result in involuntary servitude.
Exceptions:
1. In times of war or any national or local emergency
declared by the Congress or the Chief Executive;
2. When it is necessary to avail of favorable weather
or environmental conditions where performance or
quality of work is dependent thereon;
3. When work is necessary to preserve perishable
goods;
4. When there is urgent work needed on machines
and equipment, in order to avoid serious loss or
damage to the employer or some other cause of
similar nature;
5. To prevent loss or damage to life or property due to
emergencies or force majeure;
6. To prevent serious obstruction or prejudice to the
business or operations of the employer. [Art. 89, LC]
Amount of Overtime Pay
For regular working days: Additional compensation
equivalent to his regular wage plus at least twenty-five
percent (25%) thereof.
For holiday or rest day: Additional compensation equivalent
to the rate of the first eight hours on a holiday or rest day plus
at least thirty percent (30%) thereof.
Computation of Additional Compensation
Base for overtime pay
The "regular wage" of an employee shall include the cash
wage only, without deduction on account of facilities
provided by the employer. [Art. 90, LC]
Overtime pay shall be based only on the regular basic pay,
exclusive of fringe benefits.66
Fringe benefits not regularly received, and not by all
employees, are not included in the computation.67
Overtime pay is for extra effort beyond that contemplated in
the employment contract, hence when additional pay is given
for any other purpose, it is illogical to include the same in the
basis for the computation of overtime pay.68
66 Bisig Manggagawa ng Philippine Refining Co., Inc vs. Phil. Refining Co., Inc.,
1981
67 Shell Oil Workers Union vs. Shell and Affiliates Supervisor’s Union, 1976
68 PNB vs. Phil National Bank Employees Association, 1982
23
LABOR LAW LABOR LAW

Burden of Proof 1. In cases of urgent work to be performed on the

Entitlement to overtime pay must first be established by machinery, equipment, or installation;
proof that said overtime work was actually performed, before 2. To prevent loss or damage to perishable goods;
an employee may avail of said benefit. 3. When the nature of work requires continuous
operations and the stoppage of work may result in
Factors to consider where CBA does not contain any irreparable injury or loss to the employer;
provision on computation of overtime pay: 4. In cases of actual or impending emergencies caused
(1) Whether or not the addition pay is for extra work by force majeure to prevent loss of life and
done or service rendered; and property, or imminent danger to public safety.
(2) Whether the same is intended to be permanent and 5. In cases of abnormal pressure of work due to
regular, not contingent nor temporary and given special circumstances, where the employer cannot
only to remedy a situation which can change ordinarily be expected to resort to other measures;
anytime.69 6. Other circumstances analogous to the foregoing as
determined by the Secretary of Labor. [Art. 92, LC]
Waiver of overtime pay
General rule: Compensation
Overtime compensation cannot be waived, whether expressly Summary of premium pay for rest periods [Art. 93, LC]
or impliedly; and stipulation to the contrary is against the law.
Quitclaim where workers agree to forego payment of When work performed Premium pay
overtime compensation is null and void ab initio.70 On scheduled rest day* At least 30% of regular wage.
No regular work and no At least 30% of regular wage
Exception: regular rest days can be for work performed on
Non-payment by employer of overtime pay to employee in scheduled due to the nature Sundays and holidays
excess of the regular hours worked is valid as overtime pay of work
was already provided in the written contract with a “built-in” On any special At least 30% of regular wage
overtime pay and signed by the Director of the Bureau of holidays/special day
Employment Services and enforced by the employer. 71 On any special At least 50% of regular wage
holidays/special day falling
Rest Periods on scheduled rest day
On any regular holiday At least 30% of regular wage
Coverage and Scheduling falling on scheduled rest day

Right to a Weekly Rest Day *An employee shall be entitled to such additional
The employee is entitled to a rest not less than twenty-four compensation for work performed on Sunday only when it is
(24) consecutive hours after six consecutive normal working his established rest day.
days. [Art. 91, LC]
NOTE: Where the CBA or other applicable employment
Determination of weekly rest days contract stipulates the payment of a higher premium pay than
The employer, in determining the weekly rest days must that prescribed under Article 93, the employer shall pay such
consider the following: higher rate.
1. The collective bargaining; and
2. Rules and regulations issued by the Secretary of Lectures, Meetings, and Trainings
Labor.
Lectures, meetings and training
However, the employer shall respect the employee’s
Attendance at lectures, meetings, training programs, and
preference based on religious grounds. The employee shall
other similar activities shall not be counted as working time if all
make known his preference to the employer in writing at least
of the following conditions are met:
seven (7) days before the desired effectivity of the initial rest
1. Attendance is outside of the employee's regular
day so preferred. 72
working hours;
2. Attendance is in fact voluntary; and
Where, however, the choice of the employee as to his rest day
3. The employee does not perform any productive work
based on religious grounds will inevitably result in serious
during such attendance. 73
prejudice or obstruction to the operations of the undertaking
and the employer cannot normally be expected to resort to
Travel Time
other remedial measures, the employer may so schedule the
weekly rest day of his choice for at least two (2) days in a
month. [Art. 92, LC] Travel time
Official travel away from an employee’s workplace is hours of
Compulsory Work, when employer may require work on work if travel is:
rest day:

69 PNB vs. PEMA, 1982 72Sec.4, Rule III, Book III, IRR
70 Pampanga Sugar Development Co., Inc. vs. CIR, 1982
71 Engineering Equipment, Inc. vs. Minister of Labor, 1985 73Sec 6, Rule 1, Book III, IRR

Lasallian Commission on Bar Operations 2018 24

LABOR LAW
1. Within the days and hours of the employee’s
regularly scheduled administrative workweek,
including regularly scheduled overtime hours, or
2. Outside the hours of the employee’s regularly
scheduled administrative workweek, is ordered or
approved, and meets one of the following four
conditions:
a. Involves the performance or work while
traveling (such as driving a loaded truck)
b. Is incidental to travel that involves the
performance of work while traveling (such as
driving an empty truck back to the point of
origin)
c. Is carried out under arduous and unusual
conditions (e.g. travel on rough terrain or
under extremely severe weather conditions);
or
d. Results from an event that could not be
scheduled or controlled administratively by
any individual (such as a job-related court
appearance required by a court subpoena). 74
Commuting time
General rule: Normal commuting time from home to work
and from work to home is not hours of work.
Exception: Commuting time may be hours of work when the
employee is required to perform substantial work under the
control and supervision of the employer.75
Working while on call
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 work at his home
or with company officials where he may be reached is not
working while on call.76
When employee is required to remain on call in the premises
of the employer or so close thereto that he can no longer use
the time effectively for his own purpose or benefit.
No Work, No Pay Principle
General rule: No work, no pay. The law contemplates a "no
work" situation where the employees voluntarily absent
themselves.
When not applicable:
(a) Semestral break of private school teachers. They
certainly do not, ad voluntatem absent themselves
during semestral breaks. Rather, they are
constrained to take mandatory leave from work.77
(b) The principle of "no work, no pay" does not apply
as the fact that the complainants had not worked at the
74 USC 5542(b)(2) and 5 CFR 550. 112(g), US Office of Personnel Management;
Abad (2011), Compendium on labor law
75 CFC 551.422(b), US Office of Personnel Management; Abad (2011),
Compendium on labor law
76 Sec 5 (b), Rule 1, Book III, IRR
Lasallian Commission on Bar Operations 2018
LABOR LAW
jobsite was not of their own doing. If they were not able
to work at all, it was because they refused to sign
the third contract providing for another lowering of
their salaries in violation of their first agreement as
approved by the POEA. They had a right to insist
on the higher salaries agreed upon in the original
contract and to reject the subsequent impositions of
SAM, which obviously thought the petitioners
would have to accept because they had no choice.78
(c) Work hours of seaman. Seamen are required to
stay on board of their vessels by the very nature of
their duties, and it is for this reason that, in addition
to their regular compensation, they are given free
living quarters to be on board. It could not have been the
purpose of the law to require their employers to pay them
overtime pay even when they are not actually working.
The correct criterion in determining whether or not
sailors are entitled to overtime pay is not, therefore,
whether they are on board and cannot leave ship
beyond the regular eight working number of hours,
but whether they actually rendered service in
excess of said number of hours. 79
HOLIDAY PAY
Purpose
Holiday pay is a legislated benefit enacted as part of
constitutional imperative that the state shall afford protection
to labor. Its purpose is not merely “to prevent diminution of
the monthly income of the workers on account of work
interruptions. xxx although the worker is forced to take a rest,
he earns what he should earn, that is, his holiday pay.” It is
also intended to enable the worker to participate in the national
celebrations held during the days identified as with great historical
and cultural significance.80
Coverage
General rule: Every worker should be paid his regular daily
wage during regular holidays.
Exceptions:
Holiday pay benefits shall not cover the following persons:
(a) Those of the government and any of its political
subdivisions, including government-owned and
controlled-corporations;
(b) Those of retail and service establishments regularly
employing less than 10 workers:
a. Retail Establishment - one principally
engaged in the sale of goods to end-users
for personal or household use.
b. Service establishment - one principally
engaged in the sale of service to
individuals for their own or household
use and is generally recognized as such;
(c) Domestic helpers and persons in the personal
service of another;
77 University of Pangasinan Faculty Union vs University of Pangasinan, 1993
78 Prieto vs. NLRC, 1993
79 Cagampan, et. al. vs. NLRC, 1991
80 Asian Transmission vs. CA, 2004
25
LABOR LAW LABOR LAW

(d) Managerial employees; and recognized by law, without diminution of salary or wages
(e) Field personnel and other employees whose time during the period.
and performance is unsupervised by the employer
including those who are engaged on task or In areas designated to observe Muslim holidays, both
contract basis, purely commission basis or those Muslims and Christians may not report to work on Muslim
who are paid a fixed amount for the performing holidays (there are designated provinces and cities where
work irrespective of the time consumed in the Muslim holidays are officially observed – Art. 170, CMPL). In
performance thereof. 81 the same way that Muslims are also paid holiday pay for
Christian holidays (declared as holiday/special days). Wages
Mechanics of the Availment of the Holiday Pay Benefit and other emoluments granted by law to workers are
determined on the basis of criteria laid down by laws and not
The employee is entitled to the payment of his regular daily one’s faith or religion.82
basic wage (100%) during said holidays, even if the worker
did not report for work on said days. PROVIDED, that he was
present or was on leave of absence with pay on the work day
immediately preceding the holiday.
Computation of Holiday Pay
In case the employee was suffered to work during the
holidays, he will be entitled to payment of holiday premium Regular Holidays
of 200% of his basic wage (100% of basic wage plus 100%).
Falling on a regular work day
Holidays Covered UNWORKED 100% of regular daily wage
First 8 hours 200%
Regular Holidays and Nationwide Special Days [RA 9492]
Unless otherwise modified by law, and or proclamation, the WORKED Excess of 8 hours +30% of hourly rate
following regular holidays and special days shall be observed at 200%
in the country: Falling on a rest day
First 8 hours +30% of 200%
Regular Holidays WORKED Excess of 8 hours +30% of hourly rate
1. New Year’s Day - Jan. 1
at 200%
2. Maundy Thursday - Movable Date
3. Good Friday - Movable Date
4. Eidul Fitr
Special days
5. Araw ng Kagitingan - April 9
6. Labor Day - May 1
7. Independence Day - June 12 Falling on a regular work day
8. Nat’l Heroes Day - Last Sunday of August UNWORKED No pay (XPT: CBA, company policy, etc)
9. Bonifacio Day - November 30 First 8 hours +30% of daily rate
WORKED
10. Eid’l Fit’r - Movable Date Excess of 8 hours +30% of hourly rate
11. Eid’l Adha - Movable Date
Falling on a rest day
12. Christmas Day - December 25
13. Rizal Day - December 30 First 8 hours +50% of daily rate
WORKED
Excess of 8 hours +30% of hourly rate
Special Holidays Special working holiday
No premium pay. Daily rate only if worked.
National Special days Declared Special days
(1) Ninoy Aquino day (1) Special Non-Working
Double Holiday
(2) All Saints day Holiday
If 2 holidays fall on the same day.
(3) Last day of the year (2) Special Public Holiday
(3) Special National
Unworked double holiday
Holiday
At least 200% of his basic wage, provided he was present or on
leave with pay on the preceding work day.
NOTE: Special holidays are not the same as special working
holidays. Special working holiday is considered an ordinary Worked double holiday
working holiday; thus, there is no premium pay, Entitled to 300% of his basic wage, if present or on leave with pay
on the preceding work day.
Muslim Holidays
While the regular holidays are observed in the whole country, Illustration
the Muslim holidays, except Eid’l Fitr and Eid’l Adha, are Day 2
observed only in specified areas. Muslim employees working Day 1 Entitled?
DOUBLE HOLIDAY
outside of the specified areas shall be excused from reporting Worked or LOA
for work during the observance of the Muslim holidays Unworked. 200%
with pay.

81 Sec. 1, Rule IV, Book III, IR 82San Miguel Corp. vs. CA, nd.

Lasallian Commission on Bar Operations 2018 26

LABOR LAW LABOR LAW

Worked or LOA account of legal holidays falling on Sundays in a given year,

Worked. 300%
with pay. otherwise to reckon a year at more than 365 days.
Unworked. No.
Entitlement to Holiday Pay
Double Holiday Rule for Monthly-paid employees
Absences
For covered employees whose monthly salaries are computed
based on 365 days and for those other employees who are
Rules on absences prior to the holiday
paid using factor 314, or 262, or any other factor which already
If employee is on:
considers the payment for the 11 regular holidays, NO
a. LOA with pay on the regular holiday – entitled;
additional payment is due them. 83
b. LOA without pay on the day immediately
preceding a regular holiday – NOT entitled if he
Succesive Holiday Pay
has not worked on such regular holiday;
An employee may not be paid for both holidays if he absents
c. Where the day immediately preceding the holiday
himself from work on the day immediately preceding the first
is a non-working day in the establishment or the
holiday, unless he works on the first holiday, in which case he
scheduled rest day of the employee – entitled to
is entitled to his holiday pay on the second holiday.
holiday pay if he worked on the day immediately
preceding the nonworking day or scheduled rest
Employee is entitled to holiday for both days if:
day
(a) Employee is present on day immediately preceding
first holiday; or
Temporary Cessation of Work
(b) Employee works on first holiday, which entitles
him to pay on second holiday
In cases of temporary or periodic shutdown and temporary
cessation of work of an establishment, as when a yearly
To be entitled to pay for two (2) successive holidays,
inventory or when the repair or cleaning of machineries and
employee must be:
equipment is undertaken, the employee working on regular
(a) Present on the day immediately preceding the 1 st
holidays falling within the periods shall be entitled to holiday
holiday; or
pay.
(b) On leave with pay on that day.
However, the regular holiday during the cessation of
Illustration
operation of an enterprise due to business reverses as
authorized by the Secretary of Labor may not be paid by the
DAY 2 DAY 3
employer.
REGULAR REGULAR
DAY 1 Entitled?
HOLIDAY HOLIDAY
Holiday Pay of Hourly-Paid Faculty
1 2
Absent No. They are not entitled to payment of holiday pay because they
Yes, for the are paid only for work actually done. Since regular holidays
Absent Worked. 2nd regular are known to both the school and faculty members as ―no
holiday class days; certainly the latter do not expect payment for said
Yes to both unworked holidays.85
Present/LOA
regular
with pay
holidays They are entitled to their hourly rate on days declared as
special holidays. Be it noted that when a special public
Holidays on Sundays holiday is declared, the faculty member paid by the hour is
When a holiday falls on a Sunday, the following Monday will deprived of expected income, and it does not matter that the
not be considered a holiday unless a proclamation says so. school calendar is extended in view of the days or hours lost,
for their income that could be earned from other sources is
Holidays falling on a Sunday lost during the extended days.
A legal holiday falling on a Sunday does not create a legal
obligation to pay extra, aside from the usual holiday pay, to Similarly, when classes are called off or shortened on account
monthly-paid employees. 84 of typhoons, floods, rallies, and the like, these faculty
members must likewise be paid, whether or not extensions are
In fixing the salary: ordered.
1. Deduct 51 Sundays from the 365;
2. The difference, 314, shall be used as divisor for Piece Workers
determining the monthly salary;
3. The monthly salary thus fixed actually covers payment Philosophy underlying the exclusion of piece workers from
for 314 days of the year, including regular and special the 8-hour law is that said workers are paid depending upon
holidays. the work they do irrespective of the amount of time employed
in doing said work. 86
No provision of law requires any employer to make
adjustments in the monthly salary rate set by him to take

83 BWC-WHSD Opinion No. 053, s. 1998 85 Jose Rizal College vs. NLRC, 1987
84 Wellington Investment and Manufacturing Corporation vs. Trajano, 1995) 86 Red V Coconut Products Ltd., vs. CIR, 1966

Lasallian Commission on Bar Operations 2018 27

LABOR LAW
Seafarers
Any hours of work or duty including hours of watch-keeping
performed by the seafarer on designated rest days and
holidays shall be paid rest day or holiday pay. 87
Seasonal Workers
Seasonal workers who do not work during off-season are not
entitled to pay for the regular holidays occurring during their
off-season. Workers assigned to “skeleton crews” that work
during the off-season have the right to be paid on regular
holidays falling in that duration.
Summary of rules on entitlement to holiday pay
In case of absences
Employee is on leave of absence with pay on Entitled
the day immediately preceding a regular
holiday
An employee is on leave of absence without Not entitled
pay on the day immediately preceding a
regular holiday
Temporary cessation of work
Regular holidays falling within the period Entitled
in cases of temporary shutdowns or
cessation of work, when:
(a) an annual inventory; or
(b) repair or cleaning of
machineries and equipment is
undertaken.
Regular holidays during the suspension Not entitled
of work if:
(a) Cessation of operation is due to
business reverses; and
(b) Authorized by the Secretary of
Labor.
Private school teachers, including faculty members of
colleges and universities
Regular holidays during semestral Not entitled
vacations.
Regular holidays during Christmas Entitled
vacation;
Piece workers
His holiday pay shall not be less than his Entitled
average daily earnings for the last seven
(7) actual working days preceding the
regular holiday;
Provided, however, that in no case shall
the holiday pay be less than the applicable
statutory minimum wage rate.
Seasonal workers
During off-season when they are not at
work
Workers assigned to “skeleton crews”
that work during the off-season and
regular holidays fall in that duration.
87Section 11.C, Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean-Going Vessels
Lasallian Commission on Bar Operations 2018
LABOR LAW
Seafarers
Any hours of work or duty including Entitled to
hours of watch-keeping performed by the paid rest day
seafarer on designated rest days and or holiday
holidays pay
Role of Divisor in Determining payment of Holiday Pay for
Monthly-Paid Employees
The divisor assumes an important role in determining whether
or not holiday pay is already included in the monthly paid
employee’s salary.88
Monthly paid employees are not entitled to the holiday pay if
their total annual income is divided by 365 days resulting in a
wage which is beyond the minimum wage per day because
they are considered paid every day of the year including
holidays, rest days, and other non-working days. The 365
days are as follows:
365 days
300 Ordinary days
51 Rest days
11 Regular holidays
3 Special holidays
For company with 6-day working schedule
The divisor 314 means that the 10 legal holidays are already
included in the monthly pay of the employee
For the company with 5-day working schedule
The divisor 261 means that the holiday pay is already
included in the monthly salary of the employee
THIRTEENTH MONTH PAY
Rationale
1. To further protect the level of real wages from the
ravage of world-wide inflation;
2. There has been no increase in the legal minimum
wage rates since 1970;
3. The Christmas season is an opportune time for
society to show its concern for the plight of the
working masses so they may properly celebrate
Christmas and New Year.
Coverage
General Rule: All employers are required to pay all their rank-
and-file employees a 13th month pay not later than Dec 24 of
every year. PROVIDED that they have worked for at least one
(1) month during a calendar year.
Exceptions
1. Government, its political subdivisions, including
Not entitled GOCCs except those operating essentially as
private subsidiaries of the Government;
Entitled 2. Employers already paying their employees a 13th
month pay or more in a calendar year or its
equivalent at the time of this issuance.
88 Producers Bank vs. NLRC, 2001
28
LABOR LAW LABOR LAW

“Equivalent” includes: RULES ON 13TH MONTH PAY IN SPECIAL CASES

a. Christmas bonus, mid-year bonus, cash
bonuses; and
b. Other payments amounting to not less
than 1/12 of the basic salary;
c. But shall not include cash and stock
dividends, COLA and all other
allowances regularly enjoyed by the
employee as well non-monetary benefit;
3. Employers of household helpers and persons in the
personal service of another relation to such
workers;
4. Employers of those who are paid on purely
commission, boundary or task basis and those who
are paid a fixed amount for performing specific
work
Amount
1/12 of the total basic salary earned by an employee within a
calendar year.
Employees paid by Results
Employees who are paid on piece work basis are, by law,
entitled to the 13th month pay.
Employees paid with fixed or guaranteed wage plus
commission
Employees who are paid a fixed or guaranteed wage plus
commission are entitled to 13th month pay (not purely
commission); the basis for computation shall be both their fixed or
guaranteed wage and commission.
Employees with multiple employers
Government employees working part time in a private
enterprise, including private educational institutions, as well
as employees working in two or more private firms, whether
on full or part time bases, are entitled to the required 13th month
pay from all their private employers regardless of their total
earnings from each or all their employers.

Base amount: inclusions and exclusions in computation of Private School Teacher

13th month pay. Private school teachers, including faculty members of
universities and colleges, are entitled to the required 13th
Included Excluded month pay, regardless of the number of months they teach or
Basic pay: are paid within a year, if they have rendered service for at
• All remunerations or • COLA least one (1) month within a year.
earnings paid by an • Profit-sharing
employer to an payments Overload pay is not included in the computation for 13th
employee for services • Allowances and month pay; overload is not overtime as it is additional work
rendered monetary benefits not done within the normal shift. 89
• Cost of living considered integrated
allowances (COLA) in basic pay ** Resigned or Separated Employee
integrated into the o Unused VL; An Employee who has resigned or whose services were
basic salary of a o Sick leave terminated at any time before the time for payment of the 13th
covered employee credits; month pay is entitled to this monetary benefit in proportion to
pursuant to EO 178. o OT premium; the length of time he worked during the year, reckoned from the
• Commission in case o Night time he started working during the calendar year up to the
of salesmen differential; time of his resignation or termination from service.
(Philippine Duplicators o Holiday pay
case) • Productivity bonuses Wage Difference
The difference between the minimum wage and the actual
• Fringe benefits
salary received by the employee cannot be deemed as his 13th
month pay as such difference is not equivalent to or of the
** However, the above should be included in the computation
same import as the said benefit contemplated by law.
if by individual or collective agreement, company practice or
policy.
Terminated Employees
The payment of the 13th month pay may be demanded by the
TIME OF PAYMENT
employee upon the cessation of employer- employee
relationship.90
General Rule: 13th month pay is paid not later than December
24 of each year.
Other Rules on Thirteenth Month Pay
Exceptions:
Commissions
Employer may give to his employees half of the required 13th
If the commissions may be properly considered part of the basic
month pay before the opening of the regular school year and
salary, then they should be included. If they are not an integral
the other half on or before the 24th of December every year.
part of the basic salary, then they should be excluded.91
The frequency of payment of this monetary benefit may be the
Substitute payment not allowed
subject of agreement between the employer and the recognized
Benefits in the form of food or free electricity, assuming they
CBA of the employees.
were given, were not a proper substitute for the 13th month

89 Letran Calamba Faculty vs. NLRC, 2008] 91 Phil. Duplicators Inc. vs. NLRC, 1995
90 Archilles Manufacturing Corp. vs. NLRC, 1995

Lasallian Commission on Bar Operations 2018 29

LABOR LAW LABOR LAW

pay required by law. Neither may year-end rewards for (1) Eighty-five percent (85%) for the employees to be
loyalty and service be considered in lieu of 13th month pay.92 distributed equally among them; and the shares
shall be distributed to employees not less than once
14th Month Pay is not mandated every 2 weeks or twice a month at intervals not
Employers already paying their employees a 13th month pay exceeding 16 days.
or its equivalent are not covered by this Decree.93 (2) Fifteen percent (15%) for the management to
answer for losses and breakages and, at the
COMMISSIONS VIS-À-VIS 13TH MONTH PAY discretion of the management, distribution to
managerial employees.
Commissions are excluded from the term basic salary because
commissions are paid as productivity bonuses. These have no
clear direct or necessary relation to the amount of work
actually done by each individual employee. A bonus is an
amount granted and paid ex gratia to an employee. If an
employer cannot be compelled to pay a productivity bonus to
its employees, it should follow that such productivity bonus,
when given, should not be deemed to fall within the basic
salary of employees when the time comes to compute their
13th month pay.94

It appears that petitioner pays its salesmen a small fixed or

guaranteed wage; the greater part of salesmen‘s wages or
salaries being composed of the sales or incentive commissions
earned on actual sales closed by them. The sales commissions
were an integral part of the basic salary structure. They are not
overtime payments, or profit sharing payments or any other
fringe benefit.95

SERVICE CHARGE

In order to exempt the employer from paying 13th month pay,

a bonus stipulation in the CBA should be general in scope,
applicable to all employees, not only a few, for the legal
obligation benefits all employees regardless of their
designation or employment status so long as they have
worked at least one month during the calendar year. [96

Coverage
This rule shall apply only to establishments which collect
service charges such as:
(1) Hotels, restaurants, lodging houses, night clubs,
cocktail lounge, massage clinics, bars, casinos and
gambling houses and similar enterprises;
(2) Including those entities operating primarily as
private subsidiaries of the Government.97

Shall apply to ALL employees of covered employers

regardless of their positions, designations, or employment
status, irrespective of the method by which their wages are
paid.98

Exception:
Managerial employees are not covered.
Exception: When the laborer was able, willing and ready to
work but was illegally locked out, suspended or dismissed, or
otherwise illegally prevented from working.

Distribution of Service Charges

Service charges are distributed in accordance with the
following percentage of sharing:

92 Framanlis Farms, Inc. vs. MOLE, 1989 96 Marcopper Mining Corp. vs. Ople
93 Kamaya Port Hotel vs. NLRC, 1989 97 Sec 1, Rule VI, Book 3, IRR
94 Boie Takada vs. de la Serna, 1993 98 Sec 2, Rule VI, Book 3, IRR
95 Phil. Duplicators vs. NLRC, 1995

Lasallian Commission on Bar Operations 2018 30

LABOR LAW LABOR LAW

WAGES 2. Homeworkers engaged in needlework;

3. Workers employed in any establishment registered with
the National Cottage Industries and Development
Definition
Authority (NACIDA) in accordance with RA 3470
provided that such workers work in their respective
It is the remuneration or earnings, however designated,
homes;
capable of being expressed in terms of money, whether fixed or
4. Workers in any duly registered cooperative with
ascertained on a time, task, piece, or commission basis, or
recommended by the Bureau of Cooperative
other method of calculating the same, which is payable by an
Development and upon approval of the Secretary of
employer to an employee under a written or unwritten contract
Labor and Employment (when the cooperative cannot
of employment for work done or to be done, or for services
resort to other remedial measures without serious loss or
rendered or to be rendered and includes the fair and reasonable
prejudice to its operation);
value, as determined by the Secretary of Labor and
5. Farm tenancy or leasehold;
Employment, of board, lodging, or other facilities customarily
6. Workers in registered barangay micro business
furnished by the employer to the employee.
enterprise. [RA 9178]
Fair and reasonable value shall not include any profit to the
Forms of payment
employer, or to any person affiliated with the employer. [Art.
Not allowed: PNs, vouchers, coupons, tokens, tickets, chits,
97 (f)]
any object other than legal tender, even when requested by
WAGES VERSUS SALARIES employee. [Art. 102, LC]

Wages and salary are in essence synonymous and are used Allowed: Check or money order. Provided: ff. conditions are
interchangeably. However, strictly speaking, there is a legal met:
distinction.99 1. There is a bank/facility for encashment within a radius
of 1 km from workplace;
Wage Salary 2. Employer does not receive pecuniary benefit, directly or
Paid for skilled or unskilled Paid to white collar workers indirectly from such arrangement;
manual labor and denote a higher grade of 3. Given reasonable time during banking hours to
employment withdraw – compensable if during working hours;
Not subject to execution, Not exempt from execution, 4. With written consent of employees or otherwise
garnishment or attachment garnishment or indicated in CBA [Omnibus Rules]
except for debts related to attachment.100
necessities [Art. 1708, NCC] Time of payment
• At least once every 2 weeks;
• Twice a month, not exceeding 16 days; or
PAYMENT OF WAGES • After force majeure ceased. [Art. 103, LC]

“No Work, No Pay” Principle
General Rule: A fair day‘s wage for a fair day‘s labor.
Exception: When the laborer was able, willing and ready to
work but was illegally locked out, suspended or dismissed, or
otherwise illegally prevented from working.101
“Equal Work for Equal Pay” Principle
Persons who work with substantially equal qualifications,
skill, effort, and responsibility under similar working
conditions should be paid similar salaries.102
If an employer accords employees the same position and rank,
the presumption is that these employees perform equal
work.103
Coverage:
The rules on wages do not apply to the following:
1. Household or domestic helpers, including family
drivers, and persons in the personal service of another;
For performance of task which cannot be completed in 2
weeks, absence of CBA or arbitration award:
• Payment at intervals not exceeding 16 days, in
proportion to amount of work completed; or
• Final settlement upon completion.
Place of payment
General rule:
At or near the place of undertaking. [Art. 104, LC]
Exceptions:
(a) Cannot be effected at or near by reason of actual or
impending emergencies;
(b) Employer provides free transportation back and
forth;
(c) Any analogous circumstances. Provided: time
spent is compensable. [Omnibus Rules]
Not allowed: Bar, night club, drinking establishments,
massage clinic, dance hall or other similar places where games
are played with stakes of money, except to persons employed
in such places.
Direct payment of wages

99 Songco vs. NLRC, 1990 102 ISAE vs. Quisumbing, 2000

100 Gaa vs. CA, 1985 103 Philex Gold Philippines, Inc vs. Philex Bulawan Supervisors Union, 2005
101 Sugue vs. Triumph International, 2009

Lasallian Commission on Bar Operations 2018 31

LABOR LAW
General rule: Payment must be paid directly to employee.
Exceptions:
(a) Authorized by employee in writing to member of
his family;
(b) Authorized by law (insurance premiums, anything
under CBA);
(c) In case of death pf employee – made to heirs
without need of intestate proceedings. [Art. 105,
LC]
FACILITIES AND SUPPLEMENTS
Facilities, defined
Board, lodging, and other facilities customarily provided by
an employer to his employees both in agricultural and non-
agricultural enterprises. Acceptance of facilities must be
voluntary.
Facilities and supplements distinguished
Facilities Supplements
How treated
Wage-deductible Not wage-deductible
(includes facilities)
Purpose
Articles or services for the Tools of the trade or articles
benefit of the employee or or service primarily for the
his family. benefit of the employer or
necessary to the conduct of
the employer‘s business.
Criterion
In determining whether a privilege is a facility, the criterion is
not so much its kind but its purpose. Requirements for
deducting value of facilities:
(1) Customarily furnished by the trade - "Customary"
is founded on long-established and constant
practice connoting regularity. The receipt of an
allowance on a monthly basis does not ipso facto
characterize it as regular and forming part of salary
because the nature of the grant is a factor worth
considering;104
(2) Voluntarily accepted in writing by the employee;
(3) Charged at fair and reasonable value.105
Non-diminution of benefits
The Non-Diminution Rule, mandates that Benefits given to
employees cannot be taken back or reduced unilaterally by
the employer because the benefit has become part of the
employment contract, written or unwritten.106
Any benefit and supplement being enjoyed by employees
cannot be reduced, diminished, discontinued, or eliminated
by the employer. The principle of non-diminution of benefits
is founded on the Constitutional mandate to “protect the
rights of workers and promote their welfare,” and “to afford
labor full protection.”
104 Millares vs. NLRC, 1999
105 Mabeza vs. NLRC, 1999
106 Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-
NLU, 2010
Lasallian Commission on Bar Operations 2018
LABOR LAW
Article 100 refers solely to the non-diminution of benefits
enjoyed at the time of the promulgation of the Labor Code.
Employer-employee relationship is contractual and is based
on the express terms of the employment contract as well as on
its implied terms, among them, those not expressly agreed
upon but which the employer has freely, voluntarily and
consistently extended to its employees. Under the principle of
mutuality of contracts embodied in Article 1308 of the Civil
Code, the terms of a contract – both express and implied –
cannot be withdrawn except by mutual consent or agreement
of the contracting parties.107
Requisites
If the following are met, the employer cannot remove or
reduce benefits:
(1) Ripened company policy. Benefit is founded on a
policy which has ripened into a practice over a long
period;108
(2) Practice is consistent and deliberate; and
(3) Practice is not due to error in the construction or
application of a doubtful or difficult question of
law.109
(4) The diminution or discontinuance is done
unilaterally by the employer.
NON-DIMINUTION OF BENEFITS
General rule:
Prohibition against elimination or diminution of employee
benefits and supplements.
Exceptions:
(a) Mistake in the application of the law;
(b) Negotiated benefits - benefits initiated through
negotiation between employee and employer, e.g.
CBA, can only be eliminated or diminished
bilaterally;
(c) Wage Order Compliance;110
(d) Benefits on reimbursement basis;
(e) Reclassification of Positions - e.g. loss of some
benefits by promotion;
(f) Contingent benefits or conditional bonus - the rule
does not apply to a benefit whose grant depends on
the existence of certain conditions, so that the
benefit is not demandable if those preconditions are
absent; and
(g) Productivity incentives.
Gratuitous on the part of the employer
Moreover, to ripen into a company practice that is
demandable as a matter of right, the giving of the increase
should not be by reason of a strict legal or contractual
obligation, but by reason of an act of liberality on the part of
the employer.
On company practice
If the benefits are enjoyed at the time or even before
promulgation of the Labor Code (May 1, 1974), Art. 100
applies.
107 Arco Metal Products et al. vs Samahan ng mga Mangagawa sa Arco-Metal-
Nafula, 2008
108 Prubankers Assn. vs. Prudential Bank and Co., 1999
109Globe Mackay Cable vs. NLRC, 1988
110 Pag-asa Steel Works vs. CA, et al., 2006
32
LABOR LAW LABOR LAW

If the benefits are enjoyed after promulgation of Labor Code, clothing, medical attendance [Art. 1708,
it is a matter of company practice which cannot be unilaterally NCC];
revoked by the employer. iii. Withholding tax;
iv. Deductions of a legally established
Requisites for Company Practice:111 cooperative;
Employee must prove by substantial evidence that: v. Payment to 3rd parties upon written
(1) the giving of the benefit is done over a long authority by employee;
period of time, and vi. Deductions for loss or damage;
(2) that it has been made consistently and vii. SSS, Medicare, Pag-IBIG premiums;
deliberately. viii. Deduction for value meals and other
facilities.
PROHIBITION REGARDING WAGES
It shall be unlawful to make any deduction from the wages of
(1) Prohibition against interference in wage disposal any employee for the benefit of the employer:
(2) Prohibition against wage deduction 1. as consideration of a promise of employment or retention
(3) Prohibition against requirement to make deposits in employment [Art. 117, LC]; or
for loss or damage 2. to retaliate against the employee who filed a
(4) Prohibition against withholding of wages complaint. [Art. 118, LC]
(5) Prohibition against deduction to ensure
employment Rationale
(6) Prohibition against retaliatory measures Prohibition seeks to protect the employee against
(7) Prohibition against False Reporting unwarranted practices that would diminish his compensation
(8) Prohibition against keeping of employee’s records without his knowledge and consent. 112
in a place than the workplace
(9) Prohibition against garnishment or execution Rules on employee’s consent for wage deduction
With Employee’s consent Without employee’s
ProhIBITION AGAINST INTERFERENCE IN WAGE in writing consent
DISPOSAL (1) SSS Payments (1) Worker‘s insurance
(2) PHILHEALTH acquired by the
Rules on wage disposal payments employer
(a) No employer shall limit or otherwise interfere with (3) Contributions to (2) Union dues, where the
the freedom of any employee to dispose of his PAG-IBIG Fund right to check-off is
wages. (4) Value of meals and recognized by the
(b) He shall not in any manner force, compel, or oblige other facilities employer (provided in
his employees to purchase merchandise, (5) Payments to third the CBA)
commodities or other property from any other persons with (3) Debts of the employee
person, or otherwise make use of any store or employee ‘s consent to the employer that
services of such employer or any other person. [Art. (6) Deduction of absences have become due and
112, LC] (7) Union dues, where demandable
check-off is not
PROHIBITION AGAINST WAGE DEDUCTION provided in the CBA.
General Rule:
No employer, in his own behalf or in behalf of any person, PROHIBITION AGAINST REQUIREMENT TO MAKE
shall make any deduction from the wages of his employees. DEPOSITS FOR LOSS OR DAMAGE

Exceptions: General Rule:

(a) Employee is insured with his consent by the No deposits are required from which deductions shall be
employer, and the deduction is to recompense the made for the reimbursement of loss of or damage to tools,
employer for the amount paid by him as premium materials, or equipment supplied by the employer.
on the insurance;
Exceptions:
(b) For union dues, in cases where the right of the
(a) Recognized industry practice; or
worker or his union to check-off has been
(b) When such is necessary or desirable as determined
recognized by the employer or authorized in
by the DOLE Secretary in appropriate rules and
writing by the individual worker concerned; and
regulations. [Art. 114, LC]
(c) In cases where the employer is authorized by law
or regulations issued by the Secretary of Labor and
Conditions for the deductions
Employment, such as:
(a) Employee is clearly shown to be responsible for the
i. Employee debt to employer is due and
loss or damage
demandable [Art. 1706, NCC];
(b) The employee is given ample opportunity to show
ii. Attachment or execution in cases of debts
cause why deduction should not be made;
incurred for necessities: food, shelter,
(c) The amount of the deduction is fair and reasonable

111Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme 112 Radio Communication of the Phil., Inc. vs. Sec. of Labor, 1989
Independent Union (NMS-IND-APL) (2011)

Lasallian Commission on Bar Operations 2018 33

LABOR LAW
and shall not exceed the actual loss or damage; and
(d) The deduction from the employee‘s wage does not
exceed 20% of the employee‘s wages in a week.
[Art. 115, LC]
Daily deposits to cover shortage in boundary is illegal
The article providing the rule on deposits for loss or damage
to tools, materials, or equipment supplied by the employer
does not apply to or permit deposits to defray any deficiency
which the taxi driver may incur in the remittance of his
"boundary."
When employee stops working for employer, the alleged
purpose for the unauthorized deposits no longer exists. Any
balance due must be returned to employee with legal
interest.113
PROHIBITION AGAINST WITHHOLDING OF WAGES
It shall be unlawful, directly or indirectly, to:
(a) Withhold any amount from the wages of a worker;
or
(b) 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. 116, LC]
PROHIBITION AGAINST 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. [Art. 177, LC]
PROHIBITION AGAINST RETALIATORY MEASURES
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 or instituted any proceeding under this Title or has
testified or is about to testify in such proceedings. [Art. 188,
LC]
This article is similar to Art. 259(f) which classifies as unfair
labor practice (ULP) an employer‘s prejudicial act against an
employee who gave or is about to give a testimony under the
Code. However, they differ on the subject of the testimony.
Art. 118 Art. 259(f)
Subject of testimony is Subject is anything under
wages the Code
The employer‘s retaliatory The employer‘s retaliatory
act is unlawful but not ULP act is ULP.
(unless the act is intended
to impair the right to self-
organization of employees)
PROHIBITION AGAINST FALSE REPORTING
It shall be unlawful for any person to make any statement,
113 Five J Taxi vs. NLRC, 1994
Lasallian Commission on Bar Operations 2018
LABOR LAW
report, or record filed or kept pursuant to the provisions of
this Code knowing such statement, report or record to be false
in any material respect. [Art. 119, LC]
PROHIBITION AGAINST KEEPING OF EMPLOYEE’S
RECORDS IN A PLACE THAN THE WORKPLACE
All employment records of the employees of an employer
shall be kept and maintained in or about the premises of the
workplace – main or branch office or establishment, if any,
depending upon where the employees are regularly assigned.
The keeping of the employee's records in another place is
prohibited.114
PROHIBITION AGAINST GARNISHMENT OR
EXECUTION
General Rule:
The laborer's wages shall not be subject to execution or
attachment.
Exception:
For debts incurred for food, shelter, clothing and medical
attendance. [Art. 1708, NCC]
Article 1708 of the New Civil Code to operate in favor of any
but those who are laboring men or women in the sense that
their work is manual. Persons belonging to this class usually
look to the reward of a day's labor for immediate or present
support, and such persons are more in need of the exemption
than any others.
In cases of unlawful withholding of wages, the culpable party
may be assessed attorney's fees equivalent to 10% of the
amount of wages recovered.
It shall be unlawful for any person to demand or accept, in
any judicial or administrative proceedings for the recovery of
the wages, attorney‘s fees, which exceed 10% of the amount
of wages recovered.
WORKER PREFERENCE
Worker preference in case of bankruptcy or liquidation
In case of bankruptcy or liquidation, workers enjoy first
preference as regards their wages and other monetary claims.
They are paid in full before gov’t and other creditors are paid.
[Art. 110, LC]
Rules on worker preference
(a) It only creates a preference and not a license;
(b) Worker preference shall apply only to ordinary
preferred credits (meaning unencumbered property);
(c) It must yield to special preferred credits where liens
are attached;
(d) Covers unpaid wages as well as other monetary
claims; and
(e) Art. 110 of the Labor Code must be read with
provisions of the New Civil Code concerning the
classification, concurrence and preference of
credits. It is quite clear from the provisions that a
declaration of bankruptcy or a judicial liquidation must
114 Sec. 11, Rule X, Book II, IRR
34
LABOR LAW
be present before the worker’s preference may be
enforced. Thus, Article 110 of the Labor Code and
its implementing rule cannot be invoked by the
respondents in this case absent a formal declaration
of bankruptcy or a liquidation order.115
(f) Article 110 of the Labor Code does not establish a
lien, but a preference of credit in favor of
employees. Unlike a lien, a preference of credit does
not create in favor of the preferred creditor a charge
or proprietary interest upon any particular
property of the debtor. 116
Article 110 of the Labor Code did not sweep away the
overriding preference accorded under the scheme of the
Civil Code:
(a) Tax claims of the government or any subdivision
thereof which constitute a lien upon properties of
the insolvent still preferred over wages;
(b) The use of the phrase "first preference" in Article
110 indicates that what Article 110 intended to modify
is the order of preference found in Art. 2244, which
pertains to unencumbered property.
(c) Art. 2241 and 2242 pertain to encumbered property
and such property shall still remain reserved to its
respective lienholder;
(d) Exception is if either 2241 (6) or 2242 (3) applies.117
Primary effect
It moves wages from 2nd priority in 2244 to 1st priority; as if
2244 (2) became 2244 (1).
Art. 110 of the Labor Code cannot be viewed in isolation but
must be read in relation to the Civil Code scheme on
classification and preference of credits. 118
Requirements of judicial liquidation or declaration of
bankruptcy still intact; workers must also file their claims.
Preference does NOT apply when the Employer corporation
is under rehabilitation or receivership.119
WAGE ORDER
Wage order, defined
Issued by Regional Board when conditions so warrant. Any
party aggrieved may appeal such order to the Commission
within 10 days from publication. Mandatory for Commission
to decide within 60 days from filing. Filing of appeal does not
stay the order unless there is a surety for payment of
employee’s compensation affected. [Art. 123, LC]
Factors in determining regional minimum wages:
(a) Demand for living wages;
(b) Wage adjustment vis-a-vis the consumer price
index (CPI);
(c) Cost of living and changes or increases therein;
115 DBP vs. LA Santos, nd.
116 DBP vs. Secretary of Labor
117 Republic vs. Peralta, 1987
Lasallian Commission on Bar Operations 2018
LABOR LAW
(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) Prevailing wage levels;
(h) Fair return of the capital invested and capacity to
pay of employers;
(i) Effects in employment generation and family
income; and
(j) Equitable distribution of income and wealth along
the imperatives of economic and social
development.
Prohibition against injunction
Prohibition against injunction cannot be issued against any
proceeding before the Commission of Regional Boards. [Art.
126, LC]
Non-diminution of benefits
No wage order shall be issued which provides for wages
lower than minimum wage rates prescribed by Congress.
[Art. 127, LC]
Procedure for Wage Fixing by Regional Board
(1) Investigate and study pertinent facts, based on
criteria set in Art. 124;
(2) Conduct public hearings or consultations with
notice to employer and employee groups,
provinces, city, municipal officials and other
interested parties;
(3) Decide to issue or not to issue a wage order.
Frequency
Wage orders issued may not be disturbed for
12 months from effective date; this serves as a
bar for petitions for wage hikes as well except
when Congress passes a new law affecting
wages or other supervening circumstances
Effectivity
If it decides to issue a wage order, the wage
order takes effect after 15 days from complete
publication
in at least 1 newspaper of general circulation
in the region.
(4) Appeal wage order to Commission within 10
calendar days; mandatory for the Commission to
decide within 60 calendar days from filing.
Filing of an appeal does not stay order unless
appellant files an undertaking with a surety, to
guarantee payment of employees if the wage order
is affirmed (as amended by RA 6727)
118 Development Bank of the Philippines vs. NLRC, 1995
119 Rubberworld (Phils.), Inc. vs. NLRC, 1999
35
LABOR LAW
AGENCIES ON WAGE STUDY AND DETERMINATION
National Wages and Productivity Commission
(NWPC)
(1) Ex Officio Chairman: Secretary of Labor and
Employment
(2) Ex-officio vice-chairman: Director-General of NEDA
(3) Two members each from the workers‘ and
Composition
employers‘ sectors who shall be appointed by the
President of the Philippines upon the
recommendation of the Sec. of Labor
(4) Executive Director of the Commission
(1) Headed by the Executive Director
(2) Two (2) Deputy Directors
Secretariat
(1) To act as the national consultative and advisory
body to the President of the Philippines and
Congress on matters relating to wages, incomes and
productivity;
(2) To formulate policies and guidelines on wages,
incomes and productivity improvement at the
enterprise, industry and national levels;
(3) To prescribe rules and guidelines for the
determination of appropriate minimum wage and
productivity measures at the regional, provincial, or
industry levels;
(4) To review regional wage levels set by the Regional
Tripartite Wages and Productivity Boards to
determine if these are in accordance with prescribed
guidelines and national development plans;
(5) To undertake studies, researches and surveys
necessary for the attainment of its functions and
Powers and objectives, and to collect and compile data and
Functions periodically disseminate information on wages and
productivity and other related information,
including, but not limited to, employment, cost-of-
living, labor costs, investments and returns;
(6) To review plans and programs of the Regional
Tripartite Wages and Productivity Boards to
determine whether these are consistent with
national development plans;
(7) To exercise technical and administrative supervision
over the Regional Tripartite Wages and Productivity
Boards;
(8) To call, from time to time, a national tripartite
conference of representatives of government,
workers and employers for the consideration of
measures to promote wage rationalization and
productivity; and
(9) To exercise such powers and functions as may be
necessary to implement this Act. [Art. 121, LC]
Lasallian Commission on Bar Operations 2018
LABOR LAW
Regional Tri-partite Wages and Productivity
Boards (RTWPB)
(1) Chairman: Regional Director of DOLE
(2) Vice Chairman: Regional Director of NEDA
(3) Vice Chairman: Regional Director of DTI
(4) 2 Members from the employer sector
(5) 2 Members from the employee sector
(6) Secretariat
Tri-partite body – 3 sectors are represented:
(1) Government
(2) Employers
(3) Employees.
(1) To develop plans, programs and projects
relative to wages, incomes and productivity
improvement for their respective regions;
(2) To determine and fix minimum wage rates
applicable in their regions, provinces or
industries therein and to issue the
corresponding wage orders, subject to
guidelines issued by the Commission;
(3) To undertake studies, researches, and surveys
necessary for the attainment of their functions,
objectives and programs, and to collect and
compile data on wages, incomes, productivity
and other related information and periodically
disseminate the same;
(4) To coordinate with the other Regional Boards as
may be necessary to attain the policy and
intention of this Code;
(5) To receive, process and act on applications for
exemption from prescribed wage rates as may be
provided by law or any Wage Order; and
(6) To exercise such other powers and functions as
may be necessary to carry out their mandate
under this Code. [Art. 122, LC]
36
LABOR LAW
WAGE DISTORTION
Definition
A situation where an increase in prescribed wage rates results
in the eliminatin 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
Elements
1. Existing hierarchy of positions with corresponding salary
rates;
2. A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a
higher one
3. The elimination of the distinction between the two levels;
and
4. The existence of the distortion in the same region of the
country.120
Distortion adjustment = [Minimum wage/Actual salary] x
Prescribed increase
Wage distortion presupposes classification of employees
based on skills, knowledge, complexity of job and other
logical differentiation. In this case, the classification is not
among those considered as logical which is based on seniority
between newly hired and old regular employees. No
hierarchy of positions involved.121
How to Resolve Wage Distortion
In organized establishment with bargaining representative
(1) Employer and the union shall negotiate to correct
the distortions.
(2) Disputes shall be resolved through the grievance
procedure.
(3) If still unresolved, voluntary arbitration.
In unorganized Establishment
(1) Employer and Employees shall endeavor to correct
such distortions.
(2) Disputes shall be settled through the National
Conciliation and Mediation Board.
(3) If still unresolved after 10 calendar days of
conciliation, it shall be referred to the appropriate
branch of the NLRC – compulsory arbitration.122
120 Prubankers Assn. vs. Prudential Bank and Co., 1999
121 Bankard Employee Union vs. NLRC, nd.
122 National Federation of Labor vs. NLRC, 1994
123 Sec. 1, Rule V, IRR
124 Cebu Institute of Technology vs. Ople, 1987
Lasallian Commission on Bar Operations 2018
LABOR LAW
LEAVES
SERVICE INCENTIVE LEAVE
Coverage [Art. 95, LC]
Every employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days
with pay.
Exceptions:
1. Those of the government and any of its political
subdivisions, including GOCCs
2. Domestic helpers and persons in the personal service of
another
3. Managerial employees as defined in Book 3 of this Code
4. Field personnel and other employees whose
performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed
in the performance thereof
5. Those who are already enjoying the benefit herein
provided
6. Those enjoying vacation leave with pay of at least 5 days
7. Those employed in establishments regularly employing
less than 10 employees. 123
Teachers of private school on contract basis are entitled to
service incentive leave.124
Piece-rate workers are not entitled to service incentive
leave.125 However, they shall be entitled to service incentive
leave when, although they are piece-rate workers, they are
regular employees.126
Meaning of “1 year of service”
The term "at least one-year service" shall mean service for not
less than 12 months, whether continuous or broken, reckoned
from the date the employee started working, including
authorized absences and paid regular holidays unless the
working days in the establishment as a matter of practice or
policy, or that provided in the employment contract is less
than 12 months, in which case said period shall be considered
as one year.127
Entitlement
The grant of benefit in excess of that provided herein shall not
be made a subject of arbitration or any court or administrative
action. [Art 95 (c), LC]
The service incentive leave shall be commutable to its money
equivalent if not used or exhausted at the end of the year. 128
The cause of action of an entitled employee to claim his
service incentive leave pay accrues from the moment the
employer refuses to remunerate its monetary equivalent if the
employee did not make use of said leave credits but instead
chose to avail of its commutation (into money). Accordingly,
125 Makati Haberdashery vs. NLRC, 1989
126 Labor Congress vs. NLRC, 1998
127Sec 3, Rule V, Book III, IRR
128Sec 3, Rule V, Book III, IRR
37
LABOR LAW
if the employee wishes to accumulate his leave credits and
opts for its commutation upon his resignation or separation
from employment, his cause of action to claim the whole
amount of his accumulated service incentive leave shall arise
when the employer fails to pay such amount at the time of his
resignation or separation from employment. 129
MATERNITY LEAVE
[Sec 14-A, RA 1161 (Social Security Law) as amended by RA 7322
and RA 8282]
Coverage
Every woman in the private sector, whether married or
unmarried, is entitled to the maternity leave benefits.
Requisites
(a) Employment - A female employee employed at the
time of delivery, miscarriage, or abortion
(b) Contribution - Who has paid at least 3 monthly
contributions in the 12-month period immediately
preceding the semester of her childbirth, or
miscarriage
(c) Notice - Employee notified employer of her
pregnancy and the probable date of her childbirth,
which notice shall be transmitted to the SSS in
accordance with the rules and regulations it may
provide.
Benefits
A daily maternity benefit equivalent to 100% of her average
daily salary credit for:
1. 60 days for normal delivery
2. 78 days for caesarean delivery
This benefit shall NOT be included in the computation of 13th
month pay as it is granted to an employee in lieu of wages
which is the basis for computing 13th month.
Availment
Other conditions
1. SSS pays for the maternity leave. The employer
shall advance the payment subject to
reimbursement by the SSS within 30 days from
filing of leave application.
2. Availment shall be a bar to the recovery of
sickness benefits provided by this Act for the
same period for which daily maternity benefits
have been received.
3. Employee may only avail of benefit for the first
four (4) deliveries or miscarriages.
4. Sanction: That if an employee should give birth
or suffer miscarriage
a. without the required contributions
having been remitted for her by her ER
to the SSS, or
b. without the latter having been
previously notified by the ER of time of
the pregnancy, then the employer shall
pay to the SSS damages equivalent to the
129 Auto Bus Transport vs. NLRC, 2005
130Sec 2, RA8187
131Sec 2 RA8187
132Sec 1, IRR, RA 8187
Lasallian Commission on Bar Operations 2018
LABOR LAW
benefits which said employee member
would otherwise have been entitled to.
PATERNITY LEAVE
[RA 8187: Paternity Leave Act of 1996]
Coverage
Every married male employee in the private and public
sectors shall be entitled to a paternity leave of 7 days with full
pay for the first four deliveries of the legitimate spouse with
whom he is cohabiting.
Requisites
1. Employment
2. Marriage to and cohabitation with his legitimate
spouse
3. Delivery of the legitimate spouse
Who is entitled to paternity leave
Married male employee both in the public and private sectors 130
When may it be availed of
It may be availed of for the first 4 deliveries of the legitimate
spouse with whom he is cohabiting131
Cohabiting means the obligation of the husband and wife to
live together.132 If the spouses are not physically living
together because of the workstation or occupation, the male
employee is still entitled to the paternity leave benefit.
What are the benefits under the law
A married male employee is allowed not to report for work
for seven (7) days.
While on leave, the employee continues to earn the
compensation, 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. 133
For purposes of this Act, delivery shall include childbirth or
any miscarriage.
Non-conversion to cash
In the event that the paternity leave is not availed of, it shall
not be convertible to cash and shall not be cumulative.134
PARENTAL LEAVE FOR SOLO PARENTS
[RA 8972: Parental Leave for Solo Parents]
Defined
Leave benefits granted to a solo parent to enable him/her to
perform parental duties and responsibilities where physical
presence is required.135
Coverage
Any solo parent or individual who is left alone with the
responsibility of parenthood due to:
133Sec 3, RA8187
134Sec 7, IRR, RA 8187
135 Sec 3 (d), RA 8972
38
LABOR LAW LABOR LAW

1. Giving birth as a result of rape or, as used by the 2. Flexible work schedule
law, other crimes against chastity; 3. No discrimination policy
2. Death of spouse; 4. Educational benefits
3. Spouse is detained or is serving sentence for a 5. Housing benefits
criminal conviction for at least one (1) year; 6. Medical assistance
4. Physical and/or mental incapacity of spouse as
certified by a public medical practitioner;
LEAVE BENEFITS FOR WOMEN WORKERS UNDER
5. Legal separation or de facto separation from spouse SPECIAL LAWS
for at least one (1) year: Provided that he/she is
entrusted with the custody of the children;
Leaves for victims of violence against women
6. Declaration of nullity or annulment of marriage as
decreed by a court or by a church: Provided, that
[RA 9262 (Anti-Violence against Women and Their Children Act
he/she is entrusted with the custody of the
of 2004)]
children;
7. Abandonment of spouse for at least one (1) year;
Benefit
8. Unmarried father/mother who has preferred to
A victim of VAWC who is employed shall be entitled to a paid
keep and rear his/her child/children, instead of
leave of up to ten (10) days in addition to other paid leaves
having others care for them or give them up to a
under the Labor Code and Civil Service Rules and
welfare institution;
Regulations and other existing laws and company policies:
9. Any other person who solely provides parental
care and support to a child or children: Provided,
1. At any time during the application of any protection
that he/she is duly licensed as a foster parent by the order, investigation, prosecution and/or trial of the
Department of Social Welfare and Development
criminal case, extendible when the necessity arises
(DSWD) or duly appointed legal guardian by the
as specified in the protection order.
court; and 2. Upon the issuance of the Punong
10. Any family member who assumes the
Barangay/kagawad or prosecutor or the Clerk of
responsibility of head of family as a result of the
Court, as the case may be, of a certification (at no
death, abandonment, disappearance, or prolonged
cost) to the woman that such an action is pending,
absence of the parents or solo parent: Provided, and this is all that is required for the employer to
that such abandonment, disappearance, or
comply with the 10- day paid leave.
prolonged absence lasts for at least one (1) year. 136
3. For government employees, in addition to the
aforementioned certification, the employee
Conditions to entitlement
concerned must file an application for leave citing
A solo parent employee shall be entitled to the parental leave
as basis R.A. 9262.140
under the following conditions:
1. He/she has rendered at least one (1) year of service,
Availment
whether continuous or broken; In addition to other paid leaves under existing labor laws,
2. He/she has notified his/her employer that he/she
company policy, and/or collective bargaining agreement, the
will avail himself/herself of it, within a reasonable
qualified victim employee shall be entitled to a leave of up to
period of time; and
10 days with full pay, consisting of basic salary and
3. He/she has presented to his/her employer a Solo
mandatory allowances fixed by the Regional Wage Board, if
Parent Identification Card, which may be obtained
any.141
from the DSWD office of the city or municipality
where he/she resides. 137 Condition for Entitlement
To be entitled to the leave benefit, the only requirement is for
Availment
the victim-employee to present to her employer a certification
The parental leave is in addition to leave privileges under
from the barangay chairman or barangay councilor or
existing laws with full pay, consisting of basic salary and
prosecutor or the Clerk of Court, as the case may be, that an
mandatory allowances. It shall not be more than seven (7)
action relative to the matter is pending.
working days every year. 138
Unused leaves are not convertible to cash.
Termination of the Benefit
A change in status or circumstances of parent claiming
Special Leave Benefits for Women
benefits, such that he/she is no longer left alone with the
responsibility of parenthood, shall terminate his/her [RA 9710 (The Magna Carta of Women), DOLE DO No. 112,
eligibility for these benefits. 139 Series of 2011 as amended by DO No. 112-A Series of 2012]

Other Employment-related benefits available to all “solo Leaves under Magna Carta of Women
parents” (See VIII. Labor Standards - Related Special Laws)
1. Parental leave Benefit

136 Sec 3(a), RA 8972 139 Sec 3(a), RA 8972

137 Sec 19, Art. V, IRR, RA 8972 140 Sec. 42, IRR, RA 8972
141 Sec. 45, RA 9262
138 Sec 8, RA 8972

39
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

A female employee’s leave entitlement of two (2) months with 60 6 mos. service No
full pay from her employer based on her gross monthly Magna for the last 12
compensation following surgery caused by gynecological Carta mos. before
disorders, provided that she has rendered continuous surgery
aggregate employment service of at least six (6) months for
the last 12 months.

Gynecological Disorders
Disorders that would require surgical procedures such as, but
not limited to, dilatation and curettage and those involving
female reproductive organs such as the vagina, cervix, uterus,
fallopian tubes, ovaries, breast, adnexa and pelvic floor, as
certified by a competent physician. It shall also include
hysterectomy, ovariectomy, and mastectomy.

Conditions for Entitlement

Any female employee, regardless of age and civil status, shall
be entitled to a special leave benefit, provided she has
complied with the following conditions:
1. She has rendered at least 6 months continuous
aggregate employment service for the last 12
months prior to surgery;
2. She has filed an application for special leave
3. She has undergone surgery due to gynecological
disorders as certified by a competent physician.142

Application for Special Leave

Before surgery
The employee shall file her application for leave with her
employer within a reasonable period of time from the
expected date of surgery, or within such period as may be
provided by company rules and regulations or by CBA.

After surgery
Prior application for leave shall not be necessary in cases
requiring emergency surgical procedure, provided that the
employer shall be notified verbally or in written form within
a reasonable period of time and provided further that after
the surgery or appropriate recuperating period, the female
employee shall immediately file her application using the
prescribed form.143

Summary of leaves
No. of Commutable
Requirements
Days
5 1 year of Yes
SIL
service
60 3 mos. No
(normal); contributions
Maternity
for the last 12
Leave
78 (C- mos. before
section) birth
7 Married; No
Paternity cohabiting
Leave with legal
spouse
7 1 year of No, unless
Parental
service; CBA says
Leave
present SP ID yes
VAWC 10 Certification No

142 Sec. 2, DO 112 143 Sec 3, DO 112

40
Lasallian Commission on Bar Operations 2018
LABOR LAW
SPECIAL GROUPS OF EMPLOYEES
WOMEN WORKERS
Coverage
Shall apply to all employers, whether operating for profit or
not, including educational, religious and charitable
institutions
Exceptions
The government and its subdivisions including GOCC’s and
to the employers of household helpers and persons in their
personal service insofar as such workers are concerned.144
Prohibited acts
1. Night work
2. Discrimination
3. Stipulation against marriage
4. Discharge to prevent enjoyment of benefits and on
account of pregnancy
5. Discharge on account of Testimony
Discrimination
Prohibition [Art. 135, LC]
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:
a. Payment of a lesser compensation, including
wage, salary, or other forms of remuneration and
fringe benefits, to female employees as against a
male employee, for work of equal value; and
b. Favoring a male employee over a female
employee with respect to promotion, training
opportunities, study, and scholarship grants solely
on account of their sexes. [Art 133, LC]
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 303 and 304 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.145
Stipulation against Marriage
It shall be unlawful for an employer to:
1. require as a condition of employment or
continuation of employment that a woman
employee shall not get married, or
2. stipulate expressly or tacitly that upon getting
married a woman employee shall be deemed
resigned or separated or
144 Sec 1, Rule XII, Book III, IRR
145 As amended by RA 6725, May 12, 1989
146 PT&T vs. NLRC, 1997
Lasallian Commission on Bar Operations 2018
LABOR LAW
3. actually dismiss, discharge, discriminate, or
otherwise prejudice a woman employee merely by
reason of her marriage. [Art. 134, LC]
Company policy of not accepting married women for
employment or disqualifying her because she got married is
considered as discrimination.146
Bona fide occupational qualification exception
When the employer can prove that the reasonable demands
of the business require a distinction based on marital status
and there is no better available or acceptable policy which
would better accomplish the business purpose, an employer
may discriminate against an employee based in the identity
of the employee’s spouse. 147
The Court sustained the validity of employer policy
prohibiting an employee from having a personal or marital
relationship with an employee of a competitor. The
prohibition was reasonable under the circumstances because
relationships of such nature might compromise the interests
of the company. 148
Prohibited Acts
Note: No more night work prohibition under R.A. 10151 (An
Act Allowing the Employment of Night Workers, thereby
Repealing Articles 130 and 131 of LC, as amended)
Prohibited Acts
It shall be unlawful for any employer:
1. To deny any woman employee the benefits provided
for in this Chapter or to discharge any woman employed by
him for the purpose of preventing her from enjoying any of
the benefits provided under this Code.
2. To discharge such woman on account of her pregnancy, or
while on leave or in confinement due to her pregnancy;
3. To discharge or refuse the admission of such woman
upon returning to her work for fear that she may again be
pregnant. [Art 135, LC]
Discharge on Account of Testimony
It shall be unlawful for any employer to discourage any
woman or child or any other employee for having filed a
complaint or having testified or being about to testify under
the code.149
Sexual Harassment
[RA 7877: Anti-Sexual Harassment Act]
Work, education or training-related sexual harassment,
defined
Work, education or training-related sexual harassment is
committed by an employee, manager, supervisor, agent of the
employer, teacher, instructor, professor, coach, trainer, or any
other person who, having authority, influence or moral
ascendancy over another in a work or training or education
environment, demands, requests or otherwise requires any
147 Star Paper Corp. vs. Simbol, 2006
148 Duncan Association of Detailmen vs. Glaxo Wellcome, 2004
149 Sec 13(d), Rule XII, Book III
41
 LABOR LAW
sexual favor from the other, regardless of whether the demand,
request or requirement for submission is accepted by the
object of said Act.150
How work-related sexual harassment is committed
1. In a work-related or employment environment, sexual
harassment is committed when:
a. The sexual favor is made as a condition
a. in the hiring or in the employment, re-
employment or continued employment of said
individual, or
b. in granting said individual favorable
compensation, terms, conditions, promotions,
or privileges; or
c. in refusal to grant the sexual favor results in
limiting, segregating or classifying the
employee which in a way would discriminate,
deprive or diminish employment opportunities
or otherwise adversely affect said employee;
b. The above acts would either:
a. impair the employee’s rights or privileges under
existing labor laws; or
b. The above acts would result in an intimidating,
hostile, or offensive environment for the employee.
2. In an education or training environment, sexual
harassment is committed:
a. Against one who is under the care, custody or
supervision of the offender;
b. Against one whose education, training,
apprenticeship or tutorship is entrusted to the
offender;
c. When the sexual favor is made a condition to the
giving of a passing grade, or the granting of
honors and scholarships, or the payment of a
stipend, allowance or other benefits, privileges,
or considerations; or
d. When the sexual advances result in an
intimidating, hostile or offensive environment for the
student, trainee or apprentice.
Who are liable
1. The offender:
a. Employee
b. Manager, Supervisor, agent of the employer
c. Teacher, instructor, professor, coach, trainer
d. Any other person who, having authority,
influence or moral ascendancy over another in a
work or training or education environment
2. Any person who directs or induces another to
commit any act of sexual harassment
3. Any person who cooperates in the commission
thereof by another without which it would not have
been committed
Role of the employer or Head of Office
The Employer or Head of Office shall have the duty:
(1) To prevent the commission of such acts and
150 Sec 3, RA 7877
151 Sec 4, RA 7877
152 Sec 5, RA 7877
153 Sec 6, RA 7877
Lasallian Commission on Bar Operations 2018
LABOR LAW
(2) To lay down the procedure for the resolution,
settlement or prosecution of committed acts.151
Employer shall be solidarily liable for damages if:
(1) The employer or head of office, educational or
training institution is informed of such acts by the
offended party and
(2) No immediate action is taken thereon152
Independent Action for Damages
The victim of work, education or training-related sexual
harassment can institute a separate and independent
action for damages and other affirmative relief.153
Sanctions
1. Criminal: imprisonment of 1 month to mos. or fine
of P10k to P20k or both
2. Termination
Prescription of such action is in 3 years.
MINORS
General Rule:
Children below 15 shall NOT be employed [Art. 139(a) LC and
Sec 12 to 16 of RA 7610 as amended by RA 7658 and RA 9231]
Exceptions:
1. Child works directly under the sole responsibility of his
parents or legal guardian and where only members of the
ER‘s family are employed, provided:
a. his employment does NOT endanger his life,
safety, health and morals,
b. nor impairs his normal development, and
c. the parent or legal guardian shall
provide the said minor child with the
prescribed primary and/or secondary
education154
2. Child‘s employment or participation in public
entertainment or information through cinema, theater,
radio or television is essential, provided that:155
a. employment does NOT involve ads or commercials
promoting alcohol, tobacco and its by-products or
violence156.
b. the employment contract is concluded by the child’s
parents or guardian, and approved by DOLE
c. The ER shall ensure the protection, health, safety and
morals of the child
d. The ER shall institute measures to prevent the child’s
exploitation or discrimination taking into account the
system and level of remuneration, and the duration
and arrangement of working time
e. The ER shall formulate and implement, subject to
the approval and supervision of competent
authorities, a continuing program for training and
skills acquisition of the child.157
In the above-exceptional cases where any such child may be
employed, the employer shall first secure, before engaging
154 Sec 12, RA 7610 as amended by RA 7658
155 Sec 12, RA 7610 as amended by RA 7658]
156 Sec 14, RA 7610 as amended by RA 7658
157 Sec 12, RA 7610 as amended by RA 7658
42
LABOR LAW LABOR LAW

such child, a work permit from the DOLE which shall ensure (1) Minimum wage
observance of the above requirements. The minimum wage of domestic workers shall not be less
than the following:
The term "child" shall apply to all persons under eighteen (18) i. P2,500 a month for those employed in NCR
years of age.158 ii. P2,000 a month for those employed in chartered
cities and first class municipalities
Employment of Children from 15 to 18 - allowed but iii. P1,500 a month for those employed in other
restricted to non-hazardous undertakings. municipalities
Within one year from the effectivity of the Act, and
The following are hazardous workplaces:159 periodically thereafter, the Regional Tripartite and
1. Nature of the work exposes the workers to Productivity Wage Boards shall review, and if proper,
dangerous environmental elements, contaminants determine and adjust the minimum wage rates of domestic
or working conditions; workers.163
2. Construction work, logging, fire-fighting, mining,
quarrying, blasting, stevedoring, dock work, deep (2) Standard of Treatment
sea fishing, and mechanized farming; The employer or any member of the household shall not
3. Manufacture or handling of explosives and other subject a domestic worker or “kasambahay” to any kind of
pyrotechnic products; abuse nor inflict any form of physical violence or harassment
4. Exposure to or use of heavy power-driven or any act tending to degrade the dignity of a domestic
machinery or equipment; worker.164
5. Exposure to or use of power-driven tools
(3) Board, Lodging and Medical Attendance
Working Hours of a Child The employer shall provide for the basic necessities of the
Quantity domestic worker to include at least three (3) adequate meals
Age Bracket Daily Max Weekly Max a day and humane sleeping arrangements that ensure safety
Below 15 y 4 hours 20 hours and shall provide appropriate rest and assistance to the
15 to below 18 8 hours 40 hours domestic worker in case of illnesses and injuries sustained
during service without loss of benefits.165
Night work prohibition
Age Bracket Prohibited Hours (4) Privacy
Below 15 y 8 pm to 6 am (10 hrs) Respect for the privacy of the domestic worker shall be
15 to below 18 10 pm to 6 am (8 hrs) guaranteed at all times and shall extend to all forms of
communication and personal effects 166

KASAMBAHAY (5) Access to Outside Communication

[R.A. 10361, Batas Kasambahay or Domestic Worker’s Act]
Note: RA 10361 has expressly repealed Chapter III,
“Employment of Househelpers,” Title III of Book III of the
Labor Code
Domestic work
This refers to work performed in or for a household or
households.160
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. 167
(6) 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.168

Domestic worker or “Kasambahay” (7) Social and Other Benefits

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. 161
The term domestic worker or “kasambahay” excludes any
person who performs domestic work only occasionally or
sporadically and not on an occupational basis.162
RIGHTS AND PRIVILEGES
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.
(8) 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 pay169

158 Sec 2, RA 9231 165 Sec 6, RA 10361

159 Sec 3, Rule XIII, Book III, IRR 166 Sec 7, RA 10361
160 Sec 4(C), RA 10361 167 Sec 8, RA 10361
161Sec 4(D). RA 10361 168Sec 9, RA 10361
162 Id.
163 Sec 24, RA 10361 169 Sec 29, RA 10361
164 Sec 5, RA 10361

43
Lasallian Commission on Bar Operations 2018
LABOR LAW
Employment Age of Domestic Workers
Unlawful to employ any person below fifteen (15) years of age
as a domestic worker170
Persons between 15-18 years old should only be employed in
non-hazardous work.171
Daily Rest Period:
Aggregate of eight (8) hours per day. 172
Obligations of the Employer
Employer’s Reportorial Duties. – The employers shall register all
domestic workers under their employment in the Registry of
Domestic Workers in the barangay where the employer’s
residence is located.
Time and Manner of Payment
Payment of wages shall be made on time directly to the
domestic worker in cash at least once a month and unless
allowed by the domestic worker through a written consent,
employer shall make no deductions from the wages other
than that which is mandated by law. 173
Pay Slip
The employer shall at all times provide the domestic worker
with a copy of the pay slip containing the amount paid in cash
every pay day, and indicating all deductions made, if any.
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
wage.
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.
Employment Certification
ER shall give the househelper a written statement of the
nature and duration of the service and his or her work
performance as househelper upon severance. 174
Termination
Initiated by the domestic worker
The domestic worker may terminate the employment
relationship at any time before the expiration of the
employment 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;
170Sec 16, RA 10361
171 DO 4- 99 Sec. 4
172 Sec. 20, RA 10361
173 Sec 25, RA 10361
174Sec 35, RA 10361
Lasallian Commission on Bar Operations 2018
LABOR LAW
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. 175
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;
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. 176
HOMEWORKERS
Note: DO 5, DOLE (February 4, 1992), is now Rule XIV, Book
III of the IRRI.
Homeworker
Any person who performs industrial homework for an
employer, contractor, or sub-contractor.177
Industrial homework
1. Is a system of production under which work for an
employer or contractor is carried out by a homeworker
at his/her home. Materials may or may not be furnished
by the employer or contractor.
2. Decentralized form of production, where there is
ordinarily very little supervision or regulation of
methods of work.178
Employer of homeworkers
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 employee,
agent contractor, sub-contractor or any other person:
1. Delivers, or causes to be delivered, any goods, articles
or materials to be processed or fabricated in or about
175 Sec 33, RA 10361
176 Sec 34, RA 10361
177 Sec. 1, Rule XIV, Book III, IRR
178 Sec 2(a), Rule XIV, Book III, IRR
44
LABOR LAW
a home and thereafter to be returned or to be
disposed of or distributed in accordance with his
directions; or
2. Sells any goods, articles or materials to be processed
or fabricated in or about a home and then rebuys
them after such processing or fabrication, either by
himself or through some other person.
Rights and benefits of homeworkers 179
1. Right to form, join or assist organizations
2. Right to acquire legal personality and the rights and
privileges granted by law to legitimate labor
organizations upon issuance of the certification of
registration
3. Immediate payment upon ER‘s receipt of finished
goods or articles
4. SSS, MEDICARE and ECC premium contributions
shall be deducted from their pay and shall be
remitted by ER/contractor/subcontractor to the SSS
Liability of Employer180
1. Employer may require homeworker to redo work
improperly executed without additional pay
2. Employer need not pay homeworker for any work
done on goods or articles not returned due to
homeworker‘s fault
3. If subcontractor/contractor fails to pay homeworker,
ER is jointly and severally liable with the former to the
homeworker for his/her wage
4. ER shall assist the homeworkers in the maintenance of
basic safe and healthful working conditions at the
homeworkers‘ place of work
Regional Office shall provide technical assistance to registered
homeworkers’ organizations181
Prohibited Homework
1. explosives, fireworks and articles of like character;
2. drugs and poisons; and
3. other articles, the processing of which requires
exposure to toxic substances.
Conditions for deduction from homeworker’s earnings
No deduction from the homeworker‘s earnings for the value
of materials lost, destroyed or damaged unless:
1. Homeworker is clearly shown to be responsible for
loss or damage
2. Reasonable opportunity to be heard
3. Amount of deduction is fair and reasonable, and
does not exceed actual loss or damage
4. Deduction does not exceed 20% of homeworker‘s
weekly earnings 182
NIGHT WORKERS
NOTE: RA 10151 repealed Arts. 130 and 131 of the LC –
Women can now work at night
Coverage
179 Rule XIV, Book III, IRR
180 Rule XIV, Book III, IRR
181 Sec 14, Rule XIV, Book III, IRR
Lasallian Commission on Bar Operations 2018
LABOR LAW
a. All employees working at night
b. Work covers period between 10pm to 6am
c. Works for no less than 7 consecutive hours
Excluded: Those working in Agriculture, stock raising,
fishing, maritime transport, inland navigation.
Night worker
Any employed person whose work requires performance of a
substantial number of hours of night work which exceed a
specified limit. This limit shall be fixed by the Sec of Labor
after consulting the workers’ representatives/labor
organizations and employers. [Art. 154, LC as amended by RA
10151]
Any employed person whose work covers the period from 10
o’clock in the evening to 6 o’clock the following morning,
provided that the worker performs no less than 7 consecutive
hours of work.183
Rights of Night Workers
Health Assessment
At the worker’s request, they 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;
c. If they experience health problems during such an
assignment;
With the exception of a finding of unfitness for night work,
the findings of such assessments shall be confidential and
shall NOT be used to their detriment, subject, however, to
applicable company policies. [Art 155, LC as amended by RA
10151]
Mandatory Facilities
Mandatory facilities shall be made available for workers
performing night work, which include the following:
a. Suitable first-aid and emergency facilities
b. Lactation station in required companies pursuant to
RA 10028
c. Separate toilet facilities for men & women
d. Facility for eating w/ potable drinking water; AND
e. Facilities for transportation and/or properly
ventilated temporary sleeping or resting quarters,
separate for male and female workers, shall be
provided except where any of the ff. circumstances is
present:
i. There is an existing company guideline,
practice or policy, CBA, or any similar
agreement providing for an equivalent
or superior benefit; or
ii. Start or end of the night work does NOT
fall within 12 mn - 5 am; or
iii. Workplace is located in an area that is
accessible 24 hours to public
transportation; or
iv. Number of employees does NOT exceed
a specified number as may be provided
182 Sec 8, Rule XIV, Book III, IRR
183 Book III, Rule XV, Sec. 2, IRR, thru DO 119-12
45
LABOR LAW
for by the SOLE in subsequent issuances
[Art. 156, LC as amended by RA 10151]
Transfer
If night worker is unfit for night work due to health reasons
as certified by competent physician, s/he shall be:
1. Transferred in good faith to a job for which they are
fit to work whenever practicable, which must be
similar and equivalent position;
2. If transfer is not practicable, or workers are unable
to render night work for a continuous period of not
less than 6 months upon certification of a
competent public health authority, they shall be
granted the same benefits as other workers who are
unable to work due to illness.
3. If workers are certified as temporarily unfit to
render night work for a period of less than 6
months, they shall be given the same protection
against dismissal or notice of dismissal as other
workers who are prevented from working for
health reasons. [Art. 157, LC as amended by RA
10151]
Women Night Workers
Employers shall ensure that measures shall be taken to ensure
that an alternative to night work for pregnant and nursing
employees who would otherwise be called upon to perform
such work. Such measures may include:
1. Transfer to day work – As far as practicable,
pregnant or nursing employees shall be assigned
to day work, before and after childbirth, for a
period of at least sixteen (16) weeks, which shall be
divided between the time before and after
childbirth;
Medical certificate issued by competent physician
(OB/Gyne/Pedia) is necessary for the grant of:
a. additional periods of assignment to day
work during pregnancy or after
childbirth, provided that such shall not be
more than 4 weeks or for a longer period
as may be agreed upon by employer and
worker;
b. extension of maternity leave; and
c. clearance to render night work.
2. Provision of social security benefits - in accordance
with provisions of Act No 8282 (Social Security
Act of 1997) and other existing company policy or
collective bargaining agreement.
3. Extension of maternity leave – where transfer to day
work is not possible, but requires recommendation
by competent physician; without pay or using
earned leave credits, if any [Art. 158, LC, as amended
by RA 10151; Book III, Rule XV, Sec. 6, IRR, through
DO 119-12]
Protection against dismissal and loss of benefits attached to
employment status, seniority, and access to promotion
Where no alternative work can be provided to a woman
employee who is not in a position to render night work, she
184 Book III, Rule XV, Sec. 8, IRR, thru DO 119-12
185 Sec 3, RA 8042
Lasallian Commission on Bar Operations 2018
LABOR LAW
shall be allowed to go on leave or on extended maternity
leave, using her earned leave credits.
A woman employee shall NOT be dismissed for reasons of
pregnancy, childbirth and childcare responsibilities as
defined under this Rule. She shall NOT lose the benefits
regarding her employment status, seniority, and access to
promotion which may attach to her regular night work
position.184
MIGRANT WORKERS
Migrant worker
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 legal resident to be used interchangeably with
overseas Filipino worker.185
Overseas Filipino Worker
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.186
Deployment of Migrant Workers
The State shall deploy overseas Filipino workers only in
countries where the rights of Filipino migrant workers are
protected. The government recognizes any of the following as
guarantee on the part of the receiving country for the
protection of the rights of overseas Filipino workers:
a. It has existing labor and social laws protecting the
rights of migrant workers;
b. It is a signatory to multilateral conventions,
declarations or resolutions relating to the
protection of migrant workers;
c. It has concluded a bilateral agreement or
arrangement with the government protecting the
rights of overseas Filipino workers; and
d. It is taking positive, concrete measures to protect
the rights of migrant workers.
Provided, That the receiving country is taking positive,
concrete measures to protect the rights of migrant workers in
furtherance of any of the guarantees under subparagraphs (a),
(b) and (c) hereof.
In the absence of a clear showing that any of the
aforementioned guarantees exists in the country of
destination of the migrant workers, no permit for deployment
shall be issued by the Philippine Overseas Employment
Administration (POEA). 187
Termination or Ban on Deployment
Notwithstanding the provisions of Section 4 hereof, in pursuit
of the national interest or when public welfare so requires, the
POEA Governing Board, after consultation with the
186 Sec 2 (a), RA 8042, as amended
187Sec 4, RA 8042
46
LABOR LAW
Department of Foreign Affairs, may, at any time, terminate or
impose a ban on the deployment of migrant workers.
Claims for Compensability of Work-related Death,
Sickness, or Disability
Compulsory Insurance Coverage for Agency-Hired
Workers188
Each migrant worker deployed by a recruitment/manning
agency shall be covered by a compulsory insurance policy
which shall be secured at no cost to the said worker.
Insurance policy shall be effective for the duration of the
migrant worker's employment and shall cover, at the
minimum:
Accidental death
At least Fifteen thousand US dollars (US$15,000.00)
survivor's benefit payable to the migrant worker's
beneficiaries.
Permanent total disablement
At least Seven thousand five hundred US dollars
(US$7,500.00) disability benefit payable to the
migrant worker. The following disabilities shall be
deemed permanent:
a. total, complete loss of sight of both
eyes;
b. loss of two limbs at or above the ankles
or wrists;
c. permanent complete paralysis of two
limbs;
d. brain injury resulting to incurable
imbecility or insanity;
Repatriation cost of the worker when his/her
employment is terminated without any valid cause,
including the transport of his or her personal
belongings.
Death
The insurance provider shall arrange and pay for
the repatriation or return of the worker's remains.
The insurance provider shall also render any
assistance necessary in the transport including, but
not limited to, locating a local licensed funeral
home, mortuary or direct disposition facility to
prepare the body for transport, completing all
documentation, obtaining legal clearances,
procuring consular services, providing necessary
casket or air transport container, as well as
transporting the remains including retrieval from
site of death and delivery to the receiving funeral
home.
Compassionate visit
When a migrant worker is hospitalized and has
been confined for at least seven (7) consecutive
days, he shall be entitled to a compassionate visit
by one (1) family member or a requested
individual. The insurance company shall pay for
the transportation cost of the family member or
requested individual to the major airport closest to
188 Sec 23, RA 10022
Lasallian Commission on Bar Operations 2018
LABOR LAW
the place of hospitalization of the worker. The
family member or requested individual is
responsible to meet all visa and travel document
requirements.
Medical evacuation
When an adequate medical facility is not available
proximate to the migrant worker, as determined by
the insurance company's physician and/or a
consulting physician, evacuation under
appropriate medical supervision by the mode of
transport necessary shall be undertaken by the
insurance provider.
Medical repatriation
When medically necessary as determined by the
attending physician, repatriation under medical
supervision to the migrant worker's residence shall
be undertaken by the insurance provider at such
time that the migrant worker is medically cleared
for travel by commercial carrier. If the period to
receive medical clearance to travel exceeds fourteen
(14) days from the date of discharge from the
hospital, an alternative appropriate mode of
transportation, such as air ambulance, may be
arranged. Medical and non-medical escorts may be
provided when necessary.
Required documents
Any claim arising from accidental death, natural death or
disablement under this section shall be paid by the insurance
company without any contest and without the necessity of
providing fault or negligence of any kind on the part of the
insured migrant worker: Provided, That the following
documents, duly authenticated by the Philippine foreign
posts, shall be sufficient evidence to substantiate the claim:
1. Death Certificate - In case of natural or accidental
death;
2. Police or Accident Report - In case of accidental death;
and
3. Medical Certificate - In case of permanent
disablement;
For repatriation: a certification which states the reason/s for
the termination of the migrant worker's employment and the
need for his or her repatriation shall be issued by the
Philippine foreign post or the Philippine Overseas Labor
Office (POLO) located in the receiving country.
APPRENTICES AND LEARNERS
Apprenticeship, Apprentice, Apprenticeship Agreement
and Apprenticeable Occupation, defined
Art 58, Labor Code “TESDA Law”
Apprenticeship
Practical training on the Training within
job supplemented by employment with
related theoretical compulsory related
instruction theoretical instructions
involving a contract
between an apprentice and
47
LABOR LAW LABOR LAW

an employer on an express agreement of the child concerned, if

approved apprenticeable possible, and approval of the Department of Labor
occupation and Employment: and Provided, That the
Apprentice following requirements in all instances are strictly
A worker who is A person undergoing complied with:
covered by a written trainingfor an approved a. The employer shall ensure the protection,
apprenticeship apprenticeable occupation health, safety, morals and normal
agreement with an during an established development of the child;
individual employer or period assured by an b. The employer institute measures to prevent
any of the entities apprenticeship agreement the child's exploitation or discrimination
recognized under this taking into account the system and level of
Chapter. remuneration and the duration and
Apprenticeship Agreement arrangement of working time; and
An employment contract A contract wherein a c. The employer shall formulate and
wherein the employer prospective employer implement, subject to the approval and
binds himself to train binds himself to train the supervision of competent authorities, a
the apprentice and the apprentice who in turn continuing program for training and skills
apprentice in turn accepts the terms of acquisition of the child.
accepts the terms of training for a recognized
training. apprenticeable occupation In the above exceptional cases where any such child may be
emphasizing the rights, employed, the employer shall first secure, before engaging
duties and responsibilities such child, a work permit from the Department of Labor and
of each party Employment which shall ensure observance of the child.
Apprenticeable Occupation
Any trade, form of An occupation officially The Department of Labor and Employment shall promulgate
employment or endorsed by a tripartite rules and regulations necessary for the effective
occupation which body and approved for implementation of this Section.190
requires more than three apprenticeship by the
(3) months of practical Authority Qualifications of apprentice under the Labor Code
training on the job a. Be at least 14 years of age;
supplemented by related b. Possess vocational aptitude and capacity for
theoretical instruction. appropriate tests; and
c. Possess the ability to comprehend and follow oral
and written instructions.
When Apprentices may be Employed
Prior approval by the DOLE of the proposed apprenticeship Trade and industry associations may recommend to the
program is a condition sine quo non before an apprenticeship Secretary of Labor appropriate educational requirements for
agreement can be validly entered into. The act of filing the different occupations. [Art 59, LC]
proposed apprenticeship program with the DOLE is a
preliminary step towards its final approval and does not Qualifications of apprentice under the IRR
instantaneously give rise to an employer-apprentice To qualify as apprentice, an applicant shall:
relationship.189 a. Be at least 15 years of age; provided those who are
at least fifteen years of age but less than eighteen
Conditions under which children below 15 may be may be eligible for apprenticeship only in non-
employed hazardous occupations;
Children below fifteen (15) years of age shall not be b. Be physically fit for the occupation in which he
employed except: desires to be trained;
1. When a child works directly under the sole c. Possess vocational aptitude and capacity for the
responsibility of his parents or legal guardian and particular occupation as established through
where only members of the employer's family are appropriate tests; and
employed: Provided, however, that his d. Possess the ability to comprehend and follow oral
employment neither endangers his life, safety, and written instructions.
health and morals, nor impairs his normal
development: Provided, further, That the parent or Employment of Apprentices
legal guardian shall provide the said minor child When applicable:
with the prescribed primary and/or secondary 1. Only employers in highly technical industries may
education; or employ apprentices; and
2. Where a child's employment or participation in 2. Only in apprenticeable occupations approved by
public entertainment or information through the Secretary of Labor. [Art 60, LC]
cinema, theater, radio or television is essential:
Provided, the employment contract is concluded by Apprenticeable Occupation
the child's parents or legal guardian, with the

189 Nitto Enterprises vs. NLRC, (1995) 190 RA 7160, Sec. 12 as amended by RA 7658, Sec. 1

48
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

An occupation officially endorsed by a tripartite body and Learnership Apprenticeship

approved to be apprenticeable by the authority. [Sec 4, RA Nature
7796]
Semi-Skilled Highly Technical
Under TESDA guidelines, the period of apprenticeship Period
should not be less than 4 months and not more than 6 months.
3 Months Not less than 3 months but
An apprentice is entitled to the full minimum wage (not 75%) not more than 6 months
when:
1. The employer stipulates in the contract and 3 months < P<6 months
2. The employer avails of the tax benefit where he is Commitment to employment
able to deduct from his remittance to the
government in exchange of the training program At the option of the At the option of the
given to apprentice. Learner employer
Necessity of DOLE approval of program
Learners, defined
Persons hired as trainees in semi-skilled and other industrial
Not necessary. Only Prior approval by DOLE is
occupations which are non-apprenticeable and which may be learned
DOLE inspection necessary
through practical training on the job in a relatively short period
required
of time which shall not exceed three (3) months. [Art 73, LC]
Deductibility of expenses
When Learners may be Employed
No provision for Expenses of training
deductibility deductible from income
Learners may be employed when no experienced workers are tax
available, the employment of learners is necessary to prevent When employed
curtailment of employment opportunities, and the (1) When no (1) The person is at least
employment does not create unfair competition in terms of
experienced workers fifteen (15) years of age,
labor costs or impair or lower working standards. [Art 74, LC]
are available provided those who are at
Learnership programs must be approved by the Authority. (2) The employment of least fifteen (15) years of
[RA 7796] learners is necessary age but less than eighteen
to prevent curtailment (18) may be eligible for
Conditions of Employment [Art 75, LC] of employment apprenticeship only in
Any employer desiring to employ learners shall enter into a
opportunities; and non-hazardous
learnership agreement with them, which agreement shall
include: (3) The employment occupation;
a. The names and addresses of the learners; does not create unfair (2) The person is
b. The duration of the learnership period, which shall competition in terms physically fit for the
not exceed three (3) months; of labor costs or occupation in which he
c. The wages or salary rates of the learners which impair or lower desires to be trained;
shall begin at not less than seventy-five percent working standards. (3) The person possesses
(75%) of the applicable minimum wage; and
vocational aptitude and
d. A commitment to employ the learners if they so
desire, as regular employees upon completion of capacity for the particular
the learnership. occupation as established
through appropriate tests;
All learners who have been allowed or suffered to work and
during the first two (2) months shall be deemed regular (4) The person is able to
employees if training is terminated by the employer before comprehend and follow
the end of the stipulated period through no fault of the
oral and written
learners.
instructions
The learnership agreement shall be subject to inspection by
the Secretary of Labor and Employment or his duly Wage rate
authorized representative. [Art 75, LC] General Rule General Rule
Not less than 75% of Not less than 75% of the
Learners employed in piece or incentive-rate jobs during the the minimum wage minimum wage
training period shall be paid in full for the work done. [Art 76,
LC] Exception Exception
Learners in piecework No compensation if SOLE
Learnership and Apprenticeship, distinguished shall be paid in full for authorizes, as OJT is
the work done. required by the school
Deductibility of training cost
Not allowed Allowed

49
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

Learnership Apprenticeship 2. a record of such an impairment; OR

Conditions 3. being regarded as having such an impairment 193
(1) Program is
duly recognized
by DOLE
Handicap
(2) Deduction
A disadvantage for a given individual, resulting from an
shall not exceed impairment or a disability that limits or prevents the
10% of direct function, or activity that is considered normal given the age
labor wage and sex of the individual. 194
(3) Payment of
minimum wage Rights of Disabled Workers
to apprentices
1. Equal Opportunity
No disabled person shall be denied access to opportunities
Regularization for suitable employment. A qualified disabled EE shall be
A commitment to subject to the same terms and conditions of employment
employ the learners if and the same compensation, privileges, benefits, fringe
they so desire, as benefits, incentives or allowances as a qualified able-bodied
regular employees person.195
upon completion of
the learnership.
2. Discrimination On Employment
Forms of discrimination against the handicapped in
All learners who have employment196
been allowed or 1. Limiting, segregating or classifying a disabled job
suffered to work applicant in such a manner that adversely affects
during the first two (2) his work opportunities;
months shall be deemed
regular employees if 2. Using qualification standards, employment tests
training is terminated or other selection criteria that screen out or tend to
by the employer screen out a disabled person unless such standards,
before the end of the tests or other selection criteria are shown to be job
stipulated period related for the position on question and are
through no fault of the consistent with business necessity;
learners.
3. Utilizing standards, criteria, or methods of
Enforcement administration that:
Any violation of this Chapter or its implementing rules and a. have the effect of discrimination on the
regulations shall be subject to the general penalty clause basis of disability; or
provided for in this Code. [Art 77, LC] b. perpetuate the discrimination of others
who are subject to common
DISABLED WORKERS administrative control;

[RA 7277 - Magna Carta for Disabled Persons, as amended by
RA 9442]
Disabled Persons
Those suffering from restriction or different abilities, as a
result of a mental, physical or sensory impairment, to
perform an activity in the manner or within the range
considered normal for a human being 191
Impairment
Any loss, diminution or aberration of psychological,
physiological, or anatomical structure or function192
Disability shall mean:
1. physical or mental impairment that substantially
limits one or more psychological, physiological
or anatomical function of an individual or
activities of such individual; OR
4. Providing less compensation, such as salary, wage
or other forms of remuneration and fringe
benefits, to a qualified disabled employee, by
reason of his disability, than the amount to which
a non-disabled person performing the same work
is entitled;
5. Favoring a non-disabled employee over a qualified
disabled employee with respect to promotion,
training opportunities, study and scholarship
grants, solely on account of the latter’s disability;
6. Re-assigning or transferring a disabled employee to a
job or position he cannot perform by reason of his
disability;
7. Dismissing or terminating the services of a disabled
employee by reason of his disability unless the

191 Sec. 4 (a), RA 7277 194 Sec 4(d), RA 7277

192 Sec. 4(b), RA 7277 195 Sec 5(1), RA 7277
193 Sec 4(c), RA 7277 196 Sec 32, RA 7277

50
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

employer can prove that he impairs the

satisfactory performance of the work involve to
the prejudice of the business entities; Provided,
however, That the employer first sought provide
reasonable accommodations for disabled
persons;

8. Failing to select or administer in the effective manner

employment tests which accurately reflect the skills,
aptitude or other factor of the disabled applicant or
employee that such test purports to measure,
rather than the impaired sensory, manual or
speaking skills of such applicant or employee, if
any; and

9. Excluding disabled persons from membership in

labor unions or similar organization.

If the violator is a corporation or an organization, who

is/are liable under the Act
If the violator is a corporation, organization or any similar
entity, the officials thereof directly involved shall be liable197

3. Incentives for Employers

Tax Incentives for Employers/ Establishments
1. For employment of disabled persons - additional
deduction, from their gross income, equivalent to
25% of the total amount paid as salaries and wages
to disabled persons
a. Private entities
b. Employ disabled persons either as
regular EEs, apprentice or learner
c. Provided such entities present proof as
certified by the DOLE and the DOH198

2. For construction of disabled- friendly facilities -

additional deduction from their net taxable income,
equivalent to 50% of the direct costs of the
improvements or modifications
a. Private entities
b. That improve or modify their physical
facilities in order to provide reasonable
accommodation for disabled persons
c. Does NOT apply to improvements or
modifications or facilities required
under BP 344.199

3. For discounts – may claim such discounts as tax

deductions based on the net cost of the goods sold
or services rendered
a. The cost of the discount shall be allowed as
deduction from gross income for the same
taxable year that the discount is granted.
b. The total amount of the claimed tax
deduction net of VAT if applicable, shall be
included in their gross sales receipts for tax
purposes and shall be subject to proper
documentation and to the provisions of the
National Internal Revenue Code, as
amended.200

197 Sec 46 (c), RA 7277 199 Sec 8 (c), RA 7277

198 Sec 8(b), RA 7277 200 Sec 32, RA 7277, as amended by RA 9442

51
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

EMPLOYER-EMPLOYEE RELATIONSHIP

Employer, defined
One who employs the services of others; One for whom
employees work and who pays their wage or salaries.

NOTE: A juridical entity is considered as an employer,

whether registered or unregistered. As provided under Art.
219 (e) of the Labor Code, as amended, an employer is any
person acting in the interest of an employer, directly or
indirectly. The law does not require an employer (in this case,
an association) to be registered before he may come within the
purview of the Labor Code. 201

Employee, defined
One who is engaged in the service of another; who performs
services for another; who works for salary or wages.

His work is subject to control of the employer not only as to

the result but the matter and means of doing it.

An employee-employer relationship is not a condition sine

qua non before the Labor Code applies. It depends on what
kind of issues is involved. When one speaks of employments
benefits or of unionization, EE-ER relationship is a requisite.
When the issue is an indirect employer’s liability, or illegal
recruitment, or misuse of POEA license, there is no EE-ER
relationship between the complainant and the respondent,

POST
and yet the pertinent Labor Code provisions may be invoked.
(Azucena, p. 6)

TESTS TO DETERMINE RELATIONSHIP

EMPLOYMENT Four-fold test

The existence of an employer-employee relationship is

ultimately a question of fact. Four elements must be
considered to determine the existence of employer-employee
relationship:
1. Selection and engagement of the employees
2. Payment of wages
3. Power of dismissal
4. Power to control the employees conduct in relation
to his work,

The control test is the most crucial indication of the existence

of an employer-employee relationship.202

Power of control refers to the existence of the power and not the
actual exercise thereof.

The most important is the employer’s control of the

employee’s conduct, not only as to the results of the work to be
done, but also as to the means and methods to accomplish.

NOTE: RULES AS GUIDELINES vs. RULES AS CONTROL:

The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which
address both the result and the means used to achieve it.203

Decided Cases where there is EE-ER Relationship:

201 Orlando Farm Works vs. NLRC, 1998 203 Insurance Life Assurance Co., Ltd. vs NLRC
202 The Manila Hotel Corp vs. NLRC, 2000

52
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

1. Between jeepney owners/operators and jeepney drivers The proper standard of economic dependence is whether the
[National Labor Union vs. Dinglasan, 1956]; worker is dependent on the alleged employer for his continued
2. Between bus owner/operator and bus conductor [Doce employment in that line of business.
vs. Workmen’s Compensation Commission, 1958]
3. Between auto-calesa owner/operator and driver Payment of PAG-IBIG Fund contributions;
[Citizens’ League of Freeworkers vs. Abbas, 1966] payment/remittance of contributions to the State Insurance
4. Between taxi owners/operators and taxi drivers. Fund; Deduction of withholding tax; and
[Martinez vs. NLRC, 1977]; Deduction/remittance of SSS contributions are proof of
5. Between barbershop owner and barbers and manicurists employment.
[Corporal Sr. v. NLRC, 2000];
6. Between fishing enterprise and fishermen-crew Mode of compensation is not a test for the existence of
members whose fishing activity is scheduled by the employer-employee relationship.
former [Ruga v. NLRC, 1990]204;
7. Between an insurance corporation and an insurance KINDS OF EMPLOYMENT
agent [Tongko vs Manulife Phils Inc.] 205;
Probationary Employee
Two-tiered test
Probationary employee, defined
First Tier: Control Test - the putative employer’s power to One who is under observation by an employer to determine
control the employee with respect to the means and methods whether he is qualified for permanent employment.
by which the work is to be accomplished; and (Azucena)

Second Tier: Economic Reality Test - the underlying
economic realities of the activity or relationship. Existing
economic conditions between the parties are used to
determine whether employer-employee relationship exists.
This is resorted to when there is serious doubt as to the
relationship of the employee with the employer.
Purpose
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.
The determination of the relationship between the employer
and employee depends upon the circumstances of the whole
economic activity, such as:
1. The extent to which the services performed are an
integral part of the employer’s business;
2. The extent of the worker’s investment in equipment and
facilities;
3. The nature and degree of control exercised by the
employer;
4. The worker’s opportunity for profit and loss;
5. The amount of initiative, skill, judgment or foresight
required for the success of the claimed independent
enterprise;
6. The permanency and duration of the relationship
between the worker and the employer; and
7. The degree of dependency of the worker upon the
employer for his continued employment in that line of
business.
One who is on trial by an employer during which the
employer determines whether or not he is qualified for
permanent employment. 206
General rule:
Probationary employment shall not exceed six (6) months
(Art. 296, LC)
If an employee is allowed to work after a probationary period,
he shall be considered a regular employee. (Art. 296, LC)
Exception:
1. Covered by an apprenticeship agreement
stipulating a longer period (Art. 296 [281], LC)
2. Voluntary agreement of parties
3. The employer gives the employee a second chance
to pass the standards set207
4. When a longer period is required and established
by company policy
Termination of probationary employment
1. Just / authorized cause (Art. 296, LC)
2. When employee fails to qualify as a regular
employee in accordance with reasonable standards
made known by the employer to the employee at
the time of his engagement
NOTE: In all cases of probationary employment, the
employer shall make known to the employee the standards
under which he will qualify as a regular employee at the time
of his engagement. Where no standards are made known to
the employee at that time, he shall be deemed a regular
employee. 208
Probationary employees may be dismissed before end of the
probationary period. (Azucena). Termination, to be valid,
must be done before the lapse of the probationary period.209

204As distinguished from a “joint fishing venture” in Pajarillo vs. SSS, 1966 206 International Catholic Migration Comm. vs. NLRC
205As distinguished from a subsequent management contract which superseded a 207 Mariwasa Manufacturing vs. Leogardo
contract of agency between the insurance corporation and insurance agent in Great 208 Aberdeen Court, Inc. vs. Agustin
Pacific Life Assurance Corporation v. National Labor Relations Commission 209 Pasamba vs. NLRC

(1990) and Insular Life Assurance Co., Ltd. v. National Labor Relations
Commission (1998).

53
Lasallian Commission on Bar Operations 2018
LABOR LAW
In the case of teachers, the legal requisites for acquisition of
permanent employment, are as follows:
1. The teacher is a full-time teacher;
2. The teacher must have rendered three consecutive
years of service; and
3. Such service must have been satisfactory.210
Full time teachers who have rendered three consecutive years
of satisfactory services shall be considered permanent.211
Under the Manual of Regulations
A full time teacher is one whose total working time is devoted
to the school, has no other regular remunerative employment,
and is paid on a regular monthly basis regardless of the
number of teaching hours. In college, the normal teaching
load of a full-time instructor shall be eighteen (18) hours a
month.212
Regular Employee
Regular employee, defined
One who is engaged to perform tasks usually necessary or
desirable to the usual trade or business of the employer.
Test
Primary standard to determine a regular employment is the
reasonable connection between the particular activity
performed by the employee in relation to the usual business
or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the
employer.213
The connection can be determined by considering the nature
of work performed and its relation to the scheme of the
particular business or trade in its entirety. The repeated and
continuing need for the performance of the job has been
deemed sufficient evidence of the necessity, if not
indispensability of the activity to the business.
If the work is an integral part of the business and the worker
does not furnish an independent business or professional
service, the work is presumed to be a regular employment.
NOTE: Employees may become regular by the nature of their
work; by the period of their service (in the case of casual
employees); and by probationary employment. (Azucena)
Employees are deemed regular if they have been engaged to
perform activities which are usually necessary or desirable in
the usual business or trade of the employer (Art. 295, LC)
Casual employees are those who, after one year of service,
become regular. The employee is only regular for that work
activity for which he is hired. His employment may be on-
and-off, but every time the particular work activity occurs, he
is the one to be rehired. (Art. 295, LC; Azucena)
Project Employee
Project employee, defined
One whose employment has been fixed for a specific project
210 UST vs. NLRC
211 Mercado, et al. vs. NLRC
212 UST vs. NLRC
Lasallian Commission on Bar Operations 2018
LABOR LAW
or undertaking, the completion or termination of which has
been determined at the time of the engagement of the
employee… (Art. 280, LC; Azucena)
Project employment is subject to two types of activities: those
particular job or undertaking that is within the regular or
usual business of the employer company, and those without.
Whichever type they are, employees must be designated as
“project employees”; are assigned to a specific project; and
such project must be effected and implemented in good faith.
(Azucena)
Test:
Whether or not the “project employees” were assigned to
carry out a specific project or undertaking, the duration (and
scope) of which were specified at the time the employees were
engaged for that project. 214
NOTE: Day Certain Rule is when the project employment
does not end at an exact date but upon the completion of the
project.
If there is a continuous rehiring for the same tasks or nature
of tasks under different projects, which tasks are vital,
necessary, and indispensable to the usual business or trade of
the employer, an employee who was initially hired as a
project employee may eventually acquire regular status. 215
Seasonal Employee
Seasonal employee, defined
One whose work or services performed is seasonal in nature
and the employment is for the duration of the season (Art. 295,
LC)
Passage of time does not make a seasonal employee regular
or permanent.
Regular seasonal employees are those called to work from
time to time. The nature of their relationship with the
employer is such that during off season they are temporarily
laid off. They are not separated from service but are merely
considered on leave of absence without pay until they are
reemployed. As such, they are considered as regular
employees. (Manila Hotel Co. v. CIR et. al.) Workers who have
performed the same tasks every season for several years are
considered regular employees for their respective tasks.
(Hacienda Fatima v. National Federation of Sugarcane Workers-
Food and General Trade)
Casual Employee
Casual employee, defined
Where an employee is engaged to perform a job, work, or
service which is merely incidental to the business of the
employer; and such job, work or service is for a definite
period made known to the employee at the time of
engagement.
If employee has rendered at least 1 year of service, whether
such service is continuous or broken, he is considered a
213 De Leon vs. NLRC
214 ALU-TCP, et. al. vs. NLRC
215 Maraguinot vs. NLRC
54
LABOR LAW
regular employee with respect to the activity which he is
employed.
Fixed-Term Employee
Fixed-term employee, defined
Fixed-term employment is not defined under the Labor Code
as it was repealed. The Civil Code however recognizes its
validity. Under the Civil Code, fixed-term employment
contracts are not limited, as they are under present Labor
Code, to those by nature seasonal or for specific projects with
predetermined dates of completion. It also includes those to
which the parties by free choice have assigned a specific date
of termination.216
A fixed-term employment is valid provided it is entered into
by the parties without any force, duress, or improper pressure
being brought to bear upon either party, particularly the
employee, and absent any other circumstance vitiating
consent. It must also appear that the employer and the
employee dealt with each other on more or less equal terms
with no moral dominance exercised by the former or the
latter. (Id)
Fixed-term employees are deemed regular because: (a) the
nature of their work is necessary or desirable in the principal
business of the employer; and (2) they enjoy security of
tenure. They are however not permanent for their work will
exist only for a certain period of time. (Azucena)
SUBCONTRACTING VERSUS LABOR-ONLY
CONTRACTING
Contracting or Sub-contracting
Defined as an arrangement whereby a principal agrees to put
out or farm out with a contractor or subcontractor the
performance or completion of a specific job, work, or service
within a definite or predetermined period, regardless of
whether such job, work, or service is to be performed or
completed within or outside the premises of the principal.217
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. (Art. 106, LC)
It “is an arrangement where the contractor or subcontractor
merely recruits, supplies, or places workers to perform a job,
work, or service for a principal.218 The elements enumerated
under Sec. 5 of D.O. No. 174-17 must be present.
Indirect Employer
216 Brent School, Inc. vs. Zamora
217 Section 3[c], D.O. No. 174-17, 2017
218 Polyfoam-RGC International Corp. v. Concepcion
Lasallian Commission on Bar Operations 2018
LABOR LAW
Any person, partnership, association or corporation which,
not being an employer, contracts with an independent
contractor for the performance of any work, task, job or
project. (Art. 107, LC)
Independent Contractor
They are those who undertake ‘job contracting’. They exercise
independent employment, contracting to do a piece of work
according to their own methods and without being subject to
control of their employer except as to the result of their
work.219
LEGITIMATE CONTRACTING OR SUBCONTRACTING
MUST HAVE: 220
1. Registered in accordance with the rules and carries a
distinct and independent business;
2. Undertakes to perform a job, work or service on its own
responsibility, according to its own manner and method,
and free from control and direction of the principal in all
matters connected with the performance of the work
except as to the results therof;
3. The contractor has substantial capital and/or
investment
The Service Agreement ensures compliance with all the rights
and benefits under Labor Laws. Assure that the contractual
employees are entitled to all labor and occupational safety
and health standards, free to exercise right to self-
organization, security of tenure and social and welfare
benefits.
SEVERAL FACTORS THAT MAY BE CONSIDERED IN
DETERMINING THE EXISTENCE OF INDEPENDENT
CONTRACTOR RELATIONSHIP:221
1. whether the contractor is carrying on an
independent business;
2. the nature and extent of work;
3. the skill required;
4. the term and duration of the relationship;
5. the right to assign the performance of specified
pieces of work;
6. the control and supervision of the workers;
7. The power of the employer with respect to the
hiring, firing and payment of workers of the
contractor;
8. The control of the premises;
9. The duty to supply premises, tools, appliances,
materials and labor;
The mode and manner and terms of payment.
Job Contracting Labor-Only Contracting
The principal is The principal is
considered by the law as considered the direct
an indirect employer of employer of the
the contractor’s contractor’s employees;
employees;
The relationship between the principal and the
contractor is governed by the Civil Code and
pertinent commercial laws;
And if it is labor-only contracting, there arises a
principal-agent relationship between them; thus, the
219 Wack Wack Gold v NLRC (2005)
220 Sec. 4, Department Order No. 18-A, Series of 2011
221 Vinoya v NLRC (2000)
55
LABOR LAW LABOR LAW

principal is responsible to the employees of the shorter than the term of the Service Agreement,
contractor as if such employees had been directly unless the contract is divisible into phases for
employed by the principal employer222 which substantially different skills are required
Permissible Prohibited by law and this is made known to the employee at the time
There is substantial There is no substantial of engagement;
capital or investment capital or investment j. Such other practices, schemes or employment
arrangement designed to circumvent the right of
EE-ER relationship exists EE-ER relationship workers to security of tenure.
between for a limited exists for a
purpose, that is, to comprehensive purpose, Elements of Contracting or Subcontracting
ensure that the i.e. to prevent a
employees are paid their circumvention of labor Under Sec. 8 of D.O. No. 174-17 (2017), contracting or
wages laws. subcontracting shall only be allowed if the contractor or
subcontractor:
A presumption arises A presumption arises a.) Is engaged in a distinct and independent business
that it is job contracting that it is a labor-only and undertakes to perform the job or work on its
if it is registered with contractor if it is not own responsibility, according to its own manner
DOLE pursuant to D.O. registered with the and method;
18-A, 2011. But such DOLE pursuant to D.O. b.) Has substantial capital to carry out the job farmed
presumption may be 18-a, 2011. Such out by the principal on his account, manner and
refuted. presumption may be method, investment in the form of tools,
refuted. equipment, machinery and supervision;
c.) Is free from control and/or direction of the
PROHIBITIONS principal in all matters connected with the
performance of the work except as to the result
(1) Labor-only contracting223 thereto; and
(2) Arrangements that violate public policy224 – they are not d.) The Service Agreement ensures compliance with all
labor-only contracting but are nonetheless are prohibited the rights and benefits for all employees of the
because they contravene public policy. contractor or subcontractor under the labor laws.
a. When the principal farms out work to a “Cabo”;
b. Contracting out of job or work through an in-house Under D.O. No. 174-17 (2017), Labor-only contracting, which
agency; is totally prohibited, refers to an arrangement where:
c. Contracting out of job or work through an in-house a.) i. The contractor or subcontractor does not have
cooperative which merely supplies workers to the substantial capital, OR
principal; ii. The contractor or subcontractor does not have
d. Contracting out of a job or work by reason of a investments in the form of tools, equipment,
strike or lockout whether actual or imminent; machineries, supervision, work premises, among
e. Contracting out of a job or work being performed others, and
by union members and such will interfere with, iii. The contractor’s or subcontractor’s employees
restrain or coerce employees in the exercise of their recruited and placed are performing activities
rights to self-organization as provided in Art. 259 which are directly related to the main business
of the Labor Code, as amended; operation of the principal;
f. Requiring the contractor’s/subcontractor’s
employees to perform functions which are OR
currently being performed by the regular
employees of the principal; b.) The contractor or subcontractor does not exercise
g. Requiring the contractor’s/subcontractor’s the right to control over the performance of the
employees to sign, as a precondition to work of the employee
employment or continued employment, an
antedated resignation letter; a blank payroll; a Substantial Capital, defined
waiver of labor standards including minimum A contractor’s paid-up capital stocks/shares must at least
wages and social or welfare benefits; or a quitclaim P5,000,000 in the case of corporations, partnerships and
releasing the principal or contractor from liability cooperatives; in the case of single proprietor ship, a net worth
as to payment of future claims; or require the of at least P5,000,000.225
employee to become a member of a cooperative;
h. Repeated hiring by the contractor/subcontractor of Trilateral Relationship
the employees under an employment contract of
short duration; A trilateral relationship exists when there are:
i. Requiring employees under a 1. Principal – decides to farm out a job or service to a
contracting/subcontracting arrangement to sign a contractor or subcontractor;
contract fixing the period of employment to a term 2. Contractor/Subcontractor – has the capacity to
independently undertake the performance of the job,

222 Aliviado vs. P&G, 2010 224 Sec. 6, D.O. No. 174-17
223 Sec. 5, D.O. No. 174-17 225 Sec. 3, D.O. No. 174-17, 2017

56
Lasallian Commission on Bar Operations 2018
LABOR LAW
work, or service; and
3. Workers – those engaged by the
contractor/subcontractor to accomplish the job, work, or
service
NOTE: The relationship between the principal and the
contractor is governed by the Civil Code and pertinent
commercial laws.
Those of the contractor and his employees are governed by
the Labor Code and special labor laws.
No employer-employee relationship exists between the
principal and the contractor’s employees, because the
contractor is deemed the employer. (Azucena)
Solidary Liability
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. [Art.
109, LC]
In the event that any violation of any provision of the Labor
Code, including the failure to pay wages, there exists a
solidary liability on the part of the principal and the
contractor for purposes of enforcing the provision of the
Labor Code and other social legislation, to the extent of the
work performed under the employment contract. 226
Consequences of labor-only contracting
1. A principal-agent relationship is established between
the principal and the contractor227;
2. The workers supplied by the contractor becomes the
direct employee of the principal228;
3. Thus, an EE-ER relationship arises between the principal
and the employees of the contractor (Labor Code
governs);
4. Consequently, it becomes entitled to the benefits under
the CBA of the principal229;
5. The principal becomes solidarily liable to the employees
of his contractor on their wages and money claims.
TERMINATION OF EMPLOYMENT
BASIC PRINCIPLES IN TERMINATION CASES
Balancing of interest in disciplinary cases
1. Labor’s interests
Worker’s right to labor is recognized by the Constitution
as property right. An employee cannot be deprived of
his work without just cause or due process.
226 Sec.9, D.O. 174-17, 2017
227 Aliviado vs. P&G, 2010
228 Phil. Bank Communication vs. NLRC, 1986
229 Tabas, et al vs. California Manufacturing Company, Inc. et al., 1989
230 Sagales vs. Rustan’s Commercial Corp, 2008
231 Virginia Sugue v Triumph International Phils, Inc., 2009
232 Subject to the requirements of due process (IRR, Book V, Rule 23, Sec1. Security
of Tenure)
Lasallian Commission on Bar Operations 2018
LABOR LAW
2. Management’s interests
Discipline of employees is a management prerogative.230
The employer cannot be compelled to continue to
employ such persons whose continuance in the service
will patently be inimical to his interest.231
Security of Tenure
Security of Tenure, defined
Security of Tenure means the right not to be removed from
one’s job except for a valid reason and through proper
procedure.
In case of regular employment, the employer shall not
terminate the services of an employee.
Exceptions:232
1. When it is for a just cause (Art 297, LC) or
2. When authorized by law (Art 298-299, LC)
The right of employees to security of tenure does not give
them vested rights to their positions to the extent of depriving
management of its prerogative to change their assignments or to
transfer them.233
The employer’s privilege to transfer its employees to different
workstations cannot be used as a subterfuge to rid itself of an
undesirable worker. 234
Nature of right
Security of tenure is a right of paramount value guaranteed by the
Constitution. 235 It stands to reason that a right so highly
ranked as security of tenure should not lightly be denied on
mere speculation.236
Dismissal based on loss of trust and confidence arising from
alleged misconduct of employee is not to be used as a shield
to dismiss an employee arbitrarily.
Termination without just cause entitles a worker to
reinstatement regardless of whether he was accorded due
process.
Termination for a just cause even without procedural due
process, does not warrant reinstatement. The employer incurs
only liability for damages. 237
Coverage
All workers are entitled to security of tenure. (Art XIII, Sec 3,
1987 Constitution)
Confidential and Managerial employees are also entitled to
security of tenure. They cannot be arbitrarily dismissed at any
time, and without cause as reasonably established in an
appropriate investigation.238
Requisites of a Valid Termination239
233 Antonio H. Abad Jr., Compendium on Labor Law (2004), p. 55, as cited in
Mendoza v Rural Bank of Lucban (2004)
234 Veterans Security Agency Inc. vs. Gonzalvo, Jr.
235 Art 11, Sec 9, 1987 Constitution
236 Llosa Tan vs. Silahis International Hotel, 1990
237 Alhambra Industries vs. NLRC
238 Inter Oriental Maritime Enterprises, Inc. vs. NLRC, 1994
239 Shoemart vs. NLRC, 1989
57
LABOR LAW LABOR LAW

1. Substantive due process The bona-fide suspension of the operation of a business or

Legality of the act of dismissal as provided under Articles undertaking for a period not exceeding six (6) months, or the
297 to 299 of the Labor Code. fulfillment by the employee of a military or civic duty shall
not terminate employment. In all such cases, the employer
2. Procedural due process shall reinstate the employee to his former position without
Legality in the manner of dismissal with due observance loss of seniority rights if he indicates his desire to resume his
of the procedural requirements. work not later than one (1) month from the resumption of
operations of his employer or from his relief from the
Measure of Penalty military or civic duty.
Employee’s length of service is taken into consideration in
imposing the penalty to be meted an erring employee.240 But
if it is to be regarded as a justifying circumstance in
moderating the penalty of dismissal, it will actually become a
prize for disloyalty, perverting the meaning of social justice
and undermining the efforts of labor to cleanse its ranks of all
undesirables.241

The penalty must be commensurate with the act, conduct or RETIREMENT

omission imputed to the employee and must be imposed in [RA 7641: Retirement Pay Law]
connection with the disciplinary authority of the employer.242
Resignation and constructive dismissal, defined
While the employer has the inherent right to discipline,
including that of dismissing its employees, this prerogative is Resignation Constructive Dismissal
subject to the regulation by the State in the exercise of its Employee, who finds Employee involuntarily
police power. himself in a situation in resigns due to the harsh,
which he believes that hostile, and unfavorable
personal reasons cannot be conditions set by the
sacrificed in favor of the employer. It arises when
TERMINATION BY EMPLOYEE exigency of the service; there is clear
thus he has no other choice discrimination,
RESIGNATION but to disassociate himself insensibility, or disdain by
from his employment. 247 an employer and this
Resignation, defined becomes unbearable to the
Voluntary resignation is the act of an employee, who finds employee. 248
himself in a situation in which he believes that personal reasons
No ill will on the part of There is ill will on the part
cannot be sacrificed in favor of the exigency of the service; thus, he
management of management which
has no other choice but to disassociate himself from his
prompted discrimination
employment.243
against employee.
Voluntary Involuntary
No illegal dismissal unless Amounts to illegal
If resignation is not voluntary, it can be deemed to be
involuntary dismissal
constructive dismissal.244
Employee is generally not Employee is entitled to
entitled to separation pay separation pay
Voluntary resignation and illegal dismissal are adversely
opposed modes of terminating employment relations, in that
the presence of one precludes that of the other245 If resignation is not voluntary, it can be deemed to be
constructive dismissal.249
Not entitled to separation pay246
An employee who voluntarily resigns is not entitled to Voluntary resignation and illegal dismissal are adversely
separation pay. opposed modes of terminating employment relations, in that
the presence of one precludes that of the other250
Exceptions:
1. When otherwise stipulated in the employment Constructive Dismissal
contract
2. Stipulated in the CBA Constructive dismissal, defined
3. Sanction by established employer practice and Quitting because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving
policy.
demotion in rank and a diminution in pay. 251
Art. 301. When employment not deemed terminated.

240 Inter Oriental Maritime Enterprises, Inc. vs. NLRC, 1994 246 CJC Trading, Inc. vs. NLRC, 1995
241 Bago vs. NLRC, 2007 247 Alfaro vs. CA, 2001
242 Sagales vs. Rustan’s Commercial Corporation, 2008 248 Gilles vs. CA, 2009
243 Alfaro v CA, 2001 249Abad, Jr, Antonio H. (2008). The Law on Labor Standards. Rex Printing
244 Abad, Jr, Antonio H. (2008). The Law on Labor Standards. Rex Printing Company, Inc.
Company, Inc. 250 Alfaro vs. CA, 2001
245 Alfaro vs. CA, 2001 251 Jo Cinema Corporation vs. Abellana, 2001

58
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

May also involve act of clear discrimination, insensibility, or

disdain by an employer that it becomes so unbearable on the
part of the employee that it could foreclose any choice by him
except forego his continued employment. 252

Test of constructive dismissal

Whether a reasonable person in the employee's position would have
felt compelled to give up his position under the circumstances.253

Resignation contemplates a voluntary act; thus, an employee

who is forced to relinquish his position due to the employer's
unfair or unreasonable treatment is deemed to have been
illegally terminated or discharged.

Employer’s sudden, arbitrary and unfounded adoption of the

two-day work scheme which greatly reduced petitioners’
salaries renders it liable for constructive dismissal.254

Demotion is allowed as a penalty. The appropriateness depends

on factors such as employer’s tolerance of or laxity in past
similar offences, employee’s years of service and record, and
even the amount of money or value involved.
TERMINATION BY EMPLOYER
JUST CAUSES
Just causes refer to those instances enumerated under Article
297 of the Labor Code, as amended. These are causes directly
attributable to the fault or negligence of the employee. 255
An employee terminated by reason of just causes is not
entitled to separation pay except as expressly provided for in
the company policy or CBA. 256
Bar 1996, 2001
Art. 297. Termination by employer.
An employer may terminate an employment for any of the
following causes:
a. Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
b. Gross and habitual neglect by the employee of his
duties;
c. Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
d. Commission of a crime or offense by the employee
against the person of his employer or any
immediate member of his family or his duly
authorized representatives; and
e. Other causes analogous to the foregoing.
Serious Misconduct or Willful Disobedience
Bar 1995, 1996
SERIOUS MISCONDUCT
Misconduct
Improper or wrong conduct. It is 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. 257
Requisites for serious misconduct 258
1. Conduct must be serious
2. Must relate to the performance of the employee’s
duties
3. Must show that the employee has become unfit to
continue working for the employer
Examples of Serious Misconduct justifying termination
1. Falsification of time records259
2. Immorality. Teachers must adhere to the exacting
standards of morality and decency. A teacher, both
in his official and personal conduct, must display
exemplary behavior.260
3. Moonlighting. It is a valid ground for dismissal for
unauthorized use of company time. 261
4. Theft of company property262
5. Drug abuse. Supreme Court has taken judicial
notice of scientific findings that drug abuse can
damage the mental faculties of the user. 263
Bar 1995, 1999, 2003
WILLFUL DISOBEDIENCE

Requisites of Willful Disobedience

1. Employee’s assailed conduct must have been willful
or intentional,
2. The willfulness being characterized by a “wrongful
and perverse attitude”;

252 Hyatt Taxi Services, Inc vS. Catinoy, 2002; Gilles v CA, 2009 258 Pastor Austria vs. NLRC, 1999
253 Gilles vs. CA, GR 149273, 2009; 259 Felix vs. Enertech Systems Industries, Inc., 2001
254 La Rosa vs. Ambassador Hotel, 2009 260 Santos, Jr vs. NLRC, 1998
255 Dep. Order No. 147-15 (2015) 261 Capitol Wireless vs. Balagot, 2007
256 Id. 262 Caltex Phils, Inc vs. Agad, 2010
257 Pastor Austria vs. NLRC, 1999 263 Bughaw Jr vs. Treasure Island, 2008

59
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

3. The order violated must have been reasonable, lawful, Requisites of Abandonment 270
made known to the employee and a. Failure to report for work or absence without
4. Order must pertain to the duties which he had been valid or justifiable reason
engaged to discharge. b. Clear intention to sever the employer-
employee relationship.

Gross and Habitual Neglect of Duties The burden of proof to show that there was unjustified
refusal to go back to work rests on the employer. 271
Gross negligence, defined
Want or absence of or failure to exercise slight care of The filing by an employee of a complaint for illegal
diligence, or the entire absence of care. It evinces a dismissal is proof of her desire to return to work, thus
thoughtless disregard of consequences without exerting any negating the employer’s charge of abandonment. 272
effort to avoid them.
Employer must serve a memo or show-cause letter to the
Requisites of neglect of duty employee at her last known address requiring her to
1. Gross neglect of duty report for work or to explain her absence, with a warning
2. Neglect must be habitual that her failure to report would be construed as
abandonment of work. 273
Gross Negligence, Habitual Neglect and Fraud264
Employer should serve the employee a notice of
Fraud and termination as required by law. 274
Gross
Habitual neglect willful neglect
negligence
of duties 2. Habitual absenteeism
Imply bad faith Repeated and habitual infractions, committed despite
on the part of the several warnings, constitute gross misconduct. Habitual
Repeated failure employee in absenteeism without leave constitute gross negligence
Want of care in to perform one’s failing to and is sufficient to justify termination of an employee.275
the duties over a perform his job
performance of period of time, to the detriment Employee’s infractions are worse than inefficiency. They
one’s duties depending upon of the employer border on dishonesty constituting serious misconduct.276
the circumstances and the
employer’s A series of irregularities when put together may
business constitute serious misconduct. We also held that gross
neglect of duty becomes serious in character due to
Bar 1999
frequency of instances. There can be no good faith in
To be a valid ground for dismissal, neglect must be both
intentionally and habitually incurring inexcusable
gross and habitual. 265 However, if gross negligence, though
not habitual, results to loss of trust and confidence, such as absences.277
when the resultant damage claims the life of a child,
dismissal is valid and legal.266 Loss of Trust and Confidence /Fraud or Willful Breach of
Trust
A single or isolated act of negligence do not constitute a just
cause for the dismissal of the employee. 267 Fraud, defined
Deemed to comprise anything calculated to deceive,
An unsatisfactory rating can be a just cause for dismissal only including all acts, omissions, and concealment involving a
if it amounts to gross and habitual neglect of duties. The fact breach of legal or equitable duty, trust or confidences justly
that an employee’s performance is found to be poor or reposed, resulting in damage to another, or by which an
unsatisfactory does not necessarily mean that the employee is undue and unconscientious advantage is taken of another.
grossly and habitually negligent of his duties. 268 Deceit is specie of fraud.278

Examples of Gross of Habitual neglect of duties justifying Requisites of willful breach of trust leading to loss of
termination trust and confidence 279
1. Abandonment of work 1. Breach must be willful and not ordinary breach280
The deliberate and unjustified refusal of an employee to 2. Employee hold a position of trust and confidence
resume his employment. It is a form of neglect of duty, 3. Must be in relation to the work performed
and hence, a just cause for termination by employer.269 4. There must exist substantial evidence, and should
not be based on mere surmises, speculations and

264 JGB and Associates, Inc. vs. NLRC, 1996
265 National Sugar vs. NLRC, 1998
266 School of the Holy Spirit of Quezon City vs. Taguiam, 2008
267 National Bookstore, Inc. vs. CA, 2000
268 Eastern Overseas Employment Center, Inc. v Bea, 2005
269 Abad
270 Padilla Machine Shop vs. Javilgas, 2008
271 Tacloban Far East Marketing Corporation vs. CA, 2009
272 Henlin Panay Company vs. NLRC, 2009
273 Henlin Panay Company vs. NLRC, 2009
274 Henlin Panay Company vs. NLRC, 2009
275 Challenge Socks Corporation vs. CA, 2005
276 Arseno Quiambao vs. Manila Electric Company, 2009
277 Quiambao vs. Manila Electric Co., 2009
278 Yolanda Garcia vs. People, 1999
279 Roberto Gonzales vs. NLRC
280 Salas vs. Aboitiz One, Inc., 2008

60
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

conjectures It would be unjust and inequitable to compel an employer to

Breach must be willful and not ordinary breach281
The breach is willful if it is done intentionally, knowingly, and
purposely without justifiable excuse.
There must be a cause for the loss of confidence. It must rest
on some basis which must be convincingly established. An
employee must not be dismissed on mere presumptions or
suppositions.282
continue with the employment of a person who occupies a
managerial and sensitive position despite loss of trust and
confidence
The relationship must be considered seriously strained,
foreclosing the remedy of reinstatement. 289
Trust in an employee, once lost is difficult, if not impossible
to regain.290

Employee holds a position of trust and confidence Strained Relation rule does not apply to ULP cases where the
A position of trust and confidence has been defined as one employee was dismissed for union activities.291
where a person is entrusted with confidence on delicate
matters, or with the custody, handling, or care and protection Penalty of dismissal for breach of trust cannot be mitigated by
of the employer’s property and/or fund. 283 length of service.292 The longer an employee stays in the
service of the company, the greater is his responsibility for
knowledge and compliance with the norms and conduct and
General rule: dismissal on the ground of loss of trust and
the code of discipline of the company. 293
confidence is restricted to Managerial employees.284
Exception: it also applies to rank-and-file employees when
Requirement of Substantial evidence
position is reposed with trust and confidence. 285 (Cashiers,
Proof beyond reasonable doubt of employee’s misconduct is
auditors, property custodians)
not required. It is sufficient that employer has reasonable
grounds to believe that the employee is responsible for the
Positions of trust and confidence who may be terminated on
misconduct which renders him unworthy of the trust and
the ground of Fraud or Willful Breach of Trust and Loss of
confidence demanded of his position.294
Confidence 286
1. Managerial and Employees
If there is sufficient evidence to show that the employee
2. Supervisory Employees
occupying a position of trust and confidence is guilty of a
3. Fiduciary Rank and File Employees
breach of trust, or that his employer has ample reason to
distrust him, the labor tribunal cannot justly deny the employer
Rules of dismissal for managerial employees are different
the authority to dismiss such employee.295
from those governing ordinary employees. 287
Department Order 147-15 (2015) makes a distinction between
Managerial and Rank and file
Fraud or Willful Breach of Trust and Loss of Confidence as a just
confidential employees cause for the termination by an employer.
employees
Employers are Termination The requisites of Loss of Confidence:
generally allowed based on the 1. There must be an act, omission, or concealment;
a wider latitude of ground of loss 2. The act, omission or concealment justifies the loss
of trust and confidence of the employer to the
discretion in of trust and
employee;
terminating confidence
3. The employee concerned must be holding a
managerial requires proof position of trust and confidence;
personnel, or those of involvement 4. The loss of trust and confidence should not be
similar rank, in the events in simulated;
performing question288 5. It should not be used as a subterfuge for causes
functions which, which are improper, illegal, or unjustified; and
6. It must be genuine and not mere afterthought to
by their nature,
justify an earlier action taken in bad faith.
require the
employer’s full Commission of a Crime
trust and
confidence Requisites
1. Employee committed an act or omission
Strained Relation Rule punishable/prohibited by law. 296
2. Commission of a crime should be made against:

281 Salas vs. Aboitiz One, Inc., 2008
282 Nozario Austria vs. NLRC, 1991
283 Eats-cetera Food Services Outlet vs. Letran, 2009
284 Fujitsu Computer Products Corp vs. CA; 2005
285 Coca Cola vs. NLRC, 1989
286 Chan, 2017.
287 Mania Midtown Commercial Corporation vs. NUHRAIN, 1988
288 Mania Midtown Commercial Corporation vs. NUHRAIN, 1988
289 Aurelio vs. NLRC, 1993
290 Bago vs. NLRC, Standard Insurance Co. Inc., 2007
291 Gubac vs. NLRC, 1990
292 PLDT vs. NLRC, 1988
293 Citybank N.A. vs. Gatchalian, 1995
294 Ocean Terminal Services, Inc. vs. NLRC, 1991
295 Eats-cetera Food Services Outlet vs. Letran, 2009
296 Dep. Order No. 147-15 (2015).

61
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

a. The employer himself, 282(e). His obesity may not be unintended, but is
b. His duly authorized representative,297 or nonetheless voluntary.303
c. Any immediate member of his family ( Art
11 (2), RPC) Others
i. Spouse
ii. Ascendants Courtesy resignations were utilized in government
iii. Descendants reorganization.304
iv. Legitimate, natural or adopted siblings
of the employer or of his relative by Change of ownership is a management prerogative. Where
affinity or consanguinity within the 4th such transfer of ownership is in good faith, the transferee is
civil degree under no legal duty to absorb the transferor employees. The
most that the transferee may do is to give preference to the
Termination by employer on the basis of commission of qualified separated employees in the filling of vacancies in the
a crime is an act of self-defense impelled by the natural facilities of the purchaser.305
instinct of self-preservation.
Fixed-term employment. If the contract is for a fixed term and
The acquittal in a criminal prosecution involving the employee is dismissed without just cause, he is entitled to
misconduct is not binding and conclusive upon a labor the payment of his salaries corresponding to the unexpired
tribunal.298 Conviction of an employee in a criminal case portion of the employment contract. 306
is not indispensable to warrant his dismissal by his
employer.299 Previous offenses may be used as valid justification for
dismissal from work only if they are related to the subsequent
Analogous Cases infraction-basis of the termination of employment. Previous
infractions, in other words, may be used if they have a bearing
The act or omission must be voluntary and/or willful on the on the proximate offense warranting dismissal.307
part of the employees. 300
Transfer
Examples of Analogous causes justifying termination
The transfer of employees is a management prerogative subject
1. Attitude problem is a valid ground for termination.301 only to limitations found in law, collective bargaining
agreement, and general principles of fair play and justice.308
An employee who cannot get along with his co-
employees is detrimental to the company for he can An employee’s right to security of tenure does not give him such
upset and strain the working environment. Thus a vested right in his position as would deprive the company of
management has the prerogative to take the necessary its prerogative to change his assignment or transfer him
action to correct the situation and protect its where he will be most useful.309
organization.
The objection to the transfer being grounded solely upon the
It is analogous to loss of trust and confidence that must be duly personal inconvenience or hardship that will be caused to the
proved by the employer. employee by reason of the transfer is not a valid reason to
disobey an order of transfer. Employee may be dismissed for
2. Stealing the wallet of a co-employee cannot be a ground willful disobedience.310
for dismissal under serious misconduct because it is not
work-related. But the employee can be validly dismissed Transfer as valid management prerogative and
for cause analogous to serious misconduct.302 transfer as constructive dismissal311
Valid management
A cause analogous to serious misconduct is a voluntary Constructive dismissal
prerogative
and/or willful act or omission attesting to an employee's No demotion in rank or When continued employment
moral depravity. diminution of salary, is rendered impossible,
benefits, and other unreasonable or unlikely;
Theft committed by an employee against a person other privileges, and the action is When there is a demotion in
than his employer, if proven by substantial evidence, is not motivated by rank and/or a diminution in
a cause analogous to serious misconduct. discrimination, made in pay; or
bad faith, or effected as a When a clear discrimination,
3. Obesity of a flight attendant, when the airline company form of punishment or insensibility or disdain by an
constituted a continuing qualification of an employee to demotion without employer becomes
keep the job, is a ground for dismissal under Art sufficient cause. unbearable to the employee.

297 Chan, 2017 305 Manlimos vs. NLRC , 1995

298 Starlight Plastic Industrial Corporation vs. NLRC, 1989
299 Mercury Drug Corp. vs. NLRC, 1989
300 John Hancock Life Insurance Company vs. Davis, 2008
301 Heavylift Manila, Inc vs. CA, 2005
302 John Hancock Life Insurance Corporation vs. Davis, 2008
303 Yrasuegui vs. PAL, 2008
304 Batongbacal vs. Associated Bank, 1988
306 Medenilla vs. PVB, 2000
307 Mc Donald’s vs. Alba, 2008; La Carlota Planters Association v NLRC, 1998
308 Aguanza vs. Asian Termminal Inc, 2009
309 PLDT vs. Paguio, 2005
310 Herida vs. F&C Pawnshop and Jewelry Store , 2009
311 Aguanza vs. Asian Termminal Inc, 2009

62
Lasallian Commission on Bar Operations 2018
LABOR LAW
Promotion
Promotion, defined
The advancement from one position to another with an
increase in duties and responsibilities as authorized by law,
and usually accompanied by an increase in salary.312
For there to be a promotion is that there must be
“advancement from one position to another” or an upward
vertical movement of the employee’s rank or position. Any
increase in salary should only be considered incidental but
never determinative of whether or not a promotion is
bestowed upon an employee. 313
There is no law that compels an employee to accept a
promotion for the reason that a promotion is in the nature of
a gift or reward, which a person has a right to refuse. 314
Residency Training
Residency or resident physician position in a medical
specialty is never a permanent one. Residency connotes
training and temporary status. It is a step taken by a physician
right after post-graduate internship prior to his recognition as
a specialist or sub specialist in a given field.
The appointment was for a definite and renewable period
which, when it was not renewed, did not involve a dismissal
but an expiration of the petitioner's term. 315
Other Causes of Termination under D.O. 147-15
1. Reasonable and lawful grounds specified under its
company policies
2. Sexual Harassment (which is considered as a
serious misconduct)
3. Causes of termination as provided under the CBA
AUTHORIZED CAUSES
Authorized causes refer to those instances enumerated under
Articles 298 [Closure of Establishment and Reduction of
Personnel] and 299 [Disease as a Ground for Termination] of
the Labor Code, as amended. These are causes brought by the
necessity and exigencies of business, changing economic
conditions and illness of the employees. 316
Bar 2001, 2002
Authorized causes of termination (Art 298, 299 LC)317
1. Labor-saving devices
2. Redundancy
3. Retrenchment
4. Closing or cessation of operation
5. Disease or illness
6. Totality of infractions
Art. 298. Closure of establishment and reduction of
personnel.
312 Phil Telegraph vs. CA, 2003
313 Phil Telegraph vs. CA, 2003
314 Phil Telegraph vs. CA, 2003
315 Felix vs. Buenaseda, 1995
316 Dep. Order No. 147-15 (2015).
Lasallian Commission on Bar Operations 2018
LABOR LAW
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.
Procedural steps required
1. Written notice to DOLE 30 days prior to the
intended date of termination
2. Written notice to employee(s) concerned 30 days
prior to the intended date of termination
3. Payment of separation pay:
For Redundancy and installation of labor saving
devices
1 month pay, or 1 month pay for every year of
service (a fraction of 6 months or more to be
considered 1 year), whichever is higher
For retrenchment, closure not due to serious
business losses, and diseases
1 month pay, or 1 half month pay for every year of
service (a fraction of 6 months or more to be
considered as 1 year) whichever is higher.
For closure or cessation of business operation due
to serious business losses or financial reverses, no
separation pay is required.318
Basis of employer’s right
The law acknowledges the right of every business entity to
reduce its work force if such measure is made necessary or
compelled by economic factors that would otherwise
endanger its stability or existence.319
General rule:
The wisdom or soundness of the decision is not subject to
discretionary review on the part of the Labor Arbiter, the
NLRC and the CA.
Exception:
Such decision may, however, be rejected if the same is found
to be in violation of the law or is arbitrary or malicious.320
Labor-Saving Devices
317 Abad
318 Dep. Order No. 147-15 (2015).
319 Edge Apparel Inc. vs. NLRC, 1998
320 Elleccion vs. NLRC, 2009
63
LABOR LAW
Definition
Contemplates the installation of machinery to effect economy
and efficiency in its method of production. 321 It refers to the
reduction of the number of workers in any workplace made
necessary by the introduction of labor-saving machinery or
devices.322
Where the introduction of labor-saving devices is resorted to
not merely to effect greater efficiency in the operations of the
business but principally because of serious business reverses
and to avert further losses, the device could then verily be
considered one of retrenchment. 323
Redundancy
When position considered redundant
Redundancy exists where the services of an employee are in
excess of what would reasonably be demanded by the actual
requirements of the enterprise.
An employer has no legal obligation to keep on the payroll
employees more than the number needed for the operation of
the business.324
Cause of Redundancy
Redundancy could be a result of a number of factors, such as
the over-hiring of workers, a decrease in the volume of
business or the dropping of a particular line or service
previously manufactured or undertaken by the enterprise.325
Requisites for valid redundancy program326
1. Written notice served on both the employee and the
DOLE at least one month prior to the intended date of
termination;
2. Payment of separation pay equivalent to at least one month
pay or at least one month pay for every year of service,
whichever is higher;
3. good faith in abolishing the redundant position; and
4. Use of fair and reasonable criteria in ascertaining what
positions are to be declared redundant.
Criteria in implementing a redundancy program327
1. Preferred status
2. Efficiency
3. Seniority.
Retrenchment
Bar 1998, 2001, 2003
Retrenchment, defined
An economic ground to reduce the number of employees due
to business losses or reverses which are serious, actual and
real.
Cause of retrenchment
321 Edge Apparel Inc. vs. NLRC, 1998
322 Dep. Order No. 147-15 (2015).
323 Edge Apparel Inc. vs. NLRC, 1998
324 Edge Apparel Inc. vs. NLRC, 1998
325 Edge Apparel Inc. vs. NLRC, 1998; Lowe Inc v CA, 2000
326 Lowe Inc vs. CA, 2000
327 Lowe Inc vs. CA, 2000
Lasallian Commission on Bar Operations 2018
LABOR LAW
Normally resorted to by management during periods of
business reverses and economic difficulties occasioned by
such events as recession, industrial depression, or seasonal
fluctuations.
Retrenchment as a means of last resort
Retrenchment is only a measure of last resort, when other less
drastic means have been tried and found to be inadequate.328
Requirements for valid retrenchment 329
The requirements must be proved by clear and convincing
evidence
1. That retrenchment is reasonably necessary and likely to
prevent business losses which, if already incurred, are
not merely de minimis, but substantial, serious330, actual
and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;
2. Written notice served on both the employee and the
DOLE at least one month prior to the intended date of
termination;
3. Payment of separation pay equivalent to at least one
month pay or at least one month pay for every year of
service, whichever is higher;
4. good faith in exercising management’s prerogative to
retrench employees for the advancement of its interest
and not to defeat or circumvent the employees' right to
security of tenure; and,
5. Use of fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among
the employees, such as status, efficiency, seniority331,
physical fitness, age, and financial hardship for certain
workers.
The fact alone that a mere portion of the business shut down
and not the whole of it does not necessarily remove the
measure within the meaning of Retrenchment. 332
Retrenchment cannot be resorted to once business losses had
already decreased and the business had picked up. 333
Closing or Cessation of Operation
Closure of company may pertain to: 334
1. Complete cessation of business operation
2. Partial cessation of business operation
3. Shut-down of establishment
Closure may be due to:
1. Serious business loss
2. Not due to business loss
Requisites of a valid Closure of business
1. Bona fide closure/cessation of business, i.e., its purpose
is to advance the interest of the employer and not to
defeat or circumvent the rights of employees under the
law or a valid agreement;
328 Flight Attendants & Stewards Association of the Philippines vs. PAL, 2008
329 Flight Attendants & Stewards Association of the Philippines vs. PAL, 2008
330 Metro Construction Inc. vs. Aman, 2009
331 Emcor, Inc vs. Sienes, 2009
332 Edge Apparel Inc. vs. NLRC, 1998
333 PSBA vs. NLRC, 1993
334 Cheniver Deco Print Technics Corp. vs. NLRC, 2000
64
LABOR LAW LABOR LAW

2. Written notice served on both the employee and the of employees, albeit the displacement should not exceed six (6)
DOLE at least one month prior to the intended date of months.336
termination;
The paramount consideration should be the dire exigency of the
Bar 2006 business of the employer that compels it to put some of its
3. Separation pay, in case of closure/cessation of employees temporarily out of work.337
business not due to financial losses, must be equivalent
to ½ month pay for every year of service or one month If the employee was forced to remain without work or
pay, whichever is higher. assignment for a period exceeding six months, then he is in
effect constructively dismissed.338
Effects of closure of business335
Due to NOT due to Bar 2004
serious serious Closure of business done The so-called "floating status" of an employee should last only
business business in bad faith for a legally prescribed period of time. When that "floating
status" of an employee lasts for more than six months, he may
losses losses
be considered to have been illegally dismissed from the
Good faith service.339
Legal Legal Illegal dismissal
No Employee is Employee is In case of installation of labor-saving devices, redundancy,
separation entitled to entitled to and retrenchment, the Last-in, First-Out Rule shall apply
benefits separation reinstatement except when an employee volunteers to be separated from
pay. employment. It means that when there are two employees
and payment of
full wages. occupying the same position in the company affected by, for
example, retrenchment program, the last one employed will
necessarily be the first to go.340
If reinstatement
not possible,
employee is
entitled to full
backwages and
separation pay

Temporary Closure

Bar 2001
Article 301. When employment not deemed terminated.
The bona-fide suspension of the operation of a business or
undertaking for a period not exceeding six (6) months, or
the fulfillment by the employee of a military or civic duty
shall not terminate employment. In all such cases, the
employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month
from the resumption of operations of his employer or from
his relief from the military or civic duty.

Bona fide suspension of the operation

• less than 6 months:
closure shall not terminate employment

• More than 6 months:

employment shall be deemed terminated

Article 286 applies only when there is a bona fide suspension of

the employer’s operation of a business or undertaking for a period
not exceeding six (6) months. In such a case, there is no
termination of employment but only a temporary displacement

335 Eastridge Golf Club Inc. vs. Eastridge Golf Club Inc. Labor Union, 2008 Valdez vs. NLRC, 1998
339
336 Eagle Gold Club Inc. vs. Mirando, 2009 Dep. Order No. 147-15 (2015) citing Maya Farms Employees Organization vs.
340
337 Eagle Gold Club Inc. vs. Mirando, 2009 NLRC, 1994
338 Valdez vs. NLRC, 1998

65
Lasallian Commission on Bar Operations 2018
LABOR LAW
Redundancy, Retrenchment, and Closure, distinction
REDUNDANCY
Management prerogative
Service capability of the
workforce is in excess of
what is reasonably needed
to meet the demands of the
Cause business enterprise
1. Written notice served
on both the employee
and the DOLE at least
one month prior to the
intended date of
termination;
2. Payment of separation
pay equivalent to at least
one month pay or at least
one month pay for every
year of service,
whichever is higher;
3. Good faith in
abolishing the
Requisite to redundant position; and
be valid 4. Use of fair and
reasonable criteria in
ascertaining what
positions are to be
declared redundant,
such as: (1) preferred
status; (2) efficiency; and
(3) seniority.341
Employer must prove that it
has become overmanned.
Justification
341 Lowe Inc v CA, 2000
342 Metro Construction Inc. v Aman, 2009
Lasallian Commission on Bar Operations 2018
LABOR LAW
RETRENCHMENT CLOSURE OF BUSINESS
Management prerogative Management prerogative
Effected by management during Carried out to either stave off the
periods of business recession, financial ruin or promote the business
industrial depression, seasonal interest of the employer.
fluctuations, lack of work or Art 283 authorizes termination of
considerable reduction in the volume employment due to business closure,
of the employer’s business. Resorted to regardless of the underlying reasons
by an employer to avoid or minimize and motivations therefore, be it
business losses. financial losses or not.
1. That retrenchment is reasonably 1. Bona fide closure/ cessation of
necessary and likely to prevent business, i.e., its purpose is to
business losses which, if already advance the interest of the
incurred, are not merely de employer and not to defeat or
minimis, but substantial, serious342, circumvent the rights of
actual and real, or if only employees under the law or a
expected, are reasonably valid agreement;
imminent as perceived objectively 2.Written notice served on both the
and in good faith by the employer; employee and the DOLE at least
2. Written notice served on both the one month prior to the intended
employee and the DOLE at least date of termination;
one month prior to the intended 3. Separation pay, in case of
date of termination; closure/cessation of
3. Payment of separation pay business not due to financial
equivalent to at least one month losses. It must be equivalent to ½
pay or at least one month pay for month pay for every year of
every year of service, whichever is service or one month pay,
higher; whichever is higher.
4. Good faith in exercising
management’s prerogative to
retrench employees for the
advancement of its interest and
not to defeat or circumvent the
employees’ right to security of
tenure; and,
5. Use of fair and reasonable criteria
in ascertaining who would be
dismissed and who would be
retained among the employees,
such as status, efficiency,
seniority343, physical fitness, age,
and financial hardship for certain
workers.
Employer must prove serious business Must prove that the closure is bona
losses. fide. Unlike retrenchment, closure or
Necessary conditions for the company cessation of business, as an authorized
losses to justify retrenchment: cause of termination of employment,
1. Losses must be substantial and need not depend for validity on
not de minimis; evidence of actual or imminent
2. Losses must be actual or reversal of the employer's fortune.
reasonably imminent;
3. the retrenchment is reasonably
necessary and is likely to be
effective in preventing the
expected losses; and
343 Emcor, Inc v Sienes, 2009
66
LABOR LAW LABOR LAW

4. the alleged losses, if already

incurred, or the expected
imminent losses sought to be
forestalled, are proven by
sufficient and convincing
evidence.
New staffing pattern, Books of accounts, profit and loss
feasibility studies/ proposal statements, and even its accountant to
on the viability of the newly competently amplify its financial
Evidence that
created positions, job position.345
may be
description and the
proffered
approval by the
management of the
restructuring.344

competent public authority that the disease of which its

Disease
Article 299. 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.
Bar 2004
Requisites for Disease or illness to be a ground for
termination346
1. The continued employment of the employee is
prohibited by law or prejudicial to his health or the
health of his co-employees
2. There is a certification by a competent public health authority
that the disease is of such a nature or at such a stage that
it cannot be cured within a period of 6 months, even with
proper medical treatment
3. Notice to the employee and DOLE at least 1 month prior to
the intended date of termination
4. Separation pay of one month or one-half month for every
year of service, whichever is higher, a fraction of 6
months or more being considered as 1 year.
Requirements are mandatory for valid termination.347
The requirement for a medical certificate under Art 284 of
the Labor Code cannot be dispensed with.
employee is suffering is of such nature or at such a stage that
it cannot be cured within a period of six months even with proper
treatment.349
The requirement of a medical certificate under Article 299
cannot be dispensed with; otherwise, it would sanction the
unilateral and arbitrary determination by the employer of the
gravity or extent of the employee's illness and thus defeat the
public policy in the protection of labor.350
An employee shall not be terminated on basis of actual,
perceived, or suspected HIV status or Hepatitis B status. 351
Totality of Infraction Doctrine
Where the employee has been found to have repeatedly
incurred several suspensions or warnings on account of
violations of company rules and regulations, the law warrants
their dismissal as it is akin to “habitual delinquency”. 352
General rule: It is the totality, not the compartmentalization
of company infractions that the employee had consistently
committed, which justifies the penalty of dismissal. 353
Exceptions: Previous past infractions may be used as a
justification for an employee’s dismissal from work only if in
connection with a subsequent similar offense. 354
Past infractions for which an employee had already been
penalized cannot be collectively taken as a justification for his
dismissal from the service.355
DUE PROCESS

The burden of proving the validity of the dismissal of the
employee rests on the employer.348
The employer, before it can legally dismiss its employee on
the ground of disease, must adduce a certification from a
General concepts
Dismissals based on just causes contemplate acts or omissions
attributable to the employee while dismissals based on

344 AMA vs. Garcia, 2008

345 Metro Construction Inc. vs. Aman, 2009
346 Savallana vs. IT International Corp., 2001
347 Viola Cruz vs. NLRC, 2000
348 Savallana vs. IT International Corp., 2001
349 Duterte vs. Kingswood Trading Co., 2007
350 Crayon Processing vs. Pula, 2007
351 Dep. Order No. 147-15 (2015).
352 Villeno vs. NLRC, 1995
353 Manila Electric Company vs. NLRC, 1996
354 Stellar Industrial Services, Inc. vs. NLRC, 1996
355 Tower Industrial Sales vs. CA, 2006, citing Lopez vs. NLRC, 1998

67
Lasallian Commission on Bar Operations 2018
LABOR LAW LABOR LAW

authorized causes involve grounds under the Labor Code

which allow the employer to terminate employees. 356 “Reasonable opportunity” should be construed as a period of at
least 5 calendar days from receipt of notice.359
Bar 1994
Rationale for strict adherence to procedural requirements Hearing; Ample opportunity to be heard
The due process must be observed in effecting an A hearing or conference wherein the employees will be
employee’s dismissal because the dismissal of an employee given the opportunity to:
affects not only his position but also his means of livelihood a. Explain and clarify their defenses to the charge
and his dependents’ sustenance. 357 against them;
b. present evidence in support of their defenses; and
Procedural Requirement c. rebut the evidence presented against them by the
Basis for termination Requirements management.
Art 297: Just Cause
1. Serious Hearing or conference in termination cases is not necessary.360
misconduct or Twin-notices and hearing rule Employer however must provide the employee an ample
willful 1. Notice specifying the opportunity to be heard and to defend himself with the
disobedience grounds for which assistance of his representatives if he so desires.
2. Gross and habitual dismissal is sought
neglect of duties 2. Hearing or opportunity to Ample opportunity to be heard means any meaningful
3. Fraud or willful be heard opportunity (verbal or written) given to the employee to
breach 3. Notice of the decision to answer the charges against him and submit evidence in
4. Commission of a dismiss support of his defense, whether in a hearing, conference or
crime or offense some other fair, just, and reasonable way, not necessarily in a
5. Analogous causes hearing for that purpose.

Art 298 and 299: Exception:361

Authorized cause
1. Notice to: A formal hearing or conference becomes mandatory only
1. Labor-saving when:
devices a. Employee
b. DOLE 1. Requested by the employee in writing
2. Redundancy 2. Substantial evidentiary disputes exist
3. Retrenchment 3. company rule or practice requires it
At least 30 days prior to the
4. Closing or
effectivity of the separation 4. When similar circumstances justify it
cessation of
operation “Ample opportunity”, connotes every kind of assistance that
5. Disease or illness management must accord the employee to enable him to
prepare adequately for his defense, including legal
PROCEDURAL REQUIREMENTS FOR TERMINATION representation362
WITH JUST CAUSE UNDER ART 297
1. Twin Notice Requirement Dismissal without due process
a. First written notice to be served on the employees.
It must contain: Bar 2002
ii. Specific causes or grounds for termination Consequence of non-compliance with procedural
iii. Directive that the employees are given the requirements
opportunity to submit their written explanation Just or Effects
Due
within a reasonable period. authorized Employer’s
process Dismissal
iv. Detailed narration of the facts and circumstances cause liability
that will serve as basis for the charge. No liability
v. Company rules, if any, are violated and/or
among which the grounds under Art. 297 is being Separation pay if
charged against the employees. Legal dismissal is due
to authorized
b. Written notice of termination, after being given an cause
ample opportunity to be heard, indicating that:
i. All circumstances involving the charge against Reinstatement
the employees have been considered; and Full backwages
ii. Grounds have been established to justify the
severance of their employment. x Illegal Separation pay if
reinstatement
The foregoing notices shall be served personally to the not possible
employee or to the employee’s last known address. 358

356 Agabon vs. NLRC, 2004 360 Perez vs. Philippine Telegraph and Telephone Company, GR 152048, 2009
357 RCPI vs. NLRC, 1993 361 Id.
358 Dep. Order No. 147-15 (2015). 362 Abiera vs. NLRC, 1992
359King of Kings Transport, Inc. vs. Mamac, 2007

Lasallian Commission on Bar Operations 2018 68

LABOR LAW LABOR LAW

Reinstatement The doctrine in Serrano had already been abandoned

Full backwages in Agabon v. NLRC by ruling that if the dismissal is done
without due process, the employer should indemnify the
x x Illegal Separation pay if employee with nominal damages. 364
reinstatement
not possible

Damages due to
non-compliance
with procedural
requirements
x Legal
Separation pay if
dismissal is due Indemnity for Nominal Damages for Dismissal without
Due Process365
to authorized
cause Dismissal for
Dismissal for just
authorized cause
cause

History of the effects of non-compliance with Php30,000 only Php50,000 because it was
procedural requirements because it was initiated by employer’s
Ruling initiated by an act exercise of management
prerogative
Year Employer’s liability for non- attributable to
Dismissal compliance with procedural employee
requirements
Prior to
Illegal
1989 Right to counsel
1989 It is true that administrative and quasi-judicial bodies are not
Wenphil bound by the technical rules of procedure in the adjudication
Legal Damages
Corp v cases. However, the right to counsel, a very basic requirement of
NLRC substantive due process, has to be observed. Indeed, rights to
Full backwages counsel and to due process of law are two of fundamental
2000 Computed from the time of rights guaranteed by the 1987 Constitution to person under
Serrano v Legal dismissal until the court finds investigation, be the proceeding administrate civil, or
NLRC the dismissal to be for just criminal.366
cause
Nominal damages Burden of proof
2004 Indemnity is stiffer than
Agabon v Legal Wenphil Corp. v NLRC to Burden of Proof367
NLRC discourage the practice of Employee Employer
“dismiss now, pay later”
Must first establish by Burdened to prove that they
substantial evidence the fact did not commit illegal
Wenphil or Belated Due process rule of his or her dismissal. dismissal.
Where the employer had a valid reason to dismiss an
employee but did not follow the due process requirement, the Degree of proof
dismissal may be upheld but the employer will be penalized All administrative determinations require only substantial
to pay an indemnity to the employee. 363 proof and not clear and convincing evidence.368

Wenphil-Serrano Doctrine Substantial evidence is that relevant evidence that a reasonable

Serrano modifies Wenphil. The Wenphil doctrine was meant
to discourage dismissal without due process. But the purpose
is not achieved as many employers “dismiss now and pay
later”. Employer is liable for the full backwages although the
dismissal is not outright illegal since it is based on a valid reason.
The employee remains dismissed. The dismissal is merely
defective or “ineffectual”. The doctrine applies to dismissals
under Art 297, 298 and 299.
Agabon abandoned Serrano ruling
mind might accept as adequate to support a conclusion, even
if other equally reasonable mind might conceive otherwise.369
As a general rule, employers are allowed a wider latitude of
discretion in terminating the services of managerial employees who
perform functions which, by their nature, require the
employers' full trust and confidence; thus, existence of basis
for believing that the employee has breached the trust of the
employer is sufficient and does not require proof beyond
reasonable doubt. In fact, it has been held that when the

363 Agabon vs. NLRC, 2004 366 Salaw vs. NLRC, 1991
364 King of Kings Transport, Inc. vs. Mamac, 2007 367 Romeo Basay, et al. vs. Havienda Consolacion, et al., 2010
365 PNCC Skyway Corp. vs. SOLE, 2017 citing JAKA Food Processing Corporation 368 Manalo v Roldan-Confesor, 1992
vs. Paco, 2005 369 Mitsubishi Motors Phils. Corporation v Simon, 2008

Lasallian Commission on Bar Operations 2018 69

LABOR LAW
employer has ample reason to distrust an employee, a labor
tribunal cannot deny the employer the authority to dismiss
him.370
Prescription
Bar 1994, 1997
An action for reinstatement by reason of illegal dismissal is
one based on an injury which may be brought within 4 years
from the time of dismissal. (Art 1146, Civil Code)
RELIEFS FROM ILLEGAL DISMISSAL
Bar 1999
The employee who has been illegally terminated is entitled to
the twin reliefs of reinstatement and backwages.371
1. Reinstatement without loss of seniority rights and
other privileges
2. Full backwages inclusive of allowances, and to
other benefits or their monetary equivalent
computed from the time his compensation was
withheld up to the time of actual reinstatement
The fact that his employer later made an offer to re-employ
him did not cure the vice of his earlier arbitrary dismissal.372
REINSTATEMENT
Reinstatement, defined
The restoration to a state or condition from which one had
been removed or separated. 373
Doctrine of strained relations rule 374
1. Where reinstatement is not feasible, expedient or
practical
2. Where reinstatement would only exacerbate the tension
and strained relations between parties
3. Where relationship between the employer and employee
has been unduly strained by reason of their
irreconcilable differences, particularly where the
illegality dismissed employee held a managerial or key
position in the company
4. It would be more prudent to order payment of
separation pay instead of reinstatement
In order to apply the Doctrine, it must be proven that the
concerned employee occupies a position where he enjoys the
trust and confidence of his employer; and 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 employee concerned. 375
When reinstatement no longer available, payment of
separation pay is awarded
Clearly, the law intended reinstatement to be the general rule. It
is only when reinstatement is no longer feasible that payment
370 Rentokil Philippines, Inc. v Sanchez, 2008
371 Condo Suite Club Travel, Inc. v NLRC, 2000; Golden Donuts, Inc. v NLRC, 2000
372 Ranara v NLRC, 1992
373 Pheschem Industrial Corporation v Moldez, 2005
374 Quijano vs. Mercury Drug Corp, 1998
375 Cabigting vs. San Miguel Foods Inc., 2009
376 Pheschem Industrial Corporation vs. Moldez, 2005
Lasallian Commission on Bar Operations 2018
LABOR LAW
of separation pay is awarded to an illegally dismissed
employee. 376
Payment of separation pay as a substitute for reinstatement
is allowed only under exceptional circumstances, viz:377
1. When reasons exist which are not attributable to the fault
or beyond the control of the employer, such as, when the
employer, who is in severe financial strait and has
suffered serious business losses, has ceased operations,
implemented retrenchment, or abolished the position
due to the installation of labor-saving devices;
2. when the illegally dismissed employee has contracted a
disease and his reinstatement will endanger the safety of
his co-employees; or,
3. where strained relationship exists between the employer
and the dismissed employee.
When can the employee be reinstated
1. Immediately, even pending appeal, upon the decision of
the Labor Arbiter reinstating dismissed or separated
employee. The employee shall either be
a. admitted back to work or,
b. at the option of the employer, be merely reinstated
in the payroll (Art. 229 LC)
2. Upon finality of the decision ordering reinstatement (Art
294 LC)
BACKWAGES
Backwages, defined
Earnings lost by a work due to employee’s illegal dismissal. It
is a form of relief that restores the income lost by reason of such
unlawful dismissal.
It is not a private compensation or damages, 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 illegally dismissing an
employee378
Effect of failure to order Backwages
The fact that the NLRC did not award backwages to the
respondents or that the respondents themselves did not
appeal the NLRC decision does not bar the Court of Appeals
from awarding backwages. 379
Substantive rights like the award of backwages resulting
from illegal dismissal must not be prejudiced by a rigid and
technical application of the rules. The order of the Court of
Appeals to award backwages being a mere legal consequence
of the finding that respondents were illegally dismissed by
petitioners, there was no error in awarding the same.380
Computation of Backwages
1. Without deduction for their earnings elsewhere during
their layoff381
2. Awards including salary differentials are not allowed382
3. The salary base properly used should be the basic salary
rate at the time of dismissal plus the regular allowance.
377 Pheschem Industrial Corporation vs. Moldez, 2005
378 St. Theresea’s school of Novaliches Foundation vs. NLRC, 1998
379 Asian Terminals, Inc. vs. NLRC, 2007
380 Asian Terminals, Inc. vs. NLRC, 2007
381 Bustamante vs. NLRC, 1996
382 Insular Life Assurance Co. vs. NLRC, 1987
70
LABOR LAW LABOR LAW

Separation pay in lieu of Backwages

Allowance includes: reinstatement
✓ Emergency cost of living allowances (ECOLA), Granted to an illegally Granted to an illegally
transportation allowances, 13th month pay383 dismissed employee
dismissed employee
✓ Vacation leaves, service incentive leaves and sick leaves

The effects of extraordinary inflation are not to be applied without Granted where Granted with reinstatement
an official declaration thereof by competent authority 384 reinstatement is no longer
feasible.
Salary increase based on performance is not included in the
computation of backwages; otherwise, it would be merely Employer must still pay for
based on speculation. A salary increase is conditioned on the
backwages.
outstanding performance of the employee; an illegally
terminated employee could not be guaranteed to have an
outstanding performance simply because in the past he did
excel.385 Oriented towards the Payment of backwages is a
immediate future, the form of relief that restores
SEPARATION PAY transitional period the the income that was lost by
reason of unlawful
dismissed employee must
Kinds dismissal391
undergo before locating a
1. Separation pay as statutory requirement for authorized
causes replacement job.390

When termination is based on grounds under Art 298

and 299: Computation
a. Installation of labor saving devices 1. Employer may not, in the guise of exercising
b. Redundancy management prerogatives, pay separation benefits
c. Retrenchment unequally.392
d. Cessation of the employer’s business 2. Allowances and commissions are included in the
e. Disease computation of separation pay. Since commissions
were earned by actual market transactions
2. Separation pay as financial assistance attributable to employees, such commissions
Separation pay shall be allowed as a measure of social should be included in the separation pay. Thus, the
justice separation pay should take into account the
average commissions earned during the last year of
Separation Pay as Financial Assistance employment. 393
When allowed When not allowed
Employees who receive their separation pay are not barred from
Though validly dismissed, Where employee was contesting the legality of their dismissal from the service and
employee may be awarded dismissed for just cause their acceptance of those benefits would not amount to
as some equitable relief in under Art 297 of the Labor estoppel. Otherwise, employees who have been forced to
consideration of the past code387 or for an offense resign and accept their separation pay can no longer resort to
services rendered where involving moral legal remedies.394
dismissal was due to causes turpitude, like theft or
other than just causes under illicit sexual relations with DAMAGES, ATTORNEY’S FEES, AND OTHER
Art 297 or those reflecting a fellow worker388 INDEMNITY
on his moral character.386
Bar 2001
3. Separation pay in lieu of reinstatement where Moral damages
reinstatement is not feasible Recoverable when the dismissal of an employee is attended
by: 395
The grant of separation pay was a proper substitute only 1. Bad faith,
for reinstatement; it could not be an adequate substitute 2. fraud
both for reinstatement and for backwages. 389 3. constitutes an act oppressive to labor
4. done in a manner contrary to good customs and
4. Separation pay as a benefit in the CBA or company policy public policy

Separation pay and Backwages, distinguished

383 Paramount Vinyl Product Corpo vs. NLRC, 1990 389 Nissan North EDSA Balintawak vs. Serrano, 2009
384 Lantion vs. NLRC, 1990 390 Id.
385 PLDT vs. Paguio, 2005 391 Id.
386 Bristol Myers Squibb vs. Baban, 2008; Toyota Motor Phils. Corp Workers 392 Businessday Information Systems and Services, Inc. vs. NLRC, 1993

Association v NLRC, 2007 393 Songco vs. NLRC, 1990

387 BPI and BPI Family Bank vs. NLRC and Arambulo, 2010 394 Amkor Technlogy Philippines, Inc. vs. Juangco, 2006
388 PLDT vs. NLRC, 1988 395 PAL vs. NLRC, 1999

Lasallian Commission on Bar Operations 2018 71

LABOR LAW
Such an award cannot be justified solely upon the premise
that the employer fired his employee without just cause or
due process. Additional facts must be pleaded and proven
to warrant the grant of moral damages under the Civil
Code.396
Exemplary damages
Awarded if the dismissal is effected in a wanton, oppressive
or malevolent manner.397
Attorney’s fees
Not recoverable when there is no sufficient showing of bad
faith.
Justified when claimant is compelled to litigate with 3 rd
parsons or to incur expenses to protect his interest by reason
of an unjustified act of the party against whom it is sought.398
Liability of Corporate officers
General Rule:
In cases of illegal dismissal, corporate directors and officers
are not solidarily liable with the corporation.399
Exception:
Where termination of employment is done with malice or bad
faith.400
Corporate veil is pierced:
1. When it is deliberately and maliciously designed to
evade financial obligations to employees or when used
as means to perpetuate fraud or an illegal act401
2. Directors or trustees who willfully and knowingly assent
to patently unlawful acts or who are guilty of gross
negligence or bad faith in the managing corporate
affairs.402
Otherwise, the manager, officer or the stockholder s are not
liable personally since the corporation is vested by law with a
separate and distinct personality.403
PREVENTIVE SUSPENSION
Nature
A disciplinary measure for a protection of the company’s
property pending investigation of any alleged malfeasance
committed by the employee.
Preventive suspension is not a penalty.
Period
It cannot exceed 30 days.
After the period, employee must be reinstated to his former
position
If suspension is extended, the employee shall be entitled to his
salaries and other benefits that may accrue to him during the
period of such suspension.404
396 M+W Zander Philippines, Inc. vs. Enriquez, 2009
397 Kay Products vs. CA, 2005
398 Lopez vs. NLRC, 1998
399 Harpoon Marine Services Inc. vs. Francisco, 2011
400 Bogo Medelin Sugarcane Planters Association vs. NLRC, 1998
401 Pabalan vs. NLRC, 1990
Lasallian Commission on Bar Operations 2018
LABOR LAW
When preventive suspension exceeds maximum period
allowed without reinstatement or when preventive
suspension is for indefinite period, only then will constructive
dismissal set in.405
Requirements for preventive suspension 406
1. An employee may be placed in a preventive suspension
if his continued employment poses a serious and
imminent threat to the life or property of the employer
or his co-workers.
However, when it is determined that there is no sufficient
basis to justify an employee’s preventive suspension, the
employee is entitled to the payment of salaries during the
time of preventive suspension
RETIREMENT
Art 302. 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.
402 Sec 31 Corporation Code
403 Sunio vs. NLRC, 1984
404 Philippine Airline vs. NLRC, 1998
405 Mandapat vs. ADD Force Personnel Services, Inc. 2010
406 Gatbanton vs. NLRC, 2006
72
LABOR LAW LABOR LAW

A retirement plan in a company partakes the nature of a

contract, with the employer and the employee as the
contracting parties. It creates a contractual obligation in
which the promise to pay retirement benefits is made in
consideration of the continued faithful service of the
employee for the requisite period.

RA 7641
Age requirement
1. Compulsory
Upon reaching 65 years of age; with at least 5 years of
service
2. Optional
Upon reaching 60 years of age before 65 years; with at
least 5 years of service; at the option of the employee

Computation of retirement pay

1. 15 days based on the employee’s latest salary
2. 1/12 of the 13th month pay; and
3. cash equivalent of the 5 days of service incentive
leave

Computation: 22.5 days x number of years of service

22.5 days is computed at 15 days plus 2.5 days representing
1/12 of the 13th month pay plus 5 days of service incentive
leave407

R.A. No. 7641 does not apply to a retirement plan which gives
to the retiring employee more than what the law requires.408
While termination of employment and retirement from
service are common modes of ending employment, they are
mutually exclusive, with varying juridical bases and resulting
benefits. 409

Termination and Retirement, distinguished 410

Termination Retirement

Mode of ending Mode of ending

employment employment
Statutory, governed by the Contractual, based on a
Labor code and other bilateral agreement of the
related law as to its employer and employee
grounds, benefits and
procedure
Benefits resulting from Article 302 of the Labor
termination vary, Code gives leeway to the
depending on the cause parties to stipulate above a
floor of benefits

(see previous discussion on Retirement a mode of termination by

employee)

407 Capitol Wireless v Confessor, 1996 409 Quevedo v Benguet Electric Cooperative Inc., 2009
408 Oxales v Unilab, 2008 410 Quevedo v Benguet Electric Cooperative Inc., 2009

Lasallian Commission on Bar Operations 2018 73

LABOR LAW LABOR LAW

Management prerogative, defined

Act by which one directing a business is able to control the
variables thereof so as to enhance the chances of making a
profit.

This is also one which, the employer is free to regulate,

according to his own discretion and judgment all aspects of
employment; this includes hiring, working assignments,
methods, time, place and manner, tools to be used, process to
be followed, supervision of workers, working regulations,
transfer of employees, lay-off of workers, discipline, dismissal
and recall of work.

Management has the prerogative to discipline its employees

and to impose appropriate penalties on erring workers
pursuant to company rules and regulations. 411

DISCIPLINE

The only criterion to guide the exercise of management

prerogative is that the policies, rules and regulations on work-
related activities of the employees must always be fair and
reasonable and the corresponding penalties, when
prescribed, commensurate to the offense involved and to the
degree of the infraction. 412

MANAGEMENT In revising the employees Code of Conduct which would

have repercussions to their security of tenure and deprive

PREROGATIVE
them of their livelihood, the company must have
participation in the decision and policy making process of
affecting their rights, duties, and welfare. 413

Although the right of employers to shape their own work

force is recognized, this management prerogative must not
curtail the basic right of employees to security of tenure. 414

TRANSFER OF EMPLOYEES

Business enterprises have the right to transfer employees

from one work station to another where it deems the
employee will be most useful and productive. The limits as to
transferring employees are as long as there is no unreasonable
cause, inconvenience, and prejudice in their transfer.415

Employer has the right to transfer or assign employees from

one area of operation to another, or one office to another in
pursuit of its legitimate business interest, provided that there
is no demotion in rank or diminution of salary, benefits, and
other privileges, and not motivated by discrimination or
made in bad faith, or effected as a form of punishment. 416

PRODUCTIVITY STANDARD

Failure to observe prescribed standards of work or to fulfil

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

411 Articificio vs. NLRC 414 Alert Security & Investigation Agency, Inc. vs. Salidali Pasawilan
412 St. Michael’s Institute vs. Santos 415 Chu vs. NLRC
413 Philippine Airlines vs. NLRC 416 Westin Phil. Plaza Hotel vs. NLRC

Lasallian Commission on Bar Operations 2018 74

LABOR LAW
may be availed of so long as they are exercised in good faith
for the advancement of the employer's interest.417
BONUS
A bonus is a gratuity or act of liberality of the giver which the
recipient has no right to demand as a matter of right. The
grant of a bonus is basically a management prerogative which
cannot be forced upon the employer who may not be obliged
to assume the onerous burden of granting bonuses or other
benefits aside from the employee’s basic salaries or wages.418
A bonus, however, becomes a demandable or enforceable
obligation when it is made part of the wage or salary or
compensation of the employee which was promised to the
employee.
CHANGE OF WORKING HOURS
The management is also empowered to change their
employees work schedule whenever exigencies so require
provided that it is done in good faith. 419
MARITAL DISCRIMINATION
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. 420
An employer has a right to guard its trade secrets,
manufacturing formulas, marketing strategies, and other
confidential programs and information from competitors.
The prohibition against personal or marital relationships with
employees of competitor companies upon the respondent's
employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of
the company. The employer, in this case, did not impose an
absolute ban, but merely sought to balance any conflict of
interest. The Constitution recognizes the right of businesses
to enforce such policy to protect its right to reasonable
returns.421
Courts have established that no-spouse employment policy
violate the marital status provision because it arbitrarily
discriminates against all spouses of present employees
without regard to the actual effect on the individual’s
qualifications or work performance. The absence of a bona fide
occupational qualification invalidates a rule denying
employment to one spouse due to the current employment of
the other spouse in the same office, otherwise known as the
bona fide occupational qualification exception.
Bona fide Occupational Qualification Exception:
417 Buiser vs. Leogardo, Jr.
418 Trader’s Royal Bank vs. National Labor Relations Commission
419 Union Carbide Labor Union vs. Union Carbide Phils., Inc
420 Sec. 136, Title III, Chapter I, Stipulation Against Marriage
421 Duncan Association of Detailman v. Glaxo Wellcome, Phils., Inc. (2005)
Lasallian Commission on Bar Operations 2018
LABOR LAW
(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.422
POST-EMPLOYMENT BAN
Post-Employment Ban – a stipulation in an employee’s
employment contract forbidding or restricting the employee
from accepting a competitive employment or from doing
certain action after he resigns or retires from his employ.
Examples/Kinds
(a) non-competition/non-compete clause – when the
employee is prevented from directly competing or
working for a competitor of his former employer, or
when the employee is prevented from setting up a
competing business;
(b) non-solicitation clause – when a duty is imposed on
the employee not to approach his former employer’s
customers or prospective customers, or when the
employee is prevented from taking customers/clients
of his former employer; and
(c) non-poaching clause – when the employee is
prevented from enticing his former employer’s staff
away from the business, the aim is to prevent the
employee from taking key employees with him to his
new employment or business.
Whether such an agreement would be held valid and
binding will depend on its reasonableness in relation to the
parties concerned, as well as to its public policy.
Factors to consider for the ban/clause’s validity: 423
(a) whether the covenant protects a legitimate business
interest of the employer;
(b) whether the covenant creates an undue burden on the
employee;
(c) whether the covenant is injurious to the public welfare;
(d) whether the time and territorial limitations contained in
the covenant are reasonable; and
(e) whether the restraint is reasonable from the standpoint
of public policy
Restrictive covenants are not necessarily void for being in
restraint of trade. In deciding to include a restrictive covenant
in the employment contract, employers must see to it that
there are reasonable limitations as to:
1. time,
2. trade and
3. place424
The limitations of the exercise of management prerogative is
that there must be an exercise of good faith for the
advancement of the employees interest and not for the
purpose of defeating or circumventing the rights of the
employees under the law are valid exercise of management
prerogative.425
422 Star Paper, Corp. v. Simbol (2006)
423 Rivera v. Solidbank Corporation (2006)
424 Tiu v. Platinum Plans Phils., Inc. (2007)
425 Chu vs. NLRC
75
LABOR LAW LABOR LAW

In particular, the employer must be able to show that the

transfer is not unreasonable, inconvenient or prejudicial to the
employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits. The
employer bears the burden of proving that the transfer of the
employee has complied with the foregoing test. 426

Limitations in their exercise of management prerogatives are

the following:
1. Constitution
2. Law
3. Contracts (CBA)
4. General principles of fair play and justice

426 PLDT vs. Paguio

Lasallian Commission on Bar Operations 2018 76

LABOR LAW LABOR LAW

DEFINITION

The interactions between employers and employees or their

representatives; and the mechanism by which the standards
and other terms and conditions of employment are
negotiated, adjusted, and enforced. 427

DECLARATION OF POLICY

The State aims to promote:

1. Free collective bargaining and negotiations,
including voluntary arbitration, mediation, and
conciliation as modes of settling labor or industrial
disputes; 

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
employees;
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. A truly democratic method of regulating the
relations between the employers and employees 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

LABOR pay, hours of work, or other terms and conditions

of employment, except as otherwise provided
under the LC. (Art. 218) 


RELATIONS
RIGHT TO SELF-ORGANIZATION

Definition

It is the right of workers and EEs to form, join, or assist

unions, organizations, or associations for purposes of CB
and negotiation and for mutual aid and protection. It also
refers to the right to engage in peaceful concerted activities
or to participate in policy and decision-making processes
affecting EEs rights and benefits.

Extent of the right to self-organization

(1) To form, join, and assist labor organizations for

the purpose of CB through representatives of 

their own choosing or for their mutual aid and
protection; and (Art. 253) 

(2) To engage in lawful and concerted activities for
the purpose of CB or for their mutual aid and
protection. (Art. 278) 


The right to self-organization includes the right NOT to join

any labor organization.

427C.A. Azucena, The Labor Code with Comments and Cases, Volume II, 2010,
p.10.

Lasallian Commission on Bar Operations 2018 77

LABOR LAW LABOR LAW

WHO MAY EXERCISE THE RIGHT

Aliens
(1) All employees
(2) Government employees
General Rule: All aliens, natural or juridical, as well as
(3) Supervisory Employees
foreign organizations are strictly prohibited from engaging
(4) Aliens with valid working permits
directly or indirectly in all forms of trade union activities
(5) Security personnel
without prejudice to normal contacts between Philippine
labor unions and recognized international labor centers.
All Employees
Exception: Aliens working in the country can exercise the
Any person in the employ of an employer. The term shall right to self-organization if: (VR)
not be limited to the employees of a particular employer, (a) With valid permits issued by the Department of Labor
unless the Code so explicitly states. It shall include any and Employment, and
individual whose work has ceased as a result of or in (b) Reciprocity - said aliens are nationals of a country which
connection with any current labor dispute or because of any grants the same or similar rights to Filipino workers.429
unfair labor practice if he has not obtained any other
substantially equivalent and regular employment. (Art. 219 Security personnel
(f))
The security guards and other personnel employed by a
Any employee, whether employed for a definite period or security service contractor shall have the right:
not, shall, beginning on his first day of service, be considered (1) To form, join, or assist in the formation of a labor
as an employee for purposes of membership in any labor organization of their own choosing for purposes of
union. (Art. 292 (c)) collective bargaining and
(2) To engage in concerted activities which are not contrary
Government Employees to law including the right to strike. [D.O. No. 14 Series of
2001 Guidelines Governing the Employment and
A. Employees of government corporations established Working Conditions of Security Guards and Similar
under the Corporation law: Personnel in the Private Security Industry)
• Right to organize
• Right to bargain collectively WHO MAY NOT EXERCISE THE RIGHT

B. All other employees in the civil service: (1) Managerial employees

• Right to form associations for purposes not (2) Confidential employees
contrary to law (3) Member-employee of a cooperative
(4) Employees of international organizations
(5) Non-employees
Supervisors (6) Members of the AFP, police officers, policemen, firemen
and jail guards
(7) High-level / Managerial Government Employees
Supervisory employees may join, assist, or form separate
labor organizations of their own.
Managerial Employees
Supervisory employees are not eligible to join rank-and-file
labor organizations, because conflict of interest may arise A "Managerial employee" is one who is vested with the
with rank-and-file employees in so far as supervisory powers or prerogatives to lay down and execute management
employees are considered as extensions of the management. policies and/or to hire, transfer, suspend, lay-off, recall,
discharge, assign, or discipline employees.
Test of supervisory status
Rationale for prohibition
The test of "supervisory" or "managerial status" depends on
whether a person possesses authority to act in the interest of If these managerial employees would belong to or be
his employer in the matter specified in Article 212 (k) of the affiliated with a Union, the latter might not be assured of
Labor Code and Section 1 (m) of its Implementing Rules their loyalty to the Union in view of evident conflict of
[now Section 1(t)] and whether such authority is not merely interests. The Union can also become company-dominated
routinary or clerical in nature, but requires the use of with the presence of managerial employees in Union
independent judgment. Thus, where such recommendatory membership.430
powers, as in the case at bar, are subject to evaluation,
review, and final action by the department heads and other Managerial functions refer to powers, such as to:
higher executives of the company, the same, although (1) Effectively recommend managerial actions;
present, are not effective and not an exercise of independent (2) Formulate or execute management policies or decisions;
judgment as required by law. 428 or

428FranklinBaker Company v Trajano, G.R. No. 75039 (1988). 429 Art 284
(More recent citation: Cathay Pacific Steel Corporation vs. CA, G.R. No. 164561, 430Bulletin Publishing Corp. v Sanchez (1986)
Aug. 30, 2006)

Lasallian Commission on Bar Operations 2018 78

LABOR LAW
(3) Hire, transfer suspend, lay-off, recall, dismiss, assign, or
discipline employees.431
Confidential Employees
Bar 1994, 2002, 2009
Who are confidential employees?
Those who, by reason of their positions or nature of
work, are required to assist or act in a fiduciary manner
to managerial employees; and hence, are likewise privy
to sensitive and highly confidential records. xxx By the
very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential
matters of, persons who exercise managerial functions in
the field of labor relations. 432
Rationale for exclusion
By the very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential
matters of, persons who exercise managerial functions in the
field of labor relations. As such, the rationale behind the
ineligibility of managerial employees to form, assist or join a
labor union equally applies to them.433
Doctrine of Necessary Implication
This doctrine states that what is implied in a statute is as
much a part thereof as that which is expressed. While Art
245 of the LC singles out managerial employees as ineligible
to join, assist, or form nay labor organization, under the
doctrine of necessary implication, confidential employees
are similarly disqualified”434
Art 245 does not directly prohibit confidential employees
from engaging in union activities. However, under the
doctrine of necessary implication, such confidential
employees, if they have access to confidential labor relations
information, are treated like managers and therefore cannot
unionize. Thus, when a confidential employee does not have
access to labor relations information, such employee may
still form, join or assist a union.435
Confidential Employee Rule (Test/Criteria)
(1) Assists or acts in a confidential capacity
(2) To persons who formulate, determine and effectuate
management policies in the field of labor relations.
These two criteria are cumulative.436
Nature of Access Test
An important element of the “confidential employee rule” is
the employees need to have access to labor relations information.
Thus, in determining the confidentiality of certain
employees, a key question frequently considered is the
431 San Miguel Supervisors and Exempt Union v Laguesma, 1997
432Metrolab Industries v Confessor (1996)
433PhilipsIndustrial Dev’t., Inc. v NLRC (1992)
434 NATU v. Torres (1994)
435 Sugbuanon Rural Bank v. Laguesma (2000).
436Tunay na Pagkakaisang Manggagawang Asia Brewery v Asia Brewery, Inc.
(2012)
Lasallian Commission on Bar Operations 2018
LABOR LAW
employees’ necessary access to confidential labor relations
information.437
Function Test: Nomenclature is not controlling
The mere fact that an employee is designated “manager”
does not ipso facto make him one. Designation should be
reconciled with the actual job description of the
employee. 438
Worker-members of a Cooperative
Bar 2002
Rationale: A cooperative is, by its nature, different from
an ordinary business being run either by persons,
partnerships, or corporations. Its owners and/or
members are the ones who run and operate while the
others are its employees.439
Therefore, an employee of such a cooperative, who is a
member and co-owner thereof, cannot invoke the right to
collectively bargain because an owner cannot bargain
with himself or his co-owners.440
May form associations
While the members of a cooperative who are also its
employees cannot unionize for purposes of collective
bargaining, the law does not prohibit them from forming
an association for their mutual aid and protection.
Employees of International Organizations
A certification election cannot be conducted in an
international organization which the Philippine government
has granted immunity from local jurisdiction.
International organization, defined.
The term is generally used to describe an organization set up
by agreement between two or more states. Such organizations
are endowed with some degree of international legal
personality such that they are capable of exercising specific
rights, duties, and powers.
Reason for grant of immunity
The assurance of unimpeded performance of their functions
by the agencies concerned.
No deprivation of labor’s basic rights
The immunity of international organizations from local
jurisdiction does not deprive labor of its basic rights which are
guaranteed by Article II, Section 18, Article III, Section 8 and
Article XIII, Section 3 of the 1987 Constitution; and
implemented by Articles 243 and 246 of the Labor Code.
Recourse for any violation of labor’s basic rights by an
international organization may be had through international
Conventions or through the organization’s internal grievance
machineries.441
437San Miguel Corporation Supervisors and Exempt Union, et al. v Hon.
Laguesma (1997)
438 Paper Industries v. Laguesma (2000).
439Batangas Electric Cooperative v Young (1988).
440 Supra note 10.
441 International Catholic Migration Commission v. Calleja (1990).
79
LABOR LAW
Certification election barred by immunity
A certification cannot be viewed as an independent or
isolated process. It could trigger off a series of events in the
collective bargaining process together with related incidents
and/or concerted activities, which could inevitably involve
the international organization in the “legal process”, which
includes “any penal, civil, and administrative proceedings.”
The eventuality of court litigation is neither remote and from
which international organizations are precisely shielded to
safeguard them from the disruption of their functions. 442
Waiver of immunity
Waiver of immunity is discretionary. Without such express
waiver, the NLRC or its labor arbiters have no jurisdiction
even in cases of alleged illegal dismissal of any of its
employees.443
Non-Employees
Persons who are not employees of a company are not entitled
to the constitutional right to join or form a labor organization
for purposes of collective bargaining. The question of whether
employer-employee relationship exists is a primordial
consideration before extending labor benefits under the
workmen's compensation, social security, Medicare,
termination pay, and labor relations law.444
Members of the AFP, Policemen, Police Officers, Firemen,
and Jailguards
Members of the AFP, Policemen, Police Officers, Firemen, and
Jailguards are expressly excluded by EO 180 from the
coverage of the law which provides guidelines for the exercise
of the right to organize of government employees.
High-level/Managerial Employees
High-level employees of the government whose functions are
normally considered as policy-making or managerial or
whose duties are of a highly confidential nature shall not be
eligible to join the organization of rank- and-file government
employees. [Sec. 3, E.O. 180]
COMMINGLING/MIXTURE OF MEMBERSHIP
Prohibition
Supervisory employees shall not be eligible for membership
in a labor organization of the rank-and-file employees but
may join, assist, or form separate labor organizations of their
own. (Art. 256)
Bar 2010
Effect
The mixture of rank-and-file and supervisory employees
in a union does not nullify the union’s legal personality as a
legitimate labor organization.445 As stated in Article 256, the
effect is that the employees that should not have been
included in the membership are automatically deemed
removed from the list of membership.
RIGHTS AND CONDITIONS OF MEMBERSHIP
442 Id.
443 Callado v. International Rice Research Institute (1995)
Lasallian Commission on Bar Operations 2018
LABOR LAW
(a) No arbitrary or excessive initiation fees, fines and
forfeitures
(b) Members entitled to full and detailed reports of financial
transactions as provided for in Constitution/By-Laws
(c) Members directly elect their officers by secret ballot
(including the officers of the national union/federation,
trade center or to any similar affiliate) every 5 years
• Qualification: membership in good standing and
must be employed in the company
• Report: Labor Sec to be furnished with a list of
newly elected officers, appointive officers/agents
who handle funds within 30 days 1) after election
or 2) from occurrence of any change in the list of
officers
(d) Members determine by secret ballot any question of
major policy affecting the entire membership of the
organization.
Exception: secret balloting not required if:
(i) nature of organization
(ii) force majeure renders such balloting
impractical  in this case, the board of
directors of the organization may make the
decision in behalf of the general membership
(e) LO cannot knowingly admit a member or continue in
membership any individual who belongs to a 1)
subversive organization or 2) who is engaged directly or
indirectly in any subversive activity
(f) Person convicted of crime of moral turpitude shall not
be 1) eligible for election as union officer or 2) for
appointment to any position in the union
(g) Fees, dues or other contribution for the organization
shall only be collected by one who is authorized to do so
pursuant to the organization’s constitution and by-laws
(h) Every payment of fees, dues or other contributions shall
be evidenced by a receipt and entered into the record of
the organization
(i) Funds of organization shall not be applied to for any
other purpose or object other than those expressly
provided for by its 1) constitution and by-laws or those
2) expressly authorized by written resolution adopted
by the majority of the members at a general meeting duly
called for that purpose.
(j) Every income and revenue shall be evidenced by a
record showing its source and every expense shall be
evidenced by a receipt from the person to whom
payment is made. The record or receipt forms part of the
financial records of the organization
✓ Any action involving the funds of the organization
shall prescribe after 3 years from 1) the date of
submission of the annual financial reports to the
DOLE or 2) from the date it should’ve been
submitted as required by law, whichever comes
earlier
Provided: this provision applies only to a legitimate
labor organization which has submitted the
financial report requirements
(k) Officers shall not be paid any compensation other than
the salaries/expenses due to their positions 1) as
provided by its constitution and by-laws or 2) in a
written resolution duly authorized by the majority of
all the members at a general membership meeting duly
called for that person
444 Singer Sewing Machine v. Drilon (1991)
445 SMCC-SUPER v. Charter Chemical and Coating Corp (2011)
80
LABOR LAW
(l) Treasurer/any person responsible for the funds or other
property shall render an accounting to its members and
the organization of all the money received and paid by
him since the last day on which he rendered such
account.
✓ Rendering of account shall be made
(1) At least once a year within 30 days from the
close of its fiscal year
(2) At such other times as may be required by
resolution of the majority of the members
(3) Upon vacating his office
(m) Books of accounts and other records of the financial
activities shall be open to inspection by any
officer/member during office hours
(n) No special assessment/extraordinary fees may be levied
unless authorized by a written resolution of a majority
of all the members at a general membership meeting
duly called for that purpose
(1) The secretary shall record the minutes of the
meeting, including the list of all members present,
the votes cast, the purpose of the special assessment
and the recipient of such assessment.
(2) This record shall be attested by the President
(o) Other than for mandatory activities under this code, no
special assessments, attorney’s fees, negotiation fees
may be checked off from any amount due to an
employee without his signed individual written
authorization
(p) Duty of LO and its officers: inform its members of its
constitution and by-laws, CBA, Labor relations system,
and their rights and obligations
✓ For this purpose, registered labor organizations
may assess reasonable dues to finance labor
relations seminars and other labor education
activities
Any violation of the above rights and conditions of
membership shall be a ground for:
(1) cancellation of union registration or
(2) expulsion of officer from office.
At least 30% of all members of the union or any member or
members specially concerned (if violation directly affects
their rights and conditions as mentioned above) may report
such violation to the Bureau
Jurisdiction over violations over rights and conditions of
membership:
(1) Liabilities under the Labor Code = Bureau
(2) Civil and Criminal Liabilities = Ordinary courts
Summary of rights and conditions of membership
(1) Political Right (to vote, be voted for)
(2) Deliberative and Decision Making (vote on policy
issues)
(3) Rights over money matters
(4) Right to Information
NATURE OF RELATIONSHIP
446 IR, Book V, Rule I, Sec 1 (w)
447 IR, Book V, Rule I, Sec 1 (kk)
448 IR, Book V, Rule I, Sec 1 (i)
Lasallian Commission on Bar Operations 2018
LABOR LAW
Independent union, local union
Refers to a labor organization operating at the enterprise
level that acquired legal personality through independent
registration.446
National union or federation
Refers to a group of legitimate labor unions in a private
establishment organized for collective bargaining or for
dealing with employers concerning terms and conditions of
employment for their member unions or for participating in
the formulation of social and employment policies,
standards and programs, registered with the Bureau. 447
Chartered local (local/chapter)
Refers to a labor organization in the private sector operating
at the enterprise level that acquired legal personality
through registration with the Regional office.448
Affiliate
Refers to an independent union/local union affiliated with a
federation, national union, or is a chartered local which was
subsequently granted independent registration but did not
disaffiliate from its federation, reported to the regional office
and the bureau.449
A local union maintains its separate personality despite
affiliation with a larger national federation.450
Affiliation local union from the mother union
Affiliation happens when:
(1) An independent union affiliates with a federation
(2) A chartered local gets independent registration and
remains affiliated with the federation
Purpose: To increase collective bargaining power
Trade union centers
Composed of group of registered national unions or
federations.
Trade union centers cannot form chapters. There is no law
stating that a trade union center is among those labor
organizations which are allowed to charter. 451
MEMBER - LABOR UNION RELATIONSHIP
The nature of the relationship between the union and its
members is one which is fiduciary in nature, and arises out
of two factors:
(1) one is the degree of dependence of the individual
employee on the union organization; and
(2) the comprehensive power vested in the union with
respect to the individual.
The union may be considered but the agent of its members
for the purpose of securing for them fair and just wages and
good working conditions and is subject to the obligation of
449 IR, Book V, Rule I, Sec 1(a)
450Sugbuanon Rural Bank v. Laguesma (2000).
451San Miguel Corp. Employees Union v. San Miguel Packing (2007).
81
LABOR LAW
giving the members as its principals all information relevant
to union and labor matters entrusted to it.452
LABOR UNION – FEDERATION RELATIONSHIP
The mother federation is a mere agent and the local
chapter/union is its principal, notwithstanding the failure of
the local union to comply with the procedural requirements
that would make it a legitimate labor organization.453
Federation and union are separate entities. A local union
does not owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary association
owing its creation to the will of its members. Mere affiliation
does not divest the local union of its own personality,
neither does it give the mother federation the license to act
independently of the local union. It only gives rise to a
contract of agency, where the former acts in representation
of the latter. Hence, local unions are considered principals
while the federation is deemed to be merely their agent. 454
Supervisory/Rank and File Union Affiliation
Rank-and-file unions and supervisory unions operating
within the same establishment may join the same federation
or national union.455
When local supervisor unions are not allowed to
affiliate with federation of rank-and-file union.
A local supervisors' union should not be allowed to
affiliate with a national federation of unions of rank-and-
file employees where that federation actively participates in
union activities in the company, in order to avoid a
situation where supervisors would merge with the rank-
and-file or where the supervisors' labor organization
would represent conflicting interests.
Two conditions must concur:
• (1) the rank-and-file employees are directly under the
authority of the supervisory employees
• (2) the national federation, in which they are affiliated in,
is actively involved in union activities in the company456
The affiliation of two local unions in a company with the
same national federation is not by itself a negation of their
independence since, in relation to the employer, the local
unions are considered as the principals, while the federation
is deemed to be merely their agent. This conclusion is in
accord with the policy that any limitation on the exercise by
employees of the right to self-organization guaranteed in the
Constitution must be construed strictly. Workers should be
allowed the practice of this freedom to the extent recognized
in the fundamental law. 457
DISAFFILIATION
A local union may disaffiliate at any time from its mother
federation, absent any showing that the same is prohibited
452 Heirs of Cruz v. CIR, G.R. No. L-23331-32 (1969)
453Filipino Pipe & Foundry Corp v. NLRC (1999).
454Coastal Subic Bay Terminal v DOLE (2006).
455 Article 255, Labor Code
456Atlas Lithographic Services v. Laguesma (1992).
457De La Salle University Medical Center v. Laguesma (1998).
458 Id.
Lasallian Commission on Bar Operations 2018
LABOR LAW
under its constitution or rules. Such, however, does not
result in it losing its legal personality altogether.
The right of the local members to withdraw from the
federation and to form a new local union depends upon the
provisions of the union's constitution, by-laws, and charter
and, in the absence of enforceable provisions in the
federation's constitution preventing disaffiliation of a local
union, a local may sever its relationship with its parent.458
Disaffiliation is not considered disloyalty. A local union
which has affiliated itself with a federation is free to sever
such affiliation anytime, and such disaffiliation cannot be
considered disloyalty. In the absence of specific provisions in the
federation’s constitution prohibiting disaffiliation or the
declaration of autonomy of a local union, a local may dissociate
with its parent union.459
Disaffiliation, however, by a union that is not independently
registered is suicide as such actions remove the legal personality of
the union.
Mass disaffiliation
Certification election, most expeditious way to determine
SEBA after disaffiliation. Once the fact of disaffiliation has
been demonstrated beyond doubt, as in this case, a
certification election is the most expeditious way of
determining which labor organization is to be the exclusive
bargaining representative.460
Period
Disaffiliation may be pursued at any time as long as
supported by 2/3 vote of general membership. As a rule, a
labor union may disaffiliate from the mother union only
within the freedom period. PD 1391 - “No petition for
certification election, or intervention and disaffiliation shall
be entertained or given due course except within the 60-day
freedom period xxx.” However, under the Labor Code Art.
245-A, disaffiliation may be carried out by a vote of 2/3 of its
general membership in a meeting duly called for that
purpose to dissolve the organization.461
SUBSTITUTIONARY DOCTRINE
The "substitutionary" doctrine only provides that the
employees cannot revoke the validly executed collective
bargaining contract with their employer by the simple
expedient of changing their bargaining agent. 462 So, the
bargaining agent may be changed without affecting the
existence of the existing CBA.
BARGAINING UNIT
Labor organization
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. (Art. 219 (g))
459Supra note 79.
460PhilippineLabor Alliance Council v BLR, 75 SCRA 163 (1977).
461Allianceof Nationalist v. Samana, 258 SCRA 371 (1996).
462 Cebu Portland Cement Co. vs. Cement Workers Union, 25 SCRA 504, Nos. L-
25032 and L-25037-38 October 14, 1968
82
LABOR LAW
Any union or association of employees in the private sector
which exists in whole or in part for the purpose of collective
bargaining, mutual aid, interest, cooperation, protection or
other lawful purposes.463
Union
Any labor organization in the private sector organized for
collective bargaining and for other legitimate purposes464
Workers' association
An association of all workers organized for the mutual aid
and protection of its members or for a legitimate purpose
other than collective bargaining465
Legitimate labor organization
Any labor organization duly registered with the Department
of Labor and Employment, and includes any branch or local
thereof (Art. 219(h)).
Any labor organization in the private sector registered or
reported with the Department in accordance with Rules III
and IV of these Rules.466
Legitimate workers' association
An association of workers organized for mutual aid and
protection of its members or of any legitimate purposes
other than collective bargaining registered with the
Department467
Company union
Any labor organization whose formation, function, or
administration has been assisted by any act defined as unfair
labor practice by this Code. (Art. 219 (i))
Rationale for labor unions
A labor union is the instrumentality through which an
individual labourer, who is helpless as against a powerful
employer, may through concerted effort and activity, achieve the
goal of economic well-being.468
Union registration
Registration is basically compliance with documentary
requirements.
Bar 2010
Requirements for Independent Labor Unions (Art 240 LC
and IR Book V, Rule III, Sec. 2): Application form
(1) Registration fee: fifty pesos (P50.00)
(2) Officers' names and addresses, principal address of
the labor organization, minutes of the organizational
meetings and the list of workers who participated in
such meetings
(3) Names of all its members comprising at least twenty
percent (20%) of all employees in the bargaining unit
where it seeks to operate (As amended by EO No.
111, December 24, 1986)
463 IR, Book V, Rule I, Sec. 1(cc)
464 IR, Book V, Rule I, Sec. 1(zz)
465 IR, Book V, Rule I, Sec. 1(ccc)
Lasallian Commission on Bar Operations 2018
LABOR LAW
(4) Copies of its annual financial report, if applicant
union has been in existence for one or more years;
unless it has not collected any amount from the
members (in which case a statement to this effect
should be made)
(5) Four (4) copies of the constitution and by-laws of the
applicant union, minutes of its adoption or
ratification, and the list of the members who
participated in it
(6) Statement that it is not reported as a local chapter or
union
Federations or National Unions additional requirements
(IR Book V, Rule III, Sec. 2)
(1) Proof of affiliation of at least ten (10) chartered locals or
chapters (each of which must be a duly recognized
collective bargaining agent in the establishment or
industry in which it operates) supporting the
registration of such applicant federation or national
union
(2) Names and addresses of the companies where the locals
or chapters operate and the list of all the members in
each company involved.
Registration requirements for reporting a Local Chapter
(IR Book V, Rule III, Sec. 2 (e))
(1) Charter certificate issued by the federation or national
union and
(2) Names of its officers, their addresses, and the chapter’s
principal office
(3) Chapter’s constitution and by-laws
(4) Certification of the genuineness and due execution of
requirements 2 & 3, made under an oath by secretary or
treasurer and attested to by the president of the chapter
NOTE:
• Upon being issued the 1st requirement, the Chapter
gains legal personality to file a petition for
certification election
• Requirements 2 – 4 are in order for the chapter to
be entitled to all other rights and privileges of a
legitimate labor organization
Minimal requirement for local or chapter
The law gives this incentive as it favors the creation of
chapters/locals than independent labor organizations.
Where to file application for registration
1. For ILO, Chartered Locals, Workers Association: DOLE
Regional Office where the labor organization operates
2. For federations or national unions: Directly with the BLR
or through DOLE Regional Office which will forward the
application to the BLR
Action on application
Art 242
The Bureau shall act on all applications for registration
within thirty (30) days from filing.
All requisite documents and papers shall be certified
under oath by the secretary or the treasurer of the
organization, as the case may be, and attested to by its
president.
466 IR, Book V, Rule I, Sec. 1(ee)
467 IR, Book V, Rule I, Sec. 1(ff)
468 Guijarno v. CIR (1973).
83
LABOR LAW LABOR LAW

IR, Book V, Rule IV, Sec. 4 (3) The Bureau or the Office of the Secretary shall decide
The Regional Office or the Bureau, as the case may be, the appeal within twenty (20) days from receipt of the
shall act on applications for registration or notice of records of the case
change of name, affiliation, merger and consolidation
within one (1) day from receipt thereof, either by:
Effects of registration
approving the application and issuing the certificate of
(1) It grants the union the status of legitimacy of a labor
registration/acknowledging the notice/report; or
organization;
(2) Results in the acquisition of legal personality; and
denying the application/notice for failure of the
(3) It becomes entitled to all rights and privileges granted
applicant to comply with the requirements for
by law to legitimate labor organizations.
registration/notice.
IR, Book V, Rule III, Sec. 2 (E)
(As amended by Dept. Order No. 40-D-05, series of 2005
For Local Chapters: gains legal personality only for
purposes of filing a petition for certification election from
Denial of registration, appeal.
the date it was issued a charter certificate.
Art 243
The decision of the Labor Relations Division in the
But, if the other requirements are submitted, it is entitled
regional office denying registration may be appealed by the
to all rights and privileges granted by law to legitimate
applicant union to the Bureau within ten (10) days from
labor organizations.
receipt of notice thereof.
Union personality not subject to collateral attack
IR, Book V, Rule IV, Sec. 5-7
Sec. 5:
Once a union acquires a legitimate status as a labor
Grounds for denial:
organization, it continues as such until its certificate of
(1) supporting documents are incomplete
registration is cancelled or revoked in an independent action
(2) supporting documents do not contain the required
for cancellation (petition for cancellation of registration). 469
certification and attestation
BARGAINING UNIT
Periods:
(1) Notify the applicant within one (1) day from receipt
Definition
of application/notice
(2) Give applicant thirty (30) days from receipt of notice
Bargaining unit is a group of employees sharing mutual
to complete the necessary requirements; upon
interest within a given employer unit, comprised of all or
prescription of this period, such application will be
less that all of the entire body of employees in the employer
denied, or the notice will be returned, without
unit or any specific occupational or geographical grouping
prejudice to the filing of a new application or notice
within such employer unit.
Sec. 6: If union is not the exclusive representative of the majority of the
Form of denial: employees of petitioner, it cannot demand from employer the right
In writing, stating in clear terms the reasons for denial or to bargain collectively in their behalf. xxx Only the labor
return
organization designated or selected by majority of the
employees in an appropriate collective bargaining unit is the
Period for appeal:
exclusive representative of the employees in such unit for
Within ten (10) days from receipt of notice:
the purpose of collective bargaining, through CE or
(1) to the Bureau if denied by the Regional Office
voluntary recognition.470
(2) to the Secretary if denied by the Bureau
Where a union certified as EBA in a bargaining unit had
Grounds for appeal:
previously filed a case in representation not only of its
Grave abuse of discretion
members but also of the members of a rival union, the
latter’s members cannot subsequently claim that they were
Procedure on appeal:
not parties in the earlier case.471
(1) File a memorandum of appeal with the Regional
Office or the Bureau that issued the denial/return of
DETERMINATION OF APPROPRIATE BARGAINING
notice
UNIT
(2) The memorandum (together with the complete
Our labor laws do not however provide the criteria for
records of the application/notice) shall be
determining the appropriate bargaining unit.
transmitted by the Regional Office to the Bureau, or
Jurisprudence/case laws provide for different factors.472
by the Bureau to the Office of the Secretary, within
twenty-four (24) hours from receipt of the Who determines?
memorandum of appeal

469 Legend International v. Kilusang Manggagawa ng Legenda (2011). 471Militante v NLRC, 246 SCRA 365 (1995).
472UP v Calleja, 211 SCRA 451 (1992).
470Phil Diamond Hotel v Manila Diamond Hotel EU, G.R. NO.158075 (2006).

Lasallian Commission on Bar Operations 2018 84

LABOR LAW
Initially, the members themselves. But if dispute arises as
regards appropriateness of ABU, it may be referred to the
BLR. Appropriateness may also be resolved in a petition for
certification election.
Tests to determine the appropriate bargaining unit
The basic test in determining the appropriate bargaining
unit is that a unit, to be appropriate, must affect a grouping
of employees who have substantial, mutual interests in
wages, hours, working conditions and other subjects of
collective bargaining.473
Factors
(1) Globe doctrine - Express will or desire of the employees
(2) Substantial Mutual Interests Rule - Affinity and Unity
of the employees’ interest, such as substantial similarity
of work and duties, or similarity of compensation and
working conditions
(3) Similarity of Employment status - The determination of
the appropriate bargaining unit is based on the
employment status of the employees.
(4) Collective Bargaining history – This factor puts
premium to the prior collective bargaining history or
affinity of the employees in determining the appropriate
bargaining unit. However, the existence of a prior
collective bargaining is neither decisive nor conclusive
in the determination of what constitute an appropriate
bargaining unit.
Bar 2007
Community of interest
Not exactness of interests. Interrelatedness or
interdependence is sufficient.
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 employees the exercise of their CB
rights. 474
The bargaining history factor is the weakest factor in
determining the bargaining unit. xxx The [Supreme Court]
has categorically ruled that the existence of a prior collective
bargaining history is neither decisive nor conclusive in the
determination of what constitutes an appropriate bargaining
unit.475
What will best assure the employees’ rights to CB is
principal consideration. It is not the convenience of the
employer that constitutes the determinative factor in
forming an appropriate bargaining unit.476
Unit severance and Globe Doctrine
Bar 2007
Globe doctrine. Bargaining units may be formed through
separation of new units from existing from existing ones
whenever plebiscites had shown the worker’s desire to
have their own representatives.477
473Supra note 26.
474Democratic Labor Assoc. v. Cebu Stevedoring, 103 Phil 1103 (1958).
475San Miguel v. Laguesma, G.R. No. 100485 (1994).
476Supra note 70.
477Mechanical Departments Labor Union v. CIR, 24 SCRA 925 (1968).
Lasallian Commission on Bar Operations 2018
LABOR LAW
Duty of court to conduct plebiscite478
No one would deny court’s right to full investigation in
arriving at a correct and conclusive finding of fact in order to
deny or grant the petitions for CE. One way of determining
the will of employees. Plebiscite not to be conducted by the
DOLE but by the court. Order to hold plebiscite in
interlocutory.
Size of unit and effect of self-organization
When confidential employees are few in number and by
practice and tradition identified with the supervisors, such
identity of interest should allow their inclusion in the
bargaining unit of supervisors-managers for purposes of CB.
The breaking up of bargaining agents into tiny units will
greatly impair their organizational value – the
ineffectiveness of a small union with scanty members as
bargaining unit. 479
Effect of prior agreement
Prior agreement not binding to employees of separate BU. A
prior agreement (collective bargaining agreement) does not
bind employees of a separate bargaining unit or if they are
indeed part of the bargaining unit. The agreement will not
bind subsequent federation or union if it curtails the right to
self-organization as guaranteed by the Constitution and
labor laws.480
Determining Agency
BLR no longer handles all labor-management disputes. Its
functions and jurisdiction are largely confined to union
matters, collective bargaining registry, and labor education.
The industrial court enjoys a wide discretion in determining
the procedure necessary to insure the fair and free choice of
bargaining representations by employees. 481
BARGAINING REPRESENTATIVE
Pre-condition: employer-employee relationship
Under the law, the duty to bargain collectively arises only
between an employer and its employees. Where neither
party is an employer nor an employee of the other, no such
duty would exist. Where there is no duty to bargain
collectively, the refusal to bargain violates no right.482
Determination of representation status
1. SEBA Certification (replaced Voluntary
Recognition)
2. Certification Election
3. Consent Election
4. Run-off Election
An employer does not have the power to declare a union as
the exclusive representative of its workers for the purpose of
collective bargaining. Voluntary recognition [now SEBA
Certification] is not a mere formality. Employer had no
478Kapisanan ng mga Manggagawasa Manila Railroad Co. v Yard Crew Union
(1960).
479Filoil refinery v. Filoil Supervisory & Confidential Employees Assoc. (1972)
480General Rubber v. BLR (1997).
481 Supra note 72.
482 Allied Free Workers Union v. Cia Maritima (1967)
85
LABOR LAW
authority to give this certification, because it is the
employees’ prerogative (no the employers) to determine
whether they want a union to represent them and which
union it should be.483
SEBA CERTIFICATION [REPLACED VOLUNTARY
RECOGNITION]
Definition
Also known as the Request for Sole and Exclusive
Bargaining Agent (SEBA) Certification. Under SO 40-I-15,
this repealed and replaced Voluntary Certification.
The process by which a legitimate labor union is recognized
by the employer as the exclusive bargaining representative
or agent in a bargaining unit, reported with the Regional
Office.
The determination of an exclusive bargaining agent shall be
through SEBA certification in cases where there is only one
legitimate labor organization operating within the
bargaining unit in an unorganized establishment.
Requirements
SEBA Certification can be conducted:
(1) In an unorganized establishment (wherein there is
no certified exclusive bargaining representative),
(2) Where there is only 1 union operating in the
bargaining unit, and
(3) The union is comprised of at least majority (51%)
of the number of employees covered by the
bargaining unit
• If unorganized but BU has more than 1 union  request
will be referred to the election officer for the conduct of
a CE
• If establishment is organized  request will be referred
to the Mediator-Arbitrator for determination of
propriety of conducting a CE
Effects
(1) The certified labor union enjoys all rights and privileges
of an exclusive bargaining agent
(2) Has the right to compel management to bargain with it
(3) One-year period bar from the filing of a petition for CE
starting from the issuance of the certificate
Public sector
Section 11, EO No. 180: Sole and Exclusive Employees’
Representative
A duly registered employees’ organization shall be
accorded voluntary recognition upon a showing that no
other employees’ organization is registered or is seeking
registration, based on records of the Bureau of Labor
Relations, and that the said organization has the majority
support of the rank-and-file employees in the
organizational unit.
Where there is only one registered organization in the unit,
they may be accorded voluntary recognition.
483 Samahang Manggagawa sa PERMEX v SOLE, G.R. No. 10772 (1998).
Lasallian Commission on Bar Operations 2018
LABOR LAW
Conditions:
Proven that there is no other employees’ organization
registered or seeking registration in the unit (based on the
records of BLR)
This organization must have the majority support of the rank-
and-file employees in the unit.
CERTIFICATION ELECTION
Bar 2001, 2003, 2004, 2005, 2013
IR, Book V, Rule I, Sec 1 (h) Certificate election or consent
election
refers to the process of determining through secret ballot
the sole and exclusive representative of the employees in
an appropriate bargaining unit for purposes of collective
bargaining or negotiation.
A certification election is ordered by the department, while a
consent election is voluntarily agreed upon by the parties, with
or without the intervention by the department.
Nature of proceeding
Certification election is not a litigation, but a mere
investigation of a non-adversary character where the rules of
procedure are not strictly applied. Technical rules and
objections should not hamper the correct ascertainment of the
labor union that has the support of confidence of the majority
of the workers and is thus entitled to represent them in their
dealings with management.484
Bar 2012
Who may file
A petition for CE may be filed by a legitimate labor union
in an unorganized establishment.
Med-arbiter must automatically order the conduct of CE
in an unorganized establishment upon filing of a petition
for CE by a legitimate labor union. 485
Employer may also be an initiating party (Bystander rule)
Bar 1996
Art 270.When an employer may file petition.
When requested to bargain collectively, an employer may
petition the Bureau for an election. If there is no existing
certified collective bargaining agreement in the unit, the
Bureau shall, after hearing, order a certification election.
All certification cases shall be decided within twenty (20)
working days.
The Bureau shall conduct a certification election within
twenty (20) days in accordance with the rules and
regulations prescribed by the Secretary of Labor.
Employer has no standing to question a petition for CE.
Employer is not a party to certification election which is the
sole or exclusive concern of the workers except when workers
484Port Workers Union v DOLE, 207 SCRA 329 (1992).
485Sugbuanon Rural Bank v Laguesma, G.R. No. 116194 (2000).
86
LABOR LAW
request to bargain collectively. Employer may not question
the validity of a CE. 486
Except where the employer has to file a petition for certification
election pursuant to Article 258 of the Labor Code because of a
request to bargain collectively, it has nothing to do with a
certification election which is the sole concern of the workers.
Its role in a certification election has aptly been described
in Trade Unions of the Philippines and Allied Services (TUPAS) v.
Trajano, as that of a mere by-stander. It has no legal standing in
a certification election as it cannot oppose the petition or
appeal the Med-Arbiter's orders related thereto. An employer
that involves itself in a certification election lends suspicion to
the fact that it wants to create a company union. 487
Voting is done by a secret ballot ordered by the DOLE.
Purpose
• Find out if employees want to be represented;
• Find out which union should be certified as the sole and
exclusive bargaining representative
Form of Petition
(1) In writing
(2) Verified under oath
(3) Members and officers list
(4) Description of the bargaining unit
Statement indicating that:
(1) bargaining unit is unorganized or there is no registered
collective bargaining agreement;
(2) petition is filed within 60-day freedom period, if there is
an existing CBA;
(3) petition is filed outside the 1-year period from date of
recording of voluntary recognition or conduct of CE or
run-off and no appeal is pending, if another union had
been previously recognized voluntarily or certified in a
valid certification.
(4) Signatures as proof of support of at least 25% of all
employees of the APU
Rules of procedure not binding on labor cases. Verification of
pleadings is not a formal jurisdictional requirement. When all
requirements have been complied with, it is incumbent upon
the med-arbiter to order a CE to be conducted. 488
Bar 2009
Substantial Support
25% consent signatures requirement may be belatedly
submitted. The administrative rule requiring the
simultaneous submission of the 25% consent signatures
upon the filing of petition for certification election should
not be strictly applied to frustrate the determination of
the legitimate representative of the workers.
Significantly, the requirement in the rule is not found in
Article 268, the law it seeks to implement. This is all the
more reason why the regulation should at best be given
only a directory effect. Accordingly, the mere filing of a
486Hercules Industries, Inc. v SOLE, 214 SCRA 129 (1992).
487Philippine Scouts, et al., v Torres, 224 SCRA 682 (1993).
488National Mines and Allied Workers Union v SOLE, 227 SCRA 821 (1993).
489Port Workers Union v DOLE, 207 SCRA 329 (1992).
490Oriental Tin Can Labor Union v SOLE, 294 SCRA 640 (1998).
491Sugbuanon Rural Bank v Laguesma, G.R. No. 116194 (2000).
Lasallian Commission on Bar Operations 2018
LABOR LAW
petition for certification election within the freedom period is
sufficient basis for the issuance of an order for the holding of a
certification election, subject to the submission of the consent
signatures within a reasonable period from such filing.489
Whether retractions were before or after the filing of the
petition for CE has not much relevance. The rule being
followed in case of alleged retractions and withdrawals is
that the best forum for determining whether there was indeed
retractions is the certification election itself wherein the workers
can freely express their choice in a secret ballot.490
In an unorganized establishment
Art 269. Petitions in unorganized establishments.
In any establishment 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 a legitimate labor organization. (As
amended by Section 24, Republic Act No. 6715, March 21,
1989)
Article 263 of the Labor Code mandates that a certification
election shall automatically be conducted by the Med-Arbiter
upon the filing of a petition by a legitimate labor organization.
Nothing is said therein that prohibits such automatic conduct
of the certification election if the management appeals on the
issue of the validity of the union's registration.491
Since no certified bargaining agent represented the
supervisory employees, the establishment (petitioner) may be
deemed an unorganized establishment within the purview of
Art. 257 of the Labor Code. xxx The fact that petitioner's rank-
and-file employees were already represented by a certified
bargaining agent does not make the establishment an
organized establishment vis-a-vis the supervisory employees.
After all, supervisory employees are "not . . . eligible for
membership in a labor organization of the rank-and-file
employees."492
In an organized establishment
Refers to an enterprise where there exists a recognized or
certified sole and exclusive bargaining agent.493
Cannot conduct CE if any of the following BARS exist:
Bar 2011
(a) Contract Bar Rule (except during 60-day freedom
period)494
(b) Certification Year Bar Rule495
(c) Negotiation Bar Rule
(c) Deadlock Bar Rule496
CONTRACT BAR RULE
Bar 1999, 2000
492Philippine Telegraphic v Laguesma, 223 SCRA 452 (1993).
493 IR, Book V, Rule 1, Sec. 1 (ll)
494 LC, Art. 265 and IR, Book V, Rule XVII, Sec. 7
495 IR, Book V, Rule VIII, Sec. 14 (d) and (e)
496 IR, Book V, Rule VIII, Sec. 14 (d)
87
LABOR LAW
Contract bar rule. Existing CBA bars any other labor
organization from filing a petition for CE except within
60-day freedom period. 497
Petition during freedom period
Art 264. Duty to bargain collectively when there exists a
collective bargaining agreement.
When there is a collective bargaining agreement, the duty
to bargain collectively shall also mean that neither party
shall terminate nor modify such agreement during its
lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60)
days prior to its expiration date. It shall be the duty of
both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing
agreement during the 60-day period and/or until a new
agreement is reached by the parties.
Petition beyond freedom period
Purpose of prohibition of filing petition for CE beyond
freedom period. Otherwise put, the rule prohibits the filing
of a petition for certification election during the existence of
a collective bargaining agreement except within the freedom
period when the said agreement is about to expire. The
purpose is to ensure stability in the relationships of the
workers and the management by preventing frequent
modifications of any collective bargaining agreement earlier
entered into by them in good faith and for the stipulated
original period.498
CBA is automatically renewed until new agreement is
reached. 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 or until a new agreement is reached by the parties. 499
CERTIFICATION YEAR BAR RULE / ONE YEAR BAR
RULE
Provides that no petition for a CE may be filed within one year
from the date of a valid certification, consent, or run-off
election. Thus if an election had been held but not one of the
unions won, a PCE may be filed again but only after 12 mos.
The same ban shall apply even if “NO UNION” won in the
previous election. The purpose of this bar is to give a chance
to the union to conclude a CBA with the employer within 1
year.
NEGOTIATION BAR RULE
CE barred if union has commenced and sustained
negotiations in good faith within 1 year
DEADLOCK BAR RULE
Provides that a petition for CE can only be entertained if there
is no pending bargaining deadlock submitted to conciliation
or arbitration or which has become the subject of a valid
notice of strike or lockout. The principal purpose is to ensure
stability in the relationship of the workers and the
management.
497AtlanticGulf and Pacific Co. Manila Inc. v. Laguesma (1992).
498National Congress of Union in Sugar Industry v Ferrer – Calleja (1992).
499 Supra note 55.
Lasallian Commission on Bar Operations 2018
LABOR LAW
Exception: there was no reasonable effort in good faith
bargaining
Forced intervention/Motion for intervention
Incumbent union, forced intervenor. By force of law, an
incumbent union is automatically impleaded in a petition for
CE as well as other contending choices.
Written consent of at least 20% of the BU applies to petition
for CE only. It is crystal clear from the said provisions that the
requisite written consent of at least 20% of the workers in the
bargaining unit applies to petitioners for certification election
only, and not to motions for intervention. Nowhere in the
aforesaid legal provisions does it appear that a motion for
intervention in a certification election must be accompanied
by a similar written consent.500
Responsible Agencies
• BLR and med-arbiters (original jurisdiction)
• DOLE (regional offices)
Requisite for validity of election/failure of election
Majority of all eligible voters must cast their votes.
Less than majority = failure of election.
Re-election may be had upon appeal of any of the unions to
be held within 6 months after the first election.
Election was held by SC as null and void because members
of cooperative (ineligible to vote) were allowed to vote in the
election.501
Effect of private agreement
Private agreement is not binding to foreclose the petition for
CE.502
• Posting notice
• Notice of pre-election conference
• Voters’ list
• Optional: sample ballot
Posting of notice may not be waived.
Voter's list
IR, Book V, Rule IX, Sec 6 (as amended by DO 40 – I - 15
All employees who are members of the appropriate
bargaining unit 3 months prior to the filing of the
petition/request shall be eligible to vote.
An employee who has been dismissed from work but has
contested the legality of the dismissal in a forum of
appropriate jurisdiction at the time of the issuance of the
order for the conduct of a certification election shall be
considered a qualified voter, unless his/her dismissal
was declared valid in a final judgment at the time of the
conduct of the certification election.
In case of disagreement over the voters’ list or over the
eligibility of voters, all contested voters shall be allowed
to vote. But their votes shall be segregated and sealed in
500Philippine
Association of Free Labor Union v Calleja, 169 SCRA 491 (1989).
501Benguet
Electric Coop v Calleja, 180 SCRA 740 (1989).
502PLUM Federation v Noriel, 119 SCRA 299 (1982).
88
LABOR LAW
individual envelopes in accordance with Sections 11 and
12 of this Rule.
Employees with questioned dismissal are still qualified to
vote. Their case need not be resolved before CE be
conducted.503 Without a final judgment declaring the legality
of dismissal, dismissed employees are eligible or qualified
voters
Election proceedings
It refers to the period during a certification election, consent
or run-off election and election of union officers, starting
from the opening to the closing of the polls, including the
counting, tabulation and consolidation of votes but
excluding the period for final determination of the
challenged votes and the canvas thereof.
Waiver of protest
Grounds of protests not raised before the close of the
proceedings and duly formalized within 5 days after the close of
the election proceedings are deemed waived.504
However, in one case, the SC ruled that rule on when one Is
allowed to file a protest should not be a ground to dismiss a
protest by former members of the petitioning union, if the
reason for the former members’ late protest was because
they had to form another union to file the said protest, as a
result of the fraud committed against them by the
petitioning union. Mere technicalities should not be allowed
to prevail over the welfare of the workers. What is essential
is that they be accorded an opportunity to determine freely
and intelligently which labor organization shall act on their
behalf. Having been denied this opportunity by the betrayal
committed by petitioning union in the present case, the
employees were prevented from making an intelligent and
independent choice.505
Appeal
Art 272. Appeal from certification election orders.
Any party to an election may appeal the order or results
of the election as determined by the Med-Arbiter directly
to the Secretary of Labor and Employment on the ground
that the rules and regulations or parts thereof established
by the Secretary of Labor and Employment for the
conduct of the election have been violated. Such appeal
shall be decided within fifteen (15) calendar days. (As
amended by Section 25, Republic Act No. 6715, March 21,
1989)
“Close of election proceedings”
Period from the closing of the polls to the counting and
tabulation of the votes, as it could not have been the
intention of IR to include here the period for the final
determination of the challenged votes and canvas. 506
Nullification of election results
A general allegation of duress is not sufficient to invalidate a
CE. It must be shown by competent and credible proof. xxx
503Transport Corp v Laguesma, 227 SCRA 827 (1993).
504SamahanngManggagawa v Laguesma, 267 SCRA 303 (1997).
505 DHL Phils. United Rank and File Assoc. v. Buklod ng Manggagawa ng DHL
Phils. (2004).
506Phil Fruits and Vegetable Industries v Torres, 211 SCRA 95 (1992).
507United Employees Union of Gelmart v Noriel, 67 SCRA 267 (1975).
Lasallian Commission on Bar Operations 2018
LABOR LAW
One’s religious convictions may be the basis for an employee
joining or refusing to join a labor union; exercise of
constitutional freedom cannot be a ground to invalidate
CE.507
Suspension of certification election: Prejudicial Question
Anterior to the granting of an order allowing a CE, it
becomes necessary to inquire into the composition of labor
organization whenever status of the labor organization is
challenged on the basis of Art 255 (Ineligibility of
Managerial EEs to Join any LO; Right of Supervisory EEs).508
Opposition
Non-submission of books of account is a ground to oppose a
petition for CE by the local or chapter concerned.509
Effect of Petition for Cancellation of Registration
An order to hold a certification election is proper despite the
pendency of the petition for cancellation of the registration
certificate of the respondent union. The rationale for this is that
at the time the respondent union filed its petition, it still had
the legal personality to perform such act absent an order
directing a cancellation xxx Also, the pendency of a petition for
cancellation of union registration does not preclude CB. 510
Public Sector
Recognition after Certification Election
Section 12, EO No. 180: Sole and Exclusive Employees’
Representative
Where there are two or more duly registered employees’
organizations in the appropriate organizational unit, the
Bureau of Labor Relations shall, upon petition, order the
conduct of a certification election and shall certify the
winner as the exclusive representative of the rank-and-
file employees in said organizational unit.
Where there are two or more unions in the bargaining unit, a
Certification Election must take place.
Certification Election
“Accreditation”
• Whoever gets accredited will be the exclusive
representative of the unit
• May be conducted by the BLR
Whether the employees of National Housing Corporation
are covered by the Labor Code or by the civil service laws, a
certification election may be conducted. 511
CONSENT ELECTION
• Not ordered by the DOLE
• Agreed upon by the parties, with or without the
intervention of the DOLE
Agreement
508Dunlop Slazenger v SOLE, G.R. No. 131248 (1998).
509Protection Technology v SOLE, 242 SCRA 99 (1995).
510Legend International v Kilusang Manggagawang Legenda, G.R. No. 169754
(2011).
511Trade Unions of the Philippines and Allied Services vs. National Housing
Corporation, GR No. 49677 (1989)
89
LABOR LAW
In case the contending unions agree to a consent election, the
Med-Arbiter shall forward the records of the petition to the
Regional Director for the determination of the Election
Officer by the contending unions through raffle. The first
pre-election conference shall be scheduled within 10 days
from the date of entry of agreement to conduct consent
election.
Number of hearings
If the contending unions fail to agree to a consent election,
the Med-Arbiter may conduct as many hearings but in no
case shall the conduct thereof exceed 15 days from the date
of the scheduled preliminary conference/hearing, after
which time the petition shall be considered submitted for
decision.
Effects of consent election
IR, Book V, Rule VIII, Sec 23. Effects of consent election
Where a petition for certification election had been filed,
and upon the intercession of the Med-Arbiter, the parties
agree to hold a consent election, the results thereof shall
constitute a bar to the holding of a certification election
for one year from the holding of such consent election.
Where an appeal has been filed from the results of the
consent election, the running of the one-year period shall
be suspended until the decision on appeal has become
final and executory.
Where no petition for certification election was filed but
the parties themselves agree to hold a consent election
with the intercession of the Regional Office, the result
thereof shall constitute a bar to another petition for
certification election
RUN-OFF ELECTION
Definition
Bar 2000, 2006
Art 268 par 1 penultimate sentence
IR, Book V, Rule I, Sec 1 (ss)
An election between the labor unions receiving the two highest
number of votes in a certification or consent election with 3 or
more choices, where such a certified or consent results in
none of the 3 or more choices receiving the majority of
the valid vote cast; provided that the total number of votes
for all contending unions is at least 50% of the number of
votes cast.
Conditions for run-off
✓ There is a valid election (majority of employees in BU
voted)
✓ No choice in the election received majority of the votes
cast;
✓ Total number of votes for all contending unions = at least
50% of the number of votes cast;
✓ No unresolved challenge or election protest
• If all conditions are present, then a run-off election can
be conducted between the labor unions receiving the 2
highest number of votes.
512Acedera v. ICTSI, G.R. No. 146073 (2003).
513TropicalHut Employees Assoc. V. Tropical Hut Food Market, G.R. No. L-
43495-99 (1990).
Lasallian Commission on Bar Operations 2018
LABOR LAW
RIGHTS OF LABOR ORGANIZATION
(1) Right to act as the representative of its members in
collective bargaining
(2) Right to be certified as the exclusive representative of all
the employees in an appropriate bargaining unit
(3) Right to be furnished by the employer, upon written
request, with its annual audited financial statements
within thirty (30) calendar days from the date of receipt
of the request, or within sixty (60) days before the
expiration of the existing collective bargaining
agreement, or during the collective bargaining
negotiation
(4) Right to own property, real or personal
(5) Right to sue and be sued in its registered name
(6) Right to undertake all other activities not contrary to law
for the benefit of the organization and its members
Rule on intervention
A labor union is one such party authorized to represent its
members. This authority includes the power to represent its
members for the purpose of enforcing the provisions of the
CBA. A party acting in a representative capacity, such as a
union, may be permitted to intervene in a case.
A person whose interests are already represented will not
be permitted to do the same except when there is a
suggestion of fraud or collusion or that the representative
will not act in good faith for the protection of all interests
represented by him. 512
Effects of non-registration
(1) No acquisition of legal personality
(2) Union does not become entitled to all rights and
privileges granted by law to legitimate labor
organization.
A local union owes its creation and continued existence to
the will of its members and not to the federation. 513
Being an affiliate union does not mean the affiliate cannot
stand on its own without the federation.514
Cancellation of Union Certificate of Registration
The legal process leading to the revocation of the legitimate
status of a union or workers’ association.515
Grounds for cancellation (Art. 247)
(1) Misrepresentation, false statement or fraud in
connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the
minutes of ratification, and list of members who took
part in the ratification.
514 MSMG-UWP v. Ramos (2000)
515 IR, Book V, Rule I, Sec. 1 (g)
90
LABOR LAW
(2) Misrepresentation, false statements or fraud in
connection with the election of officers, minutes of
election of officers, list of voters.
(3) Voluntary dissolution by the members.
Comingling not a ground. The rule in Art. 256 on
prohibiting the commingling of supervisors with rank-and-
file employees in a union is not a ground for cancellation of
union registration.516
For fraud and misrepresentation to be grounds for
cancellation of union registration under the Labor Code, the
nature of the fraud and misrepresentation must be grave
and compelling enough to vitiate the consent of a majority
of union members. 517
Existence of a ground does not automatically lead to
cancellation. An overly stringent interpretation of the statute
governing cancellation of union registration without regard
to the surrounding circumstances cannot be allowed.
Otherwise, it would lead to an unconstitutional application
of the statute and emasculation of public policy objectives.
Worse, it can render nugatory the protection to labor and
social justice clauses that pervades the Constitution and the
Labor Code.518
Cancellation of union registration kills the union.
Cancellation of a certificate of registration is the equivalent
of snuffing out the life of a labor organization, for without
such registration, it loses its rights under the labor code.519
Union-member relations are governed by
(1) Union’s constitution and by-laws
(2) Art 241: Rights and conditions of membership
(3) Art 260: ULP of labor organizations
CHECK OFF, ASSESSMENT, AGENCY FEES
Union dues and special assessments
Right of members as regards Union Funds (Art 250)
• To full and detailed financial reports (250-b)
• To audited, verified financial statements (250-l)
• To inspect books of accounts (250-m)
• To have fiscal officers duly authorized by
constitution and by-laws (250-g)
• To have the union’s finances reported to the DOLE
(250-g)
• To have fiscal officers who are were not convicted
for any crime involving moral turpitude (250-f)
• To have members’ payment receipted (250-h)
• To have income and expenses properly
documented (250-h)
• To be secure in that the funds of the organization
are not misappropriated and are being used for
authorized purposes only (250-j)
• To be given a true and correct financial account of
monies received and paid by the union (250-i)
• To not be charged or levied special assessment of
other extra-ordinary fees, unless authorized
516 Air Phil v. BLR (2006).
517 Mariwasa v. Secretary of DOLE (2009).
Lasallian Commission on Bar Operations 2018
LABOR LAW
through a written resolution by majority of the
members (250 – n)
Bar 2009, 2011
Art. 289. Visitorial power.
The Secretary of Labor and Employment or his duly
authorized representative is hereby empowered to inquire
into the financial activities of legitimate labor
organizations upon the filing of a complaint under oath
and duly supported by the written consent of at least
twenty percent (20%) of the total membership of the labor
organization concerned and to examine their books of
accounts and other records to determine compliance or
non-compliance with the law and to prosecute any
violations of the law and the union constitution and by-
laws: Provided, That such inquiry or examination shall not
be conducted during the sixty (60)-day freedom period nor
within the thirty (30) days immediately preceding the date
of election of union officials. (As amended by Section 31,
Republic Act No. 6715, March 21, 1989)
Union dues
Are payments to meet the union’s general and current
obligations. Payment must be regular, periodic, and
uniform.
Bar 1997, 2001, 2002
Art 250 (n), (o)
(n) No special assessment or other extraordinary fees
may be levied upon the members of a labor organization
unless authorized by a written resolution of a majority of
all the members in a general membership meeting duly
called for the purpose. The secretary of the organization
shall record the minutes of the meeting including the list
of all members present, the votes cast, the purpose of the
special assessment or fees and the recipient of such
assessment or fees. The record shall be attested to by the
president.
(o) Other than for mandatory activities under the Code,
no special assessments, attorney’s fees, negotiation fees or
any other extraordinary fees may be checked off from
any amount due to an employee without an individual
written authorization duly signed by the employee. The
authorization should specifically state the amount,
purpose and beneficiary of the deduction;
Payment of attorney’s fees
Art 228 (b) Appearances and Fees
No attorney’s fees, negotiation fees or similar charges of
any kind arising from any collective bargaining
agreement shall be imposed on any individual member of
the contracting union: Provided, However, that
attorney’s fees may be charged against union funds in an
amount to be agreed upon by the parties. Any contract,
agreement or arrangement of any sort to the contrary
shall be null and void. (As amended by Presidential
Decree No. 1691, May 1, 1980)
Payment of attorney’s fees is an obligation of the union, not
the employees. Attorney’s fees must be charged with the
518 Heritage Hotel Manila v. National Union of Workers (2011).
519Supra note 22.
91
LABOR LAW
union funds, not on individual members. Art 228 intended
to protect employee against unwarranted practices that
would diminish his compensation without his consent. 520
Requirements for special assessments
• Authorization by written resolution of general
membership at a general membership meeting
• Secretary's record of the minutes
• Individual written authorization for check-off
signed by employee
Check-off
The method of deducting from an employer's pay, the
amounts due to the union for fees, fines or assessments.
Substantial compliance not sufficient. Failure of the union to
comply strictly with the requirements set out by the law
invalidates the questioned special assessment. Substantial
compliance is not enough in view of the fact that special
assessment will diminish the compensation of union
members.521
Express consent of the employee to any deduction in his
compensation is required to be obtained in accordance with
the steps outlined by the law, which must be followed to the
letter.522
Attorney’s fees cannot be deducted without employee’s
written consent. Attorney’s fees may not be deducted or
checked off from any amount due to an employee without
his written consent. No deduction can be made from the
salaries of the concerned employees other than those
mandated by law. 523
COLLECTIVE BARGAINING
Policy declaration
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. (Art. 218-A
(a))
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 the Labor Code. (Art. 218-B)
Definition
Collective bargaining is a process where the parties agree to
fix and administer terms and conditions of employment
which must not be below the minimum standards fixed by
law, and set a mechanism for resolving their grievances.
DUTY TO BARGAIN COLLECTIVELY
520PacificBanking Corporation v Clave, 128 SCRA 112 (1984).
521Palacolv Ferrer-Calleja, 182 SCRA 710 (1990).
522 Peninsula Employees Union v. Esquivel (2016)
Lasallian Commission on Bar Operations 2018
LABOR LAW
The duty to bargain collectively means the performance of a
mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work, and all other
terms and conditions of employment including proposals for
adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such
agreements if requested by either party but such duty does
not compel any party to agree to a proposal or to make any
concession. (Art. 263)
Collective bargaining as a democratic means
It is a mutual obligation of employer and union. Collective
bargaining, which is defined as negotiation towards collective
agreement, is one of the most democratic frameworks under
the New Labor Code, designed to stabilize the relation
between labor and management and to create a sound and
stable industrial peace. It is a mutual responsibility of the
employer and the Union and is characterized as a legal
obligation.524
Legal duty to initiate contract negotiation
While it is a mutual obligation of the parties to bargain, the
employer, however, is not under any legal duty to initiate
contract negotiation. The mechanics of collective bargaining
is set in motion only when the following jurisdictional
preconditions are present, namely:
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 by the Labor Code;
2. Proof of majority representation; and
3. A demand to bargain.525
CB does not end with negotiation
Collective bargaining does not end with the execution of the
agreement. It is a continuous process.
Ensures workers’ participation in decision-making. CB is a
way to ensure workers’ participation in decision-making. It
provides for an orderly procedure by which each side can
seek to present to the other best possible case for satisfaction
of particular demands and elicits the consent of those who
will have to live under the terms of any agreement derived
from the bargaining process.
Duty to bargain when there is no CBA
It is the mutual obligation of the employer and SEBA to meet
and convene.
The purposes of the meeting and convening are:
(1) To negotiate an agreement on wages, hours of work, and
all other terms and conditions of employment, including
mandatory provisions for grievances and arbitration
machineries
(2) To execute a contract incorporating such agreement
Kind of compliance
“prompt, expeditious, in good faith”
523Gabriel v Sec of Labor, G.R. No. 115949 (2000)
524Kiok Loy v NLRC, 141 SCRA 179 (1986).
525 Id.
92
LABOR LAW LABOR LAW

Limitations • Wages and other types of compensation

“no compulsion on either party to agree to a proposal or to make a • Hours of work
concession.” • Vacation and holiday; bonus
• Bonuses
How to bargain in good faith • Pensions and retirement plan
To deal with each other, openly, with a sincere desire to • Seniority
negotiate • Transfer
• Lay-offs
“Good faith can be inferred from the totality of the circumstances • Employee workload
involved in the negotiation” • Work load rules and regulations
• Rent of company houses
Effect of bad faith bargaining • Union security arrangement
Refusal to make counter proposal indication of bad faith. • Code of conduct
Refusal to make a counter proposal to the union’s proposal
for CBA negotiation is an indication of its bad faith. Where Mandatory Provisions of CBA
the employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of
the duty to bargain collectively.526 (a) Grievance procedure
(b) Voluntary Arbitration
Duty to bargain when there is a CBA (c) No strike, no lock-out clause
Includes all of the duties where there is no CBA yet, plus the
obligation not to terminate or modify the CBA during its GRIEVANCE PROCEDURE
lifetime. Duty to keep the status quo and to continue in full
force and effect the terms and conditions of the CBA during How enforcement/implementation effected
the 60-day period and/or until a new agreement is reached Ordinarily: Through grievance machinery; Voluntary
(Art. 264). arbitration
Extraordinarily: Strike; ULP complaint with the NLRC
Bargaining requires good faith. The duty to bargain requires
that the parties deal with each other with open and fair minds. Grievance
A sincere endeavor to overcome obstacles and difficulties that Any dispute between employee and union as regards:
may arise, so that employer-employee relations may be 1. Interpretation of the CBA
stabilized and industrial strife eliminated, must be apparent. 2. Interpretation of company personnel policies
Respondents cannot invoke the beneficial provisions of the
1987 CBA but disregard the concessions it voluntary extended Implication: VA still has jurisdiction even if there is no
to petitioner. The goal of collective bargaining is the making SEBA or CBA.
of agreements that will stabilize business conditions and fix
fair standards of working conditions.527 Any claim by either party that the other party is violating
any provision of the CBA or company personnel policies.
CBA is the law between the parties. There can be no unilateral
modifications in the CBA. 528 Grievance machinery
“grievance procedure”
Collective bargaining agreement (CBA) Series of formal steps agreed upon by parties to a CBA for
the resolution of grievances
Definition
It is a contract executed upon request of either the employer VOLUNTARY ARBITRATION
or the exclusive bargaining representative of the employees Reference of a dispute to an impartial third party designated
incorporating the agreement reached after negotiations with by the parties.
respect to wages, hours of work and all other terms and
conditions of employment, including proposals for adjusting List of VAs are found in the NCMB
any grievances or questions under such agreement.
Disputes that may be brought to VA:
1. Unresolved grievances as agreed to by the parties
MANDATORY PROVISIONS OF CBA 2. ULPs and bargaining deadlocks
Bar 1996, 1997
Mandatory subjects of bargaining Compulsory Arbitration
• Statutory or mandatory proposals The process of settlement of labor disputes by a government
• Employer’s refusal to negotiate mandatory agency which has authority to investigate and make an award
subjects of bargaining is ULP. which is binding on the parties.

Examples of mandatory subjects Consent of the parties is not required.

• Terms and conditions of employment

526GeneralMilling ILU v General Milling Corp., G.R. Nos. 183122/183889 (2011). 528Faculty Association of Mapua v CA, 254 SCRA 709 (2007).
527P.I.
Manufacturing Inc. v P.I. Manufacturing Supervisors and Foremen
Association, 543 SCRA 613 (2008).

Lasallian Commission on Bar Operations 2018 93

LABOR LAW
It is government agency who will hear and rule on the case.
Voluntary Arbitrator
Refers to any person accredited by the NCMB as such, or any
person named or designated in the CBA by the parties to act
as their voluntary arbitrator, or one chosen by the parties
pursuant to a selection procedure agreed upon in the CBA.529
May recourse to grievance procedure be dispensed with?
Yes. If union is not interested in a particular grievance, union
should not participate anymore, the employee is then allowed
to skip the grievance procedure. 530
Notice of strike illegal  dispute may be resolved via
grievance procedure or VA.531
Under voluntary arbitration, xxx, referral of a dispute by the
parties is made, pursuant to a voluntary arbitration clause in
their collective agreement, to an impartial third person for a
final and binding resolution. 532
The essence of voluntary arbitration, after all, is that it is by
agreement of the parties, rather than compulsion of law, that
a matter is submitted for arbitration. It does not matter that
the person chosen as arbitrator is a labor arbiter who, under
Art. 224 of the Labor Code, is charged with the compulsory
arbitration of certain labor cases. There is nothing in the law
that prohibits these labor arbiters from also acting as
voluntary arbitrators as long as the parties agree to have him
hear and decide their dispute. 533
The decision of a VA chosen by the parties is final and
executory and not appealable. This principle strengthens the
purpose of arbitration in preserving industrial peace and in
avoiding unnecessary litigation between the parties. 534
NO STRIKE-NO LOCKOUT CLAUSE
A no strike clause is applicable only to economic strikes. “no
strike, no lock-out” provision in the CBA is a valid stipulation
but may be invoked only by employer when the strike is
economic in nature or one which is conducted to force wage
or other concessions from the employer that are not mandated
to be granted by law itself. It would inapplicable to prevent a
strike which is grounded on unfair labor practice.535
Permissible Issues
When a subject under discussion is NOT MANDATORY, it
may be discussed if both parties agree, BUT a strike or lockout
may not be used to compel negotiation or agreement.
Wages, hours of work and all other terms and conditions of
employment.
A collective bargaining agreement refers to the negotiated
contract between a legitimate labor organization and the
employer concerning wages, hours of work and all other terms
and conditions of employment in a bargaining unit, including
mandatory provisions for grievances and arbitration machineries.
As in all other contracts, the parties in a CBA may establish
529IR, Book V, Rule I, Sec. 1(aaa)
530AtlasFarms v NLRC, G.R. No. 142244 (2002).
531USAEU-FFW v CA, G.R. No. 169632 (2006).
532Luzon Dev’t Bank v Assoc of Luzon Dev’t Bank Employees, 249 SCRA 162
(1995).
533Manila Central Line v Manila Central Line FWU-NFL, 290 SCRA 690 (1998).
534Eternet Employees v De Veyra, 189 SCRA 752 (1990).
Lasallian Commission on Bar Operations 2018
LABOR LAW
such stipulations, clauses, terms and conditions as they may
deem convenient provided they are not contrary to law,
morals, good customs, public order or public policy. xxx
provision in the CBA condoning the implementation of the
Wage Order is void as only the Tripartite Wage Productivity
Board of the DOLE could approve exemption of an
establishment from the coverage of a Wage Order. 536
Retirement plan valid CBA issue.
The fact that the retirement plan is non-contributory, i.e.
employees contribute nothing to the operation of the plan,
does not make it a non-issue in the CBA negotiations. xxx
Since the retirement plan has been an integral part of the CBA
since 1972, the union’s demand to increase the benefits due
the employees under said plan, is a valid CBA issue.537
Bar 2004
CBA interpretation
How interpreted. 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. 538
A promise not incorporated in CBA cannot be validly
demanded under the law. 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.539
Bar 1999, 2001, 2008
The CBA must be implemented in good faith during its
lifetime, even if the parties are negotiating a new CBA. The
implementation may exceed the CBA’s lifetime if no CBA
was agreed upon in which case the CBA is automatically
renewed.
Provisions of the imposed CBA continues to have full force
and effect until a new CBA has been entered into by the
parties. Article 259 mandates the parties to keep the status
quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period
prior to the expiration of the old CBA and/or until a new
agreement is reached by the parties. 540
BARGAINING PROCEDURE
Art. 261. Procedure in collective bargaining.
535Panay Electric v NLRC, 248 SCRA 688 (1995).
536Manila Fashions, Inc. v NLRC, 264 SCRA 104 (1996).
537Union of Filipro Employees-Drug v Nestle, G.R. No. 158930-31 (2006).
538Samahanng Manggagawasa Top Form v NLRC, 295 SCRA 171 (1998).
539 Id.
540Supra note 87.
94
LABOR LAW
The following procedures shall be observed in collective
bargaining:
When a party desires to negotiate an agreement, it shall serve
a written notice upon the other party with a statement of its
proposals. The other party shall make a reply thereto not later
than ten (10) calendar days from receipt of such notice;
Should differences arise on the basis of such notice and reply,
either party may request for a conference which shall begin
not later than ten (10) calendar days from the date of request.
If the dispute is not settled, the Board shall intervene upon
request of either or both parties or at its own initiative and
immediately call the parties to conciliation meetings. The
Board shall have the power to issue subpoenas requiring the
attendance of the parties to such meetings. It shall be the duty
of the parties to participate fully and promptly in the
conciliation meetings the Board may call;
During the conciliation proceedings in the Board, the parties
are prohibited from doing any act which may disrupt or
impede the early settlement of the disputes; and
The Board shall exert all efforts to settle disputes amicably
and encourage the parties to submit their case to a voluntary
arbitrator. (As amended by Section 20, Republic Act No. 6715,
March 21, 1989)
Art. 262. Duty to bargain collectively in the absence of
collective bargaining agreements.
In the absence of an agreement or other voluntary
arrangement providing for a more expeditious manner of
collective bargaining, it shall be the duty of employer and the
representatives of the employees to bargain collectively in
accordance with the provisions of this Code.
When to file written notice of intent
1. During the certification period (year)
Notice of intent must be submitted with the Union proposal.
If there is a CBA in place, written notice must be served 60
days prior to expiry.
Reply
Employer to reply not later than 10 days after notice of intent to
negotiate was served.
Conferences
How many times? As many as needed
How long should a negotiation be?
LC 265. x xx Any agreement on such other provisions of the
CBA entered into within 6 months from the date of expiry of
the term of such other provisions as fixed in the CBA, shall
retroact to the day immediately following such date. If any
such agreement is entered into beyond six months, the
parties shall agree on the duration of retroactivity thereof x
xxx
541Caltex Refinery Employees Association v Brillantes.279 SCRA 218 (1997).
Lasallian Commission on Bar Operations 2018
LABOR LAW
Agreeing first on the effectivity date of the CBA lifts or
releases the burden of deadline to reach agreement.
Example: Expiry of the CBA – December 31, 2011 . If the new
CBA is agreed upon within six months from December 31,
2011(expiry), the effectivity of the new CBA shall be from January
1, 2012. End of 6-month period of negotiation – June 30, 2012. If
the new CBA is agreed upon beyond June 30, 2012, the effectivity
of the new CBA shall be agreed upon by the parties.
Conferences may either result in an agreement or a
deadlock.
If there is a deadlock, a notice of strike or lock-out (NSL) may
be filed as the case may be;
If no NSL has been filed:
2. NCMB Conciliation. At the request of any of the parties,
the NCMB may interfere for preventive mediation.
3. The NCMB shall exert all efforts to settle the dispute.
The conciliator is not a judge; he shall not rule on the
dispute.
Information obtained in the conciliation proceedings are
privileged communication. It cannot be used in any NLRC
litigation.
During conciliation, parties are prevented from doing any
acts that could prevent settlement of the dispute or could be
disruptive. This is to give the conciliator a chance to really
settle the dispute.
If not resolved in conciliation, the deadlock may result to:
(1) Voluntary arbitration
(2) Assumption of jurisdiction (AJ) of the SOLE
(3) Strike or lock out
Courts are not to interfere until there is a showing that the
SOLE abused his discretion. Bargaining is not equivalent to
an adversarial litigation when the rights and obligations are
delineated and remedies applied – it is simply a process of
finding a reasonable solution to a conflict and harmonizing
opposing positions into a fair and reasonable compromise.541
CBA resulting from an AJ or VA, need not be ratified. But
CBA still needs to be posted and registered with the DOLE.
RULES IN THE ADMINISTRATION AND
IMPLEMENTATION OF THE CBA
During the lifetime of the CBA, it is the law between the
parties. Those who are entitled to its benefits can invoke its
provisions.
But CBA provisions are not beyond judicial determination if
impugned.
The CBA may not provide for substandard benefits.542
Only provisions embodied in the CBA should be so interpreted and
complied with. Where a proposal raised by a contracting party does
542 Manila Fashions v. NLRC (1996)
95
LABOR LAW
not find print in the CBA, it is not a part thereof and the
proponent has no claim whatsoever to its implementation.543
The provisions of the CBA should be interpreted in
accordance with their literal meaning.
No interpretation of CBA provisions if their meaning is
clear.
In case of ambiguity of the terms of a CBA, and there is doubt as to
the intention of the parties, resort to evidence extrinsic of the CBA
to determine the full agreement intended by the parties. Evidence
aliunde may consist of the minutes of negotiation,
contemporaneous and subsequent practices, etc.544
Extrinsic evidence: Minutes of CBA negotiations
Contemporaneous and subsequent practices or acts in the
implementation of the CBA
In case of doubt or ambiguity, apply:
Art. 1702 of the Civil Code, which provides that all labor
legislation and labor contracts shall be construed in favor of
safety and decent living for the laborer, and;
Art. 4 of the Labor Code that says all doubts shall be
resolved in favor of labor.
Unless expressly assumed, labor contracts such as CBAs are not
enforceable against a transferee of an enterprise, labor contracts
being in personam, thus binding only between the parties.545
It is the bargaining unit, which is the true party in interest to
a CBA. Thus, a shift in the union's allegiance after the
execution of the CBA does not affect the binding effect of a
contract up to its expiration date.
There must be express assumption of liability for terms and
conditions of CBA for transferee of enterprise to be liable.
CBA Enforcement
Art. 267. 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
543 Samahang Manggagawa sa Top Form v. NLRC (1998)
544 United Kimberly Clark EU v. UKC Inc. (2006)
545 ALU-VIMCONTU v. NLRC (1991)
Lasallian Commission on Bar Operations 2018
LABOR LAW
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)
Duration
Bar 2012
Duration of CBA Provisions
5 years
term of the bargaining agent (SEBA)
representation aspect/union recognition
3 years
All other provisions
Bar 2000, 2009
Substitutionary doctrine
New SEBA to implement existing CBA until negotiations
may be validly had.
Company may not be compelled to early negotiation.
Who benefits from extended CBA?
All members of the bargaining unit.
When a CBA is entered into by union representing the
employees and employer, even non-union member
employees are entitled to the benefits. 546 All members of the
BU are included in the CBA. It is discrimination to exclude
them from the application of the CBA. 547
Arbitral awards
Imposed by the NLRC, SOLE, SC
Bar 1994, 2001
Effectivity of arbitral awards
Retroacts to such time agreed upon by the employer and
union.
If there is no agreement and it was awarded beyond the
6-month period =First day after the 6-month period from
expiration
If there is no agreement and it was awarded within the 6-
month period =first day after expiry of the CBA
Extension of 5-year term of CBA as regards representation
Can parties agree to extend the term for more than 5
years? General Rule: No. Express provision, Art 259-A.
Exception: In Rivera v Espiritu (2002) ---where PALEA and
PAL agreed to suspend the existing CBA between them with
the condition, among others, that PALEA is to be recognized
as SEBA during the period of the suspension of the CBA ---
up to 10 years was allowed, by agreement of the parties.
Implications:
PALEA was recognized as SEBA for 10 years.
Parties by agreement may install the SEBA indefinitely.
Parties by agreement may suspend CBA even for 10 years.
The right to CB includes the right to suspend it.
546New Pacific Timber v NLRC, G.R. No. 124224 (2000).
547Mactan Workers v Aboitiz, 45 SCRA 577 (1972).
96
LABOR LAW
Union security clauses
Bar 1995, 2004, 2011, 2012
Termination of employment pursuant to Union Security
Clause; requisites:
the union security clause must be applicable
the union is requesting for the enforcement of the union
security provision in the CBA
there is sufficient evidence to support union’s decision to
expel the employee from the union 548
Courts must look into substantial evidence to warrant the
dismissal of an employee pursuant to Union Security
Clause.549
UNFAIR LABOR PRACTICE
NATURE, ASPECTS
Definition and General Concept
Bar 1996, 2005
Art. 219 (k)
"Unfair labor practice" means any unfair labor practice as
expressly defined by the Code.
Art. 258. Concept of unfair labor practice and procedure
for prosecution thereof.
Unfair labor practices violate the constitutional right of
workers and employees to self-organization, are inimical
to the legitimate interests of both labor and management,
including their right to bargain collectively and otherwise
deal with each other in an atmosphere of freedom and
mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management
relations.
Consequently, unfair labor practices 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 as herein provided.
Subject to the exercise by the President or by the
Secretary of Labor and Employment of the powers vested
in them by Articles 278 and 279 of this Code, the civil
aspects of all cases involving unfair labor practices, which
may include claims for actual, moral, exemplary and
other forms of damages, attorney’s fees and other
affirmative relief, shall be under the jurisdiction of the
Labor Arbiters. The Labor Arbiters shall give utmost
priority to the hearing and resolution of all cases
involving unfair labor practices. They shall resolve such
cases within thirty (30) calendar days from the time they
are submitted for decision.
Recovery of civil liability in the administrative
proceedings shall bar recovery under the Civil Code.
548Alabang Country Club v NLRC, 545 SCRA 351 (2008).
549Del Monte v Zaldivar, G.R. No. 158620 (2006).
Lasallian Commission on Bar Operations 2018
LABOR LAW
No criminal prosecution under this Title may be
instituted without a final judgment finding that an unfair
labor practice was committed, having been first obtained
in the preceding paragraph. During the pendency of such
administrative proceeding, the running of the period of
prescription of the criminal offense herein penalized shall
be considered interrupted: Provided, however, that the
final judgment in the administrative proceedings shall
not be binding in the criminal case nor be considered as
evidence of guilt but merely as proof of compliance of the
requirements therein set forth. (As amended by BP Blg.
70, May 1, 1980 and later further amended by Section 19,
RA No. 6715, March 21, 1989)
ULP may only be committed in the context of an
employer-employee relationship.
ULP violates the rights to:
1. Self-organization
2. Collective bargaining
3. Concerted activities
ULPs are not only civil rights violations but are also criminal
offenses against the State.
ULPs are those expressly defined by the labor code (LC 219-
K):
1. Those in LC 259 > ULP of employers
2. Those in LC 260 > ULP of LOs
3. Those in LC 274 > violations of CBA economic provision
was gross in character
Any violations that relate to the exercise of the right to self-
organization and collective bargaining
ULP vis-à-vis Management Prerogative
Law on ULP not intended to hamper management
prerogatives. Law on unfair labor practices is not intended
to deprive employers their fundamental right to prescribe
and enforce rules as they honestly believe to be necessary to
the proper, productive and profitable operation of their
business. 550
Requisite of ULP
Employer – Employee relationship
When there is no employer-employee relationship between
the company and the union, it should necessarily follow that
the company cannot be guilty of unfair labor practice. Unfair
labor practice may be committed only within the context of
an employer-employee relationship. 551
General Prohibition
Art 259. ULP of Employers Art 260. ULP of LOs
a. To interfere with, restrain a. To restrain or coerce
or coerce employees in the employees in the exercise of
exercise of their right to self- their right to self-
organization; organization;
550Philcom EU v Philcom, G.R. No. 144315 (2006).
551 American President Lines v. Clave (1982)
97
LABOR LAW
Effect of dismissal of union leaders = made union leaderless
Dismissal amounted to restrain and the dismissal was
tainted with discrimination. This would constitute ULP on
the basis of Art 259(a) or under general prohibition.552
Petitioner is guilty of ULP from its refusal to bargain, to their
acts of economic inducements resulting in the promotion of those
who withdrew from the union, use of armed guards to prevent the
organizers to come in, and the dismissal of the union officials and
members. Once cannot but conclude that respondents did not
want a union in their hacienda, a clear interference in the right
of the workers to self-organization.553
Where the ill-timed resignation from the union members
indicate that the employer had interfered with the right of its
employees to self-organization, the company may be found
guilty of ULP. 554
ULP by Employers
Only the officers and agents of corporations, associations or
partnerships who have actually participated in or authorized
or ratified ULPs are criminally liable.
Art. 259: ULP by Employers:
1. Interference, restraint, coercion 

2. Yellow dog condition 

3. Contracting out of services 
 organization.
4. Company unionism or captive unionism 

5. Discrimination for or against union 
membership 
 Individual bargaining is not allowed.
6. Discrimination because of testimony 
 When employer negotiates or attempts to negotiate with his
7. Violation of duty to bargain 
 employees individually in connection with changes in the
8. Payment by the Er of negotiation fees
9. Gross violation of CBA 

Interference, restraint and coercion
An act which restrains, coerces, or interferes with employees
in the exercise of their right to self-organization is an Unfair
Labor Practice.
Test of interference
Whether the EE has engaged in a conduct which, it may
reasonably be said, tends to interfere with the free exercise of
the EES right to self-organization.
It is not necessary that there be a direct evidence that an EE
was in fact intimidated or coerced by statement of threats of
the ER if there is a reasonable inference that anti-union
conduct of the ER does have an adverse effect on self-
organization and CB. 555
Totality of Conduct Doctrine
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.
552Republic Savings Bank v CIR, 21 SCRA 226 (1967).
553Hacienda Fatima v National Federation of Sugarcane Workers, G.R. No.
149440 (2003).
554General Milling v CA, G.R. No. 146728 (2004).
555 The Insular Life Assurance-NATU v. The Insular Life Assurance (1971)
Lasallian Commission on Bar Operations 2018
LABOR LAW
Under this doctrine, expressions of opinion by an ER,
though innocent in themselves, frequently were held to be
culpable because of:
1. The circumstances under which they were uttered;
2. The history of the particular ER’s labor relations or
anti-union bias, and;
3. Their connection with an established collateral
plan of coercion or interference.

Interrogation
Scotty’s Department Store v Micaller (1956)556
Employer’s interrogation of union members, while it is a
privilege, should not hamper the members’ right to self-
organization.
Philippine Steam Navigation v. Philippine Marine Officers Guild
(1965)
The rule in this jurisdiction is that subjection by the
company of its employees to a series of questioning
regarding their membership in the union or their union
activities, in such a way as to hamper the exercise of free
choice of their part, constitutes ULP. 557
Speech, espionage, economic coercion
Insular Life Assurance Co EU v Insular Life Assurance Co., Ltd
(1971). 558
It is not necessary that the employees are coerced or
restrained, the reasonable tendency test will determine
whether the employer has engaged in the conduct that tends
to interfere with employees’ free exercise of right to self-
agreement is ULP.
Act of company president in writing letters to strikers urging
them to return to work is an interference with the right to
CB. Individual solicitation is also interference.
Concerted activities
Philippine Blooming Mills EO v PBM (1973). 559
Concerted activity need not be rooted in CBA matters, but
may be by reason of mutual aid and protection. Employer
who refuses its employees to join a demonstration against
police abuses is guilty of ULP. Employees who
demonstrated did not violate CBA, as it was in the exercise
of their freedom of expression, guaranteed by the Bill of
Rights.
Letter containing promises of benefits to the employees in
order to entice them to return to work is not protected by the
free speech provisions of the Constitution.
The free speech protection is inapplicable where the
expression of opinion by the employer of his agent contains
a promise of benefit, threats, or reprisal. Letters should be
interpreted according to the totality of conduct doctrine.
55699 Phil 762 (1946).
55715 SCRA 174 (1965).
55837 SCRA 243 (1971).
55951 SCRA 189 (1973).
98
LABOR LAW
Yellow-Dog Contract
Non-union membership or withdrawal from membership as
a condition of employment
Yellow dog contract/stipulation
“only a yellow dog (coward) would sign such.”
A promise exacted from workers as a condition of
employment that they are not to belong to, or attempt to
foster a union during their period of employment.
Visayan Stevedore v CIR (1967)560
Where the workers not admitted to work were union
members and the company branch manager had told them
directly that severance of their connection with the union
was the remedy if they wanted to continue working with the
company, there was unfair labor practice.
Contracting out to discourage unionism
Contracting out per se is not ULP. It becomes ULP when
such interfere with, restrain or coerce employees in the
exercise of their right to self-organization.
Contracting out if motivated to prevent employees from
exercising their right to SO. An employer’s contracting out
of work is itself an ULP where motivated by the desire to
prevent his employees from organizing and selecting a
collective bargaining representative, rid himself of union
men, or escape his statutory duty to bargain collectively with
his employees’ bargaining representative.
Company domination of union
Progressive Development v CIR (1977). Where the dismissal
of the employees because of union activities and not because
of company’s alleged losses was adequately proven, the
employer is guilty of ULP.
When financial assistance does NOT constitute union
domination or union interference or ULP:
• Company provided the union a union office
• Company granting union leaves or privileges
• Company granting assistance for conduct of union
education seminars
For as long as financial assistance is publicly disclosed and
ratified by the members, it is valid.
Discrimination to Encourage/Discourage Unionism
What the law prohibits is discrimination to encourage or
discourage union membership.
Discouraging membership in a labor organization includes
not only discouraging adhesion to union membership but
also discouraging participation in union activities such as a
legitimate strike.
ULPs in the form of discriminatory dismissal were found
where only unionists were permanently dismissed while non-
unionists were not.
Unequal treatment based on union or non-union membership
56019 SCRA 426 (1967).
561LC Art. 274
Lasallian Commission on Bar Operations 2018
LABOR LAW
Purpose is to ensure that employees are given equal treatment
whether they are union members or not.
Test of discrimination
It is necessary that the underlying reason for the discharge is
established. The discharge must be made with proper
motive.
Where circumstances establish a discriminatory motive on
the part of the employer, the assignment of a just cause will
be unavailing. If it can be established that the true and basic
inspiration for the employer’s act is derived from the
employees’ union activities, the assignment by the employer
of another reason, whatever its semblance of validity, is
unavailing.
An inference that the discharge of an employee was
motivated by his union activity must be based upon
evidence, direct or circumstantial, not upon mere suspicion.
Retaliation testimony against employer/indirect
discrimination
Should the testimony relate to the right of SO and CB?
2 views:
(1) Yes. All matters relating to labor
(2) No. Strict view: only those relating to exercise of right to
SO and CB
What is prohibited to be done directly shall not be allowed
to be done indirectly. Thus, the following have been held as
ULP:
(1) Dismissal of a laborer on account of union activities of
his brother;
(2) Discharge of an employee due to union activities of the
wife;
(3) Discharge of a wife to due union activities of the
husband
Violation of duty to bargain
Duty to bargain does not end in the execution of the CBA.
Gross failure to comply with the an economic provision of
the CBA constitutes ULP. 561
If an employer found the union’s demands excessive, its
remedy under the law is to refer the matter for voluntary
arbitration or compulsory dispute resolution, not the closure
of the establishment.562
The duty to bargain does not include the obligation to reach
an agreement.563
Negotiation or attorneys fees
Sweetheart contracts are favorable both to the union and the
employer at the expense of the employees. The settlement of
bargaining issues must be made by fair bargaining in good
faith, and not through the payment of negotiation or
attorney's fees which will ultimately lead to sweetheart
contracts.
Gross violation of CBA
562St. John Colleges v St. John Faculty and EU, G.R. No. 167892 (2006).
563Union of Filipro Employees v Nestle, G.R. No. 158930 (2008).
99
LABOR LAW
Only gross violations of economic provisions of the CBA are
to be deemed ULPs; violations which are not gross are mere
grievances. (Art. 267)
To be considered as gross violation, it must be a flagrant
and/or malicious refusal to comply with the economic
provision of the CBA.
ULP BY LABOR ORGANIZATIONS
Only the officers, members of governing boards,
representatives or agents or member of labor associations or
organizations who have actually participated in or
authorized or ratified the ULPs are criminally liable.
Art. 260: It shall be ULP for labor organizations, its officers,
agents or representatives:
1. To restrain or coerce EEs in the exercise of their
rights to self-organization; however, a labor
organization shall have the right to prescribe its
own rules with respect to the acquisition or
retention of membership
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 (Featherbedding)
5. To ask for or accept negotiations or attorney's fees
from ERs as part of the settlement of any issue in
Collective Bargaining or any other dispute
6. To violate the CBA.
Restraint or Coercion
“Interfere” is not included since any act of a labor
organization is an interference to the right of self-
organization.
Exception: LO has a right to prescribe its own rules with
respect to the acquisition or retention of membership (ex.
Union Security Clause)
Discrimination to Encourage/Discourage Unionism [ART.
260 (B)]
GR: It is a ULP for a labor organization to cause an employer
to discriminate against an employee.
XPN: Provisions of a valid union security clause and other
company policies.
564Arellano University EU v CA, G.R. No. 139940 (2006).
Lasallian Commission on Bar Operations 2018
LABOR LAW
Featherbedding
Featherbedding or “make-work” by the union is the practice
of the union asking for money or other things of value from
the employer in return for services which are not performed
or are not to be performed. (Art. 260)
Asking or Accepting Negotiation and Other Attorney’s
Fees
Sweetheart Contracts or the act of labor organizations to ask
for or accept negotiation or attorney’s fees from the
employer in settling a bargaining issue or a dispute.
Violation of a Collective Bargaining Agreement
Bar 2011
Violation of CBA must be gross and as regards economic
provisions. To constitute ULP, violations of the CBA
must be gross, which means, under LC 274, flagrant
and/or malicious refusal to comply with the economic
provisions thereof.564
Violations of collective bargaining agreements, except
flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor
practice and shall not be strikeable. (IRR)
Economic provisions
With reasonable monetary cost
Non-economic provisions
Without or wherein monetary cost cannot be computed, i.e.
job security, management prerogatives, grievance machinery
If ER refuses to abide by the CBA’s check-off provision or
grievance procedure, is there ULP per LC 274?
No. They are non-economic provisions.
Remedy: treat it as violation of the CBA or duty to bargain
collectively independently of LC 264.
Burden of proof
Union with burden of proof to support ULP allegations. It is
the union, therefore, who had the burden of proof to present
substantial evidence to support its allegations of ULP by
management. xxx It is not enough that union believed that
the employer committed acts of ULP when the
circumstances clearly negate even a prima facie showing to
warrant such belief. 565
For a charge of ULP to prosper, it must be shown that the
employer was motivated by ill will, bad faith, or fraud, or
was oppressive to labor, or done in a manner contrary to
morals, good customs, or public policy, and of course, that
565Schering Employees Labor Union v Schering Plough Corp, G.R. No. 142506
(2005).
100
LABOR LAW LABOR LAW

social humiliation, wounded feelings or grave anxiety

resulted. 566

Interpretation
Liberal construction in favor of labor. Statutory prohibitions
construed liberally in favor of employees and strictly against
the employer. 567

Inter-relations of ULP Acts

Republic Savings Bank v CIR, 21 SCRA 226 (1967).
FACTS: Respondent wrote and published letter to the bank
president, demanding his resignation on the grounds of
PEACEFUL CONCERTED ACTIVITIES
immorality, nepotism, favoritism and discrimination in the
appointment and promotion of bank employees.
HELD: Assuming that they acted in their individual The State shall guarantee the rights of all workers to self-
capacities when they wrote the letter, they were nonetheless organization, collective bargaining and negotiations, and
protected for they were engaged in concerted activity, in peaceful concerted activities, including the right to strike in
their right of self-organization that includes concerted
accordance with law.570
activity for mutual aid and protection, interference with
which constitutes ULP. The joining in protests or demands
Concerted activities
by even a small group of employees, if in furtherance of their
1. Participated in by 2 or more EEs;
interests as such, is a concerted activity protected by the IPA.
2. May be done by one employee
It is not necessary that union activity be involved or that CB
be contemplated.
Deemed as concerted activity if aim is to move others for
purposes of CB or mutual aid or protection.
Management prerogative and ULPs
The Court recognizes the proprietary right of SanMig to
For CB or mutual aid or protection;
exercise an inherent management prerogative and its best
business judgment to determine whether it should contract
Through action generally directed at ER or by others having
out the performance of some of its work to independent
duties under the law to induce the desired behavior.
contractors. However, the rights of all workers to self-
organization, collective bargaining and negotiations, and
The more common of these concerted activities as far as
peaceful concerted activities, including the right to strike in
employees are concerned are:
accordance with law, equally call for recognition and
1. STRIKES — the temporary stoppage of work as a
protection.568
result of an industrial or labor dispute;
2. PICKETING — the marching to and fro at the
MOTIVE, CONDUCT, AND PROOF
employer's premises, usually accompanied by the
display of placards and other signs making known
Employer motive and proof
the facts involved in a labor dispute; and
Motive is decisive factor in holding an employer guilty of
3. BOYCOTTS — the concerted refusal to patronize
ULP.569
an employer's goods or services and to persuade
PARTIES LIABLE FOR ACTS others to a like refusal.
4. LOCKOUT — the counterpart activity that
management may licitly undertake. The temporary
ULP by employer refusal to furnish work on account of a labor
Officers of company who participated in the commission of dispute
the UL
The right of legitimate labor organizations to strike and picket
ULP by LO and of employer to lockout, consistent with the national
Officers of union who participated in the commission of the interest, shall continue to be recognized and respected. The
ULP legality of these activities is usually dependent on the legality
of the purposes sought to be attained and the means
Compromise employed therefor.571
ULP cases cannot be compromised for PUBLIC INTEREST
Limitations
Bar 2011 Bar 2000
Remedies and Sanctions Any violation of legal requirements will render strike
Quadra v CA (2006). In ULP cases, particularly in cases of illegal. The strike is indeed a powerful weapon of the
dismissal, moral and exemplary damages may be working class. But precisely because of this, it must be
awarded. handled carefully, like a sensitive explosive, lest it blow

566Central
Azucarera de Bais EU v Central Azucarera, G.R. No. 186605 (2010).
567Caltex
Filipino Managers and Supervisors Assoc., v CIR, 44 SCRA 350 (1972).
568SMC-EU v Bersamira, 186 SCRA 496 (1990).
569Phil. Metal Foundries v CIR, 90 SCRA 135 (1979).
570 Sec 3, Art XIII, The 1987 Constitution.
571Ilaw at Buklod ng Manggagawa v NLRC, 198 SCRA 586 (1991).

Lasallian Commission on Bar Operations 2018 101

LABOR LAW
up in the workers’ own hands. Thus, it must be declared
only after the most thoughtful consultation among them,
conducted in the only way allowed, that is, peacefully,
and in every case conformably to reasonable regulation.
Any violation of the legal requirements and strictures,
such as a defiance of a return-to-work order in industries
affected with public interest, will render the strike illegal,
to the detriment of the very workers it is supposed to
protect.572
The right to strike is not an absolute right.
Role of Peace Officers During Strikes And Picketing
1. Escorting - No public official or employee,
including officers and personnel of the New Armed
Forces of the Philippines or the Integrated National
Police, or armed person, shall bring in, introduce or
escort in any manner, any individual who seeks to
replace strikers in entering or leaving the premises of
a strike area, or work in place of the strikers.
The police force shall keep out of the picket lines unless
actual violence or other criminal acts occur therein:
Provided, that nothing herein shall be interpreted to prevent
any public officer from taking any measure necessary to
maintain peace and order, protect life and property, and/or
enforce the law and legal order. (As amended by Executive
Order No. 111, December 24, 1986)573
2. Arrest and detention of law violators- Except on
grounds of national security and public peace or in
case of commission of a crime, no union members or
union organizers may be arrested or detained for
union activities without previous consultations with
the Secretary of Labor.574
CONCERTED ACTIVITIES BY LABOR
ORGANIZATIONS
STRIKE
Definition
Strike means any temporary stoppage of work by the
concerted action of employees as a result of an industrial or
labor dispute.575
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.576
The most powerful of the economic weapons of workers
which they unsheathe to force management to agree to an
equitable sharing of the joint product of labor and capital.577
Requisites
572BLT Bus Co. v NLRC, 212 SCRA 792 (1992).
573 Art. 279. Prohibited activities.
574 Art. 281. Requirement for arrest and detention.
575 Art 219(o)
576Phil Can Co. v CIR (1950).
577Sta. Rosa Coca Cola Plant Employees Union v. Coca Cola Bottlers Phils., Inc.,
G.R. No. 164302 (2007).
Lasallian Commission on Bar Operations 2018
LABOR LAW
1. Temporary work stoppage
2. By workers’ concerted action
3. Because of a labor dispute
4. Between ER and EES
A valid strike therefore presupposes the existence of a labor
dispute. The strike undertaken by respondents took the form
of a sit-down strike, or more aptly termed as a sympathetic
strike, where the striking employees have no demands or
grievances of their own, but they strike for the purpose of
directly or indirectly aiding others, without direct relation to
the advancement of the interest of the strikers. It is
indubitable that an illegal strike in the form of a sit-down
strike occurred in petitioner’s premises, as a show of
sympathy to the two employees who were dismissed by
petitioner.578
Strike must be pursued on legal bounds. A strike is the most
powerful of the economic weapons of workers which they
unsheathe to force management to agree to an equitable
sharing of the joint product of labor and capital. It is a
weapon that can either breathe life to or destroy the Union
and its members in their struggle with management for a
more equitable due to their labors. The decision to declare a
strike must therefore rest on a rational basis, free from
emotionalism, envisaged by the tempers and tantrums of a
few hot heads, and finally focused on the legitimate interests
of the Union which should not, however, be antithetical to
the public welfare, and, to be valid, a strike must be pursued
within legal bounds. The right to strike as a means of
attainment of social justice is never meant to oppress or
destroy the employer. 579
Nature and Purpose
A worker who joins a strike does so precisely to assert or
improve the terms and conditions of his employment. If his
purpose is to abandon his work, he would not go into the
trouble of joining a strike.580
Rationale for regulation by law
A strike is “any temporary stoppage of work by the
concerted action of employees as a result of an industrial or
labor dispute.” It is the most preeminent of the economic
weapons of workers which they unsheathed to force
management to agree to an equitable sharing of the joint
product of labor and capital. Undeniably, strikes exert some
disquieting effects not only on the relationship between labor and
management but also on the general peace and progress society.
Our laws thus regulate their exercise within reasons by
balancing the interests of labor and management together
with the overarching public interest.581
Effect on work relationship
Continuing work relationship
Work relationship SUSPENDED during the strike, NOT
SEVERED!
578G&S Transport v Infante, 533 SCRA 326 (2007).
579Sta.
Rosa Coca Cola Plant Employees Union v. Coca Cola Bottlers Phils., Inc.,
G.R. No. 164302 (2007).
580BLTB Bus Co. v NLRC, 212 SCRA 792 (1992).
581Lapanday Workers Union v NLRC, 248 SCRA 95 (1995).
102
LABOR LAW
Consequences of continuing work relationship between
ER and strikers
ER’s duty to bargain collectively with EEs remains
ER’s must reinstate them after the strike
Since strikes cause disparity effects not only on the
relationship between labor and management but also on the
general peace and progress of society, the law has provided
limitations on the right to strike.582
Responsibility for illegal acts must be on an individual and
not collective basis. A union officer may be declared to have lost
his employment status if he knowingly participated in an illegal
strike whereas a union member may be similarly faulted if he
knowingly participates in the commission of illegal acts during the
strike.583
Mere participation in an illegal strike is not a sufficient
ground for termination of the services of the union members.
The law, however, treats differently mere union members.
Mere participation in an illegal strike is not a sufficient
ground for termination of the services of the union members.
The Labor Code protects an ordinary, rank-and-file union
member who participated in such a strike from losing his job,
provided that he did not commit an illegal act during the
strike. It can be gleaned from the aforecited provision of law
in point, however, that an ordinary striking employee cannot
be terminated for mere participation in an illegal strike. There
must be proof that he committed illegal acts during the strike
and the striker who participated in the commission of illegal
act must be identified. 584
TYPES AND CONVERSION
Types
(a) ULP
(b) Economic or bargaining deadlock
A no-strike clause in a CBA is applicable only to economic
strikes. Corollarily, 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. An
economic strike is defined as one which is to force wage or
other concessions from the employer which he is not
required by law to grant. 585
ULP
Bar 2009, 2010, 2011, 2012, 2013
Art 278 (c)
(c) In case of bargaining deadlocks, the duly certified or
recognized bargaining agent may file a notice of strike or
the employer may file a notice of lockout with the
Ministry at least 30-day before the intended date thereof.
In cases of unfair labor practice, the period of notice shall
be 15 days and in the absence of a duly certified or
recognized bargaining agent, the notice of strike may be
filed by any legitimate labor organization in behalf of its
members. However, in case of dismissal from
employment of union officers duly elected in accordance
with the union constitution and by-laws, which may
582Sta
Rosa Coca-Cola Plant EU v CCBP, G.R. No. 164302-03 (2007).
583Chuayuco Steel v Buklod ng Manggagawa, G.R. No. 167347 (2007).
584G&S Transport v Infante, 533 SCRA 288 (2007).
Lasallian Commission on Bar Operations 2018
LABOR LAW
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. (As
amended by Executive Order No. 111, December 24,
1986)
ULP strike
Strike committed upon a ULP complaint.
May be conducted after filing a notice of strike to the DOLE
at least 15 days before
BARGAINING DEADLOCK –
ECONOMIC/ULP
Economic strike
A concerted activity to force wage or other concessions from
the employer which he is not required by law to grant.
Conversion
An economic strike changes in character to one for ULP from
the time the company refuses to reinstate some of its striking
employees because of their union activities after it had
offered to readmit all strikers and in fact readmit others.
Backpay not due to strikers in economic strikes since the
employer should get the equivalent day’s work for what he
pays his employees. In ULP strikes, grant of back wages is
discretionary.586
Non-conversion – Strike to lock-out
Sukhothai Cuisine and Restaurant v. CA (2006).
Strikes held in violation of agreements providing for
arbitration are illegal since these agreements must be strictly
adhered to and respected if their ends are to be achieved.
Xxx For failing to exhaust all steps in the arbitration
proceedings, the strike staged by the private respondents is
illegal. xxx Even if the strike were to be declared valid
because its objective or purpose is lawful, the strike may still
be declared invalid where the means employed are illegal.
Grounds for strike
Bar 2007, 2012
IR, Book V, Rule XXII, Sec. 5. Grounds for strike or lock-
out.
A strike or lock-out may be declared in cases of
bargaining deadlocks and unfair labor practices.
Violations of collective bargaining agreements, except
flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor
practice and shall not be strikeable. No strike or lock-out
may be declared on the grounds involving inter-union
and intra-union disputes or without first having filed a
notice of strike or lock-out or without the necessary strike
or lock-out vote having been obtained and reported to
the Board. Neither will a strike be declared after
assumption of jurisdiction by the Secretary or after
certification or submission of the dispute to compulsory
or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lock-out.
585Mastor Iron Labor v NLRC, 219 SCRA 47 (1993).
586Consolidated Labor Assn v Marsman and Co, 11 SCRA 589 (1964).
103
LABOR LAW LABOR LAW

(c) In case of bargaining deadlocks, the duly certified or

Grounds as strikeable issues: recognized bargaining agent may file a notice of strike or
• ULP (including union busting) the employer may file a notice of lockout with the
• Bargaining deadlock Ministry at least 30 days before the intended date thereof.
In cases of unfair labor practice, the period of notice shall
ULP ECONOMIC be 15 days and in the absence of a duly certified or
Barred by no- recognized bargaining agent, the notice of strike may be
strike clause? NO587 YES filed by any legitimate labor organization in behalf of its
Strikers’ Court has discretion to members. However, in case of dismissal from
entitlement to grant. employment of union officers duly elected in accordance
backwages YES, in cases of with the union constitution and by-laws, which may
discriminatory dismissal constitute union busting, where the existence of the union
or suspension, unlawful NO is threatened, the 15-day cooling-off period shall not
lock-out and other ULPs apply and the union may take action immediately. (As
Cooling off amended by Executive Order No. 111, December 24,
period 15 days or 0 days (if 30 days 1986)
required union busting)
Good faith as ILLEGAL STRIKE
defense YES NO 1. Without union first having bargained collectively (279-
a)
Striking Party 2. For failure to comply with statutory/procedural
IR, Book V, Rule XXII, Sec. 6. Who may declare strike or requirements (279-a)
lockout. (1) Notice of strike was filed with DOLE
Any certified or duly recognized bargaining (2) Observe cooling – off period (between filing of
representative may declare a strike in cases of bargaining notice and actual strike)
deadlocks and unfair labor practices. The employer may 30 days = bargaining deadlock strike
declare a lockout in the same cases. In the absence of a 15 days = ULP strike
certified or duly recognized bargaining representative, 0 day = union busting
any legitimate labor organization in the establishment (3) 24 – hour prior notice to NCMB on strike
may declare a strike but only on the grounds of ULP. vote588
(4) Valid strike vote was taken by majority of total
union membership
Who may strike? (5) Report on strike vote to NCMB (7 days before
Strike upon: SEBA LLO strike, subject to cooling-off period)
Bargaining 3. CBA violation not gross in character (Art. 274)
deadlock YES (278- NO 4. Reason for strike is inter-union or intra-union dispute
c) (278-b)
ULP YES (278- NO, but YES if there is 5. Done thru unlawful means (279 – b)
c) NO SEBA • obstruct, impede, or interfere with by force,
violence, coercion, threats or intimidation any
Can minority union strike because of a ULP? peaceful picketing by EEs during any labor
NO. They cannot strike. Only recourse is to file ULP controversy or in the exercise of the right to SO or
complaint with the NLRC. CB, or shall aid or abet such obstruction or
interference.
LEGAL VS. ILLEGAL STRIKE 6. Conducted after AJO or certification order (279-a, par. 2)
7. Conducted after certification or submission of dispute to
LEGAL STRIKE compulsory/voluntary arbitration (279-a, par. 2)
Art. 278 (c) 8. Conducted during pendency of cases involving the same
grounds for the strike (279-a, par. 2)
9. ER hires/employs a strikebreaker (279-c)
10. Strikebreaking by non-strikers (279-c)
11. Escorting replacement by AFP/PNP, government
officers or employees, security guards (279–d)
12. After improved offer balloting (assumed that strike
declared, on 30th day NCMB will tell union the offer of
management, labor dispute shall end if union accepts)
(280)
13. In violation of a no strike – no lockout provision in
CBA589
14. Wage distortion (RA 6727)

587Mastor Iron Labor v NLRC, 219 SCRA 47 (1993). 589 Soriano Aviation v Employees Association of A. Soriano Aviation (2009)
588 IR, Rule XXII, Sec. 10 and Capitol Medical Center v. NLRC (2005)

Lasallian Commission on Bar Operations 2018 104

LABOR LAW
15. Employees who have no labor dispute with their
employer but who, on the day they are scheduled to
work, refuse to work and instead join a “welgang
bayan”, where there is no showing that the employees
notified their employer of their intention, or that they
were allowed by the latter, to join the welgang bayan,
commit an illegal work stoppage.590
Statutory/Procedural Requirements
The procedural requirements for a valid strike are
mandatory in nature and failure to comply therewith
renders the strike illegal. 591
In case of alleged union-busting, the 3 remaining
requirements – notice, strike vote, and 7-day report period –
cannot be dispensed with (only cooling – off period is
dispensed with). The union may strike “immediately”
provided that the strike vote is conducted, the result thereof
submitted “in every case” at least 7 days before the intended
strike or lockout.592
Unlawful Means
Strike must be through legal means. It is doctrinal that the
exercise of the right of private sector employees to strike is
not absolute. Even if the purpose of the strike is valid, the
strike may still be held illegal where the means employed
are illegal.593
Employment of Strike Breakers
Art 279. Prohibited activities.
(c) No employer shall use or employ any strike-breaker,
nor shall any person be employed as a strike-breaker.
Strike breakers
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.594
Improved offer balloting and strikes
Art 280. Improved offer balloting.
In an effort to settle a strike, the Department of Labor and
Employment shall conduct a referendum by secret ballot
on the improved offer of the employer on or before the
30th day of the strike. When at least a majority of the
union members vote to accept the improved offer the
striking workers shall immediately return to work and
the employer shall thereupon readmit them upon the
signing of the agreement.
In case of a lockout, the Department of Labor and
Employment shall also conduct a referendum by secret
balloting on the reduced offer of the union on or before
the 30th day of the lockout. When at least a majority of
the board of directors or trustees or the partners holding
the controlling interest in the case of a partnership vote to
accept the reduced offer, the workers shall immediately
return to work and the employer shall thereupon readmit
590BiflexPhils.Inc. Labor Union v Filflex Industrial and Manufacturing
Corporation and Biflex, G.R. No. 155679 (2006)
591Pilipino Telephone Corp. v PILIEA, 525 SCRA 361 (2007)
592Sukhothai Cuisine Restaurant v CA, G.R. No. 150437 (2006).
Lasallian Commission on Bar Operations 2018
LABOR LAW
them upon the signing of the agreement. (Incorporated
by Section 28, Republic Act No. 6715, March 21, 1989)
IR, Book V, Rule XXII, Sec 12
In case of a strike, the regional branch of the Board shall,
at its own initiative or upon request of any affected party,
conduct a referendum by secret balloting on the
improved offer of the employer on or before the 30th day
of the strike. When at least majority of the union
members vote to accept the improved offer, the striking
workers shall immediately return to work and the
employer shall thereupon re-admit them upon the
signing of the agreement.
xxx
TEST OF LEGALITY
Purpose and means test
Assumption and certification orders are executory in
character and are to be strictly complied with by the parties
even during the pendency of any petition questioning their
validity. xxx Regardless therefore of their motives, or the
validity of their claims, the striking workers must cease
and/or desist from any and all acts that tend to, or
undermined this authority of the secretary once an
assumption and/or certification was issued.595
The strike in question was illegal. The strike itself was
prompted by no actual, existing unfair labor practice
committed by the petitioner. In effecting a change in the
seating arrangement in the office of the underwriting
department, the petitioner merely exercised a reasonable
prerogative employees could not validly question, much less
assail as an act of ULP. The court is indeed at a loss how
rearranging furniture, as it were, can justify a 4 month long
strike.596
Guidelines and balancing of interest
Shell Oil Workers Union v Shell Co. of the Phils., 39 SCRA 276
(1971). When to strike – The assumption is that labor can be
trusted to determine for itself when the right to strike may be
availed of in order to attain a successful fruition in their
disputes with management.
How strike is to be conducted – A strike otherwise valid, if
violent in character, may be placed beyond the pale. Care is
to be taken, however, especially where an unfair labor
practice is involved, to avoid stamping it with illegality just
because it is tainted by such acts. To avoid rendering illusory
the recognition of the right to strike, responsibility in such a
case should be individual and not collective. A different
conclusion would be called for, of course, if the existence of
force while the strike lasts is pervasive and widespread,
consistently and deliberately resorted to as a matter of policy.
It could be reasonably concluded then that even if justified as
to ends it becomes illegal because of the means employed.
The right to strike while constitutionally recognized, is not
without legal restrictions. There are procedural steps to be
593Philippine Diamond Hotel v Manila Diamond EU, G.R. No. 158075 (2006).
594Art 219(r)
595Union of Filipino Employees v Nestle Phils.Inc., 192 SCRA 396 (1990).
596Reliance Surety and Insurance v NLRC, 193 SCRA 365 (1991).
105
LABOR LAW
followed before a strike may be staged. These requirements
are mandatory, meaning noncompliance therewith makes the
strike illegal.597
Defenses – good faith
Where a union believes that an employer committed ULP and
the surrounding circumstance warranted such belief in good
faith, resulting strike may be considered legal, although such
allegations of ULP were found to be groundless.598
Effect of illegality
For union officers: Dismissal, No back wages
For members: None, except if it is proved that they
committed illegal acts during strike
An ordinary striking worker cannot be terminated for mere
participation in an illegal strike. The effects of such illegal
strikes, outlined in Article 279(a), make a distinction between
workers and union officers who participate therein: an
ordinary striking worker cannot be terminated for mere
participation in an illegal strike. There must be proof that he
or she committed illegal acts during a strike. A union officer,
on the other hand, may be terminated from work when he
knowingly participates in an illegal strike, and like other
workers, when he commits an illegal act during a strike. In all
cases, the striker must be identified. But proof beyond
reasonable doubt is not required. Substantial evidence
available under the attendant circumstances, which may
justify the imposition of the penalty of dismissal, may suffice.
Liability for prohibited acts is to be determined on an
individual basis.599
Injunctions
There can be no injunction issued against any strike except in
only one instance, that is, when a labor dispute arises in an
industry indispensable to the national interest and such
dispute is certified by the President to the CIR in compliance
with sec 10, RA 875.600
Exceptions
Art. 225. Powers of the Commission.
The Commission shall have the power and authority:
e. 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 or
render ineffectual any decision in favor of such party:
Provided, That no temporary or permanent injunction in
any case involving or growing out of a labor dispute as
defined in this Code shall be issued except after hearing
the testimony of witnesses, with opportunity for cross-
examination, in support of the allegations of a complaint
made under oath, and testimony in opposition thereto, if
offered, and only after a finding of fact by the
Commission, to the effect:
597Stamford Marketing Corp v Julian, G.R. No. 145496 (2004).
598HotelEnterprises of the Phils.vSamahanngManggagawang Hyatt, G.R. No.
165756 (2009).
Lasallian Commission on Bar Operations 2018
LABOR LAW
That prohibited or unlawful acts have been threatened
and will be committed and will be continued unless
restrained, but no injunction or temporary restraining
order shall be issued on account of any threat, prohibited
or unlawful act, except against the person or persons,
association or organization making the threat or
committing the prohibited or unlawful act or actually
authorizing or ratifying the same after actual knowledge
thereof;
That substantial and irreparable injury to complainant’s
property will follow;
That as to each item of relief to be granted, greater injury
will be inflicted upon complainant by the denial of relief
than will be inflicted upon defendants by the granting of
relief;
That complainant has no adequate remedy at law; and
That the public officers charged with the duty to protect
complainant’s property are unable or unwilling to
furnish adequate protection.
Such hearing shall be held after due and personal notice
thereof has been served, in such manner as the
Commission shall direct, to all known persons against
whom relief is sought, and also to the Chief Executive and
other public officials of the province or city within which
the unlawful acts have been threatened or committed,
charged with the duty to protect complainant’s property:
Provided, however, that if a complainant shall also allege
that, unless a temporary restraining order shall be issued
without notice, a substantial and irreparable injury to
complainant’s property will be unavoidable, such a
temporary restraining order may be issued upon
testimony under oath, sufficient, if sustained, to justify the
Commission in issuing a temporary injunction upon
hearing after notice. Such a temporary restraining order
shall be effective for no longer than twenty (20) days and
shall become void at the expiration of said twenty (20)
days. No such temporary restraining order or temporary
injunction shall be issued except on condition that
complainant shall first file an undertaking with adequate
security in an amount to be fixed by the Commission
sufficient to recompense those enjoined for any loss,
expense or damage caused by the improvident or
erroneous issuance of such order or injunction, including
all reasonable costs, together with a reasonable attorney’s
fee, and expense of defense against the order or against the
granting of any injunctive relief sought in the same
proceeding and subsequently denied by the Commission.
The undertaking herein mentioned shall be understood
to constitute an agreement entered into by the
complainant and the surety upon which an order may be
rendered in the same suit or proceeding against said
complainant and surety, upon a hearing to assess
damages, of which hearing, complainant and surety shall
have reasonable notice, the said complainant and surety
submitting themselves to the jurisdiction of the
599Sukhothai Cuisine Restaurant v CA, G.R. No. 150437 (2006).
600Caltex Filipino Managers and Supervisors Assn v CIR, G.R. No. 130632-33
(1972).
106
LABOR LAW
Commission for that purpose. But nothing herein
contained shall deprive any party having a claim or cause
of action under or upon such undertaking from electing
to pursue his ordinary remedy by suit at law or in equity:
Provided, further, That the reception of evidence for the
application of a writ of injunction may be delegated by
the Commission to any of its Labor Arbiters who shall
conduct such hearings in such places as he may
determine to be accessible to the parties and their
witnesses and shall submit thereafter his
recommendation to the Commission. (As amended by
Section 10, Republic Act No. 6715, March 21, 1989)
PICKET
Bar 2000, 2004
IR, Book V, Rule XXII, Sec 13. Peaceful picketing.
Workers shall have the right to peaceful picketing. No
person engaged in picketing shall commit any act of
violence, coercion, or intimidation or obstruct the free
ingress to or egress from the employer’s premises for
lawful purposes, or obstruct public thoroughfares.
No person shall obstruct, impede or interfere with, by
force, violence, coercion, threats or intimidation, any
peaceful picketing by workers during any labor
controversy or in the exercise of the right to self-
organization or collective bargaining shall aid or abet
such obstruction or interference. No employer shall use
or employ any person to commit such acts nor shall any
person by employed for such purpose.
Nature and purpose
The purpose of pickets is said to be a means of peaceable
persuasion. Picketing involves merely the marching to and
fro at the premises of the employer, usually accompanied by
the display of placards and other signs making known the
facts involved in a labor dispute. xxx As applied to a labor
dispute, to picket means the stationing of one or more
persons to observe and attempt to observe.601
Picketing and libel laws
Peaceful picketing is part of the freedom of speech. That the
language employed by the picketers is far from being
courteous and polite does not give rise to a cause for label
and damages. 602
Curtailment
Peaceful picketing, freedom of speech. The wholesale
condemnation of peaceful picketing is likewise clearly bereft
of support in law. Peaceful picketing is part of freedom of
speech guarantee of the constitution.603
Regulation / restrictions, innocent third party rule and
liabilities
A picketing labor union has no right to prevent employees of
another company from getting in and out of its rented
premises; otherwise, it will be held liable for damages for its
acts against an innocent bystander. 604
601StaRosa Coca-Cola Plant EU v CCBP, G.R. No. 164302-03 (2007).
602Philcom v Philnabank EA, 105 SCRA 314 (1981).
603Nagkahiusang Manggagawa sa Cuison Hotel-National Federation of Labor v
Libron, 124 SCRA 448 (1983).
604Liwayway publishing Co. Inc. v Permanent concrete workers union, 108 SCRA
161 (1981)
Lasallian Commission on Bar Operations 2018
LABOR LAW
Prohibited activities
• Acts of violence, coercion or intimidation
• Obstruct the free ingress to or egress from the
employer’s premises for lawful purposes
• Obstruct public through fares
• Obstruct, impede, or interfere with by force,
violence, coercion, threats or intimidation, any
peaceful picketing
• Use or employment of any person to commit such
acts or employment of person for such purpose.
SLOWDOWN
Slowdown as “strike on installment”, inherently illicit a willful
reduction in the rate of work by concerted action of workers for the
purpose of restricting the output of the employer, 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.
The Court also agrees that such a slowdown is generally
condemned as inherently illicit and unjustifiable, because while
the employees "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
employer's damage, to do other work;" in other words, they
"work on their own terms. 605
CONCERTED ACTIVITIES BY EMPLOYER
LOCKOUT
Definition
It is any temporary refusal of an employer to furnish work as
a result of an industrial or labor dispute.606 It is an
employer’s act excluding employees who are union
members from the plant. 607
The right of legitimate labor organizations to strike and
picket and of employers to lockout, consistent with the
national interest, shall continue to be recognized and
respected. However, no labor union may strike and no
employer may declare a lockout on grounds involving inter-
union and intra-union disputes.608
Effect On Work Relationship
Lockout may affect all or less than all of the employee-union
members. Lockout, in the sense in which it is universally
used, is an act directed at the union itself rather than at the
individual employee-union members of the union. 609
Grounds
In case of bargaining deadlocks, the ER may file a notice of
strike or the employer may file a notice of lockout with the
Ministry at least 30-days before the intended date thereof.
In cases of unfair labor practice, the period of notice shall be
15 days and in the absence of a duly certified or recognized
605Ilaw at Buklod ng Manggagawa v NLRC, 198 SCRA 598 (1991).
606 Art. 218 (p), Labor Code of the Philippines
607Sta.Mesa v. CIR, 48 OG 3353
608 Art. 278 (b), LC
609Azucena, Vol. II
107
LABOR LAW
bargaining agent, the notice of strike may be filed by any
legitimate labor organization in behalf of its members.
Lockout may be caused either by:
1. A collective bargaining deadlock or
2. An unfair labor practice act.
Lockout is recognized as a valid weapon in collective
bargaining. It may bring pressure upon the other party
(employee), where an impasse has arisen during bargaining
negotiations or where one party commits ULP, subject to
statutory requirements.
General Rule: Lockout, as a rule, is not subject to labor
injunction or restraining orders.
Exception: In cases of national interest or if acts prohibited
under Art. 279 are being committed.
PROHIBITED LOCKOUT
No labor union may strike and no employer may declare a
lockout on grounds involving inter-union and intra-union
disputes.610
In line with the national concern for and the highest respect
accorded to the right of patients to life and health, strikes and
lockouts in hospitals, clinics and similar medical institutions
shall, to every extent possible, be avoided, and all serious
efforts, not only by labor and management but government as
well, be exhausted to substantially minimize, if not prevent,
their adverse effects on such life and health, through the
exercise, however legitimate, by labor of its right to strike and
by management to lockout. 611
No or employer shall declare a lockout without first having
bargained collectively in accordance with Title VII of this
Book or without first having filed the notice required in the
preceding Article or without the necessary lockout vote first
having been obtained and reported to the Ministry.
No lockout shall be declared after assumption of jurisdiction
by the President or the Minister or after certification or
submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the
same grounds for the strike or lockout.612
VALID LOCKOUTS:
• In anticipation of a threatened strike, where
motivated by economic considerations.613
• In response to unprotected strike or walkout.614
• In response to a whipsaw strike. 615
Unlawful lockouts:
✓ To discourage and dissipate membership in a labor
organization, or otherwise kill the union
✓ To aid a particular union by preventing further
organizational work of its rival, or to coerce the
employees to join the favoured union.
610 Art. 278 (b) (3rd sentence) , LC
611 Art. 278 (g), LC
612 Art. 279 (a)
613Tidewater Express Lines case, 142 NLRB 1111
614News Union of BAtimore v. NLRB, 393 F2d 673
Lasallian Commission on Bar Operations 2018
LABOR LAW
✓ To avoid bargaining.
Lockout must be for a lawful purpose and carried out through
lawful means. A lockout is unlawful where it is declared in
order to defeat organizational and bargaining rights of
employees. 616
Procedural Requirements
1. BARGAIN FIRST (Art. 264(a))
2. NOTICE OF INTENTION TO LOCKOUT.
File notice of lockout to the regional office of the NCMB 617 A
copy of the notice should also be served to the other party.
Cooling-Off Period
Observe cooling off period
1. 30 days for Bargaining deadlock;
2. 15 days for Unfair Labor Practice;
In case of union busting, where the existence of the union is
threatened, the cooling off period shall not apply and the
union may take action immediately.
Strike Vote
If not resolved, conduct a strike vote and inform the NCMB
24-hours prior the intended day of conducting the strike vote.
Conduct of Strike Vote. Get approval of a majority of the
board of directors of the corporation or association or of the
partners in the partnership
1. Obtained by secret ballot
2. In a meeting called for that purpose
Strike Vote Report
Submit the result of the strike vote at least 7 days before the
intended strike or lockout. (7 day strike ban)
Declaration of Lockout
If NCMB is satisfied that the conduct of strike vote was
properly done, after the lapse of 7 days, the employees may
now conduct their strike, or the employer may now proceed
with its lockout.
If the dispute remains unsettled after the lapse of the cooling
off period and the 7day reporting period, the labor union may
strike or the employer may lockout its workers.
NCMB shall continue mediating and conciliating.
Effect of Illegal Lockout
Any worker whose employment has been terminated as a
consequence of any unlawful lockout shall be entitled to
reinstatement with full backwages. 618
ASSUMPTION OF JURISDICTION
Art. 278(g) of the Labor Code provides that when in the
opinion of the DOLE Secretary, the labor dispute causes or
will likely cause a strike or lockout in an industry
615NLRB v. Brown, 13 L ed 2d 839
616Dinglasan v. NLU, 98 Phil. 649
617 National Conciliation and Mediation Board (Regional branch)
618 Art. 279(a), par. 3, 1st sentence, LC
108
LABOR LAW
indispensable to the national interest, he is empowered to
either:
1. Assume jurisdiction over the labor dispute and
decide it himself; or 
 assumption or certification order. If one has already taken
2. Certify it to the NLRC for compulsory arbitration,
in which case, it will be the NLRC which shall hear
and decide it. 
 the employer shall immediately resume operations and
This power may be exercised by the DOLE Secretary even
before the actual staging of a strike or lockout since Art.
278(g) does not require the existence of a strike or lockout
but only of a labor dispute involving national interest.
Nature
The assumption of jurisdiction by the Secretary of Labor
over labor disputes causing or likely to cause a strike or
lockout in an industry indispensable to the national interest
is in the nature of a police power measure.
The compelling consideration of the Secretary’s assumption
of jurisdiction is the fact that a prolonged strike or lockout is
inimical to the national economy; and thus, the need to
implement some measures to suppress any act which will
hinder the company’s essential productions is indispensable
for the promotion of the common good. 619
Assumption order
The power granted to the Secretary of DOLE by Art 278(g)
authorizes her to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, and correlatively, to
decide the same. 620
The Secretary’s assumption of jurisdiction power necessarily
includes matters incidental to the labor dispute; that is,
issues that are necessarily involved in the dispute itself, not
just to those ascribed in the Notice of Strike, or, otherwise
submitted to him for resolution621
The authority to assume jurisdiction over a labor dispute
must include and extend to all questions and controversies
arising therefrom.622
Compulsory arbitration, conducted by:
1. Labor arbiter
2. SOLE under 278 (g)
In compulsory arbitration, parties are compelled to forego
their right to strike by the government.
Initiating Party
1. SECRETARY OF LABOR AND EMPLOYMENT
“When, 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, the Secretary of Labor
and Employment may assume jurisdiction over the dispute
and decide it or certify the same to the Commission for
619 Union of Filipro Employees v. NLRC (1990).
620Union of Filipro Employers v Nestle, G.R. No. 158930-31 (2006).
621Union of Filipro Employers v Nestle, G.R. No. 158930-31 (2006).
622Supra.
623 Art 278(g)
624PLDT v Manggagawang Komunikasyon s aPilipinas, 463 SCRA 418 (2005).
Lasallian Commission on Bar Operations 2018
LABOR LAW
compulsory arbitration. Such assumption or certification
shall have the effect of automatically enjoining the intended
or impending strike or lockout as specified in the
place at the time of assumption or certification, all striking or
locked out employees shall immediately return-to-work and
readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission 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. xxx”623
Great breadth of discretion given to Secretary of Labor
under Article “(263)” 278 (g).624
The discretion to assume jurisdiction may be exercised by
the SOLE without necessity of prior notice or hearing given
to any of the parties. 625
The Secretary of Labor has the discretion to determine what
industries are indispensable to national interest.626
2. PRESIDENT – 269(G)
To certify a labor dispute to the Industrial Court is the
prerogative of the President. The Supreme Court will not
interfere with such prerogative, much less curtail its
exercise.627
Assumption and certification orders are executory in
character and are to be strictly complied with by the parties
even during the pendency of any petition questioning their
validity. 628
Awards and orders
A union’s demand for a signing bonus bereft of any factual
or legal basis where the CBA was not concluded in the
bargaining table. There is no basis for the award or
conversion of the Unions demand for a signing bonus into
gratuity pay inasmuch as the latter benefit was, in the first
place, never an issue between the parties nor part of the
Unions demand. So, the SOLE abused her discretion when
she extended to the union an award not asked for, let alone
negotiated.629
Arbitral award; retroactive effect. CBA arbitral awards
granted after six months from the expiration of the last CBA
shall retroact to such time agreed upon by both employer
and the employees or their union. Absent such an agreement
as to retroactivity, the award shall retroact to the first day
after the six-month period following the expiration of the
last day of the CBA should there be one. In the absence of a
CBA, the Secretary's determination of the date of
retroactivity.630
The Labor Secretary’s authority to assume jurisdiction over a
labor dispute must include and extend to all questions and
625CapitolMedical v Trajano, 462 SCRA 457 (2005).
626PhiltreadWU v Confesor, 269 SCRA 393 (1997).
627FeatiUniversity v Bautista, 18 SCRA 1191 (1966).
628Union of Filipro Employees v Nestle, 192 SCRA 396 (1990).
629Nissan Motors v SOLE, 491 SCRA 602 (2006).
630Manila Electric Co. v SOLE, G.R. No. 127598 (2000).
109
LABOR LAW LABOR LAW

controversies arising therefrom, including cases over which

the labor arbiter has jurisdiction.631

Effects of Assumption of Jurisdiction

1st effect - Automatic injunction

The intended strike is automatically enjoined.

2nd effect – Automatic return to work orders

If a strike has taken place, all employees should immediately
return to work. Employers should immediately resume
operation and readmit all employees under same terms
before the strike.

Note: There must be actual reinstatement.

AJ or Certification immediately executory, even if motion for

reconsideration is still pending.

Effect of Defiance of Assumption or Certification Orders

A strike undertaken despite Secretary’s issuance of an
assumption or certification order becomes a prohibited
activity and thus, illegal.632

Once the SOLE assumes jurisdiction over a labor dispute,

such jurisdiction should not be interfered with by the
application of the coercive processes of a strike or lockout.
Defiance of the assumption order or a return-to work order
by a striking employee, whether a union officer or a
member, is an illegal act and, therefore, a valid ground for
loss of employment status. 633

OPTION – Submit case Voluntary arbitration after

certification
Art 278 (h)
(h) Before or at any stage of the compulsory arbitration
process, the parties may opt to submit their dispute to
voluntary arbitration.

Compulsory arbitration and labor rights

The assumption of jurisdiction is in the nature of 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 Secretary of Labor acts to
maintain industrial peace. Thus, his certification for compulsory
arbitration is not intended to impede the workers' right to strike but
to obtain a speedy settlement of the dispute.634

631Interphil Lab EU v Interphil, 372 SCRA 658 (2001). 633Manila Hotel Employees v Manila Hotel, 517 SCRA 349 (2007).
632Philcom EU v Philcom 495 SCRA 214 (2006). 634Philtread Workers Union v Confesor, 296 SCRA 393 (1997).

Lasallian Commission on Bar Operations 2018 110

LABOR LAW LABOR LAW

LABOR ARBITER

Jurisdiction
1. Unfair labor practice cases (Art. 224)
2. Termination disputes; (Art. 224)
3. If accompanied by a claim for reinstatement, those cases
that workers may file involving wages, rates of pay,
hours of work, and other terms and conditions of
employment; (Art. 224)
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations
(Art. 224)
5. Cases arising from any violation of Article 279
(Prohibited Activities) of this Code, including questions
involving the legality of strikes and lockouts (Art. 224)
6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims arising from employer-employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement. (Art. 224)
7. Wage distortion disputes in unorganized establishments
not voluntarily settled by the parties (R.A. 6727 and Art.
124);
8. Enforcement of compromise agreements when there is
non-compliance by any of the parties (Art. 233)
9. Money claims arising out of employer-employee
relationship or by virtue of any law or contract,

JURISDICTION involving Filipino workers for overseas deployment,

including claims for actual, moral, exemplary and other
forms of damages (R.A. 8042, as amended by R.A. 10022)

AND REMEDIES 10. Other cases as may be provided by law.

Labor Arbiter vs. Regional Director

LABOR ARBITER (Art. REGIONAL DIRECTOR
224) (Art. 129)
1. Money claim 1. Money claim is not
accompanied with a claim accompanied
of by reinstatement, AND
Reinstatement, regardless of
amount, OR
2. Money claim exceeds 2. Money claim does not
P5,000, whether exceed P5,000
or not there is a claim for
reinstatement.

Requirements to perfect appeal to NLRC

Decisions, awards, or orders of the Labor Arbiter shall be final
and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt
thereof; and in case of decisions or resolutions of the Regional
Director of the Department of Labor and Employment
pursuant to Article 129 of the Labor Code, within five (5)
calendar days from receipt thereof. If the 10th or 5th day, as
the case may be, falls on a Saturday, Sunday or holiday, the
last day to perfect the appeal shall be the first working day
following such Saturday, Sunday or holiday (Rule VI, Section
1, 2011 NLRC Rules of Procedure).

REQUISITES FOR PERFECTION OF APPEAL. (Rule VI,

Section 4, 2011 NLRC Rules of Procedure).

(a) The appeal shall be:

Lasallian Commission on Bar Operations 2018 111

LABOR LAW
1. Filed within the reglementary period provided in
Section 1 of this Rule;
2. verified by the appellant himself/herself in accordance
with Section 4, Rule 7 of the Rules of Court, as amended;
3. in the form of a memorandum of appeal which shall
state the grounds relied upon and the arguments in
support thereof, the relief prayed for, and with a
statement of the date the appellant received the
appealed decision, award or order;
4. in three (3) legibly typewritten or printed copies; and
5. accompanied by:
a. proof of payment of the required appeal fee and
legal research fee,
b. posting of a cash or surety bond as provided in
Section 6 of this Rule, and
c. proof of service upon the other parties.
A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the
period for perfecting an appeal.
The appellee may file with the Regional Arbitration Branch
or Regional Office where the appeal was filed his/her
answer or reply to appellant's memorandum of appeal, not
later than ten (10) calendar days from receipt thereof. Failure
on the part of the appellee who was properly furnished with
a copy of the appeal to file his/her answer or reply within
the said period may be construed as a waiver on his/her
part to file the same.
Subject to the provisions of Article 225 of the Labor Code, as
amended, once the appeal is perfected in accordance with
these Rules, the Commission shall limit itself to reviewing
and deciding only the specific issues that were elevated on
appeal. (4a)
Reinstatement pending appeal
Under Article 229 of the Labor Code, the decision of the [LA]
reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option
of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for
reinstatement. Verily, the employer is duty-bound to reinstate
the employee, failing which, the employer is liable instead to
pay the dismissed employee's salary. 635
NATIONAL LABOR RELATIONS
COMMISSION (NLRC)
Jurisdiction
1) Exclusive original jurisdiction
a. Petition for injunction in ordinary labor
disputes to enjoin or restrain any actual
or threatened commission of any or all
prohibited or unlawful acts or to require
the performance of a particular act in any
labor dispute which, if not restrained or
performed forthwith, may cause grave or
635 Manila Doctors College and Turla vs. Olones, G.R. No. 225044, (2016)
Lasallian Commission on Bar Operations 2018
LABOR LAW
irreparable damage to any party;
b. Petition for injunction in strikes or
lockouts under Article 279 of the Labor
Code;
c. Certified Cases which refer to labor
disputes causing or likely to cause a
strike or lockout in an industry
indispensable to the national interest,
certified to it by the Secretary of Labor
and Employment for compulsory
arbitration by virtue of Article 278 (g) of
the Labor Code;
d. Petition to annul or modify the order or
resolution (including those issued
during execution proceedings) of the
Labor Arbiter.
2) Exclusive appellate jurisdiction
a. All cases decided by the Labor Arbiters;
b. Cases directed by the DOLE Regional
Directors or hearing officers involving
small money claims under Article 129 of
the Labor Code;
c. Contempt cases decided by the Labor
Arbiters.
GROUNDS OF APPEAL FROM LA TO NRLC (Rule VI,
Section 2, 2011 NLRC Rules of Procedure)
a. If there is prima facie evidence of abuse of discretion on
the part of the Labor Arbiter or Regional Director;
b. If the decision, award or order was secured through
fraud or coercion, including graft and corruption;
c. If made purely on questions of law; and/or
d. If serious errors in the findings of facts are raised which,
if not corrected, would cause grave or irreparable
damage or injury to the appellant.
REVERSAL OF LA DECISION BY NLRC
However, in the event that the LA's decision is reversed by a
higher tribunal, the employer's duty to reinstate the
dismissed employee is effectively terminated. This means that
an employer is no longer obliged to keep the employee in the
actual service or in the payroll. The employee, in turn, is not
required to return the wages that he had received prior to the
reversal of the LA's decision. Notwithstanding the reversal of
the finding of illegal dismissal, an employer, who, despite the
LA's order of reinstatement, did not reinstate the employee
during the pendency of the appeal up to the reversal by a
higher tribunal may still be held liable for the accrued wages
of the employee, i.e., the unpaid salary accruing up to the time
of the reversal. By way of exception, an employee may be
barred from collecting the accrued wages if shown that the
delay in enforcing the reinstatement pending appeal was
without fault on the part of the employer. 636
COURT OF APEALS
Appeal via rule 65, Rules of Court
Section 2, Rule 43 of the 1997 Rules of Civil Procedure is
explicit that Rule 43 shall not apply to judgments or final
orders issued under the Labor Code of the Philippines.
636 Manila Doctors College v. Olones (2016)
112
LABOR LAW
The correct remedy that should have been availed of is the
special civil action of certiorari under Rule 65. The party may
seasonably avail of the special civil action for certiorari,
where the tribunal, board or officer exercising judicial
functions has acted without or in excess of its jurisdiction, or
with grave abuse of discretion, and praying that judgment
be rendered annulling or modifying the proceedings, as the
law requires, of such tribunal, board or officer. In any case,
St. Martins Funeral Homes v. NLRC (295 SCRA 494, 1998)
settled any doubt as to the manner of elevating decisions of
the NLRC to the CA by holding that the legislative
intendment was that the special civil action of certiorari was
and still is the proper vehicle for judicial review of decisions
of the NLRC.637
SUPREME COURT
RULE 45, RULES OF COURT
Appeal by Certiorari to the Supreme Court
A party desiring to appeal by certiorari from a judgment or
final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file with the Supreme
Court a verified petition for review on certiorari. The petition
shall raise only questions of law which must be distinctly set
forth.638
BUREAU OF LABOR RELATIONS (BLR)
JURISDICTION
The Bureau of Labor Relations and the Labor Relations
Division in the regional offices of the Department of Labor
shall have original and exclusive authority to act, at their
own initiative or upon request of either or both parties, on
all
inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-
management relations in all work places whether
agricultural or non-agricultural, except those arising from
the implementation or interpretation of collective bargaining
agreements which shall be subject of grievance procedure
and/or voluntary arbitration. (Art. 232)
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.
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
637 PNB v. Velasco (2008)
638 Sec. 1, Rule 45, Rules of Court
639 Sec. 22, E.O. 86
Lasallian Commission on Bar Operations 2018
LABOR LAW
9. Regular courts over intra-corporate disputes
Mediator-arbiter
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.
The BLR has original and exclusive jurisdiction over:
1. Inter-union disputes
2. Intra-union disputes
3. Other related labor relations disputes
NATIONAL CONCILIATION AND
MEDIATION BOARD (NCMB)
The National Conciliation and Mediation Board, is hereby
created and which shall absorb the conciliation, mediation
and voluntary arbitration functions of the Bureau of Labor
Relations.639
CONCILIATION vs. MEDIATION
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.640
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
dispute641
PREVENTIVE MEDIATION
A formal or informal request for conciliation and mediation
assistance sought by either or both parties to avoid the
occurrence of actual labor dispute.
DOLE REGIONAL DIRECTORS
The DOLE Regional Directors have original and exclusive
jurisdiction over the following cases:
1. Labor standards enforcement cases under Article
128; 

2. Small money claims cases arising from labor
standards violations in the amount not exceeding
P5,000.00 and not accompanied with a claim or
reinstatement under Article 129; 

3. Occupational safety and health violation; 

4. Registration of unions and cancellation thereof,
cases filed against unions and other labor 
relations
related cases; 

5. Complaints against private recruitment and 

placement agencies for local employment; and 

641 NCMB
113
LABOR LAW
6. Cases submitted to them for voluntary arbitration
in their capacity as Ex-Officio Voluntary
Arbitrators under Department 
Order No. 83 - 07,
Series of 2007. 
 2.
RECOVERY/ADJUDICATORY POWERs
Requisites for Regional Director’s Adjudicatory Power:
1. Claim is presented by an employee or a person
employed in domestic or household service, or house
helper.
2. Claim arises form employer-employee relations
3. Claimant does not seek reinstatement
4. Aggregate money claim of each employee or house
helper does not exceed 5,000 pesos. (Azucena,
Everyone’s Labor Code, p. 121)
The RD or any of his duly authorized hearing officers is
empowered through summary proceeding and after due
notice, to hear and decide cases involving recovery of wages
and other monetary claims and benefits, including legal
interests.
DOLE SECRETARY
VISITORIAL AND ENFORCEMENT POWERS
Visitorial Power
It constitutes:
1. Access to ER’s records and premises at any time 
 or not; and
of the day or night, whenever work is being
undertaken
2. To copy from said records 
 attributable to his fault
3. Question any EE and investigate any fact, condition
or matter which may be necessary to determine
violations or which may aid in the enforcement of
the LC and of any wage order, or rules and
regulation issued pursuant thereto . resolution of the dispute in the event of a prima facie finding
Instances where the visitorial power of the SOLE may be
exercised under the Labor Code
Power to:
1. Inspect books of accounts and records of any 
 REMEDIES
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). 
 national interest over which the President may assume
2. Have access to Er’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 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.
642 Pena v. Office of the President, G.R. No. 189314 (2011)
Lasallian Commission on Bar Operations 2018
LABOR LAW
Modes of Labor Standards Inspections (RULE III., SEC.1,
DO 131-B)
1. Joint Assessment (JA);
Compliance Visit (CV);
3. Occupational Safety and Health Standards
Investigation (OSHI); or
4. Special Assessment or Visit Establishment (SAVE).
Enforcement Power
It is the power of the SOLE to:
1. Issue compliance orders

2. Issue writs of execution for the enforcement of their
orders, except in cases where the 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
b. ER shall pay the concerned EEs their 

salaries in case the violation is
POWER TO SUSPEND EFFECTS OF TERMINATION
The Secretary of the Department of Labor and Employment
may suspend the effects of the termination pending
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. (Art. 292 (b))
The proper remedy to question the decisions or orders of the
Secretary of Labor is via Petition for Certiorari under Rule 65,
not via an appeal to the OP. For appeals to the OP in labor
cases have indeed been eliminated, except those involving
jurisdiction.642
VOLUNTARY ARBITRATOR
JURISDICTION
The original and exclusive jurisdiction of the labor arbiter over
unfair labor practices, termination disputes, and claims for damages
cannot be arrogated into the powers of voluntary arbitrators
in the absence of an express agreement between the union and
the company. 643
643Lantex Industries v CA, 529 v 631 (2007).
114
LABOR LAW LABOR LAW

The Voluntary Arbitrator or Panel of Voluntary Arbitrators
will have original and exclusive jurisdiction over money claims
'arising from the interpretation or implementation of the Collective
Bargaining Agreement and, those arising from the
interpretation or enforcement of company personnel policies',
under Article 267."644
NOTE: Art. 262-A deleted the word “unappealable” from Art.
263. It makes the voluntary arbitration award final and
executory after 10 calendar days from receipt of the copy of
the award or decision by the parties. But, the decision may
still be reconsidered by the VA on the basis of a motion for
reconsideration duly filed during that period. 646

Unresolved grievances. The law grants to voluntary XPN: Appeal to the CA via Rule 43 of the Rules of Court
arbitrators original and exclusive jurisdiction to hear and within 15 days from the date of receipt of VA’s decision.
decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining NOTE: A VA by the nature of his functions acts in quasi-
Agreement and those arising from the interpretation or judicial capacity. There is no reason why the VA’s decisions
enforcement of company personnel policies (Art. 274, Labor involving interpretation of law should be beyond the SC’s
Code).645 review. Administrative officials are presumed to act in
accordance with law, yet the SC will not hesitate to pass upon
ART. 274. Jurisdiction of Voluntary Arbitrators and Panel of their work where a question of law is involved or where a
Voluntary Arbitrators. - The Voluntary Arbitrator or panel of showing of abuse of authority or discretion in their official
Voluntary Arbitrators shall have original and exclusive acts is properly raised in petitions for certiorari.647
jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the PRESCRIPTION OF ACTIONS
interpretation or enforcement of company personnel policies
referred to in the immediately preceding article. Accordingly, PRESCRIPTION OF ACTIONS
violations of a Collective Bargaining Agreement, except those
which are gross in character, shall no longer be treated as MONEY ART. 306, Labor Code
unfair labor practice and shall be resolved as grievances CLAIMS All money claims arising from
under the Collective Bargaining Agreement. For purposes of employer-employee relations
this article, gross violations of Collective Bargaining shall be filed within 3 years from
Agreement shall mean flagrant and/or malicious refusal to the time the cause of action
comply with the economic provisions of such agreement. accrued; otherwise they shall be
forever barred.
The Commission, its Regional Offices and the Regional ILLEGAL Art. 1146, Civil Code
Directors of the Department of Labor and Employment shall DISMISSAL Although illegal dismissal is a
not entertain disputes, grievances or matters under the violation of the Labor Code, it
exclusive and original jurisdiction of the Voluntary Arbitrator does not fall within the ambit of
or panel of Voluntary Arbitrators and shall immediately the term “offense” in Art. 305
dispose and refer the same to the Grievance Machinery or because in illegal dismissal, no
Voluntary Arbitration provided in the Collective Bargaining penalty, fine, or imprisonment is
Agreement. imposed. Thus, the 4-year
prescription in the civil code
ART. 275. Jurisdiction over other Labor Disputes. - The must apply.648
Voluntary Arbitrator or panel of Voluntary Arbitrators, upon UNFAIR LABOR Art. 305, Labor Code
agreement of the parties, shall also hear and decide all other PRACTICE All unfair labor practices shall be
labor disputes including unfair labor practices and bargaining filed with the appropriate agency
deadlocks. within 1 year from accrual of
such unfair labor practice;
ART. 224. Jurisdiction of the Labor Arbiters and the otherwise, forever barred.
Commission. OFFENSES Art. 305, Labor Code
(c) Cases arising from the interpretation or UNDER THE Offenses penalized under the
implementation of collective bargaining agreements and LABOR CODE Code and the rules and
those arising from the interpretation or enforcement of regulations shall prescribe in 3
company personnel policies shall be disposed of by the years
Labor Arbiter by referring the same to the grievance ILLEGAL Sec. 12, RA 8042
machinery and voluntary arbitration as may be RECRUITMENT Illegal recruitment cases shall
provided in said agreements. prescribe in 5 years: Provided; if
economic sabotage is involved, it
Remedy shall prescribe in 20 years.
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).

644Del Monte v Saldivar, 504 SCRA 192 (2006). 647 Continental Marble Corp. v. NLRC (1988)
645Sanyo Philippines Workers Union v Canizares, 211 SCRA 361 (1992). 648 Callanta v. Carnation Phil. Inc., 1886
646 Albert Teng Fish Trading v. Pahagac (2010)

Lasallian Commission on Bar Operations 2018 115