Business Commerce: Legal and Regulatory Requirements

(source: https://www.universalclass.com/articles/business/business-commerce-legal-and-regulatory-
requirements.htm)

Legal Environment of Business

When commerce is transacted, several areas of business law are affected. Depending on the type of business
you manage, there could be many regulations and legal obligations you must comply with in order to operate
the company. Businesses can be impacted by statutes in different disciplines, such as tax laws, material handling
laws, and employment laws. Most businesses either have attorneys on staff or retain firms to handle issues
surrounding the law. As a manager, however, you may be required to know some basic legal requirements.

Whether you are establishing a business organization, protecting proprietary information, shipping products
across state lines, or managing employees, certain business laws affect all companies. The following areas cover
companies in most industries:

 tax laws;
 environmental laws;
 consumer protection laws;
 employment and labor laws;
 antitrust/fair competition laws;
 interstate commerce laws;
 license and permitting laws;
 contract laws;
 intellectual property laws;
 financial regulation laws;
 bankruptcy laws.

Now let us look at some key areas most business managers should be aware of.

Employment Law

When employees are under a management or control structure, they are protected against offenses committed
by the company and provided rights as a consequence of employment. The following sections provide an
overview of protections for all employees.

Unfair Labor Practice (https://blr.dole.gov.ph/2014/12/11/unfair-labor-practice/)

1. What is unfair labor practice (ULP)?

ULPs are offenses committed by the employer or labor organization which violate the constitutional right of
workers and employees to self-organization. ULP acts are inimical to the legitimate interests of both labor and
management, disrupt industrial peace and hinder the promotion of healthy and stable labor-management
relations. (Art. 248 of the Labor Code, as amended)

2. What is the nature of ULP?

ULP is not only a violation of the civil rights of both labor and management, but also a criminal offense against
the State. Criminal ULP cases may be filed with the regular courts. No criminal prosecution may be instituted,
however, without a final judgment from the NLRC that an unfair labor practice was committed.

3. What are some of the ULPs committed by an employer?

ULP by management are as follows:

a) Requiring as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs;

b) Contracting out services or functions being performed by union members when such will interfere
with, restrain, or coerce employees in the exercise of their right to self-organization;

c) Discrimination as regards to wages, hours of work, and other terms and conditions of employment in
order to encourage or discourage membership in any labor organization; and

d) Dismissal, discharge, prejudice or discrimination against an employee for having given or being about
to give testimony under the Labor Code. (Art. 248, 249 of the Labor Code, as amended)

4. What are some ULPs committed by labor organizations?

A labor organization commits ULP by any of the following violations:

a) Restraint or coercion of employees in the exercise of their right to self-organization: However, the
labor organization shall have the right to prescribe its own rules with respect to the acquisition or
retention of membership; and

b) Causing or attempting to cause an employer to discriminate against an employee, including

discrimination against an employee with respect to whom membership in such organization has been
denied or terminating an employee on any ground other than the usual terms and conditions under
which membership or continuation of membership is made available to other members.

5. What are ULPs committed by both employers and labor organizations?

ULPs by both management and labor organizations are as follows:

a) Interference, restraint, or coercion of employees in the exercise of their right to self-organization;

b) Violation of a collective bargaining agreement, when circumstances warrant;

c) Initiating, dominating, assisting or otherwise interfering with the formation or administration of any
labor organization, including the giving of financial or other support to it or its organizers or supporters;

d) Violation of the duty to bargain collectively; and

e) Payment by employer of negotiation or attorney’s fees and acceptance by the union or its officers or
agents as part of the settlement of any issue in collective bargaining or any other dispute (Art. 248, 249
of the Labor Code, as amended).

Collective Bargaining (https://blr.dole.gov.ph/2014/12/11/collective-bargaining/)

1. What is Collective Bargaining?

It 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.

2.What is Collective Bargaining Agreement (CBA)?

It is a contract executed upon request of either the employer or the exclusive bargaining representative of the
employees incorporating the agreement reached after negotiations with respect to wages, hours of work and all
other terms and conditions of employment, including proposals for adjusting any grievances or questions under
such agreement.

3.Is the ratification of the CBA by the majority of all the workers in the bargaining unit mandatory?

Yes. The agreement negotiated by the employees’ bargaining agent should be ratified or approved by the
majority of all the workers in the bargaining unit.

4.Is there any exception to the requirement of mandatory ratification by the majority of all the workers in the
bargaining unit?

Yes. Ratification of the CBA by the employees in the bargaining unit is not needed when the CBA is a product of
an arbitral award by appropriate government authority or by a voluntary arbitrator.

5.What constitutes CBA registration?

It is a process of determining whether the application for registration of a Collective Bargaining Agreement
complies with the Rules on CBA registration specifically Rule XVII of the Department Order No. 40-03 or the
Rules amending the Implementing Rules of Book V of the Labor Code of the Philippines.

6.What is the effect of the CBA registration?

The registration of the CBA will bar a certification election except within the last sixty days (freedom period)
before the expiration of the five-year CBA.

7.What is the lifetime of a CBA?

With respect to representation aspect, the CBA lasts for 5 years. However, not later than 3 years after the
execution of the CBA, the economic provisions shall be renegotiated.

8.What is the freedom period?

It refers to the last sixty days immediately preceding the expiration of the five-year CBA. A petition for
certification election may be filed during the freedom period.
9.Where to file the application for CBA registration?

The application for CBA registration shall be filed at the Regional Office that issued the certificate of registration
or certificate of creation of chartered local of the labor union-party to the agreement.

10.When to file the application for CBA registration?

The application for registration of the CBA shall be filed within thirty (30) days from the execution of such CBA.

11.What are the requirements for CBA registration?

The following are the requirements for CBA registration (original and two (2) duplicate copies which must be
certified under oath by the representative of the employer and labor union concerned):

a) The Collective Bargaining Agreement;

b) A statement that the Collective Bargaining Agreement was posted in at least two (2) conspicuous
places in the establishment concerned for at least five (5) days before its ratification; and

c) A statement that the Collective Bargaining Agreement was ratified by the majority of the employees
in the bargaining unit of the employer concerned.

12.Is registration fee required?

Yes. The certificate of CBA registration shall be issued by the DOLE Regional Office only upon payment of the
prescribed registration fee.

13.How long will it take to process the CBA registration?

The application for CBA registration shall be processed within one day from receipt thereof.

14.What is the ground for denial of the CBA registration?

Failure of the applicant to complete the requirements for CBA registration but such denial is without prejudice
for the filing of another application for registration.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-25999             February 9, 1967

ASSOCIATED LABOR UNION, petitioner, 

vs.
JUDGE AMADOR E. GOMEZ, JUDGE JOSE C. BORROMEO and SUPERIOR GAS AND EQUIPMENT
CO., OF CEBU, INC., respondents.

Sino, Mendoza, Ruiz & Associates for petitioner.

Parades, Poblador, Cruz & Nazareno for respondents.

SANCHEZ, J.:

Following are the facts that spawned the present proceedings:

On January 1, 1965, Associated Labor Union 1 and Superior Gas and Equipment Co. of Cebu, Inc., 2 entered
into a collective bargaining contract. It was to expire on January 1, 1966. Prior to the contract's expiry, Union
and employer started negotiations for its renewal. Late in February, 1966, while bargaining was in progress,
12 of Sugeco's employees resigned from the Union. Negotiations were broken. On March 1, 1966, the Union
wrote Sugeco. There, request was made that unless the 12 resigned employees 3 could produce a clearance
from the Union, they be not allowed in the meantime to report for work. On the same day, Sugeco's attorney
rejected the request. The reasons given are that irreparable injury would ensue, that the bargaining contract
had lapsed, and that the Company could no longer demand from its employees the requested clearance.
Sugeco made it understood that after the 12 men would have returned into the Union fold, said company
would then be "in a position to negotiate again for the renewal of the collective bargaining contract." Also on
the same day, March 1, the Union wrote Sugeco, charged the latter with bargaining in bad faith, and its
supervisors with "campaigning for the resignation of members of this Union". The Union there served notice
"that unless the aforementioned unfair labor practice acts will immediately be stopped and a collective
bargaining agreement be signed between your company and this union immediately after receipt of this
letter, this union will declare a strike against your management and correspondingly establish picket lines in
any place where your business may be found". On March 3, 1966, counsel for Sugeco wrote the Union
stating that with the resignation of Union members aforesaid, the Union was no longer the representative of
the majority of the employees "for purposes of negotiation and recognition".

On March 4, the Union struck, picketed the Basak (Mandawe) plant of Sugeco.

The next day, March 5, 1966, Sugeco went to the Court of First Instance of Cebu (Case No. R-9221, entitled
"Superior Gas and Equipment Co. of Cebu, Inc., petitioner, vs. Associated Labor Union, respondent"),
praying that the Union be restrained from alleged illegal picketing activities at its Basak plant, and also from,
picketing Sugeco's offices at Juan Luna street, Cebu City, and its other offices located elsewhere in the
Philippines.

On the same date, March 5, 1966, upon a bond of P5,000.00, respondent Judge Amador E. Gomez,
purportedly upon the authority of the Rules of Court, 4 issued ex parte the writ of preliminary injunction
prayed for. The Union moved to reconsider. Ground, inter alia, is that the court of first instance had no
jurisdiction over the subject-matter — unfair labor practice. It was the turn of the other respondent, Judge
Jose C. Borromeo, to refuse reconsideration.

Meanwhile, on March 5, 1966 — on the same day the Court of First Instance complaint was filed by Sugeco
against the Union — the latter lodged with the Court of Industrial Relations (CIR, for short) a charge for
unfair labor practice against Sugeco, its general manager, Concepelon Y. Lua, and its two supervisors,
Nestor Yu and Mariano Nulla. The Union there averred that said respondents coerced and exerted pressure
upon the union members to resign, as they did resign, from the Union; and that such resignations were
seized upon by Sugeco to refuse further negotiations with the Union. Offshoot is the complaint for unfair
labor practice registered in the CIR on April 29, 1966 by its Acting Prosecutor. 5

On May 9, 1966, the Union came to this Court on certiorari and prohibition. The Union here prays that
respondent judges of the Court of First Instance of Cebu be declared without jurisdiction over the subject
matter of the petition in Civil Case No. R-9221 aforesaid; that the writ of preliminary injunction therein issued
be annulled; and that said judges be directed to dismiss said case. The Union also asks that pendente
lite the respondent judges be stopped from further proceeding with the case just adverted to.

This Court on May 16, 1966, issued the solicited cease-and-desist order. 1äwphï1.ñët

The quintessence of this case is jurisdiction.

First, we go to the background facts. We take stock of Sugeco's petition against the Union in the Court of
First Instance of Cebu (Case No. R-9221). Read as it should be, Sugeco in paragraph 10 thereof charges
the Union with "coercing the resigned employees to rejoin" the same. And this, obviously to neutralize the
Union claim that Sugeco was coercing and cajoling its members to separate therefrom. 6

This charge and countercharge require us to focus attention on the Industrial Peace Act. 7 Section 4(a) and
(b) thereof recite, as follows:

(a) It shall be unfair labor practice for an employer:

(1) To interfere with, restrain or coerce employees in the exercise of their rights guaranteed in
section three;

xxx     xxx     xxx

(b) It shall be unfair labor practice for a labor organization or its agents:

(1) To restrain or coerce employees in the exercise of their rights under section three ....

And Section 3 referred to in Section 4(a) and (b) provides:

... Employees shall have the right to self-organization and to form, join or assist labor organizations
of their own choosing for the purpose of collective bargaining through representatives of their own
choosing and to engage in concerted activities for the purpose of collective bargaining and other
mutual aid or protection. ....

The broad sweep of the law suggests that the coercion or cajolery of employees heretofore described, by
management or union, is unfair labor practice. 8 Therefore, the alleged act of coercing or instigating union
members to resign therefrom is clearly within the coverage of the prescription. It is aimed at crippling the
Union, throwing it off balance, destroying its bargaining authority. It is an attack against the Magna Carta of
Labor. By the same token, the charge levelled by Sugeco against the Union that the latter "is coercing
the resigned employees to rejoin the Union" is no less an unfair labor practice.

Jurisdiction then is exclusively vested in the Court of Industrial Relations. For, explicit in Section 5(a) of the
Industrial Peace Act is the precept that —
 The Court shall have jurisdiction over the prevention of unfair labor practices and is empowered to
prevent any person from engaging in any unfair labor practice. This power shall be exclusive and
shall not be affected by any other means of adjustment or prevention that has been or may be
established by an agreement, code, law or otherwise. [Emphasis supplied]

Nor will Sugeco's averment below that it suffers damages, by reason of the strike, work to defeat the CIR's
jurisdiction to hear the unfair labor practice charge. Reason for this is that the right to damages "would still
have to depend on the evidence in the unfair labor practice case" — in the CIR. 9 To hold otherwise is to
sanction split jurisdiction — which is obnoxious to the orderly administration of justice. 10

The stance that the ULP case initiated by the Union in the CIR was an afterthought, will not carry the day for
Sugeco. That case was filed on the very same day Sugeco went to the Court of First Instance — which,
anyway, is without jurisdiction over the subject-matter. The Union struck precisely because of the unfair
labor practice allegedly indulged in by Sugeco. So that, the ULP case was not calculated merely to divest
the Cebu court of first instance of jurisdiction which it did not possess. 11

A rule buttressed upon statute and reason that frequently reiterated in jurisprudence is that labor
cases involving unfair labor practice are within the exclusive jurisdiction of the ClR. By now, this rule has
ripened into dogma. It thus commands adherence not breach.12 This Court once pointedly remarked that
"[t]he policy of social justice guaranteed by the Constitution demands that when cases appear to involve
labor disputes courts should take care in the exercise of their prerogatives and discretion".13

The Court of First Instance of Cebu, we rule, is without jurisdiction over the subject-matter of Case No. R-
9221. Its judges, therefore, did not have the authority to provide for an ancillary remedy in that case. Hence,
the injunction below complained of was issued coram non judice. It is void.

For the reasons given:

(1) the petition herein for a writ of certiorari and prohibition is hereby granted, and the writ of preliminary
injunction we issued on May 13, 1966 is declared permanent;

(2) the writ of preliminary injunction issued by the Court of First Instance of Cebu in Case No. L-9221,
entitled "Superior Gas and Equipment Co. of Cebu, Inc., petitioner, vs. Associated Labor Union, respondent"
is hereby declared null and void; and

(3) the respondent judges, or whoever shall take their place, are hereby directed to dismiss the said Case
No. L-9221.

Costs against respondent Superior Gas and Equipment Co. of Cebu, Inc. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Castro, JJ., concur.

Footnotes

1
Here in after referred to as Union, a duly registered labor organization under Republic Act 875.

To be referred to herein as Sugeco, a corporation organized and existing under the laws of the
2

Philippines.

(1) Eduardo Aguanta, (2) Eduardo Alforque, (3) Cirilo Barrientos, (4) Rodolfo Gerebese, (5) Alejo
3

Gullin, (6) Camilo Hatamosa, (7) Cirilo Macasero (8) Emillano Macasero, (9) Rosalio Occo, (10)
Francisco Saberon (11) Felix Tan, (12) Braulio Ycong.

4
Rule 58, 1964 Rules of Court.

Case No. 400-ULP-Cebu, entitled "The Associated Labor Union, complainant, vs. Superior Gas and
5

Equipment Co. of Cebu, Inc., respondent."

6
Annexes D and E of the petition below; Annex F of the Union petition herein, Record, p. 64.

7
United Pepsi-Cola Sales Organization vs. Cañizares, 102 Phil. 887, 891.

8
Erlanger & Galinger, Inc. vs. Erlanger & Galinger Employees Association, L-11907, June 24, 1958,
citing National Garments and Textiles Workers Union vs. Caluag, L-9104, September 10, 1956.

9
Id.

10
Bay View Hotel, Inc. vs. Manila Hotel Workers' Union, L-21803, December 17, 1966.
 11
Naric Workers' Union vs. Alvendia, L-14439, March 25, 1960.

Pambujan Sur United Mine Workers vs. Samar Mining Co., Inc., 94 Phil. 932, 940, 941-942; Paflu
12

vs. Tan, 99 Phil. 854, 866; Reyes vs. Tan, 99 Phil. 880, 883; NGTW vs. Caluag, 99 Phil. 1067; SMB
Box Factory Workers' Union vs. Victoriano, 102 Phil 646, 651-652; Consolidated Labor Association
of the Philippines vs. Caluag, 55 O.G. No. 22, pp. 4037, 4041-4042; Erlanger & Galinger, Inc. vs.
Erlanger & Galinger Employees' Association, supra; Naric Workers' Union vs. Alvendia, supra;
Jornales vs. Central Azucarera de Bais, L-15287, September 30, 1963; Malayang Manggagawa sa
Esso vs. Esso Standard Eastern, Inc., L-24224, July 30, 1965.

Associated Watchmen and Security Union vs. United States Lines, 54 O.G. 31, pp. 7397, 1400;
13

emphasis supplied.

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