University of Cebu

College of Law
UCLASS Bar Operations
Labor Law Society

LABOR LAW
BAR NOTES
2012 by:

Chairperson:
Aubrey Mae M. Paronda

Members:

Hermelito Bulala
Rilven Christian Virtudazo
Camille Bono
Vincent Isles
Jaime Bernardo Tumulak

Bar Operations 2012: Ace the Bar, Race the Car!

References: Law Textbooks, Codes, Reviewers, Notes, Compilations, Articles and Internet Sources

For Private and Personal Use Only

Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society

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

national development.

I: FUNDAMENTAL PRINCIPLES AND POLICIES Section 11. The State values the dignity of every human person
and guarantees full respect for human rights.

The following are the topics covered: Section 13. The State recognizes the vital role of the youth in
1. Definition and Classification nation-building and shall promote and protect their physical,
moral, spiritual, intellectual, and social well-being. It shall
2. Constitutional Provisions on Labor inculcate in the youth patriotism and nationalism, and encourage
3. Civil law provisions on labor their involvement in public and civic affairs.

4. The Labor Code Section 14. The State recognizes the role of women in nation-
building, and shall ensure the fundamental equality before the
law of women and men.
I. Fundamental Principles and Policies
Section 18. The State affirms labor as a primary social economic
1. Definition: force. It shall protect the rights of workers and promote their
welfare.
Labor Law is the law governing the rights and
duties of the employer and employees: Section 20. The State recognizes the indispensable role of the
private sector, encourages private enterprise, and provides
incentives to needed investments.
a. with respect to the terms and conditions, and
b. with respect to labor disputes arising from
a. General Definition:
collective bargaining respecting terms and
conditions
i. Social Justice is "neither communism, nor
despotism, nor atomism, nor anarchy," but the
Classification:
Humanization of laws and the equalization of
social and economic forces by the State so that
a. Labor Legislation/Welfare Legislation is
justice in its rational and objectively secular
intended to benefit all persons not only
conception may at least be approximated.
workers. It provides benefits in case of
Social justice means the promotion of the
contingencies or for other needs in order that
welfare of all the people, the adoption by the
we may have decent and adequate living.
Government of measures calculated to insure
b. Labor Standards Law sets out the minimum
economic stability of all the competent
terms, conditions, and benefits of employment,
elements of society, through the maintenance
which employers must provide or comply with
of a proper economic and social equilibrium in
and to which the employees are entitled to as
the interrelations of the members of the
a matter of legal right.
community, constitutionally, through the
adoption of measures legally justifiable, or
c. Labor Relations Law defines the status,
extra-constitutionally, through the exercise of
rights, duties and the Institutional mechanisms
powers underlying the existence of all
that govern the individual and collective
governments on the time-honored principle of
interactions of employers, employee's or their
salus populi est suprema lex. (Calalang vs.
representatives.
Williams, 70 Phil. 726 [1940])
d. It intends to stabilize the relations of the
employee's and their employers, adjust
ii. Welfare State concept is found in the
differences between them through the
constitutional clause on the promotion of social
encouragement of collective bargaining, and
justice to ensure the well-being and economic
settle labor disputes through conciliation,
security of all the people, as well as the pledge
mediation and arbitration.
of protection to labor with the specific
authority to regulate the relations between
2. Constitutional Provisions on Labor:
landowners and tenants and between labor and
capital. (Alalayan vs. National Power
Article II Declaration of Principles and State Policies
Corporation, 24 SCRA 172 [1968])
Section 9. The State shall promote a just and dynamic social
order that will ensure the prosperity and independence of the iii. Limits of Social Justice. Social Justice should
nation and free the people from poverty through policies that be used only to correct an injustice. As the
provide adequate social services, promote full employment, a eminent Justice Jose P. Laurel observed, social
rising standard of living, and an improved quality of life for all.

Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 2
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
justice must be founded on the recognition of
the necessity of interdependence among
diverse units of a society and of the protection
that should be equally and evenly extended to
all groups as a combined force in our social
and economic life. As interdependent and
indispensable partners in nation-building, labor
and management need each other to foster
productivity and economic growth; hence, the
need to weigh and balance the rights and
welfare of both the employee and employer.
(Agabon vs NLRC, G.R. No. 158693, November
17, 2004)
b. Social Justice and Human Rights:
N.B.:
i. it is incorrect to say that self-organization is
limited in purpose to CBA.
ii. it is incorrect to say that “ambulant, intermittent
and itinerant workers, self-employed people, rural
workers and those without any definite employers
[who “may form labor organizations for their
mutual aid and protection”] do not have the right
to self-organization. They too are covered by the
injunction that “It shall be unlawful for any person
to restrain, coerce, discriminate against or unduly
interfere with (said) employees in their exercise of
the right to self-organization”. (at least on
concerted activities)
Self-organization is a fundamental right
guaranteed by the Philippine Constitution and the
Labor Code. Employees have the right to form,
join or assist labor organizations for the purpose of
collective bargaining or for their mutual aid and
protection. The constitutional right to self-
organization is better understood in the context of
ILO Convention No. 87 (Freedom of Association
and Protection of Right to Organize), to which the
Philippines is a signatory. (UST Faculty Union v.
Bitonio, Jr., G.R. No. 131235, November 16, 1999,
318 SCRA 185)
Workers and employers, without distinction
whatsoever, shall have the right to establish and,
subject only to the rules of the organization
concerned, to job organizations of their own
choosing without previous authorization; (Standard
Chartered Bank Employees Union (NUBE) v.
Confesor, G.R. No. 114974, June 16, 2004, 432
SCRA 308, 320-321) and that workers'
organizations shall have the right to draw up their
constitution and rules and to elect their
representatives in full freedom, free from any
Bar Operations 2012: Ace the Bar, Race the Car!
interference from public authorities. (UST Faculty
Union v. Bitonio, Jr., supra)
Liberty of Contract/Laissex Faire. The
prohibition to impair the obligation of contracts is
not absolute and unqualified. In spite of the
constitutional prohibition and the fact that both
parties are of full age and competent to contract
does not necessarily deprive the State of the
power to interfere where the parties do not stand
upon equality, or where the public health demands
that one party to the contract shall be protected
against himself. (Leyte Land Transportation
Company, Inc. vs Leyte Farmer’s and Laborer’s
Union, G.R. No. L-1377, May 12, 1948)
The Constitution is primarily a document of social
justice, and although it has recognized the
importance of the private sector, it has not
embraced fully the concept of laissez faire or
otherwise, relied on pure market forces to govern
the economy (Employers Confederation of the
Philippines vs. National Wages and Productivity
Commission, G.R. No. 96169, September 24,
1991)
Article III Bill of Rights:
Section 1. No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the
equal protection of the laws.
Section 4. No law shall be passed abridging the freedom of
speech, of expression, or of the press, or the right of the people
peaceably to assemble and petition the government for redress of
grievances.
Section 8. The right of the people, including those employed in
the public and private sectors, to form unions, associations, or
societies for purposes not contrary to law shall not be abridged.
c. Due Process:
Under the Labor Code, as amended, the
requirements for the lawful dismissal of an
employee by his employer are two-fold: the
substantive and the procedural. Not only must the
dismissal be for a valid or authorized cause as
provided by law (Articles 279, 281, 282-284, New
Labor Code), but the rudimentary requirements of
due process — notice and hearing — must also be
observed before an employee may be dismissed.
One does not suffice; without their concurrence, to
terminate would, in the eyes of the law, be illegal.
(Salaw vs. NLRC, G.R. No. 90786 September 27,
1991)
d. Labor as Property Right:
One's employment, profession, trade or calling is a
"property right", and the wrongful interference
For Private and Personal Use Only 3
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
therewith is an actionable wrong. The right is
considered to be property within the protection of
a constitutional guaranty of due process of law.
(Sibal vs. Notre Dame of Greater Manila, G.R. No.
75093 February 23, 1990)
Article XIII:
Section 1. The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of all
the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by equitably
diffusing wealth and political power for the common good.
To this end, the State shall regulate the acquisition, ownership,
use, and disposition of property and its increments.
Section 2. The promotion of social justice shall include the
commitment to create economic opportunities based on freedom
of initiative and self-reliance.
Section 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as
may be provided by law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth.
Section 14. The State shall protect working women by providing
safe and healthful working conditions, taking into account their
maternal functions, and such facilities and opportunities that will
enhance their welfare and enable them to realize their full
potential in the service of the nation.
e. Participation in Decision-Making Process:
Verily, a line must be drawn between management
prerogatives regarding business operations per
se and those which affect the rights of the
employees. In treating the latter, management
should see to it that its employees are at least
properly informed of its decisions or modes action.
Indeed, industrial peace cannot be achieved if the
employees are denied their just participation in the
discussion of matters affecting their rights. (PAL
vs. NLRC, G.R. No. 85985 August 13, 1993)
f. Management and the Constitution:
Management Function/Prerogative:
Bar Operations 2012: Ace the Bar, Race the Car!
1. The law in protecting the rights of the
employees authorizes neither oppression nor
self-destruction of the employer.  It should be
made clear that when the law tilts the scale of
justice in favor of labor, it is but a recognition
of the inherent economic inequality between
labor and management. The intent is to
balance the scale of justice; to put the two
parties on relatively equal positions. There may
be cases where the circumstances warrant
favoring labor over the interests of
management but never should the scale be so
tilted if the result is an injustice to the
employer. (Phil. Geothermal Inc. vs. NLRC,
G.R. No. 106370 September 8, 1994)
2. This Court held that the employer’s right to
conduct the affairs of his business, according
to its own discretion and judgment, is well-
recognized. An employer has a free reign and
enjoys wide latitude of discretion to regulate all
aspects of employment, including the
prerogative to instill discipline in its employees
and to impose penalties, including dismissal,
upon erring employees. This is a management
prerogative, where the free will of
management to conduct its own affairs to
achieve its purpose takes form. (Torreda vs.
Toshiba, G.R. No. 165960, February 8, 2007)
3. But, like other rights, there are limits
thereto.  The managerial prerogative to
transfer personnel must be exercised without
grave abuse of discretion, bearing in mind the
basic elements of justice and fair play.  Having
the right should not be confused with the
manner in which the right is exercised.  (Tinio
vs. CA, G.R. No. 171764, June 8, 2007)
3. Civil Law Provision on Labor:
Article 1700. The relations between capital and labor are not
merely contractual. They are so impressed with public interest
that labor contracts must yield to the common good. Therefore,
such contracts are subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar subjects.
a. Contracts. And 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.[20]Inasmuch as in this particular
instance the contract is 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. (PAL Employees Savings and Loan Assn.,
For Private and Personal Use Only 4
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
Inc. vs. NLRC, G.R. No. 105963.,  August 22,
1996)
b. Fair Treatment. The employer's right to
dismiss his employee, however, differs from,
and should not be confused with the manner in
which the right is exercised. It must not be
oppressive and abusive since it affects one’s
person and property. (General Bank and Trust
Co. vs. CA, G.R. No. L-42724, April 9, 1985)
c. Mutual Obligation. The employer's obligation
to give his workers just compensation and
treatment carries with it the corollary right to
expect from the workers adequate work,
diligence and good conduct. (Firestone Tire and
Rubber Company of the Philippines vs. Lariosa,
G.R. No. 70479, February 27, 1987)
d. Compliance with Law. It is also important to
emphasize that the return-to-work order not so
much confers a right as it imposes a duty; and
while as a right it may be waived, it must be
discharged as a duty even against the worker's
will. ( People vs. Tuico, G.R. No. 75271-73
June 27, 1988)
e. Employee’s compliance and obedience to
the employer’s orders. The lack of a written
or formal designation should not be an excuse
to disclaim any responsibility for any damage
suffered by the employer due to his
negligence. The measure of the responsibility
of an employee is that if he performed his
assigned task efficiently and according to the
usual standards, then he may not be held
personally liable for any damage arising
therefrom. Failing in this, the employee must
suffer the consequences of his negligence if not
lack of due care in the performance of his
duties. (PCIB vs. Jacinto, G.R. No. 92742, May
6, 1991)
4. The Labor Code
Article 3. Declaration of basic policy:
The State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex,
race or creed and regulate the relations between workers and
employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just
and humane conditions of work.
Article 211. Declaration of Policy:
It is the policy of the State:
Bar Operations 2012: Ace the Bar, Race the Car!
To promote and emphasize the primacy of free collective
bargaining and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling labor or industrial
disputes;
To promote free trade unionism as an instrument for the
enhancement of democracy and the promotion of social justice
and development
To foster the free and voluntary organization of a strong and
united labor movement;
To promote the enlightenment of workers concerning their rights
and obligations as union members and as employees;
To provide an adequate administrative machinery for the
expeditious settlement of labor or industrial disputes;
To ensure a stable but dynamic and just industrial peace; and
To ensure the participation of workers in decision and policy-
making processes affecting their rights, duties and welfare.
To encourage a truly democratic method of regulating the
relations between the employers and employees by means of
agreements freely entered into through collective bargaining, no
court or administrative agency or official shall have the power to
set or fix wages, rates of pay, hours of work or other terms and
conditions of employment, except as otherwise provided under
this Code. (As amended by Section 3, Republic Act No. 6715,
March 21, 1989)
Article 212 . Definitions:
"Commission" means the National Labor Relations Commission or
any of its divisions, as the case may be, as provided under this
Code.
"Bureau" means the Bureau of Labor Relations and/or the Labor
Relations Divisions in the regional offices established under
Presidential Decree No. 1, in the Department of Labor.
"Board" means the National Conciliation and Mediation Board
established under Executive Order No. 126.
"Council" means the Tripartite Voluntary Arbitration Advisory
Council established under Executive Order No. 126, as amended.
"Employer" includes any person acting in the interest of an
employer, directly or indirectly. The term shall not include any
labor organization or any of its officers or agents except when
acting as employer.
"Employee" includes any person in the employ of an employer.
The term shall not be limited to the employees of a particular
employer, unless the Code so explicitly states. It shall include any
individual whose work has ceased as a result of or in connection
with any current labor dispute or because of any unfair labor
practice if he has not obtained any other substantially equivalent
and regular employment.
"Labor organization" means any union or association of
employees which exists in whole or in part for the purpose of
collective bargaining or of dealing with employers concerning
terms and conditions of employment.
For Private and Personal Use Only 5
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
"Legitimate labor organization" means any labor organization duly
registered with the Department of Labor and Employment, and
includes any branch or local thereof.
"Company union" means any labor organization whose formation,
function or administration has been assisted by any act defined
as unfair labor practice by this Code.
"Strike-breaker" means any person who obstructs, impedes, or
interferes with by force, violence, coercion, threats, or
intimidation any peaceful picketing affecting wages, hours or
conditions of work or in the exercise of the right of self-
organization or collective bargaining.
"Strike area" means the establishment, warehouses, depots,
plants or offices, including the sites or premises used as runaway
shops, of the employer struck against, as well as the immediate
vicinity actually used by picketing strikers in moving to and fro
before all points of entrance to and exit from said establishment.
(As amended by Section 4, Republic Act No. 6715, March 21,
1989)
Article 255. Exclusive bargaining representation and
workers’ participation in policy and decision-making:
The labor organization designated or selected by the majority of
the employees in an appropriate collective bargaining unit shall
be the exclusive representative of the employees in such unit for
the purpose of collective bargaining. However, an individual
employee or group of employees shall have the right at any time
to present grievances to their employer.
Any provision of law to the contrary notwithstanding, workers
shall have the right, subject to such rules and regulations as the
Secretary of Labor and Employment may promulgate, to
participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes
will directly affect their rights, benefits and welfare. For this
purpose, workers and employers may form labor-management
councils: Provided, That the representatives of the workers in
such labor-management councils shall be elected by at least the
majority of all employees in said establishment. (As amended by
Section 22, Republic Act No. 6715, March 21, 1989)
Principle of Codetermination:
It is a joint responsibility of the employer and the
employee to establish terms and conditions of
employment. In establishing such terms and
conditions of employment, the employer and the
employee must take into consideration existing
laws and regulations.  representations, complainants entrusted their hard-
Study Guide Questions:
1. What is labor law and what does it aim to achieve?
2. What are the constitutional mandates pertaining to labor and
labor-management relations?
3. Do Philippine labor laws meet international labor standards?
4. Are Philippine labor laws pro-labor?
II.RECRUITMENT AND PLACEMENT
The following are the topics covered:
1. Recruitment of Local and Migrant Workers
2. Regulation and Enforcement
Bar Operations 2012: Ace the Bar, Race the Car!
II. Recruitment and Placement:
1. Recruitment of Local and Migrant Workers:
a. Recruitment and Placement; defined:
Labor Code, Article 13 (b)
"Recruitment and placement" refers to any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring
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.
The number of persons dealt with is not an
essential ingredient of the act of recruitment and
placement of workers. Any of the acts mentioned in
the basic rule in Article 13(b) win constitute
recruitment and placement even if only one
prospective worker is involved. The proviso merely
lays down a rule of evidence that where a fee is
collected in consideration of a promise or offer of
employment to two or more prospective workers,
the individual or entity dealing with them shall be
deemed to be engaged in the act of recruitment
and placement.  (People vs. Panis, 142 SCRA
664, 1986).
.
The Court finds that accused-appellant was
engaged in unlawful recruitment and placement
activities.  The prosecution clearly established that
accused-appellant promised the three complainants
- Benny Maligaya, Angeles Javier and Leodigario
Maullon – employment in Taiwan as factory
workers and that he asked them for money in order
to process their papers and procure their
passports. Relying completely upon such
earned money to accused-appellant in exchange for
what they would later discover to be a vain hope of
obtaining employment abroad.  It is not disputed
that accused-appellant is not authorized[11] nor
licensed by the Department of Labor and
Employment to engage in recruitment and
placement activities.  The absence of the necessary
license or authority renders all of accused-
appellant’s recruitment activities criminal. (People
vs. Saulo, G.R. No. 125903.,  November 15,
2000)
.
For Private and Personal Use Only 6
 Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society

i. It should be noted that the definition of

“recruitment and placement” in Art. 13(b),
does not make any of the eleven (11) acts
enumerated therein illegal per se. What
makes it a case of illegal recruitment is when
any of said recruitment activities are
“undertaken by non-licensees or non-
holders of authority”. [Art. 38(a)] Such
that an employee, who introduces an applicant
to owner-employer agency, committed an act
of referral, a “recruitment activity”. There is
an illegal recruitment when one gives the
impression of having the ability to send a d. Illegal Recruitment, Article 38(Local), Sec.
worker abroad. (People vs. Goce, 247 SCRA 6, Migrant Workers Act, RA 8042:
780, 789 (1995))
ii. A non-licensee means a person, corporation or Illegal Recruitment; defined:
entity to which the labor secretary has not
issued a valid license or authority to engage in Labor Code, Article 38 (a)
recruitment and placement; or whose license Any recruitment activities, including the prohibited practices
enumerated under Article 34 of this Code, to be undertaken by
or authority has been suspended, revoked, or
non-licensees or non-holders of authority, shall be deemed illegal
cancelled by the POEA or the labor secretary. and punishable under Article 39 of this Code. The Department of
A licensee authorizes a person or an entity to Labor and Employment or any law enforcement officer may
operate a private employment agency, while initiate complaints under this Article.
For definition of recruitment activities, see Article 13 (b)
authority is given to those engaged in
For definition of prohibited practices, see Article 24
recruitment and placement activities. (Rodolfo
vs. People, G.R. No. 146964, August 10, 2006)
iii. When a person or entity, in any manner, offers Migrant Workers and Overseas Filipino Act of
or promises for a fee employment to two or 1995 (RA 8042), Section 6:
more persons, that person or entity shall be
Migrant Workers and Overseas Filipino Act of 1995 (RA
deemed engaged in recruitment and 8042), Section 6
placement. (People vs. Laogo, G.R. No. For purposes of this Act, illegal recruitment shall mean any act of
176264, January 10, 2011) canvassing, enlisting, contracting, transporting, utilizing, hiring,
procuring workers and includes referring, contact services,
promising or advertising for employment abroad, whether for
b. Act of referral:
profit or not, when undertaken by a non-license or non-holder of
authority contemplated under Article 13(f) of Presidential Decree
The act of referral, which is included in No. 442, as amended, otherwise known as the Labor Code of the
recruitment, is "the act of passing along or Philippines. Provided, that such non-license or non-holder, who,
in any manner, offers or promises for a fee employment abroad
forwarding of an applicant for employment after an to two or more persons shall be deemed so engaged.
initial interview of a selected applicant for
employment to a selected employer, placement RA No. 10022, an act amending Migrant
officer or bureau."  Petitioner’s admission that she Workers and Overseas Filipino Act of 1995
brought private complainants to the agency whose (RA 8042):
owner she knows and her acceptance of fees
including those for processing betrays her guilt.
RA No. 10022, an act amending Migrant Workers and
(Rodolfo vs. People, G.R. No. 146964, August 10, Overseas Filipino Act of 1995 (RA 8042)
In December 1996, LCL had no approved POEA
2006) Section 5. For purposes of this Act, illegal recruitment shall
license to recruit. C.F. Sharp’s accreditation as
mean any act of canvassing, enlisting, contracting, transporting,
LCL’s new manning agency was still pending
c. Presence of elements of crime: utilizing, hiring, or procuring workers and includes referring,
approval, yet it entertained applicants for LCL’s contract services, promising or advertising for employment
vessels, and conducted interviews. According to abroad, whether for profit or not, when undertaken by non-
licensee or non-holder of authority contemplated under Article
Art. 13 (b) of the Labor Code, the conduct of 13(f) of Presidential Decree No. 442, as amended, otherwise
preparatory interviews is a recruitment activity. known as the Labor Code of the Philippines: Provided, That any
The fact that C.F. Sharp did not receive any such non-licensee or non-holder who, in any manner, offers or
payment during the interviews is of no moment. promises for a fee employment abroad to two or more persons
shall be deemed so engaged. It shall likewise include the
From the language of Article 13(b), the act of following acts, whether committed by any person, whether a non-
recruitment may be "for profit or not." Notably, it is licensee, non-holder, licensee or holder of authority
the lack of the necessary license or authority, not
the fact of payment, that renders the recruitment
activity of LCL unlawful. (C.F. Sharp Crew
Bar OperationsInc.
Management, vs. Ace
2012: the Bar,
Espanol, Race
G.R. No.the155903,
Car! For Private and Personal Use Only 7
September 14, 2007)
.
.

Labor Law Bar Notes

University of Cebu College of Law UCLASS Bar Operations: Labor Law Society

License vs. Authority:

Any act of canvassing,

enlisting, contracting,
transporting, utilizing,
hiring, or procuring
workers,

RECRUITMENT AND And includes referrals,

PLACEMENT contract services,
promising or advertising
for employment, locally
or abroad, whether for
profit or not.

Document issued by
LICENSE DOLE authorizing a
person/entity to
operate a private fee-
charging agency [Art.
13(c) and (d), LC]
Document authorizing a
person/association to
AUTHORITY engage in recruitment
and placement activities
as a private recruitment
entity, i.e., not for a
fee. [Art. 13(f)]
A non-licensee means a person, corporation or
entity to which the labor secretary has not issued a
valid license or authority to engage in recruitment
and placement; or whose license or authority has
been suspended, revoked, or cancelled by the
POEA or the labor secretary. A licensee authorizes
a person or an entity to operate a private
employment agency, while authority is given to
those engaged in recruitment and placement
activities. [Rodolfo vs. People, G.R. No.
146964, August 10, 2006]

Labor Code, Article 13

(d) “License” means any document issued by the Department
of Labor authorizing a person or entity to operate a private
employment agency.
(f) "Authority" means 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
When a person or entity, in any manner, offers or
promises for a fee employment to two or more
persons, that person or entity shall be deemed
engaged in recruitment and placement. [People
vs. Laogo, G.R. No. 176264, January 10, 2011,
Villarama, J.]

Essential elements of illegal recruitment:

Notes: When offender is a non-holder of
authority

The offender is a non-holder of authority to

It should be noted that the definition of lawfully engage in recruitment and placement
“recruitment and placement” in Art. 13(b), does of workers.
not make any of the eleven (11) acts enumerated Offender undertakes any of the infractions in
therein illegal per se. What makes it a case of Article 13 (b) in the Labor Code, Section 6 of
illegal recruitment is when any of said recruitment RA 8042 and Section 5 of RA 10022.
activities are “undertaken by non-licensees or non-
holders of authority”. [Art. 38(a)] Such that an When offender is a holder of authority
employee, who introduces an applicant to owner-
employer agency, committed an act of referral, a The offender is a holder of authority to lawfully
“recruitment activity”. There is an illegal engage in recruitment and placement of
recruitment when one gives the impression of workers.
having the ability to send a worker abroad. [People Offender undertakes any of the infractions in
vs.
BarGoce, 247 SCRA
Operations Ace 789
2012:780, the Bar, Race the Car!
(1995)]. Section 6 of RAPrivate
For 8042 and Section 5Use
and Personal of Only
RA 8
10022.
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society

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

or commit any act of misrepresentation for the purpose of
securing a license or authority under the Labor Code, or for the
purpose of documenting hired workers with the POEA, which
include the act of reprocessing workers through a job order that
pertains to nonexistent work, work different from the actual
overseas work, or work with a different employer whether
registered or not with the POEA;
"(d) To include or attempt to induce a worker already employed
to quit his employment in order to offer him another unless the
transfer is designed to liberate a worker from oppressive terms
and conditions of employment;
"(e) To influence or attempt to influence any person or entity not
to employ any worker who has not applied for employment
through his agency or who has formed, joined or supported, or
has contacted or is supported by any union or workers'
organization;
"(f) To engage in the recruitment or placement of workers in jobs
Simple Illegal Recruitment: harmful to public health or morality or to the dignity of the
Republic of the Philippines;
Labor Code, Article 13 "(h) To fail to submit reports on the status of employment,
There is illegal recruitment when a non-holder of a license placement vacancies, remittance of foreign exchange earnings,
commits the following acts: separation from jobs, departures and such other matters or
1. canvassing, information as may be required by the Secretary of Labor and
Employment;
2. enlisting,
"(i) To substitute or alter to the prejudice of the worker,
3. contracting,
employment contracts approved and verified by the Department
4. transporting, of Labor and Employment from the time of actual signing thereof
5. utilizing, by the parties up to and including the period of the expiration of
6. hiring or the same without the approval of the Department of Labor and
7. procuring workers Employment;
8. referrals, "(j) For an officer or agent of a recruitment or placement agency
9. contract services, to become an officer or member of the Board of any corporation
engaged in travel agency or to be engaged directly or indirectly in
10. promising or
the management of travel agency;
11. advertising for employment, locally or abroad,
"(k) To withhold or deny travel documents from applicant workers
before departure for monetary or financial considerations, or for
any other reasons, other than those authorized under the Labor
Code and its implementing rules and regulations;
Illegal recruitment may be committed "(l) Failure to actually deploy a contracted worker without valid
when a non-licensee or a non-holder of reason as determined by the Department of Labor and
authority performs any of the 11 acts of Employment;
recruitment and placement under Art. "(m) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for purposes of
13(b) of the Labor Code. While Art. 34
deployment, in cases where the deployment does not actually
makes a distinction between: take place without the worker's fault. xxx; and
"(n) To allow a non-Filipino citizen to head or manage a
Prohibited practices – when committed by a licensed recruitment/manning agency.
licensee or holder of authority; and
Illegal recruitment – when such prohibited
practices were committed by a non-licensee or
non-holder of authority. A non-licensee can be guilty of 24 illegal
recruitment acts:

11 acts under Art. 13(b)

RA No. 10022, an act amending Migrant 14 illegal recruitment acts under Sec. 5, RA 10022
Workers and Overseas Filipino Act of 1995
(RA 8042): A licensee can be liable only for 14 illegal
recruitment/prohibited acts (under Sec. 5, RA
Section 5. xxx It shall likewise include the following acts, whether 1022), UNLESS he conspires with a non-licensee in
committed by any persons, whether a non-licensee, non-holder,
licensee or holder of authority.
the commission of any of the illegal acts in Art.
"(a) To charge or accept directly or indirectly any amount greater 13(b).
than that specified in the schedule of allowable fees prescribed by
the Secretary of Labor and Employment, or to make a worker pay
or acknowledge any amount greater than that actually received
by him as a loan or advance;
"(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment; Employees’/Other Officer’s Liabilities:

Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 9
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society

In People vs. Cabais, an employee of a company or

corporation engaged in illegal recruitment may be
held liable as principal, together with his employer,
if it is shown that he actively and consciously
participated in illegal recruitment. Moreover, in this
case the appellant was both the APSC Vice-
President-Treasurer and the Assistant General
Manager. She was a high corporate officer who had
direct participation in the management,
administration, direction and control of the
business of the corporation, and is thus liable
under Section 6 of RA 8042. The terms "control,
management or direction" used in the last
paragraph of Section 6 of Republic Act No. 8042
broadly cover all phases of business operation.
They include the aspects of administration,
marketing and finances, among others. (People vs.
Sagayaga, G.R. No. 143726, February 23, 2004)
Moreover, even it Blanza and Garcia had been
illegally recruited so as to make the number of
persons illegally recruited four and make the crime
Illegal Recruitment in large scale: that of illegal recruitment on a large scale, since
this was not alleged in the information and this is
the more serious offense which includes that which
was charged, the appellant can only be found guilty
Illegal recruitment is a matter of evidence. (People
of the less serious offense charged. (People vs.
vs. Panis, 142 SCRA 664 (1986))
Reyes, G.R. No. 105204, March 9, 1995)

Labor Code, Article 38

b. Illegal recruitment when committed by a syndicate or in large
scale shall be considered an offense involving economic sabotage Illegal recruitment as economic sabotage:

LARGE SCALE SYNDICATE Labor Code, Article 38

3 or more victims 3 or more conspirators
and shall be penalized in accordance with Article 39 hereof. b. Illegal recruitment when committed
c. Illegal recruitment is deemed committed by a syndicate if 3. by a syndicate or
carried out by a group of three (3) or more persons conspiring 4. in large scale
and/or confederating with one another in carrying out any
shall be considered an offense involving economic
unlawful or illegal transaction, enterprise or scheme defined
sabotage and
under the first paragraph hereof. Illegal recruitment is deemed
committed in large scale if committed against three (3) or more shall be penalized in accordance with Article 39 hereof.
persons individually or as a group.
c. Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons conspiring
RA No. 10022, an act amending Migrant Workers and and/or confederating with one another in carrying out any
Overseas Filipino Act of 1995 (RA 8042) unlawful or illegal transaction, enterprise or scheme defined
m. xxx Illegal recruitment when committed by a syndicate or in under the first paragraph hereof. Illegal recruitment is deemed
large scale shall be considered an offense involving economic committed in large scale if committed against three (3) or more
sabotage; xxx persons individually or as a group.
There
"Illegal were fourteen
recruitment (14)committed
is deemed other cases of Illegal
by a syndicate if carried
Recruitment
out by a group offiled
threeand/or pending
(3) or more against
persons accused
conspiring or
confederating with one another. It is deemed committed in
and her husband in different courts of Manila. Illegal recruitment vs. Estafa:
large scale if committed against three (3) or more persons
These cases
individually orcannot be taken into account for the
as a group.
purpose of Art. 38(b). When the Labor Code speaks Revised Penal Code
of illegal recruitment
Recruitment "committed
in Large Scale vs.against three (3)
Syndicate:
or more persons individually or as a group," it must Art. 315. Swindling (estafa). — Any person who shall defraud
be understood as referring to the number of another by any of the means mentioned hereinbelow shall be
complainants in each case who are complainants punished by:

therein, otherwise, prosecutions for single crimes of

xxx the fraud be committed by any of the
illegal recruitment can be cummulated to make out following means:
a case of large scale illegal recruitment. In other
words, a conviction for large scale illegal
recruitment must be based on a finding in each
case of illegal recruitment
Bar Operations of three
2012: Ace the or more
Bar, Race persons
the Car! For Private and Personal Use Only 10
whether individually or as a group.
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
1. With unfaithfulness or abuse of confidence, namely:
xxx xxx xxx
(b) By misappropriating or converting, to the prejudice
of another, money, goods, or any other personal property
received by the offender in trust or on commission, or for
administration, or under any other obligation involving the duty
to make delivery of or to return the same, even though such
obligation be totally or partially guaranteed by a bond; or by
denying having received such money, goods, or other
xxx xxx xxx
2. By means of any of the following false pretenses or fraudulent
acts executed prior to or simultaneously with the commission of
the fraud:
(a) By using fictitious name, or falsely pretending to possess
power, influence, qualifications, property, credit, agency,
business or imaginary transactions, or by means of other similar
deceits.
Illegal recruitment and estafa are entirely different
offenses and neither one necessarily includes or is
necessarily included in the other. A person who is
convicted of illegal recruitment may, in addition, be
convicted of estafa under Article 315, paragraph
2(a) of the RPC. In the same manner, a person
acquitted of illegal recruitment may be held liable
for estafa. Double jeopardy will not set in because
illegal recruitment is malum prohibitum, in which
there is no necessity to prove criminal intent,
whereas estafa is malum in se, in the prosecution
of which, proof of criminal intent is necessary. (Sy
vs. People, G.R. No. 183879, April 14, 2010)
Any recruitment activities to be undertaken by non-
licensee or non-holder of contracts shall be deemed
illegal and punishable under Art. 39 of the Labor
Code. Absence of money or any valuable
consideration as payment for services of the
recruiter still considers the recruitment illegal under
Art. 13(b) of the Labor Code as recruitment maybe
for profit or not. (People vs. Jamilosa, 512 SCRA
340 (2007))
Liabilities:
RA 8042, Section 6 (Paragraph 3)
"The persons criminally liable for the above offenses are the
principals, accomplices and accessories. In case of juridical
persons, the officers having ownership, control, management or
direction of their business who are responsible for the commission
of the offense and the responsible employees/agents thereof shall
be liable.
Bar Operations 2012: Ace the Bar, Race the Car!
RA No. 10022, an act amending Migrant Workers and
Overseas Filipino Act of 1995 (RA 8042)
Section 7. Section 10 of Republic Act No. 8042, as amended, is
hereby amended to read as follows:
"SEC. 10. Money Claims. - Notwithstanding any provision of law
to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of
damage. Consistent with this mandate, the NLRC shall endeavor
to update and keep abreast with the developments in the global
services industry.
"The liability of the principal/employer and the
recruitment/placement agency for any and all claims under this
section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall
be a condition precedent for its approval. The performance bond
to de filed by the recruitment/placement agency, as provided by
law, shall be answerable for all money claims or damages that
may be awarded to the workers. If the recruitment/placement
agency is a juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the
aforesaid claims and damages.
"Such liabilities shall continue during the entire period or duration
of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a
foreign country of the said contract.
Local employment agency:
Local Agency is solidarily liable with foreign
principal for unpaid salaries of a worker recruited.
Before recruiting, the agency is required to submit
a document with the principal or foreign-based
employer for any of the violations of the
Republic Actagreement,
recruitment No. 8042 provides
and the for the joint and
contracts
solidary liability of private recruitment agencies
employment.
with their foreign principals in any and all money
claims against them. Such provision is
automatically incorporated by law in the contract
for overseas employment and is a condition
precedent for its approval. This is to afford the
OFWs immediate and sufficient payment of what is
due them.  Moreover, such obligation is not
coterminous with the agreement between the local
agent and its foreign principal so that if either or
both of the parties decide to end the agreement,
the responsibilities of such parties towards the
contracted employees under the agreement do not
at all end, but the same extends up to and until the
expiration of the employment contracts of the
employees recruited and employed pursuant to the
said recruitment agreement. Thus, to allow
petitioners to simply invoke the immunity from suit
of its foreign principal or to wait for the judicial
determination of the foreign principal’s liability
before petitioner can be held liable renders the law
on joint and solidary liability inutile. (ATCI
For Privateet
Overseas Corporation, and Personal
al.  vs. Ma.Use 11
OnlyEchin, 
Josefa
G.R. No. 178551. October 11, 2010)
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
Pretermination of contract of migrant worker:
1.
2.
Joint and Several Liability of Agent and Principal, POEA
Rules, Book II, Rule II, Section 1(f)
Requirements for Issuance of License—Every applicant for license
to operate a manning agency shall submit a written application
together with the following requirements:
a. A verified undertaking stating that the applicant shall:
xxx
7. Assume full and complete responsibility for all claims and
liabilities which may arise in connection with the use of the
license;
8. 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;
9. Guarantee compliance with the applicable labor, social and
maritime legislations of the Philippines, and applicable regulations
of the flag state and international maritime bodies such as the
International Maritime Organization (IMO) and the International
Labor Organization (ILO);
10. Assume full and complete responsibility for all acts of its
officials, employees and representatives done in connection with
recruitment and placement; xxx
Severance of relations between local agent and
foreign principal does not affect liability of local
recruiter.
Foreign employer:
a. Theory of Imputed Knowledge:
The so-called theory of imputed knowledge, that
is, knowledge of the agent is knowledge of the
principal. [New Life vs. CA, G.R. No. 94071 March
31, 1992] For the liability of the agent to attach,
Rules on Repatriation of Overseas Workers:
this theory states that the agent knew of and
consented to the extension of period of
1.
employment. Otherwise, the liability of the
recruitment agency shall expire from the
termination of the worker's original contract.
(Sunace International Management vs. NLRC, G.R.
No. 161757, January 25, 2006)
Bar Operations 2012: Ace the Bar, Race the Car!
If the contract is for a fixed term and the
employee is dismissed without just cause, he is
entitled to the payment of his salaries
corresponding to the unexpired portion of his
contract. (Anderson vs. NLRC, 252 SCRA 116)
The Migrant Workers Act provides that salaries
for the unexpired portion of the employment
contract or three (3) months for every year of
the unexpired term, whichever is less, shall be
awarded to the overseas Filipino worker, in
cases of illegal dismissal. However, in 24 March
2009, Serrano v. Gallant Maritime Services
and Marlow Navigation Co. Inc. (G.R. No.
167614), the Court, in an En Banc Decision,
declared unconstitutional the clause “or for
three months for every year of the unexpired
term, whichever is less” and awarded the
entire unexpired portion of the employment
contract to the overseas Filipino worker. On 8
March 2010, however, Section 7 of Republic
Act No. 10022 (RA 10022) amended Section
10 of the Migrant Workers Act, and once again
reiterated the provision of awarding the
unexpired portion of the employent contract or
three (3) months for every year of the
unexpired term, whichever is less.
Nevertheless, since the termination occurred
on January 1999 before the passage of the
amendatory RA 10022, the Supreme Court
applied RA 8042, without touching on the
constitutionality of Section 7 of RA 10022. The
declaration in March 2009 of the
unconstitutionality of the clause “or for three
months for every year of the unexpired term,
whichever is less” in RA 8042 shall be given
retroactive effect to the termination that
occurred in January 1999 because an
unconstitutional clause in the law confers no
rights, imposes no duties and affords no
protection. The unconstitutional provision is
inoperative, as if it was not passed into law at
all. (Skippers United Pacific, Inc. and Skippers
Maritime Services, Inc. Ltd. vs. Nathaniel
Doza, et al., G.R. No. 175558.  February 8,
2012.)
Without fault of the worker, his repatriation
shall be borne by the local agency and/or
principal over the:
a. worker and his personal belongings;
For Private and Personal Use Only 12
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
b. remains of the deceased worker and his
personal belongings [Sec. 15, par. 1, RA
8042]
2. Repatriation due to the fault of migrant
worker shall be borne by the migrant worker.
[Sec. 15, par. 1, RA 8042]
3. Repatriation in cases of war, epidemic,
disasters/calamities, or other similar events
shall be borne by OWWA, without prejudice to
reimbursement by the principal or local
agency. [Sec. 15, par.2, RA 8042]
4. Repatriation of underage migrant worker
shall be mandatory upon discovery, done by
the responsible officers of the foreign service
where the underage migrant worker is found.
[Sec. 16, RA 8042]
5. Repatriation of seafarer—
POEA Memo Circular No. 55-96 provides that a
seaman can be repatriated without cause if the
vessel arrives at a convenient port within 3 months
before the expiration of his contract, BUT only
upon payment of:
a. all his earned wages;
b. leave pay for the entire contract;
c. termination pay of 1 month basic salary, IF
seaman has at least 10 months original
contract. [PCL Shipping Phils. vs. NLRC, G.R.
No. 153031, December 14, 2006, Austria-
Martinez, J.]
Direct hiring:
Labor Code, Article 18
General Rule: Ban on direct-hiring. No employer may hire a
Filipino worker for overseas employment except through the
Boards and entities authorized by the Secretary of Labor.
Exemption: 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.
POEA Rules, Part III, Rule III, Section 8
Ban on Direct Hires. No foreign principal or employer may hire a
Filipino worker for overseas employment except through the
boards and entities authorized by the Secretary. Direct hiring by
members of the diplomatic corps, international organizations and
such other employers as may be allowed by the Secretary is
exempt from this provision.
Bar Operations 2012: Ace the Bar, Race the Car!
2. Regulation and Enforcement:
a. Citizenship:
Labor Code, Article 27
1. Only Filipino citizens
2.or corporations, partnerships or entities at least seventy-five
percent (75%) of the authorized and voting capital stock of which
is owned and controlled by Filipino citizens
shall be permitted to participate in the recruitment and placement
of workers, locally or overseas.
POEA Rules, Part II, Rule I, Section 1
Only those who possess the following qualifications may be
permitted to engage in the business of recruitment and
placement of Filipino seafarers:
a. Filipino citizens, partnerships or corporations at least seventy-
five percent (75%) of the authorized and voting capital stock of
which is owned and controlled by Filipino citizens; xxx
b. Capitalization:
Labor Code, Article 28
All applicants for authority to hire or renewal of license to recruit
are required to have such substantial capitalization as determined
by the Secretary of Labor.
POEA Rules, Part II, Rule I, Section 1
Xxx
b. A minimum capitalization of Two Million Pesos (P2,000,000.00)
in case of a single proprietorship or partnership and a minimum
paid-up capital of Two Million Pesos (P2,000,000.00) in case of a
corporation; Provided that those with existing licenses shall,
within four years from effectivity hereof, increase their
capitalization or paid up capital, as the case may be, to Two
Million Pesos (P2,000,000.00) at the rate of Two Hundred Fifty
Thousand (P250,000.00) every year; xxx
c. Duration:
POEA Rules, Part II, Rule II
Section 5. Provisional License. Applicants for new license shall be
issued a provisional license which shall be valid for a limited
period of one (1) year within which the applicant should be able
to comply with its undertaking to deploy 50 seafarers to its new
principal. The license of a complying agency shall be upgraded to
a full license entitling them to another three years of operation.
Non-complying agencies will be notified of the expiration of their
license.
Section 6. Validity of the License. Except in case of a provisional
license, every license shall be valid for four (4) years from the
date of issuance unless sooner cancelled, revoked or suspended
for violation of applicable Philippine law, these rules and other
pertinent issuances. Such license shall be valid only at the place/s
stated therein, subject to the conditions of the subsequent
For Private and Personal Use Only 13
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
paragraph, and when used by the licensed person, partnership or
corporation.
Even if Josefina was licensed to recruit workers for
overseas employment, her authority to do so
ceased when the license of her agency, RSI, was
suspended and when it eventually expired.
Moreover, licensed agencies are prohibited from
conducting any provincial recruitment, job fairs or
recruitment activities of any form outside of the
address stated in the license, acknowledged branch
or extension office, without securing prior authority
from the POEA. RSI could recruit only in
Mandaluyong but had no branch or extension office
in Baguio.  (People vs. Buli-e, G.R. No.
123146., June 17, 2003)
d. Registration Fees and Bonds:
Labor Code,
Article 30. Registration fees.The Secretary of Labor shall
promulgate a schedule of fees for the registration of all applicants
for license or authority.
Article 31. Bonds. All applicants for license or authority shall post
such cash and surety bonds as determined by the Secretary of
Labor to guarantee compliance with prescribed recruitment
procedures, rules and regulations, and terms and conditions of
employment as may be appropriate.
POEA Rules, Part II, Rule II, Section 4
Payment of Fees and Posting of Bonds. Upon approval of the
application, the applicant shall pay a license fee of Fifty Thousand
Pesos (P50,000.00). It shall submit an escrow agreement in the
amount of One Million Pesos (P1,000,000.00), confirmation of
escrow deposit with a reputable bank and a surety bond of One
Hundred Thousand Pesos (P100,000.00) from a bonding company
acceptable to the Administration and accredited with the
Insurance Commission.
Agencies with existing licenses shall, within four years from
effectivity hereof, increase their Escrow Deposit to One Million
Pesos (P1,000,000.00) at the rate of One Hundred Seventy-Five
Thousand (P175,000.00) pesos per year.
The bonds and escrow shall answer for all valid and legal claims
arising from violations of the conditions for the grant and use of
the license and/or contracts of employment. The bonds and
escrow shall likewise guarantee compliance with the provisions of
these rules and pertinent Philippine laws and all liabilities which
the Administration may impose. The surety bonds shall include
the condition that notice to the principal is notice to the surety
and that any final and executory judgment against the principal in
connection with matters falling under POEA’s/NLRC’s jurisdiction
Bar Operations 2012: Ace the Bar, Race the Car!
shall be binding and conclusive on the surety. The surety bonds
shall cover the validity period of the license.
e. Worker’s fees:
Labor Code
Article 32. Fees to be paid by workers. Any person applying with
a private fee-charging employment agency for employment
assistance shall not be charged any fee until he has obtained
employment through its efforts or has actually commenced
employment. Such fee shall be always covered with the
appropriate receipt clearly showing the amount paid. The
Secretary of Labor shall promulgate a schedule of allowable fees.
POEA Rules, Part V, Rule II, Section 3
Section 3. Fees/Costs Chargeable to the Workers. Except where
the prevailing system in the country where the worker is to be
deployed, either by law, policy or practice, do not allow the
charging or collection of placement and recruitment fee, a land-
based agency may charge and collect from its hired workers a
placement fee in an amount equivalent to one month salary,
exclusive of documentation costs.
Documentation costs to be paid by the worker shall include, but
not limited to, expenses for the following:
a. Passport
b. NBI/Police/Barangay Clearance
c. Authentication
d. Birth Certificate
e. Medicare
f. Trade Test, if necessary
g. Inoculation, when required by host country
h. Medical Examination fees
In the event that the recruitment agency agrees to perform
documentation services, the worker shall pay only the actual cost
of the document which shall be covered by official receipts.
The above-mentioned placement and documentation costs are
the only authorized payments that may be collected from a hired
worker. No other charges in whatever form, manner or purpose,
shall be imposed on and be paid by the worker without prior
approval of the POEA.
Such fees shall be collected from a hired worker only after
he has obtained employment through the facilities of the
recruitment agency.
f. Reports/Submission:
Labor Code
Article 33. Reports on employment status. Whenever the public
interest requires, the Secretary of Labor may direct all persons or
entities within the coverage of this Title to submit a report on the
status of employment, including job vacancies, details of job
requisitions, separation from jobs, wages, other terms and
conditions and other employment data.
Article 14. Employment promotion. The Secretary of Labor shall
have the power and authority:
Xxx
For Private and Personal Use Only 14
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
To require any person, establishment, organization or institution
to submit such employment information as may be prescribed by
the Secretary of Labor.
g. Suspension:
Article 35. Suspension and/or cancellation of license or
authority. The Minister of Labor shall have the power to suspend
or cancel any license or authority to recruit employees for
overseas employment for violation of rules and regulations issued
by the Ministry of Labor, the Overseas Employment Development
Board, or for violation of the provisions of this and other
applicable laws, General Orders and Letters of Instructions.
Remittance of foreign exchange earnings:
Labor Code, Article 22
It shall be mandatory for all Filipino workers abroad to remit a
portion of their foreign exchange earnings to their families,
dependents, and/or beneficiaries in the country in accordance
with rules and regulations prescribed by the Secretary of Labor.
POEA Rules, Book III, Rule VIII
All overseas Filipino workers are required to remit a portion of
their foreign exchange earnings ranging from 50% to 80%,
depending on the worker’s kind of job, to their families,
dependents and/or beneficiaries.
The following are the percentages of foreign
exchange remittance required from various
kinds of migrant workers:
a) Seamen or mariners: Seventy (70) percent of
basic salary;
b) Workers of Filipino contractors and
construction companies: Seventy (70) percent
of basic salary;
c) Doctors, engineers, teachers, nurses and other
professional workers whose contract provide
for free board and lodging: Seventy (70)
percent of basic salary;
d) All other professional workers whose
employment contracts do not provide for free
board and lodging facilities: Fifty (50) percent
of basic salary;
e) Domestic and other service workers: Fifty (50)
percent of basic salary;
f) All other workers not falling under the
aforementioned categories: Fifty (50) percent
of basic salary.  from jobs, departures and such other matters or information as
Resolution No. 1-83, Inter-Agency Committee for
Implementation of E.O. 857
The following individuals, however, are exempted from the
mandatory remittance requirement:
The immediate family members, dependents or beneficiaries of
migrant workers of migrant workers residing with the latter
abroad;
Bar Operations 2012: Ace the Bar, Race the Car!
Filipino servicemen working within US military installations;
Immigrants and Filipino professionals working with the United
Nations and its agencies or other specialized bodies.
Prohibited activities:
Any undertaking pursuant to recruitment of a
person, corporation or entity:
a. which has not been issued a valid license or
authority to engage in recruitment and placement
by the Secretary of Labor, or
b. whose license or authority has been suspended,
revoked or cancelled by the POEA or the Secretary
of Labor
Labor Code, Article 34
Prohibited practices.  It shall be unlawful for any individual, entity,
licensee, or holder of authority:
1. 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 received by him as a loan or advance;
2. To furnish or publish any false notice or information or
document in relation to recruitment or employment;
3. 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.
4. 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;
5. 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;
6. 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;
7. To obstruct or attempt to obstruct inspection by the Secretary
of Labor or by his duly authorized representatives;
8. To fail to file reports on the status of employment, placement
vacancies, remittance of foreign exchange earnings, separation
may be required by the Secretary of Labor.
9. 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;
For Private and Personal Use Only 15
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
10. 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
11. 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.
RA No. 10022, an act amending Migrant Workers and
Overseas Filipino Act of 1995 (RA 8042)
xxx it shall also be unlawful for any person or entity to commit
the following prohibited acts:
"(1) Grant a loan to an overseas Filipino worker with interest
exceeding eight percent (8%) per annum, which will be used for
payment of legal and allowable placement fees and make the
migrant worker issue, either personally or through a guarantor or
accommodation party, postdated checks in relation to the said
loan;
"(2) Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to avail of a loan only from
specifically designated institutions, entities or persons;
"(3) Refuse to condone or renegotiate a loan incurred by an
overseas Filipino worker after the latter's employment contract
has been prematurely terminated through no fault of his or her
own;
"(4) Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to undergo health
examinations only from specifically designated medical clinics,
institutions, entities or persons, except in the case of a seafarer
whose medical examination cost is shouldered by the
principal/shipowner;
"(5) Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to undergo training, seminar,
instruction or schooling of any kind only from specifically
designated institutions, entities or persons, except fpr
recommendatory trainings mandated by principals/shipowners
where the latter shoulder the cost of such trainings;
"(6) For a suspended recruitment/manning agency to engage in
any kind of recruitment activity including the processing of
pending workers' applications; and
"(7) For a recruitment/manning agency or a foreign
principal/employer to pass on the overseas Filipino worker or
deduct from his or her salary the payment of the cost of
insurance fees, premium or other insurance related charges, as
provided under the compulsory worker's insurance coverage.
Regulatory and visitorial powers of the Labor
Secretary:
Labor Code
Article 35. Suspension and/or cancellation of license or
authority. The Minister of Labor shall have the power to suspend
or cancel any license or authority to recruit employees for
overseas employment for violation of rules and regulations issued
by the Ministry of Labor, the Overseas Employment Development
Bar Operations 2012: Ace the Bar, Race the Car!
Board, or for violation of the provisions of this and other
applicable laws, General Orders and Letters of Instructions.
Article 36. 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.
Article 37. 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 it to submit reports regularly on
prescribed forms, and act on violation of any provisions of this
Title.
The Supreme Court declared Art. 38, par. (c)
unconstitutional and null and void, stating that only
a judge may issue warrants of search and arrest.
[Hortencia Salazar vs. Tomas D. Achacoso and
Ferdie Marquez, G.R. No. 81510, March 14,
1990]
Penalties for illegal recruitment:
Labor Code
Article 35. Suspension and/or cancellation of license or
authority. The Minister of Labor shall have the power to suspend
or cancel any license or authority to recruit employees for
overseas employment for violation of rules and regulations issued
by the Ministry of Labor, the Overseas Employment Development
Board, or for violation of the provisions of this and other
applicable laws, General Orders and Letters of Instructions.
Article 39. Penalties.
The penalty of life imprisonment and a fine of One Hundred
Thousand Pesos (P1000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein;
Any licensee or holder of authority found violating or causing
another to violate any provision of this Title or its implementing
rules and regulations shall, upon conviction thereof, suffer the
penalty of imprisonment of not less than two years nor more than
five years or a fine of not less than P10,000 nor more than
P50,000, or both such imprisonment and fine, at the discretion of
the court;
Any person who is neither a licensee nor a holder of authority
under this Title found violating any provision thereof or its
implementing rules and regulations shall, upon conviction thereof,
suffer the penalty of imprisonment of not less than four years nor
more than eight years or a fine of not less than P20,000 nor more
than P100,000 or both such imprisonment and fine, at the
discretion of the court;
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;
For Private and Personal Use Only 16
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
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.
RA No. 10022, an act amending Migrant Workers and
Overseas Filipino Act of 1995 (RA 8042)
Section 6. Section 7 of Republic Act No. 8042, as amended, is
hereby amended to read as follows:
"SEC. 7. Penalties. -
"(a) Any person found guilty of illegal recruitment shall suffer the
penalty of imprisonment of not less than twelve (12) years and
one (1) day but not more than twenty (20) years and a fine of
not less than One million pesos (P1,000,000.00) nor more than
Two million pesos (P2,000,000.00).
"(b) The penalty of life imprisonment and a fine of not less than
Two million pesos (P2,000,000.00) nor more than Five million
pesos (P5,000,000.00) shall be imposed if illegal recruitment
constitutes economic sabotage as defined therein.
"Provided, however, That the maximum penalty shall be imposed
if the person illegally recruited is less than eighteen (18) years of
age or committed by a non-licensee or non-holder of authority.
"(c) Any person found guilty of any of the prohibited acts shall
suffer the penalty of imprisonment of not less than six (6) years
and one (1) day but not more than twelve (12) years and a fine
of not less than Five hundred thousand pesos (P500,000.00) nor
more than One million pesos (P1,000,000.00).
"If the offender is an alien, he or she shall, in addition to the
penalties herein prescribed, be deported without further
proceedings.
"In every case, conviction shall cause and carry the automatic
revocation of the license or registration of the
recruitment/manning agency, lending institutions, training school
or medical clinic."
Section 7. Section 10 of Republic Act No. 8042, as amended, is
hereby amended to read as follows:
"SEC. 10. Money Claims. - Notwithstanding any provision of law
to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of
damage. Consistent with this mandate, the NLRC shall endeavor
to update and keep abreast with the developments in the global
services industry.
"The liability of the principal/employer and the
recruitment/placement agency for any and all claims under this
section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall
be a condition precedent for its approval. The performance bond
to de filed by the recruitment/placement agency, as provided by
law, shall be answerable for all money claims or damages that
may be awarded to the workers. If the recruitment/placement
agency is a juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the
aforesaid claims and damages.
Bar Operations 2012: Ace the Bar, Race the Car!
"Such liabilities shall continue during the entire period or duration
of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a
foreign country of the said contract.
"Any compromise/amicable settlement or voluntary agreement on
money claims inclusive of damages under this section shall be
paid within thirty (30) days from approval of the settlement by
the appropriate authority.
"In case of termination of overseas employment without just,
valid or authorized cause as defined by law or contract, or any
unauthorized deductions from the migrant worker's salary, the
worker shall be entitled to the full reimbursement if his placement
fee and the deductions made with interest at twelve percent
(12%) per annum, plus his salaries for the unexpired portion of
his employment contract or for three (3) months for every year of
the unexpired term, whichever is less.
"In case of a final and executory judgement against a foreign
employer/principal, it shall be automatically disqualified, without
further proceedings, from participating in the Philippine Overseas
Employment Program and from recruiting and hiring Filipino
workers until and unless it fully satisfies the judgement award.
"Noncompliance with the mandatory periods for resolutions of
case provided under this section shall subject the responsible
officials to any or all of the following penalties:
"(a) The salary of any such official who fails to render his decision
or resolution within the prescribed period shall be, or caused to
be, withheld until the said official complies therewith;
"(b) Suspension for not more than ninety (90) days; or
"(c) Dismissal from the service with disqualification to hold any
appointive public office for five (5) years.
"Provided, however, That the penalties herein provided shall be
without prejudice to any liability which any such official may have
incured under other existing laws or rules and regulations as a
consequence of violating the provisions of this paragraph."
Notes:
Licensing of and Administrative Complaints
against Recruitment Agencies:
LOCAL RECRUITMENT AGENCY
Where to file: DOLE Regional Office
Who issues license: DOLE Regional Director
Who revokes/cancels license: DOLE Regional
Director BLE copy furnished of all Orders for
Database
OVERSEAS RECRUITMENT AGENCY
Where to file: POEA Director of Licensing &
Regulatory Office (LRO), which office is under the
wing of the Deputy Administrator for Adjudication
and Employment Regulation.
Who issues license: POEA Director of LRO
Who revokes/cancels license: POEA Director of
LRO
For Private and Personal Use Only 17
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
EXCEPT, in case of ILLEGAL RECRUITMENT:
1 Under the POEA Rules on Overseas Land-based
Employment (2002), both the POEA Administrator
and DOLE Regional Director has the power to issue
a CLOSURE ORDER against an erring overseas
recruitment and manning agency.
2 BUT, Under the new Omnibus Rules
Implementing RA 10022 (amendment to RA 8042),
it is the POEA Administrator who has the authority
to issue a CLOSURE ORDER upon preliminary
finding of guilt against an overseas recruitment
agency. [Sec. 11]
HOWEVER,
Prior to the issuance of a CLOSURE ORDER, an
investigation takes place whereby the POEA
Illegal recruitment in large scale – if
committed against three or more persons
individually or as a group.
Illegal recruitment by a syndicate - if carried
out by a group of three or more persons conspiring
and/or confederating with one another.
1. When only one complainant filed individual
complaints, there is no illegal recruitment in
large scale BUT the three conspiring recruiters
can be held guilty of illegal recruitment by a
syndicate. [People vs. Hernandez, K. Reichl,
and Y.G. de Reichl, G.R. Nos. 141221-36,
March 7, 2002.]
2. Where illegal recruitment is proved but the
elements of “large scale” or “syndicate” are
absent, the accused can be convicted only of
“simple” illegal recruitment.
3. VENUE: The RTC of the province or city where
the offense was committed or where the
offended party actually resides at the time of
the commission of the offense.
III: LABOR STANDARDS
The following are the topics covered:
1. Hours of Work
2. Wages
3. Rest Days
4. Holidays
5. Leaves
6. Service Charges
Bar Operations 2012: Ace the Bar, Race the Car!
Administrator may issue a preventive suspension
upon the recommendation of the POEA Director of
LRO. [Sec. 9, Omnibus Rules implementing RA
10022]
Closure Order may be lifted upon filing a Motion
before the POEA Director of LRO, which motion
shall be resolved by the POEA Administrator. [Sec.
18, Omnibus Rules Implementing RA 10022]
Criminal Complaints involving Migrant
Workers:
ILLEGAL RECRUITMENT AS ECONOMIC
SABOTAGE:
Categories:
7. 13th Month Pay and other Bonuses
8. Women Workers
9. Minor Workers
10. Employment of Househelpers
11. Employment of Homeworkers
12. Apprentices and Learners
13. Handicapped Workers
III. Labor Standards:
1. Hours of Work:
a. Coverage/Exclusions:
Covered
Labor Code
Art. 82. The provisions of this Title shall apply to employees in all
establishments and undertakings whether for profit or not.
Omnibus Rules Implementing the Labor Code, Book III Rule 1
Section 1. General statement on coverage. - The provisions of
this Rule shall apply to all employees in all establishments and
undertakings, whether operated for profit or not.
Not covered
Labor Code
Art. 82. xxx but not to government employees, managerial
employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers
who are paid by results as determined by the Secretary of Labor
in appropriate regulations.
For Private and Personal Use Only 18
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
i. Government employees:
(Article 276, Labor Code)
The terms and conditions of employment of all government
employees, including employees of government-owned and
controlled corporations, shall be governed by the Civil Service
Law, rules and regulations. 
ii. Managerial employees:
(Article 82, Labor Code)
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.
(Omnibus Rules Implementing the Labor Code, Book III Rule 1,
Section 2)
The provisions of this Rule shall not apply to the following
persons if they qualify for exemption under the conditions set
forth herein:
(b) Managerial employees, if they meet all of the following
conditions:
(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department or
sub-division thereof.
(2) They customarily and regularly direct the work of two or more
employees therein.
3) They have the authority to hire or fire employees of lower
rank; or their suggestions and recommendations as to hiring and
firing and as to the promotion or any other change of status of
other employees, are given particular weight.
(c) Officers or members of a managerial staff if they perform the
following duties and responsibilities:
(1) The primary duty consists of the performance of work directly
related to management policies of their employer;
(2) Customarily and regularly exercise discretion and independent
judgment; and
(3) (i) 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
(ii) execute under general supervision work along specialized or
technical lines requiring special training, experience, or
knowledge; or (iii) execute, under general supervision, special
assignments and tasks.
(4) Who do not devote more than 20 percent 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.
NOTES:
Bar Operations 2012: Ace the Bar, Race the Car!
For purposes of the exemption, managerial
employees “are those whose primary duty consists
of the management of the establishment in which
they are employed or of a department or
subdivision.” [Peñaranda vs. Baganga Plywood
Corp., G.R. No. 159577, May 3, 2006]
A purported “manager” whose function is simply to
carry out the company’s orders, plans and policies
is not a managerial employee. If their functions,
duties and responsibilities do not bear relation with
the management of the establishment, nor
participate in the formulation of its policies, nor in
the hiring and firing of its employees, then they are
NOT managerial employees. [NAWASA vs. NWSA
Consolidated Unions, 11 SCRA 766 (1964)]
Managerial employee is not required to report at a
fixed hour or to keep fixed hours of work.
[International Pharmaceuticals, Inc. Vs. NLRC,
287 SCRA 213 (1998)]
A Vice President/Plant Manager is a managerial
employee, and therefore excluded from the
coverage of Title I, Book III, of the Labor Code.
[John McLeod vs. NLRC, G.R. No. 146667,
January 23, 2007]
Includes managerial staff
While not considered as managerial employees,
officers and members of the managerial staff are
likewise exempted from the coverage of Article 82.
Managerial staff are those with the following duties
and responsibilities:
1. primary duty consists of the performance of
work directly related to management policies
of the employer;
2. customarily and regularly exercise discretion
and independent judgment;
3. (a) regularly and directly assist a
proprietor/managerial employee, whose
primary duty consists of the management of
the establishment; OR
(b) execute under general supervision work
along specialized or technical lines requiring
special training, experience or knowledge; OR
(c) execute under general supervision special
assignments and tasks;
For Private and Personal Use Only 19
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society

4. who do NOT devote more than 20% of their

hours of work in a week to activities which are
not directly and closely related to management
of the establishment. [Peñaranda vs. Baganga
Plywood Corp., supra, citing Section 2(c), Rule
I, Book III of the Omnibus Rules and
Regulations]

An employee tasked to supervise the engineering

section of the plant, and whose work involved
overseeing the operation of the machines and the
performance of the workers in said section, is
considered part of the managerial staff. His
functions require the use of discretion and
independent judgment to ensure the proper
functioning of the plant. The term FOREMAN
If required to be at specific places at specific times,
implies that he was the representative of
employees including drivers cannot be said to be
management over the workers, and the operation
field personnel despite the fact that they are
of the department. [Peñaranda vs. Baganga
performing work away from the principal office of
Plywood Corp., supra] Likewise, an employee
the employee.  (Auto Bus Transport System,
with powers of supervisor/manager is part of the
Inc. vs. Bautista, G.R. No. 156367.  May 16,
managerial staff. [Quebec vs. NLRC, 301 SCRA
2005)
627 (1999)]

iv. Dependent family members

N.B.: v. Domestic helpers

Managers and members of managerial staff (Article 141, Labor Code)

are NOT entitled to:

"Domestic or household service" shall mean service in the
employer’s home which is usually necessary or desirable for the
Overtime pay [Art. 87; Salazar vs. NLRC, maintenance and enjoyment thereof and includes ministering to
supra] the personal comfort and convenience of the members of the
employer’s household, including services of family drivers.

Service incentive leave pay [Art. 95(b]; Quebec

vs. NLRC, supra] vi. Persons in service of another

c. Holiday pay (Art. 94) (Omnibus Rules Implementing the Labor Code, Book III
Rule 1, Section 2)

(d) Domestic servants and persons in the personal service of

another if they perform such services in the employer's home
iii. Field Personnel: which are usually necessary or desirable for the maintenance and
enjoyment thereof, or minister to the personal comfort,
(Article 82, Labor Code) convenience, or safety of the employer as well as the members of
his employer's household.

Refer to non-agricultural employees who regularly perform their

The clause
duties "whose
away from time place
the principal and of
performance is office
business or branch
of the employer and whose actual hours of work in the field vii. Piece workers
unsupervised by the employer" did not amplify but
cannot be determined with reasonable certainty.
merely interpreted and expounded the clause
"whose actual hours of work in the field cannot be (Omnibus Rules Implementing the Labor Code, Book III
Rule 1, Section 2)
determined with reasonable certainty." The former
Tests: Field Personnel
clause is still within the scope and purview of (e) Workers who are paid by results, including those who are paid
Article 82 which defines field personnel. Hence, in on piece-work, "takay," "pakiao" or task basis, and other non-
deciding whether or not an employee's actual time work if their output rates are in accordance with the
working hours in the field can be determined with standards prescribed under Section 8, Rule VII, Book Three of

reasonable certainty, query must be made as to

whether or not such employee's time and
performance is constantly supervised by the
Bar Operations
employer. 2012:
(Union of Ace the Bar,
Filipro Race the Car!
Employees vs. For Private and Personal Use Only 20
Vivar, G.R. No. 79255 January 20, 1992)
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
these regulations, or where such rates have been fixed by the
Secretary of Labor and Employment in accordance with the
aforesaid Section.
The philosophy underlying the exclusion of piece
workers from the Eight-Hour Labor Law is that said
workers are paid depending upon the work they do
"irrespective of the amount of time employed" in
doing said work.  (Red vs. Coconut Products
Ltd., vs. CIR, G.R. No. L-21348, June 30,
1966)
b. Normal Hours of Work:
Labor Code
Article 83. Normal hours of work. The normal hours of work of
any employee shall not exceed eight (8) hours a day.
Hours Worked
Article 84. Hours worked shall include (a) all time during which
an employee is required to be on duty or to be at a prescribed
workplace; and (b) all time during which an employee is suffered
or permitted to work.
Section 3.  The following shall be considered as compensable
hours worked:
(a) All time during which an employee is required to be on duty
or to be at the employer's premises or to be at a prescribed work
place; and
(b) All time during which an employee is suffered or permitted to
work.
Principles in determining hours worked
Omnibus Rules Implementing the Labor Code, Book III
Rule 1, Sec. 4
The following general principles shall govern in determining
whether the time spent by an employee is considered hours
worked for purposes of this Rule:
(a) 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.
(b) 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 he stops working, may rest completely and
- may leave his work place, to go elsewhere, whether within or
outside the premises of his work place.
(c) If the work performed was necessary, or it benefited the
employer, or the employee could not abandon his work at the end
of his normal working hours because he had no replacement, all
Bar Operations 2012: Ace the Bar, Race the Car!
time spent for such work shall be considered as hours worked, if
the work was with the knowledge of his employer or immediate
supervisor.
(d) 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 the imminence of the resumption of work requires the
employee's presence at the place of work or
- if the interval is too brief to be utilized effectively and gainfully
in the employee's own interest
Rest Period
Labor Code
Article 84. Rest periods of short duration during working hours
shall be counted as hours worked.
Omnibus Rules Implementing the Labor Code, Book III
Rule 1
Section 7. xxx Rest periods or coffee breaks running from five (5)
to twenty (20) minutes shall be considered as compensable
working time.
Waiting time
Omnibus Rules Implementing the Labor Code, Book III
Rule 1, Section 5.
(a) Waiting time spent by an employee shall be considered as
working time if waiting is an integral part of his work or the
employee is required or engaged by the employer to wait.
On call
Omnibus Rules Implementing the Labor Code, Book III
Rule 1, Section 5.
(b) An employee who is required to remain on call in the
employer's premises or so close thereto that he cannot use the
time effectively and gainfully for his own purpose shall be
considered as working while on call. An employee who is not
required to leave word at his home or with company officials
where he may be reached is not working while on call.
Lectures, meetings and trainings
Omnibus Rules Implementing the Labor Code, Book III
Rule 1, Section 6
Attendance at lectures, meetings, training programs, and other
similar activities shall not be counted as working time if all of the
following conditions are met:
(a) Attendance is outside of the employee's regular working
hours;
(b) Attendance is in fact voluntary; and
(c) The employee does not perform any productive work during
such attendance.
For Private and Personal Use Only 21
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society
Continuous work:
And considering the established fact that the work
of Severino Pepito was continuous, and during the
time he was not working, he could not leave and
could not completely rest, because of the place and
nature of his work, the provisions of sec. 1, of
Comm. Act No. 444, which states "When the work
is not continuous, the time during which the laborer
is not working and can leave his working place and
can rest completely shall not be counted", find no
application in his case. (States Marine
Corp. vs. Cebu Seamen's Association, Inc., L-
12444, February 28,1963)
a. Exceptions:
(i) Health Personnel
Labor Code
Article 83. Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in hospitals and
clinics with a bed capacity of at least one hundred (100) shall
hold regular office hours for eight (8) hours a day, for five (5)
days a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for six
(6) days or forty-eight (48) hours, in which case, they shall be
entitled to an additional compensation of at least thirty percent
(30%) of their regular wage for work on the sixth day.
For purposes of this Article, "health personnel" shall include
resident physicians, nurses, nutritionists, dietitians, pharmacists,
social workers, laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or
clinic personnel.
(ii) Compressed Work Week
DOLE Advisory no. 2 series of 2009
In a compressed workweek scheme, the normal workweek is
reduced to less than six days, but the total work hours per week
remain at 48 hours. The normal workday is increased to more
than 8 hours but not exceeding 12 hours, without corresponding
overtime premium.
Valid conditions of a compressed workweek
scheme
Department Advisory No. 02, series of 2004 (“Advisory No.
2-04”)
a. The compressed workweek scheme is undertaken as a result of
an express and voluntary agreement of the majority of the
covered employees or their duly authorized representatives. This
agreement may be expressed through collective bargaining or
Bar Operations 2012: Ace the Bar, Race the Car!
other legitimate workplace mechanisms of participation, such as
labor management councils, employee assemblies, or referenda.
b. In business establishments using substances, chemicals and
processes, or operating under conditions where there are
airborne contaminants, human carcinogens or noise, the
prolonged exposure to which may pose hazards to the employees’
health and safety, there must be a certification from an
accredited health and safety organization or practitioner or from
the business establishment’s safety committee, that work beyond
eight hours is within threshold limits or tolerable levels of
exposure as set forth in the Occupational Safety and Health
Standards (“OSHS”).
c. The employer notifies the field office of the DOLE regional
office having jurisdiction over the workplace of the
implementation of the compressed workweek scheme.
When basic contract does not include
overtime pay
A contract of employment, which provides for a
weekly wage for a specified number of hours,
sufficient to cover both the statutory minimum
wage and overtime compensation, if computed on
the basis of the statutory minimum wage, and
which makes no provision for a fixed hourly rate or
that the weekly wage includes overtime
compensation, does not meet the requirements of
the Act. (Manila Terminal Co., G.R. No. L-4148,
July 16, 1952)
Entitlement to overtime pay must first be
established by proof that said overtime work was
actually performed, before an employee may avail
of said benefit. (Lagatic vs. NLRC, G.R. No.
121004.  January 28, 1998)
b. Work interruption due to brownouts
Policy Instruction No. 36 (May 22, 1978)
Brown-outs of short duration not exceeding twenty (20) minutes
- compensable hours worked.
Brown-outs running for more than twenty (20) minutes may not
be treated as hours worked provided any of the following
conditions are present:
a.The employees can leave their workplace or go elsewhere
whether within or without the work premises; or
The employees can use the time effectively for their own interest.
Omnibus Rules Implementing the Labor Code, Book III Rule 1,
Section 4
(d) 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 the imminence of the resumption of work
For Private and Personal Use Only 22
Labor Law Bar Notes
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society

requires the employee's presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the
employee's own interest.

Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 23

Built-in compensation
Written contracts with a "built-in" overtime pay in
the ten-hour working day and that their basic
monthly pay was adjusted to reflect the higher
amount covering the guaranteed two-hour extra
time whether worked or unworked are valid.
(Engineering Equipment Inc. vs. Minister of
Labor, G.R. No. L-64967 September 23, 1985)
Proof of Work
A meal period of not less than twenty (20) minutes may be given
by the employer provided that such shorter meal period is
credited as compensable hours worked of the employee:
Where the work is non-manual work in nature or does not involve
strenuous physical exertion;
Where the establishment regularly operates not less than sixteen
(16) hours a day;
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
Where the work is necessary to prevent serious loss of perishable
goods.
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. (Pan-American Airways vs.
Pan-American Employees Association, G.R.
No. L-16275, February 23, 1961)
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.(Philippine Airlines
vs. NLRC, G.R. No. 132805, February 2, 1999)
c. Meal Break
Regular meal
Labor Code
Article 85.  Subject to such regulations as the Secretary of Labor
may prescribe, it shall be the duty of every employer to give his
employees not less than sixty (60) minutes time-off for their
regular meals.
Omnibus Rules Implementing the Labor Code, Book III Rule 1,
Section 7
Section 7.  Every employer shall give his employees, regardless
of sex, not less than one (1) hour time-off for regular meals
Shorter meal periods
Omnibus Rules Implementing the Labor Code, Book III
Rule 1, Section 7
d. Idle time, waiting time, commuting time,
travel time, whether part of hours of work or
not
Idle time
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 premises2 of his
employer, is not counted as working time only
where the work is broken or is not continuous.
(National Development Co. vs. CIR, G.R. No. L-
15422, November 30, 1962)
A laborer need not leave the premises of the
factory, shop or boat in order that his period of rest
shall not be counted, it being enough that he
"cease to work", may rest completely and leave or
may leave at his will the spot where he actually
stays while working, to go somewhere else,
whether within or outside the premises of said
factory, shop or boat. If these requisites are
complied with, the period of such rest shall not be
counted. (Luzon Stevedoring Co. vs. Luzon
Marine Department Union, G.R. No. L-9265
April 29, 1957)
Waiting Time

Omnibus Rules Implementing the Labor Code, Book III

Rule 1, Section 5.
(a) Waiting time spent by an employee shall be considered as
working time if waiting is an integral part of his work or the
employee is required or engaged by the employer to wait.
On another note, the meaning and scope of the
term “workplace” determine whether the time
spent within work premises is considered “hours
worked”.

(a) A worker confined within the

premises of a boat or a factory shop
The thirty (30)-minute assembly is a deeply- need not leave said premises in order
rooted, routinary practice of the employees, and to enjoy his “rest period”, it being
the proceedings attendant thereto are not infected enough that he (1) cease to work, (2)
with complexities as to deprive the workers the may rest completely, and (3) leave or
time to attend to other personal pursuits.  (Arica may leave, at his will, the spot where
vs. NLRC, G. R. No. 78210, February 28, 1989) he actually stays while working, or to
go somewhere else. In such cases,
the period of rest shall not be
counted as hours worked. [Luzon
Travel Time
Stevedoring vs. Luzon Marine
Department Union, G.R. No. L-
The fact that he picks up employees of Philnor at 9265, April 29, 1957]
certain specified points along EDSA in going to the
project site and drops them off at the same points (b) A worker who continues to
on his way back from the field office going home to report for work at the employer's
Marikina, Metro Manila is not merely incidental to previous workplace may not be
petitioner's job as a driver. On the contrary, said compensated, if he is aware that the
transportation arrangement had been adopted, not employer's workplace has been
so much for the convenience of the employees, but transferred to another area. [Aklan
primarily for the benefit of the employer, herein Electric Cooperative vs. NLRC, 323
private respondent.  Since the assigned task of SCRA 258 (2000)]
fetching and delivering employees is indispensable
and consequently mandatory, then the time (c) A worker who is required to
required of and used by petitioner in going from his assemble at a designated area at least
residence to the field office and back, that is, from 30 minutes prior to the start of their
5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to scheduled working hours is not
around 6:00 p.m., which the labor arbiter rounded compensated when he is not subject
off as averaging three hours each working day, to the absolute control of the
should be paid as overtime work.  (Rada v. NLRC, employer during this 30-minute
G. R. No. 96078, 9 January 1992) assembly time. [Arica vs. NLRC, 170
SCRA 776 (1989)]
BUT,
A driver who is also required to pick
There are special circumstances where employees, up other employees at certain
who although considered to be on “forced leave” specified points on his way to the
during the semestral break, such as full-time workplace, and likewise drops them
professors in a university, are still entitled to off on his way home is entitled to
compensation. Professors and teachers, during this overtime compensation, since the
period of time, are nevertheless burdened with assigned task of fetching and
correcting papers, evaluating students, meeting delivering employees to the worksite
deadlines, and submitting grading reports within a is primarily for the benefit of the
given period, such that the semestral break could employer. [Rada vs. NLRC, 205
not be used effectively for the teacher's own SCRA 69 (1992)]
purposes, and thus, should be considered as
compensable “hours worked”. [University of
Pangasinan Faculty Union vs. University of
Pangasinan, 127 SCRA 691, 699 (1984)]

See: RA 10028, (approved on March 16, 2010)
e. Overtime Work
Art. 87. Overtime Work.—Work may be performed beyond
eight (8) hours a day provided that the employee is paid for the
overtime work an additional compensation equivalent to his
regular wage plus at least twenty-five (25%) percent thereof.
Work performed beyond eight hours on a holiday or rest day shall
be paid an additional compensation equivalent to the rate for the
first eight hours on a holiday or rest day plus at least thirty
(30%) percent thereof.
Overtime work is actually the lengthening of hours
developed to the interests of the employer and the
requirements of his enterprise. It follows that the
wage or salary to be received must likewise be
increased, and a special additional amount must be
added to serve either as encouragement or
inducement.
Wage, on the other hand, is the remuneration or
earnings, however designated, capable of being
expressed in terms of money, which is payable by
an employer to an employee for work done.
Thus, for purposes of computing overtime
compensation, regular wage includes all payments
which the parties have agreed shall be received
during the work week. Extra, temporary and
contingent compensation unrelated to work done or
service rendered should not be part of the
computation. [PNB vs. PEMA, G.R. No. L-30279,
July 30, 1982]
Undertime not offset by overtime
Labor Code
Article 88. 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 in this Chapter.
If a worker should incur in undertime during his
regular daily work, it should not be set off by his
overtime, for that would place the schedule of
working hours dependent on the employee.
NAWASA vs. NWSA Consolidated Unions, 11
SCRA 766 (1964)
Waiver of overtime pay
Article 88 of the Labor Code requires that an
employee be paid overtime compensation
notwithstanding agreement to work for a lesser
wage. Consequently, such an agreement or
“waiver’ will not prevent an employee from
recovering the difference between the wages paid
the employee and the overtime compensation he
or she is entitled to receive.
 For instance, the generally observed
workweek of 6 days is shortened to 5
days, but prolonging the working hours
from Monday-Friday without the employer
being obliged to pay overtime premium
compensation for work performed in
excess of 8 hours on weekdays, in
exchange for the benefits that will accrue
to employees. (Bisig Manggagawa sa
Tryco, et al. vs. NLRC, G.R. No. 151309,
October 15, 2008)
c. Night Work
Omnibus Rules Implementing the Labor Code, Book III
Rule 2 (Night Shift Differential)
Section 1. Coverage. - This Rule shall apply to all employees
except:
(a) Those of the government and any of its political subdivisions,
including government-owned and/or controlled corporations;
(b) Those of retail and service establishments regularly employing
not more than five (5) workers;
(c) Domestic helpers and persons in the personal service of
another;
(d) Managerial employees as defined in Book Three of this Code;
(e) 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.
Section 2. Night shift differential. - An employee shall be paid
night shift differential of no less than ten per cent (10%) of his
regular wage for each hour of work performed between ten
o'clock in the evening and six o'clock in the morning.
Section 3. Additional compensation. - Where an employee is
permitted or suffered to work on the period covered after his
work schedule, he shall be entitled to his regular wage plus 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.
Section 4. Additional compensation on scheduled rest day/special
holiday. - An employee who is required or permitted to work on
the period covered during rest days and/or special holidays not
falling on regular holidays, shall be paid a compensation
equivalent to his regular wage plus at least thirty (30%) per cent
and an additional amount of not less than ten (10%) per cent of
such premium pay rate for each hour of work performed.
Section 5. Additional compensation on regular holidays. - For
work on the period covered during regular holidays, an employee
shall be entitled to his regular wage during these days plus an
additional compensation of no less than ten (10%) per cent of
such premium rate for each hour of work performed. d. CBA provision vis-à-vis overtime work

Section 6. Relation to agreements. - Nothing in this Rule shall

justify an employer in withdrawing or reducing any benefits,
supplements or payments as provided in existing individual or
collective agreements or employer practice or policy.
Labor Code
If a particular rule in computing overtimepay is
provided in the CBA, this rule will prevail. (Shell
Oil Workers Union vs. Shell Oil Co., 70 SCRA
223)

Article 86. Every employee shall be paid a night shift differential

of not less than ten percent (10%) of his regular wage for each
hour of work performed between ten o’clock in the evening and
six o’clock in the morning.

Night-shift work is more onerous and burdensome,

and thus deserves more remuneration than their
day time counterparts. There is no dispute that
ordinary and regular normal work is performed in Rule on Computation of Overtime Pay
the daytime, and that night work is exceptional and
is only justified in unavoidable circumstances 1. Basis for computation
necessary for the business of the employer. [Shell
Company vs. NLU, 81 Phil. 315 (1948)]

Law CBA If CBA is silent

Based on regular wage As provided therein [PNB Apply the law again [PNB vs.
[Bisig ng Manggagawa vs. PEMA, supra] PEMA, supra]
sa PRC, supra]

3. The basis of OT claim is “permitted to work”,

Cash Wage is the regular wage used in otherwise not demandable. [Manila Jockey, supra]
computing night shift and overtime work
[the only premium standards in Chapter I,
Title I, Book III of the Labor Code] [limited
only to night shift and OT (Arts. 86 & 90)
2. Wages:
By “cash wage”, “facilities provided by the
employer” shall not be included, meaning only General Concept
cash wage shall be used in computing OT and
NSDP [unlike Art. 97 (f) where wage Labor Code, Article 97 (f)
“includes fair and reasonable value xxx of
board and lodging, or other facilities 1. the remuneration or earnings, however designated, capable of
being expressed in terms of money,
customarily furnished by the employer to the
employee”. 2.whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same,
Longevity pay is not included in the
computation of overtime pay [PNB vs. PEMA, 3.which is payable by an employer to an employee
supra]. It is not part of regular wages, but a
form of gratuity. 4.under a written or unwritten contract of employment for work
done or to be done, or for services rendered or to be rendered
and
2. Work Hour is 8:00 A.M. To 4:00 P.M.
OT has to be computed on a 24-hour work day 5. includes the fair and reasonable value, as determined by the
schedule Secretary of Labor and Employment, of board, lodging, or other
facilities customarily furnished by the employer to the employee.
6."Fair and reasonable value" shall not include any profit to the
employer, or to any person affiliated with the employer
a. "No work no pay" principle
General Rule: A fair day’s wage for a fair day’s
labor or nor work no pay.
The general “no work, no pay” rule should prevail
with respect to employees’ wages during the
suspension period, subject to existing CBA terms
on leave credits and similar benefits of employees.
The suspension was due to environmental causes
that can affect the health and safety of those within
the vicinity of Marcopper, particularly its
employees. [National Mines and Allied
Workers Union (NAMAWU) vs. Marcopper
Mining Corporation, G.R. No. 174641,
November 11, 2008]
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.
( Sugue v. Triumph International (Phils.) Inc., G.R.
Nos. 164804 and 164784, January 30, 2009; Aklan
Electric Cooperative Incorporated
(AKELCO) v. NLRC [G.R. 121439, January
25, 2000)
b. Coverage/Exclusions
Labor Code, Article 98; Omnibus Rules Implementing the
Labor Code, Book III Rule VII Chapter I Sec. 1
This Title (Wage) shall not apply to the following:
1.Farm tenancy or leasehold;
2.Household or domestic helpers, including family drivers and
other persons in the personal service of another;
3.Homeworkers engaged in needlework
4.Workers in registered cottage industries who actually work at
home;
5.Workers in registered cooperatives when so recommended by
the Bureau of Cooperative Development upon approval of the
Secretary of Labor
6.Workers in registered barangay micro business enterprise (RA
9178)
Employees are entitled to be paid the minimum
wage regardless whether they are regular or non-
regular employees, except for those employees
enumerated in Section 3, Rule VII of the Omnibus
Rules implementing the Labor Code. [SLL
International Cables Specialist, et al. vs.
NLRC, et al., G.R. No. 172161, March 2, 2011,
Mendoza, J.]
Cooperatives Still Exempted from Minimum
Wage Law
In view of the foregoing, we hold that cooperatives
may still be exempted from the statutory minimum
wage. [Benguet Electric Cooperative v. Ferrer-
Calleja, G.R. No. 79025, December 29, 1989]
c. Facilities vs supplements
IRR Book III Rule VII Section 5
Facilities are articles or services for the benefit of the employee or
his family.
Facilities shall not include tools of the trade pr articles or service
primarily for the benefit of the employer or necessary to the
conduct of the employer’s business.
NB: The second paragraph is essentially the definition of a
supplement.
In determining whether a privilege is a facility, the
criterion is not so much its kind but its purpose.
(Millares vs. NLRC and PICOP, 305 SCRA 500
(1999))
Facilities are items of expense necessary for the
laborer’s and his family’s existence and
subsistence. (States Marine Corp. vs. Cebu
Seamen's Association, Inc., L-12444, February
28,1963)
The benefit or privilege given to the employee
which constitutes an extra remuneration above
and over his basic or ordinary earning or
wage is supplement; [State Marine Corp. vs.
Cebu Seamen's Association, Inc., 7 SCRA 294
(1963); (1988 Bar, XIIb)] and when said benefit
or privilege is part of the laborers' basic
wages, it is a facility. The distinction lies not so
much in the kind of benefit or item given, but in
the purpose for which it is given. [SLL
International Cables Specialist, et al. vs.
NLRC, et al., G.R. No. 172161, March 2, 2011,
Mendoza, J.] So, if they are not so furnished, the
laborer would spend and pay for them just the
same. [Atok-Big Wedge Assn. vs. Atok-Big
Wedge Co., (97 Phil. 294)]
An employer cannot simply deduct from the
employee's wages the value of the board and
lodging without satisfying the ff. requisites: (1)
proof that such facilities are customarily furnished
by the trade/business of the employer; (2)
voluntary acceptance in writing by the employees
of the deductible facilities; and (3) proof of the fair
and reasonable value of the facilities charged.
[S.I.P. Food House, supra; SLL International,
supra]
Although it is quite easy to comprehend “board”
and “lodging”, it is not so with “facilities”. Thus,
Sec. 5, Rule VII, Book III, of the Rules
Implementing the Labor Code gives meaning to the
term as including articles or services for the benefit
of the employee or his family but excluding tools of
the trade or articles or service primarily for the
benefit of the employer or necessary to the conduct
of the employer's business. The Staff/Manager's
allowance may fall under “lodging” but the
transportation and Bislig allowances are not
embraced in “facilities” on the main consideration
that they are granted as well as the
Staff/Manager's allowance for respondent PICOP's
benefit and convenience, i.e., to insure that
petitioners render quality performance. In
determining whether a privilege is a facility, the
criterion
Facilitiesis and
not so much its kinddistinguished
Supplements but its purpose.
[States Marine Corporation vs. Cebu Seamen's
Association, Inc., No. L-12444, 28 February
Category Facilities Supplements
1963, 7 SCRA 294] That the assailed allowances
What it is As Articles or services/ Extra remuneration or special
were for the benefit and convenience of respondent
(not much diffence) items of expense benefits/ articles or services/
company was supported by the circumstance that
tools of the trade
they were not subjected to withholding tax.
For the benefit of the For the benefit or convenience
[Liduvino M. Millares, et al. vs. NLRC, et al.,
Purpose employee and his family; of the employer
G.R. No. 122827, March 29, 1999, 2nd Division,
for their existence and
Bellosillo, J.]
subsistence
How treated Part of wage so it is deductible Independent of the wage so not
deductible

Requirements for deducting vale of facilities

The free board and lodging SIP furnished the d. Wages vs. salaries
employees cannot operate as a set-off for the
underpayment of their wages.  It was held in Wages and salary are in essence synonymous.
Mabeza v. National Labor Relations Commission (Songco, et al. vs. National Labor Relations
that the employer cannot simply deduct from the Commission. G.R. Nos. 50999-51000, March
employee’s wages the value of the board and 23, 1990)
lodging without satisfying the following
requirements:  (1) proof that such facilities are
customarily furnished by the trade; (2) voluntary
acceptance in writing by the employees of the
deductible facilities; and  (3) proof of the fair and
reasonable value of the facilities charged. It is
clear from the records that SIP failed to comply
with these requirements. (S.I.P. Food House and
Mr. and Mrs. Alejandro Pablo Vs. Restituto
Batolina, et al., G.R. No. 192473, October 11,
2010.)
 Wages Salaries valid ways with which a wage distortion may be
Paid for skilled or Paid to white collar corrected. A CBA increase which re-establishes the
unskilled manual workers and denote a wage gap, or a unilateral grant by the employer
labor higher grade of Elements
which also restores said gap are valid wage
employment distortion Wagecorrection schemes. [National
Not subject to Not exempt from distortion involves four elements:
Federation of Labor vs. NLRC, 234 SCRA
An existing hierarchy of positions 311, 322-with
execution, execution, garnishment 323]
garnishment or or attachment. (Gaa corresponding salary rates
attachment except v. Court of Appeals, L- A significant change in the salary rate of a
Definition lower pay class without a concomitant increase
for debts related to 44169, December
necessities (Article 3, 1985) in the salary rate of a higher one
Labor Code, Article 124
1708) The elimination of the distinction between the
two levels
A wage distortion shall mean a situation where an increase in
prescribedThe
wage existence
results in the of the distortion
elimination in the ofsame
of severe contraction
intentionalregion of the
quantitative country.
differences in wage or salary rates
Wages are defined as “remuneration or earnings, between and among employee groups
(Prubankers in an establishment
Association as to
vs. Prudential
effectively obliterate the distinctions embodied in such wage
however, designated, capable of being expressed in structure basedBank and Trust
on skills, length Company,
of service, G.R.
or other No.bases
logical 131247,
terms of money, whether fixed or ascertained on a January 25, 1999)
of differentiation.
time, task, piece or commission basis, or other
method of calculating the same, which is payable NOTES:
by an employer to an employee under a written or
unwritten contract of employment for work done or  Wages are defined as “remuneration
to be done, or for service rendered or to be or earnings, however, designated,
rendered.” [Chavez v. NLRC, G.R. No. 146530,
capable of being expressed in terms
January 17, 2005]
of money, whether fixed or
ascertained on a time, task, piece or
commission basis, or other method of
The distinction between salary and wage in Gaa
calculating the same, which is payable
was for the purpose of Article 1708 of the Civil
by an employer to an employee under
Code which mandates that, “[t]he laborer’s wage
shall not be subject to execution or attachment, a written or unwritten contract of
except for debts incurred for food, shelter, clothing employment for work done or to be
and medical attendance.” In labor law, however, done, or for service rendered or to be
the distinction appears to be merely semantics. rendered.” [Chavez v. NLRC, G.R.
Paramount and Evangelista may have involved No. 146530, January 17, 2005]
wage earners, but the petitioner in Espejo was a
General Manager with a monthly salary of  The distinction between salary and
P9,000.00 plus privileges. That wage and salary
wage in Gaa was for the purpose of
are synonymous has been settled in Songco v.
NLRC. [Equitable Banking Corp v. Ricardo Article 1708 of the Civil Code which
Sapac, 490 SCRA 381 (2006)] mandates that, “[t]he laborer’s wage
shall not be subject to execution or
attachment, except for debts incurred
for food, shelter, clothing and medical
attendance.” In labor law, however,
e. Wage Distortion the distinction appears to be merely
semantics. Paramount and
The concept of wage distortion assumes an Evangelista may have involved wage
existing grouping or classification of employees earners, but the petitioner in Espejo
which establishes distinctions among such was a General Manager with a
employees on some relevant or legitimate basis.
monthly salary of P9,000.00 plus
This classification is reflected in a differing wage
rate for each of the existing classes of employees”. privileges. That wage and salary are
While Art. 124 provides for Grievance Machinery synonymous has been settled in
which ends up in Voluntary Arbitration, (organized Songco v. NLRC. [Equitable
establishments) and NCMB conciliations which Banking Corp v. Ricardo Sapac,
eventually maybe referred to Compulsory 490 SCRA 381 (2006)]
Arbitration by Labor Arbiter, such are not the only
 In determining an employee’s regular wage, the
pertinent stipulations in the CBA are controlling,
provided the result is not less than statutory
requirement. (PNB vs. PEMA, L-30279 July 30,
1982)

(P.I. Manufacturing, Incorporated vs. P.I.

Manufacturing Supervisors and Foreman
Association and the National Labor Union, G.R.
No. 167217, February 4, 2008) There is wage
distortion based on the prevailing rates of the
supervisors and foremen (before the increase in
wages based on the CBA). If RA 6640 would be
implemented, the gaps existing between and
among the wage rates of all the employees of
petitioner would have been substantially altered
and reduced.
How to Resolve
In the present case, only three (3) of the union
members are receiving wages below P100.00, thus
1. Organized establishment (with bargaining entitled to the increase. To direct petitioner to
representative) grant an across-the-board increase to all of them
-employer and the union shall negotiate to would be harsh and unfair to the employer.
correct the distortions However, due to the CBA provision, providing for
-disputes shall be resolved through the increased monthly salaries of supervisors and
grievance procedure foremen, such has re-established and broadened
-if still unresolved, voluntary arbitration. the gap, and significantly doubled the P100.00
increase under RA 6640, which in effect
2. Unorganized establishment substantially complied with the wage increase
-ERs and Employees shall endeavor to under RA 6640. The union is estopped from
correct such distortions claiming wage increase under RA 6640 when it
-disputes shall be settled through the forged the CBA with petitioner after the law took
National Conciliation and Mediation Board effect.
-If still unresolved after 10calendar days of xxx xxx xxx
conciliation, it shall be referred to the xxx [W]age distortion means the
appropriate branch of the NLRC— disappearance or virtual disappearance of pay
compulsory arbitration differentials between lower and higher positions in
an enterprise because of compliance with a wage
3. Both employer and employee cannot use order.
economic weapons
-employer cannot declare a lock-out; The apparent intention of the law is only to
employee cannot declare a strike because upgrade the salaries or wages of the employees
the law has provided for a procedure for specified therein. (Manila Mandarin Employees
settling Union v. NLRC, G.R. No. 108556, November 19,
-the salary or wage differential does not 1996, 264 SCRA 320)
need to be maintained. (National
Federation of Labor vs. NLRC, G.R. No.
103586 July 21, 1994)

g. Non-diminution of benefits
f. CBA vis-à-vis Wage Orders – CBA
creditability
Diminution of Benefits, defined. Diminution of
benefits is the unilateral withdrawal by the
employer of benefits already enjoyed by the
employees. [TSPIC Corporation vs. TSPIC
Employees Union (FFW), G.R. 163419, Feb. 13,
2008]

General Rule: Prohibition against elimination or
diminution of benefits. (Labor Code, Article 100)
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. (Prubankers Association
vs. Prudential Bank and Co. 1990)
2. Practice is consistent and deliberate.
3. Not due to error in the construction or
application of a doubtful or difficult question of
law. (Globe Mackay cable vs. NLRC, 1988)
4. Unilateral withdrawal or diminution by
employer.
When not applicable: when one of the
requisites is absent.
Benefits initiated through negotiation between
employee and employer, e.g. CBA, can only
be eliminated or diminished bilaterally.
Diminution of Benefits; Negative Definition
 Since under the CBA, “overtime pay was
not given to each employee consistently,
deliberately and unconditionally, but as
compensation for additional services
rendered”, the employer's change of
schedule which is not prohibited by the
CBA, resulting in lesser overtime work,
does not constitute a diminution of
benefits under Art. 100 of the Labor Code
[Manila Jockey Club Employees Labor
Union-PTGWO vs. Manila Jockey Club,
Inc., 517 SCRA 707, 712-713, March 7,
2007]
 Rationale for Art. 100: Employees are
protected by law from unwarranted
practices that diminish an employee's
compensation without his knowledge and
consent [Pacific Banking Corporation vs.
Clave, 128 SCRA 112]
 “The prohibition against elimination or
diminution of benefits set out in Article 100
of the Labor Code is specifically concerned
with benefits already enjoyed at the time
of the promulgation of the Labor Code.
Article 100 does not purport to apply to
situations arising after the promulgation
date of the Labor Code.”  Even
assuming arguendo that Article 100 applies
to the case at bar, the same does not
prohibit a union from offering and agreeing
to reduce wages and benefits of the
employees. In Rivera v. Espiritu, this Court
ruled that the right to free collective
bargaining includes the right to suspend
it. (Insular Hotel Employees Union-NFL vs.
Waterfront Insular Hotel Davao,  G.R. No.
174040-41, September 22, 2010
h. Worker’s preference in case of bankruptcy
Labor Code, Article 110
In the event of bankruptcy or liquidation of an employer’s
business, his workers shall enjoy first preference as regards their
wages and other monetary claims, any provisions of law to the
contrary notwithstanding.
Such unpaid wages and monetary claims shall be paid in full
before claims of the government and other creditors may be paid.
(As amended by Section 1, Republic Act No. 6715, March 21,
1989)
New Civil Code
Article 1707. The laborer's wages shall be a lien on the goods
manufactured or the work done.
Article 2241. With reference to specific movable property of the
debtor, the following claims or liens shall be preferred:
(6) Claims for laborers' wages, on the goods manufactured or
the work done;
Article 2242. With reference to specific immovable property and
real rights of the debtor, the following claims, mortgages and
liens shall be preferred, and shall constitute an encumbrance on
the immovable or real right:
(2) For the unpaid price of real property sold, upon the
immovable sold;
(3) Claims of laborers, masons, mechanics and other workmen,
as well as of architects, engineers and contractors, engaged in
the construction, reconstruction or repair of buildings, canals or
other works, upon said buildings, canals or other works;
Jurisprudence
Summary

 It only creates a preference and not a lien

so;
 Worker preference shall apply only to
ordinary preferred credits (meaning
unencumbered property)
 It must yield to special preferred credits
where liens are attached;
 Covers unpaid wages as well as other
monetary claims; and
 Judicial declaration of
insolvency/bankruptcy and filing of claims
by workers still required

Republic vs. Peralta (G.R. No. L-56568 May

20, 1987)

Article 110 of the Labor Code did not sweep away Rubberworld (Phils.), Inc., vs. NLRC (1999)
the overriding preference accorded under the
scheme of the Civil Code: Preference does not apply when the employer
corporation is under rehabilitation/receivership.
Tax claims of the government or any subdivision
thereof which constitute alien upon properties of
the Insolvent still preferred over wages.

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 Article
2244, which pertains to unencumbered property.
Article 2241 and 2242 pertain to unencumbered
property and such property shall still remain
reserved to its respective lienholder.
Exception is if either 2241 (6) or 2242 (3) applies.
Primary effect: it moves wages from 2nd priority in
2244 to 1st priority; as if 2244(2) became 2244(1).
i. Labor Code provisions for wage protection
Labor Code, Article 112
No employer shall limit or otherwise interfere with the freedom of
any employee to dispose of his wages.
He shall not in any manner force, compel, or oblige his employees
to purchase merchandise, commodities or other property from
any other person, or otherwise make use of any store or services
of such employer or any other person.
Prohibition against wage deduction (Article 113)

General rule: No employer, in his own behalf or in behalf of any

(Development Bank of the Philippines vs.
NLRC, G.R. No. 108031 March 1, 1995)
Article 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.
Requirements of judicial liquidation/ declaration of
bankruptcy still intact; workers must also file their
claims.
A preference applies only to claims which do not
attach to specific properties. A lien creates a charge
on a particular property. The right of first
preference as regards unpaid wages recognized by
Article 110 does not constitute lien on the property
of the insolvent debtor in favor of workers. It is but
a preference of credit in their favor, a preference in
application.
person, shall make any deduction from the wages of his
employees.
Exceptions:
In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for
the amount paid by him as premium on the insurance;
For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and
In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment, such as:
Employee’s debt to employer is due and demandable (Civil Code
Article 1706);
Attachment or execution in cases of debts incurred for
necessities: food, shelter, clothing, medical attendance (Civil
Code Article 1708);

Withholding tax;
Deductions of a legally established cooperative;
Payment to 3rd parties upon written authority by employee;
Deductions for loss or damage;
SSS, Medicare, Pag-IBIG premiums.
It shall be unlawful to make any deduction from the wages of any
Employee for the benefit of the Employer as consideration of a
promise of employment or retention in employment (Article 117,
Labor Code)
Or to retaliate against the employee who filed a complaint.
(Article 118, Labor Code)
Article 222 of the Labor Code requires an individual written
authorization as a prerequisite to wage deductions.
Prohibition seeks to protect the employee against unwarranted
practices that would diminish his compensation without his
knowledge and consent. (Radio Communication of the Phil. Inc.,
vs. Sec. of Labor, 1989)
Prohibition against requirement to make deposits for loss
or damage (Article 114-115, Labor Code)
General rule: No employer shall require his worker to make
deposits from which deductions shall be made for the
reimbursement of loss of or damage to tools, materials, or
equipment supplied by the employer.
Exception:
1. Recognized industry practice or
2. When such is necessary or desirable as determined by the
Secretary of Labor and Employment in appropriate rules and
regulations.
3. Deductions from the deposits of an employee for the actual
amount of the loss or damage can be made provided that the:
- EE has been heard thereon,
- His responsibility has been clearly shown,
- Fair and reasonable deduction which should not exceed 20% of
the employee’s weekly wages.
Five J Taxi vs. NLRC, 235 SCRA 556, 562
(1994)
a) This 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 the remittance of his boundary.
b) When employee stops working for
employer, the alleged purpose for the
unauthorized deposits no longer exists.
c) Any balance due must be returned to
employee with legal interest.
Labor Code
Prohibition against withholding of wages (Article 116)
- It shall be unlawful for any person, directly or indirectly,
- to withhold any amount from the wages of a worker or
- induce him to give up any part of his wages by force, stealth,
intimidation, threat or by any other means whatsoever without
the worker’s consent.
Prohibition against deduction to ensure employment (Article 117) 
- 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.
Prohibition against retaliatory measures (Article 118) 
- 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.
Prohibition against false reporting (Article 119)
- It shall be unlawful for any person
- to make any statement, 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.
Special Steel Products, Inc. vs. Lutgardo
Villareal, et al., G.R. No. 143304, July 8, 2004
Petitioner contends that as a guarantor, it could
legally withhold respondent Villareal’s monetary
benefits as a preliminary remedy pursuant to
Article 2071 of the Civil Code, as amended. As to
respondent So, petitioner, citing Article 113 of the
Labor Code, as amended, in relation to Article 1706
of the Civil Code, as amended, maintains that it
could withhold his monetary benefits being
authorized by the memorandum he signed.
Article 116 of the Labor Code, as amended,
provides:
“ART. 116. Withholding of wages and kickbacks prohibited.—It
shall be unlawful for any person, directly or indirectly, to
withhold any amount from the wages (and benefits) of a
worker or induce him to give up any part of his wages by force,
stealth, intimidation, threat or by any other means whatsoever
without the worker’s consent.”
The above provision is clear and needs no further
elucidation. Indeed, petitioner has no legal
authority to withhold respondents’ 13th month pay
and other benefits. What an employee has worked
for, his employer must pay. Thus, an employer
cannot simply refuse to pay the wages or benefits
of its employee because he has either defaulted in
paying a loan guaranteed by his employer; or
violated their memorandum of agreement; or failed
to render an accounting of his employer’s property.
IRR Book II Rule X Section 11
Prohibition against keeping of employee’s records in a place than
the workplace
- All employment records of the employees shall be kept and
maintained by the employer in or about the premises of the work
place
- main or branch office of the establishment, if any, depending
upon where the employees are regularly assigned.
- The keeping of the employee's records in another place is
prohibited.
Civil Code (Article 1708)
General Rule: The laborer’s wages does shall not be subject to
execution or attachment.
Exception: for debts incurred for food, shelter, clothing and
medical attachment.
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.
j. Allowable deductions without employee’s
consent
Note: Please refer to the exceptions to prohibition
against wage deduction in the previous subsection.
k. Attorney’s fees and union service fee in
labor cases
Labor Code Article 111
In cases of unlawful withholding of wages, the culpable party may
be assessed attorney’s fees equivalent to ten percent 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 wages,
attorney’s fees which exceed ten percent of the amount of wages
recovered.
NOTES:
a) Extraordinary concept – awarded by
court;
- 10% against culpable party
for unlawful w/holding of wages;
* Art. 111(a) is extraordinary
attorney's fees. It does not require
proof that the employer acted with
malice or bad faith in withholding the
wage. Proof that lawful wages were
not paid is enough [PAL Shipping
Phils., Inc., et al. vs. NLRC, et al.
[G.R. 153031, Dec. 14, 2006]
b) Ordinary concept – paid by client
to a lawyer as reasonable
compensation;
- 10% for lawyer in recovery
of wages cases.
* The award of attorney's fees,
though not prayed for, is sanctioned
by law and must be upheld [Marivel
Trading, Inc. vs. NLRC, 525 SCRA 708,
733 (2007).
Rules:
(1)In actions for (1) recovery of wages or (2)
where an employee was forced to litigate and thus
incurred expenses to protect his rights and
interests, a maximum award of ten percent (10%)
of the monetary award by way of attorney's fees is
legally and morally justifiable under Art. 111 of the
Labor Code. Xxx
Forced to litigate recovery of wages – basics of
attorney’s fees (Rutaquio vs. NLRC, (Oct. 19,
1999); Marsaman Manning Agency vs. NRLC, (Aug.
25, 1999)
(2)No attorney’s fees when complaint is
represented by PAO. (Lambo vs. NLRC, G.R. No.
111042, Oct. 26, 1999, 317 SCRA 420)
(3)Non-Lawyers Not Entitled to Attorney's Fees
l. Criteria/Factors for Wage Setting
Labor Code Article 124
The regional minimum wages to be established by the Regional
Board shall be as nearly adequate as is economically feasible to
maintain the minimum standards of living necessary for the
health, efficiency and general well-being of the employees within
the framework of the national economic and social development
program. In the determination of such regional minimum wages,
the Regional Board shall, among other relevant factors, consider
the following:

a. The demand for living wages;
b. Wage adjustment vis-à-vis the consumer price index;
c. The cost of living and changes or increases therein;
d. The needs of workers and their families;
e. The need to induce industries to invest in the countryside;
f. Improvements in standards of living;
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of
employers;
i. Effects on employment generation and family income; and
j. The equitable distribution of income and wealth along the
imperatives of economic and social development.
Procedure for Wage Fixing by Regional Board
(Labor Code Article 123)
 investigate and study all pertinent facts;
and based on the standards and criteria set
in Article 124
 conduct public hearings/consultations,
giving notices to employees’ and
employers’ groups, provincial, city and
municipal officials and other interested
parties.
 Decide to ISSUE or NOT TO ISSUE a wage
order
-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
If 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
 Appeal wage order to Commission within
10 calendar days; mandatory for the
Commission to decide within 60 calendar
days from filing
 filing of the appeal does not stay the order
unless the person appealing such order
shall file an undertaking with a surety or
sureties satisfactory to the Commission for
the payment to the employees affected by
the order of the corresponding increase, in
the event such order is affirmed. (As
amended by Republic Act No. 6727, June
9, 1989)
3. Rest Day
IRR Book III Rule III
Section 1. General statement on coverage. - This Rule shall
apply to all employers whether operating for profit or not,
including public utilities operated by private persons.
Section 2. Business on Sundays/Holidays. - All
establishments and enterprises may operate or open for business
on Sundays and holidays provided that the employees are given
the weekly rest day and the benefits as provided in this Rule.
Section 3. Weekly rest day. - Every employer shall give his
employees a rest period of not less than twenty-four (24)
consecutive hours after every six consecutive normal work days.
Section 4. Preference of employee. - The preference of the
employee as to his weekly day of rest shall be respected by the
employer if the same is based on religious grounds. The
employee shall make known his preference to the employer in
writing at least seven (7) days before the desired effectivity of
the initial rest day so preferred.
Where, however, the choice of the employee as to his rest day
based on religious grounds will inevitably result in serious
prejudice or obstruction to the operations of the undertaking and
the employer cannot normally be expected to resort to other
remedial measures, the employer may so schedule the weekly
rest day of his choice for at least two (2) days in a month.
Section 5. Schedule of rest day. -
(a) Where the weekly rest is given to all employees
simultaneously, the employer shall make known such rest period
by means of a written notice posted conspicuously in the work
place at least one week before it becomes effective.
(b) Where the rest period is not granted to all employees
simultaneously and collectively, the employer shall make known
to the employees their respective schedules of weekly rest
through written notices posted conspicuously in the work place at
least one week before they become effective.
Section 6. When work on rest day authorized. - An employer
may require any of his employees to work on his scheduled rest
day for the duration of the following emergencies and exceptional
conditions:
(a) In case of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other
disaster or calamity, to prevent loss of life or property, or in cases
of force majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on machineries,
equipment or installations to avoid serious loss which the
employer would otherwise suffer;
(c) In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be expected
to resort to other measures;
(d) To prevent serious loss of perishable goods;
(e) Where the nature of the work is such that the employees
have to work continuously for seven (7) days in a week or more,
as in the case of the crew members of a vessel to complete a
voyage and in other similar cases; and
(f) When the work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon.
No employee shall be required against his will to work on his
scheduled rest day except under circumstances provided in this
Section: Provided, However, that where an employee volunteers
to work on his rest day under other circumstances, he shall
express such desire in writing, subject to the provisions of
Section 7 hereof regarding additional compensation.
Section 7. Compensation on rest day/Sunday/holiday. -
(a) Except those employees referred to under Section 2, Rule I,
Book Three, an employee who is made or permitted to work on
his scheduled rest day shall be paid with an additional
compensation of at least 30% of his regular wage. An employee
shall be entitled to such additional compensation for work b. Preference of the employee
performed on a Sunday only when it is his established rest day.
(b) Where the nature of the work of the employee is such that he Labor Code Article 91 (b)
has no regular work days and no regular rest days can be
scheduled, he shall be paid an additional compensation of at least
30% of his regular wage for work performed on Sundays and The employer shall determine and schedule the weekly rest day
holidays. of his employees subject to collective bargaining agreement and
to such rules and regulations as the Secretary of Labor and
(c) Work performed on any special holiday shall be paid with an
Employment may provide. However, the employer shall respect
additional compensation of at least 30% of the regular wage of
the preference of employees as to their weekly rest day when
the employees. Where such holiday work falls on the employee's
such preference is based on religious grounds.
scheduled rest day, he shall be entitled to additional
compensation of at least 50% of his regular wage.
(d) The payment of additional compensation for work performed c. When work on rest day authorized
on regular holiday shall be governed by Rule IV, Book Three, of
these regulations.
Labor Code Article 92
(e) Where the collective bargaining agreement or other applicable
employment contract stipulates the payment of a higher premium
pay than that prescribed under this Section, the employer shall The employer may require his employees to work on any day:
pay such higher rate.
In case of actual or impending emergencies caused by serious
Section 8. Paid-off days. - Nothing in this Rule shall justify an accident, fire, flood, typhoon, earthquake, epidemic or other
employer in reducing the compensation of his employees for the disaster or calamity to prevent loss of life and property, or
unworked Sundays, holidays, or other rest days which are imminent danger to public safety;
considered paid-off days or holidays by agreement or practice
subsisting upon the effectivity of the Code. In cases of urgent work to be performed on the machinery,
equipment, or installation, to avoid serious loss which the
Section 9. Relation to agreements. - Nothing herein shall employer would otherwise suffer;
prevent the employer and his employees or their representatives
in entering into any agreement with terms more favorable to the In the event of abnormal pressure of work due to special
employees than those provided herein, or be used to diminish circumstances, where the employer cannot ordinarily be expected
any benefit granted to the employees under existing laws, to resort to other measures;
agreements, and voluntary employer practices.
To prevent loss or damage to perishable goods;

a. Right to weekly rest day Where the nature of the work requires continuous operations and
the stoppage of work may result in irreparable injury or loss to
the employer; and
Labor Code Article 91 (a)

Under other circumstances analogous or similar to the foregoing

It shall be the duty of every employer, whether operating for as determined by the Secretary of Labor and Employment.
profit or not, to provide each of his employees a rest period of not
less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.

4. Holidays

Note: RA No. 9492 (Approved on July 27, 2007)

a) Regular Holidays
New year’s Day - January 1
Maundy Thursday - Movable date
Good Friday - Movable date
Eidul Fitr - Movable date
Araw ng Kagitingan - Monday nearest April 9
(Bataaan and Corregidor Day)
Labor Day - Monday nearest May 1
Independence Day - Monday nearest June 12
National Heroes Day - Last Monday of August
 Bonifacio Day - Monday nearest November 30
Christmas Day - December 25
Rizal Day - Monday nearest December 30
b) Nationwide Special Holidays:
Ninoy Aquino Day - Monday nearest August 21
All Saints Day - November 1
Last Day of the Year - December 31

a. Right to holiday pay

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
Art. 94. Right to Holiday Pay.
(a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to
work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate; and
(c) As used in this Article, “holiday” includes:
New Year's Day, Maundy Thursday, Good Friday, the ninth of
April, the first of May, the twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth of December and the day
designated by law for holding a general election.
 holiday pay is a statutory benefit
demandable under the law. Since a worker
is entitled to the enjoyment of ten paid
regular holidays, the fact that two holidays
fall on the same date should not operate to
reduce to nine the ten holiday pay benefits
a worker is entitled to receive. [Asian
Transmission Corporation vs. Court of
Appeals, G.R. No. 144664, March 15,
2004]
In case of absences
 on leave of absence with pay the day
before – with pay
 on leave of absence without pay – without
pay
 day before holiday is non-working day –
apply (a) & (b)
Azucena:
Regular Holidays
1) IF Holiday is the employee's Regular
Workday, and
unworked – 100%
If worked:
1st 8 hours – 200% (the given hourly rate)
excess of 8 hours – plus 30% of hourly rate
2) IF Holiday is employee's Rest Day, and
unworked – 100%
If worked:
1st 8 hours – plus 30% of 200% (the given hourly
rate)
excess of 8 hours – plus 30% of hourly rate for the
day
Special Day
Bar Operations 2012: Ace the Bar, Race the Car
77
1) IF unworked, no pay shall accrue unless
otherwise provided in a CBA, or established
company practice to grant wages on this
given day
2) IF worked:
1st 8 hours – plus 30% of the daily rate
(100%)
excess of 8 hours – plus 30% of hourly
rate on that day
3) IF it falls on employee's Rest Day, and
worked
1st 8 hours – plus 50% of the daily rate of
100%
excess of 8 hours – plus 30% of hourly
rate on that day
Special Working Holiday: The employee is
entitled only to his basic rate, if worked. No
premium pay accrues on this day, but considered
as ordinary working day.
In case of temporary cessation of work
 temporary periodic closure – with pay
 closure due to business reverses –
WITHOUT PAY
Of teachers, piece workers, seafarers,
seasonal workers, etc.
On the issue of holiday pay, however, two (2)
contradictory views exist in jurisprudence:
(1) In Labor Congress vs. NLRC, (290
SCRA 509) the Supreme Court held that piecerate
workers are granted holiday pay based on Section
8(b), Rule IV, Book III. The argument is that
the Omnibus Rules implementing the Labor Code
exclude certain employees from receiving benefits
such as night differential pay, holiday pay, service
incentive leave pay, and 13th month pay, i.e., “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 time consumed in the performance
thereof.” BUT that piece-rate workers do not
fall under this group.
(2) In Makati Haberdashery, Inc. vs.
NRLC, (179 SCRA 448) on the other hand, piece-
rate workers are NOT entitled to holiday pay,
pursuant to Section 1(e), Rule IV, Book III.
For Private and Personal Use Only
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
 The Supreme Court in said
case reasoned that since piece-rate
workers are not entitled to service
incentive leave pay, because they fall
under one of the exceptions in Section
1(d), Rule V, Book III of the
Implementing Rules, they being “paid
at a fixed amount for performing
work irrespective of time
consumed,” for this same reason,
thus, they are not entitled to
holiday pay as well.
HOWEVER,
In the case of Lambo vs. NLRC, [317
SCRA 421 (1999)] the Supreme Court
recognized that there are two
categories of employees paid by
results:
(1) those whose time and
performance are supervised by the
employer – where an element of
control and supervision over the
manner work is to be performed,
especially if worker performs his work
in the company premises; and
(2) those whose time and
performance are unsupervised – the
employer's control is over the result
of the work only.
a. Both classes of workers
are paid per
accomplished. Piece-rate
payment is generally
practiced in garment
factories where work is
done in the company
premises, while payment
on pakyao and takay basis
is commonly observed in
the agricultural industry,
such as in sugar
plantations where
work is performed in bulk
or in volumes difficult to
quantify. [Lambo
NLRC, supra at 426]
“Petitioners Lambo, et. al.
belong to the first category, i.e.,
supervised employees.” However, the
Court further held – “The awards for
overtime pay, holiday pay and 13th
month pay are in accordance with our
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 78
finding that petitioners are regular
employees” [ibid., at 431-433]
forgetting that Art. 82 excluded
“workers who are paid by results”
from the coverage of Title I, Book III
of the Labor Code – which includes
“overtime work” (Art. 87) and
“holiday pay” (Art. 94).
In short, what the S.C. should
have held is – Lambo, et. al. are
employees, their work being
supervised (control); but they are not
entitled to overtime pay and holiday
pay due to Art. 82, Labor Code.
b. Exclusions from coverage
 Government employees, including those in
chartered corporation.
 Rental/Service establishments with less
than 10 employees.
 Those exempted from coverage of title
(Domestic, etc.)
5. Leaves:
unit a. Service Incentive Leave Pay
The basis of the grant of Service Incentive Leave
to qualified employees is found in Article 95 of the
Labor Code.
Section 2, Rule V, Book III of the Omnibus Rules
contains the rules and regulations for the
implementation this right.
Right to service incentive leave
the  Every employee (subject to the exceptions
below) who has rendered at least one year
of service  is entitled to yearly service
vs. incentive leave of five days with pay.
 “At least one year of service” Meaning
 The term “at least one-year service” means
service for not less than 12 months,
whether continuous or broken.
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

 The 12-month period shall be reckoned  Grant of V/L and S/L – is not a standard of
from the date the employee started law, but a prerogative of management.
working, including authorized absences [Virginia Sugue vs. Triumph Int’l.
and paid regular holidays. Phils., Inc., G.R. No. 164804, Jan. 30,
2009]
 However, where the operation of the
establishment as a matter of practice or
policy, or that provided in the employment Exclusions from coverage
contract, is less than 12 months, such
The following employees are excluded from
period shall be considered as one year.
entitlement to SIL under the Labor Code (but they
may be entitled to the same or similar benefits if
 Grant of leave benefits in excess of what
so provided under other laws, or collective
is provided here “shall NOT be subject of bargaining agreement or employment contract):
arbitration or any court action”. 1. Those of the government and any of its
political subdivisions, including
VSEV: government-owned and controlled
corporations;
Computation of 1 year includes holidays
“authorized absences [Secs. 2 & 3, Rule V, Book 2. Domestic helpers and persons in the
III] I think even those on AWOL – as this personal service of another;
subjects him to separate penalty.
3. Managerial employees as defined in Book
It is here where absence is considered served. Three of the Labor Code;
[Sunripe Coconut Products vs. NLU, 97 Phil. 691]
Convertible to cash.
4. Field personnel and other employees
whose performance is unsupervised by
the employer including those who are
engaged on task or contract basis, purely
 V/L (as SIL) – are among those incomes commission basis, or those who are paid a
intended as replacements for regular fixed amount for performing work
income that depend on days worked. irrespective of the time consumed in the
[Davao Integrated Port Stevedoring performance thereof;
Services vs. Abarquez, 220 SCRA 197]
5. Those who are already enjoying the benefit
The vacation leave privilege was not
herein provided;
intended to serve as additional salary, but
as a non-monetary benefit. To give the 6. Those enjoying vacation leave with pay of
employees the option not to consume it at least five days; and
with the aim of converting it into cash at
the end of the year would defeat the very 7. Those employed in establishments
purpose of the vacation leave. [PNCC regularly employing less than ten
Skyway, supra] employees. (Omnibus Rules)

VSEV:
This rule is proof that SIL does not have to depend
on authorized absences for an employee to be
entitled thereto.
Commutable nature of benefit
Under the Omnibus Rules, the unused service
incentive leave is commutable to its money
equivalent at the end of the year. [N.B. Not found
in the LC.]

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 79

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

period of recovery and/or in the nursing of the

b. Maternity Leave newly-born child.

RA 8282 (SSS Law) Coverage

SECTION 2. xxx every married male employee in

Coverage
SEC. 14-A. Maternity Leave Benefit. – A female member who
has paid at least three (3) monthly contributions in the twelve-
month period immediately preceding the semester of her
childbirth or miscarriage shall be paid a daily maternity benefit
equivalent to one hundred percent (100%) of her average daily
salary credit for sixty (60) days or seventy-eight (78) days in
case of caesarian delivery, xxx
the  private and public sectors shall be entitled to a paternity
leave  of seven (7) days with full pay for the first four (4)
deliveries of  the legitimate spouse with whom he is cohabiting.
The male  employee applying for paternity leave shall notify his
employer of the pregnancy of his legitimate spouse and the  
expected date of such delivery.
Conditions to entitlement

Paternity Leave Benefits

Conditions to entitlement
1) Married male employee in private or public
SEC. 14-A. Maternity Leave Benefit. – xxx, subject to the
following conditions: sector

(a) That the employee shall have notified her employer of her 2) An employee at the time of delivery
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; 3) Cohabiting with his spouse at the time of
delivery (includes childbirth, miscarriage or
(b) The full payment shall be advanced by the employer within abortion)
thirty (30) days from the filing of the maternity leave application;

(c) That payment of daily maternity benefits shall be a bar to the 4) Has applied for paternity leave within a
recovery of sickness benefits provided by this Act for the same reasonable period from expected
period for which daily maternity benefits have been received;
delivery
(d) That the maternity benefits provided under this section shall
bepaid only for the first four (4) deliveries or miscarriages; 5) His wife gave birth or suffered a
miscarriage. [Sec. 3, Revised
(e) That the SSS shall immediately reimburse the employer of
one hundred percent (100%) of the amount of maternity benefits
Implementing Rules of RA 8187]
advanced to the employee by the employer upon receipt of
satisfactory proof of such payment and legality thereof; and Availment
(f) That if an employee member should give birth or suffer
miscarriage without the required contributions having been
remitted for her by her employer to the SSS, or without the latter
 Notification: A married male employee
having been previously notified by the employer of the time of shall be entitled to PL by filing the requisite
the pregnancy, the employer shall pay to the SSS damages leave application form within a reasonable
equivalent to the benefits which said employee member would
period prior to the expected delivery.
otherwise have been entitled to.
 Availment: The paternity benefits may be
enjoyed by the qualified male employee on
Availment
the days immediately before, during and
after childbirth or miscarriage of his
 The maternity benefits provided under this
legitimate spouse.
section shall bepaid only for the first four
 Validation Requirement: Any employee
(4) deliveries or miscarriages;
availing the paternity benefits may be
c. Paternity Leave
required to furnish the necessary
documents (e.g. marriage certificate, birth
RA 8187 grants paternity leave of 7 days with full
certificate of the newly born child, medical
pay to all married male employees in the private
certificate, etc.) [Sections 3-5 of the
and public sectors. Paternity leave is available
Paternity Leave Act of 1996]
only for the first four deliveries of the legitimate
spouse with whom the husband is cohabiting. The
purpose of paternity leave is to enable the
husband to lend support to his wife during the d. Parental Leave

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 80

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

1. Solo parent has rendered at least 1

Parental Leave (for Solo Parents) year of service (continuous or broken)
RA 8972 grants a solo parent employee parental 2. has notified employer of the
leave of not more than 7 working days every year. availment within a reasonable time; and
3. has presented a Solo Parent
Coverage Identification Card to the employer.

Considered Solo Parent: Availment

 You are a parent left alone with the
responsibility of parenthood because of the Parental leave is not convertible to cash unless
death of your spouse. otherwise provided in CBA.
 You are a parent left alone with the
responsibility of parenthood because of any
Sec. 8. Parental Leave. - In addition to leave privileges under
physical and/or mental incapacity of your existing laws, parental leave of not more than seven (7) working
spouse as certified by a public medical days every year shall be granted to any solo parent employee
practitioner. who has rendered service of at least one (1) year.
 You are a parent left alone with the
responsibility of parenthood because you
have legally separated from your spouse or e. Leaves for victims of violence against
because you have been separated for at women
least one year and your child is in your
custody. RA 9262
 You are a parent left alone with the
responsibility of parenthood because your
Coverage
marriage was annulled by a court or a
church decree, and your child is in your
 Leave available to an Employee (not only
custody.
for women) who are victims of violence,
 You are a parent left solo or alone with the
either physical, sexual or psychological.
responsibility of parenthood because your
spouse abandoned you for at least one
Conditions to entitlement
year.
 You are a parent left solo or alone with the
1. A requirement to apply for the battered
responsibility of parenthood because your
woman leave is a certification obtained
spouse is detained or is serving sentence
from the Barangay Captain or Kagawad or
for a crime for at least one year.
prosecutor or the clerk of court that an
 You are an unmarried mom or dad who has
action based on R. A. 9262 has been filed
preferred to keep and rear your child
and is pending.
yourself, instead of having others care for
2. The use of the ten-day leave is at the
them or give them up to a welfare
option of the employee.
institution.
3. It shall be used for the days that she need
 You solely provide parental care and
to attend to medical and legal concerns.
support to a child or children.
4. Leaves not availed of are non-cumulative
 You assume the responsibility of head of
and not convertible to cash. Indeed, the
the family as a result of the death,
battered woman leave is useful for victims
abandonment, disappearance or prolonged
of violence. Lastly, this law is only
absence of the children's parents or solo
applicable in the Philippines.
parent.
 You are a victim of rape and/or other
Availment
crimes against chastity, have given birth to
a child as a result and have decided to  Leave of up to ten days in addition to other
keep and raise your child.
paid leaves under the Labor Code, or other
Conditions to entitlement
laws.
Conditions for Availment
6. Service Charges

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 81

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

If a restaurant or similar establishment does not

Art. 96. Service Charges. All service charges collected by
hotels, restaurants and similar establishments shall be distributed
at the rate of eighty-five percent (85%) for all covered employees
and fifteen percent (15%) for management. The share of the
employees shall be equally distributed among them. In case the
service charge is abolished, the share of the covered employees
shall be considered integrated in their wages.
Coverage
collect service charges, but has a practice or policy
of monitoring and pooling the tips given by
customers, the pooled tips should be accounted for
and distributed in the same manner as the service
charges. In many restaurants, a waiter must drop
in a tip box the tips he received; otherwise, he
commits “tip pocketing”, a serious offense of
dishonesty that may cost him his job.

 Article 96 and its implementing rule (Rule

VI, Book III), apply only to 7. Thirteenth (13th) Month Pay and other
establishments collecting service bonuses
charges, such as hotels, restaurants,
lodging houses, night clubs, cocktail Concept:
lounges, massage clinics, bars, casinos,
 Benefit – a 13th month pay for
and gambling houses, and similar employees whose salary was “not more
enterprises, including those entities than P1,000”.
operating primarily as private subsidiaries
of the government. [Sec. 1, Rule VI,  Exemption, Sec. 2 – those already paying
Book III] equivalent.

Exclusion  Implementing Rules dated December 22,

1975 provided for who are covered vs.
 Tip, not normally part of salary, it being whose who are not covered, issued by then
paid by customer [Ace Navigation Co., Sec. Blas Ople.
Inc. vs. Court of Appeals, 338 SCRA
70] a) August 13, 1986, President Corazon C.
Aquino issued Memorandum Order 28
Distribution b) Drilon guideline, issued on November 16,
1987
 All service charges collected by Hotels,
restaurants and similar  Basic Feature – removed of ceiling
establishments shall be distributed (P1,000)
at the rate of:
When payment is made -
85% - for all covered employees  before opening of regular school
15% - for management [Managerial employee year;
under Art. 212(M), as implied in Sec. 2, Rule VI,
Bk, III]  on or before December 24
 Supervisors – are considered as rank-and-
file per Sec. 2, Rule VI, as they are not Coverage
managerial in Art. 212(M)
1. “all rank and file employees”
 In case the service charge is abolished, the
share of the covered employee shall be 2. regardless of their designation or
considered integrated in their wages employment status; and

Integration 3. irrespective of the method by which their

wages are paid, provided they have
Azucena: worked “for at least 1 month during a
calendar year”, became covered
TIPS are handled similarly as service charges. employees. (1 mo. is qualifying

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 82

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
requirement. Include regular benefits only
after one has qualified). 1 month here is
not necessarily 30 worked days. I should
be calendar month, so that those who
worked only for 20 days, for being daily
paid employee, is entitled. Otherwise, the
1 year would be short of 48 days (if 6
working days) on short of 96 days (if 5
working days a year).
Who are covered --
a) Commission paid employees?
1) Purely commission – NO
2) Guaranteed wage + commission – YES
[PACIWU (TUCP) vs. NLRC, 247 SCRA 256,
260 (1995)]
b) Gov't. employees on part time
Private employment – YES
c) Private school teachers – YES,
regardless of months taught - Provided
taught at least 1 month
Exclusion/Exemptions from coverage
 Managerial employees are not entitled to
13th month pay as per Memorandum Order
No. 88, “13th month pay has mandatory
effect only on all rank and file employees”
[Serafin Quebec, Jr. vs. NLRC, et al., G.R.
No. 123184, January 22, 1999
Nature of 13th month pay
 Notwithstanding therefore the absence of
any contractual agreement, the payment of
a thirteenth-month pay being a statutory
grant, compliance with the same is
mandatory and is deemed incorporated in
the CBA. [Philippine Airlines, Inc. vs.
NLRC and Airline Pilots Association of
the Philippines, etc., G.R. No. 114280,
July 26, 1996]
 Food, etc., Not Substitute for 13 th
Month Pay
“Where an employer pays less than 1/12 of the
employee's basic salary, the employer shall pay
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 83
the difference. [Framanlis Farms, Inc. vs. Minister
of Labor, G.R. Nos. 72616-17, March 8, 1989]
 Proportionate 13th Month Pay
“Thus, if he worked only from January up to
September, his proportionate 13th month pay
should be equivalent to 1/12 of the total basic
salary he earned during that period. [International
School of Speech vs. NLRC and M.C. Mamuyac,
G.R. No. 112658, March 18, 1995]
 13th month pay is a Nonstrikeable
Issue
“Difference on how to compute the 13 th month pay
does not justify a strike; in other words, it is a
nonstrikeable issue and a strike held on that
ground is an illegal strike.
Commissions vis-à-vis 13th month pay
 “If the commissions may properly be
considered part of the basic salary, they
should be included in computing the
13th month pay. If the commissions are
not integral part of the basic salary, then
they should be excluded. What
commissions are part of the salary and
what commissions are not, are illustrated
respectively in the Philippine Duplicators'
and the Boie-Takeda's types of
commission. That of Philippine
Duplicators is wage or sales
percentage type which should be
included in the 13th month pay
computation, while that of Boie-Takeda is
profit-sharing or bonus type which
may be excluded.”
- vs -
 the 13th month pay of the bus drivers and
conductors who are paid a fixed or
guaranteed minimum wage in case their
commissions be less than the statutory
minimum, and commission only in case
where the same is over and above the
statutory minimum, must be equivalent to
one-twelfth (1/12) of their total earnings
during the calendar year. [Phil.
Agricultural Commercial and Industrial
Workers Union (PACIWU)-TUCP vs. NLRC
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
and Vallacar Transit, Inc., G.R. No.
107994, August 14, 1995)]
CBA vis-à-vis 13th month pay
 But if the CBA did provide for a bonus in
graduated amounts depending on the
length of service of the employee, the
intention is clear that the bonus provided
in the CBA was meant to be in addition to
the legal requirement. [Universal Corn
Products vs. NLRC, G.R. No. 60337,
August 21, 1987]
 Ruling: The bonus under the CBA is an
obligation by the contract between the
management and workers while the 13 th
month pay is mandated by law.
 Under the circumstances, the 7-day bonus
is in addition to the legal requirement.
 But as it is, the provision for the continued
payment of a year-end bonus was
incorporated in the CBA without any
qualification, from which the only logical
conclusion that could be derived is that PAL
intended to give the members of ALPAP a
year-end bonus in addition to its obligation
to grant a thirteenth-month pay.”
[Philippine Airlines, Inc. (PAL) vs. NLRC &
Airline Pilots Association of the Philippines
(ALPAP), etc., G.R. No. 114280, July 26,
1996]
Rules:
 Managerial employees are not entitled to
13th month pay as per Memorandum Order
No. 88, “13th month pay” has mandatory
effect only on all rank and file employees”.
[Serafin Quebec, Jr. vs. NLRC, et al.,
G.R. No. 123184, January 22, 1999]
 Piece rate workers are entitled to 13 th
month pay [Mark Roche International
and/or Edmundo Dayot vs. NLRC, et
al., G.R. No. 123825, August 31,
1999].
 Christmas gift is not christmas bonus,
milling bonus, amelioration bonus, year-
end productivity bonus. It cannot
therefore be considered as equivalent of
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 84
13th month pay. [UST Faculty Union vs.
NLRC, 190 SCRA 215, Oct. 2, 1990]
 13th month pay and other similar
benefits is an exclusion from the
gross income, provided it must
not be more than P30,000.00.
The Secrtary of Finance, however,
may increase the ceiling of
P30,000.00, upon
recommendation of the
Commissioner, after considering,
among others, the effect or the
same of the inflation rate at the
end of the taxable year. [Sec.
32(7), NIRC]
 An employee who has been
separated from service before the
time for payment of the 13 th
month pay is entitled to this
monetary benefit in proportion to
the length of time he worked
during the year, reckoned from
the time he started working
during the calendar year up to the
time of his separation. [Basay
vs. Hacienda Consolacion, G.R.
No. 175532, April 19, 2010,
Del Castillo, J.]
8. Women Workers
a. Discrimination (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:
Payment of a lesser compensation, including wage, salary or
other form of remuneration and fringe benefits, to a female
employees as against a male employee, for work of equal value;
and
Favoring a male employee over a female employee with respect
to promotion, training opportunities, study and scholarship grants
solely on account of their sexes.
Criminal liability for the willful commission of any unlawful act as
provided in this Article or any violation of the rules and
regulations issued pursuant to Section 2 hereof shall be penalized
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

as provided in Articles 288 and 289 of this Code: Provided, That substantiated. Strictly speaking, there is no time
the institution of any criminal action under this provision shall not period within which he or she is expected to
bar the aggrieved employee from filing an entirely separate and
distinct action for money claims, which may include claims for complain through the proper channels. The
damages and other affirmative reliefs. The actions hereby time to do so may vary depending upon the needs,
authorized shall proceed independently of each other. (As circumstances, and more importantly, the
amended by Republic Act No. 6725, May 12, 1989)
emotional threshold of the employee [Philippine
Aeolus Automotive United Corp., et al. vs.
b. Stipulation against marriage (Art. 136, LC) NLRC, et al., G.R. No. 124617, April 28, 2000,
Second Division, Bellosillo, J.]
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 2. Persons who may be liable for sexual
that upon getting married, a woman employee shall be deemed harassment
resigned or separated, or to actually dismiss, discharge, Any person who directs or
discriminate or otherwise prejudice a woman employee merely by
reason of her marriage. induces another to commit
any act of sexual harassment
as defined in the law, or who
cooperates in the commission
thereof by another without
c. Prohibited Acts (Art. 137, LC)
which it would not have been
It shall be unlawful for any employer:
committed, shall also be held
liable under the law.
To deny any woman employee the benefits provided for in this [Section 3, Republic Act No.
Chapter or to discharge any woman employed by him for the 7877]
purpose of preventing her from enjoying any of the benefits
provided under this Code.
3. Sexual Harassment in a Work-Related or
To discharge such woman on account of her pregnancy, or while
Employment Environment
on leave or in confinement due to her pregnancy; committed when:

To discharge or refuse the admission of such woman upon (1) the sexual favor is made as a
returning to her work for fear that she may again be pregnant. condition in the hiring, or in the
employment, re-employment or continued
d. Classification of certain women workers employment of said individual or in
(Art. 138, LC) granting said individual favorable
compensation, terms, conditions,
Any woman who is permitted or suffered to work, with or without promotions, or privileges; or the refusal to
compensation, in any night club, cocktail lounge, massage clinic,
bar or similar establishments under the effective control or
grant the sexual favor results in limiting,
supervision of the employer for a substantial period of time as segregating or classifying the employee
determined by the Secretary of Labor and Employment, shall be which in any way would discriminate,
considered as an employee of such establishment for purposes of
deprive or diminish employment
labor and social legislation.
opportunities or otherwise adversely affect
said employee.
e. Anti-Sexual Harassment Act (RA 7877)
(2) the above acts would impair the
employee's rights or privileges under
1. Sexual harassment is an imposition of
existing labor laws; or
misplaced superiority which is enough to dampen
(3) the above acts would result in an
an employee's spirit in her capacity for
intimidating, hostile, or offensive
advancement. It affects her sense of judgment, it
environment for the employee. [Section 3
changes her life. If for this alone, private
(a), Republic Act No. 7877]
respondent should be adequately compensated
[Phil. Aeolus, Infra]

The gravamen of the offense in sexual

9.Minor Workers (RA 7678, RA 9231)
harassment is not the violation of the
employee's sexually but the abuse of power by
Sec. 2. Employment of Children - Children below fifteen (15)
the employer. Any employee, male or female, years of age shall not be employed except:
may rightfully cry “foul” provided the claim is well

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 85

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
1) When a child works directly under the sole
responsibility of his/her parents or legal guardian and where only
members of his/her family are employed: Provided, however,
That his/her employment neither endangers his/her life, safety,
health, and morals, nor impairs his/her normal development:
Provided, further, That the parent or legal guardian shall provide
the said child with the prescribed primary and/or secondary
education; or
2) Where a child's employment or participation in public
entertainment or information through cinema, theater, radio,
television or other forms of media is essential: Provided, That the
employment contract is concluded by the child's parents or legal
guardian, with the express agreement of the child concerned, if
possible, and the approval of the Department of Labor and
Employment: Provided, further, That the following requirements
in all instances are strictly complied with:
(a) The employer shall ensure the protection, health, safety,
morals and normal development of the child;
(b) The employer shall institute measures to prevent the child's
exploitation or discrimination taking into account the system and
level of remuneration, and the duration and arrangement of
working time; and
(c) The employer shall formulate and implement, subject to the
approval and supervision of competent authorities, a continuing
program for training and skills acquisition of the child.
In the above-exceptional cases where any such child may be
employed, the employer shall first secure, before engaging such
child, a work permit from the Department of Labor and
Employment which shall ensure observance of the above
requirements.
For purposes of this Article, the term "child" shall apply to all
persons under eighteen (18) years of age."
a. Regulation of working hours of a child
Sec. 2-A. Hours of Work of a Working Child. - Under the
exceptions provided in Section 12 of this Act, as amended:
A child below fifteen (15) years of age may be allowed to work for
not more than twenty (20) hours a week: Provided, That the
work shall not be more than four (4) hours at any given day;
A child fifteen (15) years of age but below eighteen (18) shall not
be allowed to work for more than eight (8) hours a day, and in no
case beyond forty (40) hours a week;
No child below fifteen (15) years of age shall be allowed to work
between eight o'clock in the evening and six o'clock in the
morning of the following day and no child fifteen (15) years of
age but below eighteen (18) shall be allowed to work between ten
o'clock in the evening and six o'clock in the morning of the
following day."
b. Employment of the child in public
entertainment
Sec. 12.       Employment of Children. - Children below fifteen
(15) years of age shall not be employed except:
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 86
xxx
2)        Where a child's employment or participation in public
entertainment or information through cinema, theater, radio or
television is essential: Provided, The employment contract is
concluded by the child's parents or legal guardian, with the
express agreement of the child concerned, if possible, and the
approval of the Department of Labor and Employment: and
Provided, That the following requirements in all instances are
strictly complied with:   cd
(a)       The employer shall ensure the protection, health, safety,
morals and normal development of the child;
(b)       The employer shall institute measures to prevent the
child's exploitation or discrimination taking into account the
system and level of remuneration, and the duration and
arrangement of working time; and
(c)       The employer shall formulate and implement, subject to
the approval and supervision of competent authorities, a
continuing program for training and skills acquisition of the
requirements.
c. Prohibition of employing minors in certain
undertakings and in certain advertisements
Sec. 14. Prohibition on the Employment of Children in
Certain Advertisements. - No child shall be employed as a
model in any advertisement directly or indirectly promoting
alcoholic beverages, intoxicating drinks, tobacco and its
byproducts, gambling or any form of violence or pornography.
10. Employment of Househelpers:
Art. 141. Coverage. This Chapter shall apply to all persons
rendering services in households for compensation.
xxx xxx xxx
a. Definition
"Domestic or household service" shall mean service in the
employer’s home which is usually necessary or desirable for the
maintenance and enjoyment thereof and includes ministering to
the personal comfort and convenience of the members of the
employer’s household, including services of family drivers.
b. Benefits accorded househelpers
Art. 143. Minimum wage.
(a) Househelpers shall be paid the following
minimum wage rates:
(b) Eight hundred pesos (P800.00) a month for
househelpers in Manila, Quezon, Pasay, and Caloocan cities and
municipalities of Makati, San Juan, Mandaluyong, Muntinlupa,
Navotas, Malabon, Parañaque, Las Piñas, Pasig, Marikina,
Valenzuela, Taguig and Pateros in Metro Manila and in highly
urbanized cities;
(c) Six hundred fifty pesos (P650.00) a month
for those in other chartered cities and first-class municipalities;
and
(d) Five hundred fifty pesos (P550.00) a month
for those in other municipalities.
Provided, That the employers shall review the
employment contracts of their househelpers every three (3) years
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
with the end in view of improving the terms and conditions
thereof.
Provided, further, That those househelpers who are
receiving at least One thousand pesos (P1,000.00) shall be
covered by the Social Security System (SSS) and be entitled to
all the benefits provided thereunder. (As amended by Republic
Act No. 7655, August 19, 1993)
c. Termination
Art. 150. Service of termination notice. If the duration of the
household service is not determined either in stipulation or by the
nature of the service, the employer or the househelper may give
notice to put an end to the relationship five (5) days before the
intended termination of the service.
d. Reliefs for unjust termination
Art. 149. Indemnity for unjust termination of services. If
the period of household service is fixed, neither the employer nor
the househelper may terminate the contract before the expiration
of the term, except for a just cause. If the househelper is
unjustly dismissed, he or she shall be paid the compensation
already earned plus that for fifteen (15) days by way of
indemnity.
If the househelper leaves without justifiable reason, he or she
shall forfeit any unpaid salary due him or her not exceeding
fifteen (15) days.
11. Employment of Homeworkers:
ART. 153. Regulation of Industrial Homeworkers.—
The employment of industrial homeworkers and field personnel
shall be regulated by the Government through appropriate
regulations issued by the Secretary of Labor to ensure the
general welfare and protection of homeworkers and field
personnel the industries employing them.
a. Definition
DO No. 5
Regulations on Employment of Homeworkers
Section 2
a. “Industrial Homework” 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.
It differs from regular factory production principally in that, it is a
decentralized form of production where there is ordinarily very
little supervision or regulation of methods of work.
b. “Industrial Homeworker” means a worker who is engaged in
industrial homework.
b. Rights and benefits accorded homeworkers
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 87
SEC. 6. Payment for homework.—Immediately upon receipt
of the finished goods or articles, the employer shall pay the
homeworker or the contractor or subcontractor, as the case may
be, for the work performed less corresponding homeworkers’
share of SSS, MEDICARE and ECC premium contributions which
shall be remitted by the contractor/subcontractor or employer to
the SSS with the employers’ share. However, where payment is
made to a contractor or subcontractor, the homeworker shall
likewise be paid immediately after the goods or articles have
been collected from the workers.
c. Conditions for deduction from homewoker’s
earnings
SEC. 8. Deductions.—No employer, contractor, or
subcontractor shall make any deduction from the homeworker’s
earnings for the value of materials which have been lost,
destroyed, soiled or otherwise damaged unless the following
conditions are met:
(a) the homeworker concerned is clearly shown to be
responsible for the loss or damage;
(b) the homeworker is given reasonable opportunity to
show cause why deductions should not be made;
(c) the amount of such deduction is fair and reasonable
and shall not exceed the actual loss or damage; and
(d) the deduction is made at such rate that the amount
deducted does not exceed 20% of the homeworker’s earnings in a
week
12. Apprentices and Learners:
RA 7796
TESDA
SEC. 4. Definition of Terms.—As used in this Act:
xxx xxx xxx
(j) “Apprenticeship” training within employment
with compulsory related theoretical instructions involving a
contract between an apprentice and an employer an established
period assured by an apprenticeable occupation;
(k) “Apprentice” is a person undergoing for an
approved apprenticeable occupation during an established period
assured by an apprenticeship agreement;
(l) “Apprenticeship Agreement” is a contract
wherein a prospective employer binds himself to train the
apprentice who in turn accepts the terms of training for a
recognized apprenticeable occupation emphasizing the rights,
duties and responsibilities of each party;
(m) “Apprenticeable Occupation” is an occupation
officially endorsed by a tripartite body and approved for
apprenticeship by the Authority;
(n) “Learners” refer to persons hired as trainees in semi-
skilled and other industrial occupation which are non-
apprenticeable. Learnership programs must be approved by the
Authority [TESDA].
(p) “Dual system/Training” refers to a delivery
system of quality technical and vocational education which
requires training to be carried out alternately in two venues: In
school and in the production plant. In-school training provides
the trainee the theoretical foundation, basic training, guidance
and human formation, while in-plant training develops his skills
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

and proficiency in actual work conditions as it continue to

inculcate personal discipline and work values;

The Labor Code defines an apprentice as a worker

who is covered by a written apprenticeship
agreement with an employer. One of the
objectives of Title II (Training and Employment of
Special Workers) of the Labor Code is to establish BUT,
apprenticeship standards for the protection of
apprentices. [Century Canning Corporation v. A prior approval obtained from DOLE (now
Court of Appeals, G.R. No. 152894, August 17, transferred to TESDA) is a preliminary step
2007]. towards its final approval

Thus, pending final approval of the

apprenticeship program upon a person’s
HOWEVER, assumption of work does not instantaneously give
rise to employer-employee relationship. [Century
In order to be an apprentice, the apprenticeship Canning Corporation v. Court of Appeals,
program the worker agreed to undergo should first supra]
be approved by the DOLE (now transferred to
TESDA) before he can be hired as an apprentice.  Republic Act No. 7796,
Otherwise, the person hired will be considered a which created TESDA, has
regular employee. [Century Canning transferred the authority over
Corporation v. Court ofA Appeals,
a. Apprentice supra] an
person undergoing
apprenticeship of the DOLE to the
approved apprenticeable TESDA. RA 7796 emphasizes
occupation within a TESDA’s approval of the
particular period provided apprenticeship program as a pre-
for in the apprenticeship requisite for the hiring of
agreement. [Sec. 4(k), apprentices. [Century Canning
ibid.] Corporation v. Court of
Appeals, supra]
Apprenticeable Occupation an occupation officially
endorsed by a tripartite
body and approved by the The requisite TESDA approval of the
Authority. [Sec. 4(m), apprenticeship program prior to the hiring of
ibid.] apprentices was further emphasized by the DOLE
with the issuance of Department Order No. 68-04
Apprenticeship Agreement a contract wherein a on 18 August 2004 xxx, which provides the
prospective employer binds guidelines in the implementation of the
himself to train the terms Apprenticeship and Employment Program of the
of training for a recognized
government, [and which] specifically states that no
apprenticeable occupation
emphasizing the rights,
enterprise shall be allowed to hire apprentices
duties and responsibilities unless its apprenticeship program is registered and
of each party. [Sec. 4(l), approved by TESDA. [Century Canning
ibid.] Corporation v. Court of Appeals, supra]

b. Trainee (w/ or w/o a participant in a There is no valid apprenticeship if:

pay) vocational, administrative, (1) the agreement submitted
or technical training to TESDA was made long
program – established for
after the workers started
the purpose of acquiring
and developing job-related undergoing
skills. [Sec. 4(i), ibid.] apprenticeship;
c. Learner a person hired as a trainee (2) the work performed by the
in semi-skilled and other apprentice was different
industrial occupation which from those allegedly
are non-apprenticeable. approved by TESDA;
[Sec. 4(n), ibid.] BUT,
learnership program must
be approved by the
Authority. [ibid.]
Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 88

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

(3) the workers undergoing a. Definition of "handicapped workers"

apprenticeship are already skilled
workers; or
(4) the workers were required
to continue undergoing
apprenticeship beyond six
months. [Atlanta
Industries, Inc., et al.
vs. Sebolino, et al., G.R.
No. 187320, January
26, 2011, Brion, J.
 While the employer may
argue that there is a need to train
its employees through
apprenticeship, this phase should
not be more than six months, and
upon expiration of the agreement,
the retention of the employees for
all intents and purposes, makes
them regular employees.
second apprenticeship for
second skill not mentioned in the
apprenticeship agreement is a
violation of the Labor Code.
[Atlanta Industries, supra]
Distinctions between Learnership and
Apprenticeship
Labor Code
A handicapped worker is a disadvantaged for a
given individual, resulting from impairment or a
disability, that limits or prevents the function or
activity, that is considered normal given the age
and sex of the handicapped individual.
b. Rights of disabled workers
Sec.  5. Equal Opportunity for Employment. — No disable
person shall be denied access to opportunities for suitable
employment. A qualified disabled employee shall be subject to
the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or
allowances as a qualified able bodied person.
Five percent (5%) of all casual emergency and contractual
positions in the Departments of Social Welfare and Development;
Health; Education, Culture and Sports; and other government
agencies, offices or corporations engaged in social development
shall be reserved for disabled persons.
Sec.  6. Sheltered Employment — If suitable employment for
disabled persons cannot be found through open employment as
A provided in the immediately preceding Section, the State shall
a endeavor to provide it by means of sheltered employment. In the
placement of disabled persons in sheltered employment, it shall
accord due regard to the individual qualities, vocational goals and
inclinations to ensure a good working atmosphere and efficient
production. 
Sec.  7. Apprenticeship. — Subject to the provisions of the
Labor Code as amended, disabled persons shall be eligible as
apprentices or learners: Provided, That their handicap is not as
much as to effectively impede the performance of job operations
in the particular occupation for which they are hired; Provided,
further, That after the lapse of the period of apprenticeship, if
found satisfactory in the job performance, they shall be eligible
for employment.

ART.  58. Definition of Terms. —As used in this Title: c. Prohibitions on discrimination against
(a)  An “apprentice” is a worker who is covered disable persons
by a written apprenticeship agreement with an individual
employer or any of the entities recognized under this Chapter
[Ch.1, Title II]
APPRENTICESHIP LEARNERSHIP
ART. 73. Learners defined.—Learners are persons hired as Period of not to exceed six Not to exceed
trainees in semi-skilled and other industrial occupations which are training months [Art. 61, LC] three (3)
non-apprenticeable and which may be learned through practical months [Art.
training on the job in a relatively short period of time which shall 75, LC]
not exceed three (3) months.
Type of Highly technical work Semi-skilled
Work in an Industry [Art. and other
ART. 74. When learners may be hired.—Learners may be
60, LC] Industrial work
employed when no experienced worker, are available, the
employment of learners is necessary to prevent curtailment of [Art. 73, LC]
employment opportunities, and the employment does not create Qualificatio At least 14 years of When no
unfair competition in terms of labor costs or impair or lower ns age with vocational experienced
working standards. aptitude and capacity, worker is
and ability to available in the
comprehend and industry [Art.
follow oral and written 74, LC]
instructions [Art. 59,
13. Handicapped Workers (RA 7277
LC]
“IMPLEMENTING RULES AND REGULATIONS Salary Not less than 75% of Not less than
OF THE MAGNA CARTA FOR DISABLED applicable minimum 75% of
PERSONS”): wage, [Art. 61, LC] applicable
EXCEPT if training is minimum wage,
required by the school [Art. 75, LC]
or training program, or EXCEPT for
requisite for learners in
Bar Operations 2012: Ace the Bar, Race the Car graduation or board piecework,
examination. [Art. 72, where salary
For Private and Personal Use Only 89 LC] shall be paid in
according to the
minimum wage
imposed. [Art.
76, LC]
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

Sec.  32. Discrimination on Employment. — No entity,

whether public or private, shall discriminate against a qualified
disabled person by reason of disability in regard to job application
procedures, the hiring, promotion, or discharge of employees,
employee compensation, job training, and other terms,
conditions, and privileges of employment. The following
constitute acts of discrimination: 
(a) Limiting, segregating or classifying a disabled job
applicant in such a manner that adversely affects his work
opportunities;
(b) Using qualification standards, employment tests or
other selection criteria that screen out or tend to screen out a
disabled person unless such standards, tests or other selection IV. TERMINATION OF EMPLOYMENT
criteria are shown to be job-related for the position in question
and are consistent with business necessity;
(c) Utilizing standards, criteria, or methods of
The following are the topics covered:
administration that: 5. Employer- Employee Relationship
(1) have the effect of discrimination on the
basis of disability; or
6. Termination of Employment
(2) perpetuate the discrimination of others 7. Retirement Pay Law
who are subject to common administrative control.
(d) Providing less compensation, such as salary, wage
or other forms of remuneration and fringe benefits, to a qualified IV. Termination of Employment
disabled employee, by reason of his disability, than the amount to
which a non-disabled person performing the same work is 1. Employer- Employee Relationship
entitled;
(e) Favoring a non-disabled employee over a qualified
disabled employee with respect to promotion, training Employer
opportunities, study and scholarship grants, solely on account of
the latter's disability;  Art. 212(e), LC
(f) Re-assigning or transferring a disabled employee to
a job or position he cannot perform by reason of his disability; Includes any persons acting in the interest of an employer,
(g) Dismissing or terminating the services of a disabled directly or indirectly.
employee by reason of his disability unless the employer can Excludes “labor organization” or any of its officers or agents
prove that he impairs the satisfactory performance of the work
Except,
involved to the prejudice of the business entity: Provided,
however, That the employer first sought to provide reasonable when acting as an employer.
accommodations for disabled persons; 
(h) Failing to select or administer in the most effective Art. 97(b)
manner employment tests which accurately reflect the skills,
aptitude or other factor of the disabled applicant or employee that
Includes any person acting directly or indirectly in the interest of
such tests purports to measure, rather than the impaired
an employer in relation to an employee. [cf. Art. 106, LC]
sensory, manual or speaking skills of such applicant or employee,
if any; and Includes the government and all its branches, subdivision and
instrumentalities, all GOCCs, as well as non-profit private
(i) Excluding disabled persons from membership in
institutions, or organizations.
labor unions or similar organizations. 

Since a corporation is an artificial person, it is the officer

d. Incentives for employers
Sec.  8. Incentives for Employers. — (a) To encourage the
active participation of the private sector in promoting the welfare
of disabled persons and to ensure gainful employment for
qualified disabled persons, adequate incentives shall be provided
to private entities which employ disabled persons. 
(manager) who is presumed to be 'the employer as he acts in the
interest of the employer. In dismissal cases, the officer is
solidarily liable with the corporation. [NYK International
Knitwear Corporation vs. NLRC, 397 SCRA 607]
Employee

Where a disabled is qualified to do the work of an
able-bodied, Art. 280 applies. In such case,
security of tenure is NOT subject to Art. 80(c) of
the Labor Code where “(c) the duration of
employment period” should be agreed upon by the
parties, NOR to Art. 80(b) thereof where her salary
rate “shall not be less than 75% of the applicable
legal minimum wage”. She will be treated as if she
is able-bodied guaranteed by Arts. 280, 281, 282,
283, 286, 277(b), 279 of the Code. [Maritess
Bernardo vs. NRLC, July 12, 1999, and cited
laws]
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 90
Art. 212(f)
Includes any person in the employ of an employer.
Includes any individual whose work has ceased as a result or in
connection with any current labor dispute or because of any ULP
if he has not obtained any other substantially equivalent and
regular employment.
Art. 97(c)
Includes any individual employed by an employer.
EER is basically a question of fact. [127 SCRA 454
(1984); Traders Royal Bank vs. NLRC, 321
SCRA 467 (1999); Mandaue Galleon Trade,
Inc. vs. Andales, G.R. No. 159668, March 7,
2008; TAPE, Inc. vs. Servaña, G.R. No.
167648, January 28, 2008]
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

 An insurance agent who is paid on purely

commission basis is NOT an employee.
[Grepalife vs. Judico, December 21, 1989]

BUT,

 An insurance agent who is paid with salary

EXCEPT in, plus commission is an employee. [Grepalife vs.
Judico, December 21, 1989]
(1) Article 106 -labor-only contracting
[Filsystems vs. NLRC, 418 SCRA 404 (2003)]; BUT,
(2) Article 138 -Massage/GRO;
(3) Article 155 -Homeworkers  An insurance agent who does not have any
license to work as an insurance agent is NOT an
employee. [Grepalife vs. NLRC, 150 SCRA 601,
a. Four-fold Test 608 (1987)]

The elements to determine the existence of an STILL,

employment relationship are:
(1) the selection and engagement of  absence of license should not be
the employee; considered a legal obstacle as what applies here is
(2) the payment of wages; the Labor Code, and not the Insurance Code.
(3) the power of dismissal; and [Grepalife vs. NLRC, 187 SCRA 694 (1990)]
(4) the power to control the
employee's conduct. Dismissal

 The allegation that a person was legally

Selection/Hiring
Hiring has not presented so much question.
Payment of Wages
 A person paid by result is NOT an
employee. [Continental Marble Corporation vs.
NLRC, 161 SCRA 151, 158]
 A bus driver paid on commission basis is
an employee. Commission is part of wage as
defined in Art. 97(f), LC. [R. Transport vs.
Ejandra, May 20, 2004]
BUT,
 A salesman who is paid 3% commission of
his gross sales is not an employee, even if
commission is part of wage under Art. 97(f).
Commission as a form of remuneration, may be
availed of by both an employee or non- employee.
[Abante vs. La Madrid Bearing Parts Corp., May 28,
2004]
 Likewise, one who receives 4% commission
from proceeds solicited out of their principal-
agency relationship is NOT an employee. [Sevilla
vs. Court of Appeals, 160 SCRA 171]
dismissed for abandonment admits of a fact that
said person was an employee. [R. Transport vs.
Ejandra, supra] Likewise, an allegation that the
employee's position was found redundant to justify
his dismissal, notwithstanding the employer
allegation of a valid job contracting. [Fulache,
supra]
 On the other hand, direct application for
employment to the principal upon the termination
of the service contract between the alleged
employer and the principal, clearly shows that
employment relationship exists between the
employees and the job contractor. [S.I.P. Food
House, et al. vs. Batolina, et al., G.R. No.
192473, October 11, 2010, Brion, J.]
Control
 Among the 4 principal tests used in the
determination of an EER, the so-called control test
is commonly regarded as the most crucial and
determinative indicator. Such element is present
where the person for whom the services are
performed reserves the right to control not only
the end achieved, but also the manner and means

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 91

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
to be used in reaching that end. [Abante vs. La
Madrid, supra]
BUT,
 Not every form of control that the hiring
party reserves to himself over the conduct of the
party hire in relation to the services rendered
maybe accorded the effect of establishing an EER.
 Company rules designed to promote the
result create no EER
 Only those rules that are intended to
address both the result and the means used to
achieve it establish EER. [Insular Life
Assurance vs. NLRC, 179 SCRA 459, 464-65
(1989), citing Mafinco Trading Corp. vs. Ople, 70
SCRA 139; Investment Planning Corp. vs. SSS, 21
SCRA 924; Sara vs. NLRC, 166 SCRA 625, 630;
Tongko vs. Manulife, 570 SCRA 503, 518,
November 7, 2008, citing Insular Life Assurance
Co., Ltd vs. NLRC, 431 SCRA 583, 604 (2004);
Manila Electric Company vs. Benamira, G.R.
No. 145271, July 14, 2005; Arsenio T.
Mendiola vs. Court of Appeals, G.R. No.
159333, July 31, 2006]
 There are built-in elements of control
specific to an insurance agency, which do not
amount to the elements of control that
characterize an employment relationship governed
by the Labor Code. [Tongko vs. The
Manufacturers Life Insurance Co. (Phils.),
Inc., et al., G.R. No. 167622, January 25,
2011, Brion, J.] The concept of control in an
insurance agency must be understood outside the
context of an employer-employee relationship,
since the kind of control wielded is only as to the
desired results and according to Insurance Code
norms. [Tongko vs. The Manufacturers Life
Insurance Co. (Phils.), Inc., G.R. No. 167622,
June 29, 2010, Brion, J.]
NOTE:
 The Grepalife case wherein the agent
brothers appointed as zone supervisor and district
manager were considered as “employees” of
Grepalife, because of the presence of the element
of control in their contract of engagement, a fact
which is not attendant in the Tongko case. The
Insular Life case is neither in point, since in the
Tongko case no other contract was presented apart
from the “Agency Agreement” executed at the
beginning of engagement, and was never
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 92
superseded by any other agreement even when
the complainant became an area manager of
Manulife. [Tongko, June 2010, supra]
COMMENT:
I likewise disagree with the ponencia
in Tongko.
Work performed and required of the
alleged insurance agent as concurrent
branch/unit manager, which is beyond the
provisions of the “Agency Agreement” he
previously executed with the insurance
company give rise to work that establishes
employer-employee relationship.
In Justice Velasco's dissenting opinion,
he opined thus: “the mere fact that no
management contract (as in Insular Life case)
was reduced into writing does not make the
duties and undertaking performed by a branch
manager still within the sphere of the 'Agency
Agreement'.”
Secondary Tests
 SSS registration as employee. [Flores vs.
Funeraria Nuestro, 160 SCRA 568; Bautista vs.
Inciong, 158 SCRA 665; Corporal vs. NLRC, 341
SCRA 658 (2000)].
“A company physician who billed professional fees
every month, who never complained “since 1981”
that he was not covered by SSS, who was
subjected to 10% withholding tax not as employee
but as “professional fee”, whose relationship is
terminable at will by either parties, and who was
not subjected to control of company – is NOT an
employee.” [Phil. Global Communications, Inc. vs.
Ricardo de Vera, G.R. No. 157214, June 7, 2005]
 Withholding Tax (W-2)
 Payment of ECC (State Insurance Fund) under
Arts. 168, Labor Code, which is “compulsory upon
all employers and their employees not over sixty
(60) years of age” [also, Art. 183(a), L.C.; in
fact 183 (c) of L.C. Requires the employer to pay
the employee contribution].
 Pag-Ibig Fund
 Employment Contract
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
 Under the Omnibus Rules Implementing the
Labor Code, one of the requirements for the
issuance of an employment permit is an
employment contract. (Section 5, Rule XIV)
[Pacific Consultants International Asia, Inc. vs.
Schonfeld, G.R. No. 166920, February 19, 2007]
Not Proof of EER
 ID cards, even with “employee's name”, if used
on to obtain entrance. [Lopez vs. Bodega City, 532
SCRA 56 (2007)]
 A solitary petty cash voucher.
 A public corporation's ownership of stocks in a
private corporation does not create employer-
employee relationship between the public
corporation and the employees of the private
corporation. [Hugo, et al. vs. Light Rail Transit
Authority, G.R. No. 181866, March 18, 2010,
Carpio Morales, J.]
Cases
If the parties themselves practically agreed on
every terms and conditions of the worker’s services
in the company, it negates the element of control
in their relationship, and thereby negating the
existence of EER. [Philippine Global
Communications, Inc. vs. de Vera, G.R. No.
157214, June 7, 2005, Garcia, J.]
It is a standard stipulation in security service
agreements that the client may request the
replacement of the guards to it. Service-oriented
enterprises [Manila Electric Company vs.
Benamira, et al., G.R. No. 145271, July 14,
2005, Austria-Martinez, J.]
Article 157 of the Labor Code clearly and
unequivocally allows employers in non-hazardous
establishments to engage ‘on retained basis’ the
service of a dentist or physician. Nowhere does the
law provide that the physician or dentist so
engaged thereby becomes a regular employee.
The very phrase that they may be engaged ‘on
retained basis’, revolts against the idea that this
engagement gives rise to an employer-employee
relationship. [Philippine Global
Communications, Inc. vs. de Vera, G.R. No.
157214, June 7, 2005, Garcia, J.]
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 93
An employee occupies no office and generally is
employed not by the action of the directors or
stockholders but by the managing officer of the
corporation who also determines the compensation
to be paid to such employee. [Easycall
Communications Phils., Inc. vs. King, G.R. No.
145901, December 15, 2005, Corona, J.]
Where a person who works for another performs
his job more or less at his own pleasure, in the
manner he sees fit, not subject to definite hours or
conditions of work, and is compensated according
to the result of his efforts and not the amount
thereof, no employer-employee relationship exists.
In our jurisdiction, the benchmark of economic
reality in analyzing possible employment
relationships for purposes of applying the Labor
Code ought to be the economic dependence of the
worker on his employer. [Wilhelmina S. Orozco
vs. The Honorable Court of Appeals, Philippine
Daily Inquirer, and Leticia Jimenez Magsanoc,
G.R. No. 155207, August 13, 2008]
Under the boundary-hulog scheme incorporated in
the Kasunduan, a dual juridical relationship was
created between petitioner and respondent: that
of employer-employee and vendor-vendee. The
Kasunduan did not extinguish the employer-
employee relationship of the parties extant before
the execution of said deed. [Villarama, Jr. vs.
Court of Appeals, G.R. No. 165881, April 19,
2006, Callejo, Sr., J.]
An owner-member of a cooperative can be its own
employee. [Republic of the Philippines,
represented by Social Security System and Social
Security Commission vs. Asiapro Cooperative,
G.R. No. 172107, November 23, 2007]
Concept of “Whole Economic Activity”
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
The determination of the relationship between
employer and employee depends upon the
circumstances of the whole economic activity, such
as: (1) the extent to which the services performed
are an integral part of the 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. (Angelina Francisco v.
NLRC, G..R No. 170087, August 31, 2006)
The presumption is that when the work is done is
an integral part of the regular business of the
employer and when the worker, relative to the
employer, does not furnish an independent
business or professional service, such work is a
regular employment of such employee and not an
independent contractor. The Court will peruse
beyond any such agreement to examine the facts
that typify the parties’ actual relationship. (ABS-
CBN Broadcasting Corporation v. Nazareno,
G.R. No. 164156, September 26, 2006)
Doctrine of Apparent Authority
In general, a hospital is not liable for the
negligence of an independent contractor-physician.
There is, however, an exception to this principle.
The hospital may be liable if the physician is the
“ostensible” agent of the hospital. This exception
is also known as the “doctrine of apparent
authority”. [Rogelio P. Nograles v. Capitol
Medical Center, G.R. No. 142625, December
19, 2006; Professional Services, Inc. vs. CA,
G.R. Nos. 126297, 126467, and 127590,
February 2, 2010, Corona, J.]
The doctrine of apparent authority is a species of
the doctrine of estoppel. Estoppel rests on the
rule: “Whenever a party has, by his own
declaration, act, or omission, intentionally and
deliberately led another to believe a particular
thing true, and to act upon such belief, he cannot,
in any litigation arising out of such declaration, act
or omission, be permitted to falsify it.” [Rogelio
P. Nograles v. Capitol Medical Center, supra]
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 94
b. Probationary Employment
Art. 281. Probationary employment. Probationary
employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the
time of his engagement. An employee who is allowed to work
after a probationary period shall be considered a regular
employee.
Refers to one who, for a given
period of time, is being observed
and evaluated to determine
PROBATIONARY whether he is qualified for
EMPLOYEE permanent employment.
[Woodridge School vs. Pe
Benito, 570 SCRA 164, October
29, 2008]
A phase in employment where the
employer is afforded the
opportunity to observe the fitness
of a probationary employee while
at work, and to ascertain whether
PROBATIONARY he will become an efficient and
EMPLOYMENT productive employee. [Magis
Young Achievers' Learning
Center vs. Manalo, G.R. No.
178835, February 13, 2009;
Philippine Daily Inquirer, Inc.
vs. Magtibay, Jr., G.R. No.
164532, July 27, 2007]
Definition
Rules
Period of Probation
While there is no statutory cap on the minimum
term of probation, the law sets a maximum “trial
period” during which the employer may test the
fitness and efficiency of the employee. [Magis
Young Achievers' vs. Manalo, supra]
The computation of probationary period is made on
a calendar date basis to be reckoned from the
date of appointment, NOT on a 30-days per
month basis as provided for in Art. 13, Civil Code.
[Alcira vs. NLRC, 431 SCRA 508 (June 9,
2004) citing CALS Poultry Supply vs. Roco, 385
SCRA 479, 488 (2002)]
BUT,
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
An employer, under exceptional circumstances, can
extend a probationary period of employment, such
as when the same is established by company
policy, or when it is required by the nature of the
work, provided such extension was agreed upon by
the parties, and exercised before the expiration of
the original period of probation. [San Miguel
Corporation vs. Caroline C. Del Rosario, 477
SCRA 604 (December 13, 2005), citing Buiser
vs. Leogardo, 216 Phil. 144, 150 (1984)] In fact,
length of time is immaterial in determining the
correlative rights of both parties in dealing with
each other during probationary period.
[Philippine Daily Inquirer vs. Magtibay, Jr.,
supra]
It is important that the contract of probationary
employment specify the period or term of its
effectivity. The failure to stipulate its precise
duration could lead to the inference that the
contract is binding for the full three-year
probationary period. [Magis Young Achievers'
vs. Manalo, supra]
Nature of Probation
The provision on employment on probationary
status under the Labor Code is a primary example
of the fine balancing of interests between labor and
management. Employment on probationary
status affords management the chance to fully
scrutinize the true worth of hired personnel before
the full force of the security of tenure guarantee
comes into play. Management is given the
opportunity to reject during the probationary
period hirees who fail to meet its own adopted but
reasonable standards. [Mercado vs. AMA
Computer College, supra]
The employee knows from the very start that he
will be under close observation and his
performance of his assigned duties and functions
would be under continuous scrutiny by his
superiors. [Philippine Daily Inquirer vs.
Magtibay, Jr., supra] Standards under which a
probationary employee will qualify as a regular
employee shall be made known to him “at the time
of engagement”. Otherwise, he shall be deemed a
regular employee. [Clarion Printing House, Inc.
vs. NLRC, 461 SCRA 272, 298-95 (2005)]
Evaluation is made before expiration of the
probationary period. [Alcira vs. NLRC, supra]
In the absence of any evaluation, one cannot
conclude that the employee failed to meet the
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 95
standards for probationary employment. [Dusit
Hotel Nikko vs. Gatbonton, 489 SCRA 671,
677 (2006)] And when he is allowed to work after
a probationary period, he shall be considered
regular. [Art. 281, LC cited in Philippine
National Bank vs. Cabansag, 460 SCRA 514
(2005)]
A probationary employee enjoys security of tenure
while on probation. He can be dismissed only for
a just cause OR when he fails to qualify for regular
employment. [Athenna International
Manpower Services, Inc. vs. Villanos, 456
SCRA 355 (2004)]
BUT,
A probationary employee does not enjoy a
permanent status. Probationary employees enjoy
temporary employment status. This means that
they are terminable anytime. The employer could
well decide if he no longer needed the
probationary's service or his performance fell short
of expectations.[Espina vs. CA, 519 SCRA 327,
350 (2007); Jennifer Fabello Pasamba vs.
NLRC, G.R. No. 168421, June 8, 2007]
HOWEVER,
In the case of PAL vs. Pascua, regularization is
NOT a management prerogative. The employer
cannot just put its employees in part-time
regularization instead of full-time regularization,
especially if only full-time regular employees are
covered by CBA and entitled to its benefits. [PAL
vs. Pascua, G.R. No. 143258, August 15,
2003, Quisumbing, J.]
A regular employee cannot be subjected to a new
probationary employment by a sister company of
the employer. [A' Prime Security Services, Inc.
vs. NLRC, G.R. No. 107320, January 19, 2000]
c. Kinds of Employment
Art. 280. Regular and casual employment. The provisions of
written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at
the time of the engagement of the employee or where the work
or service to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph: Provided, That any employee who
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
NOTES:
3 Categories of Employees under Art. 280
(1) regular employees or those whose work is
necessary or desirable to the usual business of the
employer;
(2)project employees or those whose employment
has been fixed for a specific project or
undertaking, the completion or termination of
which has been determined at the time of the
engagement of the employee,or where the work or
services to be performed is seasonal in nature and
the employment is for the duration of the season;
and
(3)casual employees or those who are neither
regular nor project employees. [Rowell Industrial
Corporation vs. Court of Appeals, 517 SCRA 691,
March 7, 2007, citing Pangilinan vs. General Milling
Corporation, G.R. No. 149329, 12 July 2004, 434
SCRA 159, 169; Pedy Caseres, et al. vs. Universal
Robina Sugar Milling Corp., et al., G.R. No.
159343, September 28, 2007; Glory Philippines,
Inc. vs. Buenaventura B. Vergara, G.R. No.
176627, August 24, 2007]
(1) Regular employment
Regular Employment
Regular employees may be classified into: (1)
regular employees by nature of work; and (2)
regular employees by years of service. [Rowell
Industrial Corporation vs. CA, supra]
By years of service
A casual employee who has rendered at least one
(1) year of service, whether continuous or broken
is a regular employee. The status of regular
employment under this category attaches to the
casual worker on the day immediately after the
end of his first year of service as such casual
employee. [Kay Products, Inc. vs. Court of
Appeals, 464 SCRA 544 (July 28, 2005)] He
shall be considered a regular employee with
respect to the activity in which he is employed and
his employment shall continue while such activity
exists. [Kasapian ng Malayang Manggagawa
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 96
sa Coca-Cola (Kasamma-CCO)-CFW Local 245
vs. Court of Appeals, 487 SCRA 487, 508
(2006)]
Article 281 of the Labor Code also considers a
regular employee as one who is allowed to work
after a probationary period. [Pier 8 Arrastre &
Stevedoring Services, Inc., et al. versus Jeff B.
Boclot, G.R. No. 173849, September 28, 2007]
If the employee has been performing the job for at
least a year, even if the performance is not
continuous and merely intermittent, the law deems
repeated and continuing need for its performance
as sufficient evidence of the necessity if not
indispensability of that activity to the business.
[Thelma Dumpit-Murillo versus Court of
Appeals, et al., G.R. No. 164652, June 8,
2007] And the signing of a “contract of temporary
employment” at the time when the employee
already attained or is about to attain regular
employment status under the CBA is an indication
of an employer's illegal intent. [Philex Mining
Corp. vs. NLRC, 312 SCRA 119 (1999)]
Example:
(a) janitorial and messengerial services in
an aquaculture business, only after
rendering 1 year of service. [SMC vs.
Aballa, 461 SCRA 392 (June 28,
2005)]
Length of service provides a fair yardstick for
determining when an employee initially hired on a
temporary basis becomes a permanent one,
entitled to security and benefits of regularization.
[William Uy Construction Corp. vs. Trinidad,
G.R. No. 183250, March 10, 2010, Abad, J.]
By nature of work
Employee performs work that is usually necessary
and desirable in the usual business or trade of the
employer. [Caparoso vs. CA, 516 SCRA 30
(February 15, 2007)] The connection can be
determined by considering the nature of the work
performed and its relation to the scheme of the
particular business or trade in its entirety. [Pier 8
Arrastre & Stevedoring Services, Inc., et al.
versus Jeff B. Boclot, G.R. No. 173849,
September 28, 2007]
A continuing need for respondents' services is
sufficient evidence of the necessity and
indispensability of their services to petitioner's
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
business. [Glory Philippines, Inc. vs. Vergara,
G.R. No. 176627, August 24, 2007] Necessity
or desirability is tied up to employer's “usual
business”. [Magsalin vs. NOWM, G.R. No.
148492, May 9, 2003]
What determines whether a certain employment is
regular or otherwise is not the will or word of the
employer, but the business, taking into account all
the circumstances, and in some cases the length of
time of its performance and its continued
existence. [ABS-CBN Broadcasting
Corporation v. Nazareno, G.R. No. 164156,
September 26, 2006]
Examples
(a) “production assistants” of ABS-CBN [ABS-
CBN Broadcasting Corp. vs. Nazareno, 503
SCRA 204, 229 (2006)]
(b) worker in the shrimp processing of the
aquaculture business of SMC [SMC vs. Aballa,
supra]
(c) piece-rate workers when:
(1) their work as tailors was necessary or
desirable in the usual business of private
respondent, which is engaged in the tailoring
business;
(2) they worked throughout the year, their
employment not being dependent on a specific
project or season; and
(3) they have worked for more than one year.
[Avelino Lambo, et al. vs. NLRC, G.R. No.
111042, October 26, 1999]
Issuance of a regular appointment is not
necessary. [Efren Paguio vs. NRLC, G.R. No.
147816, May 9, 2003]
Article 280 should not be interpreted as a way as
to deprive employers of the right and prerogative
to choose their own workers if they have sufficient
basis to refuse an employee a regular status.
Management has rights which should also be
protected. [Rowell Industrial Corporation vs.
Court of Appeals, 517 SCRA 691 (March 7,
2007)]
Where a disabled is qualified to do the work of an
able-bodied, Art. 280 applies. In such case,
security of tenure is NOT subject to Art. 80(c) of
the Labor Code where “(c) the duration of
employment period” should be agreed upon by the
parties, NOR to Art. 80(b) thereof where her
salary rate “shall not be less than 75% of the
applicable legal minimum wage”. She will be
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 97
treated as if she is able-bodied guaranteed by Arts.
280, 281, 282, 283, 286, 277(b), 279 of the Code.
[Maritess Bernardo vs. NRLC, July 12, 1999,
and cited laws]
Reasonable connection rule
The primary standard, therefore, of determining a
regular employment is the reasonable connection
between the particular activity performed by the
employee in relation to the usual business or trade
of the employer. The test is whether the former is
usually necessary or desirable in the usual
business or trade of the employer. The connection
can be determined by considering the nature of the
work performed and its relation to the scheme of
the particular business or trade in its entirety.
Also, if the employee has been performing the job
for at least one year, even if the performance is
not continuous or merely intermittent, the law
deems the repeated and continuing need for its
performance as sufficient evidence of the necessity
if not indispensability of that activity to the
business. Hence, the employment is also
considered regular, but only with respect to such
activity and while such activity exists. [De Leon
vs. NLRC, G.R. No. 70705, August 21, 1989
Employee performs work that is usually necessary
and desirable in the usual business or trade of the
employer. [Caparoso vs. CA, 516 SCRA 30
(February 15, 2007)] The connection can be
determined by considering the nature of the work
performed and its relation to the scheme of the
particular business or trade in its entirety. [Pier 8
Arrastre & Stevedoring Services, Inc., et al.
versus Jeff B. Boclot, G.R. No. 173849,
September 28, 2007]
A continuing need for respondents' services is
sufficient evidence of the necessity and
indispensability of their services to petitioner's
business. [Glory Philippines, Inc. vs. Vergara,
G.R. No. 176627, August 24, 2007] Necessity
or desirability is tied up to employer's “usual
business”. [Magsalin vs. NOWM, G.R. No.
148492, May 9, 2003]
What determines whether a certain employment is
regular or otherwise is not the will or word of the
employer, but the business, taking into account all
the circumstances, and in some cases the
length of time of its performance and its continued
existence. [ABS-CBN Broadcasting
Corporation v. Nazareno, G.R. No. 164156,
September 26, 2006]
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
(2) Project employment
PROJECT
- refers to a job/undertaking within the regular or
usual business of the employer, but which is
distinct and separate and identifiable from the
undertakings of the company. Such
job/undertaking begins and ends at determined
or determinable times. [Integrated
Contractors & Plumbing Works, Inc. vs. NLRC,
466 SCRA 265 (August 9, 2005); Dacuital, et
al. vs. LM. Camus Engineering Corporation, et
al., G.R. No. 176748, September 1, 2010,
Nachura, J.]
Indicators of project employment
Principal Test for Project Employment
(a)Whether one is assigned to carry out a specific
project or undertaking, the duration and scope of
which are specified at the time of engagement for
a project.
(b)Duration of work to be performed must be
defined in the employment contract, and
(c)Terms and conditions of employment must be
made clear to the employee at the time of hiring.
[Abesco Construction and Development Corp. vs.
Alberto Ramirez, April 10, 2006; Dacuital, et al.,
supra; Leyte Geothermal Power Progressive
Employees Union-ALU-TUCP vs. PNOC-EDC, G.R.
No. 170351, March 30, 2011, Nachura, J.]
Points to consider in Project Employment
(1) Employees drawn from a “work pool” are not
necessarily employees “by reason of that fact
alone” for “members of a work pool can either be
project or regular employees. [Abesco, supra,
citing Raycor Aircontrol Systems, Inc. vs. NLRC,
330 Phil. 306 (1996); ALU-TUCP vs. NLRC, 234
SCRA 678 (1994)]
(2) Manual services or those for special skills like
those of carpenters or masons, are, as a rule,
unschooled. But this fact alone is not a valid
reason for bestowing special treatment on them or
for invalidating a contract of employment. [Villa
vs. NLRC, 284 SCRA 105, (1998)]
(3) Employees who are hired for carrying out a
separate job, distinct from the other undertakings
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 98
of the company, the scope and duration of which
has been determined and made known to the
employees at the time of the employment, are
properly treated as project employees. [Hanjin
Heavy Industries and Construction Co., Ltd.,
Hak Kon Kim and/or Jhunie Adahar versus
Felicito Ibañez, et al., G.R. No. 170181, June
26, 2008]
(4) The length of service of a project employee is
not the controlling test of employment tenure, but
whether or not the employment has been fixed for
a specific project or undertaking the completion or
termination of which has been determined at the
time of the engagement of the employee. [PNOC-
Energy Development Corporation versus
NLRC, et al., G.R. No. 169353, April 13, 2007]
(5) A "day" as used herein, is understood to be
that which must necessarily come, although it may
not be known exactly when. This means that
where the final completion of a project or phase
thereof is in fact determinable and the expected
completion is made known to the employee.
[Hanjin Heavy Industries and Construction
Co. Ltd., Hak Kon Kim and/or Jhunie Adajar
vs. Felicito Ibañez, et al., G.R. No. 170181,
June 26, 2008]
(6) The absence of a written contract does not
by itself grant regular status to respondents, but is
evidence that respondents were informed of the
duration and scope of their work and their status
as project employees.[Hanjin Heavy Industries
and Construction Co., Ltd., vs. Felicito Ibañez,
et al., supra]
(7) When a project employee is dismissed, such
dismissal must still comply with the substantive
and procedural requirements of due process.
Employers who hire project employees are
mandated to state and prove the actual basis for
the employee's dismissal once its veracity is
challenged. [Gregorio S. Saberola vs. Ronald
Suarez and Raymundo Lirasan, Jr., G.R. No.
151227, July 14, 2008]
(3) Seasonal employment
In the case of Mercado, Sr. v. NLRC, the farm
workers, after performing their designated task in
the farm or at the end of the season for which they
were hired, their employment relationship with the
company is considered severed, and are free to
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
look for work from other farms, are considered as
seasonal workers under Art. 280 of the Labor
Code. [HIND SUGAR CO., INC. vs. HON. COURT
OF INDUSTRIAL RELATIONS, ET AL., G.R. No.
L-13364 July 26, 1960, 108 Phil 1026]
And if the employer give preference to its former
employees and laborers in hiring workers every
season, as in workers in a “work pool”, they should
be considered as “regular seasonal workers”
insofar as the effect of temporary cessation of
work is concerned. These workers, however, “do
not receive salaries and are free to seek other
employment during temporary breaks in the
business. [Integrated Contractors & Plumbing
Works, Inc. vs. NLRC, August 9, 2005]
BUT,
In a case where the employer failed to prove that
its farm workers worked only for the duration of
one particular season, but have been serving
the employer for several years already, these farm
workers should be regarded as regular — not
seasonal — employees. [Hacienda Fatima, et al.
vs. National Federation of Sugarcane
Workers-Food and General Trade, G.R. No.
149440, January 28, 2003]
(4) Casual employment
Art. 280. Regular and casual employment. The provisions of
written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at
the time of the engagement of the employee or where the work
or service to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph: Provided, That any employee who
has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
casual employees or those who are neither
regular nor project employees. [Pangilinan vs.
General Milling Corporation, G.R. No. 149329,
12 July 2004, 434 SCRA 159, 169]
(5) Fixed term employment
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 99
Fixed-Term Employment
Some workers perform tasks which are necessary
or desirable “without being hired as an employee”
(such as an independent contractor) [Philippine
Global Communications, Inc. vs. De Vera,
supra] In fact, Article 280 does not proscribe or
prohibit an employment contract with a fixed
period, [Rowell Industrial Corp. vs. Court of
Appeals, 517 SCRA 691 (March 7, 2007)]
provided it is not intended to circumvent the
employee's security of tenure. [Labayog vs. M.Y.
San Biscuits, Inc., 494 SCRA 486, 491 (2006);
Caparoso vs. Court of Appeals, 516 SCRA 30
(2007)]
It is an accepted maritime industry practice that
the employment of seafarers is for a fixed period
only. Seafarers cannot stay for a long and
indefinite period of time at sea as limited access to
shore activity during their employment has been
shown to adversely affect them. [Dante D. Dela
Cruz vs. Maersk Filipinas Crewing, Inc., et al.,
G.R. No. 172038, April 14, 2008]
Seafarers; employment contract; perfection
stage vs. commencement stage
An employment contract, like any other contract, is
perfected at the moment (1) the parties come to
agree upon its terms; and (2) concur in the
essential elements thereof: (a) consent of the
contracting parties, (b) object certain which is the
subject matter of the contract, and (c) cause of the
obligation. The object of the contract was the
rendition of service by Fantonial on board the
vessel for which service he would be paid the
salary agreed upon. In this case, the employment
contract was perfected on January 15, 2000 when
it was signed by the parties who entered into the
contract in behalf of their principal. However, the
employment relationship never commenced since
Fantonial was not allowed to leave on January 17,
2000 and go on board the vessel M/V AUK in
Germany on the ground that he was not yet
declared fit to work on the day of his scheduled
departure. But, even if no employer-employee
relationship commenced, there was,
contemporaneous with the perfection of the
employment contract, the birth of certain rights
and obligations, the breach of which may give rise
to a cause of action against the erring
party.  (Bright Maritime Corporation (BMC) /
Desiree P. Tenorio vs.  Ricardo B. Fantonial, G.R.
No. 165935,  February 8, 2012.)
Requisites for validity
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
Guidelines for Fixed-Term Employment
c. (1) that the fixed period of employment was
knowingly and voluntarily agreed upon by
the parties, without any force, duress or
improper pressure being brought to bear upon
the employee and absent any other
circumstances vitiating his consent; [E.
Ganzon, Inc. vs. NLRC, et al., G.R. No.
123769, December 22, 1999]
d. (2) it satisfactorily appears that the employer
and employee dealt with each other on
more or less equal terms with no moral
dominance whatever being exercised by the
former on the latter. [Rowell Industrial
Corporation vs. Court of Appeals, 517
SCRA 691 (March 7, 2007), citing PNOC-
EDC vs. NLRC, G.R. No. 97747, 31 March
1993, 220 SCRA 695, 699; Caparoso vs.
Court of Appeals, 516 SCRA 30 (February
15, 2007)]
e. (3) Stipulations, clauses, terms, and conditions
should not be contrary to law, morals, good
customs, public order, or public policy.
[Alberto P. Oxales vs. United
Laboratories, Inc., G.R. No. 152991, July
21, 2008]
d. Job contracting and Labor-only contracting
NOTE:
The presumption is that a contractor is a labor-
only contractor unless such contractor overcomes
the burden of proving that it has substantial
capital, investment, tools and the like. [7k
Corporation v. NLRC, G.R. No. 148490,
November 22, 2006; Coca-Cola Bottlers
Phils., Inc. vs. Alan M. Agito, et al., G.R. No.
179546, February 13, 2009]
1.When is there "job contracting"?
Art. 106. Contractor or subcontractor. Whenever an employer
enters into a contract with another person for the performance of
the former’s work, the employees of the contractor and of the
latter’s subcontractor, if any, shall be paid in accordance with the
provisions of this Code.
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 100
The Secretary of Labor and Employment may, by appropriate
regulations, restrict or prohibit the contracting-out of labor to
protect the rights of workers established under this Code. In so
prohibiting or restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine
who among the parties involved shall be considered the employer
for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.
There is "labor-only" contracting where the person supplying
workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to
the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
Permissible Job Contracting
Permissible job contracting or subcontracting refers
to an arrangement whereby a principal agrees to
put out or farm out with the 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. [Purefoods Corporation (now San
Miguel Purefoods Company, Inc.) vs. NLRC
and Lolita Neri, G.R. No. 172241, November
20, 2008; Randy Almeda vs. Asahi Glass
Philippines, Inc., G.R. No. 177785, September
3, 2008]
In legitimate job contracting, the law creates an
employer-employee relationship between the
employer and the contractor’s employees only for
a limited purpose, i.e., to ensure that the
employees are paid their wages.  The employer
becomes jointly and severally liable with the job
contractor only for the payment of the employees’
wages whenever the contractor fails to pay the
same. [Coca-Cola Bottlers Phils., Inc. vs. Alan
M. Agito, et al., G.R. No. 179546, February 13,
2009; 7k Corporation vs. NLRC, G.R. No.
148490, November 22, 2006]
“Substantial capital or investment” refers to capital
stocks and subscribed capitalization in the case of
corporations, tools, equipments [sic], implements,
machineries and work premises, actually and
directly used by the contractor or subcontractor in
the performance or completion of the job, work or
service contracted out. [Manaya v. Alabang
Country Club, Inc., G.R. No. 168988, June 19,
2007]
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
2. When is there "labor-only contracting"?
Art. 106. Contractor or subcontractor. Whenever an employer
enters into a contract with another person for the performance of
the former’s work, the employees of the contractor and of the
latter’s subcontractor, if any, shall be paid in accordance with the
provisions of this Code.
xxx xxx xxx
There is "labor-only" contracting where the person
supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities
which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if
the latter were directly employed by him.
Labor-only contracting is an arrangement wherein
the contractor merely acts as an agent in recruiting
and supplying the principal employer with workers
for the purpose of circumventing labor law
provisions setting down the rights of employees. 
It is not condoned by law. [Coca-Cola Bottlers
Phils., Inc. vs. Alan M. Agito, et al., G.R. No.
179546, February 13, 2009; Almeda vs. Asahi
Glass, supra] Where labor-only contracting
exists, the Labor Code itself establishes an
employer-employee relationship between
the employer and the employees of the 'labor-only'
contractor in order to prevent a circumvention of
labor laws. Here, the contractor is considered
merely an agent of the principal employer.
[Aliviado, et al. vs. Procter & Gamble Phils.,
Inc., G.R. No. 160506, March 9, 2010, Del
Castillo, J.]
3. Conditions that must concur in legitimate
job contracting
The existence of an independent and permissible
contractor relationship is generally established by
considering the following determinants:  whether
the contractor is carrying on an independent
business; the nature and extent of the work; the
skill required; the term and duration of the
relationship; the right to assign the performance of
a specified piece of work; the control and
supervision of the work to another; the employer’s
power with respect to the hiring, firing and
payment of the contractor’s workers; the control of
the premises; the duty to supply the premises,
tools, appliances, materials and labor; and the
mode, manner and terms of payment. [Jeromie
D. Escasinas and Evan Rigor Singco vs.
Shangri-La’s Mactan Island Resort, G.R. No.
172199, February 27, 2009; Purefoods
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 101
Corporation (now San Miguel Purefoods
Company, Inc.) vs. NLRC and Lolita Neri, G.R.
No. 172241, November 20, 2008; Lakas sa
Industriya ng Kapatirang Haligi ng
Alyansang-Pinagbuklod ng Manggagawang
Promo sa Burlingame vs. Burlingame
Corporation, G.R. No. 162833, June 15, 2007]
4. Effects of finding that there is labor-only
contracting
Labor-only contracting would give rise to: (1) the
creation of an employer-employee relationship
between the principal and the employees of the
contractor or sub-contractor; and (2) the solidary
liability of the principal and the contractor to the
employees in the event of any violation of the
Labor Code. [Coca-Cola Bottlers Phils., Inc. vs.
Alan M. Agito, et al., supra]
2. Termination of Employment:
Dismissal
Connotes permanent severance or complete
separation of the worker from the service on the
initiative of the employer regardless of the reasons
therefor. [Industrial & Transport Equipment,
Inc. vs. Tomas Tugade, et al., G.R. No.
158539, January 15, 2009]
Suspension
is a disciplinary measure that is imposed for
violation by the employee of a reasonable rule of
conduct prescribed by the employer and made
known to the employee. [Anonas Construction
and Industrial Supply Corporation vs. NLRC,
G.R. No. 164052, October 17, 2008]
Substantive Due Process
Labor Code
Art. 279. Security of tenure. In cases of regular employment,
the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of
his actual reinstatement. (As amended by Section 34, Republic
Act No. 6715, March 21, 1989)
Notes:
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
Security of tenure is a paramount right of every
employee that is held sacred by the constitutional
guarantees as an act of social justice. The right of
every employee to security of tenure is all the
more secured by the Labor Code by providing that
the employer shall not terminate the services of an
employee, except for a just cause or when
authorized by law. [Julito Sagales vs. Rustan’s
Commercial Corporation, G.R. No. 166554,
November 27, 2008] However, in the case of
private school teachers, their entitlement to
security of tenure is governed by the Manual of
Regulations for Private Schools and not the Labor
Code. [Aklan College Incorporated vs.
Rodolfo P. Guarino, G.R. No. 152949, August
14, 2007]
Transfer of Ownership; Simulated sale
In transfer of ownership, the sale or disposition
must be motivated by good faith as a condition for
exemption from liability. A change of ownership
done in bad faith, or used to defeat the rights of
labor, apart from making the successor-employer
liable for the transgressions of its predecessor-
employer, the displaced employees shall be
deemed absorbed. [Peñafrancia Tours and
Travel Transport, Inc. vs. Joselito P.
Sarmiento, et al., G.R. No. 178397, October
20, 2010, Nachura, J.]
More, if there is a charge of simulated sale,
transfer of ownership shall be deemed void, as if
no sale transpired, and no closure of business that
will operate as cause for the dismissal of the
displaced employees. [Peñafrancia Tours and
Travel Transport, Inc. vs. Joselito P.
Sarmiento, et al., G.R. No. 178397, October
20, 2010, Nachura, J.]
A. Just Causes
Labor Code
Art. 282. 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
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 102
e. Other causes analogous to the foregoing.
1. Serious misconduct or willful disobedience
Art. 282. 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;
Serious Misconduct
An improper and wrong conduct;
A 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.
For misconduct to be considered serious, it must
be of such grave and aggravated character and not
merely trivial or unimportant. [Austria vs. NLRC,
August 16, 1999; Premiere Development
Bank vs. Mantal, 485 SCRA 234, 239-40
(2006); Echeveria vs. Venutek Medika, Inc.,
516 SCRA 72 (2007); The Peninsula Manila
vs. Alipio, infra]
Dishonesty
A form of serious misconduct and fraud, or breach
of trust. [Lansangan vs. Amkor Technology
Philippines, Inc., G.R. No. 177026, January 30,
2009]
Willful Disobedience
Requisites:
Elements of Serious Misconduct
For serious misconduct be a just cause for
dismissal:
a. it must be serious;
b. it must relate to the performance of the
employee’s duties; and
c. it must show that the employee has become
unfit to continue working for the employer.
[Philippine Aeolus Automotive United Corp.
vs. NLRC, G.R. No. 124617, April 28, 2000;
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
Premiere Development vs. Mantal, supra;
Solid Development Corporation Workers
Association vs. Solid Development
Corporation, G.R. No. 165995, August 14,
2007]
Insubordination, as a just cause for the dismissal
of an employee, requires the concurrence of at
least two requisites: (1) the employee's assailed
conduct must have been willful, that is,
characterized by a wrongful and perverse attitude;
and 92) the order violated must have been
reasonable, lawful, made known to the employee,
and must pertain to the duties which he had been
engaged to discharge. [Grandteq Industrial
Steel Products, Inc., et al. vs. Annaliza M.
Estrella, G.R. No. 192416, March 23, 2011,
Nachura, J.]
Elements of Willful Disobedience
Disobedience to be a just cause for dismissal
envisages the concurrence of at least two
requisites:
a. the employee’s assailed conduct must have
been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude;
and
b. the order violated must have been reasonable
and lawful, made known to the employee, and
must pertain to the duties which he has been
engaged to discharge. [Westin Philippine Plaza
Hotel vs. NLRC, G.R. No. 121621, May 3, 1999,
Quisumbing, J.; Cosmos Bottling Corporation vs.
Nagrama, Jr., G.R. No. 164403, March 4, 2008]
2. Gross and habitual neglect of duties
Art. 282. Termination by employer. An employer may
terminate an employment for any of the following causes:
xxx xxx xxx
(b) Gross and habitual neglect by the employee of his
duties;
Abandonment
the deliberate and unjustified refusal of an
employee to resume his employment, without any
intention of returning. It is a form of neglect of
duty. [Sugue vs. Triumph International
(Phils.), Inc., infra]
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 103
Gross Negligence
The want or absence of even slight care or
diligence amounting to a reckless disregard of the
safety of a person or property. In evinces a
thoughtless disregard of consequences without
exerting any effort to avoid them. [Metro Transit
Organization, Inc. vs. NLRC, October 17,
1996; Philippine Aeolus United Corporation
vs. NLRC, supra]
Habitual Neglect
The repeated failure to perform one’s duties for a
period of time. [Chua vs. NLRC, G.R. No.
146780, March 11, 2005 citing JEB & Associates
vs. NLRC, 254 SCRA 457 (1996)]
Tardiness/Absenteeism
Habitual tardiness and absenteeism are forms of
neglect of duty.  Lack of initiative, diligence, and
discipline to come to work on time everyday
exhibit the employee’s deportment towards work,
which is inimical to the general productivity and
business of the employer. [R.B. Michael Press
vs. Galit, G.R. No. 153510, February 13, 2008]
Requisites:
Habitual Neglect
Under Article 282 of the Labor Code, gross and
habitual neglect by the employee of his duties is a
sufficient and legal ground to terminate
employment. Gross negligence connotes want of
care in the performance of one's duties. Habitual
neglect implies repeated failure to perform one's
duties for a period of time, depending upon the
circumstances. [Carlos V. Valenzuela vs.
Caltex Philippines, Inc., G.R. Nos. 169965-66,
December 15, 2010, Villarama, Jr., J.] In
dismissing an employee for gross and habitual
neglect of duties, the employer must be able to
identify what specific duties the employee violated
and whether the violations were gross and
habitual. [Benjamin vs. Amellar Corporation,
G.R. No. 183383, April 5, 2010, Carpio Morales,
J.]
An allegation of failure of an employee to conduct
monthly physical inventory of the outlet's
merchandise is not gross neglect, if inventory
preparation does not fall within the employee's
tasks who is merely tasked to assist the clerk.
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
[Kulas Ideas & Creations, et al. vs. Alcoseba
and Arao-Arao, G.R. No. 180123, February 18,
2010, Carpio Morales, J.
Absenteeism
Even assuming that respondent's absenteeism
constitutes willful disobedience, such offense does
not warrant respondent's dismissal. Not every
case of insubordination or willful disobedience by
an employee reasonably deserves the penalty of
dismissal. There must be a reasonable
proportionality between the offense and the
penalty. [Philippine Long Distance Telephone
Company vs. Joey B. Teves, G.R. No. 143511,
November 15, 2010, Peralta, J.]
While management has the prerogative to
discipline its employees and to impose appropriate
penalties on erring workers, pursuant to company
rules and regulations, however, such management
prerogatives must be exercised in good faith for
the advancement of the employer's interest and
not for the purpose of defeating or circumventing
the rights of the employees under special laws and
valid agreements. Nevertheless, it may terminate
an employee only for a just cause, his prerogative
to dismiss must be exercised without abuse of
discretion. Its implementation should be tempered
with compassion and understanding. [Philippine
Long Distance Telephone Company vs. Joey
B. Teves, G.R. No. 143511, November 15,
2010, Peralta, J.]
3. Fraud or willful breach of trust (loss of
trust and confidence)
Art. 282. Termination by employer. An employer may
terminate an employment for any of the following causes:
xxx xxx xxx
(c) Fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative;
xxx xxx xxx
Loss Of Confidence
When the employer has reasonable ground to
believe the employee is responsible for the
misconduct, and the nature of his participation
renders him unworthy of the trust and confidence
demanded by his position. [Cañete, Jr. vs. NLRC,
G.R. No. 130425, September 30, 1999;
Tolentino vs. PLDT, G.R. No. 160404, June 8,
2005]
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 104
Applies only to an employee who holds a position
of responsibility or trust and confidence, or a
person invested with confidence on delicate
matters. [Sanchez vs. NLRC, G.R. No. 124348,
August 1999; Cruz vs. Coca-Cola Bottlers
Phils., Inc., G.R. No
Breach Of Trust
A willful violation of the trust.
A breach is willful if it is done intentionally,
knowingly, and purposely without justifiable
excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly, or
inadvertently. [Pastor Dionisio Austria vs.
NLRC, G.R. No. 124382, August 16, 1999;
PNCC vs. Mandagan, G.R. No. 160965, July
21, 2008]
BUT,
Loss of trust and confidence can be based on gross
negligence [School of the Holy Spirit of Quezon
City vs. Taguiam, G.R. No. 165565, July 14,
2008]
Rationale
The basic premise for dismissal on this ground is
that the employee concerned holds a position of
trust. [Cañeda vs. PAL, G.R. No. 152232,
February 26, 2007] An employer cannot be
compelled to continue the employment of an
employee who is guilty of acts inimical to the
interest of the employer and which justifies the
loss of confidence in the employee. [Philippine
Military Veterans Security and Investigation
Agency vs. CA, G.R. No. 139159, January 31,
2006; Divine Word College of San Jose vs.
Aurelio, G.R. No. 163706, March 29, 2007]
Loss of trust and confidence is premised on the
fact that an employee concerned holds a position
where greater trust is placed by management and
from whom greater fidelity to duty is
correspondingly expected. This includes
managerial personnel entrusted with confidence on
delicate matters, such as custody, handling or care
and protection of the employer's property. The
betrayal of this trust is the essence of the offense
for which an employee is penalized. [Lima Land,
Inc. vs. Cuevas, G.R. No. 169523, June 16,
2010, Peralta, J.]
In the absence of any malicious intent or fraud, an
employee's negligence or carelessness is not a
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
justifiable ground for the employer's loss of trust
and confidence, for the breach conceived of here
should be founded on a dishonest, deceitful or
fraudulent act. [Lima Land, Inc. vs. Cuevas,
supra]
Requisites
Guidelines for Dismissal
(1) There must be an actual breach; [Salas vs.
Aboitiz One, Inc, G.R. NO. 178236, June 27, 2008]
(2) The loss of confidence must not be
simulated;
(3) It should not be used as a subterfuge for
causes which are illegal, improper, or unjustified;
(4) It may not be arbitrarily asserted in the
face of overwhelming evidence to the contrary
(5) It must be genuine, not a mere
afterthought to justify earlier action taken in bad
faith; [Tolentino vs. PLDT, G.R. No. 160404, June
8, 2005; Weh Yueh Restaurant vs. Jayona, G.R.
No. 159448, December 16, 2005; Perez vs. PT&T,
G.R. No. 152048, April 7, 2009]
(6) The employee involved holds a position of
trust and confidence [Molina vs. Pacific Plans, Inc.,
G.R. No. 165476, March 10, 2006, 484 SCRA 498]
(7) proof beyond reasonable doubt need not
be established to prove loss of trust and
confidence, as reasonable ground is enough. [P.J.
Lhuillier, Inc. vs. NLRC, G.R. No. 158758, April 29,
2005; Norsk Hydro (Phils.), Inc. vs. Rosales, Jr.,
G.R. No. 162871, January 31, 2007]
(8) must be grounded on facts clearly and
convincingly established by the employer proving
the facts and incidents upon which the loss of
confidence was based [Philippine Aeolus
Automotive United Corporation vs. NLRC, 311
SCRA 237, 247 (2000)] mere uncorroborated
assertions and accusations will not be sufficient;
[Uniwide Sales Warehouse Club vs. NLRC, G.R. No.
154503, February 29, 2008; Metro Eye Security,
Inc. vs. Salsona, G.R. No. 167637, September 28,
2007] and
(9) breach of trust and confidence as ground
for dismissal must be related to the performance of
the duties of the employee such as would show
unfitness to continue working for the employer.
[Blue Dairy Corp. vs. NLRC, G.R. No. 129843,
September 14, 1999; Rentokil (Initial) Philippines
vs. Sanchez, G.R. No. 176219, December 23,
2008]
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 105
4. Abandonment of employment; Elements
that must concur
Elements of Abandonment
1. failure to report for work or absence without
valid or justifiable reason;
2. clear intention to sever the employer-employee
relationship [Sugue vs. Triumph International
(Phils.), Inc., G.R. No. 164804, January 30,
2009; Fe La Rosa vs. Ambassador Hotel, G.R.
No. 177059, March 13, 2009]
3. employer should have reported such fact to the
nearest Regional Office of DOLE in accordance with
Rule XXIII, Section 7, Book V, DO 9-97 [R.
Transport Corporation vs. Ejandra, G.R. No.
155264, May 6, 2005] The operative act that
will ultimately put an end to this relationship is the
dismissal of the employee after complying with the
procedure prescribed by law. [Kams
International, Inc. vs. NLRC, G.R. No. 128806,
September 28, 1999; Floren Hotel vs. NLRC,
G.R. o. 155264, May 6, 2005]
Presumption: A complaint for illegal dismissal
negates allegation of abandonment. [Big AA
Manufacturer vs. Antonio, G.R. No. 160854,
March 3, 2006, 484 SCRA 33] Mere failure to
report for work is not enough to amount to
abandonment of work. Abandonment is the
deliberate and unjustified refusal of an employee
to resume his employment. [Exodus Intentional
Construction Corporation, et al. vs. Guillermo
Biscocho, et al., G.R. No. 166109, February
23, 2011, Del Castillo, J.]
BUT,
If employer alleges that employee was never even
dismissed, the presumption does not hold.
[Abad vs. Roselle Cinema, 485 SCRA 262, 272
(2006)]
BECAUSE,
Sometimes the complaint for illegal dismissal is
only made as leverage to gain monetary benefits.
[Arc-Men Food Industries Corp. vs. NLRC, May 7,
1997]
THUS,
The rule is that an employee must positively prove
first that he was indeed dismissed before
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
the burden of the employer under Article 277(b)
applies.
5. Termination of employment pursuant to a
Union Security Clause
Another cause for termination is dismissal from
employment due to the enforcement of the union
security clause in the CBA. [Alabang Country
Club, Inc., vs. NLRC, G.R. No. 170287,
February 14, 2008]
Termination of employment by virtue of a union
security clause embodied in a CBA is recognized
and accepted in our jurisdiction. This practice
strengthens the union and prevents disunity in the
bargaining unit within the duration of the CBA. By
preventing member disaffiliation with the threat of
expulsion from the union and the consequent
termination of employment, the authorized
bargaining representative gains more numbers and
strengthens its position as against other unions
which may want to claim majority representation.
[Alabang Country Club, Inc., vs. NLRC, G.R.
No. 170287, February 14, 2008] Dismissal of
an employee by the company pursuant to a labor
union's demand in accordance with a union
security agreement does not constitute unfair labor
practice. [NUWHRAIN-Manila Pavilion Hotel
Chapter vs. NLRC, et al., G.R. No. 179402,
September 30, 2008]
The rights of an employee to be informed of the
charges against him and to reasonable opportunity
to present his side in a controversy with either the
company or his own union are not wiped away by a
union security clause or a union shop clause in a
collective bargaining agreement. An employee is
entitled to be protected not only from a company
which disregards his rights but also from his own
union the leadership of which could yield to the
temptation of swift and arbitrary expulsion from
membership and hence dismissal from his job.
[General Milling Corporation vs. Casio, et al.
and Pino, et al., G.R. No. 149552, March 10,
2010, Leonardo-de Castro, J.]
6. Totality of infractions doctrine
The totality of infractions or the number of
violations committed during the period of
employment shall be considered in determining the
penalty to be imposed upon an erring employee.
The offenses committed by petitioner should not
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 106
be taken singly and separately. Fitness for
continued employment cannot be
compartmentalized into tight little cubicles of
aspects of character, conduct and ability separate
and independent of each other. While it may be
true that petitioner was penalized for his previous
infractions, this does not and should not mean that
his employment record would be wiped clean of his
infractions. After all, the record of an employee is a
relevant consideration in determining the penalty
that should be meted out since an employee's past
misconduct and present behavior must be taken
together in determining the proper imposable
penalty. Despite the sanctions imposed upon
petitioner, he continued to commit misconduct and
exhibit undesirable behavior on board. [Brendo D.
Merin vs. National Labor Relations
Commission, et al., G.R. No. 171790, October
17, 2008
B. Authorized Causes
Art. 283. Closure of establishment and reduction of
personnel. The employer may also terminate the employment of
any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless
the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before
the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year.
Definitions
Installation Of Labor-Saving Device
Streamlining of personnel structure through the
installation of machineries and equipment, or
introduction of new methods for purposes of
achieving maximum profitability of employer’s
business. [Agustilo vs. CA, G.R. No. 142875,
September 7, 2001]
Redundancy
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
Exists where the services of an employee are in
excess of what is reasonably demanded by the
actual requirements of the enterprise.
A position is redundant where it is superfluous, and
superfluity of a position/s may be the outcome of a
number of facts, such as over hiring of employees,
decreased volume of business, or dropping of a
particular product line or service activity previously
manufactured or undertaken by the enterprise.
[Coats Manila Bay, Inc. vs. Ortega, G.R. No.
172628, February 13, 2009]
Retrenchment
One of the ways of terminating employment to
preserve the viability of the business. [Eastridge
Golf Club, Inc. vs. Eastridge Golf Club, Inc.,
Labor Union-SUPER, G.R. No. 166760, August
22, 2008]
Termination of employment initiated by the
employer through no fault of the employees, and
without prejudice to the latter, resorted to by
management during periods of business recession,
industrial depression, or seasonal fluctuations or
during lulls occasioned by lack of orders, shortage
of materials, conversion of the plant for a new
production program or the introduction of new
methods or more efficient machinery, or of
automation. [Mobilia Products, Inc. vs.
Demecillo, G.R. No. 170669, February 4,
2009; AMA Computer College vs. Garcia,
infra]
It is a means of last resort, and justified only when
all other less drastic means have been tried and
found insufficient. [FASAP vs. PAL, infra]
Closure
Complete or partial cessation of the operations
and/or shutdown of the establishment of the
employer. It is carried out to either stave off the
financial ruin or promote the business interest of
the employer. [Eastridge Golf Club, Inc. vs.
Eastridge Golf Club, Inc., Labor Union-SUPER,
G.R. No. 166760, August 22, 2008]
Redundancy, Retrenchment and Closure
Redundancy exists where the services of an
employee are in excess of what is reasonably
demanded by the actual requirements of the
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 107
enterprise. A position is redundant if it is
superfluous. [Coca-Cola Bottlers Philippines,
Inc. vs. Angel U. Del Villar, G.R. No.
163091, October 6, 2010, Leonardo-de Castro,
J.]
Two (2) Types of Closure
(1) Due to business losses or reverses; and
NOT due to losses [JAT General Services vs.
NLRC, G.R. No. 148340, January 26, 2004,
Quisumbing, J.]
(2) Closure or cessation of business operations
is allowed even if the business is not undergoing
economic losses. Just as no law forces anyone to
go into business, no law can compel anybody to
continue in it. It would be stretching the intent
and spirit of the law if we were to unjustly interfere
with the management’s prerogative to close or
cease its business operations, just because said
business operations are not suffering any loss or
simply to provide the worker’s continued
employment. [Manatad vs. PT&T, supra; Espina vs.
CA, G.R. No. 164582, March 28, 2007]
Procedural steps required
Art. 283. Closure of establishment and reduction of
personnel. The employer may also terminate the employment of
any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking xxx,
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.
NOTES:
1-Month Notice Rule
 If an employee consented to
his retrenchment or voluntarily
applied for retrenchment, the
required previous notice to the DOLE
is not necessary as the employee
thereby acknowledged the existence
of a valid cause for termination of
his employment. [Mobilia
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

Products, Inc. vs. Demecillo, NLRC, September

supra] 13, 2001]
 There is no law or rule that
 Mere failure to comply with requires an employer to furnish an
the notice requirement of labor laws employee to be retrenched copies of
on company closure does not documents on evaluating employees.
amount to a patently unlawful act. The law only requires that the
[Carag vs. NLRC, 520 SCRA 25 employer serve a written notice of
(2007)] A written notice that is the retrenchment on the employee
short of the 30 days prior to notice concerned and the DOLE at least one
rule will constitute substantial month before the intended date of
compliance if the period not retrenchment. [Mendros, Jr. vs.
covered is compensated even if Mitsubishi, supra]
unworked. [Kasapian ng
Malayang Manggagawa sa Coca-  Where retrenchment
Cola vs. CA, 487 SCRA 487, 510- undertaken by the employer is bona
11 (2006), citing Serrano vs. fide, the same will not be invalidated
NLRC, 331 SCRA 331 (2000)] for its failure to serve prior notice on
the employees and the DOLE. The
 In fact, the 1-Month Notice employer shall only be liable to pay
Rule is NOT required when: nominal damages at a reasonable
rate of P50,000.00 for each
(1) retrenchment due employee. [Eastridge Golf Club,
to financial Inc., supra]
reverses was
already known to Payment of Separation Pay under Article 283
the employees
during voluntary The amount of separation pay must be computed
arbitration. from the time the employee commenced
[Revidad vs. employment until the cessation of operations of
NLRC, June 27, the employer’s business. [JAT General Services
1995] vs. NLRC, supra]
(2) employee
consented to the Computation of separation pay is:
retrenchment
[Ismael Santos Salary + Regular Allowances = Separation Pay
vs. CA, July 5, [Millares vs. NLRC, 305 SCRA 500-512
2001, citing (1999)]
Wiltshire vs. NLRC
(1991)] Under Sec. 10, Rule I, Book VI, Omnibus Rules,
(3) voluntary the computation of termination pay of an employee
retrenchment under Art. 283 shall be based on his latest salary
[International rate, unless the same was reduced by the
Hardware, Inc. employer to defeat the intention of the Code, in
vs. NLRC, August which case, the basis of computation shall be the
10, 1989] rate before its deduction.
(4) no notice due to
consented BUT,
termination rule
applies not only to Car and insurance benefits should not be included
retrenchment, but in the computation of separation pay as they are
also to ILS, benefits granted only during the course of
redundancy and employment. [Dr. Pedrito F. Reyes vs. CA, G.R.
closure. [DOLE No. 154448, August 15, 2003, Ynares-
Phils., Inc. vs. Santiago, J.]

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 108

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

Requirements for valid have been give separation pay equivalent to ½

retrenchment/redundancy month pay for every year of service or one month
pay, whichever is higher. [Eastridge Golf Club,
Requisites for Valid Redundancy Program Inc., supra]

1. good faith on the part of the employer in Redundancy

abolishing the redundant position; and
fair and reasonable criteria in ascertaining what The ground of redundancy does not require the
positions are to be declared redundant, and exhibition of proof of losses or imminent losses.
accordingly abolished. [AMA Computer College [Coats Manila Bay, Inc. vs. Ortega, supra]
vs. Garcia, G.R. No. 166703, April 14, 2008]
Criteria in selecting employees for dismissal
Requisites for Valid Retrenchment
Fair and reasonable criteria in ascertaining who
(a)the retrenchment is necessary to prevent losses will be affected:
and such losses are proven;
 Preferred status (e.g. temporary, casual or
(b)written notice to the employees and to DOLE at
regular employee)
least one (1) month prior to the intended date of
 Efficiency
retrenchment;
 Physical fitness
 Age
(c)payment of separation pay equivalent to one (1)
 Financial hardship, or
month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. [AMA  Seniority. (Asian Alcohol Corp. vs. NLRC
Computer College, Inc. vs. Garcia, supra; (1999))
Manatad vs. PT&T, G.R. No. 172363, March 7,
2008; TPI Philippines Cement Corp vs. Standards to be followed
Cajucom VIII, 483 SCRA 494, 502-03 (2006)]
The wisdom or soundness of abolishing a position
(d) the employer exercised its prerogative to for being redundant is not subject to the
retrench in good faith; and discretionary review of the labor arbiter and the
(e) it uses fair and reasonable criteria NLRC, provided there is no violation of the law and
ascertaining who would be retrenched or retained. no showing that it was prompted by an arbitrary or
[Mendros, Jr. vs. Mitsubishi Motors Phils. malicious act [AMA Computer College vs.
Corporation (MMPC), G.R. No. 169780, Garcia, supra] because it is an exercise of
February 16, 2009] business judgment on the part of the employer.
[Smart Communications, Inc. vs. Astorga,
(f) the employer must first exhaust all other G.R. Nos. 148132, 151079, 151372, January
means to avoid further losses without retrenching 28, 2008; Nelson A. Culili vs. Eastern
its employees. [FASAP vs. PAL, G.R. No. Telecommunications Philippines, Inc., et al.,
178083, July 22, 2008] G.R. No. 165381, February 9, 2011, Leonardo-
de Castro, J.]
Requisites for Valid Closure
Rule on Proof of Losses
(a) the closure/cessation of business
is bona fide – its purpose is to advance  Adequate, credible and
the interest of the employer and not persuasive evidence of dire financial
to defeat or circumvent the rights of straits from drastic business
employees under the law or a valid losses must be presented by the
agreement; employer. [Filipinas (Pre-
(b) a written notice was served on Fabricated Bldg.) Systems
the employees and the DOLE at least one “Filsystems”, Inc. vs.
month before the intended date of Gatlabayan, 487 SCRA 673
closure/cessation of business; and (2006)]
(c) IN CASE OF CLOSURE NOT DUE TO
FINANCIAL LOSSES, that the employees affected

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 109

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

(1) Losses incurred must be et al.,G.R. No. 191459,

substantial and not de minimis; January 17, 2011, Carpio
(2) Losses are actual or Morales, J.] Financial
reasonably imminent; statements must be
(3) The retrenchment is prepared and signed by
reasonably necessary and is likely to independent auditors,
be effective in preventing otherwise, they may be
the expected losses; and assailed as self-serving.
(4) The alleged losses, if already [FASAP vs. PAL, supra]
incurred, or the expected imminent
losses sought to be forestalled, are
proven by sufficient and convincing Disease or illness
evidence. [AMA Computer
College, Inc. vs. Garcia, supra; Art. 284. Disease as ground for termination. An employer
Andrada vs. NLRC, G.R. No. may terminate the services of an employee who has been found
to be suffering from any disease and whose continued
173231, December 28, 2007] employment is prohibited by law or is prejudicial to his health as
 Although when the law uses well as to the health of his co-employees: Provided, That he is
the phrase “retrenchment to paid separation pay equivalent to at least one (1) month salary or
to one-half (1/2) month salary for every year of service,
prevent losses”, it simply whichever is greater, a fraction of at least six (6) months being
means that the employer considered as one (1) whole year.
may retrench “before the
losses anticipated are Requisites
actually sustained or
realized. [TPI Philippines Requisites for Valid Dismissal under Art. 284
Cement Corp. vs.
Cajucom VII, supra] The employer must adduce:
BUT, (a) That the employee is
If alleged losses are suffering from a disease that is:
already realized, and the (1) prohibited by law;
expected imminent losses (2) prejudicial to his
sought to be forestalled, the health; or
employer must prove by (3) prejudicial to his
sufficient and convincing co-employees
evidence that retrenchment (b) A certification from a
is the most viable solution. competent public authority that
Any less exacting standard the disease of the employee is
of proof would render too incurable within a period of 6
easy the abuse of this months even with proper
ground for termination of treatment. [Duterte vs.
services of employees, as Kingswood Trading Co., Inc.,
scheming employers might G.R. No. 160325, October 4,
be merely feigning business 2007]
losses or reverses to ease (c) Payment of separation
out employees. [FASAP vs. pay of one (1) month salary or
PAL, supra; Mendros, Jr. one-half (1/2) month salary
vs. Mitsubishi Motors for every year of service,
Phils. Corp., supra] whichever is higher, and a
 Financial statements that fraction of at least 6 months is
will show the financial considered as one (1) year.
condition of the company [Crayons Processing, Inc. vs.
are pieces of evidence that Pula, G.R. No. 167727, July
may justify, among others, 30, 2007]
the enforcement of its
retrenchment program. Procedural Due Process
[Bernadeth Londonio, et
al. vs. Bio Research, Inc.,

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 110

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
Art. 277. Miscellaneous provisions.
xxx xxx xxx
(b) Subject to the constitutional right of workers to security
of tenure and their right to be protected against dismissal except
for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the
employer shall furnish the worker whose employment is sought to
be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance
of his representative if he so desires in accordance with company
rules and regulations promulgated pursuant to guidelines set by
the Department of Labor and Employment. Any decision taken by
the employer shall be without prejudice to the right of the worker
to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for
a valid or authorized cause shall rest on the employer. The
Secretary of the Department of Labor and Employment may
suspend the effects of the termination pending resolution of the
dispute in the event of a prima facie finding by the appropriate
official of the Department of Labor and Employment before whom
such dispute is pending that the termination may cause a serious
labor dispute or is in implementation of a mass lay-off. (As
amended by Section 33, Republic Act No. 6715, March 21, 1989)
Procedure to be observed in termination
cases
The law mandates that the burden of proving the
validity of the termination of employment rests
with the employer. Failure to discharge this
evidentiary burden would necessarily mean that
the dismissal was not justified and, therefore,
illegal. Unsubstantiated suspicions, accusations,
and conclusions of employers do not provide for
legal justification for dismissing employees.
[Century Canning Corporation, et al. vs.
Vicente Randy R. Ramil, G.R. No. 171630,
August 8, 2010, Peralta, J.]
The employer is bound to furnish the employee
concerned with two (2) written notices before
termination of employment can be legally effected.
One is the notice apprising the employee of the
particular acts or omissions for which his dismissal
is sought – and this may loosely be considered as
the proper charge. The other is the notice
informing the employee of the management's
decision to sever his employment. However, the
decision must come only after the employee is
given a reasonable period from receipt of the first
notice within which to answer the charge. The
requirement of notice is not a mere technicality but
a requirement of due process to which every
employee is entitled. [Erector Advertising Sign
Group, Inc. vs. NLRC, G.R. No. 167218, July 2,
2010, Peralta, J.]
This rule applies also to seafarers on board a
vessel. However, under paragraph D, Section 17
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 111
of the Revised Standard Employment Terms and
Conditions Governing the Employment of Filipino
Seafarers on Board Ocean-Going Vessels, the Ship
Master is excused from furnishing a seafarer
with the required notice of dismissal if doing so
will prejudice the safety of the crew and the
vessel, as in cases of mutiny. BUT just the same,
a complete report should be sent to the manning
agency, supported by substantial evidence of the
findings. [NFD International Manning Agents
vs. NLRC, G.R. No. 165389, October 17, 2008]
REMEMBER,
Article 277(b) recognizes the right to due process
of all workers, without distinction as to the cause
of their termination, thus, none should be
construed. [Suico vs. NLRC, G.R. Nos. 146762,
153584, 163793, January 30, 2007]
Under Article 264, union officers, while terminable
for knowingly participating in an illegal strike are,
“as in other termination cases”, entitled to the due
process protection under Art. 277(b) of the Labor
Code. Nothing in Art. 264 authorizes an
immediate dismissal of a union officer for
participating in an illegal strike. The act of
dismissal is not intended to happen ipso facto, but
rather as an option that can be exercised by the
employer and after compliance with the notice
requirements for terminating an employee.
[Stanford Marketing Corp. vs. Julian, G.R. No.
145496, February 24, 2004]
BUT,
In Biflex vs. Filflex Industrial, the Supreme Court
held that dismissals under Article 264 can be
immediately resorted to, as an exercise of
management prerogative. [Biflex vs. Filflex
Industrial, G.R. No. 155679, December 19, 2006]
Guiding Principles in connection with the
hearing requirements in dismissal cases
The essence of due process is an opportunity to be
heard, or as applied to administrative proceedings,
an opportunity to explain one's side. A formal or
trial type hearing is not at all times and in all
instances essential to due process, the
requirements of which are satisfied where the
parties are afforded fair and reasonable
opportunity to explain their side of the
controversy. Neither is it necessary that the
witnesses be cross-examined by counsel for the
adverse party. [Philippine Long
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
Distance Telephone Company vs. Eusebio M.
Honrado, G.R. No. 189366, December
8, 2010, Del Castillo, J.]
An employee is not deprived of procedural due
process if he chose not to present his side at the
administrative hearing, and in fact avoided the
investigation into the charges against him by filing
his illegal dismissal complaint ahead of the
scheduled hearing, as he was given the
opportunity to be heard. [Technol Eight
Philippines Corporation vs. NLRC, G.R. No.
187605, April 13, 2010, Brion, J.]
“Reasonable opportunity” under the Omnibus Rules
means every kind of assistance that management
must accord to the employees to enable them to
prepare adequately for their defense. This should
be construed as a period of at least five (5)
calendar days from receipt of the notice to give the
employees an opportunity to study the accusation
against them, consult a union official or lawyer,
gather data and evidence, and decide on the
defenses they will raise against the complaint. The
notice should contain a detailed narration of the
facts and circumstances that will serve as basis for
the charge against the employees. A general
description of the charge will not suffice. [Lima
Land, Inc. vs. Cuevas, G.R. No. 169523, June
16, 2010, Peralta, J.]
BUT,
It is not enough for an employer to allege in the
first written notice to the employee “acts of non-
compliance” without any specificity, as such
allegation is too general and can encompass just
about any malfeasance. The employer must make
a detailed narration of the facts and circumstances
that would serve as bases to terminate the
employee which in turn will allow the latter to
explain his side and why he should not be
dismissed. [Benjamin vs. Amellar Corporation,
G.R. No. 183383, April 5, 2010, Carpio
Morales, J.]
ALSO,
The mere fact that the notices were sent to
respondents after the filing of the labor complaint
does not, by itself, establish that the same was a
mere afterthought. The surrounding
circumstances of this case adequately explain why
the requirements of procedural due process
were satisfied only after the filing of the labor
complaint. [New Puerto Commercial, et al.
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 112
vs. Rodel Lopez, et al., G.R. No. 169999, July
26, 2010, Del Castillo, J.]
Agabon  doctrine
Effect of Non-compliance with Due Process
Requirement
Where the dismissal is for a just cause, the lack of
procedural due process should not nullify the
dismissal, or render it illegal or ineffectual. The
employer should, however, indemnify the
employee for the violation of his statutory rights,
such as when the management did not follow or
exhaust the grievance procedure under the
employment contract prior to dismissal. [DMA
Shipping Philippines, Inc. vs. Henry Cabillor,
G.R. No. 155389, February 28, 2005;
Philemploy Serices and Resources vs.
Rodriguez, 486 SCRA 302, 317 (2006)] The
indemnity to be imposed should be stiffer to
discourage the abhorrent practice of “dismiss now,
pay later” scheme, and should depend on the facts
of each case, taking into special consideration the
gravity of the due process violation of the
employer. [Agabon, vs. NLRC, 442 SCRA 573,
616-17 (2004); LBC Domestic Franchise Co.
vs. Florido, G.R. No. 162577, August 17,
2007]
The indemnity shall be in the form of nominal
damages, which the Supreme Court fixed at a rate
of P30,000.00 per employee. [Agabon vs. NLRC,
supra]
BUT,
Where the dismissal is based on an authorized
cause, the sanction should be stiff as the dismissal
process was initiated by the employer’s exercise of
his management prerogative. Several factors are
taken into account:
(1) the authorized cause invoked, whether it
was a retrenchment or a closure or cessation of
operation of the establishment due to serious
business losses or financial reverses or otherwise;
(2) the number of employees to be awarded;
(3) the capacity of the employers to satisfy the
awards, taken into account their prevailing
financial status as borne by the records; and
(4) whether there was a bona fide attempt to
comply with the notice requirements as opposed to
giving no notice at all. [Talam vs. NLRC, G.R.
No. 175040, April 6, 2010, Brion, J., citing Jaka
Food Processing]
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
STILL,
If the execution of a decision becomes
impossible, unjust or too burdensome,
modification of the decision is necessary in
order to harmonize the disposition with the
prevailing circumstances. [Industrial Timber
Corporation vs. Ababon, 480 SCRA 171, 187
(2006)]
NOTES:
Constructive Dismissal:
Termination by reason of a bonafide suspension of
operation of a business or undertaking that
exceeds six months. Otherwise stated, if the
employee was forced to remain without work or
assignment for a period exceeding six months,
then he is in effect constructively dismissed.
INVERSELY,
A bona fide suspension of the employer’s operation
of a business or undertaking for a period not
exceeding six (6) months does not amount to
termination of employment, but only a temporary
displacement of employees. The paramount
consideration should be the dire exigency of the
business of the employer that compels it to put
some of its employees temporarily out of work.
[Pido vs. NLRC, G.R. No. 169812, February 23,
2007]
BUT,
If the operation of the business is resumed within
six months, it shall be the duty of the employer to
reinstate his employees to their former positions
without loss of seniority rights. [Lagonoy Bus
Co., Inc. vs. CA, G.R. No. 165598, August 14,
2007]
PROVIDED,
That the employee should indicate his desire to
resume his work not later than one (1) month from
resumption of operation/undertaking; or relief from
military or civic duty. [Eagle Star Security
Services, Inc. vs. Bonifacio L. Mirando, G.R.
No. 179512, July 30, 2009]
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 113
 Constructive dismissal occurs when there is
cessation of work because continued employment
is rendered impossible, unreasonable, or unlikely
as when there is a demotion in rank or diminution
in pay or when a clear discrimination, insensibility,
or disdain by an employer becomes unbearable to
the employee leaving the latter with no other
option but to quit. [The University of the
Immaculate Conception, et al. vs. NLRC, et
al., G.R. No. 181146, January 26, 2011,
Carpio, J.]
 A complaint for constructive dismissal filed
prior to the employee's resumption of work has no
basis, and must be dismissed for want of cause of
action. [The University of the Immaculate
Conception, et al. vs. NLRC, et al., G.R. No.
181146, January 26, 2011, Carpio, J.]
When Off-detailing becomes Constructive
Dismissal
Temporary “off-detail” or “floating status” is the
period of time when security guards are in
between assignments or when they are made to
wait after being relieved from a previous post until
they are transferred to a new one. It takes place
when the security agency's clients decide not
to renew their contracts with the agency,
resulting in a situation where the available posts
under its existing contracts are less than the
number of guards in its roster. It also happens
in instances where contracts for security
services stipulate that the client may request
the agency for the replacement of the guards
assigned to it even for want of cause. [Bebina
G. Salvaloza vs. NLRC, et al., G.R. No. 182086,
November 24, 2010, Nachura, J.]
HOWEVER,
An employee who was placed on temporary “off-
detail” on the ground of poor performance and
inefficiency, allegations of which were never made
known to him, and instead was given to various
assignments amounts to constructive dismissal.
Assignment to different posts despite repeated
errors and poor performance is considered
condonation, which the employer cannot invoke to
justify placing the employee on temporary “off-
detail”. [Bebina G. Salvaloza vs. NLRC, et al.,
G.R. No. 182086, November 24, 2010,
Nachura, J.]
Preventive Suspension:
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
Preventive suspension is imposed on an employee
under investigation if he poses a serious threat to
the life and property of the employer and of his co-
workers. [Gatbonton vs. NLRC, G.R. No.
146779, January 23, 2006, 479 SCRA 416]
The rule on preventive suspension is found in Secs.
8 and 9, Rule XXIII, DO 19, June 21, 1997.
As a general rule, the employee is not entitled to
wages during the period of a valid preventive
suspension. However, if preventive suspension is
found to be without basis, the employer is required
to pay the illegally suspended employee his
backwages for the period of his suspension.
[Maricalum Mining vs. Decorion, infra]
REMEMBER that
 Preventive suspension pending
investigation is not a penalty.
It is a measure intended to enable the disciplining
authority to investigate charges against
respondent by preventing the latter from
intimidating or in any way influencing witnesses
against him. [Mandapat vs. Add Force
Personnel Services, Inc., G.R. No. 180285,
July 6, 2010, Perez, J.]
If the investigation is not finished and a decision is
not rendered within that period, the suspension will
be lifted and the respondent will automatically be
reinstated. [The Board of Trustees of the
Government Service Insurance System, et al.
vs. Albert M. Velasco, et al., G.R. No. 170463,
February 2, 2011, Carpio, J.]
Preventive suspension lasts only for a period of 30
days, and beyond this period, such suspension
may amount to constructive dismissal.
[Maricalum Mining Corp. vs. Decorion, 487
SCRA 182 (2006)]
HOWEVER,
There are cases where a violation of the 30-day
suspension period may entail payment of
indemnity of P1,000.00 [JRS Business Corp. vs.
NLRC, G.R. No. 108891, July 17, 1995] or
P3,000.00 [Pepsi-Cola Distributors vs. NLRC,
G.R. No. 106831, May 6, 1997]
While another view is that the period exceeding 30
days shall be compensable, [Carlos V.
Valenzuela vs. Caltex Philippines, Inc., G.R.
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 114
Nos. 169965-66, December 15, 2010,
Villarama, Jr., J.] thus, the extension will not give
rise to constructive dismissal.
The preventive suspension beyond 30 days shall be
upheld provided the employee's wages and
benefits are paid in the interim. [Genesis
Transport Service, Inc. vs. Unyon ng
Malayang Manggagawa ng Genesis Transport,
G.R. No. 182114, April 5, 2010, Carpio Morales,
J.]
An employee who was preventively suspended
pending an investigation is treated like an
employee on approved vacation leave without pay.
The period of preventive suspension shall
effectively interrupt the continuity of his
government service. [The Board of Trustees of
the Government Service Insurance System, et
al. vs. Albert M. Velasco, et al., G.R. No.
170463, February 2, 2011, Carpio, J.]
Imposition of preventive suspension does not
amount to termination of employment. Preventive
suspension is justified where the employee's
continued employment poses a serious and
imminent threat to life or property or of the
employee's co-workers, and does not amount to
illegal dismissal. [Jose P. Artificio vs. NLRC, et
al., G.R. No. 172988, July 26, 2010, Perez, J.]
Quitclaims:
Quitclaims executed by employees are given effect
when:
(1) the employee voluntarily executes the
quitclaim;
(2) no fraud or deceit on the part of the
parties;
(3) the consideration is credible and
reasonable; and
(4) contract in not contrary to law, morals,
public policy or good customs. [Goodrich
Manufacturing Corporation vs. Ativo, et al, G.R.
No. 188002, February 1, 2010, Villarama, J.]
2010 Bar Question
Consideration received in a quitclaim is credible
and reasonable if the amount is not grossly
inadequate vis-a-vis what the employee should
receive in full. [Goodrich Manufacturing
Corporation vs. Ativo, et al, G.R. No. 188002,
February 1, 2010, Villarama, J.]
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
Termination of employment by employee:
Art. 285. Termination by employee.
(a) An employee may terminate without just cause the
employee-employer relationship by serving a written notice on
the employer at least one (1) month in advance. The employer
upon whom no such notice was served may hold the employee
liable for damages.
(b) An employee may put an end to the relationship
without serving any notice on the employer for any of the
following just causes:
1. Serious insult by the employer or his representative on
the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the
employee by the employer or his representative;
3. Commission of a crime or offense by the employer or
his representative against the person of the employee or any of
the immediate members of his family; and
4. Other causes analogous to any of the foregoing.
3. Retirement Pay Law:
Art. 287. Retirement. Any employee may be retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned under
existing laws and any collective bargaining agreement and other
agreements: Provided, however, That an employee’s retirement
benefits under any collective bargaining and other agreements
shall not be less than those provided therein.
In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served
at least five (5) years in the said establishment, may retire and
shall be entitled to retirement pay equivalent to at least one-half
(1/2) month salary for every year of service, a fraction of at least
six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the
term ‘one-half (1/2) month salary’ shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive
leaves.
Retail, service and agricultural establishments or
operations employing not more than ten (10) employees or
workers are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful
and subject to the penal provisions under Article 288 of this
Code.
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 115
 Retirement is the result of a
bilateral act of the parties, a voluntary
agreement between the employer and
the employee whereby the latter,
after reaching a certain age, agrees to
sever his or her employment with the
former. RA 7641 pegs the age for
compulsory retirement at 65 years,
while the minimum age for optional
retirement is set at 60 years. An
employer is, however, free to impose
a retirement age earlier than the
foregoing mandates. [Lourdes A.
Cercado vs. Uniprom, Inc., G.R.
No. 188154, October 13, 2010,
Nachura, J.]
Retirement (as amended by RA 7641, Dec. 9.
1992)
a) Retire under existing CBA; in absence thereof
b) Retire under law -
rendered at least 5 yrs. Service, and
age 60 yrs. old – optional
age 65 yrs. old – compulsory
Benefits
1. for those paid on “boundary” basis of
computation is “average daily income” [R & E
Transport, Inc.] – ½ mo./yr. of service, a fraction
of 6 mos. = 1 yr.
2. unless more beneficially agreed upon by the
parties -1/2 month shall mean/include:
a) 15 days/year
b) 1/12 of 13th mo. pay
c) Cash equivalent of not more than 5 days
SIL
 A retirement plan giving the employer the
option to retire its employees below the ages
provided by law must be assented to and accepted
by the latter, without which, the exercise of such
option will amount to deprivation of property
without due process of law. [Lourdes A. Cercado
vs. Uniprom, Inc., supra]
 Implied knowledge of the existence of the
retirement plan does not amount to voluntary
acceptance of all the provisions set forth therein.
The law demands more than a passive
acquiescence on the part of the employees,
considering that an employer's early retirement
age option involves a concession of the former's
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
constitutional right to security of tenure.
[Lourdes A. Cercado vs. Uniprom, Inc., supra]
 It must be explicit, voluntary, free,
and uncompelled.
 While an employer may unilaterally retire
an employee earlier than the legally permissible
ages under the Labor Code, this prerogative must
be exercised pursuant to a mutually instituted
early retirement plan. Otherwise stated, only the
implementation and execution of the option may
be unilateral, but certainly not the adoption and
institution of the retirement plan containing such
option. Without the voluntary and explicit assent
of at least the majority of its employees, the option
to unilaterally retire an employee is not valid.
[Lourdes A. Cercado vs. Uniprom, Inc., G.R.
No. 188154, October 13, 2010, Nachura, J.]
 An employee's claim under the Early
Retirement Program of a corporation is mooted
when he avails of the optional retirement under
Article 287 of the Labor Code, and accepted the
benefits. Acceptance of said benefits means that
the employee opted to retire under Article 287.
[Korean Air Co., Ltd vs. Yuson, G.R. No.
170369, June 16, 2010, Carpio, J.]
Coverage
RA 7641 or the Retirement Pay Law shall apply to all
employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which
their wages are paid. They shall include part-time employees,
employees of service and other job contractors and domestic
helpers or persons in the personal service of another. [Labor
Advisory on Retirement Pay Law, October 24, 1996]
Compulsory retirement age
The retirement age is primarily determined by the
existing agreement or employment contract.
Absent an agreement, retirement age shall be
fixed by law at the age of 65 years, while the
minimum age for optional retirement is set at 60
years. Article 287 of the Labor Code applies only
to a situation where (1) there is no CBA or other
applicable employment contract providing for
retirement benefits; or there is a CBA or other
applicable employment contract providing for
retirement benefits, but it is below the requirement
set by law. The rationale is to prevent the absurd
situation where an employee is denied retirement
benefits through the nefarious scheme of
employers to deprive employees of the benefits
due them under existing labor laws. [Amelia R.
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 116
Obusan vs. Philippine National Bank, G.R. No.
181178, July 26, 2010, Nachura, J.]
However, the company retirement plans must not
only comply with the standards set by existing
labor laws, but they should also be accepted by the
employees to be commensurate to their faithful
service to the employer within the requisite period.
Due process only requires that notice of the
employer's decision to retire an employee be given
to the employee. [Amelia R. Obusan vs.
Philippine National Bank, G.R. No. 181178,
July 26, 2010, Nachura, J.]
Unlike in the case of Jaculbe, the retirement plan
of PNB was solely and exclusively funded by PNB,
and no financial burden is imposed on the
employees for their retirement benefits. [Amelia
R. Obusan vs. Philippine National Bank, G.R.
No. 181178, July 26, 2010, Nachura, J.]
2. Constitutional Provisions on Labor:
Retirement pay, on the other hand, presupposes
that the employee entitled to it has reached the
compulsory retirement age or has rendered the
required number of years as provided for in the
collective bargaining agreement (CBA), the
employment contract or company policy, or in the
absence thereof, in Republic Act No. 7641 or the
Retirement Law. [Motorola Philippines, Inc. vs.
Ambrosio, G.R. No. 173279, March 30, 2009]
The receipt of retirement benefits does not bar the
retiree from receiving separation pay. Separation
pay is a statutory right designed to provide the
employee with the wherewithal during the period
that he/she is looking for another employment. On
the other hand, retirement benefits are intended to
help the employee enjoy the remaining years of his
life, lessening the burden of worrying about his
financial support, and are a form of reward for his
loyalty and service to the employer. [Santos vs.
Servier Philippines, Inc., G.R. No. 166377,
November 28, 2008]
EXCEPT,
When the Retirement Plan of the employer
bars the employee from claiming additional
benefits on top of that provided for in the Plan.
[Santos vs. Servier Philippines, Inc., supra]
The Retirement Pay Law only applies in a situation
where:
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
(1) there is no collective bargaining agreement
or other applicable employment contract; or
(2) there is a CBA or other applicable
employment contract, but it is below the
requirements set for by law. [Oxales vs. United
Laboratories, G.R. No. 152991, July 21, 2008]
There are two (2) essential requisites in order that
R.A. 7641 may be given retroactive effect:
(1) the claimant for retirement benefits was still in
the employ of the employer at the time the
statute took effect; and
(2) the claimant had complied with the
requirements for eligibility for such retirement
benefits under the statute. [Universal
Robina Sugar Milling Corporation
(URSUMCO) vs. Caballeda, G.R. No.
156644, July 28, 2008]
An employer is free to impose a retirement age
less than 65 for as long as it has the employees’
consent. [Alpha C. Jaculbe vs. Silliman
University, G.R. No. 156934, March 16, 2007]
An employee who has rendered at least 20 years
of service may retire under RA 1616, and receive a
retirement gratuity of 1 month salary for every
year of service. MC No. 26-96, on the other hand,
provides for the computation of the separation
benefit applicable to permanent officials who are
not qualified to retire under any existing law and
those who are qualified to retire. Those who are
not qualified, as long as they served for more than
a year, may avail of the gratuity corresponding to
their length of service. As for those employees
who are qualified to retire, they may only receive a
separation pay equivalent to the difference
between the incentive package and the retirement
benefit under any existing law. [Metropolitan
Waterworks and Sewerage System vs.
Gabriel Advincula, et al., G.R. No. 179217,
February 2, 2011, Carpio, J.]
When PNB was privatized, its personality as a
government-owned corporation ceased, and all the
employees therein are deemed retired. The
separated employees are entitled to all the benefits
accruing to them, after PNB cleared them of any
accountability, absent PNB's findings of pending
administrative case against them. [Ang vs.
Philippine National Bank, G.R. No. 178762,
June 16, 2010, Abad, J.]
BUT,
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 117
Employees who were offered appointments and
absorbed by the private concessionaires after
privatization are never separated from service by
virtue of the reorganization pursuant to RA 8041.
[Metropolitan Waterworks and Sewerage
System vs. Advincula, et al., G.R. No. 179217,
February 2, 2011, Carpio, J.]
COMMENT: In both cases, some employees
were absorbed by the company after privatization
took effect. However, these two cases treated the
subsequent appointment of the employees
concerned differently, in that, one considered the
absorbed employees as retired from government
service and entitled to retirement benefits,
whereas the other treated the absorbed employees
as never separated, their service uninterrupted.
Exclusions from coverage
The law does not cover employees of retail, service and
agricultural establishments or operations employing not more
than (10) employees or workers and employees of the National
Government and its political subdivisions, including Government-
owned and/or –controlled corporations, if they are covered by the
Civil Service Law and its regulations. [Labor Advisory on
Retirement Pay Law, supra; Sec. 2, Rules Implementing
the New Retirement Law]
Components of retirement pay
Rules Implementing the New Retirement Law
SEC. 5. Retirement Benefits.
5.1. In the absence of an applicable agreement or
retirement plan, an employee who retires pursuant to the Act
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.
5.2. Components of One-half (1/2) Month Salary.
—For the purpose of determining the minimum retirement pay
due an employee under this Rule, the term “one-half month
salary” shall include all the following:
(a) Fifteen (15) days salary of the employee
based on his latest salary rate. As used herein, the term “salary”
includes all remunerations paid by an employer to his employees
for services rendered during normal working days and hours,
whether such payments are fixed or ascertained on a time, task,
piece or commission basis, or other method of calculating the
same, and includes the fair and reasonable value, as determined
by the Secretary of Labor and Employment, of food, lodging or
other facilities customarily furnished by the employer to his
employees. The term does not include cost of living allowances,
profit-sharing payments and other monetary benefits which are
not considered as part of or integrated into the regular salary of
the employees;
(b) The cash equivalent of not more than five (5)
days of service incentive leave;
(c) One twelfth of the 13th month pay due the
employee;
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
(d) All other benefits that the employer and
employee may agree upon that should be included in the
compensation of the employee’s retirement pay.
5.3. One-half month salary of employees who are
paid by results.—For covered workers who are paid by results and
do not have a fixed monthly rate, the basis for determination of
the salary for fifteen days shall be their average daily salary
(ADS), subject to the provisions of Rule VII-A, Book III of the
Rules Implementing the Labor code on the payment of wages of
workers whoa re paid by results. The ADS is the average salary
for the last twelve (12) months reckoned from the date of their
retirement, divided by the number of actual working days in that
particular period.
 Republic Act No. 7641 amended Article 287
of the Labor Code by providing for retirement pay
to qualified private sector employees in the
absence of any retirement plan in the
establishment. Even a bus conductor paid on
commission basis falls within the coverage of RA
7641 if no retirement scheme was adopted in the
establishment he is working. Thus, his retirement
pay should include the cash equivalent of the 5-
day service incentive leave and 1/12 of the 13 th
month pay. [Rodolfo J. Serrano vs. Severino
Santos Transit, et al., G.R. No. 187698,
August 9, 2010, Carpio Morales, J.]
Rules on Retirement vs. Separation Pay
under Art. 283
1. If there is no prohibition in the
CBA/retirement plan against double
recovery of both the retirement pay and
separation pay under the law - the
employee can get both. [Aquino vs.
NLRC, 206 SCRA 118 (1992)]
2. Otherwise, the employee can only get
either. [Carlos F. Solomon, et al. vs.
Associate of International Shipping
Lines, Inc., G.R. No. 156317, April 26,
2005; Ma. Isabel T. Santos vs. Servier
Phils., Inc., G.R. No. 166377,
November 28, 2008]
Retirement pay under RA 7641 vis-à-vis
retirement benefits under SSS and GSIS laws
Labor Code
Art. 287. Retirement. Any employee may be retired
upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned under
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 118
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.
SSS Law
SEC. 12-B. Retirement Benefits.—
(a) A member who has paid at least one hundred twenty (120)
monthly contributions prior to the semester of retirement; and
who (1) has reached the age of sixty (60) years and is already
separated from employment or has ceased to be self-employed
(2) has reached the age of sixty (65) years, shall be entitled for
as long as he lives to the monthly pension: Provided, That he
shall have the option to receive his first eighteen (18) monthly
pensions in lump sum discounted at the preferential rate of
interest to be determined by the SSS.
(b) A covered member who is sixty (60) years old at
retirement and who does not qualify for pension benefits under
paragraph (a) above, shall be entitled to a lump sum benefit
equal to the total contributions paid by him and on his behalf:
Provided, That he is separated from employment and is not
continuing payment of contributions to the SSS on his own.
(c) The monthly pension shall be suspended upon the re-
employment or resumption of self-employment of a retired
employee who is less than sixty-five (65) years old. He shall
again be subject to Section Eighteen and his employer to Section
Nineteen of this Act.
(d) Upon the death of the retired member, his primary
beneficiaries as of the date of his retirement shall be entitled to
receive the monthly pension: Provided, That if he has no primary
beneficiaries and he dies within sixty (60) months from the start
of his monthly pension, his secondary beneficiaries shall be
entitled to a lump sum benefit equivalent to the total monthly
pensions corresponding to the balance of the five-year-
guaranteed period, excluding the dependents’ pension.
(e) The monthly pension of a member who retires after
reaching sixty (60) shall be the higher of either: (1) the monthly
pension computed at the earliest time he could have retired had
he been separated from employment or ceased to be self-
employed plus all adjustments thereto; or (2) the monthly
pension computed at the time when he actually retires.
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

GSIS Law upkeep. A pension partakes of the nature of

SEC. 13. Retirement Benefits.—
(a) Retirement benefits shall be:
(1) the lump sum payment as defined in this Act
payable at the time of retirement plus an old-age pension benefit
equal to the basic monthly pension payable monthly for life,
starting upon expiration of the five-year (5) guaranteed period
covered by the lump sum; or
(2) cash payment equivalent to eighteen (18)
months of his basic monthly pension plus monthly pension for life
payable immediately with no five-year (5) guarantee.
(b) Unless the service is extended by appropriate
authorities, retirement shall be compulsory for an employee at
sixty-five (65) years of age with at least fifteen (15) years of
service: Provided, That if he has less than fifteen (15) years of
service, he may be allowed to continue in the service in
accordance with existing civil service rules and regulations.
“retained wages” of the retiree for a dual purpose:
(1) to entice competent people to enter the
government service; and (2) to permit them to
retire from service with relative security, not only
for those who have retained their vigor, but more
so for those who have been incapacitated by illness
or accident.
A retiree, after receiving retirement benefits under
one law, but later on was discovered not qualified
thereunder is not all throughout disqualified to
receive retirement benefits under any other
existing retirement law. This does not amount to
double retirement nor does it amount to
conversion of retirement mode.

SEC. 13-A. Conditions for Entitlement.—A member who retires
from the service shall be entitled to the retirement benefits
enumerated in paragraph (a) of Section 13 hereof: Provided,
That:
(1) he has rendered at least fifteen (15) years of service;
(2) he is at least sixty (60) years of age at the time of
retirement; and
(3) he is not receiving a monthly pension benefit from
permanent total disability.
 The provision “as of the date of his
retirement” which qualifies the term “primary
beneficiaries” was nullified by the Supreme Court
for violating the due process and equal protection
clauses of the Constitution. [Dycaico vs. SSS,
G.R. No. 161357, November 30, 2005]
The conversion under the law is one that is
voluntary choice made by the retiree. On the
other hand, in a case where retiree was later on
discovered to be disqualified to receive retirement
benefits under one law, his receipt of retirement
benefits based on another retirement law is not
conversion, because it is not a voluntary choice of
the retiree, but a consequence of his
disqualification.
In this case, retired prosecutors of the National
Prosecution Service, pursuant to RA 10071, is not
entitled to receive the benefits granted to all those
who retired prior to the effectivity thereof.
Rules On Double Recovery

1. If CBA/Retirement Plan prohibits double

CASE:
recovery of separation pay and retirement
benefit – then grant only one benefit,
Government Service Insurance System vs.
whichever is greater.
Fernando P. De Leon,
G.R. No. 186560, November 17, 2010,
2. If CBA/Retirement Plan contains no prohibition,
Nachura, J.
grant both. [Aquino vs. NLRC, 206 SCRA
The inflexible rule in our jurisdiction is that social
118, 122-123 (1992)]
legislation must be liberally construed in favor of
the beneficiaries. Retirement laws should be
3. Same is true with retirement plan vs. CBA.
liberally construed in favor of the retiree, because
[Aquino, supra, citing BLTB Co. vs. CA, 71
their objective is to provide for the retiree's
SCRA 470; see also Salomon vs. Association
sustenance and even comfort when he no longer
of International Shipping Lines, Inc., 457
has the capability to earn a livelihood. All doubts
SCRA 254, 262 (2005)]
must be resolved in favor of the retiree to achieve
their humanitarian purpose.
4. If CBA does not require payment of retirement
pay “in addition” to retrenchment pay, then no
Retirement benefits are a form of reward for an
double recovery.
employee's loyalty and service to the employer,
and are intended to help the employee enjoy the
 Retirement under the CBA is subject to
remaining years of his life, lessening the burden of
judicial review and nullification. A CBA, as a labor
having to worry about his financial support or
contract, is not merely contractual in nature but

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 119

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
impressed with public interest. It can be nullified
for being contrary to law, public morals, or public
policy. [Cainta Catholic School vs. Cainta
Catholic School Employees Union, 489 SCRA
468, 485 (2006)]
 Retirement laws are liberally construed in
favor of the persons intended to be
benefited.
HOWEVER,
 When the employer’s retirement plan
precludes employees, whose services were
terminated for cause, from availing retirement
benefits, such cannot be granted for lack of
consensual and statutory basis for the grant of
retirement benefits. [Divina S. Lopez vs.
National Steel Corporation, G.R. No. 149674,
Feb. 16, 2004 (423 SCRA 109)]
Voucher records – indicates the
amounts disbursed
Clearance – is a certification
clearing an employee of
any accountability. [Tiu vs.
Pasaol, April 30, 2003,
Quisumbing, J.]
MANAGEMENT PREROGATIVE:
MANAGEMENT PREROGATIVE – except as
otherwise limited by special laws, an employer is
free to regulate, according to his own description
and judgment, all aspects of employment,
including hiring, work assignments, working
methods, time, place and manner of work, tools to
be used, processes to be followed, supervision of
workers, working regulations, transfer of
employees, work supervision, lay-off of workers
and discipline, dismissal and recall of workers.
- As long as the company’s exercise of the
same is exercised in good faith for the
advancement of the employer’s interest,
and not for the purpose of defeating or
circumventing the rights of the employees
under special laws or valid agreements, the
courts will uphold them. [Capitol Mediacal
Center, Inc. v. Meris, (2005)]
The law on ULP is not intended to deprive the
employer of his fundamental right to prescribe and
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 120
enforce such rules as he honestly believes to be
necessary to the proper, productive and profitable
operation of his business.
Where, however, an employer does violate the Act
and is found guilty of the commission of ULP, it is
no excuse that his conduct was unintentional and
innocent.
A. Discipline
Except as limited by special laws, an employer is
free to regulate, according to his own discretion
and judgment, all aspects of employment,
including hiring, work assignments, working
methods, time, place, and manner of work, tools to
be used, process to be followed, supervision of
workers, working regulations, transfer of
employees, lay-off workers and the discipline,
dismissal and recall of work. [NLR v. Insular La
Yebana Co. (1961)]
B. Transfer of employees
Unless there are instances which directly point to
interference by the company with the employees
right to self-organization, the transfer of an
employee should be considered within the bounds
allowed by law, e.g. where despite his transfer to a
lower position, his original rank and salary
remained undiminished. [Rubberworld Phils., Inc.
et al. v. NLRC (1989)]
C. Productivity standard
As a general concept, “poor performance” is
equivalent to inefficiency and incompetence in the
performance of official duties. Under Art. 282 of
the LC, an unsatisfactory rating can be a just
cause for dismissal only if it amounts to gross and
habitual neglect of duties. Thus, the fact that an
employee’s performance is found to be poor or
unsatisfactory does not necessarily mean that the
employee is grossly and habitually negligent of his
duties. Gross negligence implies a want or absence
of or failure to exercise slight care of diligence, or
the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any
effort to avoid them. [Universal Staffing Services,
Inc. v. NLRC, 559 SCRA 221]
D. Grant of Bonus
There is unfair and unjust discrimination in the
granting of salary adjustments where the evidence
shows that (a) the management paid the
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society
employees of the unionized branch; (b) where
salary adjustments were granted to employees of
one of its non-unionized branches although it was
losing in its operations; and (c) the total salary
adjustments given every ten of its unionized
employees would not even equal the salary
adjustments given one employee in the non-
unionized branch. [Manila Hotel Company v. Pines
Hotel Employees Ass’n. and CIR (1972)]
E. Change of working hours
Except as limited by special laws, an employer is
free to regulate, according to his own discretion
and judgment, all aspects of employment,
including hiring, work assignments, working
methods, time, place and manner of work, tools to
be used, processes to be followed, supervision of
workers, workin regulations, transfer of
employees, work supervision, lay-off of workers
and discipline, dismissal and recall of workers.
[SMB Sales v. Oples, 8 Feb. 1989]
F. Marital discrimination
Art. 136. STIPULATION AGAINST MARRIAGE
It is unlawful for an employer to require as a condition of
employment or continuation of employment that:
A woman employee shall not get married;
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.
G. Post-employment ban
Rivera v. Solidbank (2006)
Undeniably, petitioner retired under the SRP and
received and certain sum of money from
respondent. However, petitioner is not proscribed,
by waiver or estoppels, from assailing the post-
retirement competitive employment ban since
under Art. 1409 NCC, those contracts whose
cause, object or purpose is contrary to law,
morals, good customs public order or public policy
are inexistent or void from the beginning.
Estoppels cannot give validity to an act that is
prohibited by law or one that is against public
policy.
Respondent, as employer, is burdened to establish
that a restrictive covenant barring an employee
from accepting a competitive employment after
retirement or resignation is not an unreasonable or
oppressive, or in undue or unreasonable restraint
Bar Operations 2012: Ace the Bar, Race the Car
For Private and Personal Use Only 121
of trade, thus, unenforceable for being repugnant
to public policy.
There are two principal grounds on which the
doctrine is founded that a contract in restraint of
trade is void as against public policy. One is, the
injury to the public by being deprived of the
restricted party’s industry; and the other is the
injury to the party himself by being precluded from
pursuing his occupation, and thus being prevented
from supporting himself and his family.
In determining whether the contract is reasonable
or not, the trial court should consider the following
factors: (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.
We are not impervious of the distinction between
restrictive covenants barring an employee to
accept a post-employment competitive
employment or restraints on trade in employment
contracts and restraints on post-retirement plans
either incorporated in employment contracts or in
CBA between the employer and the union of
employees, or separate from said contracts or CBA
which provide that an employee who accepts post
retirement competitive employment will forfeit
retirement and other benefits or will be obliged to
restitute the same to the employer. The strong
weight of authority is that forfeitures for engaging
in subsequent competitive employment included in
pension and retirement plans are valid even
though unrestricted in time or geography.
A restriction in the contract which does not
preclude the employee from engaging in
competitive activity, but simply provides for the
loss or rights or privileges if he does so is not in
restraint of trade.
A post-retirement competitive employment
restriction is designed to protect the employer
against competition by former employees who may
retire and obtain retirement or pension benefits
Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

and, at the same time, engage in competitive

employment.

H. Limitations in its exercise

So long as a company’s prerogatives are exercised

in good faith and for the advancement of the
employer’s interest and not for the purpose of
defeating or circumventing rights of the employees
under special laws or under valid agreements, the
SC will uphold them.

Nonetheless, while it is true that the parties to a

contract may establish any agreements, terms,
and conditions that may deem convenient, they
should not be contrary to law, morals, good
customs, public order or public policy. The
relations between capital and labor are not merely
contractual, impressed as they are with so much
public interest that the same should yield to the
common good. [Phil. Telegraph and Telephone Co.
v. NLRC, 23 May 1997]

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 122

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

VI. SOCIAL LEGISLATION

The following are the topics covered:

1. SSS Law (RA 8282)
2. GSIS Law (RA 8291)
3. Limited Portability Law (RA 7699)
4. Employee’s Compensation –
Coverage and when compensable

SOCIAL SECURITY ACT OF 1997 GOVERNMENT SERVICE INSURANCE

(RA 8282) ACT OF 1997 (RA 8291)
 EMPLOYER – any person, natural  EMPLOYER – the national
or juridical, domestic or foreign who government, its political
carries on in the Philippines any subdivisions, branches or
trade, business, industry instrumentality, including GOCCs,
undertaking or activity of any kind and financial institutions with
and uses the services of another original charters, the Constitutional
WHO ARE person who is under his orders as Commissions and the judiciary.
COVERED regards employment.
EXEMPT EMPLOYER – government
and any of its political subdivisions,
branches and instrumentality,
including GOCC.
 EMPLOYEE – any person who
performs services for an employer
who receives compensation for such
services, where there is EER.
 SELF-EMPLOYED – considered  EMPLOYEE – any person receiving
both employer and employee compensation while in service of an
employer as defined herein,
whether by election or
appointment.
 Legal spouse entitled for support;
DEPENDENTS  Child, whether legitimate, legitimated, legally adopted or
illegitimate;
 Parents dependent for support
 Unmarried;  -do-
CONDITIONS FOR  Not gainfully employed;  -do-
CHILD TO BE  Has not reached 21 years of age;  Not over age of majority; OR
CONSIDERED OR  *age of majority.
DEPENDENT  Incapable of supporting himself
either physically or mentally prior to
*21 years of age

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 123

Labor Law Bar Notes
University of Cebu Law Students Society Labor Law Society

BENEFICIARIES
1. PRIMARY  Dependent spouse until remarriage;  Legal, dependent spouse until
AND remarriage; AND
 Dependent legitimate or legitimated  Dependent children.
or legally adopted and illegitimate
children.
2. SECONDA
RY  Dependent parents;  Dependent parents AND
 Absent primary and secondary  Legitimate descendants subject to
beneficiaries, any other person restrictions on dependent children,
designated by member as legitimate descendants.
secondary beneficiary
3. OTHERS
 As to DEATH BENEFITS, if no
beneficiary qualifies under the Act,
benefits shall be paid to legal heirs
in accordance with the law of
succession.
 Monthly pension  ALL members
 Dependent’s pension - Life insurance
 Retirement - Retirement
 Death - Disability
BENEFITS  Permanent disability - Survivorship
 Funeral - Separation
 Sickness - Unemployment
 Maternity (ONLY 1st four deliveries  JUDICIARY
OR miscarriages) - Life insurance ONLY – ALL
 Loan grant TAX EXEMPT

Bar Operations 2012: Ace the Bar, Race the Car

For Private and Personal Use Only 124

Limited Portability Law (RA 7699):

Provisions of any general or special law or rules

and regulations to the contrary notwithstanding, a
covered worker who transfers employment from
one sector (i.e, private/public) to another or is
employed in both sectors shall have his credible
services or contributions in both the SSS and GSIS
credited to his service or contribution record in
each of the Systems and shall be tatalized for
purposes of old-age, disability, survivorship and
other benefits in case the covered member does
not qualify for such benefits in either or both
Systems without totalization.

Overlapping periods of membership shall be

credited only once for purposes of totalization.
All contributions paid by such member personally,
and those that were paid by his employers to both
Systems shall be considered in the processing of
benefits which he can claim from either or both
Systems.

The amount of benefits to be paid by on System

shall be in proportion to the number of
contributions actually remitted to the System.

Employee’s Compensation – Coverage and

when compensable

Coverage

f. Every employer
g. Every employee not over 60 years old
h. Any employee over 60 years old if he had been
paying contributions prior to the age of 60 and
has not been compulsorily retired
i. An employee who is coverable by both GSIS
and SSS shall be compulsorily covered by both
Systems.

Grounds for Compensability

a. For the injury and the resulting disability or

death to be compensable, the injury must be
the result of accident arising out of and in the
course of the employment.
b. For the sickness and resulting disability or
death to be compensable, the sickness must be
the result of and occupational disease listed
under the Annex of the IR dealing with
occupational diseases with the conditions set
therein satisfied. Otherwise, proof must be
shown that the risk of contracting the disease
is increased by the working conditions.

VII. LABOR RELATIONS LAW
The following are the topics covered:
1. Right to Self-organization
2. Right to Collective Bargaining
3. Right to Peaceful and Concerted Activities
1. Right to Self-organization
Who may unionize for purposes of collective
bargaining
a. All Employees (General Rule)
Right to Self-Organization: Coverage
Art. 243. All employees of all kind of employers – public or
private, profit or non-profit, commercial or religious.
Employee: Definition
Art. 212 (f). Employee includes:
 Any person in the employ of an employer;
 The term shall not be limited to the employees of a
particular employer, unless this code explicitly states;
 It shall include any individual whose work has ceased
as a result of or in connection with any current labor
dispute or because of any unfair labor practice if he has
not obtained any other substantially equivalent and
regular employment.
Rank-and-File Employees: Definition
IRR Book V Rule 1 Sec. 1:
(nn) “Rank-and-File Employee” refers to an employee whose
functions are neither managerial nor supervisory in nature.
Art. 244 now allows employees of non-profit
organizations to join, form and/or assist labor
organizations. (FEU-Dr. Nicanor Reyes Medical
Foundation, Inc. v. Trajano, 1992)
b.Government Corporate Emplotees
(Corporations created under the Corporation
Code)
Art. 244. Right of Employees in the Public Service.
Employees of government corporations established under the
corporation code shall have the right to organize and to bargain
collectively with their respective employers.
c. Supervisory Employees
Art. 212 (m). Supervisory employees are those who, in the
interest of the employer, effectively recommend such managerial
actions if the exercise of such authority is not merely routinary or
clerical in nature but requires the uses of independent judgment.
Art. 245. Ineligibility of Managerial Employees to join any
Labor Organization; Right of Supervisory Employees.
Managerial employees are not eligible to join, assist or form any
labor organization. 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.
Why can’t supervisors join a union of rank-
and-file?
This policy of segregation is founded on fairness
to the employer and the employees themselves. It
will be detrimental to the employer if the
supervisors and the rank-and-file, as members of
only one union, could take a common stand
against the employer (Azucena).
What is the Effect of Mixed Membership?
As stated in Article 245-A the employees that
should not have been included in membership are
automatically deemed removed from the list of
membership.
Note: The rank and file union and the supervisors’
union operating the same establishment may join
the same federation or national union. (Art. 245).
c. Aliens
Art. 269. Prohibition against Aliens;
Exceptions
General Rule. They are strictly PROHIBITED from
engaging directly or indirectly in all forms of trade
union activities.
Exception. Aliens working in the country who:
- Have valid permits issued by DOLE;
- Reciprocity: That said aliens are nationals of a
country which grants the same or similar rights to
Filipino workers.
e. Security Guards
The security guards and other personnel employed
by the security service contractor shall have the
right:
 To form, join, or assist in the formation of
a labor organization of their own choosing
for purposes of collective bargaining and
 To engage in concerned activities which
are not contrary to law including the right
to strike.(D.O. No.14 Series of 2001
Guidelines Governing the Employment
and Working Conditions of Security
Guards and Similar Personnel in the
Private Security Industry)
In December 1986, President Corazon Aquino
issued EO No.111 which eliminated the
provision on the disqualification of security
guards and with that security guards were thus
free to join a rank and file organization. Under the
old rule, security guards were barred from joining
labor organizations of the rank-and-file but under
RA 6715, they may now freely join a labor
organization with the rank-and-file or the
supervisory union, depending on their rank.
(Manila Electric Co. v. Sec. of Labor, 1991)
By the very nature of their functions, they assist
and act in confidential capacity to, or have access
to confidential matters of, persons who exercise
managerial functions in the field of labor relations.
(Thus there is fiduciary and confidential
relationship between manager and employer.) It is
not far-fetched that in the course of CB, they
might jeopardize that interest which they are duty
bound to protect. (Metrolab Industries Inc. v.
Roldan-Confessor, 1996)

Nomenclature not Controlling: Function Test

Who cannot form, join or assist labor The mere fact that an employee is designated
organizations “manager” does not ipso facto make him one.
Designation should be reconciled with the actual
a. Managerial Employees and Confidential
job description of the employee. (Paper
Employees
Industries Corp. of the Philippines v.
Functional Test Laguesma, 2000)

Art. 212 (m) “Managerial Employee” is one who is vested with

powers or prerogatives to: b. Employee-Member of Cooperative
(1) lay down and execute management policies,
AND/OR
(2) to hire, transfer, suspend, lay off, recall, discharge, assign or The right to collective bargaining is not available to
discipline employees. an employee of a cooperative who at the same
time is a member and co-owner thereof.
Art. 245. Ineligibility of Managerial Employees to Join any
Labor Organization; Right of Supervisory Employees
Managerial employees are NOT eligible to join, assist or form any Exclusion: Fact of Ownership Controlling
labor organization;  The fact of ownership of the cooperative
Supervisory employees shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, and not the involvement in the
assist or form separate labor organizations of their own. management thereof, which disqualifies a
Art. 245-A. Effect of inclusion as Members of Employees
member from joining any labor
Outside the Bargaining Unit. The inclusion as union members organization within the cooperative.
of employees outside the bargaining unit shall not be a ground
for the cancellation of the registration of the union. Said
employees are automatically deemed removed from the list Exclusion: Rationale
of membership of said union.  They cannot invoke the right to collective
bargaining for “certainly an owner cannot
Confidential Employees: (Nature of Access bargain with himself or his co-owners.”
Test) (Benguet Electric Cooperative v.
Ferrer-Calleja)
Confidential employees are those who:
Assist or act in a confidential capacity (integral part of the job)
Formulate, determine, and effectuate management policies in the c. Employees of International Organizations
field of labor relations.

Note: These two criteria are cumulative, both must be met if an  International organizations are endowed
employee is to be considered as confidential. with some degree of international legal
Even if an employee has access to confidential labor relations
information BUT such is merely incidental to his duties and
personality. They are granted
knowledge hereof is NOT necessary in the performance of such jurisdictional immunity.
duties, said access does not render the employee a confidential
employee. (San Miguel Corp. Supervisors v. Laguesma, 1997)
 A certification election cannot be conducted
in an international organization which the
Exclusion of Confidential Employees:
Rationale Philippine Government has granted
immunity from local jurisdiction.
Employees should not be placed in a position
involving a potential conflict of interests.
 (International Catholic Migration
Commission v. Calleja, 1990)
d. Non-Employees
 Since the persons involved are not
employees of the company, they are not
entitled to the constitutional right to join or
form a labor organization for purposes of
collective bargaining. (Republic Planters
v. Laguesma, 1996)
 Respondents are found not to be
employees of the company, they are not
entitled to the constitutional right to join or
form a labor organization for purposes of
collective bargaining. Citing La Suerte
Cigar and Cigarette Factory v. Director
of Bureau of Labor Relations the court
here reiterated, “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.
Failure to establish this juridical
relationship between the union members
and the employer affects the legality of the
union itself. (Singer Sewing Machine Co.
v. Drilon, 1993)
e. Members of the Armed Forces of the
Philippines, Policemen, Police Officers,
Firemen and Jail Guards (E.O. 180, Sec. 4)
f. High-level or managerial government
employees (E.O. 180, Sec. 3)
 High-level employee is one whose
functions are normally considered policy
determining, managerial or one whose
duties are highly confidential in nature.
Managerial Functions:
1) Effectively recommend managerial
actions;
2) Formulate or execute management
policies and decisions; or
3) Hire, transfer, suspend, lay-off, recall,
dismiss, assign, or discipline employees.
Right to Self-Organization: Basis
1. 1987 Constitution
Art. III, Sec. 8. The right of the people, including those
employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall
not be abridged.
Art. XIII, Sec. 3. The state shall afford full protection to labor,
local and overseas, organized and unorganized, and promote full
employment opportunities for all. It shall guarantee the rights of
all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right
to strike in accordance with law.
2. Labor Code
Art. 243. Coverage and Employees’ Right to Self-Organization
All persons employed in commercial, industrial and agricultural
enterprises and in religious, charitable, medical, or educational
institutions, whether operating for profit or not, shall have the
right to self-organization and to form, join or assist labor
organizations of their own choosing for purposes of collective
bargaining.
Ambulant, intermittent, and itinerant workers, self-employed
people, rural workers and those without any definite employers
may from labor organizations for their mutual aid and protection.
Right to Self-Organization: A Fundamental
Right
 Self-organization is a fundamental right
guaranteed by the Philippine Constitution
and the Labor Code. Employees have the
right to form, join or assist labor
organizations for the purpose of collective
bargaining or for their mutual aid and
protection. Whether employed for a
definite period or not, any employee shall
be considered as such, beginning on his
first day of service, for purposes of
membership in a labor union. (UST Faculty
Union v. Bitonio)
Right to Self-Organization: Extent and Scope
Art. 246: Non-abridgement of Right to Self-Organization.
It shall be lawful for any person to restrain, coerce, discriminate
against or unduly interfere with employees and workers in their
exercise of the right to self-organization.
Right to Self-Organization: Scope
1. Right to form, join and assist labor organizations
of their own choosing for the purpose of collective
bargaining through representatives (Art. 246);
2. Right to engage in lawful concerted activities for
the same purpose or for their mutual aid and
protection (Art. 246);
3. Right not to exercise it, the right NOT to join,
affiliate with, or assist any union, and to disaffiliate
or resign from a labor organization, is subsumed in
the right to join, affiliate with, or assist any union,
and to maintain membership therein. It is self-
evident that just as no one should be denied the
exercise of a right granted by law, so also, no one
should be compelled to exercise such a conferred
right. (Reyes v. Trajano, 1992)
 In the very recent case of Heritage Hotel
Manila v. PIGLAS-Heritage, GR
No.177024, October 30, 2009, the
Supreme Court reiterated the rule that the
right of any person to join an organization
also includes the right to leave that
organization and join another one.
 Right to withdraw from the organization:
the right of the employees to self-
organization is a compelling reason why
their withdrawal from the cooperative must
be allowed. As pointed out by the union,
the resignation of the member-employees
is an expression of their preference for
union membership over that of
membership in the cooperative. (Central
Negros Electric Cooperative v. Sec. of
Labor, 1991)
Art. 277. Miscellaneous Provisions
 Any employee, whether employed for a
definite period or not, shall, beginning on
his first day of service, be considered as an
employee for purposes of membership in
any labor union. To become a union
member, an employee must, as a rule, not
only signify the intent to become one, but
also take some positive steps to realize
that intent. (UST Faculty Union v.
Bitonio, 1999)
2. Bargaining unit:
(a) Test to determine the constituency of an
appropriate bargaining unit
(W-A-P-E)
1) Will of the Employees (Globe
Doctrine);
2) Affinity and unity of Employees
interest, such as substantial similarity
of works and duties or similarity of
compensation and working conditions;
3) Prior CB history;
4) Employment status i.e. temporary,
seasonal, and probationary. (UP v.
Ferrer-Calleja, 1992 citing Democratic
Labor Association v. Cebu Stevedoring
Co.)
Community or Mutuality of Interests
 Fundamental Test: 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.
This is related to the policy of the law in
ensuring the right to collective bargain.
(UP v. Ferrer-Calleja, 1992)
Mutuality of Interests: Rationale
 There are greater chances of success for
the collective bargaining process. The
bargaining unit is designed to maintain the
mutuality of interest among the employees
in such unit.
 Reason to dissolve, change or expand a
certain bargaining unit: When THE
INTEREST BETWEEN GROUPS HAS
CHANGED OVER TIME.
Collective Bargaining History
 The existence of a prior collective
bargaining history is neither decisive nor
conclusive in the determination of what
constitutes an appropriate bargaining unit.
(San Miguel Corp. v. Laguesma, 1994)
Geography – Location
Geography and location only play a significant role
if:
1. The separation between the camps and the
different kinds of work in each all militate
in favor of the system of separate
bargaining units;
2. When the problems and interests of the
workers are peculiar in each camp or
department;
3. The system of having one collective
bargaining unit in each camp has operated
satisfactorily in the past. (Benguet
Consolidated Inc. and Balatok Mining Co.
v. Bobok Lumberjack Association, 1958).
Size – Composition
 It bears noting that the goal of the DOLE is
geared towards “a single employer wide
unit which is more to the broader and
greater benefit of the employees working
force.” The philosophy is to avoid
fragmentation of the bargaining unit so as
to strengthen the employees’ bargaining
power with the management. To veer
away from such goal would be contrary,
inimical and repugnant to the objectives of
a strong and dynamic unionism. (Philippine
Diamond Hotel and Resort, Inc. v. Manila
Diamond Hotel and Employees Union,
2006)
 Since the confidential employees are very
few in number and are by practice and
tradition identified with the supervisors in
their role as representatives of
management vis-à-vis the rank and file
employees, such identity of interest has
allowed their inclusion in the bargaining of
supervisors for purposes of collective
bargaining in turn as employees in relation
to the company as their employer. This
identity of interest logically calls for their
inclusion in the same bargaining unit and
at the same time fulfills the law’s objective
of insuring to them the full benefit of their
right to self organization and to collective
bargaining, which could hardly be
accomplished if the respondent
association’s membership were to be
broken up into five separate ineffective tiny
units. Creating fragmentary units would
not serve the interests of industrial peace.
The breaking up of bargaining units into
tiny units will greatly impair their
organizational value. (Filoil Refinery
Corporation v. Filoil Supervisory and
Confidential Employees Union, 1972)
Corporate Entities
 GENERAL RULE: Two companies having
separate juridical personalities shall NOT
be treated as a single bargaining unit.
 EXCEPTION: Pervasive Unitary Aspect of
Management Doctrine – The cross-linking
of the agencies command, control, and
communication systems indicate their
unitary corporate personality. (Philippine
Scouts Veterans v. Torres)
Principles in determining whether to establish
separate bargaining units: (Indophil Textile Mills
Workers Union v. Calica, 1992; Diatagon Labor
Federation v. Ople, 1980)
1. The existence of a bonafide business
relationship between the 2 companies is
not proof of being a single corporate entity,
especially when the services provided by
the other company are merely auxiliary.
2. The fact that there are as many bargaining
units as there are companies in a
conglomeration of companies is a positive
proof that a corporation is endowed with a
legal personality DISTINCTLY ITS OWN,
independent and separate from other
corporations.
3. Separate legitimate purposes militate
against treating one corporation as an
adjunct or alter ego of the other.
4. The fact that the businesses are related,
that some of the employees are the same
persons working in the other company and
the physical plants, offices and facilities are
in the same compound are NOT sufficient
to justify piercing the corporate veil. In
Umali vs. CA, legal corporate entity is
disregarded only if it is sought to hold the
officers and stockholders directly liable for
a corporate debt or obligation.
Spun-off corporations
The transformation of companies is a management
prerogative and business judgment which the
courts cannot look into unless it is contrary to law,
public policy or morals. If, considering the spin-
offs, the companies would consequently have their
respective and distinctive concerns in terms of
nature of work, wages, hours of work, and other
conditions of employment. The nature of their
products and scales of business may require
different skills, volumes of work, and working
conditions which must necessarily be
commensurate by different compensation
packages. (San Miguel Union v. Confesor, 1996)
Unit Severance and Globe Doctrine
Globe Doctrine: Concept
  A practice designated as the “Globe
Doctrine,” which sanctions the holding of
a series of elections, not for the purpose
of allowing the group receiving an overall
majority of votes to represent all
employees, but for the specific purpose of
permitting the employees in each of the
several categories to select the group
which each chooses as a bargaining unit.
(Kapisanan ng mga Manggagawa sa
Manila Road Co. v. Yard Crew Union,
1960)
Globe Doctrine: Rationale
 Highly skilled workers have to separate to
increase their market value. It is best
explained in the context of a market place and
the demand of employment on such market
place. The GLOBE DOCTRINE usually applies
to employees with rare skills or highly technical
ones.
Effect of Prior Agreement
 Prior agreement as to the inclusion or
exclusion of workers in 3 bargaining unit or
prohibition from forming their own agreed
upon by the corporation with the previous
bargaining representatives can never bind
subsequent federations. (General Rubber &
Footwear Corp. v. BLR, 1987)
 a. Unorganized establishments;
 RATIONALE: It is a curtailment of the right to
self-organization. During the freedom period,
the parties may not only renew the existing
collective bargaining agreement but may also
propose and discuss modifications or
amendments thereto. (DLSU v. DLSUEA,
2000)
Art. 255. Exclusive Bargaining and Workers’ participation
in the policy and decision making
General Rule: 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 a unit for the purpose of collective bargaining.
Exception: 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, to participate in
the policy and decision-making processes of the establishment
where they are employed insofar as said processes will directly
affect their rights, benefits and welfare. For this purpose,
workers and employers may form labor-management councils:
Provided, that the representatives of the workers in such labor-
management councils shall be elected by at least the majority of
all employees in said establishment.
Appropriate Bargaining Unit: Defined
 A group of employees of a given employer
comprised of all or less than all of the
entire body of employees, which the
collective interests of all the employees
indicate to be best suited to serve
reciprocal rights and duties of the parties
consistent with equity to the employer.
(Belyca Corporation v. Calleja, 1988)
Appropriate Bargaining Unit: Function
 An ELECTORAL DISTRICT – It marks the
boundaries of those who may participate in
a certification election.
 An ECONOMIC UNIT – They are group of
employees with community of interests.
 A SOVEREIGN BODY – It selects the sole
and exclusive bargaining agent.
Voluntary Recognition
Book V, Rule 1, Sec. 1 (bbb)
“Voluntary Recognition” refers to 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 in accordance to Rule VII, Sec 2
of these Rules.
Conditions:
b. Only one union asking for recognition;
c. The members of the bargaining unit did not object to the
projected recognition of the union.
Requirements
Book V Rule VII Sec. 2 – The notice of voluntary recognition
shall be accompanied by the original copy and two (2) duplicate
copies of the following documents:
a. A joint statement under oath of voluntary recognition attesting
to the fact of voluntary recognition;
b. Certificate of posting of the joint statement of voluntary
recognition for fifteen (15) consecutive days in at least two (2)
conspicuous places in the establishment or bargaining unit where
the union seeks to operate;
c. The approximate number of employees in the bargaining unit,
accompanied by the names of those who support the voluntary
recognition comprising at least majority of the members of the
bargaining unit; and
d. A statement that the labor union is the only legitimate labor
organization operating within the bargaining unit.
All accompanying documents of the notice for voluntary
recognition shall be certified under oath by the employer
representative and president of the recognized labor union.

Certification election
 The certification election is the best
method of determining the will of the
workers on the crucial question of who
shall represent them in their negotiations
with the management for a collective
bargaining agreement that will best protect
and promote their interests. It is essential
that there be no collusion against this
objective between an unscrupulous
management and a union covertly
supporting it while professing its loyalty to
labor, or at least that the hopes of labor be
not frustrated because of its representation
by a union that does not enjoy its approval
and support. It is therefore sound policy
that any doubt regarding the real
representation of the workers be resolved
in favor of the holding of the certification
election. This is preferable to the
suppression of the voice of the workers
through the prissy observance of technical
rules that will exalt procedure over
substantial justice. (Port Workers Union of
the Philippines v. Laguesma, 1992)
Purpose
 The purpose of a certification election is
precisely the ascertainment of the wishes
of the majority of the employees in the
appropriate bargaining unit: to be or not to
be represented by a labor organization,
and in the affirmative case, by which
particular labor organization. (Reyes v.
Trajano, 1992)
Nature of proceeding/ effect of private
agreement
 It is not litigation, but a mere investigation
of a non-adversary character. The object
of the proceedings is merely the
determination of proper bargaining units
and the ascertainment of the will and
choice of the employees in respect of the
selection of the bargaining representative.
The determination of the proceeding does
not entail the entry of remedial orders or
redress of rights, but culmination solely in
an official designation of bargaining units
and an affirmation of the employees
expressed choice of bargaining agent.
(Young Men Labor Union Stevedores v.
CIR, 1965)
Implications
 “Technical rules and objections should not
hamper the correct ascertainment of the
labor union that has the support and
confidence of the majority of the workers
and is thus entitled to represent them in
bargaining for the terms and conditions of
their employment.” (Port Workers Union v.
DOLE, 1992)
 It is the most DEMOCRATIC and most
efficacious/effective way. (Samahang
Manggagawa sa Permex v. Secretary of
Labor, 1998)
 It is a STATUTORY POLICY. (Balyca
Corporation v. Ferre-Calleja, 1998)
 Thus it should not be circumvented. There
should be no obstacle in conducting the
certification election. (George & Peter
Lines, Inc. v. Associated Labor Union,
1985)
 Certification election is the fairest and most
effective way of determining which labor
organization can truly represent the
working force. It is a fundamental
postulate that the will of the majority given
expression in an honest election with
freedom on the aprt of the voters to make
their choice, is controlling. (PLUM
Federation of Industrial and Agrarian
Workers v. Noriel, 1978)
Who may vote?
 All employees whether union members or
not, as long as they belong to the
appropriate bargaining unit can vote.
Note: Certification election is different from a
union election. The objective of a union election is
to elect union officers. Thus, in union elections
onlu union members can vote.
In an unorganized establishment

Article 257
A petition shall be filed by a legitimate labor organization.
Upon filing of the petition, the MED-Arbiter shall AUTOMATICALLY
conduct a certification election.
Filing of petition is by A LEGITIMATE labor organization. It
cannot be an unregistered labor organization. This is best read in
relation to Art. 242 which enumerates the rights granted to a
legitimate labor organization and one of those rights granted to a
legitimate labor organization and one of those rights is the right
to be chosen as the exclusive bargaining representative. This is
one way the law encourages union registration.
Venue: BLR Regional Office which issued the petitioning union’s
certificate of registration or certificate of creation of chartered
local.
In an organized establishment
Article 256
1. A petition questioning the majority status shall be filed by a
legitimate labor organization (including mother union and local
chapter).
2. Requisites for petition:
- Verified
- Filed within the 60-day period before expiration of CBA
(freedom period)
- Supported by written consent of at least 25% of ALL employees
in the bargaining unit.
Substantial Support Rule
 Rationale: In organized establishments,
the incumbent sole bargaining agent
should not be easily replaced for that
would disturb industrial stability. To justify
the disturbance, it must appear that at
least a substantial number seeks to have a
new exclusive bargaining unit.
 Note: A union that is merely filing a
MOTION FOR INTERVENTION in a CE filed
by another union need NOT present
substantial support. The substantial
support is only needed when filing for a
petition for certification election.
Discretionary Rule
 If you strictly follow the letter of the law it
would seem to be mandatory. However, if
the petition does not comply with the
substantial support requirement, the BLR
may exercise its discretion in
determining whether or not a certification
election must be conducted. (Scout
Albano Memorial College v. Noriel,
1978)
 A rival union does not have authority to
verify the signatures in the substantial
support requirement. Only the department
of labor has authority to verify. (Today’s
Knitting Free Workers Union v. Noriel,
1977)
Effects of Withdrawal of Signatures
 Before the filing – The withdrawal is
presumed voluntary and it would affect
the propriety of the petition.
 After the filing – The withdrawal is
presumed to be involuntary and not was
procured through duress, coercion, or for a
valuable consideration. (Oriental Tin Can
Labor Union v. Secretary of Labor,
1998)
3. If the petition is filed by a national union or federation, it shall
not be required to disclose the names of the llocal chapter’s
officers and members.
4. Med-Arbiter shall automatically order an election.
5. Requisites for election:
- By secret ballot
- At least majority of ALL eligible voters in the unit must have
cast their votes.
6. Labor union receiving MAJORITY of the valid votes cast shall be
certified as the exclusive bargaining agent of all workers in the
unit.
Election process and procedure (Book V Rule
VIII, IRR)
Who may file?
SECTION 1
1. Any legitimate labor organization may file a petition for
certification election.
2. When requested to bargain collectively, an employer may file a
petition for certification election with the Regional Office.
3. If there is no existing registered collective bargaining
agreement in the bargaining unit, the Regional Office shall, after
hearing, order the conduct of a certification election.
Where to file?
SECTION 2. Regional Office of which issued the petitioning
union’s certificate of registration/certificate of creation of
chartered local.
- The petition shall be heard and resolved by the Med-Arbiter.
- Where two or more petitions involving the same bargaining unit
are filed in one Regional Office, the same shall be automatically
consolidated with the Med-Arbiter who first acquired jurisdiction.
- Where the petitions are filed in different Regional Offices, the
Regional Office in which the petition was first filed shall exclude
others; in which case, the latter shall indorse the petition to the
former for consolidation.
When to file?
SECTION 3. A petition for certification election may be filed
anytime, except:
a. When a fact of voluntary recognition has been entered or a
valid certification, consent or run-off election has been conducted
within the bargaining unit within one (1) year prior to the filing of
the petition for certification election.
- Where an appeal has been filed from the order of the
Med-Arbiter certifying the results of the election, the
running of the one year period shall be suspended until
the decision on the appeal has become final and
executory.
b. When the duly certified union has commenced and sustained
negotiations in good faith with the employer in accordance with
Article 250 of the Labor Code within the one year period referred
to in the immediately preceding paragraph;
c. When a bargaining deadlock to which an incumbent or certified
bargaining agent is a party had been submitted to conciliation or
arbitration or had become the subject of a valid notice of strike or
lockout;
d. When a collective bargaining agreement between the employer
and a duly recognized or certified bargaining agent has been
registered, the petition may be filed only within sixty (60) days
prior to its expiry.
Forced Intervenor
Book V Rule VIII Sec. 7. The incumbent bargaining agent shall
automatically be one of the choices in the certification election as
forced intervenor.
Motion for Intervention
Book V Rule VIII Sec. 8.
a. In an organized establishment:
Any legitimate labor union other than the incumbent bargaining
agent operating within the bargaining unit may file a motion for
intervention with the Med-Arbiter. When to file: during the
freedom period of the collective bargaining agreement.
The form and contents of the motion shall be the same as that of
a petition for certification election.
b. In an unorganized establishment
When to file: The motion shall be filed at anytime prior to the
decision of the Med-Arbiter.
The form and contents shall likewise be the same as that of a
petition for certification election. The motion for intervention
shall be resolved in the same decision issued in the petition for
certification election.
Preliminary Conference; hearing
Book V Rule VIII Sec. 9
Who: The Med-Arbiter shall conduct a preliminary conference and
hearing
When: within the ten (10) days from receipt of the petition to
determine the following:
1. the bargaining unit to be represented;
2. the contending labor unions;
3. possibility of a consent election;
4. the existence of anuy opf the bars to certification election
under Section 3 of this rule; and
5. such other matters as may be relevant for the final disposition
of the case
Order (Sec 13, as amended by D.O. 40-F-03
Series of 2008, Nov. 8, 2008)
Order/Decision on the Petition
Book V Rule VIII Sec 13
Who: the Med-Arbiter shall formally issue a ruling
granting or denying the petition.
When: Within ten (10) days from the last hearing
Except: in an organized establishment where the
grant of petition can only be made after the lapse
of the freedom period.
The ruling for the conduct of certification election
shall state the following:
a. the name of the employer or the
establishment;
b. a description of the bargaining unit;
c. a statement that none of the grounds for
dismissal enumerated in the succeeding
paragraph exists;
d. the names of the contending labor unions
which shall appear in the following order:
 the petitioner unions in the order of the
date of filing of their respective
petitions;
 the forced intervenor; and
 “No union”;
e. to afford an individual an informed choice
where a local/chapter is one of the contending
unions, a directive to an unregistered
local/chapter to personally submit to the
election office its certificate of creation at least
five (5) working days before the actual conduct
of the certification election. Non-submission of
this requirement as certified by the election
officer shall disqualify the local/chapter from
participating in the certification election; and
f. directive to the employer and the contending
union(s) to submit within ten (10) days from
receipt of the order; the certified list of
employees in the bargaining unit, or where
necessary, the payrolls covering the members
of the bargaining unit for the last three (3)
months prior to the issuance of the order.
Certification Election MECHANICS
a. Posting of Notice
Book V Rule IX Sec. 6, IRR:
Who: Election Officer shall cause the posting
What: notice of election precedent prescribes forfeiture of the right
Where: 2 conspicuous places in company premises
to vote by reason of neglect to exercise the
right in past cases. (Reyes v. Trajano,
When: at least 10 days before actual election
1992)
Contents and Notice:
Date and Time of election; e. Challenge Voter
Names of all contending unions;
Description of the bargaining unit;
List of eligible and challenged Voters.  An employer has no standing to question a
certification election since this is the sole
The posting of the notice of election, the information required to
be included therein and the duration of the posting cannot be concern of the workers but may question
waived by the contending unions or the employer. the inclusion of any disqualified employee
in the certification election during the
b. Voting List and Voters exclusion-inclusion proceedings before the
representation officer. (Philippine
 The basis of determining voters may be
Telephone & Telegraph Co. v. Laguesma,
agreed upon by the parties (i.e. the use of
1993)
payroll). (Acoje Workers Union v.
NAMAWU, 1963) f. Voting Day

c. All Employees entitled to vote IRR, Book V Rule IX Sec. 2.

 All rank-and-file employees in the  The election shall be set on a regular

appropriate bargaining unit. The Code business day.
makes no distinction as to their
employment status. All they need to be Organized v. Unorganized Establishment
eligible to support the petition is to belong
Art. 256: Art. 257:
to a bargaining unit. (Airtime Specialists, Organized Unorganized
Inc. v. Director of BLR, 1990) Bargaining Existing, has one None
agent
Petition VERIFIED No need to be
 Employees who have been improperly laid filed verified
off but who have a present, unabandoned Freedom No petition for Not applicable.
Period Certification No freedom
right to or expectation elections. If the election EXCEPT period.
dismissal is under question, employees within 60 days Can file petition
before the anytime.
concerned could still qualify to vote in the expiration of the
elections. (Philippine Fruits v. Torres, collective
bargaining
1992) agreement (See
Art 253 & 253-A)
Rationale for Non-Distinction Policy Take note how
SC inter preted
the term
 Collective bargaining covers all aspects of “WITHIN.”
the employment relation and the resultant
What is the
CBA binds all employees in the bargaining rationale of
unit. All rank and file employees, freedom period
in Organized
probationary or permanent, have a establishments,
substantial interest in the selection of the why is there
none in
bargaining representative. (Reyes v. unorganized
Trajano, 1992) establishments?
It has something
to do with
d. Effect of Non-participation in previous industrial peace.
election
Substantial Must be duly NO substantial
Support supported by support rule.
 Failure to take part in previous elections is Rule 25% of ALL THE Why? Intention
no bar to the right to participate in future MEMBERS OF of law is bring
THE in the union, to
elections. No law, administrative rule or
 APPROPRIATE implement Rules prohibiting the filing of petition for
BARGAINING policy behind
certification election
UNIT. Art. 211 (a).
Percentage
base: all General Rule: The Bureau shall not entertain any
members of an petition for certification election or any other action
appropriate
bargaining unit. which may disturb the administration of duly
What is intent registered existing collective bargaining
and purpose of agreements affecting the parties. (Art. 232 – sec.
law for requiring
the substantial
15 of RA 6715)
support rule?
Law wants to Exceptions: Art. 253, 253-A and 256 of this Code
know the (60 day freedom period)
intention of the
employees. If
they really want Freedom Period
a CE, since they  The last 60n days in a Collective
already have a
bargaining Bargaining Agreement (CBA) is referred to
unit. as the “freedom period” when rival union
representation can be entertained during
EMPLOYER as initiating party the existence of a CBA. It is during this
particular period when the majority status
 An employer may file a petition ONLY when of the incumbent bargaining agent can be
it is requested to bargain collectively. challenged. (Tanduay Distillery Labor Union
v. NLRC, 1987)
Art. 258, par. 1. When an employer may file
petition?  The purpose of the prohibition against the
filing of a petition for certification election
 When requested to bargain collectively, an
outside the so-called freedom period is to
employer may petition the Bureau for an
ensure industrial peace between the
election. If there is no existing certified
employer and its employees during the
collective bargaining agreement in the unit,
existence of the CBA. (Republic Planters
the Bureau shall, after hearing, order a
Bank Union v. Laguesma, 1996)
certified election.
 The premature renewal of a CBA cannot
Art. 258-A Employer as by-stander.
bar the holding of a certification election by
 In all cases, whether the petition for virtue of a bona fide petition filed within
certification election is filed by an employer the freedom period if the clear intention
or a legitimate labor organization, the was to frustrate the constitutional right of
employer shall not be considered a party the employees to self-organization.
thereto with the concomitant right to (Associated Labor Union v. Calleja, 1989)
oppose a petition for certification election.
The employer participation is such
proceedings shall be limited to:
One-Year Ban Rule
a. Being notified or informed of petitions of
such nature; and Book V, Rule VIII, Sec. 3 (a). Within 1 year from fact that
b. Submitting the list of employees during voluntary recognition has been entered, or time of valid
the pre-election conference should the certification, consent or run-off election has been conducted.
Reckoning period: If APPEALED, date when decision is final and
Med-Arbiter act favorably on the petition. executory.

Employer is a TOTAL STRANGER in the process of
Certification Election. Employer has NO STANDING
to file a MOTION TO DISMISS. (PT&T v. Laguesma,
1993)
Book V, Rule VIII, Sec. 14 (d) [formerly sec 14 (c) as
amended by D.O. 40-F-03 Series of 2008, Novemebre 8,
2008].
From the date of recording of voluntary recognition or from valid
certification, consent, run0off election where no appeal on the
results of election is pending.
Negotation Bar Rule
Book V, Rule VIII, Sec. 3 (b): When to file
A petition for certification election my be filed anytime, EXCEPT:
When the duly certified union has commenced and sustained
negotiations in good faith with the employer.
In accordance with Art 250 of the Labor Code
Within one year period referred to in the immediate paragraph.
Sec 14 (e) [formerly sec 14 (d) as amended by D.O. 40-F-03
Series of 2008, November 8, 2008]
The Med-Arbiter may dismiss a petition on any of the following
grounds:
xxx xxx xxx
Where a duly certified union has commenced and sustained
negotiations in accordance with Art. 250 of the Labor Code within
the one-year period referred to in Section 14 of this Rule or
xxx xxx xxx
Contract Bar Rule
Book V, Rule VIII, Sec. 3 (d). When a collective bargaining
agreement between the employer and a duly recognized or
certified bargaining agent has been registered in accordance
with Art 231 of the Labor Code. Where such collective bargaining
agreement is registered, the petition may be filed only within
sixty (60) days prior to its expiry.
Book V, Rule VIII, Sec. 14 (a) (as amended by D.O. 40-F-
03 Series of 2008, November 8, 2008):
The petitioning union or national union/federation is not listed in
the Department’s registry of legitimate labor unions or
that its registritation certificate has been cancelled with
finality in accordance with Rule XIV of these rules.
Contract Bar Rule Applied: Extended CBA
 No petition for CE may be filed after the lapse
of the 60 day freedom period.
 The old CBA is extended until a new one is
filed.
The purpose is to ensure stability in the
relationship of the workers and the company.
Suspension of Election: Prejudicial Question
Rule
 Formal charge of ULP against the employer
for establishing a company union triggers
suspension. (B.F. Goodrich Philippines
Marikina v. B.F. Goodrich Confidential and
Salaried Employees Union)
 Note: The ONLY party who could ask for
the suspension of the CE is the labor union
which filed a complaint for ULP against the
employer.
Suspension of Election: Rationale
 If there is a union dominated by the
company, to which some of the workers
belong, an election among workers and
employees of the company would not
reflect the true sentiment and wishes of
the said workers and employees because
the votes of the members of the dominated
union would not be free. Such charge of
company domination is a prejudicial
question that until decided, shall suspend
or bar proceedings for certification election.
 If it were a labor organization objecting to
the participation in a certification election
of a company-dominated union, as a result
of which a complaint for an unfair labor
practice case against the employer was
filed, and when the court finds that said
union is employer-dominated in the unfair
labor practice case, the union selected
would be decertified and the whole
election proceedings would be rendered
useless and nugatory. There would be an
impairment of the integrity of the collective
bargaining process if a company-
dominated union were allowed to
participate in a certification election.
(United CMC Textile Worker’s Union v. BLR,
1984)
Requirements for validity of certification
election
Voting Turnout
 For the election to be valid, majority of
all eligible voters must have cast their
votes. (Art. 256)
Eligible Voter: Defined
Book V, Rule 1, Sec. 1 (q). “Eligible voter” refers to a voter
belonging to the appropriate bargaining unit that is the subject of
a petition for certification election.
Failure of Election
 Where the number of votes cast in a
certification election is less than the
majority of the number of eligible voters;
AND there are NO material challenged
votes.
Boo V, kRule IX, sec. 17

The election office shall declare a failure of election in the minutes
of the election proceeding.
Failure of Election: Effect
Book V, Rule IX sec 18
It shall NOT bar the filing of a motion for the immediate holding
of another certification or consent election within six (6) months
from the date of the declaration of failure of election.
 Protests not so raised are deemed waived.
(Jisscor Indeoendent Union v. Torres,
1993)
Appeal from Certification Election (Art. 259)
- Appealable: Order of Med-Arbiter
- Where to Appeal: with the Secretary of Labor
- Ground – The rules and regulations or parts established by the
Secretary of Labor for the conduct of election have been violated.
Period for decision: 15 calendar days

Valid Election: Certification of designated

majority union Annulment

Arts. 255, 256:  General allegation of duress is not

sufficient to invalidate a certification
The labor union designated or selected by the majority of the
employees in an appropriate collective bargaining unit shall be election; it must be shown by competent
the exclusive representative of the employees in such unit for the and credible proof. (United Employees
purpose of collective bargaining.
Union of Gelmart Inc. v. Noriel, 1975)
Book V Rule IX Sec 15 (as amended by D.O. 40 F-03 Series of
2008, November 8, 2008) Irregularities that may invalidate certification
The union which obtained a majority of the valid votes cast shall election:
be certified as the sole and exclusive bargaining agent of all the
employees in the appropriate bargaining unit within five (5) days  Inability of workers to vote;
from the day of the election, provided no protest is recorded in
the minutes of the election.
 Failure to safeguard secrecy of the ballot;
 Intimidation of election supervisors; and
Sec. 19 (as amended by D.O. 40 F-03 Series of 2008, November  Neglect in performance of duties.
8, 2008) (Confederation of Citizens Labor Union
When: Within twenty-four (24) hours from final canvass of votes, v. Noriel, 1982)
there being a valid election.

Who: the Election officer shall transmit

Run-off election
What: the records of the case to the Med-Arbiter who shall, within
the same period from receipt of the minutes and result of Requirements
election.

Issue an order proclaiming the results of the election and a. Valid election took place because majority
Certifying the union which obtained a majority of the valid votes of the CBU members voted;
cast as the sole and exclusive bargaining agent on the subject b. The election provides for 3 or more
bargaining unit under any of the following conditions:
No protest was filed or even if one was filed, the same was not
choices. E.g. Union “A”, Union “B”, and No
perfected within the five day period for perfection of the protest. Union, thus there are at least two union
No challenge or eligibility issue was raised or, even if one was candidates;
raised, the resolution of the same will not materially change the
c. “No Choice” receives a majority of the valid
results of the election.
xxxx votes cast;
d. The total number of votes for all
Protests and other questions arising from contending unions is at least 50% of the
conduct of certification election total number of votes cast;
e. There is no unresolved challenge of voter
Requirements in order that a protest filed or election protest;
would prosper f. The run-off election shall be conducted
between the labor unions receiving the two
a. The protest must be filed with the highest number of votes.
representation officer and made of record
in the minutes of the proceedings before Run-Off Election: Illustration
the close of election proceedings, AND
b. The protest must be formalized before the  The CBU has 100 members and eighty of
Med-Arbiter within five (5) days after the which voted. Union “A”=30; Union
close of the election proceedings. “B”=15; Union “C”=15 and No Union=20.
There were no valid votes. Since none got
 the majority of the 80 valid votes and the Choice: Yes
contending unions obtained 60 votes, Union or No
which even exceed one-half a run-off Union
election is proper. The run-off will be
2nd Level of
between the labor unions receiving “the
Choice: If
two highest number of votes.” The “Yes
rematch is NOT between two unions but Union” wins,
between “two highest votes.” Thus the WHICH
run-off will be among Union “A”, “B” and union?
“C” (Azucena) (UST Faculty
Union v.
 At the expiration of the freedom period, Bitonio,
1999)
the employer shall continue to recognize
the majority status of incumbent Conduct Ordered by Voluntarily
bargaining agent, where no petition for the DOLE. agreed upon
certification election is filed. by the parties,
with or
Re-run election without
intervention
Book V, Rule IX sec. 18 from DOLE.
A motion for the immediate holding of another certification or
consent election can be filed within six (6) months from the date Affiliation and disaffiliation of the local union
of the declaration of failure of election. from the mother union

Consent election Affiliation: Purpose and Nature of Relations

 Voluntarily agreed upon by the parties, ART. 211: Declaration of Policy

(c) To foster the free and voluntary organization of a strong and
during the preliminary conference after the united labor movement
receipt of petition for certification election

Book V Rule VIII Sec 10 (as amended by DO 40 F-03 Series

of 2008, Nov. 8, 2008)

The contending unions may agree to the holding of an election. Purpose

In which case, it shall be called a consent election. The Med-
Arbiter shall for with call for the consent election reflecting the
 The sole essence of affiliation is to
parties’ agreement and the call in the minutes of the conference.
increase, by collective action, the common
bargaining power of local unions for the
Certification election v. Consent Election effective enhancement and protection of
their interests. Admittedly, there are times
Certification Consent when without succor and support local
Election Election
unions may find it hard, unaided by other
Purpose Aimed at Merely to
determining determine the support groups, to secure justice for
the sole and issue of themselves. (Phil Skylanders v. NLRC,
exclusive majority 2002)
bargaining representation
agent of all of all the Nature of Relationship (Agency)
employees in workers in the
an appropriate  The mother union, acting for and in
appropriate collective behalf of its affiliate, had the status of an
bargaining bargaining agent while the local remained the
unit for unit.
basic unit of the association, free to serve
purpose of
collective common interest of all its members,
bargaining. subject only to restraints imposed by the
1st Level of constitution and by the by-laws of the
 association. The same is true even if the
local is not a legitimate labor organization.
(Filipino Pipe and Foundry Corp v. NLRC,
1998)
Effect of Affiliation
ART. 245-A. Effect of Inclusion as Members of Employees
outside the Bargaining Unit
The inclusion as members of employees outside the bargaining
unit shall not be a ground for the cancellation of the registration
of the union. Said employees are automatically deemed removed
from the list of membership of said union.

 Locals remain the basic units of  In Toyota Motor Philippines

association, free to serve their own and the Corporation v. Toyota Motor
common interests of all. Inclusion of FFW Philippines Corporation Labor Union
in the registration is merely to stress that and the Secretary of Labor and
they are its affiliates at the time of Employment (GR No. 121084,
registrations. It does not mean that said February 19, 1997), it was held that a
local unions cannot stand on their own. labor organization composed of both rank
Affiliation does not mean they lost their and file and supervisory employees is no
own legal personality (Adamson v. CIR, labor organization at all. Hence, it is not a
1984) legitimate labor organization.
Consequently, because it carries a mixture
Definition: Independent Union/Local Union of rank and file and supervisory
employees, it cannot possess any of the
Book V Rule 1 Sec. 1 (w) Independent Union – a labor
organization operating at the enterprise level that required legal rights of a legitimate labor organization,
personality through independent registration under Art. 234 of including the right to file a petition for
the Labor Code and Rule III Sec. 2-A of the IRR.
certification election for the purpose of
collective bargaining. This ruling was,
Definition: Chartered Local (Local Chapter)
however, abandoned in Tagaytay
Book V Rule 1 Sec. 1 (i) Chartered Local – a labor Highlands International Golf Club v.
organization in the private sector operating at the enterprise level Tagaytay Highlands Employees Union,
that acquired legal personality through the issuance of a charter
certificate by a duly registered federation or national union, and GR No. 142000, January 22, 2003
reported to the Regional Office in accordance with Rule III Sec. 2- where the Court stated that the inclusion in
E of the IRR.
a union of disqualified employees is not
Definition: Affiliate
among the grounds for cancellation, unless
Book V Rule 1 Sec. 1 (a) Affiliate – an independent union such inclusion is due to misrepresentation,
affiliated with a federated, national union or a chartered local false statement or fraud. In Republic of
which was subsequently granted independent registration but did
not disaffiliate from its federation, reported to the Regional Office the Philippines v. Kawashima Textile
and the Bureau in accordance with Rule III Secs. 6 and 7 of the Marketing Philippines, GR No. 160352,
IRR.
July 23, 2008, the Tagaytay ruling was
Definition: National Union or Federation reiterated.

Book V Rule 1 Sec. 1 (kk) National Union or Federation – a Local Union Disaffiliation/Mass Disaffiliation
group of legitimate labor unions in a private establishment
organized for collective bargaining or for dealing with employers Nature of Right of Disaffiliation
concerning terms and conditions of employment for their member
union or for participating in the formulation of social and
employment policies, standards and programs, registered with  A local union being a separate and
the BLR in accordance with Rule III Sec. 2-B of the IRR. voluntary association, is free to serve the
interests of all its members. It has the
Supervisor/Rank and File Union Affiliation right to disaffiliate or declare its autonomy
ART. 245. Ineligibility of managerial employees to join any
from the federation to which it belongs
labor organization; right of supervisory employees when circumstances warrant, in
accordance with the constitutional
Managerial employees are not eligible to join, assist or form any
labor organization. Supervisory employees shall not be eligible guarantee of freedom of association, and
for membership in a labor organization of the rank and file such disaffiliation cannot be considered
employees but may join, assist or form separate labor
organizations of their own.
 disloyalty. (Malayang Samahan ng mga
Manggagawa v. Ramos, 2000)
 The locals are separate and distinct units
primarily designed to secure and maintain
an equally of bargaining power between
the employer and their employee-
members; and the association of the locals
into the national union was in furtherance
of the same end. These associations are
consensual entities capable of entering
into such legal relations with their
member. The essential purpose was
the affiliation of the local unions into a
common enterprise to increase by
collective action the common
bargaining power in respect of the terms
and conditions of labor. (Tropical Hut
Employees Union v. Tropical Hut Food
Market, Inc. 1990)
 Local unions remain the basic units of
association, free to serve their own
interests subject to the restraints imposed
by the constitution and by-laws of the
national federation, and free also to
renounce the affiliation upon the terms
laid down in the agreement which brought
such affiliation into existence. (Phil.
Skylanders Inc. v. NLRC, 2002)
Disaffiliation: Must be by a Majority Decision
Disaffiliation is a major policy question. Thus, it shall be made by
a ,majority decision of the entire membership, after due
deliberation, by secret ballot, unless, the nature of the
organization or force majeure renders such secret ballot
impractical, in which case, the board of directors of the
organization may make the decision. (Art. 241 [d])
Disaffiliation: Effect on Legal Status
 If union is independently registered – it
retains its legal personality.
 If union is a chartered local – it loses its
legal personality.
Substitutionary doctrine
 Disaffiliation; effect on existing CBA. The
CBA shall subsist until expiration. The new
bargaining agent is bound to respect the
CBA.
The terms of an existing CBA, particularly
its economic provisions, can be extended
beyond the 3 year period prescribed by law
in the absence of a new agreement. Until
a new CBA has been executed by and
between the parties, they are duty bound
to keep the status quo and to continue in
full force and effect the terms and
conditions of the existing agreements. The
law does not provide for an exception nor
qualification as to which of the economic
provisions of the existing agreements are
to retain force and effect, therefore it
encompasses all provisions. The New CBA
is given PROSPECTIVE effect generally
since 253 and 253-A provides for an
automatic renewal clause in existing CBAs.
 PURPOSE: To avoid creating a gap during
which no agreement would govern. It is
better for industrial peace if effectivity of
the CBA is longer. (New Pacific Timber and
Supply Co. Inc. v. NLR, 2000)
Union dues and special assessments
 Union does are defined as payments to
meet the union’s general and current
obligations. The payment must be regular,
periodic, and uniform.
 Special assessments are payments for a
special purpose, especially if required only
for a limited time. (Azucena)
A. Union Funds
Rights/Conditions of membership in a Labor Organization
ART. 241 (b) Members are entitled to full/detailed financial
transaction reports
(g) Collection of any fees, dues or other contributions in behalf of
the labor org. or any disbursement of its money/funds – allowed
if duly authorized by CBL
(h) Payment of fees, dues or other contributions by member shall
be evidenced by a receipt signed by the officer or agent making
the collection and entered into the record of the org
(i) Funds of the orig shall not be applied for any purpose or object
other than those expressly provided by the CBL or authorized by
written resolution adopted by the majority of the members at a
general meeting duly called for the purpose.
(j) Every income or revenue of the orig shall be evidenced by a
record showing its source, and every expenditure of its funds
shall be evidenced by a receipt.
(l) The treasurer shall render account (duly audited and verified
by affidavit and a copy thereof shall be furnished the Secretary of
Labor)
1. At least once a year within 30 days after the close of its fiscal
year;
2. At such other times as may be required by a resolution of the
majority of the members of the organization; and
3. Upon vacating his office.
(m) Books of accounts and other records of the financial activities Requisites for assessment
of any labor org shall be open to inspection by any officer or
member thereof during office hours.
(n) No special assessment or other extraordinary fees may be Right to Collective Bargaining
levied upon the members of a labor org unless authorized by a
written resolution of a majority of all the members of a general
membership meeting duly called for the purpose.
Duty to bargain collectively
(o) Other than for mandatory activities under the Code, no
special assessments, atty.’s fees, negotiation fees or any other
extraordinary fees may be checked off from any amount due to Kiok Loy  ruling
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. a) While it is a mutual obligation, the
employer is not under any legal duty to
Note: Secretary of Labor or his duly authorized representative
may inquire into financial activities of legitimate labor
initiate contract negotiation.
organizations – UPON filing of complaint under oath and b) The mechanics of collective bargaining
supported by written consent of at least 20% of total is set in motion when the following are
membership, Provided, such inquiry shall not be conducted during present:
(60)-day freedom period nor within the thirty (30) days
immediately preceding the date of election of union officials. (Art.  Possession of the status of majority
274) representation of the employees’
representative in accordance with
B. Source of Payment –Attorney’s Fees, Special Assessments
ART. 222 (b) Attorney’s fees, negotiation fees or similar charges
any of the means of selection or
of any kind arising from any collective bargaining negotiations or designation provided for by the
conclusion of the collective agreement shall NOT be imposed on Labor Code,
individual member of contracting union, but may be charged  Proof of majority representation
against union funds in an amount to be agreed upon by the
parties. Any contract, agreement or arrangement of any sort to and
the contrary shall be null and void.  Demand to bargain under Article
251, par. (a) of the New LaborCode
General Concepts:
Requirements for validity (check off)
Duty to Bargain: Constitutional Policies
1. Authorization by written resolution of
majority of ALL the members at the 1987 Constitution. Art. XIII, Sec. 3
general membership meeting called for
The State shall guarantee the rights of workers to collective
that purpose; bargaining and negotiations.
2. Secretary’s record of the minutes of the
meetings attested to by the president; The State shall promote the principle of shared responsibilities
between workers and employers and the preferential use of
3. Individual written authorization for check- voluntary modos in settling disputes, including conciliation, and
off duly signed by the employees shall enforce their mutual compliance therewith to foster
concerned. industrial peace.

 Note: There must be strict and full Duty to Bargain: Statutory Policy
compliance with the requisites. NO
Labor Code, Art 211 (a). To promote and emphasize the
SHORTCUTS. Substantial compliance is primacy of FREE COLLECTIVE BARGAINING and negotiations,
not enough. (Palacol v. Ferrer-Calleja) including voluntary arbitration, mediation and conciliation, as
modes of setting labor or industrial disputes.

Jurisdiction over Check-Off disputes

Collective Bargaining: Definition
 The Bureau of Labor Relations has
jurisdiction to hear, decide and to mete out  Collective bargaining which is defined as
punishment any reported violation under negotiations towards a collective
Article 24.1 agreement is one of the democratic
frameworks under the New Labor Code,
Agency fees designed to stabilize the relation between
labor and management and to create a
[Agency fee] is an amount, equivalent to union climate of sound and stable industrial
dues, which a non-union member pays to the peace. It is a mutual responsibility of the
union because he benefits from the CBA negotiated
employer and the Union and is
by the union. (Azucena)
characterized as a legal obligation.
 So much so that Article 249, par (g) of the
Labor Code makes it an unfair labor
practice for an employer to refuse “to meet
and convene promptly and expeditiously
in good faith for the purpose of negotiating
an agreement with respect to wages, hours
of work, and all other terms and conditions
of employment. (Kiok Loy v. NLRC, 1986)
Collective Bargaining: Nature and Purpose
 The institution of collective bargaining is a
prime manifestation of industrial
democracy at work. The two parties to the
relationship, labor and management, make
their own rules by coming to terms to
govern themselves in matters that really
count. (United Employees Union of Gelmart
Industries v. Noriel, 1975)
 Collective Bargaining: Waiver of Right
 The right to free collective bargaining
includes the right to suspend it. (Rivera v.
Espiritu, 2000)
Duty to Bargain: Meaning
Art. 252. Meaning of duty to bargain collectively.
The duty to bargain collectively means the performance of a
mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work and all other
terms and conditions of employment including proposals for
adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such
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. 253. 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.
Rights of the Parties during Bargaining
Art. 242 (c) Right of legitimate labor organization to be
furnished by the employer with annual audited financial
statements, including the balance sheet and profit and loss
statement, upon request.
Book V Rule XVI Sec. 2. Disclosure
information
 The parties shall, at the request of either
of them, make available such up-to-date
financial information on the economic
situation of the undertaking, which is
normally submitted to relevant government
agencies, as is material and necessary for
meaningful negotiations.
 Where the disclosure of some of this
information could be prejudicial to the
undertaking, its communication may be
made condition upon a commitment that it
would be regarded as confidential to the
extent required. The information to be
made available may be agreed upon
between the parties to collective
bargaining.
Collective Bargaining Deadlock: Definition
 The situation between the labor and the
management of the company where there
is failure in the collective bargaining
negotiations resulting in a stalemate. It is
a ground for strike or lockout. {IRR, Book
V, Rule XXII, Sec. 1 of the Labor Code}.
(San Miguel Corp. v. NLRC, 1999)
Collective Bargaining: Procedure
Art. 251. Duty to bargain collectively in the absence of
collective bargaining agreements.
In the ABSENCE of a) an agreement or b) other VOLUNTARY
ARRANGEMENT providing for a MORE EXPEDITIOUS manner of
collective bargaining, it shall be the duty of the employer and the
representatives of the employees to bargain collectively in
accordance with the provisions of this Code.
Private Procedure: Expediency as a Requirement
The Labor Code authorizes parties to provide for their own
procedures in Collective Bargaining but it must be more
EXPEDITIOUS than that provided in Art. 250. If they are unable
to agree they must follow procedure in the labor code. (Art. 250)
Private Procedure: Rationale
It is the policy of the state to promote the primacy of FREE
collective bargaining. (Art. 211a)
B. Labor Code Procedure (Art. 250)
Party desiring to bargain collectively shall serve written notice on
other party with statement of proposals.
Reply by other party within 10 calendar days from receipt of
notice.
If dispute not settled, National Conciliation Mediation Board
(NCMB) shall intervene on request or motu propio & call parties
to conciliation meetings.
Art. 253. 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.
 Note: Whenever a party serves a written
notice upon the employer making
demands, the latter shall reply not later
than 10 days. However, this condition is
merely procedural, and non-compliance
cannot be deemed to be an act of ULP.
(National Union of Restaurant Workers v.
CIR, 1964)
 Compare with: More than a month after
the proposals were submitted, the
employer has not make any counter-
proposals. The company’s refusal to make
a counter-proposal to the union’s proposed
CBA is an indication of its bad faith. Where
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.
The employer’s actuations show a lack of
sincere desire to negotiate, rendering it
guilty of unfair labor practice. (Colegio de
San Juan de Letran v. Association, 2000)
Failure to reply as indicia of bad faith
 GMC’s failure to make a timely reply to the
proposal sent by the union is indicative of
its utter lack of interest in bargaining with
the union. Its excuse that it felt the union
no longer represented the workers was
mainly dilatory as it turned out to be
utterly baseless. GMC’s refusal to make a
counter-proposal is an indication of its bad
faith. Where 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. It is guilty of ULP. (General
Milling Corp. v. CA, 2004)
Conciliation/Preventive Mediation
Art. 233. Privileged Communication
Information and statements made at conciliation proceedings
shall be treated as privileged communication and shall not be
used as evidence in the Commission.
Conciliators and similar officials shall not testify in any court or
body regarding any matters taken up at conciliation proceedings
conducted by them.
 In Nissan Motors Philippines Inc. v.
Secretary of Labor and Employment,
GR 158190-91, June 21, 2006, the
Supreme Court reversed the award made
by the Secretary based on the revelation of
the NCMB Administrator that was sourced
from the confidential position given him by
the Company. The reason for this was
Article 233 which prohibits the use in
evidence of confidential information given
during conciliation proceedings. And in
Pentagon Steel Corporation v. Court of
Appeals, GR No. 174141, June 26,
2009, the Supreme Court mentioned the
two-fold justification for the exclusionary
rule as follows:
“First, since the law favors the
settlement of controversies out of
court, a person is entitled to buy his or
her peace’ without danger of being
prejudiced in case his or her efforts
fail; hence, any communication made
toward that end will be regarded as
privileged. Indeed, if every offer to buy
peace could be used as evidence against a
person who presents it, many settlements
would be prevented and unnecessary
litigation would result, since no prudent
person would dare offer or entertain a
compromise if his or her compromise
position could be exploited as a confession
of weakness.
Second, offers for compromise are
irrelevant because they are not
intended as admissions by the parties
making them. A true offer of compromise
does not, in legal contemplation, involve
an admission on the part of a defendant
that he or she is legally liable, or on the
part of a plaintiff, that his or her claim is
groundless or even doubtful, since it is
made with a view to avoid controversy and
save the expense of litigation. It is the
 distinguishing mark of an offer of  Each branch of the Board shall be headed
compromise that it is made tentatively, by an Executive Conciliator-Mediator.
hypothetically, and in contemplation of
mutual concessions.” Composition
 The Board shall be composed of:
Board Intervention a) Administrator, and
b) 2 Deputy Administrators
Art. 250 (c) – If the dispute is not settled, the Board shall  The Administrators and the Deputy
intervene upon request of either or both parties or at its own Administrators shall be appointed by the
initiative and immediately call the parties to conciliation
meetings. President upon recommendation of the
Art. 250. Procedure in collective bargaining. The following Secretary of Labor and Employment.
procedure shall be observed in collective bargaining:  There shall be as many Conciliators-
When a party desires to negotiate an agreement, it shall serve a
Mediators as the needs of the public
written notice upon the other party with a statement of its service require, who shall have at least
proposals. The other party shall make a reply thereto not later three (3) years of experience in handling
than ten (10) calendar days from receipt of such notice; labor relations and who shall be appointed
Should differences arise on the basis of such notice and reply,
either party may request for a conference which shall begin not by the Secretary.
later than ten (10) calendar days from the date of request.
If the dispute is not settled, the Board shall intervene upon Functions
request of either or both parties or at its own initiative and
immediately call the parties to conciliation meetings. The Board
 Formulate policies, programs, standards,
shall have the power to issue subpoenas requiring the attendance procedures, manuals of operation and
of the parties to such meetings. It shall be the duty of the guidelines pertaining to effective mediation
parties to participate fully and promptly in the conciliation
and conciliation of labor disputes;
meetings the Board may call;
 Perform preventive mediation and
During the conciliation proceedings in the Board, the parties are conciliation functions;
prohibited from doing any act which may disrupt or impede the  Coordinate and maintain linkages with
early settlement of the disputes; and
other sectors of institutions, and other
The Board shall exert all efforts to settle disputes amicably and government authorities concerned with
encourage the parties to submit their case to a voluntary matters relative to the prevention and
arbitrator.
settlement of labor disputes;
EO 251, Sec. 4. Section 22 of Executive Order No. 126 is hereby  Formulate policies, plans, programs,
amended to read as follows: standards, procedures, manuals of
Sec. 22. National Conciliation and Mediation Board operation and guidelines pertaining to the
promotion of cooperative and non-
adversarial schemes, grievance handling,
National Conciliation and Madiation Board voluntary arbitration and other voluntary
modes of dispute settlements;
Overview  Administer the voluntary arbitration
 A National Conciliation and Mediation program; maintain/update a list of
Board, herein referred to as the “Board”, is voluntary arbitrations; compile arbitration
hereby created and which shall absorb the awards and decisions;
conciliation mediation and voluntary  Provide counseling and preventive
arbitration functions of the Bureau of Labor mediation assistance particularly in the
of Relations. administration of collective agreement ;
 It shall be an attached agency under the awards and decisions;
administrative supervision of the Secretary  Monitor and exercise technical supervision
of Labor and Employment. over the Board programs being
 The Board shall have its main office in implemented in the regional offices; and
Metropolitan Manila and its Administrators  Perform such other functions as may be
shall exercise supervision over provided by law or assigned by the
Conciliators-Mediators and all its Secretary.
personnel.
Tripartite Voluntary Arbitration Advisory
Branches Council
 It shall establish as many branches as
there are administrative regions in the  A Tripartite Voluntary Arbitration Advisory
country, with a many Conciliator-Mediators Council is hereby created and attached to
as shall be necessary for its effective
operation.
 the National Conciliation and Mediation
Board.
 The Tripartite Voluntary Arbitration
Advisory Council shall advise the National
Conciliation Board on matters pertaining to
the promotion of voluntary arbitration as
the preferred mode of dispute settlement.
Composition
a) Administrator of the National
Conciliation and Mediation Board as
Chairman,
b) 1 other member from the government,
c) 2 members representing labor, and
d) 2 other members representing
management.
Appointment
 The members shall be appointed
by the President to serve for a
term of 3 years.
 The Chairman and Members
thereof shall serve without
compensation.
Bargainable Issues
Art 252
xxx xxx xxx
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.
xxx xxx xxx
Test for Mandatory Bargainable Issues:
NEXUS Between the Nature of Employment
and the Nature of the Demand.
 The “other terms and conditions of
employment” to become a mandatory
bargainable issue must have a connection
between the proposal and the nature of the
work.
 Importance of determining whether an
issue is a mandatory bargaining issue or
only a permissive bargaining issue:
“The question as to what are mandatory
and what are merely permissive subjects of
collective bargaining is of significance on
the right of a party to insist on his position
to the point of stalemate. A party may
refuse to enter into a collective bargaining
contract unless it includes a desired
provision as to a matter which is a
mandatory subject of collective bargaining.
But a refusal to contract unless the
agreement covers a matter which is not a
mandatory subject is in substance a refusal
to bargain about matters which are
mandatory subjects of collective
bargaining; and it is no answer to the
charge of refusal to bargain in good faith
that the insistence on the disputed clause
was not the sole cause of the failure to
agree or that agreement was not reached
with respect to other disputed clauses.”
(Samahang Manggagawa sa Top Form v.
NLRC, 1998)
Collective Bargaining Agreement
CBA: Definition
Art. 250, 252
A contract executed upon request of either the employer or the
exclusive bargaining representative 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 arising under
such agreement.
CBA: Impressed with Public Policy
 A CBA, as a labor contract with the
contemplation of Article 1700 of the Civil
Code which governs the relations between
labor and capital, is not merely contractual
in nature but impressed with public
interest, thus, it must yield to the common
good. (Davao Integrated Port Stevedoring
Services v. Abarquez, 1993)
CBA: Effect of Sub-standard Contract
 This was deleted as a ground for
cancellation of registration by RA 9481.
But it is nonetheless prohibited to enter
into sub-standard contract. An incomplete
CBA cannot be a bar to an election
certification.
CBA: Registration
Art. 231. Registry of unions and file of CBAs –
General Rule: The file shall be open and accessible to interested
parties.
Exceptions: No specific information submitted in confidence shall
be disclosed unless:
Authorized by the Secretary of Labor; or
When it is at issue in any judicial litigation when public interest or
national security so requires.
CBA: Beneficiaries
 All workers in a CBU. When a collective
bargaining contract is entered into by the
union representing the employees and the
employer, even the non-member
employees are entitled to the benefits of
the contract. (New Pacific Timber and
Supply v. NLRC, 2000)
 To accord its benefits only to members of
the union without any valid reason would
constitute undue discrimination against
non-members.
CBA Interpretation, Administration and
Enforcement
Nature of Contract and
Interpretation
 The terms and conditions of a collective
bargaining contract constitute the law
between the parties. (Mactan Workers
Union v. Aboitiz, 1972)
 Those who are entitled to its benefits can
invoke its provisions. In the event that an
obligation therein imposed is not fulfilled,
the aggrieved party has the right to go to
court for redress. (Babcock-Hitachi (Phils)
v. Babcock-Hitachi, 2005)
Contract Interpretation: Interpretation Tools
 A CBA, just like any other contract, is
respected as the law between the
contracting parties and compliance in good
faith is mandated. Similarly, the rules
embodied in the Civil Code on the proper
interpretation of contracts can very well
govern.
GENERAL RULE: If the terms of the contract are
clear, the literal meaning of the stipulations shall
control.
EXCEPTION: If the words appear to be contrary
to the evident intention of the parties, the latter
shall prevail over the former. (Kimberly Clark Phils
v. Lorredo, 1993)
Contract Effectivity, Duration and Renewal
Art. 253-A. Terms of a CBA
POLITICAL ASPECT: Any Collective Bargaining Agreement that
the parties may enter into shall, insofar as the representation
aspect is concerned be for a term of five (5) years.
No petition questioning the majority status of the incumbent
bargaining agent shall be entertained and no certification election
shall be conducted by the DOLE outside of the sixty-day period
immediately before the date of the expiry of such five year term
of the Collective Bargaining Agreement.
ECONOMIC ASPECT: All other provisions of the CBA shall be
renegotiated not later than three (3) years after its execution.
Any agreement on such other provisions of the CBA entered into
within six months from the expiry of the term of such other
provisions as fixed in such 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 he
duration of the retroactivity thereof. In case of a deadlock in the
renegotiation of the CBA, the parties may exercise their rights
under this Code.
CBA Effectivity
Contract
 If it is the first ever CBA, the effectivity
date is whatever date the parties agree on.
 If it is renegotiated CBA, the effectivity
date depends upon the duration of
conclusion. If it is concluded within 6
months from the expiry date, the new CBA
will retroact to the date following the
expiry date (Illustration: expiry date:
December 13; effectivity date: December
14). If the renegotiated CBA is concluded
beyond 6 months from the expiry date, the
matter of retroaction and effectivity is left
with the parties.
Art 253-A serves as the guide in determining when
the CBA at bar is to take effect. It provides that
the representation aspect of the CBA is to be for
aterm of 5 years. All other provisions of the CBA
shall be renegotiated not later than 3 years after
its execution. Any agreement on such other
provision of the CBA entered into within 6 months
from the date of expiry of the term of such other
provisions as fixed in such Collective Bargaining
Agreement shall retroact to the day immediately
following such date. If such agreement is entered
into beyond 6 months, the parties shall agree on
the duration of the effectivity thereof. If no
agreement is reached within 6 months from the
expiry date of the 3 years that follow the CBA
execution, the law expressly gives the parties –
not anybody else – the discretion to fix the
effectivity of the agreement. The law does not
specifically cover the situation where 6 months
have elapsed but no agreement has been reached
with respect to effectivity. In this eventually, any
provision of law should then apply. (Manila Electric
Co. v. Quisumbing, 1999)
CBA Duration
Political Aspect (representation) 5 years. This
refers to the identity and majority status of the
collective bargaining agent that negotiated the
CBA.
Non-political aspect 3 years. This refers to
other provisions in the CBA, economic or otherwise
other than representational or political.
Hold Over Principle
Art. 253. In the absence of a new CBA, the parties must
maintain the status quo and must continue in full force and affect
the terms and conditions of the existing agreement during the
sixty (60) day period and/or until a new agreement is reached.
In this manner, the law prevents the existence of a gap in the
relationship between the collective bargaining parties.
Arbitrated CBA
 In the absence of an agreement between
the aprties, an arbitrated CBA takes on the
nature of any judicial or quasi-judicial
award. It operates and may be executed
only prospectively unless there are legal
justifications for its retroactive application.
(Manila Electric Company v. Quisumbing,
1999)
 CBA in this case, on the other hand, is part
of an arbitral award. As such, it may be
made retroactive to the date of expiration
of the previous agreement. Therefore, in
the absence of a specific provision of law
prohibiting retroactivity of the effectivity of
arbitral awards issued by the Secretary of
Labor pursuant to Art. 263 (g), the latter is
deemed vested with plenary and
discretionary powers to determine the
effectivity thereof. (Manila Central Line
Corporation v. Manila Central Line Free
Workers Union, 1998)
CBA and Third Party Applicability
 Labor contracts such as employment
contracts and CBAs are not enforceable
against a transferee of an enterprise, labor
contracts being in personam, is binding
only between the parties. (Sundowner
Development Corporation v. Drilon, 1989)
General Rule: An innocent transferee of a
business establishment has no liability to the
employees of the transferor to continue employing
them. Nor is the transferee liable for past unfair
labor practices of the previous owner.
Exception:
i. When the liability therefore is assumed by
the new employer under the contract of
sale, or
ii. When liability arises because of the new
owner’s participation in thwarting or
defeating the rights of the employees.
The most that the transferee may do, for reasons
of public policy and social justice, is to give
preference to the qualified separated employees in
the filing of vacancies in the facilities of the
purchaser. (Manlimos v. NLRC, 1995)
Mandatory provisions of CBA
Grievance Procedure
Art. 260. Grievance Machinery and Voluntary Arbitration –
The parties to a Collective Bargaining Agreement shall include
therein:
Provisions that will ensure the mutual observance of its terms and
conditions.
A machinery for the adjustment and resolution of grievances
arising from:
The interpretation or implementation of their CBA; and
Those arising from the interpretation or enforcement of company
personnel policies.
All grievances submitted to the grievance machinery which are
not settled within 7 calendar days from the date of its submission
shall automatically be referred to voluntary arbitration prescribed
in the CBA.
 Grievances arising from the interpretation
or implementation of the CBA are subjects
of the grievance procedure. (Navarro III v.
Damasco, 1995)
 It should be remembered that a grievance
procedure is part of the continuous process
of collective bargaining. It is intended to
promote a friendly dialogue between labor
and management as a means of
maintaining industrial peace. (Master Iron
Labor Union v. NLRC, 1993)
 No particular setup for a grievance
machinery is required by law. Art. 260 of,
as incorporated by RA 6715, only
 mandates that the parties to the CBA
establish a machinery to settle problems
arising from “interpretation or
implementation of their collective
bargaining agreement and those arising
from the interpretation or enforcement of
company personnel policies.” (Caltex
Refinery Employees Association v.
Brillantes, 1997)
Voluntary Arbitration
Voluntary Arbitration: Procedure
Art. 260. Grievance Machinery and Voluntary Arbitration
xxx xxx xxx
Parties to a CBA shall:
Name and designate in advance a Voluntary Arbitrator or panel of
Voluntary Arbitrators, OR
Include in the agreement a procedure for the selection of such
Voluntary Arbitrator or panel of Voluntary Arbitrators preferably
from the listing of qualified Voluntary Arbitrators duly accredited
by the Board.
In case the parties fail to select a Voluntary Arbitrator or panel of
Voluntary Arbitrators, the Board shall designate the Voluntary
Arbitrator or panel of Voluntary Arbitrators, as may be necessary,
pursuant to the selection Voluntary Arbitrator or panel of
Arbitrators procedure agreed upon in the CBA, which shall act
with the same force and effect as if he has been selected by the
parties as described above.
Art. 255. However, an individual employee or group of
employees shall have the right at any time to present
grievances to their employer.
Voluntary Arbitration: Features
 The stipulation to refer all future
disputes to an arbitrator or to submit
an ongoing dispute to one is valid.
Being part of a contract between the
parties, it is binding and enforceable
in court in case one of them neglects,
fails or refuses to arbitrate. Going a
step further, in the event that they declare
their intention to refer their difference to
arbitration first before taking court action,
this constitutes a condition precedent, such
that where a suit has been instituted
prematurely, the court shall suspend the
same and the parties shall be directed
forthwith to proceed to arbitration. A court
action may likewise be proper where the
arbitrator has not been selected by the
parties. (Chung Fu Industries v. CA, 1992)
Voluntary Arbitration: Basis and Rationale
(1987 Constitution, Art. XIII, Sec. 3)
xxx The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster
industrial peace.
Promotion
 Establishing Machinery Dispute Settlement
– Collective Bargaining Agreement and
Time Frame
Art. 260. Grievance Machinery and Voluntary Arbitration –
The parties to a Collective Bargaining Agreement shall include
therein provisions that will ensure the mutual observance of its
terms and conditions. They shall establish a machinery for the
adjustment and resolution of grievances arising from the
interpretation of their Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company
personnel policies.
All grievances submitted to the grievance machinery which are
not settled within 7 month calendar days from the date of its
submission shall automatically be referred to voluntary arbitration
prescribed in the Collective Bargaining Agreement.
Xxx
Executive Order 251, Sec. 4:
Sec. 4. Section 22 of Executive Order No. 126 is hereby amended
to read as follows:
“Sec. 22. National Conciliation and Mediation Board. A National
Conciliation and Mediation Board, herein referred to as the
“Board”, is hereby created and which shall absorb the conciliation
mediation and voluntary arbitration functions of the Bureau of
Labor of Relations in accordance with Section 29 (c) hereof…”
Xxx
A Tripartite Voluntary Arbitration Advisory Council is hereby
created and attached to the National Conciliation and Mediation
Board. The Tripartite Voluntary Arbitration Advisory Council shall
advise the National Conciliation Board on matters pertaining to
the promotion of voluntary arbitration as the preferred mode of
dispute settlement.
Voluntary Arbitration: Arbitrable Issues
Disputes covered in Voluntary Arbitration:
General Rule (Art. 261):
 Those unresolved grievances arising from
the interpretation or implementation of
the CBA;
 Also, those arising from the interpretation
or enforcement of company personnel
policies;
 Gross violations of CBA provision.
Exception (Art. 262):
 If parties agree, VA may hear and decide
all other labor disputes including ULP and
bargaining deadlock.

For purposes of this article, gross violations of CBA
shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such
agreement.
Rights Disputes and Interests Disputes:
Distinguished
 Rights disputes: Claim for violation of a
specific right (Arising from a contract, ex:
CBA or company policies). Voluntary
Arbitrator has original and exclusive
jurisdiction over these matters.
Interest Disputes: These ponder on the question
“what should be included in the CBA.” Strictly
speaking, the parties may choose a voluntary
arbitrator to decide on terms and conditions of
employment, but that is impracticable because it
will be a value judgment of the arbitrator and not
the parties.
Voluntary Arbitrator Selection
Art. 260. How Voluntary Arbitrator is selected
As stated in CBA (or selection procedure of a VA), preferably from
a list of qualified VA’s accredited by NCMB;
If parties fail to select, the Board (NCMB) shall select VA pursuant
to selection procedure as stated in CBA.
Art. 260
xxx For this purpose, parties to s zcollective Bargaining
Agreement shall name and designate in advance a Voluntary
Arbitrator or panel of Voluntary Arbitrators,
Or include in the agreement the procedure for he selection of
such Volunay Arbitrator or panel of voluntary Arbitrators,
preferably from the listing of qualified Voluntay Arbitrators duly
accredited by the Board.
In case the parties fail to select a Voluntary Arbitrators, the Board
shall designate the Voluntary Arbitrators, as may be deemed
necessay, pursuant to the selection procedure agreed upon in the
Collective Bargaining Agreement, which shall act with same force
and effect as if the Arbitrator or panel of Arbitrators has been
selected by the parties as prescribed.
 Indeed, the Labor Code formerly provided
that if the parties in collective bargaining
fail to reach an agreement, the Bureau of
Labor Relations should call them to
conciliation meetings and, if its efforts
were not successful, certify the dispute to
a labor arbiter for compulsory arbitration.
But this was changed by RA No. 6715
which took effect on March 21, 1989. Art.
250 (e) of the Labor Code now provides
that if effects of conciliation fail, the Board
shall “encourage the parties to submit their
case to a voluntary arbitrator.” This is
what the parties did in this case. After the
Board failed to resolve the bargaining
deadlock between parties, the union filed a
petition for compulsory arbitration in the
Arbitration Branch of the NLRC. Petitioner
joined the petition and the case was
submitted for decision. Although the
union’s petition was for “compulsory
arbitration,” the subsequent agreement of
petitioner to submit the matter for
arbitration in effect made the arbitration a
voluntary one. 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. 217 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. (Manila Central Line
Free Workers Union v. Manila Central
Line Corporation, 1998)
Voluntary Arbitration: Procedure
Art. 262-A. Procedures
The voluntary Arbitrators or panel of Voluntary Arbitrators shall
have the power to hold hearings, receive evidences and take
whatever action is necessary to resolve the issue or issues
subject of dispute, including efforts to effect a voluntary
settlement between parties.
All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party or the exclusion
of any witness from the proceedings shall be determined by the
Voluntary Arbitrators. Hearing may be adjourned for a cause or
upon agreement by the parties.
Unless the parties agreed otherwise, it shall be mandatory for the
Voluntary Arbitrators or panel of Voluntary Arbitrators to render
an award or decision within twenty (20) calendar days from the
date of submission of the dispute to voluntary arbitration.
The award or decision shall contain the facts and the law on
which it is based. It shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or its
decision by the parties. Upon motion of any interested party, the
Voluntary Arbitrator or panel of Voluntary Arbitrators or the Labor
Arbiter in the region where the movant resides, in case of the
absence or incapacity of the voluntary arbitrator or panel of
voluntary arbitrators for any reason, may issue a writ of
execution requiring wither the Sheriff of the Commission or
regular Courts or any public official whom the parties may
designate in the submission agreement to execute the final
decision, order, or award.
Awards and Orders
Art. 262-A
xxx
The award or decision shall contain the facts and the law on
which it is based. It shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or its
decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or
panel of Voluntary Arbitrators or the Labor Arbiter in the region
where the movant resides, in case of the absence or incapacity of
the voluntary arbitrator or panel of voluntary arbitrators for any
reason, may issue a writ of execution requiring the sheriff of the
Commission or regular Courts or any public official whom the
parties may designate in the submission agreement to execute
the final decision, order or award.
 Petitioner-company’s objection to the
authority of the Voluntary Arbiter to direct
the commutation of the unenjoyed portion
of the sick leave with pay benefits of
intermittent workers in his decision is
misplaced. Article 261 of the Labor Code is
clear. The questioned directive of the
herein public respondent is the necessary
consequence of the exercise of his arbitral
power as Voluntary Arbitrator under Article
261 of the Labor Code “to hear and decide
all unresolved grievances arising from the
interpretation or implementation of the
Collective Bargaining Agreement.” We,
therefore, find that no grave abuse of
discretion was committed by public
respondent in issuing the award (decision).
Moreover, his interpretation of Sections 1
and 3, Article VIII of the 1989 CBA cannot
be faulted with and is absolutely correct.
(Davao Integrated v. Abarquez, 1993)
The award of the arbitrator in this case is not to be
equated with a judicial decision. In effect, when in
relation to a controversy as to working conditions,
which necessarily include the amount of wages,
allowances, bonuses, overtime pay, holiday pay,
etc., the parties submit their differences to
arbitration, they do not seek any judicial
pronouncement technically as such:
 They are merely asking the arbitrator to fix
for them what would be the fair and just
condition or term regarding the matter in
dispute that should govern further
collective bargaining relations between
them.
 Stated differently, the arbitrator’s award
when stipulated by the parties to be
conclusive becomes part and parcel of the
CBA. Viewed in this sense, which we are
fully convinced is most consistent with the
principles of collective bargaining, the
subsequent or supervening facts referred
to by the Solicitor General consisting of
acts of none other than the respondent
Minister may not be invoked to alter,
modify, reform, much less abrogate, the
new terms, so to speak, of the award of
the arbitrator. To do otherwise would
violate the prescription of the Constitution
against impairment of the obligation of
contracts.
We hold that regardless of any law anterior or
posterior to the Arbitrator’s award, the collective
bargaining agreement in this case has been
correspondingly amended in a manner that is
unalterable, immovable and immutable like the
rock of Gibraltar, during the lifetime of the said
collective bargaining agreement. (Citibank
Employees Union v. MOLE, 1980)
Finality and Execution of Awards
Art. 262-A:
Award or decision of the voluntary arbitrator shall be final and
executory after 10 days from receipt of the copy of the award or
decision by the parties.
 When the parties submitted their
grievances to arbitration, they expressly
agreed that the decision of the Voluntary
Arbitrator would be final, executory, and
unappealable. In fact, even without this
stipulation, the first decision had already
become so by virtue of Article 263 of the
Labor Code making voluntary arbitration
awards or decisions final and executory.
(Imperial Textile Miles, etc. Calica, 1992)
 In the case of The Consolidated Bank &
Trust Corporation (SOLIDBANK) v. Bureau
of Labor Relations, et. al., the Court held
that the Voluntary Arbitrator lost
jurisdiction over the case submitted to him
the moment he rendered his decision.
Therefore, he could no longer entertain a
motion for reconsideration of the decision
for its reversal or modification. Thus by
modifying the original award, respondent
arbitrator exceeded his authority as such,
 a fact he was well aware of, as shown by
his previous Resolution of Inhibition
wherein he refused to act on the Union’s
motion for reconsideration of the award or
decision.
It is a hornbook rule that once a judgment
has become final and executory, it may no
longer be modified in any respect, even if
the modification is meant to be an
erroneous conclusion of fact or law, and
regardless of whether the modification is
attempted to be made by the court
rendering it or by the highest court of the
land, as what remains to be done is the
purely ministerial enforcement or execution
of the judgment. The doctrine of finality of
judgment is grounded on fundamental
considerations of public policy and sound
practice that at the risk of occasional
errors, the judgment of adjudicating bodies
must become final and executory on some
definite date fixed by law. In the more
recent case of DBP v. NLRC, the Supreme
Court reiterated that the doctrine of
immutability of final judgment is adhered
to by necessity notwithstanding occasional
errors that may result thereby, since
litigations must somehow come to an end
for otherwise, it would be even more
intolerable than the wrong and injustice it
is designed to correct.” Rule VII, Section 1
of the “Procedural Guidelines in the
Conduct of Voluntary Arbitration
Proceedings” provides the key. Therein,
what constitutes the voluntary arbitrator’s
decision (and, by extension, that of the
Panel of voluntary arbitrators) is defined
with precision, to wit:
“Sec. 1. Decision Award – The final
arbitral disposition of issue/s submitted to
voluntary arbitration is the decision. The
disposition may take the form of a
dismissal of a claim or grant of specific
remedy, either by way of prohibition of
particular acts or specific performance of
particular acts. In the latter case the
decision is called an Award.”
In herein case, the Decision of the Panel was in the
form of a dismissal of petitioner’s complaint.
Naturally, this dismissal was contained in the main
decision and not in the dissenting opinion. Thus,
under Section 6, Ruule VI of the same guidelines
implementing Article 262-A of the Labor Code, this
Decision, as a matter of course, would become
final and executory after ten (10) calendar days
from receipt of copies of the decision by the parties
even without receipt of the dissenting opinion
unless, in the meantime, a motion for
reconsideration or a petition for review to the
Court of Appeals under Rule 43 of the Rules of
Court is filed within the same 10-day period.
(Coca-Cola v. Coca-Cola, 2005)
Appeal
 The Jurisdiction conferred by law on a
voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the
original jurisdiction of the labor arbiter and
the appellate jurisdiction of the NLRC for
that matter. The state of our present law
relating to voluntary arbitration provides
that “the award or decision of the
Voluntary Arbitrator xxx shall be final and
executory after ten (10) calendar days
from receipt of the copy of the award or
ecision by the parties,” while the “decision,
awards, or orders of the Labor Arbiter are
final and executory unless appealed to the
Commission by any or both parties within
ten (10) calendar days from receipt of such
decision, awards or orders.”
 Hence, while there is an express mode of
appeal from the decision of a labor arbiter,
RA 6715 is silent with respect to an appeal
from the decision of a voluntary arbitrator.
(Luzon Development Bank v. Association of
Luzon Development Employees, 1995)
 Assuming arguendo that the voluntary
arbitrator or the panel of voluntary
arbitrators may not strictly be considered
as a quasi-judicial agency, board or
commission, still both he and the panel are
comprehended within the concept of a
“quasi-judicial instrumentality.” A fortiori,
the decision or award of the voluntary
arbitrator or panel of arbitrators should
likewise be appealable to the Court of
Appeals, in line with the procedure outlined
in Revised Administrative Circular No. 1-
95, just like those of the quasi-judicial
agencies, boards and commissions
enumerated therein. This would be in
furtherance of, and consistent with, the
original purpose of Circular No. 1-91 to
provide a uniform procedure for the
appellate review of adjudications of all
 quasi-judicial entities 18 not expressly
excepted from the coverage of Sec. 9 of
BP 129 by either the Constitution or
another statute. In effect, this equates the
award or decision of the voluntary
arbitrator with that of the regional trial
court. Consequently, in a petition for
certiorari from that award or decision, the
Court of Appeals must be deemed to have
concurrent jurisdiction with the Supreme
Court. As a matter of policy, this Court
shall henceforth remand to the Court of
Appeals petitions of this nature for proper
disposition.
Costs
Art. 262-B. Cost of Voluntary Arbitration and Voluntary
Arbitrators fee
The parties to a Collective Bargaining Agreement shall provide
therein a proportionate sharing scheme on the cost of the
voluntary arbitration including the Voluntary Arbitrators fee.
The fixing of the fee of the Voluntary Arbitrators, whether
shouldered wholyy by the parties or subsidized by the special
voluntary arbitration fund, shall take into account the following
factors:
Nature of the case
Time consumed in hearing the case
Professional Standing of the Voluntary Arbitrator
Capacity to Pay of the Parties
No Strike-No Lockout Clause
 A “no strike, no lock-out” provision in the
CBA is a valid stipulation although the
clause may be invoked by an employer
only when the strike is economic in nature
or one which is conducted to force wage or
other concessions from the employer that
are not mandated to be granted by the law
itself. It would be inapplicable to prevent a
strike which is grounded on unfair labor
practice. (Panay Electric Co. v. NLRC,
1995; Malayang Samahan ng mga
Manggagawa sa Greenfield v. Ramos,
2000)
 The stipulation is VALID but not absolute.
Labor Management Council
ULP in Collective Bargaining
(a) Bargaining in bad faith
 GMC’s failure to make a timely reply to the
proposals presented by the union is
indicative of its utter lack of interest in
bargaining with the union. Its excuse that
it felt the union no longer represented the
workers, was mainly dilatory as it turned
out to be utterly baseless. We hold that
GMC’s refusal to make a counter-proposal
to the union’s proposal for CBA negotiation
is an indication of its bad faith. Where 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. Failing to comply
with the mandatory obligation to submit a
reply to the union’s proposals, GMC
violated its duty to bargain collectively,
making it liable for unfair labor practice.
Perforce, the Court of Appeals did not
commit grave abuse of discretion
amounting to lack or excess of jurisdiction
in finding that GMC is, under the
circumstances, guilty of unfair labor
practice. (General Milling Corp. v. CA,
2004)
(b) Refusal to bargain
Of employers
Art. 248 (g) To violate the duty to bargain collectively as
prescribed by this Code;
Of labor organizations
Art. 249 (c) To violate the duty, or refuse to bargain collectively
with the employer, provided it is the representative of the
employees;
Art. 251. 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.
Art. 252. Meaning of duty to bargain collectively.
The duty to bargain collectively means the performance of a
mutual obligation
To meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect
To wages, hours of work and all other terms and conditions of
employment including proposals for adjusting any grievances or
questions arising under such agreement and executing a contract
incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to
make any concession.
Art. 250. Procedure in collective bargaining. 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 fro 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.
 GMC’s failure to make a timely reply to the
proposals presented by the union is
indicative of its utter lack of interest in
bargaining with the union. Its excuse that
it felt the union no longer represented the
workers, was mainly dilatory as it turned
out to be utterly baseless. We hold that
GMC’s refusal to make a counter-proposal
to the union’s proposal for CBA negotiation
is an indication of its bad faith. Where 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. Failing to comply
with the mandatory obligation to submit a
reply to the union’s proposals, GMC
violated its duty to bargain collectively,
making it liable for unfair labor practice.
Perforce, the Court of Appeals did not
commit grave abuse of discretion
amounting to lack or excess of jurisdiction
in finding that GMC is, under the
circumstances, guilty of unfair labor
practice. (General Milling Corp. v. CA,
2004)
 The school is guilty of unfair labor practice
when it failed to make a timely reply to the
proposals of the union more than one
month after the same were submitted by
the union. In explaining its failure to reply,
the school merely offered a feeble excuse
that its Board of Trustees had not yet
convened to discuss the matter. Clearly,
its actuation showed a lack of sincere
desire to negotiate. (Colegio de San Juan
de Letran v. Association, 2000)
(c) Individual bargaining
 It is an unfair labor practice for an
employer operating under a CBA to
negotiate with his employees individually.
That constitute interference because the
company is still under obligation to bargain
with the union as the bargaining
representative. (The Insukar Life
Assurance Co. Ltd. Employees Assn. v.
Insular Life Assurance Co. Ltd, 1971)
(d) Blue sky bargaining
 Sky high economic demands or making
exaggerated or unreasonable proposals are
indicative of blue-sky bargaining.
(Standard Chartered Bank Employees
Union v. Confesor, 2004)
(e) Surface bargaining
 Surface bargaining is defined as “going
through the motions of negotiating,”
without any real intent to reach an
agreement. It violates the Act’s
requirement that parties negotiate in “good
faith.” It is prohibited because, as one
commentator explained: The bargaining
status of a union can be destroyed by
going through the motions of negotiating
almost as easily as by bluntly withholding
recognition…As long as there are unions
weak enough to be talked to death, there
will be employers who are tempted to
engage in the forms of collective
bargaining without the substance. (K-MART
Corporation v. NLRC, 1980 626 F.2d 704)
Unfair Labor Practice:
Unfair Labor Practice (ULP): Definition
Art. 212 (k) Unfair labor practice – any unfair labor practice as
expressly defined by the Code.

Art. 247
Unfair labor practices violate the constitutional right of workers
and employees to self-organization.
These 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.
Unfair Labor Practices are not only violations of the civil rights of
both labor and management but are also criminal offenses.
Purpose of the Policy against ULP
Protection of right to self-organization and/or
collective bargaining
1. The employee is not only protected from
the employer but also from labor
organization
2. Employer is also protected from ULP
committed by a labor organization
3. The public is also protected because it has
an interest in continuing industrial peace.
 Unfair labor practice refers to acts that
violate the workers’ right to organize. The
prohibited acts are related to the workers’
right to self-organization and to the
observance of a CBA. Without that
element, the acts, no matter how unfair,
are not unfair labor practices. The only
exception is Art. 248 (f) [i.e. to dismiss,
discharge or otherwise prejudice or
discriminate against an employee for
having given or being about to give
testimony under this Code.] (Philcom
Employees Union v. Philippine Global,
2006)
ULP: Employer-Employee Relationship
Required
 An unfair labor practice may be committed
only within the context of an employer-
employee relationship (American President
Lines v. Clave, 1982)
 Exception: “Yellow Dog” Condition: To
require 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. (Art 248 [b])
ULP: Statutory Construction
 The Labor Code does not undertake the
impossible task of specifying in precise and
unmistakable language each incident which
constitutes an unfair labor practice.
Rather, it leaves to the court the work of
applying the law’s general prohibitory
language in light of infinite combinations of
event which may be charged as violative of
its terms. (HSBC Employee Union v. NLRC,
1997)
ULP: Not Cured by Estoppel
 The eventual signing of the CBA does not
operate to estop the parties from raising
unfair labor practice charges against each
other. (Standard Chartered Bank Union v.
Confesor, 2004)
1. ULP of Employers
Specific Acts
a)Interference/Restraint/ Coercion
Art. 248. It shall be unlawful for an employer to commit any of
the following unfair labor practice:
(a)To interfere with, restrain or coerce employees in the exercise
of their right to self-organization;
b)Non-union Membership or Withdrawal from
Membership as Condition of Employment
Art. 248 (b). To require 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;
This particular provision signifies what is known as a yellow dog
contract. A typical yellow dog contract embodies the following
stipulations:
A representative by the employee that he is not a member of a
labor organization
A promise by the employee that he will not join a union
A promise by the employee that upon joining a labor
organization, he will quit his employment.
c)Company Dominated Union
Art 248 (d). To initiate, dominate, assist or otherwise interfere
with the formation, function or administration of any labor
organization, including the giving of financial or other support to
it or its organizers or supporters;
Art. 212 (i) “Company union” means any labor organization
whose formation, function or administration has been assisted by
any act defined as unfair labor practice by this Code.
d) Discrimination – Encourage/Discourage
Unionism

Art. 248 (e)
 GENERAL RULE: It shall be unlawful to
discriminate in regard to wages, hours of
work and other terms and conditions of
employment in order to encourage or
discourage membership in any labor
organization.
 EXCEPTION: Nothing in this Code or in
any other law shall stop the parties from
requiring membership in a recognized
collective bargaining agent as a condition
for employment.
 EXCEPTION TO THE EXCEPTION: Those
employees who are already members of
another union at the time of the signing of
the collective bargaining agreement.
Employees of an appropriate bargaining unit who
are not members of the recognized collective
bargaining agent may be assessed a reasonable
fee equivalent to the dues and other fees paid by
members of the recognized collective bargaining
agent, if such non-union members accept the
benefits under the collective bargaining
agreement: Provided, that the individual
authorization required under Article 242,
paragraph (o) of this Code shall not apply to the
non-members of the recognized collective
bargaining agent;
 UNION SECURITY CLAUSE – is a stipulation
in the CBA whereby the management
recognizes that the membership of employees
in the union which negotiated the said
agreement should be maintained and
continued as a condition for employment or
retention of employment. Its purpose is to
safeguard and ensure the continued existence
of the union.
 CLOSED-SHOP – may be defined as an
enterprise in which, by agreement between the
employer and his employees or their
representatives, no person may be employed
in any or certain agreed departments of the
enterprise unless he or she is, becomes, and
for the duration of the agreement, remains a
member in good standing of a union entirely
comprised of or which the employees in
interests are part of. (Del Monte v. Saldivar,
2007)
Different kinds of Union Security Clause
(Azucena, 2010)
1. Closed shop agreement – Only union
members can be hired by the company and
they must remain as members to retain
employment in the company.
2. Union shop agreement – Non-members
may be hired, but to retain employment
must become union members after a
certain period. The requirement applies to
present and future employees.
3. Agency shop agreement – an agreement
whereby employees must either join the
union or pay to the union as exclusive
bargaining agent a sum equal to that paid
by the members;
4. Maintenance of membership agreement –
no employee is compelled to join the
union, but all present or future must, as a
condition of employment, remain in good
standing in the union.
5. Modified union shop agreement –
employees who are not union members at
the time of signing the contract need not
join the union, but all hired workers
thereafter must join.
 Under the Labor Code, a dismissal may
only be effected for any just or authorized
causes as provided by the said law. A
dismissal based on a union security clause
of company CBA is not enumerated as one
of the just or authorized causes in the
Labor Code. But jurisprudence recognized
that “it is a State policy to promote
unionism to enable workers to negotiate
with management on an even level playing
field and with more persuasiveness than if
they were individually and separately
bargain with the employer.” For this
reason, the law has allowed stipulations for
“union shop” and “closed shop” as a means
of encouraging workers to join and support
the union of their choice in the protection
of their rights and interests vis-à-vis the
employer. Even though the law recognizes
union shop agreement as valid, yet it
cannot be used as a means to guarantee to
the union an unmitigated discretion in
terminating the employment status on an
employee-member. Therefore, the
requirements laid down by the law in
determining whether or not an employee
was validly terminated must still be
 followed even if it is based on a closed-
shop provision of a CBA, i.e. the
substantive as well as the procedural due
process requirements. (Del Monte v.
Saldivar, 2007)
e)Retaliation for Testimony against Employer
Art. 248 (f) To dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or being about
to give testimony under this Code;
f)Exaction-Featherbedding (ULP of Labor
Organizations. See next sub topic)
g)Contracting out to discourage unionism
Art 248 (c) To contract out services or functions being
performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their rights to self-
organization;
The act of an employer in having certain services or functions
being performed by union members contracted out is NOT per se
an unfair labor practice act. It is only when the contracting out of
the services or functions being performed by union members will
interfere with, restrain or coerce employees in the exercise of
their right to self-organization that it shall be unlawful and shall
constitute ULP act. (Sec . 6 (f) DOLE Department Order No.
18-02, Series of 2002)
Interrogation
 Questioning of employees concerning union
membership and activities and disparaging
remarks by supervisory employees made in
such a way as to hamper the exercise of
free choice on the part of the employees,
have been uniformly condemned as an
unfair labor practice. (Scoty’s Department
Store v. Micaller, 1956)
 An employer is not denied the privilege of
interrogating its employees as to their
union affiliation, provided the same is for a
legitimate purpose and assurance is given
by the employer that no reprisals would be
taken against unionists. Nonetheless, any
employer who engages in interrogation
does so with notice that he risks a finding
of unfair labor practice if the circumstances
are such that his interrogation restrains or
interfere with employees in the exercise of
their rights to self-organization. When the
interrogation and investigation by the
company’s supervisory officials of the
employees in such a way that it hampers
the exercise of their right to self-
organization, ULP is committed. The
subjection by the company of union to
nullification and its participation in
soliciting membership for a completing
union is also ULP act. (Philippine Steam
Navigation Co. v. Philippine Marine
Officer’s Guild, 1965)
Speech
 Indeed, it is an unfair labor practice for an
employer operating under a collective
bargaining agreement to negotiate or to
attempt to negotiate with his employees
individually in connection with changes in
the agreement. And the basis of the
prohibition regarding individual bargaining
with the strikers is that although the union
is on strike, the employer is still under
obligation to bargain with the union as the
employees’ bargaining representative.
This is tantamount to an illegal act of
interference. The sending of letter
containing promises of benefits to the
individual employees in order to entice
them to return to work is not protected by
the free speech provision of the
Constitution. The same is true with letters
containing threats to obtain replacements
for the striking employees in the event
they do not report to work on a certain
date. The free speech protection under the
Constitution is inapplicable where the
expression of opinion by the employer or
his agent contains promise of benefits,
threats or reprisals. (Insular Life Assurance
Co. Employees Association v. Insular Life
Assurance Co. Ltd., 1971)
Espionage
 As regards espionage, it is said that
“picketing is inherently explosive.” As
pointed out by one author, “The picket line
is an explosive front, charged with the
emotions and fierce loyalties of the union-
management dispute. It is marked by
colorful name-calling, intimidating threats
or sporadic fights between the pickets and
those who pass the line.” It has been held
in a great number of decisions that
espionage by the employer of union
 activities, or surveillance thereof, are such
instances of interferences, restraint or
coercion of employees in connection with
their right to organize, form and join
unions as to constitute unfair labor
practice. Nothing is more calculated to
interfere with, restrain, or coerce
employees in the exercise of their right to
self-organization than such activity even
where no discharge results. The
information obtained by means of
espionage is invaluable to the employer
and can be used in a variety of cases to
break a union. The unfair labor practice is
committed whether espionage is carried on
by a professional labor spy or detective, by
officals or supervisory employees of the
employer, or by fellow employees acting at
the request or direction of the employer or
an ex-employee. (Insular Life Assurance
Company Employees Association v. Insular
Life Assurance Company Ltd., 1971)
h)Violate duty to bargain or the bargaining
agreement
Art. 248 (h) To pay negotiation or attorney’s fees to the union
or its officers or agents as part of the settlement of any issue in
collective bargaining or any other dispute;
2. ULP of Labor Organizations
a)Interference/Restraint/Coercion
Art. 249. Unfair Labor Practices of Labor Organizations. It
shall be unfair labor practice for a labor organization, its officers,
agents or representatives:
To restrain or coerce employees in the exercise of their right 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;
Art. 248 (a) – “interfere, restraint, coerce”
Art. 249 (a) – “restraint, coerce”
 “Interfere” not included in Art. 249
because any act of a labor organization
amount to interference to a right to self-
organization
 Arts. 248 (a) and 249 (a) are the general
grant of protection. All other cases of ULP
enumerated under the said provisions are
derivative of Arts. 248 (a) and 249 (a).
b) Discrimination Encourage/Discourage
Unionism
Art. 249 (b) To cause or attempt to cause an employer to
discriminate against an employee, including discrimination
against an employee with respect to whom membership in such
organization has been denied or to terminate an employee on any
ground other than the usual terms and conditions under which
membership or continuation of membership is made available to
other members;
 UNION SECURITY CLAUSE – is a stipulation
in the CBA whereby the management
recognizes that the membership of
employees in the union which negotiated
the said agreement should be maintained
and continued as a condition for
employment or retention of employment.
Its purpose is to safeguard and ensure the
continued existence of the union.
c)Exaction-Featherbedding
Art. 249 (d) To cause or attempt to cause an employer to pay or
deliver or agree to pay or deliver any money or other things of
value, in the nature of an exaction, for services which are not
performed or not to be performed, including the demand for fee
for union negotiations.
d)VIOLATE DUTY to bargain or the CBA
Art. 249 (c) To violate the duty, or refuse to bargain collectively
with the employer, provided it is the representative of the
employees;
(f) To violate a collective bargaining agreement
e)PAY Negotiation/Atty’s Fees to settle
disputes
Art. 249 (e) To ask for or accept negotiation or attorney’s fees
from employers as part of the settlement of any issue in
collective bargaining or any other dispute;
3. Right to Peaceful Concerted Activities:
Basis
Constitution
Art. XIII. Sec. 3. The state shall guarantee the
rights of all workers to:
1. self-organization
2. collective bargaining and negotiations, and
3. peaceful concerted activities,
4. including the right to strike in accordance
with law.
Statutory
Art. 263
1. Workers shall have the right to engage in
concerted activities:
 a. For purposes of collective
bargaining; or
b. For their mutual benefit and
protection.
2. 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
3. However, no labor union may strike and no
employer may declare a lockout on
grounds involving inter-union and intra-
union disputes.
Art. 246. It shall be unlawful for any person to:
1. Restrain
2. Coerce
3. Discrimination Against or
Unduly Interfere with Employees and Workers in
their Exercise of the Right to Self-Organization
Right to self-organization shall include the
right to:
1. form
2. join, or
3. assist labor organizations
i. for the purpose of collective
bargaining
ii. through representatives of their
own choosing, and
4. to engage in lawful concerted activities for
the same purpose for their mutual aid and
protection.
Right to Engage in Concerted Activities:
Limitations
 The strike is a powerful weapon of the
working class. Precisely because of this, it
must be handled carefully, like a sensitive
explosive, lest it blow up in the workers’
own hands. Thus, it must be declared onlt
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 will render the strike illegal, to
the detriment of the very workers it is
supposed to protect. (Batangas Laguna
Tayabas Bus Co. v. NLRC, 1992)
1. Forms of Concerted Activities
1. Strike
International Covenant: on Economic, Social
and Cultural Rights. ART. 8: The States Parties
to the present Covenant undertake to ensure:
(d) The right to strike, provided that it is exercised
in conformity with the laws of the particular
country.
Definition
Art. 212 (o) Strike: Any temporary stoppage of
work by the concerted action of employees as a
result of an industrial or labor dispute.
The term “strike” shall comprise not only concerted
work stoppages, but also slowdowns, mass leaves,
sitdowns, attempts to damage, destroy or
sabotage plant equipment and facilities, and
similar activities. (Samahang Manggagawa v.
Sulpicio Lines, 2004)
 The right to strike is a constitutional and
legal right of the workers as employers
have the right to lockout, all within the
context of labor relations and collective
bargaining.
 Subject to the enactment by Congress of
amendments or a new law on labor
relations, the provisions of existing laws
shall govern the exercise of those rights.
Strike: A Coercive Measure
 A strike is a coercive measure resorted to
by laborers to enforce their demands. The
idea behind a strike is that a company
engaged in a profitable business cannot
afford to have its production or activities
interrupted, much less, paralyzed.
(Philippine Can Co v. CIR, 1950)
2. Who may declare a strike or lockout?
Book V, Rule XXII, Sec. 6
1. Certified or duly recognized bargaining representative
2. Employer
3. In the absence of certified or duly recognized bargaining
representative, any legitimate labor organization in the
establishment, but only grounds of ULP.
3. Requisites for a valid strike
Strike: Procedural requirements
The procedural requirements are mandatory.
Failure to comply with the following requirements
makes the strike illegal. Consequently, the officers
of the union who participated therein are deemed
to have lost their employment.

a) Effort to bargain
Art 264 (a):
1) No labor organization or employer shall declare a strike or
lockout without first having bargained collectively in accordance
with Title VII of this Book..
b) Filling of notice of intention to strike
Art 264 (c), (d):
1) 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 department at
least 30 days before the intended date thereof.
2) In case of unfair labor practice, the period of notice shall be
15 days
3) In the absence of a duly certified of duly certified or recognized
bargaining agent, the notice of strike may be filed by any
legitimate labor organization in behalf of its members
4) The notice must be in accordance with such implementing
rules and regulations as
the Secretary may promulgate.
Book V Rule XXII Sec.8:
Contents of notice (3NS)
1) Names and addresses of the employer and the union involved
2) Nature of the industry to which the employer belongs
3) Number of union members and of workers in the bargaining
unit.
4) Such other relevant data as may facilitate the settlement of
the dispute.
Additional Requirements
In case of bargaining deadlocks:(UPCP)
1) Statement of unresolved issues in the bargaining negotiations
2) Written Proposals of the union
3) Counterproposals of the employer
4) Proof of a request for conference to settle the differences.
In case of ULP:
1) Statement of Acts complained of
2) Efforts taken to resolve the dispute amicably.
In case the notice does not conform with the requirements, the
regional branch of he NMCB shall inform the concerned party of
such fact.
Book V Rule XXII Sec.9
Action on Notice:
Upon receipt of a valid notice of strike or lockout, the NCM,
through its conciliator-Mediators, shall call the parties to a
conference the soonest possible time in order to actively assist
them to explore all possibilities for amicable settlement.
The Conciliator- Mediator may suggest/offer proposal as an
alternative avenue for the resolution of their
disagreement/conflict which may not necessarily bind the
parties.
If conciliation/mediation fails, the parties shall be encouraged to
submit their dispute for voluntary arbitration.
The procedural requirements are mandatory,
meaning, non-compliance therewith makes the
strike illegal. The evident intention of the law in
requiring the strike notice and strike-vote report is
to reasonably regulate the right to strike.
(Stamford Marketing Corp v. Julian, 2004)
Aside from the mandatory notices embedded in
Art. 263, paragraphs (c) and (f) of the Labor Code,
a union intending to stage a strike is mandated to
notify the NCMB of the meeting for the conduct of
strike vote, at least twenty four (24) hours prior to
such meeting. Unless the NCMB is notified of the
date, place and time of the meeting of the union
members for the conduct of a strike vote, the
NCMD would be unable to supervise the holding of
the same, if and when it decided to exercise its
power of supervision. The requirement of giving
notice of the conduct of a strike vote to the NCMD
at least 24 hours before the meeting for the said
purpose is designed to:
(a) Inform the NCMB of the intent of the union to
conduct a strike vote;
(b) Give the NCMB ample tine to decide on
whether or not there is a need to supervise the
conduct of the strike vote to prevent any acts of
violence and/or irregularities attendant thereto;
and
(c) Should the NCMB decide on its own initiative or
upon the request of an interested party including
the employer, to supervise the strike vote, to give
it ample time to prepare for the deployment of the
requisite personnel, including peace officers if need
be (Capitol Medical Center, Inc, v. NLRC,
2005)
(c) Observance of cooling-off periods
Art. 263 (c), (e):
1) In case of dismissal from employment of union officers duly
elected in accordance with the union constitution and by-laws,
which may constitute union busting, where the existence of the
union is threatened, the 15-day cooling-off period shall not apply
and the union may take action immediately.
2) During the cooling-off period, it shall be the duty of the
Ministry to exert efforts at mediation and conciliation to effect a
voluntary settlement. Should the dispute remain unsettled until
the lapse of the requisite number of days from the mandatory
filing of the notice, the labor union may strike or the employer
may declare a lockout.
The purpose of the cooling-off period is to provide
an opportunity for mediation and conciliation. The
waiting period, on the other hand, is intended to
provide opportunity for the members of the union
or the management to take the appropriate
remedy in case the strike of lockout vote report is
false or inaccurate. The observance of both periods
must be complied with, although a labor union may
take a strike vote and report the same within the
statutory cooling-off period. The cooling-off and 7-
day strike ban provisions of law constitute a valid
exercise of police power of the State. (National
Federation of Sugar Workers vs. Ovejera,
1982)
The 7-day strike ban is a distinct and separate
requirement from the cooling-off period prescribed
by law. The latter cannot be substituted for the
former. Both periods are mandatory. (Gold City
Integrated Port Service, Inc. vs. NLRC, 1995)
The language of the law leaves no room for doubt
that the cooling-off period and the seven-day
strike ban after the strike-vote report were
intended to be mandatory and in case of union
busting where the existence of the union is
threatened, it is only the 15-day cooling-off
period that may be dispensed with.
(Sukhothai Cuisine & Restaurant v CA, 2006)
d) Strike vote
Art. 263 (f):
A decision to declare a strike must be approved by a majority of
the total union membership in the bargaining unit concerned,
obtained by secret ballot in meetings or referenda called for that
purpose.
A decision to declare a lockout must be approved by a majority of
the board of directors of the corporation or association or of the
partners in a partnership, obtained by secret ballot in a meeting
called for that purpose.
The decision shall be valid for the duration of the dispute based
on substantially the same grounds considered when the strike or
lockout vote was taken.
The department may, at it own initiative or upon the request of
any affected party, supervise the conduct of the secret balloting.
In every case, the union or the employers shall furnish the
Department the result of the voting at least 7 days before the
intended strike or lockout, subject to the cooling-off period herein
provided.
e) Strike Vote Report
The result of the strike or lockout voting should be
reported to the NCMB at least 7 days before the
intended strike or lockout. The seven-day period is
intended to give the DOLE an opportunity to verify
whether the projected strike has the approval of
the majority of the union members.
Query: If the strike vote was reported within the
cooling-off period, how should the 7-day period be
computed?
There are at least 2 interpretations:
1) The cooling-off period and the 7-day period are
mutually exclusive. Thus, in the case of Capitol
Medical Center v. NLRC, the Court held that
when the strike vote is conducted within the
cooling-off period, the 7-day requirement shall be
counted from the day following the expiration of
the cooling off period.
2) The cooling-off period and the 7-day
requirement may coexist. After all, the purpose of
the 7-day requirement is to give time for the DOLE
to verify if the projected strike is supported by the
majority. There is no reason to add it to the
cooling-off period.
Strike: Test of Legality
Legal strike
Purpose and Means Test
There must be concurrence between the validity of
the purpose of the strike and the means of
conducting it.
A strike is a legitimate weapon in the universal
struggle for existence. It is considered as the most
effective weapon in protecting the rights of the
employees to improve the terms and conditions of
their employment. But to be valid, a strike must
be pursued within legal bounds. The right to
strike as a means for the attainment of social
justice is never meant to oppress or destroy the
employer. The law provides limits for its exercise.
Among such limits are the prohibited activities
under Art. 264, particularly paragraph (e), which
states that no person engaged in picketing shall:
• commit any act of violence, coercion, or
intimidation or
• obstruct the free ingress to or ingress from the
employer’s premises for lawful purpose or
• obstruct public thoroughfares.
(Association of Independent unions in the
Philippines (AIUP), et. Al. v NLCR, 1999)
Even if the strike is valid because its objective or
purpose is lawful, the strike may still be declared
invalid where the means employed are illegal.
(Phil. Diamond Hotel and Resort, Inc. v.
Manila Diamond Hotel Employees Union,
2006)
Acts of violence in this jurisdiction, when
committed in carrying on a strike are not to be
overlooked in determining its legality or illegality.
To overlook these acts of violence would encourage
abuses and terrorism and subvert the purpose of
the law which provides for arbitration and peaceful
settlement of disputes. If a strike is unjustified as
when it is declared for trivial, unjust or
unreasonable purpose, the employer may not be
compelled to reinstate the strikers to their
employment. More so, when the strike is carried
on illegally. (Philippine Marine Officers Guild v.
Cia. Martima, 1968)
Guidelines and Balancing of Interest
1. A strike otherwise valid, if violent in
character, may be placed beyond the pale.
2. Care is to be taken especially where an
unfair labor practice is involved, to avoid
stamping it with illegality just because it is
tainted by such acts. To avoid rending
illusory the recognition of the right to
strike, responsibility in such a case should
be individual and not collective.
3. A different conclusion would be called for 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’.
4. This is not by any means to condone the
utilization of force by labor to attain its
objectives. It is only to show awareness
that in labor conflicts, the tension that fills
the air as well as the feeling of frustration
and bitterness could break out in sporadic
acts violence.
5. If there be in this case a weighing of
interests in the balance, the ban the law
impose on unfair labor practices by
management that could provoke a strike
and its requirement that it be conducted
peaceably, it would be, to repeat,
unjustified, considering all the facts
disclosed, to stamp the strike with
illegality. It is enough that individual
liability be incurred by those guilty of such
acts of violence that call for loss of
employee status. Such an approach is
reflected in our decisions. (Shell Oil
Workers Union v. Shell Co. of the Phils,
1971)
Defense: Good faith-Strike
GENERAL RULE: A strike based on non-strikeable
grounds is illegal
EXCEPTION: Where employees believe in good
faith that ULP acts exist so as to constitute a valid
ground strike
Although rejecting the argument that PNOC and it
subsidiaries were guilty of discrimination, the NLRC
reiterated the policy enunciated in several labor
cases “that a strike does not automatically carry
the stigma of illegality even if no unfair labor
practice were committed by the employer. It
suffices if such a belief in good faith is entertained
by labor as the inducing factor for staging a
strike,” The presumption of legality prevails even it
the allegation of unfair labor practice is
subsequently found to be untrue, provided that the
union and its members believed in good faith in
the truth of such averment. (PNOC Dockyard v.
NLRC, 1998)
In the instant case, petitioners believed in good
faith that dismissing them upon request by the
federation, respondent company was guilty of
unfair labor practice in that it violated the
petitioner’s right to self-organization.
The strike was staged to protest respondent
company’s act of dismissing the union officers.
Even if the allegations of unfair labor practice are
subsequently found out to be untrue, the
presumption of legality of the strike prevails.
(Malayang Samahan ng mga Manggagawa sa
Greenfield v. Ramos,2000)
Caveat: Good Faith-Strike requires Rational
Basis
A mere claim of good faith would not justify the
holding of a strike under the aforesaid exception
as, in addition thereto, the circumstances must
have warranted such belief. It is, therefore, not
enough that the union believed that the employer
committed acts of ULP when the circumstances
clearly negate even a prima facie showing to
sustain such belief. (Interwood Employees
Assoc. V. Int’l Hardwood, 1956)
Caveat: Good Faith-Strike requires
compliance with procedural Requirements
Even if the union acted in good faith in the belief
that the company was committing an unfair labor
practice, if no notice of strike and strike vote were
conducted, the said strike is illegal. (First City
Interlink Transportation v. Roldan-Confesor)
Employer Lockout
Lockout: Definition
Art. 212(p). Lockout: the temporary refusal of an employer to
furnish work as a result of an industrial or labor dispute.
Lockout: Grounds
Art 263 (c): Strikes, picketing and lockouts
Bargaining Deadlocks:
In case of bargaining deadlocks, the duly certified or recognized
bargaining agent may file a notice of strikes or the employer may
file a notice of lockout with the Department at least 30 days
before the intended date thereof
ULP:
a) In cases of unfair labor practice, the period of notice shall be
15 days
b) In the absence of a duly certified or recognized bargaining
agent, the notice strike may be filed by any legitimate labor
organization in behalf of its members.
c) In case of dismissal from employment of union officers duly
elected in accordance with the union constitution and by-laws,
which me 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.
Lockout: Prohibitions
Art. 263 (b), last sentence:
No Labor union may strike and no employer may declare a
lockout on grounds involving inter-union and intra-union
disputes.
Art. 264 (a):
1) No labor organization or employer shall declare a strike or
lockout without first having:
a) Bargained collectively in accordance with Title VII of
this Book, or
b) Filed the notice required in the preceding Article or
without the necessary strike or lockout vote first having been
obtained and reported to the Department.
2) No strike or lockout shall be declared after assumption of
jurisdiction by the President or 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 lockout.
3) Any union officer who knowingly participates in an illegal strike
and any worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have
lost his employment status:
PROVIDED, that mere participation of a worker in a lawful strike
shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the
employer during such lawful strike.
4. Requisites for a valid lockout
Lockout: Procedural Requirements
a) Effort to bargain
Art. 264 (a):
1) No labor organization or employer shall declare a strike or
lockout without first having bargained collectively in accordance
with Title VII of this Book…
b) Filing of notice intention
Art. 263 (c), (d):
1) 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 Department at
least 30 days before the intended date hereof.
2) In case of unfair labor practice, the period of notice shall be 15
days.
3) 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.
4) The notice must be in accordance with such implementing
rules and regulations as the Secretary may promulgate.
Book V Rule XXII Sec. 8:
Contents of Notice (3NS)
1. Names and addresses of the employer and the union involved
2. Nature of the industry to which the employer belongs
3. Number of union members and of workers in the bargaining
unit
4. Such other relevant data as may facilitate the settlement of
the dispute.
Additional Requirements
In cases of bargaining deadlocks: (UPCP)
1. Statement of Unresolved issues in the bargaining negotiations
2. Written Proposal of the union
3. Counterproposals of the employer
4. Proof of a request for conference to settle the differences.
In cases of ULP:
1. Statement of Acts complained of
2. Efforts taken to resolve the dispute amicably.
In case the notice the notice does not conform with the
requirements, the regional branch of the NMCB shall inform the
concerned party of such fact.
Book V Rule XXVII Sec. 9
Action on Notice
Upon receipt of a valid notice of strike or lockout, the NCMB,
through its Conciliator-Mediators, shall call the parties to a
conference the soonest possible time in order to actively assist
them to explore all possibilities for amicable settlement.
The Conciliator-Mediator may suggest/offer proposals as an
alternative avenue for the solution of their disagreement/conflict
which may not necessarily bind the parties.
If conciliation/mediation fails, the parties shall be encouraged to
submit their disputes for voluntary arbitration.
Effect of Illegal Lockout
Art. 264 (a), par. 3, 1st sentence
Any worker whose employment has been terminated as a
consequence of any unlawful lockout shall be entitled to
reinstatement with full backwages. the offending imputation, but in the form of a
question, was included. It was due to a former
official of plaintiff appellant’s bank who thereafter
named as President of the Philippine National
Picketing: Bank. Should there be an automatic attitude of
condemnation for such incident? If the realistic
Picketing: Definition observation of Justice Frankfurter in Milk Wagon
Drivers Union of Chicago v. Meadowmoor Dairies
NCMB Manual of Procedure for Conciliation and Preventive be heeded that labor disputes give rise to strong
Mediation Cases. response, then the decision reached by the lower
Sec. 1: Definition of Terms
court becomes even more acceptable. It is a fact of
Picketing – the right of workers to peacefully march to and fro industrial life, both in the Philippines as in the
before an establishment involved in a labor dispute generally United States, that in the continuing confrontation
accompanied by the carrying and display of signs, placards and
between labor and management, it is far from
banners intended to inform the public about the dispute.
likely that the language employed would be, both
courteous and polite. Such being the case, there is
no affront either to reason or to the law in the
Picketing: Limitations
complaint for libel being dismissed. In placing
Picketing, like other freedom of expression in
reliance on the constitutional right of freedom of
general, have limits. To the extent it is an
expression, this Court once again makes manifest
instrument of coercion rather than of persuasion, it
its adherence to the principle first announced by
cannot rightfully be entitled to the protection
Justice Malcolm as ponente in the leading case of
associated with free speech. Equally so, there can
United States v. Bustos. In no uncertain terms, it
be no indiscriminate ban on the freedom to
made clear that the judiciary, in deciding suits for
disseminate the facts of a labor dispute and to
libel, must ascertain whether or not the alleged
appeal for public sympathy, which is the aim of
offending words may be embraced by the
peaceful picketing, without a transgression of the
guarantees of free speech and free press. It cannot
Constitution, sufficient to oust a court of
be too often said that Bustos was promulgated as
jurisdiction, even on the assumption that it was
far back as March 8, 1918. (PCIB V. Philnabank
originally possessed of such a competence.
Employees, 1981)
(Security Bank Employees Union v. Security
Bank and Trust Co.,1968)
Curtailment
Peaceful picketing cannot be restrained because
Picketing and libel laws
the same is part of the freedom of speech.
However, petitioner fails to realize that the
There is a unique aspect to this action for libel
questioned July 16, 1965 order of the Court of
against the Philippine National Employees’
Industrial Relations did not refer to peaceful
Association. It was filed by plaintiff PCIB as a
picketing. In Mortera (supra), where the therein
result of placards and signboards along the PNB
questioned order partly declared that “… picketing
building in Escolta, Manila, containing the
under any guise and form is hereby prohibited…,”
following: “PCIB BAD ACCOUNTS TRANSFERRED
this Court ruled that the “order of the Court of
TO PNB-NIDC?”
Industrial Relations prohibiting picketing must be
understood to refer only to illegal picketing, that is,
There was a labor controversy resulting in a strike,
picketing through the use of illegal means. In this
fortunately lasting only for one day. The labor
case, the questioned restraining order should also
union made use of its constitutional right to picket.
be taken as limited to the lifting of the lines which
From the time of Mortera vs. CIR, a 1947 decision
constituted illegal picketing especially so because it
this Court has been committed to the view that”
expressly stated that the petitioner union and its
peaceful picketing is part of the freedom of speech
officers, agents or sympathizers “are hereby
guarantee of the Constitution. The latest case in
directed to call off the strike declared on July
point where such a principle was reaffirmed
17,1965, and to lift the picket lines established in
expressly is Associated Labor Union v. Gomez, a
and around the premises of respondent company’s
1980 decision. There is no mention of the other
various offices and installation xxx The persons
placards but it is not unlikely that to bolster its
manning the picket lines in these places are hereby
claim, mention was likewise made and in bold
enjoined from impeding and interfering with
letters at that of such alleged failing of its
implementation of this Order as well as from
management. That was the aim and intent as
interfering in any manner with the operations of
found by the lower court. That could not very well
respondent. (Free Telephone Workers Union v.
be disputed by plaintiff-appellant. Unfortunately,
PLDT Co., 1982)
5. Requisites for lawful picketing
Regulation/restrictions, innocent third party
rule and liabilities
While peaceful picketing is entitled to protection as
an exercise of free speech, the courts are not
without power to confine or localize the sphere of
communication or the demonstration to the parties
of the labor dispute, including those with related
interest and to insulate establishments or persons
with no industrial connection or having interest
foreign to the context of the dispute. Liwayway
Publishing Co. v. Permanent Concrete
Workers Union (1981):
Thus, the right may be regulated at the
instance of third parties or ‘innocent
bystanders’ if:
1) it appears that the inevitable result of its
exercise is to create an impression that a
labor dispute with which they have no
connection or interest exists between
them, and
2) the picketing union or constitute an
invasion of their rights.
Regulation: Rationale
Mere innocent bystanders are entitled to seek
protection of their rights from the courts and the
courts may, accordingly, legally extend the same.
The picket is merely regulated to protect the rights
of third parties. If the law fails to afford said
protection, men will endeavor to safeguard their
rights by their own might, take the law in their
own hands, and commit acts which lead to
breaches of the law. This should not be allowed to
happen.”
An “innocent bystanders,” who seeks to enjoin a
labor strike, must satisfy the court that aside from
the grounds specified in Rule 58 of the Rules of
Court, it is entirely different from, without any
connection whatsoever to, either party to the
dispute and, its interests are totally foreign to the
context thereof. (MSF Tire Rubber Inc. v. CA,
1999)
Absence of Employer-Employee Relationship:
Effect
Picketing, peacefully carried out, is not illegal even
in the absence of employer-employee relationship,
for peaceful picketing is a part of the freedom of
speech guaranteed by the Constitution. (De Leon
v. National Labor Union. 1957)
Prohibited Activities
Art. 264 (b):
No person shall:
a) Obstruct, impede, or interfere with, by force, violence,
coercion, threats or intimidation, any peaceful picketing by
employees during any labor controversy or in the exercise of the
right to self-organization or collective bargaining, or
b) Aid or abet such obstruction or interference.
Slowdown
A slowdown is inherently illicit and unjustifiable
because while the employees continue to work,
they, at the same time, select what part of their
duties they perform. In essence, they work on
their own terms. (Ilaw at Buklod ng
Manggaagawa (IBM) v. NLRC, 1991)
Role of Peace Officers during Strike and
Picket
A. Escorting
Art. 264 (d)
No public official or employee, including officers and personnel of
the AFP or the Integrated National Police, or armed person-
a) shall bring in, introduce or escort in any manner,
b) any individual who seeks to replace strikers in
entering or leaving the premises of a strike area, or work in place
of the strikes.
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.
B. Arrest and Detention of Law Violators
Art. 266
1) GENERAL RULE: No union members or union organizes
may be arrested or detained for union activities without previous
consultations with the Secretary of Labor.
2) EXCEPTION:
a) On grounds of national security and public peace,
or
b) In case of commission of a crime
CONFLICT OF INTEREST:
1) Insofar as practicable, no officer of the law shall
be allowed to render services in connection with a
strike or lockout:
a) if there is question or complaint as regards his
relationship by affinity or consanguinity to any
official/leader of the parties in the controversy or
b) if he has financial or pecuniary interest
therein.
6. Assumption of jurisdiction by the Secretary
of Labor or Certification of the Labor dispute
to the NLRC for compulsory arbitration
Compulsory Arbitration: Definition and Nature
of Dispute
Compulsory Arbitration is by mandate of law. While
voluntary arbitration is by agreement of
parties.
• What is the type of dispute subject to
compulsory arbitration? Labor disputes
in industry indispensable to the national
interest.
• Who is initiating party? Initiated by the
Secretary of Labor or the President.
Note: the NLRC has no authority to initiate. The
NLRC only comes into the picture when the
secretary of labor or the President certifies the
case to them.
7. Nature of Assumption Order or Certification
Order
Requisites for Compulsory Arbitration
Art. 263 (g)
• there exists a LABOR DISPUTE
• causing of likely to cause a STRIKE OR LOCK-OUT
• in an INDUSTRY INDISPENSABLE TO THE NATIONAL
INTERESTS
The Secretary of Labor and Employment MAY:
1) Assume jurisdiction over the dispute and decide it OR
2) Certify the same to the Commission (NLRC) for COMPULSORY
ARBITRATION
Assumption and certification orders are executor in
character and are to be strictly complied with by
the parties even during the pendency of any
petition questioning their validity. The authority
given to the Secretary of Labor aims to arrive at a
peaceful and speedy solution to labor disputes,
without jeopardizing national interests.
EFFECT of Assumption or Certification of SOLE
If the parties are yet to go on strike or lockout:
 AUTOMATICALLY enjoining the intended or
impending strike or lock-out as specified in
the assumption or certification order
If one has already taken place at the time of
assumption or certification,
 All striking or lock-out employees shall
IMMEDIATELY RETURN TO WORK
 AND the employer shall IMMEDIATELY
resume operations and READMIT all
workers under the SAME terms and
conditions prevailing before the strike or
lock-out.
Note: the Secretary of Labor and Employment or
the Commission may seek the assistance of law
enforcement agencies to sure the compliance
with this provision (Art. 263, g) as well as with
such orders as he may issue to enforce the same.
Art. 263(g) – on strikes/lockouts in medical institutions:
In labor disputes adversely affecting the continued operation of
such hospitals, clinics or medical institutions,
1) It shall be the DUTY of striking union or locking out
employer to provide and maintain an EFFECTIVE SKELETAL
WORKFORCE of medical and other health personnel,
2) Whose movement and services shall be
unhampered and unrestricted, as are necessary to insure the
proper and adequate protection of the life and health of its
patients, most especially emergency cases, for the duration of the
strike or lockout.
The Secretary of Labor and Employment may IMMEDIATELY
assume, within twenty four (24) hours from knowledge of the
occurrence of such a strike or lockout, jurisdiction over the same
or certify it to the Commission for compulsory arbitration.
Proceedings on appeal before the NLRC en banc
cannot be considered as part of the arbitration
proceeding. In its broad sense, arbitration is the
reference of a dispute to an impartial third person,
chosen by the parties or appointed by statutory
authority to hear and decide the case in
controversy Chan Linte v. Law Union and Rock,
Inc. Co., 42 Phil. 548 (1921)]. When the consent
of one of the parties is enforced by statutory
provisions, the proceeding is referred to as
compulsory arbitration. In labor cases,
compulsory arbitration is the process of
settlement of labor disputes by a government
agency which has the authority to investigate
and to make an award which is binding on all
the parties. Under the Labor Code, it is the Labor
Arbiter who is clothed with the authority to conduct
compulsory arbitration on cases involving
termination disputes [Article 217, Pres. Decree No.
442, as amended]. When the labor Arbiter renders
his decision, compulsory arbitration is deemed
terminated because by then the hearing and
determination of the controversy has ended. (PAL
v. NLRC, 1989)
The production and publication of telephone
directories, which is the principal activity of GTE,
can scarcely be described as an industry affecting
the national interest. GTE is a publishing firm
chiefly dependent on the marketing and sale of
advertising space for its not inconsiderable
revenues. Its services, while of value, cannot be
deemed to be in the same category of such
essential activities as “the generation or
distribution of energy” or those undertaken by
“banks, hospitals, and export-oriented industries.”
It cannot be regarded as playing as vital a role in
communication as other mass media. The small
number of employees involved in the dispute, the
employer’s payment of “P10 million in income tax
alone to the Philippine government,” and the fact
that the “top officers of the union were dismissed
during the conciliation process,” obviously do not
suffice to make the dispute in the case at bar one
“adversely affecting the national interest.” (GTE
Directories Corp. v. GTE Directories Corp.
Employees Union, 1991)
Compulsory arbitration is a system whereby the
parties to a dispute are compelled by the
government to forego their right to strike and are
compelled to accept the resolution of their dispute
through arbitration by a third party. The essence of
arbitration remains since a resolution of a dispute
is arrived at by resort to a disinterested third party
whose decision is final and binding on the parties,
but in compulsory arbitration, such a third party is
normally appointed by the government. (Luzon
Development Bank v. Association of
Development Bank Employees, 1995)
A cursory reading of the above provision shows
that when the Secretary of Labor assumes
jurisdiction over a labor dispute in an industry
indispensable to national interest or certifies the
same to the NLRC for compulsory arbitration, such
assumption or certification shall have the effect of
automatically enjoining the intended or impending
strike or lockout. Moreover, if one had already
taken place, all striking workers shall immediately
return to work and the employer shall
immediately resume operations and readmit
all workers under the same terms and
conditions prevailing before the strike or
lockout. The powers granted to the Secretary of
Labor under Article 263 (g) of the Labor Code have
been characterized as an exercise of the police
power of the State, with the aim to promoting
public good:
When the Secretary exercise these powers, he is
granted “great breadth of discretion” in order to
find a solution to a labor dispute. The most obvious
of these powers is the automatic enjoining of an
impending strike or lockout or lifting thereof if one
has already taken place.
The maritime industry is indubitably imbued with
national interest. Under the circumstances, the
Labor Secretary correctly intervened in the labor
dispute between the parties to this case by
certifying the same to the NLRC for compulsory
arbitration. (Trans-Asia Shipping Lines, Inc. v.
CA, 2004)
In the present case, there is no showing that the
facts called for payroll reinstatement as an
alternative remedy. A strained relationship
between the striking employees and management
is no reason for payroll reinstatement in lieu of
actual reinstatement Petitioner correctly points out
that labor disputes naturally involve strained
relations between labor and management, and that
in most strikes, the relations between the strikers
and the non-strikers will similarly be tense.
Nevertheless, the government must still perform
its function and apply the law, especially if, as in
this case, national interest is involved.
GENERAL RULE: Voluntary Arbitration (Article
XIII, Section 3 of the Constitution; Art. 211)
EXCEPTION: Assumption of jurisdiction by Sec. of
Labor [Art. 263 (g)]
Even in the exercise of his discretion under Article
236(g), the Secretary must always keep in mind
the purpose of the law. Time and again, this Court
has held that when an official bypasses the law on
the asserted ground of attaining a laudable
objective, the same will not be maintained if the
intendment or purpose of the law would be
defeated. (Manila Diamond Hotel Employees’
Union v. CA, 2004)
Compulsory Arbitration: Rationale
The purpose of a presidential certification is
nothing more than to bring about soonest, thru
arbitration by the industrial court, a fair and just
solution of the differences between an employer
and his workers regarding the terms and
conditions of work in the industry concerned which
in the opinion of the President involves the national
interest, so that the damage such employer-
worker dispute might cause upon the national
interest may be minimized as much as possible, if
not totally averted by avoiding the stoppage of
work as a result of a strike or lockout or any
lagging of the activities of the industry or the
possibility of these contingencies which might
cause detriment to such national interest. This is
the foundation of that court’s jurisdiction in what
may be termed as a certification case. Naturally,
if the employer and the workers are able to arrive
at an amicable settlement by free and voluntary
collective bargaining preferably thru a labor union,
before the court is able to use its good offices, it is
but in consonance with the objective of the
Industrial Peace Act to promote unionism and free
collective bargaining that the court should step out
of the picture and declare its function in the
premises at an end, except as it may become
necessary to determine whether or not the
agreement forged by the parties is not contrary to
law, morals or public policy. (Manila Cordage
Company v. CIR, 1971)
“The very nature of a return-to-work order issued
in a certified case lends itself to no other
construction.
• The certification attests to the urgency of the
matter, affecting as it does an industry
indispensable to the national interest. The order is
issued in the exercise of the court’s compulsory
power of arbitration, and therefore must be obeyed
until set aside.
• To say that its effectivity must await affirmance
on a motion for reconsideration is not only to
emasculate it but indeed to defeat its import, for
by then the deadline fixed for the return to work
would, in the ordinary course, have already passed
and hence can no longer be affirmed insofar as
time element is concerned.” (National
Federation of Labor v. MOLE, 1983)
The very purpose of compulsory arbitration is to
call a halt to a pending strike by requiring that the
status quo prior to its declaration be preserved.
The Solicitor General was correct when he stated
that by assuming jurisdiction over the labor
dispute, the Acting Secretary of Labor merely
provided for a formal forum for the parties to
ventilate their positions with the end in view
of settling the dispute.
As contented by the SolGen, “there can be no such
unconstitutional application (of BPI 227) because
all that Minister has done is to certify the labor
dispute for arbitration and thereafter jurisdiction
over it. He has not rendered any decision; he
has not favored one party over the other.
(Phil. School of Business Administration v.
Noriel, 1988)
LABOR DISPUTE of NATIONAL INTEREST (DETERMINED
BY Sec. of Labor or President)
• Sec. of Labor may assume jurisdiction over the case and
resolve it
• Sec. of Labor may certify the case to the NLRC for compulsory
arbitration
Process Initiation: Certification of Dispute
Process Initiation: Initiating Party
a) Secretary DOLE
b) President
When the Secretary exercises the powers granted
by Article 263(g) of the labor Code, he is indeed
granted great breadth of discretion. However, the
application of this power is not without limitation,
lest the Secretary would be above the law. As
Article 263(g) is clear and unequivocal in stating
that ALL striking or locked out employees shall
immediately return to work and the employer shall
immediately resume operations and readmit ALL
workers under the same terms and conditions
prevailing before the strike or lockout, then the
unmistakable mandate must be followed by the
Secretary. (PLDT v. Manggagawa ng
Komunikasyon sa Pilipinas, 2005)
Role of NLRC
Corollary, the NLRC was thereby charged with the
task of implementing the certification order for
compulsory arbitration. As the implementing body,
its authority did not include the power to amend
the Secretary’s order.
Nature of Authority
When sitting in a compulsory arbitration certified
to by the Secretary of Labor, the NLRC
is:
• not sitting as a judicial court
• but as an administrative body charged with the
duty to implement the order of the Secretary.
Jurisdiction over the Issues
Necessarily, this authority to assume jurisdiction
over the said labor dispute must include and
extend to
• all questions and controversies arising
therefrom,
• including cases over which the labor arbiter has
exclusive jurisdiction.
An issue that is not part of the dispute may be
ruled on a compulsory arbitration case if it was
submitted by the parties.
The submission of an incidental issue of a labor
dispute, in assumption and/or certification cases,
to the Secretary of Labor and Employment for his
resolution is thus one of the instances referred to
whereby the latter may exercise concurrent
jurisdiction together with the Labor Arbiters.
Effect of Assumption/Certification Order
Effect of Assumption/Certification Order
pursuant to Art. 263 (g):
 1) Strike/Lockout automatically enjoined
2) Striking/Locked Out employees shall
immediately return to work
3) Employer shall resume operations and readmit
all workers
Assumption Order carries with it a Return-to
Work Order
When the labor Secretary assumes jurisdiction
over a labor dispute in an industry indispensable to
the national interest, such assumption shall have
the effect of automatically enjoining any intended
or impending strike.
It is clear from Art. 263 that the moment the
Secretary of Labor assumes jurisdiction over a
labor dispute in an industry indispensable to
national interest, such assumption shall have the
effect of automatically enjoining the intended
or impending strike. The rationale of this
prohibition is that once jurisdiction over the labor
dispute has been properly acquired by the
competent authority, that jurisdiction should not
be interfered with by the application of the
coercive processes of a strike. (Telefunken Semi-
Conductor Employees Union v. CA, 2000)
8. Effect of defiance of Assumption or
Certification Orders
Art. 263 (g) xxx For this purpose the contending parties are
STRICTLY ENJOINED to comply with such orders, prohibitions
and/or inunctions as are issued by the Secretary of Labor and
Employment or the Commission, under pain immediate
disciplinary action, including dismissal or loss of employment
status or payment by the lacking-out employer of back wages,
damages and other affirmative relief, even criminal prosecution
against either or both of them.
Return-to-Work order NOT a violation of the
right against involuntary servitude
So imperative is the order in fact that it is not even
considered violative of the right against involuntary
servitude, as this Court held in Kaisahan ng Mga
Manggagawa sa Kahoy v. Gotamco Sawmills.
The worker can of course give up his work, thus
severing his with the company, if he does not want
to obey the order, but the order must obeyed if he
wants to retain his work even if his inclination is to
strike.
One other point that must be underscored is that
the return-to-work order is issued pending the
determination of the legality or illegality of the
strike. It is not correct to say that it may be
enforced only if the strike is legal and may be
disregarded if the strikes is illegal, for the purpose
precisely is to maintain the status quo while the
determination is being made.
Return-to-Work Order Mandatory
Returning to work in this situation is not a matter
of option or voluntariness but of obligation. The
worker must return to his job together with his co-
workers so the operations of the company can be
resumed and it can continue serving the public and
promoting its interest. This extraordinary authority
given to the Secretary of Labor is aimed at arriving
at a peaceful and speedy solution to labor
disputes, without jeopardizing national interests.
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 undermine this authority of the Secretary of
Labor, once an assumption and/or certification
order is issued. They cannot for instance, ignore
return-to-work orders, citing unfair labor practices
on the part of the company, to justify their action.
(Manila Hotel Employees Assn. v. Manila
Hotel Corp., 2007)
Awards and Orders
Art. 263. Strikes, picketing and lockouts
(i). The Secretary of Labor and Employment, the
Commission or the voluntary arbitrator shall decide or resolve the
dispute, as the case may be. The decision of the President, the
Secretary of Labor and Employment, the Commission or the
voluntary arbitrator shall be final and executory ten (10) calendar
days after receipt thereof by the parties.
Art. 277 (i). To ensure speedy labor justice, the periods
provided in this Code within which decisions or resolutions of
labor relations cases or matters should be rendered shall be
mandatory. For this purpose, a case or matter shall be deemed
submitted for decision or resolution upon the filing of the last
pleading or memorandum required by the rules of the
Commission or by the Commission itself, or the Labor Arbiter, or
the Director of the Bureau of Labor Relations or Med-Arbiter, or
the Regional Director.
Upon expiration of the corresponding period, a certification
stating why a decision or resolution has not been rendered within
the said period shall be issued forthwith by the
Chairman of the Commission, the Executive Labor Arbiter, or the
Director of the Bureau of Labor Relations or Med-Arbiter, or the
Regional Director, as the case may be, and a copy thereof served
upon the parties.
Despite the expiration of the applicable mandatory period, the
aforesaid officials shall, without prejudice to any liability which
may have been incurred as a consequence thereof, see to it that
the case or matter shall be decided or resolved without any
further delay.
The company is therefore right in dismissing the
subject Union officers in accordance with Article
264 (a) of the Labor Code, for participating in
illegal strike in defiance of the assumption of
jurisdiction order by the Labor Secretary. However,
the members of the Union should not be as
severely punished. Dismissal is a harsh penalty as
surely they were only following orders from their
officers. Besides, there is no evidence that they
engaged or participated in the commission of
illegal activities during the said strike. They should
thus be reinstated to their former positions, but
without backwages. Their action which resulted in
prejudice to the Company cannot however go
unpunished. For the injury that they have
collectively inflicted on the company, they should
be disciplined. A one month suspension is a
reasonable disciplinary measure which should be
deemed served during the time they out of their
jobs (sic). (Nissan Motors Phils., Inc. v. Sec. of
Labor, 2006)
Option – Submit case to Voluntary Arbitration
after Certification
Steel Corp. of the Phils. V SCP Employees
Union National Federation of Labor Unions
(2008):
The strike undertaken by the officers of respondent
union is patently illegal for the following reasons:
• it is a union-recognition-strike which is not
sanctioned by labor laws;
• it was undertaken after the dispute had
been certified for compulsory arbitration;
and
• it was in violation of the Secretary’s
return-to-work order.
Art. 263 (g), 2nd paragraph:
Strikes and lockouts in hospitals, clinics and similar medical
institutions shall, to every extent possible, be avoided and all
serious efforts shall be exhausted to substantially minimize, if not
prevent, their adverse effects.

Art. 263 (h). Before or at any stage of the (a) Liability of officers of the unions
compulsory arbitration process, the parties may
opt to submit their dispute to voluntary arbitration. Art. 264 (a), 3rd paragraph:

Persons Punishable Punishable

9. Illegal Strike Acts Penalty
1) Any union Knowingly Termination of
Basis of illegality officer participates, employment
authorizes or
Noted authority on labor law, Ludwig Teller, lists ratifies an illegal
six (6) categories of an illegal strike, viz.: strike
2) Any union Knowingly Termination of
1. When it is contrary to a specific member participates in employment
prohibition of law, such as strike by commission of
employees performing governmental illegal acts
functions: or during a strike
2. When it violates a specific requirement
of llaw, such as Article 263 of the Labor
Code on the requisites of a valid strike]; or Query: Is the filing of a petition with the Labor
3. When it is declared for an unlawful Arbiter to declare a strike illegal condition sine qua
purpose, such as including the employer non for the valid termination of employees who
to commit an unfair labor practice against commit illegal acts in the course of such strike?
non-union employees; or
4. When it employs unlawful means in the Answer. No. The use of unlawful means in the
pursuit of its objective, such as a course of a strike renders the strike illegal.
widespread terrorism of non-strikers [for Pursuant to the principle of conclusiveness of
example, prohibited acts under Art. 264(e) judgment, the said strike was ipso facto illegal.
of the Labor Code]; or The filing of a petition to declare the strike illegal
5. When it is declared in violation of an was thus petition to declare the strike illegal was
existing injunction, such as injunction, thus unnecessary (Jackbilt Industries, Inc. v
prohibition, or order issued by the DOLE Jackbilt Employees Workers Union-NAFLU-
Secretary and the NLRC under Art. 263 of KMU, 20 March 2009)
the Labor Code]; or
6. When it is contrary to an existing Exception: If however, a complaint for illegal
agreement, such as a no-strike clause or strike is formally filed and is pending in the NLRC,
conclusive arbitration clause. (Manila the employer must desist from dismissing outright
Diamond Hotel Employees’ Union v.
CA, 2007)
the union officers involved. See PNOC Dockyard
and Engineering Corp. v. NLRC.
The law grants the employer the option of
declaring a union officer who participated in an
illegal strike as having lost his employment. It
possesses the right and prerogative to terminate
the union officers from service. (Santa Rosa
Coca-Col Plant Employees Union v. Coca-cola
Bottlers Phils., Inc., 2007)
(b) Liability of ordinary workers
Note: also refer to the table under the preceding
subsection.
Article 264 of the Labor Code, in providing for the
consequences of an illegal strike, makes a
distinction between union officers and
members who participated thereon. Thus,
knowingly participating in an illegal strike is a valid
ground for termination from employment of a
union officer. 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.
Thus, absent any clear, substantial and
convincing proof of illegal acts committed
during an illegal strike, an ordinary striking worker
or employee may not be terminated from work.
With respect to union officers, however, there is no
dispute they could be dismissed for participating in
an illegal strike. Union officers are duty-bound to
guide their members to respect the law.
Nonetheless, as in other termination cases, union
officers must be given the required notices for
terminating an employment, i.e., notice of hearing
to enable them to present their side, and notice of
termination, should their explanation prove
unsatisfactory. Nothing in Article 264 of the Labor
Code authorizes an immediate dismissal of a union
officer for participating in an illegal strike. The act
of dismissal is not intended to happen ipso
facto but rather as an option that can be exercised
by the employer and after compliance with the
notice requirements for terminating an employee.
(Stanford Marketing Corp. v. Julian, 2004)
It is necessary for the company to adduce proof of
the participation of the striking employees in the
commission of illegal acts during the strikes.
(Toyota Motor Phils. Corp. Workers
Association [TMPCWA], 2007)
Union members who participated in illegal strike
but were not identified to have committed illegal
acts are entitled to ne reinstated to their former
positions but without backwages. (Philippine
Diamond Hotel and Resort, Inc. [Manila Diamond
Hotel] v. Manila Diamond Hotel Employees Union,
2006)
Effect of assumption/certification order
Art.264. No strike or lockout shall be declared after assumption
of jurisdiction by the President or 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 of lockout.
A strike that is held despite the issuance by the
SOLE of an assumption or certification order,
becomes a prohibited activity pursuant to Article
264. As the Court ruled in Union of Filipino
Employees. V. Nestle Philippines, Inc (1990).
Under Article 264(a) of the said code, once an
assumption certification order is issued by the
SOLE, strikes are enjoined or if one has already
taken place, all strikes shall immediately return to
work. ( Grand Boulevard Hotel v. Grand Labor
Organization, 2004)
Art. 263(g):
REQUISITES FOR ASSUMPTION/CERTIFICATION OF SOLE
(Secretary of Labor):
1) Labor dispute causing or likely to cause a strike or lockout
2) In an industry indispensable to the national interest.
OPTION OF THE SOLE:
1) Assume jurisdiction over the dispute and decide it or,
2) Certify the dispute to the NLRC for compulsory arbitration.
EFFECT OF ASSUMPTION OR CERTIFICATION:
1) Automatically enjoin the intended or impending strike or
lockout as specified in the assumption or certification order.
2) If a strike or lockout has already taken place at the time of
assumption or certification-
a) all striking or locked out employees shall
immediately return to work, and
b) the employer shall readmit all workers under the
same terms and conditions prevailing before the strike or lockout.
3) The SOLE may seek the assistance of law enforcement
agencies to ensure the compliance with this provision as well as
with such orders as the may issue to enforce the same.
The powers granted to the Secretary under Article
263(g) have been characterized as an exercise of
the police power of the State. When the Secretary
exercises these powers, he is granted “great
breath of discretion” to find a solution to a labor
dispute. The most obvious of these powers is the
automatic enjoining of an impending strike or
lockout or its lifting if one has already taken place.
A return-to-work order imposes a duty that must
be discharged more that it confers a right that may
be waved. While the workers may choose not to
obey, they do so at the risk of severing their
relationship with their employer. (Philcom
Employees Union v. Philippine Global
Communications and Philcom Corporation,
2006)
The moment the Secretary of Labor assumes
jurisdiction over a labor dispute in an industry
indispensable to national interest, such assumption
shall have or impending strike. It was not even
necessary for the Secretary of Labor to issue
another order directing a return a return to work.
The mere issuance of an assumption order by the
Secretary of Labor automatically carries wit it a
return-to-work order, even if the directive to
return to work is not expressly stated in the
assumption order. (Telefunken Semiconductors
Employees Unon v. Court of Appeals, 1997)
Employment of strike breakers
Art. 264 (c). No employer shall use or employ any strike-
breaker, nor shall any person be employed as a strike-breaker.
Art. 2129R0. “Strike-breaker”
a) Means any person who obstructs, impedes, or interferes
with by force, violence, coercion, threats, or intimidation
b) any peaceful picketing affecting wages, hours or conditions of
work or in the exercise of the right of self-organization or
collective bargaining.
Improved offer balloting and strikes
Art. 265. Improved offer balloting
Strikes:
1) In an effort to settle a strike, the DOLE shall conduct a
referendum by secret ballot in 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.
Lockouts:
2) In case of a lockout, the DOLE 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 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 them upon the signing of the agreement.
(c) Waiver of illegality of strike
[J]urisprudence has enunciated that [no-strike
provision in the CBA] only bars strikes which are
economic in nature, but not strikes grounded on
unfair labor practices. (San Miguel Corp. vs.
NLRC, 2003)
As this Court has held in Philippine Metal
Foundries, Inc. vs. CIR (90 SCRA 135 [1979]), 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.
(Master Iron Labor Union vs. NLRC, 1993)
10. Injunctions
GENERAL RULE
Art. 254. Injunction prohibited. No temporary or permanent
injunction or restraining order in any case involving or growing
out of labor disputes shall be issued by any court or other entity,
except as otherwise provided in Article 218 and 264 of this Code.
EXCEPTIONS
Art. 218(e) – This article talks about the
substantial and procedural rights from issuing an
injunction. An injunction may be issued by the
NLRC, not against the strike
o BUT it may be issued against an illegal
act in a strike which may cause substantial and
irreparable damage to the property of a person.
(Pls refer to succeeding subsection)
o
Art. 264 – This provision talks about the prohibited
activities in a strike, lock-out or picket which may
be enjoined by an injunction.
Art. 264. Prohibited activities. (a) No labor organization or
employer shall a strike or lockout without first having bargained
collectively in accordance wit Title VII or this Book or without first
having filed the notice required in the preceding Article or without
the necessary strike or lockout vote first having been obtained
and reported to the Department
No strike or lockout shall be declared after assumption of
jurisdiction by the President or 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 of lockout.
Any worker whose employment has been terminated as a
consequence of an unlawful lockout shall be entitled to
reinstatement with full backwages. Any union officer who
knowingly participates in the commission of illegal acts during a
strike may be declared to have lost his employment right:
Provided, That mere participation of a worker in lawful strike shall
not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the
employer during such lawful strike.
(b) No person shall obstruct, impede or interfere with by force,
violence, coercion, threats or intimidation any peaceful picketing
by employees during any labor controversy or in the exercise of
the right of self-organization or collective bargaining or shall aid
or abet such obstruction or interference.
( c) No employer shall use or employ any strike breaker nor shall
person be employed as a strike breaker.
(d) No public official or employee, including officers and personnel
of the New Armed Force of the Philippines or the Integrated
National Police, or armed persons, 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
other criminal acts occur therein: Provided, That nothing herein
shall be interpreted to prevent any public officers from taking any
measure necessary to maintain peace and order, protect life and
property, and/or enforce the law and legal order.
(e) 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.
(a) Requisites for Labor Injunctions
Article 218. Powers of the Commission. The
Commission shall have the power and
authority:
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:
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.
xxx
(b) "Innocent Bystander Rule"
The right to picket as a means of communicating
the facts of a labor dispute is a phase of the
freedom of speech guaranteed by the constitution.  
If peacefully carried out, it cannot be curtailed
even in the absence of employer-employee
relationship.
The right is, however, not an absolute one. While
peaceful picketing is entitled to protection as an
exercise of free speech, we believe that courts are
not without power to confine or localize the sphere
of communication or the demonstration to the
parties to the labor dispute, including those with
related interest, and to insulate establishments or
persons with no industrial connection or having
interest totally foreign to the context of the
dispute. Thus the right may be regulated at the
instance of third parties or "innocent bystanders" if
it appears that the inevitable result of its exercise
is to create an impression that a labor dispute with
which they have no connection or interest exists
between them and the picketing union  or constitute
an invasion of their rights.  In one case  decided by
this Court, we upheld a trial court's injunction
prohibiting the union from blocking the entrance to
a feed mill located within the compound of a flour
mill with which the union had a dispute. Although
sustained on a different ground, no connection was
found between the two mills owned by two
different corporations other than their being
situated in the same premises. It is to be noted
that in the instances cited, peaceful picketing has
not been totally banned but merely regulated. And
in one American case,  a picket by a labor union in
front of a motion picture theater with which the
union had a labor dispute was enjoined by the
court from being extended in front of the main
entrance of the building housing the theater
wherein other stores operated by third persons
were located.(Philippine Association of Free Labor
Unions (PAFLU) vs Cloribel, G R No L 25878 March
28 1969)
VIII. PROCEDURE AND JURISDICTION
The following are the topics covered:
3. Labor Arbiter
4. National Labor Relations Commission
(NLRC)
5. Bureau of Labor Relations (BLR) – Med
Arbiters
6. National Conciliation and Mediation Board
(NCMB)
7. DOLE Regional Directors
8. DOLE Secretary
9. Voluntary Arbitrators
10. Court of Appeals
11. Supreme Court
12. Prescription of Actions
1. Labor Arbiter
a. Jurisdiction
Original and exclusive jurisdiction to hear and decide the
following cases involving all workers, whether agricultural or non-
agricultural:
Unfair labor practice cases; 
Termination disputes;  Sec. 4, NLRC Rules of Procedure 2011
If accompanied with 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;
Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations;
Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
and  received the appealed decision, award or order;
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 (Article 217, Labor
Code, as amended).
Original and exclusive jurisdiction over money claims arising out
of 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 (Section 10, Republic Act No. 8042, as amended
by Republic Act No. 10022).
Wage distortion disputes in unorganized establishments not
voluntarily settled by the parties pursuant to Republic Act No.
6727.
Enforcement of compromise agreements when there is non-
compliance by any of the parties or if there is prima
facie evidence that the settlement was obtained through fraud,
misrepresentation or coercion (Article 227, Labor Code, as
amended).
Other cases as may be provided by law.
The cases enumerated may instead be submitted to a voluntary
arbitrator by agreement of the parties under Art. 262.
The law refers voluntary over compulsory arbitration.
Concurrent with NLRC
Contempt cases.
Cases Referred to Grievance Machinery and Voluntary
Arbitration
Disputes on the interpretation or implementation of the CBA; and
Disputes on the interpretation or enforcement of company
personnel policies.
b. Effect of self-executing order of
reinstatement on backwages
 The decision of the Labor Arbiter ordering
the reinstatement of a dismissed or
separated employee shall be immediately
executor insofar as the reinstatement
aspect is concerned and the posting of an
appeal bond by the employer shall not stay
such execution.
 There is no need for a motion for the
issuance of a writ of execution on the
reinstatement order as it is self-executory.
(Pioneer Texturizing Corp. vs. NLRC, G.R.
No. 118651, October 16, 1997)
c. Requirements to perfect appeal to NLRC
a. The appeal shall be:
(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
(4) in three (3) legibly typewritten or printed copies; and
(5) accompanied by:
i) proof of payment of the required appeal fee and legal research
fee;
ii) posting of a cash or surety bond as provided in Section 6 of
this Rule; and
iii) proof of service upon the other parties.
b) A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the period for
perfecting an appeal.
c) 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.
d) Subject to the provisions of Article 218 of the Labor Code,
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.
It is clear from the NLRC Rules of Procedure that
appeals must be verified and certified against
forum-shopping by the parties-in-interest
themselves. The purpose of verification is to secure
an assurance that the allegations in the pleading
are true and correct and have been filed in good
faith. In the case at bar, the parties-in-interest are
petitioner Salenga, as the employee, and
respondent Clark Development Corporation as the
employer. A corporation can only exercise its
powers and transact its business through its board
of directors and through its officers and agents
when authorized by a board resolution or its
bylaws. The power of a corporation to sue and be
sued is exercised by the board of directors. The
physical acts of the corporation, like the signing of
documents, can be performed only by natural
persons duly authorized for the purpose by
corporate bylaws or by a specific act of the board.
Absent the requisite board resolution, neither
Timbol-Roman nor Atty. Mallari, who signed the
Memorandum of Appeal and Joint Affidavit of
Declaration allegedly on behalf of respondent
corporation, may be considered as the “appellant”
and “employer” referred to by the NLRC Rules of
Procedure. As such, the NLRC had no jurisdiction
to entertain the appeal. (Antonio B. Salenga, et al.
vs.  Court of Appeals, et al.,  G.R. No.
174941,  February 1, 2012.)
2. National Labor Relations Commission
(NLRC)
a. Jurisdictions
Exclusive and Original
Cases certified to it by the Secretary of Labor, as well as petitions
which seek to enjoin or restrain any actual or threatened
commission of prohibited or unlawful acts in any labor
disputes (Article 218, Labor Code, as amended).
Injunction cases under Articles 128 and 264; and
Contempt cases
Appellate
Decisions, awards or orders of the Labor Arbiters appealed to the
Commission through its Divisions, with the First, Second, Third,
Fourth, Fifth and Sixth handling cases from the National Capital
Region and other parts of Luzon; the Seventh and Eighth,
handling cases from the Visayas and Mindanao,
respectively (Article 217, Labor Code, as amended).
Decisions of Regional Directors or hearing officers on simple
money claims not exceeding P5,000 appealed to the
Commission (Article 129, Labor Code, as amended).
Under Article 218 the Labor Code, the NLRC (and
the labor arbiters) may hold any offending party in
contempt, directly or indirectly, and impose
appropriate penalties in accordance with law. The
penalty for direct contempt consists of either
imprisonment or fine, the degree or amount
depends on whether the contempt is against the
Commission or the labor arbiter. The Labor Code,
however, requires the labor arbiter or the
Commission to deal with indirect contempt in the
manner prescribed under Rule 71 of the Rules of
Court. Rule 71 of the Rules of Court does not
require the labor arbiter or the NLRC to initiate
indirect contempt proceedings before the trial
court.  This mode is to be observed only when
there is no law granting them contempt powers.  principle, the petition must be filed in the
As is clear under Article 218(d) of the Labor Code,
the labor arbiter or the Commission is empowered
or has jurisdiction to hold the offending party or
parties in direct or indirect contempt. Robosa, et
al., therefore, have not improperly brought the
indirect contempt charges against the respondents
before the NLRC. (Federico S. Robosa, et al. vs.
National Labor Relations Commission (First
Division), et al., G.R. No. 176085, February 8,
2012.)
b. Effect of NLRC reversal of Labor Arbiter’s
order of reinstatement
 If the decision of the labor arbiter is later
reversed on appeal upon the finding that
the ground for dismissal is valid, then the
employer has the right to require the
dismissed employee on payroll
reinstatement to refund the salaries s/he
received while the case was pending
appeal, or it can be deducted from the
accrued benefits that the dismissed
employee was entitled to receive from
his/her employer under existing laws,
collective bargaining agreement provisions,
and company practices. However, if the
employee was reinstated to work during
the pendency of the appeal, then the
employee is entitled to the compensation
received for actual services rendered
without need of refund.( Citibank vs. NLRC,
G.R. Nos. 142732-33 and 142753-54,
December 4, 2007)
c. Requirements to perfect appeal to Court of
Appeals
As held in the case of St. Martin Funeral Home of
NLRC (GR 130866. September 16, 1998), the way
to review the NLRC’s decision is through the
special civil action of certiorari under Rule 65, to
the Court of Appeals. Thus the 1997 Rules of
Procedure should be observed, to wit:
1. The petition for certiorari must be filed not
later than 60 days from notice of the
judgment, order or resolution. If a motion
for new trial or reconsideration is timely
filed, whether it is required or not, the 60
day period shall be counted from denial of
such motion.
2. The petition should be accompanied by a
certified true copy of the NLRC decision
and by a sworn certification of non forum
shopping as well as copies of all relevant
pleadings and documents.
3. In observance of the hierarchy of courts
first instance with the CA.
3. Bureau of Labor Relations (BLR) – Med
Arbiters
a. Jurisdiction (Original and Appellate)
Exclusive and Original Jurisdiction (Art. 226, Labor Code)
To act on its own initiative or upon request of either or both
parties on all:
Inter-union conflicts
Intra-union conflicts
Other related labor relations disputes
Other related labor relations disputes (Sec. 2, Rule XI, D.O. 40-
03)
Shall include any conflict between a labor union and the employer
or any individual, entity or group that is not a labor organization
or workers' association. This includes:
cancellation of registration of unions and workers associations;
and
a petition for interpleader.
E.O. 251 of 1987 removed from the jurisdiction of the BLR
“all” labor-management disputes. The effect of E.O. 251 is
to transfer to the NCMB the mediation, concillation, and
arbitration functions of the BLR.
The parties may by agreement settle their differences by
submitting their case to a voluntary arbitrator rather than
taking the case to the BLR.
Appellate Jurisdiction
The decision of the Med-Arbiter and Regional Director may be
appealed to the Bureau by any of the parties within ten (10) days
from receipt thereof, copy furnished the opposing party. The
decision of the Bureau Director in the exercise of his/her original
jurisdiction may be appealed to the Office of the Secretary by any
party within the same period, copy furnished the opposing party.
(Sec. 16, Rule XI, D.O. 40-03)
In petitions for cancellation of union registration, if filed with the
Regional Office, the appeal is with the BLR Director whose
decision shall be final and executor.
If the petition for cancellation is filed directly with the BLR, the
appeal is with the Secretary of Labor whose decision shall be final
and executor.
4. National Conciliation and Mediation Board
(NCMB)
Created by virtue of E.O. 126 (January 31, 1987)
It absorbed the conciliation, mediation and
voluntary arbitration functions of the Bureau of
Labor Relations.
Functions:
(a) Formulate policies, programs, standards,
procedures, manuals of operation and guidelines
pertaining to effective mediation and conciliation of
labor disputes;
(b) Perform preventive mediation and conciliation
functions;
(c) Coordinate and maintain linkages with other
sectors or institutions, and other government
authorities concerned with matters relative to the
prevention and settlement of labor disputes;
(d) Formulate policies, plans, programs, standards,
procedures, manuals of operation and guidelines
pertaining to the promotion of cooperative and
non-adversarial schemes, grievance handling,
voluntary arbitration and other voluntary modes of
dispute settlement;
(e) Administer the voluntary arbitration program;
maintain/update a list of voluntary arbitrations;
compile arbitration awards and decisions;
(f) Provide counselling and preventive mediation
assistance particularly in the administration of
collective agreements;
(g) Monitor and exercise technical supervision over
the Board programs being implemented in the
regional offices; and
(h) Perform such other functions as may be
provided by law or assigned by the Secretary
a. Conciliation vs. Mediation
Conciliation
 Refers to the process where a disinterested
third party meets with management and
labor at their request or otherwise, during
a labor dispute or in a collective bargaining
conferences, and, by cooling tempers, aids
in reaching an agreement.
Mediation
 A third party studies each side of the
dispute then makes proposals for the
disputants to consider. But a mediator
cannot make an award or render a
decision.
b. Preventive Mediation
 Undertaken when the issues raised are not
proper subjects of notices of strike or
lockout. E.g. dismissal of union officer or
protest regarding the conduct of
certification election. (Pasyll vs NLRC, GR
No. 24823, July 28,199)
5. DOLE Regional Directors
a. Small money claims
Upon complaint of any interested party, the
Regional Director of the Department of Labor and
Employment or any of the duly authorized hearing
officers of the Department is empowered through
summary proceeding and after due notice, to hear
and decide any matter involving the recovery of
wages and other monetary claims and benefits,
including legal interest, provided:
a) That the aggregate money claims of each
employee or househelper does not exceed
Five thousand pesos (P5,000.00).
b) The claim is presented by an employee or
person employed in domestic or household
service or househelper
c) The claim arises from EER; and
 d) The claimant does not seek reinstatement.
6. DOLE Secretary
a. Visitorial and Enforcement Powers
Visitorial Power
 Power of the Secretary of Labor or any of
his duly authorized representative to have
access to employer’s records and premises
at any time of the day or night whenever
work is undertaken therein:
Includes the right to copy therefrom, to
question any employee and investigate any
fact condition or matter which may be
necessary to determine violations or which
may aid in the enforcement of the Code
and of any labor law, wage order or rules
and regulations.
Enforcement of power (as amended by RA
7730)
 Power of the Labor Secretary to compel the
employer to comply with labor standards
upon finding of violations discovered in the
course of the exercise of the visitorial
power.
b. Power to suspend effects of termination
 The Secretary of Labor may provisionally
order reinstatement in the event of prima
facie finding that the dismissal may cause
a serious labor dispute as in a strike or
lock-out, or is in implementation of mass
lay-off.
7. Voluntary Arbitrators
a. Submission Agreement
Written agreement jointly submitted by parties to
the voluntary arbitrator which contains:
1. The parties’ statement/agreement to
submit to arbitration
2. The issues to be resolved
3. The agreement to abide by the decision or
award, the conduct of proceedings,
payment of arbitrator’s fees, etc.
b. Rule 43, Rules of Court
The decision of a Voluntary Arbitrator or panel of
Voluntary Arbitrators is appealable by ordinary
appeal under Rule 43 of the Rules of Civil
Procedure directly to the CA.
In Sime Darby Pilipinas, Inc. v. Deputy
Administrator Magsalin,G.R. No. 90426, December
15, 1989, the Supreme Court ruled that the
voluntary arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate
and to determine the scope of his own authority –
subject only, in a proper case, to the certiorari
jurisdiction of this Court. It was also held in that
case that the failure of the parties to specifically
limit the issues to that which was stated allowed
the arbitrator to assume jurisdiction over the
related issue. In Ludo & Luym Corporation v.
Saornido, G.R. No. 140960, January 20, 2003, the
Supreme Court recognized that voluntary
arbitrators are generally expected to decide only
those questions expressly delineated by the
submission agreement; that, nevertheless, they
can assume that they have the necessary power to
make a final settlement on the related issues,
since arbitration is the final resort for the
adjudication of disputes. Thus, the Supreme Court
ruled that even if the specific issue brought before
the arbitrators merely mentioned the question of
“whether an employee was discharged for just
cause,” they could reasonably assume that their
powers extended beyond the determination thereof
to include the power to reinstate the employee or
to grant back wages. In the same vein, if the
specific issue brought before the arbitrators
referred to the date of regularization of the
employee, law and jurisprudence gave them
enough leeway as well as adequate prerogative to
determine the entitlement of the employees to
higher benefits in accordance with the finding of
regularization. Indeed, to require the parties to file
another action for payment of those benefits would
certainly undermine labor proceedings and
contravene the constitutional mandate providing
full protection to labor and speedy labor
justice. (Manila Pavilion Hotel, etc. vs. Henry
Delada,  G.R. No. 189947, January 25, 2011.)
8. Court of Appeals
a. Rule 65, Rules of Court
The special civil action of certiorari should be
initially filed in the CA in strict observance of the
doctrine on the hierarchy of courts as the
appropriate forum for relief desired. (St. Martin
Funeral Home vs. NLRC, 1998)
9. Supreme Court
a. Rule 45, Rules of Court
 Appeal from CA to SC should be under Rule
45 (Petition for Review on Certiorari) and
not Rule 65 (Special Civil Action for
Certiorari). (Sea Power Shipping
Enterprises, Inc. vs. CA, G.R. No. 138270,
June 28, 2011)
 As a general rule, the Supreme Court is not
a trier of facts and a petition for review
on certiorari under Rule 45 of the Rules of
All money claims accruing prior to the effectivity of this Code shall
be filed with the appropriate entities established under this Code
within one (1) year from the date of effectivity, and shall be
processed or determined in accordance with the implementing
rules and regulations of the Code; otherwise, they shall be
forever barred.
Workmen’s compensation claims accruing prior to the effectivity
of this Code and during the period from November 1, 1974 up to
December 31, 1974, shall be filed with the appropriate regional
offices of the Department of Labor not later than March 31, 1975;
otherwise, they shall forever be barred. The claims shall be
processed and adjudicated in accordance with the law and rules
at the time their causes of action accrued.

Court must exclusively raise questions of

b. Illegal dismissal
law. Moreover, if factual findings of the
National Labor Relations Commission and
Under the New Civil Code, an action for illegal
the Labor Arbiter have been affirmed by
dismissal prescribes in 4 years from the accrual of
the Court of Appeals, the Supreme Court cause of action.
accords them the respect and finality they
deserve. It is well-settled and oft-repeated c. Unfair labor practice
that findings of fact of administrative
agencies and quasi-judicial bodies, which Article 290. Offenses. Offenses penalized under this Code and
have acquired expertise because their the rules and regulations issued pursuant thereto shall prescribe
in three (3) years.
jurisdiction is confined to specific matters, All unfair labor practice arising from Book V shall be filed with the
are generally accorded not only respect, appropriate agency within one (1) year from accrual of such
unfair labor practice; otherwise, they shall be forever barred.
but finality when affirmed by the Court of
Appeals.Nevertheless, the Supreme Court
d. Offenses penalized by the Labor Code and
will not hesitate to deviate from what are IRR issued pursuant thereto
clearly procedural guidelines and disturb
and strike down the findings of the Court Article 290. Offenses. Offenses penalized under this Code and
of Appeals and those of the labor tribunals the rules and regulations issued pursuant thereto shall prescribe
in three (3) years.
if there is a showing that they are
unsupported by the evidence on record or
Prescriptive period of illegal recruitment
there was a patent misappreciation of cases:
facts. Indeed, that the impugned decision Under RA 10022, amending RA 8042, llegal
of the Court of Appeals is consistent with recruitment cases shall prescribe in five (5)
the findings of the labor tribunals does years; provided, however, that illegal recruitment
not per se conclusively demonstrate the cases involving economic sabotage shall
prescribed in twenty (20) years.
correctness thereof. By way of exception to
the general rule, the Supreme Court will
scrutinize the facts if only to rectify the
prejudice and injustice resulting from an
incorrect assessment of the evidence
presented. (Timoteo H. Sarona vs.
National Labor Relations Commission,
Royale Security Agency, et al.,  G.R. No.
185280, January 18, 2011)

10. Prescription of Actions

a. Money claims

Article 291. Money claims. All money claims arising from

employer-employee relations accruing during the effectivity of ljb
this Code shall be filed within three (3) years from the time the
cause of action accrued; otherwise they shall be forever barred.